Frequently Asked Questions Regarding Credit Scores

What Is A Credit Score?

A credit score is a number that reflects your risk level, as an individual, to a lender. The higher the number, the lower the risk will be to the lender. As you apply for increased credit or attempt to make a purchase, the lender will check your ability to pay back that loan. The more negative marks you have on your credit report, the less likely you will be granted the loan or purchase you requested.

What Is A Credit Report And What Is It Used For?

A credit report is a history of your use of credit and other personal information which gives lenders a snapshot of your credit history. Whether you are applying for a credit card, a car loan, a personal loan or a mortgage, lenders want to determine your credit risk level. In short, lenders want to know if they can rely on you to pay them back on time.

There are three major credit reporting agencies: Equifax, Experian and TransUnion. These agencies collect data and maintain records on millions of Americans and their bill payment histories. The reports tell lenders how much credit you’ve used, what types of credit you’ve used, how long you’ve had various accounts, and whether you pay your bills on time. Every year, billions of lending decisions are based upon the information in those reports. Your credit report and score strongly influences how much credit that will be made available to you and the terms you are offered by lenders. The speed you are approved for credit, the interest rates you get, and decisions about the amount of credit are all determined by the information found in your credit report.

What’s In Your Credit Report?

Although each credit reporting agency formats and reports this information differently, all credit reports contain basically the same categories of information. Identifying Information. Your name, address, Social Security number, date of birth and employment information are used to identify you. These factors are not used in credit scoring. Updates to this information come from information you supply to lenders. Trade Lines. These are your credit accounts. Lenders report on each account you have established with them. They report the type of account (bank card, auto loan, mortgage, etc.), the date you opened the account, your credit limit or loan amount, the account balance, and your payment history. Credit Inquiries. When you apply for a loan, you authorize your lender to ask for a copy of your credit report.

This is how inquiries appear on your credit report. The inquiries section contains a list of everyone who accessed your credit report within the last two years. The report you see lists both “voluntary” inquiries, initiated by your own requests for credit, and “involuntary” inquiries, such as when lenders order your report so as to make you a pre-approved credit offer in the mail. Public Record and Collection Items. Credit reporting agencies also collect public record information from state and county courts, and information on overdue debt from collection agencies. Public record information includes bankruptcies, foreclosures, law suits, wage attachments, liens and judgments.

How Is My Credit Score Calculated?

The formula used to calculate your FICO score includes information based on several factors: 35% on your payment history, 30% on the amount you currently owe lenders, 15% on the length of your credit history, 10% on the number of new credit accounts you’ve opened or applied for (fewer is better) and 10% on the mix of credit accounts you have (mortgages, credit cards, installment loans, etc.).

How Long Do Negative Items Stay On a Credit Report?

Negative credit accounts, or trade lines, can remain on your credit report for up to 7 years, and bankruptcies and other public records for up to 10 years. Inquiries on your credit report may remain for 2 years. These are the maximum times that are permitted by federal law for reporting agencies to show negative items; however, these times are not mandatory. At any time, a creditor or credit bureau may remove a derogatory remark from your credit report if the consumer requests an investigation into remarks that they feel are incorrect.

Is There Anything That Cannot Be Removed From A Credit Report?

No, all information reported by the credit bureaus are subject to the same laws and criteria. We may challenge on your behalf any items you request and the credit bureaus must investigate these items.

Why Do The Credit Bureaus Have Separate Reports For Husband And Wife?

The credit bureaus collect information based on individual Social Security numbers.

Do All Three Credit Bureaus Report The Same Information?

Depending on which lender you go through will determine which credit bureau the item will appear on. It could be one, two or all three bureaus.

How Do Mistakes Get On My Credit Report?

It is estimated that as many as 80% of credit files have errors. If your credit report contains errors, it is often because the report is incomplete, or contains information about someone else. This typically happens because:

  • You applied for credit under different names (for example, Margaret Jones versus Margaret Jones-Smith)
  • Someone made a clerical error in reading or entering name or address information from a hand-written application
  • You gave an inaccurate Social Security number or the number was misread by the lender
  • Loan or credit card information was inadvertently applied to the wrong account

Who Can Remove Items From My Credit Report?

Only the credit bureaus have the power to remove items from your credit report. But, as required by law, the credit bureaus must delete inaccurate, unverifiable, or outdated information.

Is Credit Restoration Legal?

Absolutely! The Fair Credit Reporting Act allows anyone to dispute inaccurate items on their credit reports. There’s nothing we do that you cannot do yourself when it comes to fixing your credit situation. Individuals can restore their credit on their own but this can take time and a lot of knowledge when it comes to the credit laws. That’s why we are here to help since we have the experience and knowledge to get you the positive results.

How Long Does The Process Take?

Everyone’s credit situation is completely different, so how long it takes for you to achieve your expected results depends on the number of derogatory credit items on your reports, your participation in getting credit reports to us, and the level of credit bureau cooperation. Remember that there is no “quick fix” for credit. Much like losing weight or training for a marathon, you must stay focused and persistent. With the aid of our services, we see our clients average an increase of 40 points within the first six months, 60 points in the first nine months, and 80 points within the first year on all three bureaus. It is about 75% faster, with the help of our professional staff, then letting nature take its natural course.

How Much Will You Increase My Credit Score?

Many of our clients have seen an increase of 100 points or more*; however, the actual amount will vary per customer. There are many factors that affect a credit score besides derogatory items. For example, the ability to pay down revolving debt, the type of credit you have, your length of credit history, even the number of inquiries on your credit file. It is especially important that no current accounts fall into a negative status.

What Do I Have To Do?

After you have completed the online enrollment documents, fax or email or mail your identification documents to our processing department. A list of required documents has been provided below: Social Security Verification (as required by the credit reporting agencies)

  • Clear copy of your driver’s license with current mailing address
  • Address Verification (as required by the credit reporting agencies). Clear copy of a current bill (utility, telephone, credit card, etc.) with your name and address stated clearly.
  • Social Security Verification (as required by the credit reporting agencies): Pick ONE from below to send us.
    • Photocopy of your Social Security card
    • Photocopy of your pay stub displaying your full Social Security number
    • Photocopy of your W-2
    • Photocopy of your health insurance card that contains your full Social Security number
  • A Credit Risk Assessment Specialist will give you personalized instructions on what else you can do depending on your specific circumstances.

Can I Restore My Own Credit?

Yes, you can. You can also represent yourself in a court of law, and do your own oil changes on your vehicles. We are a service company. Just as you are probably better at what you do than we would be, we are probably better at credit assessors than you would be. We offer experienced, professional help at very affordable rates for your convenience and benefit.

Can You Remove A Bankruptcy Or Foreclosure?

Yes. If the listing is inaccurate, incomplete, misleading or unverifiable, it can be removed. The severity of bankruptcies, foreclosure, liens, etc. does not factor into their removal as much as you would believe. There are a number of elements, unrelated to severity, upon which such items can be successfully removed.

Will The Credit Bureaus Respond To All Investigations?

The credit bureaus are required by law to respond to all correspondence. It is not uncommon for credit agencies to send letters stating they want more information, or that they will not re-verify an account. These types of responses are very common and customers should not be alarmed if they receive them. Customers must continue to send all correspondence they receive from the agencies to the processing center.

How Can I Check My Progress?

Every 90 days we will do an investigative review which will include a listing of all deletions, new accounts, new information, and changes made on your credit file. We have 24/7 customer service, so you may call anytime to speak with a LIVE Credit Specialist who can inform you on all updates and progress made.

How Does My Credit Score Change If I Open Or Close Credit Accounts?

At first glance, it may seem like a good idea to close old credit accounts or open a host of new ones. But it’s not. More accounts can hurt, not help. Financial experts agree that you should not open multiple new accounts just to show a credit history. If you have had little credit in the past, build your credit history slowly. Open no more than one or two accounts initially. Also, don’t close your old accounts. A long credit history has a positive impact on your credit score. Having a large number of accounts in good standing with zero balances is a plus, not a negative.

If I Keep Paying My Bills Will That Raise My Credit Score?

Paying your bills on time should do nothing but help your credit score. Good payment histories will help clients who are trying to buy a home, refinance a home, or qualify for new credit. We often tell people that while we work on the past, you should be working on the future.

When The Process Is Completed Will I Be Approved For A Loan?

You should be in a much more favorable position as long as you meet several requirements of the credit grantor, such as a good credit history over the past 6-12 months, length of employment, debt ratio, length of time at current residence, and have amount of down payment, etc. We work with many mortgage lenders that we would be more than happy to refer you to.

Who Do I Contact If I Have Questions?

Duran Personal Credit representatives will handle all of your service needs. Give us a call today at (661) 349-2807.

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Please feel free to contact us with any credit related questions you may have.  We are always happy to help!