Proven Ways to Improve Your Credit Score

Let’s face it, we’ve all been there. You’ve enjoyed a fun and indulgent spending spree, and yes, you charged everything to your credit card. One month and many blissful purchases later, you find yourself facing a huge credit card bill.



You don’t have the money to pay for it, so you pay the minimum balance due.
This is dangerous, and in many cases, can cost you your credit score – and ultimately your financial future.

Keeping a high balance on your credit card can incur a lot of interest. The longer you leave debt on your credit card, the higher interest charges become. And consequently, it becomes harder to pay off your credit cards completely. Because of this slippery slope – late payments, accounts slipping into collections and worse – you can get red marks on your credit report, which can hurt your ability to do just about anything.

Sadly, it’s true. Just about every aspect of your financial and professional lives is impacted by your credit history. When you apply for a job, the potential employer can check your credit history and decide whether or not to hire you based upon your credit report. Your ability to obtain a loan is also impacted by long-standing debt. When you give your Social Security Number to a lender, they have the ability to go through your financial records and decide whether it’s safe to give you a loan.

Unemployment, of course, also contributes to a dropping credit scores. Many people are turning to credit cards to pay for life’s necessities, such as groceries, when they lose their jobs. If you’ve gone years without paying off a credit card bill entirely, this debt can follow you and impact your credit score for many years. After seven years, in most cases, a negative mark will be removed from your credit report. In the meantime, though, you may be denied employment, a loan or other financing.

However, there is an opportunity for redemption. Pay off your credit cards gradually over time to improve your credit. Ultimately, the ideal situation would be to pay off everything completely, but that isn’t always an option. The best thing you can do – if your primary goal is to improve your credit score – is to start with the credit card with the highest utilization. Credit utilization is simply how much credit you use (balance) compared to how much credit is available to you (limit) – the lower, the better. A utilizations over 50 percent will hurt your credit score, so you will want to tackle the debts that have high balances compared to their limits first.

While you’re concentrating on a single debt, make sure you pay the minimum balance on your other cards. The more quickly you reduce your credit card debt and utilization, the easier it will be to improve your credit score. This could take months, and in some cases, years.

Either way, the point here is to pay off at least a little bit on each card’s balance. Once you’ve paid down your debts to below 50 percent of their limits, then you’ll want to focus on paying the credit cards with the highest interest rate first. This will ensure that you pay less in interest over time that can add to your debt, while also reducing the pressure of dealing with multiple cards with intimidating balances.

Resist the temptation to keeping charging to your credit cards, and refuse to accept new ones. Once you’ve gotten debt down to the point that you can breathe, make a vow not to use your credit cards until you’ve paid off every card in full.

Check your credit report often. Keep an eye on your score’s rise and fall, and keep spending to a minimum. Over time, you will find it easier to resist the urge to use that little plastic wonder.

A second “hard pull,” or formal, credit check, can adversely affect credit scores.

THE final weeks before a mortgage closing can be nerve-racking for any borrower, but new guidelines from Fannie Mae calling for an 11th-hour inspection of finances may mean even more headaches.

These new quality-control guidelines were rolled out this summer and call for a second credit review. They are designed to ferret out borrowers who, in the weeks between applying for a mortgage or refinancing and closing on it, might have changed jobs, taken out additional consumer loans or fallen behind on monthly bills. Such activities could affect their credit rating — and delay or torpedo a new loan.

Even having an informal credit inquiry before the purchase of a big-ticket item like a washer and dryer could affect the closing, or prompt the mortgage lender to change the loan terms.

Freddie Mac has similar new guidelines for lenders that go into effect in February.

“We’ve heard of many instances of a loan not closing or of having to be reunderwritten,” said Karen Deis, a real estate agent and mortgage broker in Hudson, Wis., who publishes Loan Officer Magazine, a trade publication.

Lenders have yet to assess how the new requirement might financially affect borrowers, who so far have not been hit with extra fees, Ms. Deis said. But she added that they could eventually face “processing” fees of hundreds of dollars.

Fannie Mae, the largest buyer of mortgages, instituted the guidelines in part to root out a type of mortgage fraud known as “shotgunning,” in which borrowers take out multiple loans on one or more properties, unbeknownst to the lenders. They often skip town with the cash and default on the loans.

The guidelines are also designed to uncover that fresh car loan or run-up on credit-card limits, all of which would appear on a credit report, or the fact that in recent weeks you lost your job or switched employers — changes that lenders now verify through phone calls. A salary cut in those final weeks also could prompt lenders, under the guidelines, to reunderwrite a loan.

“Fannie is looking for undisclosed liabilities,” said Matthew Cammarota, the senior vice president for consumer finance operations at Webster Bank in Waterbury, Conn.

It sounds clear enough, but lenders have taken different approaches to the guidelines, with varying impact for borrowers.

In August, Fannie Mae clarified that it was not suggesting the only option for banks was a second “hard pull,” or formal, credit check, which can adversely affect credit scores, just before closing. It outlined other ways to comply, including the use of credit monitoring services.

But Terry Clemans, the executive director of the National Credit Reporting Association, a trade group based in Bloomingdale, Ill., noted that “by definition of what Fannie is trying to accomplish, a ‘hard pull’ is really the only way.”

He said many banks were opting to use credit monitoring, a “soft pull” process in which banks hire third-party vendors to put red flags on a consumer’s credit report without depressing credit scores. But the cost of credit monitoring, which could run into the hundreds of dollars, could get passed on to the borrower, Mr. Clemans said.

Other banks are asking borrowers to sign consent forms stating that their debt-to-income ratios did not increase more than 3 percent in the final weeks, and did not total more than 45 percent. Increases of more than 3 percent that still keep the ratio below 45 percent are not permitted, according to Janis Smith, a Fannie Mae spokeswoman. (The ratio used by Fannie Mae measures the percentage of a borrower’s monthly gross income that goes toward debts.)

Thomas A. Kelley, a spokesman for JPMorgan Chase, said his bank did only soft credit checks, through credit monitoring. Mark C. Rodgers, a spokesman for Citibank, said that the bank complied with Fannie Mae guidelines but that the details of how it did so were “proprietary.”

NCR Credit Plus Affiliate Program

Do you have a list of clients that are Credit Challenged or have Poor Credit Scores?

Do you have new clients that you cannot get them a loan because of their low scores?

Do you have clients that you have to say “sorry we can’t help you”?

NCR Credit Plus will take your potential client’s enroll them into our program. Educated, counsel and get their scores loan worthy for you and your company. Our education information will
help your clients get past the fears and doubts he or she has about
Credit Restoration.

Every client asks the same kind of questions: “Will this work, how long does it take?”

Credit Restoration is hard work, time consuming, and an ongoing affair. It is against the law to guarantee a time frame it will take to improve or restore anyone’s credit. However, it’s also against the law
to not state an “average” time frame that it will take. Our “Average”
time frame is 6 months.


How much will my score increase?

Your credit score is compiled directly from both positive and negative entries in your credit report.

* If you have open accounts that you are currently paying on, you should not record a late payment.

* If you do not have accounts you are paying on, then we will help you get some credit established.

* Use of 35% or less of your credit line will boost your score’s.

* Avoid a “hard inquiry’s” which can bring about a potential score reduction of five points or more.

* Your credit history accounts for 35% of your score.

Here’s what we think you’ll particularly appreciate about our program, and what it offers you:


NCR Credit Plus’s allows you to incorporate our services with your existing and new clients.

If you have a web site (Your Web-Master must add link) you can add a link offering our services.

In-depth updates about all account activity and progress made: We provide specific day/dates.

Identifying all accounts that are being worked on Ex; To Do / In Progress / Deleted / No Change.

Client score’s can be monitor without creating an inquiry.

Our services not only helped your client’s get approved, but also helps them get “lower interest rates.”

NCR Credit Plus success is illustrated by a client retention and track record that speaks for itself.

Please explore our site (www.ncrcreditplus.com), and contact us to receive full details regarding the services offered by NCR Credit Plus, or to answer any questions or concerns you may have. E-mail us for a Affiliate Welcome Packet.(info@ncrcreditplus.com)

Unemployed hardest hit by restrictive credit card lending

Consumers who have good credit scores are being rewarded with some of the best offers industry experts have seen in awhile. On the other hand, those struggling through unemployment are being locked out of the credit system completely.

Even as credit card rates, rewards, and introductory APR offerings improved in recent months, many consumers have been unable to obtain any lines of credit at all, according to a report from the Christian Science Monitor. Unemployed Americans have been hardest hit by these recent restrictive lending practices.

Many consumers, especially those who no longer receive unemployment insurance payments, have been completely flushed from the credit system. In addition, the report said that while unemployment rates have held steady at around 9.6 percent many consider the actual number of jobless Americans to be closer to 17 percent.

Meanwhile, several lenders have reported significant drops in the amount of defaulted credit card debt they've written off in recent months, though some say this may be a sign that consumers are simply unable to get new credit card accounts, rather than overall improved credit health.

Credit Score Facts: Trick or Treat !

TRICK or TREAT: During the recession everyone's credit score has dropped.

TRICK: While it’s true that many people have experienced lower FICO scores during the recession, millions of others have managed their credit in ways that have increased their scores. By doing a few basic things, many folks can increase their scores over time. The most important are - paying your bills on time, keeping balances low, and applying for new credit only when necessary.

TRICK or TREAT: Credit scores are only one factor that determines whether you get credit.

TREAT: While your FICO score is an important piece of information that most lenders consider, lenders will also consider other information before making their decision. This can include information from your credit application (income, length of time on your job, own vs. rent, etc.), any prior credit experience you have had with that lender, and the value of the property (auto or mortgage loan) you want to buy.

TRICK or TREAT: Congress made a law that every consumer can receive a free credit score annually.

TRICK: Every consumer is entitled to receive one free credit report per year from each of the national credit bureaus via www.annualcreditreport.com. This report does not include your credit score.

If you are taking out a loan and may be on the edge of a scoring range so that a few points difference could force you to pay a higher interest rate, it might be a good idea to ask your lender which score they would use so you review the proper one. Credit bureaus may sell the FICO score and their own proprietary version.

If you recently had a lender or car dealer pull your credit score for a purchase, you can also see if they will share the score with you. I recently inquired about my credit score from a lender because we're considering a FHA streamline refinance. My middle credit score is 799, meaning that of the three bureaus, one was higher and one was lower. The 799 score is a few points lower than when I checked last year, but it's not enough of a drop to spook me. The FICO range is between 300 and 850.

Credit check for employment stirs debate

Applying for a job comes with a certain degree of anxiety: Will they like me? Is my resume spotless? Are my references strong?

A growing number of people affected by record joblessness and foreclosure rates in metro Atlanta and nationwide have a new worry: Will bad credit keep me from getting the job?

While the U.S. Equal Employment Opportunity Commission reviews testimony regarding the use of credit background checks for employment, supporters say the checks are a smart business tool for certain industries and critics counter that the reports unfairly discriminate against minorities and those affected by the recession.

Atlanta-based CredAbility has clients who fear they’ve been denied employment based on poor credit reports, including a woman who made it to the final interview stage with a mortgage brokerage firm and submitted to a credit report check, knowing she was behind on mortgage payments. The woman, who did not want to be identified, didn’t get the job.

“It’s hard to say because the potential employer didn’t say, ‘You lost the job because of something on your credit report,’” said John McCosh, CredAbility spokesman. “But with the timing of it, we can see why people reach that conclusion.”

Credit background checks are one of several topics up for EEOC debate in a series of commission hearings examining employment barriers, an EEOC spokeswoman said. Under the Fair Credit Reporting Act, employers are required to receive written authorization from an applicant to run the report and then must provide that person, or employee, with a copy of the information. Similar to the reports a consumer can obtain for free each year through credit reporting agencies, employers receive a report that lists debt. The reports do not, however, give an applicant’s credit score.

Sarah Crawford, senior counsel for the Washington, D.C.-based Lawyers’ Committee for Civil Rights Under Law, testified before the EEOC last week against the use of credit checks. Research indicates African-Americans and Hispanics tend to have poorer credit than whites, and credit background checks, while applied broadly, can have a second-hand effect of screening out minorities, she said.

“I think the assumption that is made is, if somebody is behind on their bills, then it tells something about their integrity or responsibility, but in many cases that assumption is flawed,” Crawford said. “You have somebody who has fallen behind on their bills because they’re out of their job in this economy, and because they’ve fallen behind on their bills, they can’t get a job.”

Credit check supporters say this is only one step of the hiring process for certain industries, such as financial institutions or retail and real estate firms, in which employees handle money or have access to confidential information. Nearly 60 percent of employers use credit background checks in some way, according to the Society of Human Resource Management.

Credit checks typically are performed during the final stages of interviewing, or when an offer has been made, because of the cost involved, said Mike Aitken, SHRM director of government affairs.

“It’s one piece of the puzzle; it’s not the over-riding factor,” Aitken said. “If somebody just lost their job and fell behind on bills, that’s not what they’re looking at. They’re looking at their track record for five or six years. They’re looking at a pattern and practice of not being able to meet their obligations.”

Only 13 percent of businesses use credit background checks on all job candidates in today’s market, compared with 19 percent in 2004, according to SHRM. Another 47 percent said they use credit background checks for selective job candidates, compared with 42 percent in 2004 that reported rarely or sometimes using the checks.

Aitken said credit reports should be applied only in specific instances. For example, a software company that conducted a credit background check on a chief financial officer candidate found that person had $35,000 in gambling debt.

“That was one of those things the employer didn’t want to take a risk with,” Aitken said.

SHRM, however, doesn’t believe credit report checks are necessary for all industries.

“You can’t really argue that a maintenance person or somebody who doesn’t have access to financial information should be having a credit report performed on them; it’s pretty hard to justify that,” Aitken said.

Heather Donnelly, director of operations for Atlanta’s Paces Staffing, said credit background checks aren’t as commonly requested as criminal or social security checks. Credit background checks are typically requested for mid-to-high level accounting or finance positions, she said.

“In certain positions they are looking for someone who is going to manage their money, and they are looking for someone who can show personal responsibility in their own life as well,” Donnelly said.

Crawford said there is little research, however, that demonstrates a correlation between credit and talent.

“To my knowledge there isn’t any research out there that makes the critical link between what shows up on a credit report and information that gets to whether someone will be able to perform the job,” Crawford said.

For that reason, SunTrust mortgage company does not conduct credit background checks, spokesman Hugh Suhr said.

“We researched the issue a number of years ago and did not find sufficient data to support a correlation between a score and job performance and risk,” Suhr said.

The federal government and some states are considering legislation that would prohibit employers from using credit background checks, with certain exceptions.

Congress last year considered House Resolution 3149, which was known as the Equal Employment for All Act and sponsored by Steve Cohen, D-Tenn. Among the co-sponsors, John Lewis, D-Georgia, said the legislation was written to halt what he called discrimination against people who were unemployed because of the bad economy, and had credit standings that suffered as a result. The resolution remains at committee level.

“If people cannot earn some money to pay their bills, they will be in a hole forever,” Lewis said.

Sarah Grathwohl of Roswell submitted to a credit and criminal background check for her former job with a development and real estate company in Athens. The company conducted checks for all job positions, and she didn’t think twice about it. She was hired as an assistant to the CEO and later helped with the company’s hiring process. She never knew of an applicant denied a job because of his or her credit.

Grathwohl, 29, supports the use of credit background checks in some instances, though she still isn’t sure why it was necessary for her former position.

“I think anytime you’re handling anyone else’s money or assets, it makes sense to me, and as a consumer it makes sense to me,” she said. “With my previous employer, it didn’t bother me, but I don’t see that it was extraordinarily necessary or related to what I did at all.”

New scoring model may help lenders better assess a consumer's credit risk.

The subprime mortgage crisis forced lenders to tighten their credit standards, putting a new set of rules, regulations and requirements in motion that have made it more difficult for prospective homeowners to secure financing. Although the Homebuyer Tax Credit, record low mortgage rates and special incentives have made homeownership more advantageous for home buyers, the strict credit requirements have not.

Efforts to help lenders determine the creditworthiness of potential borrowers have led the credit analysis company FICO to develop a new model for mortgage creditors. The FICO 8 Mortgage Score will be made available to the three credit reporting bureaus, allowing lenders to better assess the risk of a potential borrower.

The model works by analyzing an applicant's full credit history, providing a sharper analysis to lenders and mitigating the risk of future mortgage loan debt and foreclosure. The scoring range is the same used for traditional consumer credit scores - between 300 and 850 - but the model takes a number of variable factors into consideration when making its determination.

"To do the best job of evaluating risk and increasing profits, lenders need updated credit scoring analytics that incorporate mortgage credit performance since the subprime mortgage meltdown," TowerGroup senior research director Craig Focardi said. "The availability of mortgage credit scores across all three credit reporting agencies will enable lenders to upgrade their loan underwriting and account management practices."

Consumers considering purchasing a home in the near future should find out their credit score and contact their lender to determine their credit requirements. Individuals may also be required to provide two copies of their credit report to lenders, so financial professionals encourage consumers to review their reports for accuracy before submitting an application.

How 721 Became the New 680

Until recently, a credit score of 680 was something to be proud of. It meant you paid most of your bills on time, got dinged when you went shopping for a refi, but in general, had a solid enough record to get a loan at the best rates.

Not anymore. That 680 is firmly second-tier these days. Now, borrowers need at least 721 to get the biggest loans or the best terms, including a credit card with the longest 0% APR promotion or a jumbo mortgage. For millions of once-desirable consumers with scores between 680 and 720, that 40-point jump could cost thousands of dollars over the life of a typical loan.

Once that line has been drawn, there’s no wiggle room, either. Lenders place borrowers into brackets, which means someone with a score of 719 is lumped into a bracket that starts as low as 690. That one measly point could cost more than $600 over the life of an average 36-month car loan, or $2,500 over the life of a 15-year home equity loan, according to Informa Research Services. And that is “ludicrous on its face," says Ed Mierzwinski of the U.S. Public Interest Research Group. "Credit scores are a blunt tool being abused by creditors as if they were a sharp instrument.”

For their part, lenders say the credit scores aren’t arbitrary and that a score of 740 predicts the borrowers who are most likely to repay their debts and least likely to default. At the same time, they’re more profitable than people with a perfect score of 850, because they’re also likely to carry a balance or incur fees – and therefore, to generate profit for the lender.

As for 680, it’s become a casualty of the market crash. When Fannie Mae and Freddie Mac were backing mortgages after the crash, they settled on the 721 threshold for the best pricing, says Keith Gumbinger, a vice president at HSH Associates, a mortgage-data tracking firm. At the time, most borrowers were afraid of lending to anyone, so 721 seemed plenty low. Because most mortgages are backed by Fannie or Freddie, the major lenders kept the same threshold, and as banks have started to put loans on their books again, it’s stuck.

Of course, while earning a 680 wasn’t all that difficult before the recession, the new good-credit bar of 721 is harder to reach. With more people out of work and unable to pay their bills, even consumers with previously envious credit scores might not reach 721. To get there, a consumer would need low balances on credit cards and a 15-year credit history — but might have missed a couple payments over the last two years. Someone who regularly pays on time could drop from the mid-700s if he applied for several new credit cards recently. Other 720-scorers: Those who haven’t missed a payment but carry balances that are more than 30% of their credit line; or those who have a short credit history but pay on time.

For someone on the cusp, the differences could be as small as one extra credit inquiry like when a lender looks up your credit score before approving you for a loan, or if a prospective employer pulls your credit report without telling the credit bureaus it’s strictly for employment reasons. The same thing could happen if you’re suddenly using more of your available credit because you made a big purchase.

What’s a 680 to do? Sadly, not much beyond the regular steps to credit score maintenance, experts say. That means paying bills on time and keeping debts to a reasonable level. And be patient, says Ulzheimer: As lending picks up, lenders will be forced to relax their standards once again. Within as early as six months to a year, 680 could be back on top.

The American people are in pain and angry

The American people are in pain and angry. We've heard about the anger, but do we really get it?

I ask this because I've been exposed to raw venting — mixed with soul searching — from readers about "strategic default." That phrase is the clinical term for people refusing to make their monthly mortgage payment and walking away from the home because they can see no reason to keep paying for a house now worth far less than the value of the loan.

Jeff Horton, of Orlando, Fla., figured out the condo he bought in 2005 and house he bought in 2007 were worth about half the $400,000 he owed to Bank of America. Horton said "life is too short," and he stopped paying.

"Strategic default is a fancy term for walking away from your responsibilities," said G.S., an online commenter to the story. "It is becoming too easy to be irresponsible and blame it on everyone else."


But those kinds of comments were drowned out by others, expressing camaraderie with the Jeff Hortons of the world, angst about their own imperiled financial situations and disgust with a system they feel victimized them. Some said they also felt hopeless about saving their homes.

"Walking away becomes more of an option, "Bank of America isn't helping. I have applied for every program that has been introduced since the crisis and somehow I can never qualify."

In an unscientific poll readers were asked if it was acceptable for an individual to intentionally walk away from a mortgage they could afford to pay. Voting was divided almost exactly 50-50.

"What is the ethics of risking your family being homeless because you choose to pay on a mortgage that is a bad long-term investment?" a reader named Steve C. asked.

He added: "The banks that caused this economic mess spent lots of money for lobbyists to get their way in Congress, and have had Glass-Steagall repealed and have emasculated any attempt to add teeth to any regulations, and have been bailed out via TARP and dozens of other programs to the tune of trillions of dollars. They have continued to pay out massive bonuses, can borrow at almost zero percent from the Fed and buy Treasurys at 3 to 4 percent, and have actually gotten bigger, not smaller."

The question raised by bankers and ethicists is whether breaking the promise to pay a mortgage is a moral breach with long-standing implications for society.

Tom Donaldson, a business ethics professor at the Wharton School of the University of Pennsylvania, notes numerous studies show that when one party breaks a promise, the other party feels entitled to do the same. With a breakdown in trust, it's more difficult to do business or count on institutions to play by the rules.

But many people reacting to the question of strategic default and ethics aren't blaming homeowners. They blame the banks and government for not upholding the public's trust.

Jon Maddux, the chief executive of YouWalkAway, a Web site that advises people on strategic default for a fee, says many people who turn over keys accuse banks of causing the housing collapse by handing out loans "to anyone with a pulse," and then doing nothing for borrowers in distress, even though the banks survived on taxpayer bailout money.

"For bankers and business people to play the morality card is a joke," said a reader named Robert. Like many other readers, he questioned the array of broken promises to taxpayers and individuals by corporations, financial industry executives and others.

"I wonder if the new United Airlines will honor all those pensions they defaulted on now that they are going to be the world's biggest," Robert said. "Pensions are a contract between the company and their employees. Certainly that promise is as moral as the promise to pay a loan. When business is bad, they cut their losses. I don't remember morality ever being part of the conversation."


"Businesses are expected to do what's right for their shareholders," and walking away from a bad investment improves their credit rating, he said. "Individuals are told they have a moral responsibility not to walk away, and people are scared about the consequences."

Under contract law, he said, there is no issue of morality. The contracts simply state what the parties will do if there is a breach. In the case of a mortgage, the person gives up a house and could be required to pay the remainder of the mortgage if the sale price on the home is insufficient.

"Individuals should do what's best for their families," White said. "There is a lot of pain and suffering."

The anger out there, as far as I can tell, is equal opportunity. It comes from people attacking both Democrats and Republicans, feeling betrayed by the financial crisis, housing crisis and the 9.7 percent unemployment rate.

As for strategic default, many people wanted to know what risks they would be taking if they dared cross into such territory. For them, White offers these words of advice.

If you live in a state that is considered a "non-recourse" state, you can walk away from your mortgage and the bank can't keep chasing you for the money. In "recourse" states, such as Illinois, banks will recover as much money as they can through a foreclosure sale of your home, and then have the right to pursue a "deficiency judgment," attempting to collect what they couldn't recover when your home was sold.

Although they can do this, few banks do, White said.

Horton, 33, who is awaiting foreclosure, has been living in his home without paying the mortgage for 14 months. He's saving his payments to cover any possible deficiency judgment.

Other worries revolve around credit scores and the fact that a bad score can keep people from getting another mortgage or a car loan. According to NCR Credit Plus, a foreclosure can take about 140 points off your credit score turning a top-quality credit score into a subprime score. White said a default can stay on your credit report for seven years.

But White said that if a person pays attention to the rules of credit scoring, he or she can default on the mortgage and rebuild credit quickly. Much of the score depends on total debts, he said, so people who pay off their other debts can raise their score close to where it was before a foreclosure. In fact, for people deeply in debt, this approach can end up giving them a better credit score.

The trouble is no one can be sure just what will happen to a credit score, so White provides this advice: Talk to a lawyer before walking away, and don't do it if you will need to borrow soon.