The Range of Poor to Excellent Credit Scores and What It Means for Your Finances

Your credit score is a seemingly simple three-digit number, but it can have a major impact on your finances. Without a high score, you may not be able to pursue some of your major financial goals. Or even if you can, those goals can actually turn into major challenges if you’re stuck with high interest rates because you had a low score. If you are preparing to improve your credit, you need to know the general ranges for scores so that you can set a specific goal for yourself. There are various tiers of credit scores, and being in a higher tier will generally bring the reward of better terms.

First, What’s the Average?

We’re going to talk about credit score categories in a moment, such as “poor,” “fair,” and “good.” But first let’s take a look at the average credit score. One initial point of clarification—while there are two major credit scoring models—FICO and VantageScore—we will focus primarily on the FICO score in this article, though we will make brief mention of the VantageScore as well. There are actually multiple FICO scoring models, and lenders use a variety of them, but the information here specifically relates to FICO® Score 8.

FICO most recently reported that the average credit score is 706. Credit scores nationwide can fluctuate significantly depending on the state of the economy. Back in 2009, the average was 686. COVID-19 and other economic factors may have a negative impact on the national average, but only time will tell. The average can be a useful baseline for comparing your own score. But, don’t let the average discourage you if your score is lower, because there are many ways to increase your score.

Source: FICO.com

The Breakdown

Using the FICO 8 scoring model, the credit bureaus agree (see Experian’s post here and Equifax’s here) to the following breakdown for score ranges. Again, remember that your lender may use a different model which could result in a slightly different breakdown. But, this should give you a good general idea of what to aim for.

Poor

A poor credit score is a score between 300 and 579.

Fair

A fair credit score is a score between 580 and 669.

Good

A good credit score is a score between 670 and 739.

Very Good

A very good credit score is a score between 740 and 799.

Excellent

An excellent credit score is a score between 800 and 850.

If you are curious about the breakdown for VantageScore 3.0, it looks like this:

Very Poor: 300-499
Poor: 500-600
Fair: 601-660
Good: 661-780
Excellent: 781-850

Interestingly, the VantageScore ranges are narrower on the low end of the spectrum (including both a “very poor” and “poor” range, and broader on the high end (including only a “good” and “excellent,” without a “very good” range).

Why the Ranges Matter

Now that you know the ranges, here are three important reasons that they matter.

Access to Credit and Other Services

If your score is too low you may not have access to credit or, at the very least, you will likely have obstacles to credit. A score in the “very poor” range may mean that any applications for credit are denied. Your best bet may be a secured credit card, which requires you to make a deposit. While this is not ideal, a secured card can be an important tool in rebuilding your credit.

Also, remember that getting credit is not the only concern. Access to other products and services often depends, in part, on your credit history. Being in the “very poor” range can limit your ability to rent an apartment, enter certain contracts, or even get a job.

Favorable Credit Terms

Even if you can get credit, you will want the credit terms to be as favorable as possible. Bad credit terms, like high interest rates, will make your debt more expensive. They will also limit your purchasing power, which can prevent you from buying the home or car you want. Every time your score improves from one category to the next (say from “fair” to “good”), that should be paired with lenders offering you more favorable terms.

Here is a look at estimated mortgage rates by credit score and a look at auto loan rates by credit score. Note: these tools use different ranges and terminology for scores (for instance, the auto loan chart has ranges from “deep subprime” to “super prime”), but the general point still applies.

Goal Setting

Knowing the general credit score ranges can help you plan your goals for the future. Make a plan to check your credit score frequently, but especially as you make major changes (paying off a debt, opening a new card or loan, or changing your credit limit). You will also need to check your credit report often, as that report is the basis for your score. Keeping a close eye on these will help ensure that you move your credit in the right direction.

Want a free credit report review? An NFCC-certified counselor can review your credit report with you, and help you make a game plan for improving your financial standing. Learn more about the free credit report review, or get started here.

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How To Use The Fair Credit Reporting Act To Your Advantage

Using a credit card is easy — you use the card to buy things and then pay the credit card bill.

A credit card can sometimes be difficult, however, when dealing with your credit file. From a  missed payment to a loan that isn’t yours that’s incorrectly listed on your credit report, there are all kinds of ways your credit score can drop. And not all of them are from something you did wrong.

Consumers have protections under the law regarding their credit reports — which is where credit scores and credit problems are listed for lenders to check before offering you credit. Errors on a credit report can drop your credit score, making it harder to get a loan, credit card, rent an apartment, or qualify for insurance coverage, among other things.

The main law that protects consumers from credit errors is the Fair Credit Reporting Act, or FCRA. Here are some of the rights you have under this law and how to use it to protect your credit:

View credit reports

Fair Credit Reporting ActThe FCRA entitles you to review your credit file from each of the three main credit bureaus for free once every 12 months. You can do one check every four months from each of the three — Equifax, Experian and TransUnion — if you really want to be on top of it.

Start by going to AnnualCreditReport.com to request your credit file online. Only use that website and don’t use a copycat site that charges fees for what should be a free service. You’ll need to verify your identity to get online access. You can also request your credit file through an automated phone system or the mail.

The FCRA applies to all consumer reporting agencies. You can also look at reports from other consumer reporting agencies that collect noncredit information about you. These include rent payments, insurance claims, employers and utility companies. The Consumer Financial Protection Bureau lists the reporting companies and how to request a free report from each.

Check your credit score

The law allows you to request a credit score, though it’s legal for credit agencies and other businesses to charge you a fee for this service. Some credit cards provide scores for free, so check with your credit card issuer first.

A credit score isn’t the same as a credit report. Information in a credit report determines a credit score, and each credit bureau can use a different scoring model that requires it to provide different information. You have different credit scores, depending on which factors are weighed more heavily.

Monitoring your credit is vital. Make sure that you review your credit report for any inaccuracies.

Know who can view your credit report

The FCRA doesn’t allow a credit reporting agency to share your credit file with someone who doesn’t have a valid need. Some inquiries, such as from a potential employer or landlord, require your written consent. And, they can only check your credit report, not your credit score.

The credit reporting agencies can share your credit report for legitimate reasons, such as when you’re applying for credit, insurance, housing or with a current creditor.

Disputing errors

Getting a credit report in your hands can lead to all sorts of eye-opening concerns. Anything that’s listed as negative should be checked for accuracy. Here are some things to look out for:

Eviction that wasn’t legal.
Creditor listed that you didn’t have an account with.
Loan default.
Wrong name.
Wrong address.
Wrong Social Security Number.
Incorrect loan balance.
Closed account reported as open.
A loan you didn’t initiate.

Some errors may be simple to resolve and others you may need to do more research on before disputing them to ensure they’re incorrect.

For example, you may not recognize the name of a creditor and assume you don’t have an account with them. But it may just be a store credit card you recently applied for that is listed by the issuing bank’s name. Or maybe a home or auto loan was sold to a new loan servicer.

Other errors could be reason to suspect identity theft, or there could just be wrong information that’s bringing down your credit score.

If you suspect identity theft, such as someone taking out a credit card in your name, then file a police report and report it to your credit card company and the credit reporting agencies.

To dispute erroneous information, use certified mail to send the credit bureau a letter and copies of documents explaining the error. If a loan still shows an outstanding balance and you have written proof that it was paid off, for example, send a copy to the credit agency.

The Federal Trade Commission has a simple sample letter to dispute errors on your credit report.

Credit agencies have 30 days to investigate and respond to your dispute, unless they deem it frivolous.

If it corrects an error, it must send you a free copy of your credit report through AnnualCreditReport.com so you can see that the corrections have been made.

A time limit to negative information

The FCRA doesn’t allow credit bureaus to report negative information that’s more than seven years old, though it allows some forms of bankruptcy to remain on a credit report for 10 years.

There’s also a time limit for positive credit information such as on-time payments and low balances — up to 10 years after the last date of activity on the account.

Rejections based on credit report

If your application for credit, job, insurance or housing has been denied because of information in your credit report, the law gives you the right to know this information.

The landlord, employer or other entity that denied your application must notify you and give you the name, address and phone number of the credit reporting agency that provided the information.

The FCRA allows you to get a free copy of your credit report from that reporting agency within 60 days of the action against you. That’s in addition to the three free credit reports allowed annually.

To best deal with a potential rejection ahead of time, it’s smart to check your credit report before applying for credit, rental unit or related use of your credit report and check it for errors. Give yourself enough time to fix them.

Go to court

If these actions or a complaint with the CFPB doesn’t resolve your dispute, you may be able to sue for damages in state or federal court. You can sue a credit reporting agency or related parties for violating any of the above rights.

However, it’s worth knowing that your right to legal action doesn’t start until after the creditor or credit reporting agency has been notified of an error and has a chance to fix it. In other words, you’ll only be awarded damages if the adverse action happened after you reported the error.

So if you didn’t get approved for a mortgage because of a mistake on your credit report, it’s unlikely you’ll be compensated for losing out on the house if you lost out on it before reporting the mistake.

The post How To Use The Fair Credit Reporting Act To Your Advantage appeared first on Better Credit Blog | Credit Help For Bad Credit.

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This Is How a Rapid Rescore Can Boost Your Credit Score Fast

This Is How a Rapid Rescore Can Boost Your Credit Score Fast - PinterestIf you’ve just resolved some errors on your credit report or paid down your balances and you’re wondering how to update your credit report information fast so that you can improve your credit rating quickly, you may be interested in something called a rapid rescore. You can find the answers to all of your questions about rapid rescores in this article.

What Is a Rapid Rescore?

A rapid rescore is a process that mortgage lenders use to manually update your credit report information with the credit bureaus so that your score can be recalculated quickly. Instead of waiting for your creditors to report your information to the bureaus periodically, your mortgage lender can provide the information to the bureaus and request that they update your credit report right away. 

When Would You Need a Rapid Rescore?

Since mortgage loans are time-sensitive, a rapid rescore can definitely be a useful tool in certain situations. If you are in a situation where there’s been a change to one or more of your tradelines that has not yet been reflected in your credit report, and you need to rapidly increase your credit score in order to qualify for better mortgage terms, you may want to consider requesting a rapid rescore.

Rapidly increasing your credit score before getting approved for a mortgage could mean qualifying for a lower interest rate and therefore huge savings in interest over the term of your loan.

For this reason, the best candidates for a rapid rescore are consumers who have credit scores between the mid-600s and the 720s who are five to 10 points shy of their target score, according to Bankrate. The maximum benefit of a rapid rescore is gained by borrowers who are able to get bumped up to the next credit score “tier” in order to qualify for a lower interest rate, which can ultimately save them thousands of dollars over the course of the mortgage.

If you have recently paid down some of your revolving balances, a rapid rescore could get your credit score to reflect your lower credit utilization sooner.

If you have recently paid down some of your revolving balances, a rapid rescore could get your credit score to reflect your lower credit utilization sooner.

Of course, it’s always best to plan ahead well in advance of applying for a mortgage so you have plenty of time to get your credit score in great shape first. However, sometimes situations may arise in which a rapid rescore would be beneficial. Some examples of situations that might call for a rapid rescore include:

If you have recently received a credit line increase
If you have just paid down the balance of an account
If you have been added as an authorized user to an account in good standing or removed from a derogatory account
If you need to dispute inaccurate negative items on your credit report, such as late payments that were being reported in error

Remember, credit utilization makes up 30% of your credit score, so any action you take to improve your credit utilization ratio, such as paying down account balances, may help boost your score and get you a better deal on your mortgage.

How to Get a Rapid Rescore

If you need to know how to improve your credit rating quickly through a rapid rescore, keep in mind that not just anyone can request one. Rapid rescores are only offered by mortgage lenders, so, unfortunately, you cannot get a rapid rescore on your own. If you are in the process of applying for a mortgage, ask your lender if they can complete a rapid rescore for you.

How Long Does a Rapid Rescore Take?

The great thing about a rapid rescore is that it can get the credit bureaus to update your credit report within just a few days, instead of waiting for weeks or even months for it to happen automatically. Once your mortgage lender submits all the necessary documentation to initiate the rapid rescore, you should see your new results in three to seven business days.

A rapid rescore can update your credit report in days instead of weeks, which can be useful when applying for a mortgage.

A rapid rescore can update your credit report in days instead of weeks, which can be useful when applying for a mortgage.

How Much Does It Cost to Do a Rapid Rescore?

According to creditcards.com, the cost of a rapid rescore typically ranges from around $25 – $30 for each account that needs to be updated. However, the mortgage lender should be paying for the rescore, not the consumer. 

The reason for this is that a rapid rescore is considered an expedited dispute process, and the Fair Credit Reporting Act says that consumers cannot be charged to dispute inaccurate information.

Does Rapid Rescore Really Work?

When it comes to rapid rescore results, they will likely be the same as if you had gone through the normal channels to submit a dispute. Remember, a rapid rescore is essentially an accelerated credit report dispute. The rescore itself is not guaranteed to make your credit score increase.

If you are using the rapid rescore to remove inaccurate information that has been dragging down your credit score, then you should see positive results from the rescore.

However, just as in traditional credit repair, a rapid rescore cannot be used legitimately to try to remove information that is accurate. If the derogatory items on your credit report are accurate and timely (from within the past seven years), then a rapid rescore won’t be able to help you.

Rapid Rescore Companies

Companies that offer the rapid rescore service to borrowers include mortgage lenders such as banks and credit unions. Not all mortgage lenders offer the service, though, since it can end up being expensive and lenders are not allowed to charge borrowers for a rapid rescore.

If you are getting ready to apply for a home loan and you think you may want to have the option of doing a rapid rescore, ask the banks or mortgage lenders you are interested in whether the companies offer the rapid rescore service to borrowers.

If you find any rapid rescore companies advertising their services to individual consumers, use caution and watch out for possible scams.

You can use our tradeline calculator or a credit score simulator to get a general idea about whether a rapid rescore could benefit your score.

You can use our tradeline calculator or a credit score simulator to get a general idea about whether a rapid rescore could benefit your score.

Rapid Rescore Calculator

To calculate your rapid rescore results, you don’t need a specific rapid rescore simulator. Just use your favorite credit score simulator and plug in the numbers that make sense for your situation.

If you are planning to do a rapid rescore after paying off $5000 in credit card debt, for example, you could enter that information into the credit score simulator to calculate what the results of your rapid rescore might be. You could also try our Tradeline Calculator to see how your credit utilization ratios would change as a result of paying down some of your accounts or transferring balances.

However, keep in mind that any credit score simulator is likely not going to produce the exact same results that your lender will see. Online credit score calculators typically use simplified credit scoring algorithms to produce estimates, which may not always match up with the numbers the mortgage lender sees when they pull your FICO scores.

How to Do a Rapid Rescore Yourself

Unfortunately, it’s not possible to do a DIY rapid credit rescore on your own, since only mortgage lenders can perform this service on your behalf. 

What you can do is prepare thoroughly to ensure your dispute will be accepted. As with a normal credit report dispute, you’ll need to provide proof to support your claim. This often means obtaining a letter from the creditor verifying the change that you can then provide to the credit bureaus.

For example, if you have just paid down the balance on one of your credit cards, you can ask the credit card company to send you a letter verifying the updated tradeline information. Your mortgage lender can then submit this to the credit bureaus to get you a rapid rescore.

How to Update Credit Report Information
To update your credit report information yourself, you can obtain a letter from your creditor and forward it to the credit bureaus.

To update your credit report information yourself, you can obtain a letter from your creditor and forward it to the credit bureaus.

Although you can’t officially do a DIY rapid credit rescore yourself, you can trigger a manual credit report update by submitting your documentation directly to the credit bureaus. However, your tradeline may not be updated as quickly as when your mortgage lender pays for the privilege of an expedited update.

To summarize, follow these steps to manually update tradelines in your credit report:

Contact the creditor and request that they send you a letter that verifies the updated account information.
Send this letter to the credit bureaus and request that they update the information in your credit file.

Once they receive your information, the credit bureaus should then update the information for that tradeline in your credit profile.

In addition, some banks may report a tradeline in the middle of a reporting cycle if you pay down the balance to zero.

Rapid Rescore Success Stories

If you’re interested in reading some rapid rescore success stories, you can find plenty of them online. Try searching in some online credit forums to see the rapid rescore results other consumers have been able to achieve.

Some consumers may see a credit score boost of up to 100 points after a rapid rescore, although results vary widely based on what information is being changed.

Some consumers may see a credit score boost of up to 100 points after a rapid rescore, although results vary widely based on what information is being changed.

Some sources say they have seen credit score increases of up to 60 points after a rapid rescore, while others claim that a rapid rescore could potentially boost one’s credit score by up to 100 points. However, keep in mind that the result of a rapid rescore is going to depend on what information in your credit report is being updated and how severely it had been affecting your score.

Conclusions on Rapid Rescores

Although a rapid rescore won’t necessarily raise your credit score per se, it can be a very useful tool if you need to get your credit report and credit score updated within a few days rather than waiting weeks or even months for the credit bureaus to update your information normally.

When applying for a mortgage, a rapid rescore may be used to increase your chances of getting the best possible rate on your loan by getting positive changes to reflect on your credit report and in your credit score quickly.

Only some mortgage lenders offer this service, so check with your lender to see if they provide rapid rescores to their clients.

In addition, it’s a good idea to check your credit reports several months in advance so that you have plenty of time to correct any errors and pay down your balances. That way, you can decrease the likelihood that you will have to rely on a rapid rescore when applying for a mortgage.

For more tips on how to prepare to buy a home, check out “What You Need to Buy a House in 2020” from Redfin.

Over to you: have you ever used the rapid rescore tool to rapidly increase your credit score? What did you learn from this article? Let us know below!

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What Are Credit Scoring “Buckets?”

Most of the time when I’m asked about credit scores the line of questioning is commonly about how to improve scores. It’s equally often, and equally enjoyable, when I receive questions from people about how many points certain things from your credit reports are worth to their credit scores.  The questions generally go something like this… “How many points is a charge off worth” or some variation of that question.

Not only are these questions common but they are also reasonable. We grow up in an academic environment where questions on tests are worth a certain number of points toward our final grade. For example, if you have a test with 25 questions then each question is worth 4 points for a possible grade of 100. Credit scoring systems, however, are not designed such that entries on your credit reports are worth any specific number of points.

That’s Not How Credit Scores Work

If you ever read a book or blog or hear someone suggest that credit report entries are worth a specific number of points, you can ignore it because it’s factually inaccurate. Nothing on your credit report is worth any specific number of points, either positive or negative. Scoring models do not assign points like that because they’re not designed to do so.

Instead, credit scoring models assign points based on how well you have performed in certain credit scoring categories. Without getting highly technical and jargon-heavy, points are assigned based on how your credit reports answer questions asked by the credit scoring models.

Buckets, Bins, Variable Classing…They’re All the Same Thing.

Credit scoring models are made up primarily of three things…characteristics, variables, and weights. These three things can also be described as…questions, answers, and points. These three work in concert as part of the scoring process.  Here is an example of how it works:

Characteristic (aka, a question asked by the scoring model)

Example: How many credit card accounts do you have with a balance greater than zero?

Variable/Bucket (aka, the answer from your credit report)

Example: I have 4 credit card accounts with a balance greater than zero.

Weight (aka, the points assigned by the credit scoring model based on the answer)

Example: If you have between 3 and 6 credit card accounts with balances, you earn 20 points. As such, because you have 4 cards with balances you have earned 20 points.*

*This fictitious example isn’t meant to mimic the points you’ll earn for having four credit card accounts with balances. It’s simply meant to illustrate how scoring models work.

The variable or “answer” component is also commonly referred to as a bucket or bin. It’s essentially a range where the answer to a credit scoring characteristic/question falls. And, the weight or points are assigned based on which bucket/range your answer falls.

I recognize that this is complex and it might take you a few times reading through this to understand how it works. But, at the very least what this should expose is the truth that no item on your credit report is worth “x” points.

Instead, the bucket/range where your answers fall is what’s worth the points. And, you may have several answers that would cause you to fall into the same bucket, meaning multiple consumers with different credit reports can have the same credit score.

In the above example, the variable bucket was “between 3 and 6 credit card accounts with balances.” And, that bucket was worth 20 points to your credit score. So, if your credit report had either 3, 4, 5 or 6 credit cards with balances your answer would have fallen in the same bucket and you would have earned the same 20 points.

This is precisely why the people who try to assign a specific value to any one credit report entry are universally incorrect. In this example, you would have earned an equal 20 points toward your score even if you had 4 different credit reports.

Your Never “Lose” Credit Score Points

Here’s another one that’s going to blow your mind. Your credit score doesn’t start out at a perfect 850 and then go down based on your credit reports. You instead start low and accumulate points.

Nothing on your credit report is worth negative points. So, collections are not worth negative 50 points. Charge offs are not worth negative 100 points. It doesn’t work that way. Your score doesn’t go down because of negative information, it just simply isn’t as high as it could be because you’ll accumulate fewer points during the scoring process.

If you have any of those negative items, like collections and charge offs, you would fall into a bucket that would be worth fewer points than you would have fallen into if you did not have those types of negative entries. That’s why people who have negative entries have lower scores, generally, than people who do not. They earn fewer points, rather than lose more points.

You can apply these examples to every scorable entry on your credit reports. This includes inquiries, the presence or lack of negative information, debt and debt-related ratios, the age of your credit report information, and the diversity of your credit report entries.

John Ulzheimer is a nationally recognized expert on credit reporting, credit scoring and identity theft. He is the President of The Ulzheimer Group and the author of four books about consumer credit. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. He has 27+ years of experience in the consumer credit industry, has served as a credit expert witness in more than 370 lawsuits, and has been qualified to testify in both Federal and State courts on the topic of consumer credit. John serves as a guest lecturer at The University of Georgia and Emory University’s School of Law.

Disclaimer: The views and opinions expressed in this article are those of the author John Ulzheimer and do not necessarily reflect the official policy or position of Tradeline Supply Company, LLC.

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Credit Repair vs. Tradelines [Infographic]

Perhaps the title “Credit Repair vs Tradelines” is not entirely accurate, but this is a common way that many consumers think of the two industries and even many credit repair companies as well. In truth, as our infographic illustrates, the two services really go hand-in-hand.

However, there are several differences that we will highlight in order to understand the full range of credit-related options. Be sure to check out our article below the infographic for all the details.

Credit Repair & Tradelines Infographic

What Is Credit Repair?

The term “credit repair” can have different definitions depending on who you ask. Generally, however, credit repair is considered to be the process of mending poor credit that is a result of errors in your credit report or identity theft. This is accomplished by disputing inaccurate information in your credit file with the credit bureaus, who will investigate the claim and take appropriate action.

For example, if you have collections on your credit report that are being reported with inaccurate information, you can dispute the collection account and have it updated or removed from your credit report.

Sometimes people also use the term credit repair to mean fixing bad credit in general, using traditional methods such as bringing all accounts current and paying down debts.

For those who are seeking credit repair services through a company, you are probably interested in the process of repairing bad credit by disputing inaccurate negative information in your credit file. If your credit score is lower than the average range, going to a credit repair business may seem like an appealing option.

However, keep in mind that credit repair has its limitations. Since credit repair services focus on removing information from your credit file, once that is accomplished, there may not be much left in your file to show that you have a credit history at all. This is especially true of questionable credit repair companies who use dishonest methods to aggressively “sweep” your credit file of legitimate information.

In order to truly improve your credit score, it is important not only to remove inaccurate negative information but to also work on rebuilding your credit.

Filled-in crossword puzzle repaired with white-out. Repair credit by removing errors from your credit report.

Credit repair focuses on removing inaccurate information from your credit report.

Tradelines vs. Credit Repair: What’s the Difference?
Addition and Subtraction

As we discussed above, credit repair can be thought of as the process of removing negative information from your credit report. In contrast, tradelines add information to your credit report.

A tradeline is simply any account in your credit file, so adding tradelines by definition bulks up your file. This can be helpful for people with short or thin credit histories, or those who are recovering from a period of bad credit and trying to rebuild their credit.

A short credit history means the age of your credit file is not very long, while a thin credit history means you have only a few accounts in your credit profile, if any. Credit scoring models factor in both the length of your credit history and your mix of credit, so having a thin or short credit file will likely result in a lower credit score rating.

Being added as an authorized user to tradelines that are in good standing and have a higher age (known as “seasoned” tradelines) could improve both of these factors by increasing your length of credit history and diversifying your mix of accounts.

In addition, seasoned tradelines for sale from a reputable company will have perfect payment histories and relatively low utilization ratios, which impact important components of your credit.

Alarm clock on desk showing tradelines can post quickly

Tradelines can post to your report quickly, while the credit repair process may take longer.

How Long Does Credit Repair Take to See Results?

The credit repair process typically takes 1-6 months or longer, depending on how many disputes you need to make. Once you submit your disputes to the credit bureaus, they have 30 days to research the dispute and 5 more days to respond once they have completed the investigation. Sometimes, additional information may be needed, which can add more time to the process.

If you have a lot of errors to dispute, you may have to submit them a few at a time, which is why getting results can take several months.

Tradelines, however, can post to your credit report in as few as 11 days, and sometimes even faster. It just depends on the reporting period of the tradeline you are adding.

How Much Does Credit Repair Cost?

The cost of credit repair services can vary widely depending on the company, which services you need, and how long the process takes. Many credit repair organizations charge a monthly fee for their work in addition to an initial fee for pulling your credit reports. Typically, the monthly fees range between $60 to about $100 per month for basic credit repair services. [Disclosure: This article contains affiliate links.]

Purchasing tradelines, on the other hand, usually involves paying a one-time fee (unless you choose to extend the tradeline for additional time).

Is Credit Repair Worth It?

If you have bad credit, paying for a credit repair service is an option that you may want to consider, especially if you have a lot of errors on your credit report or if you have been the victim of identity theft and you need some help disputing fraudulent accounts.

If you do decide to hire a credit repair service to help you clean up your credit, make sure you research each company thoroughly and choose a legit credit repair company. Unfortunately, the industry has not earned the best reputation. Be sure to know your rights laid out by the Credit Repair Organizations Act (CROA) so you can protect yourself from being taken advantage of by shady credit repair companies.

Not everyone needs the help of a credit repair company to begin with. If you have one or two simple errors on your credit report, you may feel that you will be able to go through the credit repair process on your own and have those errors successfully removed or updated.

To answer the question of whether paying for credit repair is worth it, you’ll have to take a look at your credit report and decide whether the damage is extensive enough to warrant hiring a professional credit repair service or whether you want to try DIY credit repair.

How Credit Repair and Tradelines Work Together to Fix Your Credit

Credit repair and tradelines naturally go hand-in-hand. In one sense, tradelines pick up right where credit repair ends. Again, credit repair helps to “clean up” credit and tradelines help build or re-establish positive credit history.

One really should not exist without the other; the two techniques are most effective if done in tandem. Since credit repair removes information from your credit file, it may be necessary to add positive information to your file in the form of tradelines in order to truly rebuild your credit.

Boy and man building a house. Tradelines can help to build credit.

Tradelines can help to build or rebuild credit.

Buy Tradelines or Fix My Credit: Which Should I Do First?

It does not necessarily matter which one comes first. Both can exist at the same time.

However, if you have bad credit due to inaccurate derogatory information on your credit report, those variables will have an impact on your overall credit picture and could lead to tradelines having a diminished effect. In this case, the most effective course of action would be to repair your credit before adding tradelines.

On the other hand, it is never a bad time to have good things on your credit report. The timing of which strategy should come first ultimately depends on your individual situation and your own timeline.

For example, some credit repair programs take quite some time to accomplish. As we mentioned, is not uncommon for certain credit repair programs to take many months to complete. In these cases, tradelines may fit in at any given time during the credit repair process.

Woman looking at financial data on tablet screen. Tradelines and credit repair work best together.

Credit repair and tradelines work best when used together as part of your overall credit strategy.

Why Don’t All Credit Repair Companies Offer Tradelines?

Surprisingly, not all credit repair companies sell tradelines or even know about tradelines. Sometimes tradeline companies are seen as competition to credit repair businesses because clients may end up spending money on tradelines as opposed to credit repair services.

However, as we have seen, credit repair works best when paired with tradelines. The best credit repair companies will provide you with all of the information and options that you need to make an informed decision about your financial future.

Conclusion

While tradelines and credit repair can both be effective in improving your credit, they are not the same thing. Rather, they are complementary strategies that work best when used together.

Don’t mistake tradelines for credit repair—think of tradelines as a way to build or re-establish credit. The best course of action for your credit is to evaluate your own unique situation and ask how tradelines can complement your credit repair strategy.

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What Is a Credit Freeze on My Credit Report?

What Is a Credit Freeze - PinterestIf you’ve been paying attention to the world of credit, you’ve probably heard a lot about credit freezes lately. A credit freeze can be a valuable tool for those who may be concerned about identity theft. However, many people are unaware of how credit freezes works and how to use them.

What is a credit freeze and how does it work? How do you place a freeze on your credit report? Is a credit freeze worth it? Keep reading for the answers to these questions and more.

What Does a Credit Freeze Do?

What a credit freeze does is it blocks lenders and business from accessing your credit file without your consent. This helps to prevent identity theft in the case of a criminal trying to open a fraudulent credit account in your name.

However, a credit freeze does not block access for all businesses; rather, it only pertains to companies with which you do not have an existing relationship. Lenders that you currently have a relationship with can still access your credit file, such as your credit card issuers, your auto lender, etc.

In addition, if you have an account in collections and your lender hires a collection agency, the collection agency can also view your credit report.

A credit freeze also does not prevent you from accessing your own credit report, including your free annual credit report from each credit reporting agency.

Who Should Do a Credit Freeze?
If you receive any bills that are in your name but do not belong to you, that is a sign of possible fraudulent activity.

If you receive any bills that are in your name but do not belong to you, that is a sign of possible fraudulent activity.

You may want to consider freezing your credit if you have been a victim of identity theft or suspect you may be a victim of identity theft.

Here are some signs of potentially fraudulent activity in your name that Experian says to watch out for:

You have received bills in your name or letters from debt collectors for accounts that are not yours.
There are inquiries on your credit report from businesses to which you did not give your permission to pull your credit report.
You get a notice from a company that warning you that you have been affected by a data breach.
You get an alert from your bank about fraudulent activity on your account.

If any of these situations apply to you, you may have an elevated risk of becoming a victim of identity theft, which means it may be a good idea to freeze your credit.

How Does a Credit Freeze Work?
You will need to provide your PIN when you want to lift a credit freeze.

You will need to provide your PIN when you want to lift a credit freeze.

The way that credit freezes work is governed by federal law. Each of the major credit bureaus is required to provide credit freezes to consumers within a certain time frame.

If you request a security freeze online or over the phone, the law mandates that the freeze must be put in place by the next business day. When you want to lift the freeze to apply for credit, the credit bureaus must “thaw” your credit report within an hour of your request.

If you send your request to place or lift a freeze in the mail, the credit reporting agencies have up to three days after they receive your request to take the appropriate action.

When you place a credit freeze, the credit bureaus will provide you with a PIN or password. You will need this PIN or password to lift the freeze, so it’s important to store it securely. When you want to remove the freeze temporarily or permanently, you can contact the credit bureaus and provide your PIN or password and they will lift the freeze.

When it comes time to lift a freeze temporarily to apply for credit or employment, it’s worth asking which credit bureau the lender or employer is planning to pull your report from, so that you only have to lift the freeze with that specific bureau. If you are not sure which bureau they will use, you will need to contact each bureau to lift all of the freezes on your reports.

A security freeze on your credit will not prevent fraudulent activity on accounts that were compromised prior to the freeze.

A security freeze on your credit will not prevent fraudulent activity on accounts that were compromised prior to the freeze.

Will a Credit Freeze Prevent Identity Theft?

A credit freeze can certainly help reduce the risk of identity theft by preventing scammers from opening new credit accounts in your name.

However, a credit freeze will not protect you against identity theft in cases where someone has already accessed your financial information, such as if your bank account password was stolen by a hacker or exposed in a data breach.

It’s always a good idea to check your credit reports regularly to watch out for fraudulent activity, whether you have a freeze on your credit file or not. If you are concerned about identity theft, placing a security freeze on your credit may give you some additional peace of mind.

Since credit freezes are guaranteed by federal law, if someone were to open a fraudulent account in your name while your credit is frozen, you would not be held liable for the financial losses incurred.

How Long Is a Credit Freeze in Effect?

The length of time that a credit freeze stays in effect varies depending on which state you live in.

In most states, credit freezes are in place permanently until the consumer decides to lift them, whether temporarily or permanently. However, some states set automatic expiration dates for security freezes a number of years after they were originally placed.

Is a Credit Freeze Permanent In Your State?

In Kentucky, Nebraska, and Pennsylvania, credit security freezes automatically expire 7 years from the date of placement. In all other states, they are permanent until removed by the consumer.

If you want to learn more about credit freeze regulations in your state, creditcards.com has a useful resource that summarizes the laws in all 50 states.

How Much Does a Credit Freeze Cost?

Thanks to the Economic Growth, Regulatory Relief, and Consumer Protection Act, which was passed in 2018, the credit bureaus are now required to provide free credit freezes to consumers. 

It is completely free to place a freeze on each of your credit reports. In addition, it is also free to temporarily lift the freeze and then reinstate it, which is important to do when applying for credit or buying tradelines, as we will discuss below.

How to Do a Credit Freeze

To place a security freeze on your credit file, you will need to contact each credit bureau (Equifax, Experian, TransUnion, and Innovis) and be ready to provide personal information such as your name, address, date of birth, and social security number.

Unfortunately, since the credit reporting agencies are all separate private companies, there is no integrated system in place where you can request a freeze once and have it apply to all of your credit reports. Instead, you have to work with each of the credit bureaus individually in order to place or lift a credit freeze.

Can I Place a Credit Freeze Online?

In many cases, it is possible to initiate a credit freeze online by visiting each credit bureau’s website and filling out a form. In some cases, they may ask you to send documentation verifying your identity via mail before issuing the freeze.

Some experts recommend freezing your child's credit to prevent identity theft.

Some experts recommend freezing your child’s credit to prevent identity theft.

Freezing Your Child’s Credit

Given the proliferation of synthetic identity fraud using stolen SSNs, which we talked about in our article about CPNs, many credit experts recommend freezing your child’s credit to protect them from identity theft. You don’t want to wait until your child is an adult and ready to apply for credit to find out that their credit has been ruined by a criminal that stole their identity years ago.

If you have children under the age of 16, federal law allows you to freeze their credit. Although most children do not have credit files yet, when you request a credit freeze, the bureaus will create a credit file for your child and then freeze it.

When you freeze your child’s credit report, just like when you freeze your own credit file, remember that you will need to keep the PIN in a secure place and you should be prepared to “thaw” their file when the time comes for them to apply for credit.

What’s the Difference Between a Credit Freeze, a Credit Lock, and a Fraud Alert?

While they sound similar and are often confused, a credit freeze, a credit lock, and a fraud alert are all different things.

Fraud Alerts

A fraud alert is an alert placed on your credit report that lets potential lenders know that you may have been a victim of fraud.

It is similar to a credit freeze, but instead of simply preventing lenders from seeing your credit report, it allows them to obtain a copy if they take extra steps to verify your identity and that you are the person applying for credit, such as calling you on the phone.

Like a credit freeze, a fraud alert may help to prevent fraudulent accounts being opened in your name, but cannot stop someone who already has access to your accounts. 

Unlike a credit freeze, fraud alerts are temporary. A normal fraud alert for someone who has not been the victim of identity theft lasts for one year. Victims of identity theft can get an extended fraud alert, which lasts for seven years. Those serving in the military can use an active duty military alert, which lasts one year and is renewable as long as you are deployed.

Credit locks are not governed by federal law and may come with monthly fees.

Credit locks are not governed by federal law and may come with monthly fees.

Fraud alerts are free. Conveniently, when you request a fraud alert, you only have to contact one credit bureau. That bureau must then contact the other two major bureaus and all three of them will implement a fraud alert on your respective credit reports.

Credit Locks

A credit lock is also similar to a credit freeze, but it does have some important distinctions. One of the main ways in which a credit lock differs from a credit freeze is that it is more convenient to unlock your credit than it is to lift a credit freeze.

While lifting a credit freeze requires you to provide the PIN that you were given when you placed the freeze, a credit lock can be undone in seconds and without a PIN online or using an app on your phone.

Credit locks are not covered by the federal law that regulates credit freezes and fraud alerts, so the credit bureaus are allowed to charge fees for providing credit locks. Consequently, placing a lock on your credit often comes with monthly fees.

In addition, a credit lock is simply a business arrangement between you and the credit bureaus and is not regulated by federal law. Therefore, the credit bureaus can’t necessarily be held responsible if someone does manage to fraudulently open an account in your name while you have a credit lock in place.

Some credit locks may come with forced arbitration agreements in the contract, meaning that if you have a dispute with the credit bureau, it must be resolved by arbitration instead of taking them to court.

Will a Credit Freeze Prevent My Tradelines from Posting?

Unfortunately, credit freezes and tradelines do not mix.

In order for your tradelines to post correctly, all credit freezes, fraud alerts, and credit locks must be lifted.

In order for your tradelines to post correctly, all credit freezes, fraud alerts, and credit locks must be lifted.

The reason for this is simply that the purpose of a credit freeze is to block anyone from accessing your credit file. This, of course, includes the banks that you may buy tradelines from.

Therefore, if you have a credit freeze placed on your file, there is a good chance that it will prevent the tradelines from posting to your credit report.

The same goes for fraud alerts and credit blocks, which also restrict access to your credit file and thus prevent tradelines from posting.

For this reason, our non-posting guarantee requires that you lift all credit freezes, credit locks, and fraud alerts before placing a tradeline order with us.

For more tips on making sure your tradelines post successfully, check out “How to Get Tradelines to Post.”

Conclusion: Is a Credit Freeze a Good Idea?

A credit freeze is a tool that allows you to prevent others from accessing your credit report, which makes it harder for criminals to open fraudulent accounts in your name and thus helps to protect you from identity theft.

Placing a security freeze on your credit report is free and it does not affect your credit score, so it may be a good idea, particularly for consumers who are concerned about identity theft.

Unfortunately, the credit bureaus and banks have left themselves vulnerable to cyberattacks, and it has become commonplace for hackers to gain access to and expose the personal information of millions of consumers at a time. Therefore, virtually all savvy consumers are likely to be concerned about protecting their identity and sensitive financial information.

However, there are some things to keep in mind when considering placing a security freeze on your credit file.

Firstly, it is important to remember that you must lift a credit freeze before applying for credit. If you don’t, since the credit freeze will block the lender from accessing your file, your application could be delayed or denied altogether. You’ll need to carefully keep track of the information required to lift your credit freezes, such as a PIN or password.

Because of the hassle of unfreezing and refreezing your credit report, you might want to postpone placing a freeze on your credit if you are about to apply for a mortgage, an auto loan, or another type of new credit.

In addition, if you are planning to purchase authorized user tradelines, it is vital to remove all credit freezes, fraud alerts, and credit locks of any kind before buying tradelines, or else they will prevent your tradelines from being added to your credit report.

To summarize, a credit freeze can be a highly valuable tool in protecting your credit health—just be sure to remove any security freezes on your credit report before applying for credit or buying tradelines.

Now that you are familiar with the ins and outs of how credit freezes work, let us know what you think. Do you plan to get a credit freeze? Do you have a credit freeze in place already? Share your thoughts below!

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