Hey people!! Sorry I haven’t written for a while but I have been a little busy. In my absence a few things have occurred that I need to add to make you current.
First, my personal credit. Back in November I leased a car and that increased my debt load and dropped my score by 30 points. (see my November 18, 2015 blog). At that time, I told you we would monitor my score from that point to see if it would return to its previous level, and how quickly. As of today 20 of the 30 points I lost have been restored. Why?? First, the car lease was a new account with no payment history. A new account will always lower your score because it has no history. Your score will continue to be lower until the credit bureaus see that you are making full and timely payments on the account (I now have a six month positive history). Even if you are diligent with your payments, however, your score may not be fully restored unless your total debt load is reduced. One of the best ways to do this is to reduce the amounts you owe on your credit and charge cards.
Update on Credit Scoring
Back in January gave you the good news that the congress was considering new legislation on credit scoring. I advised that the only time a utility bill or a rent payment appears on your credit report is when you are late. Why? It costs money. Posting what the industry calls a “trade line” on a credit report is expensive. It is a major source of income for the three credit bureaus, all of whom are multi-billion dollar corporations. As a result, for years now the three major credit bureaus and the major financial institutions have a had a “choke hold’” on credit scoring and have elevated credit cards to a level above your car loan or mortgage payment. The Fair Credit Reporting Improvement Act makes it easier and cheaper for your utility companies and your landlord to report positive payments to your credit report, significantly broadening your FICO score. Some additional provisions of the Bill include:
- Providing relief to millions of borrowers who were victimized by predatory mortgage lenders and servicers, by removing adverse information about these residential loans that are found to be unfair, deceptive, abusive, fraudulent or illegal.
- Ending the unreasonably long time periods that most adverse information can remain on a credit report, shortening such periods by three years.
- Giving consumers the ability to verify the accuracy and completeness of their credit reports, by mandating that furnishers retain all relevant records for as long as adverse information remains on a person’s credit report.
- Eliminating punitive credit scoring practices by removing fully paid or settled debt from credit reports, including medical debt, which has been found not to be a reliable predictor of a person’s creditworthiness. This one is very significant!!
- Giving distressed private education loan borrowers the same chance to repair their credit as federal student loan borrowers, by removing adverse information when delinquent borrowers make nine consecutive, on-time monthly payments on their loans.
This bill is going to committee for consideration TODAY!! Drop me a line at email@example.com and give me hour thoughts. Better yet, contact your Congressman and provide your input.