Frequently Asked Questions
Credit Restoration & Advisory Program
Most lenders consider a bad credit score as any score below 620. Keep in mind that credit bureaus use separate scoring models to evaluate consumer credit. Both scoring models range from 300 to 850 but the cutoff for good or bad credit varies.
For example, 670 is considered a good FICO score and a fair VantageScore. Here is a breakdown of the VantageScore credit scores:
● 300 to 599: bad
● 600 to 649: poor
● 650 to 699: fair
● 700 to 749: good
● 750 to 850: excellent
The FICO scores are a little different:
● 300 to 579: bad
● 580 to 669: fair
● 670 to 739: good
● 740 to 799: very good
● 800 to 850: exceptional
FICO and VantageScore are the most used credit scoring models. However, Experian also has its own model with scores ranging from 330 to 830. You may even find lenders that use their own scoring models. No matter your current score, taking steps to remove errors on your credit report and paying down debts can help improve your creditworthiness.
Low credit scores keep you from obtaining low interest rates on loans. Depending on your specific situation, a bad credit score may even keep you from obtaining a mortgage, car loan, or job. Lenders use credit scores to determine the risk of you defaulting on your payments. If your score is too low, your loan application is more likely to be denied. Many employers also perform credit checks before hiring a new employee. A bad credit score is sometimes considered a risk, especially when seeking employment in the financial industry or a business with sensitive data, such as an IT company. When debt continues to pile up, many people become overwhelmed and allow their credit to spiral downward. Grandaddio provides an effective option for fixing your credit, helping to put you on the right path toward better financial health.
A credit score is a number that provides a snapshot of your creditworthiness.
It gives lenders an analysis of your credit history, including the number of open accounts, total debt, and repayment history. Along with banks, insurance companies, government agencies,employers, and landlords may check a consumer’s credit score.
Depending on the credit bureau providing the score, the number may range from 300 to 850. The median FICO credit score is between 711 and 723. When scores start to fall below the median, you become a greater risk to lenders.
Credit bureaus obtain information from creditors and compile detailed reports on any consumer with a credit history.
Each credit bureau uses its own methods for calculating a credit score based on the information in the report. While credit reporting agencies keep their formulas secret, they publish a general breakdown of the main factors that influence the score:
● 35%: Payment history
● 30%: Amount owed
● 15%: Length of credit history
● 10%: New credit
● 10%: Types of credit used
Your payment history has the biggest impact on your score and ability to obtain a loan or a lower rate on a credit card. If you frequently miss payments or have late payments for loans,credit cards, or utilities, your score suffers.
Credit reporting companies also look at the amount that you owe. Consumers with a lot of credit debt tend to be overextended, which means that they have more debt than they can afford to pay down. The length of your credit history can influence your score.
Credit bureaus examine how long your accounts have been established. Having a mix of credit accounts may improve your score compared to having multiple credit cards. For example, someone with healthy credit may have one credit card, one installmentloan, and one retail account.
New credit can lower your score if you open several new credit accounts over a short period. This is especially true for those without long credit histories. Try to avoid opening several accounts at the same time.
You are entitled to a free copy of your report once per year for each of the three major credit reporting companies.
Annualcreditreport.com is the only website authorized to provide free credit reports.
Obtaining a credit report is different from checking your credit score. A credit report is a detailed breakdown of all your accounts and debts.
The details in the report are used to determine your score. To obtain your report from the official website, you need to provide your name, social security number, address, and date of birth. You can also request a copy of your report by phone or mail.
No, checking your own credit does not lower it. This is one of the main questions people look for in a credit repair F.A.Q. as many consumers assume that checking your score lowers it.
Any time that you or someone else checks your credit, an inquiry is added to your credit report. The report includes several details, including who is requesting a check of your credit and why.
Credit reporting agencies record inquiries as “soft inquiries” or “hard inquiries”. Soft inquiries do not impact your credit score while hard inquiries may temporarily lower your score.
A soft inquiry occurs when you check your credit score. Employers and landlords also perform soft inquiries when running a credit check.
Frequent inquiries from banks, credit card companies, and other lenders may temporarily lower your credit score.
A hard inquiry occurs when you apply for credit, such as when applying for a new credit card. Each new hard inquiry may lower your score by five points. While the impact of hard inquiries is temporary, it may hurt your chances of getting approved for a loan or credit card.
If you try to open several new accounts in a short period of time, you may lower your score by 15 or more points.
The first step in fixing your credit score is to find out where your credit stands. Obtain your free credit reports and credit score.
When you get your reports, look over the accounts and information provided. Try to detect any errors or mistakes, such as accounts that you do not recognize.
Fixing these errors may improve your score without requiring you to pay off an old account. You may also find more information about past accounts. For example, if you had a delinquent account from a few years ago and stopped receiving payment reminders, you can use the information on the report to contact the creditor and establish a payment plan.
Your credit reports also provide an honest look at your current situation. If you have bad credit, the truth is that you likely have accounts with late payments or missed payments and a significant amount of debt. Calculate your total debt to understand the seriousness of the problem. In some cases, you may be able to consolidate the debt into a single account with one monthly payment.
If debt consolidation is not an option for you, start making the minimum payments on your accounts to avoid additional penalties and a lower score. You should also try to minimize your current expenses. You may trade in your car for a more affordable model or eliminate one or more monthly services, such as streaming services.
Along with these steps, working with a credit repair company may improve your score. Credit repair companies work with credit reporting agencies to resolve negative items on your report.
Credit monitoring is a service that is used to review your credit reports for accuracy. It allows consumers to quickly detect issues that may indicate fraudulent activity or errors from creditors.
Credit monitoring services are often subscription-based. You pay a monthly fee to allow a credit monitoring agency to review your credit reports. They look at changes to your report and notify you when potential fraud is detected.
Credit repair is a service provided by credit repair companies to help address negative items that appear on your credit report.
For example, if you have recently settled a delinquent account and the report still indicates that the account is delinquent, a credit repair company may be able to remove the item from your report.
The process of removing negative items from your credit report is complex. You typically need to request validation from the creditor. You also need to submit a dispute to the credit reporting agencies. If a negative item remains on your report after contacting the credit reporting agencies, you may need to send a cease-and-desist letter to the creditor.
Instead of dealing with these steps, you can allow an experienced credit repair company to take over and resolve the problems efficiently.
There is no set time for how long it takes to repair bad credit. However, most credit repair clients improve their credit within three to six months. The amount of time needed to repair your credit may depend on the number of negative items on your report and your financial
When disputing a negative item, you may need to provide proof in the form of bill receipts or letters from your creditors. If you cannot easily obtain the necessary information, the process may take longer. A credit repair company can complete the process for you. After reviewing your credit report, a dispute is submitted to the credit bureaus.
Credit bureaus have 30 days to verify the information, contact the creditor, and respond to your dispute. In some cases, the credit bureaus may request additional information. This can extend the time needed to resolve the negative item on your report.
Negative items remain on your credit report for up to seven years. That is why old accounts can continue to hurt your credit score after you pay them off.
Foreclosures, late payments, charge-offs, and other negative items all have a deadline of seven years. After seven years, the credit bureaus must remove them from your report.
However, mistakes can happen. If you have an old charge-off or late payment on your report that is more than seven years old, reporting the error to the credit bureaus may improve your score.
After detecting inaccurate or outdated information on your credit report, you can submit a dispute to the credit reporting bureaus. You can send the dispute via mail, phone, or online form. Credit bureaus have 30 days to respond.
When submitting a dispute, provide as much evidence as you can. Include supporting documents. For example, if you were the victim of identity theft, provide a copy of the police report. For other errors, you may need to contact your creditor to verify specific details in
Submitting a dispute also requires you to provide a clear explanation of the problem. Make sure that you include the date of the inaccurate information, the account that you are disputing, and any other relevant information.
Even with a clear and concise explanation, you may not get the response that you want from the credit bureaus. This is where credit repair companies can help. Allowing a reliable credit repair agency to submit a dispute on your behalf may help expedite the process by ensuring
that all necessary information is provided to the credit bureaus.
Your payment history has the largest impact on your credit score. According to FICO, about 35% of your score is based on your payment history. When you miss a payment on your loan, utilities, or credit cards, the creditor reports the late payment to the credit reporting
You can view your payment history status when reviewing your credit report. Your report contains a list of all your credit accounts. Each entry lists the account number, account type, credit limit, minimum monthly payment, date opened, last payment date, loan type, and
The “current status” includes a numerical value between 1 and 9. A “1” indicates that the account is paid as agreed. If you are one to thirty days past due, your status is “2”. A status rating of “5” indicates that the account has been referred for collection while an “8”
indicates that your account has been recommended for repossession.
These status ratings have the biggest influence on your credit score.
When a credit bureau receives a dispute, they investigate the matter and respond within 30 days. They typically start by reaching out to the furnisher of the account information, such as your credit card company or bank.
The credit bureau wants the creditor to verify the information that you provided in the dispute. The creditor has a limited time to respond to the credit bureau. The credit bureau will then notify you of the outcome of their investigation. If the credit bureau does not receive a response from the creditor, they delete or correct the disputed information.
Yes, you can repair your credit on your own. However, dealing with credit bureaus and resolving errors is often a complex process that requires knowledge of credit law.
Credit bureaus are notoriously difficult to work with when disputing negative items. A credit repair agency can handle any disputes and settlements on your behalf, keeping you from spending hours contacting credit agencies and creditors.
Errors are surprisingly common in credit reports. According to a report by the Federal Trade Commission published in 2012, about 79% of credit reports contained errors.
There are four primary causes of errors on credit reports:
● Furnisher errors
● Mixed files
● Re-aging of old debts
● Identity theft
Furnisher errors are inaccurate information provided to a credit reporting agency by a lender, debt collector, bank, or another creditor. For example, a bank may furnish the credit bureaus with incorrect information regarding a late payment.Files can also become mixed, either by the furnisher or the credit bureau.
This commonly occurs when two individuals have the same name or similar names. Re-aging of old debt occurs when a creditor sells off your delinquent debt to a third-party debt collector. This restarts the clock on the seven-year limit for negative items. Identity theft can have long-lasting effects.
If someone steals your identity and opens new credit cards or loans, their actions may negatively impact your credit. Resolving these issues tends to be more of a challenge compared to errors as you need to prove that you did not open the accounts yourself.
Your spouse’s credit score may not directly impact your credit score if you maintain separate accounts. However, many couples have joint accounts, including joint bank accounts, credit cards, and mortgages. You may also share the responsibility of covering bills and other
The health of your spouse’s credit can also impact your ability to obtain a loan. A low score can bring down the strength of the application.
No, credit repair agencies cannot guarantee that you will receive a specific credit score. It is against federal law to provide a guarantee. However, many clients can improve their credit scores within three to six months and often experience increases of 100 points or more.
In most cases, an attorney is not necessary. If an attorney is required to dispute an error or settle an account with a creditor, the credit repair company may retain legal services.
An unpaid debt has the potential to negatively affect your credit for many years. While a negative item can only remain on your credit report for seven years, it can also have long-lasting consequences.
If you fail to pay a credit card or loan, the creditor may decide to sell the account to a debt collection agency. This resets the seven-year limit. If you fail to arrange payments with the debt collector, you may get taken to court.
A court judgment could lead to other financial consequences, such as bankruptcy, which may take many additional years to resolve. You should never assume that your negative items will magically go away if you wait long enough.
Yes, you still have a responsibility to pay debts related to a joint account that you opened during the marriage unless the divorce settlement required your ex-spouse to cover the debt. However, the matter should be resolved during the divorce process.
If the item unfairly remains on your credit report, you may try to dispute the matter with the credit bureaus. This will likely require substantial supporting evidence, such as copies of the divorce settlement or a statement from the creditor that lists your ex-spouse as the sole account holder.
Yes, when you co-sign on a loan you agree to cover payments if the co-signer fails to make payments. You are equally responsible for ensuring that payments are made on time.
Yes, a low credit score may keep you from getting approved for a personal loan, mortgage, or even another credit card. However, many creditors offer high-interest loans to people with bad credit.
The average interest rate on a personal loan is 9.41%. The average interest rate for a bad credit loan is 18% to 36%, which is about two to four times higher compared to the national average.
After fixing your bad credit, continue to take steps to improve your financial health. The first step is to ensure that you make all payments on time even if you only make the minimum payment.
If you have any outstanding debts that you have failed to pay, contact the creditor to arrange a payment plan and make the minimum payments each month. You may also consider using a credit monitoring service to detect errors.
If an error is found quickly, a credit repair company should be able to easily dispute the matter before it has long-term effects on your credit.