Fixing errors on your credit report, or even having certain accounts removed can be quite easy, sometimes a simple dispute is enough to do the job. Unfortunately Judgements are often harder to deal with, and without taking the proper steps judgments can continue to affect your credit for years to come, up to 10 years in some States. Luckily there are several simple steps which can be taken to improve your score after paying off your judgements, in some cases even helping you remove the negative information completely.

Understanding Judgements on Credit Reports

First we need to understand exactly what a judgment entails. If you have ever lost a court case, such as a case for unpaid credit card debt, or an eviction from an apartment or house you will more than likely find the outcome of that case listed under the “judgements” section of your credit report. Judgements it is believed by many credit experts weigh heavy on your credit report due to the nature of a judgement.

For instance, unlike many collection agencies, the law offices that won the judgement can file wage garnishments against your paychecks taking up to 15% of your wages, obviously if you have even one judgement is shows lenders that you are susceptible to this garnishment, whereas several judgements show even more vulnerability in your likelihood of multiple wage garnishments. Also, judgements are subject to certain interest rates in many states, for instance, in Illinois a 9% interest rate can be applied to judgements, these statutory interest rates may scare away many lenders because it shows you owe a growing debt on a debt you have already failed for whatever reason to pay. Read the rest of this entry »

The heart of protecting yourself against identity theft is being hyper-vigilant about your privacy; going “off the radar” as much as is possible with your personal information. This means getting proactive and taking responsibility for protecting yourself. Fortunately there are a number of simple and effective ways anyone can take for preventing identity theft.

1. Buy a shredder and use it

A home shredder is inexpensive and easily available at any office supply store. Bringing one home is simple; disciplining yourself to use it may not be. Place the shredder near where you receive your mail and immediately shred all offers for credit cards or insurance policies that you receive in the mail. Thieves can and will go through garbage cans to find those offers, fill them out, and develop a line of credit in your name they can exploit and for which you will pay.

2. Change your passwords monthly

All your passwords should be a combination of letters and numbers. Do not use something as obvious as your first name and your birthdate, for instance: Brenda080162. Be creative and keep a master list of all your passwords to all your accounts in a safe place. Once a month, change your passwords and update your list. Never leave your list where it can be exploited, for instance on a home computer connected to the Internet without virus protection and a firewall or loose in your wallet. Read the rest of this entry »

The single, most deciding factor in determining whether or not you get that mortgage or that car loan (and how much interest you’ll be paying) is your credit score. For years, the score has been calculated using the same rules but now that’s about to change because Fair Isaac Corp, the private company responsible for calculating your score, is changing those rules.

How will it affect you? Well, that depends on your current credit ranking and your credit habits.

Let’s look at some of the changes.

Types of Credit

Raising your credit scores with the new FICO 2008, you need to have a diverse credit portfolio. A wallet of credit cards won’t be sufficient. You will score points for having a mix of loans, mortgage and auto specially, and revolving accounts like credit cards.

The rationale is lenders need to see you can handle a variety of types of debt before they feel comfortable trusting you with additional money.

Credit Limits

Having credit cards is, therefore, a good idea. However, using them responsibly is a must. Your credit score will go down if you use charge too much of that available credit. If fact, to be safe, you don’t want to maintain a balance of more than 50 or 60% of you credit limit.

Lenders want to make sure you aren’t piling on too much debt. A borrower who already has three or four maxed out credit cards may be sinking themselves into a hole they will have trouble digging out of and lenders don’t want to be part of that experience.

Applying for Credit

In the past, your credit score could be hit pretty hard if you tried applying for credit from many different sources. That looked as if you were just trying to take on as much debt as you could your hands on or were being turned down a lot for being a poor risk.

One of the rule changes, however, is that shopping for credit from multiple sources won’t hurt nearly as bad. It’s still not a great idea to overdo it, but looking for a good deal by applying for the same type of loan, for example, is now acceptable.

Late Payments

FICO used to have no mercy when it came to delinquent accounts. If you were late, especially late more than 90 days, then your score would plummet like it had reached the highest hill on a roller coaster. That’s not necessarily the case anymore.

The new scoring system is a little more forgiving. If you occasionally miss a due date, don’t worry. If you’re 90 days past due on a single account but all of your other accounts are current, then don’t worry. However, if you are frequently late with your payments or are seriously delinquent on multiple accounts, your credit score will drop considerably.

The bottom line is the new FICO scores are meant to ensure responsible credit users get a break when accidents happen. They are also meant to keep people who are already over their heads in debt from getting additional credit from lenders.

You can expect to start seeing these changes reflected in your FICO score slowly throughout 2008 as the new rules are adopted by each of the three credit bureaus.