If you have a bad credit score, you sure would like to know how long will it take to fix your bad credit. You would like your score to be in the better credit score range than where you are now. You have dreams of one day buying a house and would like to qualify for a low rate mortgage loan.
Or you have a low credit score and you are paying a high double digit interest rate on your auto loan. You want to know how long for your credit scores to improve so you can refinance at a lower interest rate and lower your monthly payment so you can see your principal balance go down from month to month.
There are many reasons why you would want to improve your credit score. It will not happen overnight but with the right financial habits you can get a better credit score and get better interest rates. Avoid credit repair companies that promise they can quickly improve your FICO by 50 to 100 points in 30 days or less.
There are a lot of scams out there when it comes to credit repair. They prey on your desperate situation to save money and qualify for a home or car loan. Do your research before you give any of these companies your money.
So how do you get in the better credit score ranges? Number one is pay all your bills on time. Do not make late payments. This is the worst thing you can do for your credit scores. Over 1/3rd of your credit score is determined by your payment history.
The next biggest factor is how much you owe to your creditors. If all your credit cards and department store cards are maxed out then you need to get these balances reduced to get a better credit score. The goal is to be under 25% credit utilization. So if you have a $1000 limit credit card, you want to keep the balance under $250.
The next biggest factor to get into the better credit score ranges is how long your accounts have been opened. The longer the better. You want to have accounts in your credit report 5, 10, 15 years old and longer.
Working on these 3 credit score factors alone will greatly increase your Experian, Equifax, and Transunion credit scores. The better you get at paying your bills on time then the more your FICO will increase. You can expect to see improvements in your score over a 6 to 12 month period. You can use free credit monitoring tools like Credit Karma and Credit Sesame to keep track of your progress.
What is your credit score? Do you have a 670 score? Is that good enough to get an auto loan? What kind of credit score do you need to buy a home? Is a 700 credit score good enough? How does your compare against people your own age or in your own state? What is the good credit score range?
There are tons of questions when it comes to knowing what’s in your credit report and how that data gets put into a formula and out comes your credit scores from Transunion, Equifax, and Experian.
Lenders then use this information to decide to lend you money or not and at what interest rate. Your score is one main factor that determines if you can buy a car, truck or SUV, get a home mortgage, or if you have a mortgage already, if you can refinance your mortgage and take advantage of historic low interest rates and lower your monthly mortgage payment, if you can get approved for a credit card or line of credit or personal loan.
Having a score in the good credit score range will help you get a 1.9%, 2.9% or 3.9% APR interest rate for an auto loan. While having a below average or poor credit score will ensure you have to come up with a larger down payment and pay a double digit interest rate such as 14%, 18% or even 20%!
So what kind of scores fall in the good credit score range?
Transunion, Equifax, and Experian scores from 670 and up qualify as good scores. So if you have a FICO credit score of 670 671 672 673 674 675 676 677 678 679 680 681 682 683 684 685 686 687 688 689 690 691 692 693 694 695 696 697 698 699 700 701 702 703 704 705 706 707 708 709 710 711 712 713 714 715 716 717 718 719 720 721 723 724 725 726 727 728 729 730 731 732 733 734 735 736 737 738 739 you have a good credit score and can qualify for some of the best interest rates when you want to buy a home, car, or boat and refinance your mortgage, get approved for a good rewards credit card, or obtain a line of credit for your small business.
what is a good credit score
If you happen to have a credit score from 740 741 742 743 744 745 746 747 748 749 750 751 752 753 754 755 756 757 758 759 760 761 762 763 764 765 766 767 768 769 770 771 772 773 774 775 776 777 778 779 780 781 782 783 784 785 786 787 788 789 790 791 792 793 794 795 796 797 798 799 800 801 802 803 804 805 806 807 808 809 810 811 812 813 814 815 816 817 818 819 820 821 822 823 824 825 826 827 828 829 830 831 832 833 834 835 836 837 838 839 840 841 842 843 844 845 846 847 848 849 to 850 you will have what is considered an excellent credit score and can pretty much buy and get approved for whatever you want. But if you have a credit score in this range you have shown good financial discipline and have not been spending too much money on wasteful things.
What about the average credit score range? Credit scores can vary based on age and location. The average credit score of 18-24 year olds is 638 which does not fall in the good credit score range while the average score of 45-54 year olds is 685 which does fall in the good credit score range.
And then you can compare national average credit scores. The average credit score in Texas is 664 while the average credit score in California is 685. In Florida it’s 668 and in New York it’s 683. (Source: Credit Karma)
To answer the question about what credit score you need to get an auto loan, you can qualify with scores in the 500s but you will have to come up with a larger down payment, show a longer job history, and pay a higher interest rate.
Now you know what scores fall in the good credit score range. You can take the next 2 minutes and find out all 3 credit scores free from Experian, Equifax, and Transunion credit reporting bureaus.
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Its long but well worth the read, it’s very informative.
Equifax, Experian and Transunion have begun limited marketing of a new consumer credit scoring algorithm to Risk Based Lenders. According to David Rubinger of Equifax, the planned nationwide rollout to Risk Based Lenders is scheduled for July, and will be followed, approximately 9 months later, with the public disclosure of these scores to consumers.
An algorithm is a mathematical formula that is written to assign value to specific data in order to attain a final score. Risk Based Lenders are financial institutions that lend money based upon a consumer’s credit history and the consumer’s ability and historical willingness to repay a loan. These types of lenders cover the full range of financial institutions lending money for credit cards, auto loans, unsecured loans and mortgage loans.
David Rubinger, the national marketing contact for Equifax, explained "approximately one year ago, the analytical managers for the 3 credit bureaus got together for the purposes of addressing variations within the present scoring models in use. Under the current system, the three major credit-reporting agencies use three different algorithms that produce three different and unique scores, regardless of the data being scored. The primary issue to be addressed was how they could create a solution for Risk Based Lenders who wanted fewer variations within the credit scoring models they were using to make lending decisions."
The solution for the three agencies was to create a single algorithm that would produce a more "predictive score" by creating a single variable in scoring, which would be the data. To do this, they came up with a solution that involved creating an independent company called VantageScore, LLC. Each credit-reporting agency would own an equal share in the company, and purchase a license to use and sell the resulting scores to risk based lenders under the VantageScore service mark. The hard part was creating the uniform scoring that the three credit-reporting agencies were attempting to design and sell.
To achieve as close a model as possible, the three credit agencies tested the initial base algorithm on 15 million active credit files. Throughout the testing process, changes were made to the algorithm as were needed to create a more stable scoring model until the finished product created an acceptable level of score variance in the finished product.
By creating an independent LLC company, the three credit reporting agencies are now able to offer a single product that has only one variable, the data being scored. Where the credit information reported is the same, the score for a consumer file will be the same, regardless of whether the score comes from Transunion, Experian, or Equifax. Where the credit information is different, the variations in the actual score will be significantly reduced.
Under the new VantageScore product, the three agencies decided to change the scoring formula from its current 450 to 850 scoring range to a new 501 to 990 range. When asked about why they would do this, Rubinger responded, "The new scoring model is to help consumers better understand their credit score. By basing it on a grading scale used throughout the K through 12 school system, consumers can look at their score and know exactly what they have". Unfortunately for Risk Based Lenders, the new scoring model will require they spend thousands of dollars in updating software to incorporate the new scoring model.
When asked about some of the negative aspects of the change, Mr. Rubinger declined to answer any questions.
The initial question that Down Payment Solutions has relates to anti-trust laws and where the congressional oversight is. As we only have three major Credit Reporting Agencies, how is it they can bypass any oversight to create an LLC company in order to offer a single uniform product in which all can sell, with the goal appearing to be the complete replacement of the present day independent scoring algorithms?
When contacted for comment on this matter, the Department of Justice – Anti-Trust division – declined comment and suggested consumers who have concerns should e-mail them at antitrust.complaints@usdoj.gov. Neither Senator Bill Nelson (D – FL), Senator Mel Martinez (R – FL), Congressman Jim Davis (D-FL) or Congressman Michael Bilirakis (R- FL) offices would offer any comments for this article.
Jan Helder of the Helder Law Firm called the formation of a LLC by the three Credit Reporting Agencies "shady, at best" and advised that, unfortunately for consumers, they "cannot file an anti-trust suit until they have experienced a financial loss resulting from the new VantageScore credit scoring system, and then they will have to prove financial loss in court." This will be well after low to moderate-income families, and the businesses dependent upon them, have felt the tightening of credit nationwide.
"The new VantageScore model creates a significant financial risk to consumers in their ability to obtain affordable financing," according to Dwayne Singletary of Allstate Mortgage and Loan Corp in Tampa, Florida. "Many risk-based lenders in the mortgage industry use all three credit-reporting scores–also known as a Tri-Merged Credit Report–and have programs that allow them to use the credit-reporting agency that has the highest credit score. A reduction in that higher score will most likely result in home buyers needing more money out of pocket for a down payment, or require them to pay a higher rate of interest…" under the VantageScore model, whether refinancing or purchasing.
In the installment and revolving credit market, most risk-based lenders do not use the scores from all three reporting agencies. Rather, each lender selects the reporting agency that best fits their type of borrower. A reduction in any one score across any credit-reporting agency, via adoption of the VantageScore algorithm, could result in consumers being unable to obtain credit, or consumers paying a significantly higher rate of interest to borrow the same money tomorrow, versus what they would pay under the current separate credit-scoring models.
Rubinger contends the new scoring model is designed to help consumers better understand their score. However, given the thousands of dollars in financial costs that will be incurred by Risk Based Lenders in updating programming, it leaves the impression the new scoring model may actually be designed to mislead consumers into believing the new VantageScore system actually improves their credit scores.
Under the current system, in theory, if a consumer has a Transunion credit score of 600, then potentially under the new VantageScore model, they could have a score as high as 720. This certainly would go a long way towards silencing a potential consumer backlash if someone with challenged credit sees a dramatic increase in their credit score. This is potentially misleading, and may be the reason for the delay in consumers having access to their new VantageScore credit score for any given credit-reporting agency.
At present, it has not been disclosed how consumers will know what model they are being scored under. As consumers apply for credit, most will assume they are being scored under existing Credit Models, when in fact; they may have been scored under the VantageScore system if a particular financial institution adopted it.
Consumers who are concerned about the potential implications that VantageScore has on their financial future should contact the DOJ – Anti-Trust Division. In addition, we strongly encourage you to contact your Congressman via www.congress.org.
Down Payment Solutions believes that before this new Credit Scoring System is implemented, both the DOJ and Congress have some over sight as to how, when and if Transunion, Experian and Equifax, can implement this type of product in order to protect every American consumer and the businesses dependent upon them.
You are free and encouraged to reproduce, link to, e-mail and redistribute this article in its entirety as long as you leave the below author information intact.
Author: George Chaney, President, Down Payment Solutions, Inc. http://www.downpaymentsolutions.com
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Please read this entirely then respond with your answer. I would like to know what is the best way I can improve my credit? I have all credit debt paid off and has been for 2 years now. I have no debt. I recently attempted to get a 0 secured credit card from bank of America but was denied. They also talked me into applying for a regular card from them and also was denied this took place in Jan 2010. So I have 2 inquires from BOA now. I applied last week for a Capital One unsecured credit card (1 inquiry) and was instantly approved. I will probably have the lowest limit which is 0 due to my past bad credit items. I will receive this card next week. I know to use under 30% of my debt to credit ratio. However I plan to only use 7% because this is what FICO recommends and you can achieve a higher score. I have read it is good to use a mix of credit such as revolving, installment and charge. After being approved for the Cap One card I decided to dispute two of my old negative accurate accounts on my credit reports with all 3 burearus. One has successfully been removed by Experian and transunion so far. So now I only have 3 negitive accounts on record these are listed below. I know to wait 60 days then dispute one or two items once again otherwise my reports will be flagged by the bureaus. I have quite a few thousand in the bank should I use some of this money to also get a CD secured loan from my bank or a credit union? Should I put a ,500 deposit down on a secured credit card from my local credit union? Should I apply for an American Express charge card (good/excellent credit is needed from what I have read)? Currently before trying with bank of America, applying for Capital One and having a negative account removed from my credit reports My FICO scores were in early January 2010 Transunion: 597 and Equifax: 648. Experian has no FICO score so I will never know it, the Vantagescore from what I have read is useless and not used by lenders or creditors. Also how much will my credit scores improve 1-2 years from now after using at least Capital One credit card or other forms of credit building methods? Be it charge or installment. Will I be in the 700+ score range? This is my goal to be at in 2 years or less. By 2013 all negative items should be off my reports the 7 year period if not disputed successfully.
Negitive items: 3
2 charge offs / bad debt closed
Remove by 09/2012
1 credit card
2- 90 day late payments
Held for one year then closed
Went over limit
Remove by 09/2012
Good accounts: 5
One open, never used. 4 closed
Longest account 5 years old
Goal FICO score: 700+ (2 years or less)
The card I am recieveing from capital one is unsecured NOT secured. The negitive accounts I have been closed for years and have NOT reported since 2005, 2007, 2008.
