Breana and Janna with Credit Law Center we are just going to share some credit advice this week w mortgage asked us to be part of their segment so we really appreciate that. We’re gonna just discuss some misconceptions about credit. And Jane is gonna go through and answer some questions that we’ve had we posted on Facebook to see what people are asking. And we wanna make sure we get to that feedback. So we’re gonna just jump right in. So the first thing that a lot of people ask is Why is my credit different online when they pull up those scores and then why is it different than when the lender pulls it.

That’s a great question. I think we get asked this more than any other question and it’s completely confusing for most people even people that are in the industry like real estate agents loan officers and everything. So understand that the scores that you pull up online are not actual Vegas scores. They’re not anywhere really close than what your loan officer or say a car dealership or a credit card company would pull up. So their call advantage scores are consumer scores but typically much higher than what your actual FICO scores will be. So typically they start out about a 500 and ended a thousand. They calculate everything much different. They are good to see what’s positive and negative and negative on your credit report but you don’t want to use them and think that you’re actually looking at your figure scores. Now I have a monitor my credit but I want to see what’s positive what’s negative image sure everything is going the way I think it is.

So use it for that but understand if you’re trying to look at that and think that that’s your actual scores it’s not like I said it’s typically much higher than what if I guess where I will be.

So of people then they get pretty frustrated at their lender because they’re like Hey I just got my credit it says this and now you tell me it’s on points lower.

Yeah I feel really bad for our loan officers as so many times you know they look it up in their credit and like or they think it’s their Fargo scores and like all this is also I mean on it 680 it’s much higher than what I thought it was. And then they call their loan officer they think they’re ready to go ahead and purchase a home and they’re in the low six hundreds. So it’s not your loan officers small don’t beat them up at all. It really isn’t. But it’s just the way that their scores are calculated and and they like I said they start out much higher now even with in Fargo scores two and a lot of people don’t understand this there’s 56 different versions of Fargo.

So if you go into a car dealership or apply for a credit card those scores are typically going to be a little bit higher than if you would go in to apply for a mortgage. So credit card companies and car dealerships usually use Fargo version 9. And then lenders are using Fargo version 4 that’s not going to change anytime soon. Freddie and Fannie Mac are the ones who dictate that it would literally cost billions of dollars to switch. So then we kind of talk about all we talk about a lot with.

The errors on reports.

What is the number of errors or what. What’s the likelihood or the percent of credit reports that contain errors. It’s terrible. I mean 79 percent.

So seventy nine percent of all credit reports contain errors which is a huge number and there’s literally no other industry in the world that could get by with that 79 percent of the time except for maybe the IRS or the Weathermen. That’s my favorite saying. But it really is staggering and most people don’t even understand that which means at 79 percent of the viewers on here have errors on their credit report. 79 percent of the people in this coffee shop have errors in the credit report that’s that’s real facts that’s real information and they’ve proven that so on credit reports people got you know they’ve got their collections or their charge offs.

You know all of that stuff on their reports judgments. Let’s talk a little bit because I know you know even sometimes lenders will tell people that they can pay go and pay a collection. Yeah so does paying a collection help the credit score or how does that affect their report.

So obviously you would think common sense would tell you if you have a collection and report and you go and pay it off it’s going to help. Right. That’s absolutely false and please understand that I’m I’m not being like overdramatic or anything if you pay a collection that’s showing up on your credit report.

You have a huge public probability of your scores actually lowering. Now the reason why is because instead of it just showing up like or removing after you pay it it shows up as a paid collection versus a collection. So it’s like the difference of having 10 stitches instead it’s well you’re actually harming your scores. So let’s say I go to the emergency room three years ago and then they throw it on my credit report. If I don’t pay it today what’s going to happen is the last state of activity from three years ago is now going to be today’s date because a recording that something has changed that I paid it off it shows up a collection and now my scores have actually lowered I’ve seen it lower over 100 points per honor. It’s a big big deal. So be careful if you do have collections on your credit report. Make sure you know what you’re doing. And you know what to do. You can always call us and get some consultation to find out what to do but just don’t think that you can just pay it off and it fixes your scores go up they most likely will go down.

So then the other thing that’s impacting their scores is late payers where people are like oh I just had one 30 day late is had a big deal.

Let’s kind of talk a little bit because we had questions about that once the late payers due to the credit report.

So one late paying one 30 day late can damage your scores anywhere depending on what else is going on in your credit. But anywhere between 30 to 50 to 80 points. So one late pay is absolutely. Terrible for your credit.

You want to make sure that you’re paying everything on time. Now once you do let’s say that you had a hiccup and you know what guys I’ve been there too but you had a hey guys you know you go through a divorce or you have a medical issue. Or job loss or whatever it’s going to take about 24 months to actually heal from that.

You won’t be exactly back where you are but you are going to be healing. And then it kind of starts slowing down as far as that the power of that.

After about 24 months.

Okay so then if they’re trying to figure out how to get their scores back up or try and take care of those late fees. What’s a good way to start to build their credit in. You know what. What’s a healthy credit report look like.

So a healthy credit report. So what you’re I would say what your ideal situation would be with your credit.

You want to make sure that you have it for trade lines and trade lines is what I mean like credit cards or installment loans installment loans are going to be home loan auto loan personal loan.

So I like that it’s a good rule of thumb as to credit cards a home loan and an auto loan that’s going to give you a good credit pro profile now also keep in mind that history is so important so many times people make the mistake and they think that payment history is a hundred percent of what’s making up your FICO score. That’s only actually 35 percent. So you want to make sure that you have good thick history.

So you want your credit cards in to be like keep them until your grandchildren our children and then as far as your installment loans and again that’s going to be home loan auto loan personal loan you want to make sure that you’re paying on those for twelve months or more.

That’s going to give you a really good credit profile make sure that you’re always maintaining those four straight lines at all time. So if you pay off your car make sure you have some other type of storm alone. Also keep your credit card balances about 30 to 60 days before you go into apply for any type of loan. Pay the balances down as low as possible. So a really good rule of thumb is the older the credit card the lower the balance the better your FICO scores. So it’s a really great way to manipulate your FICO scores in a positive direction by paying those credit card balances down to zero to 10 percent. Honestly guys it’s the best place you can be right before you go in. And again not 30 to 60 days before you get to apply for a loan and pay down as low as possible.

So is there a little you know we kind of discussed this a little bit for the viewers. Is there a trick say they don’t have the funds to pay those down. What what’s the next thing they can do.

It’s a great question one of the things you can do if you have good payment history with that credit card company you can go ahead and call them and ask them to raise the limits. Now a lot of times I get asked like oh why are they really going to do that. Come on now.

Like what a credit card companies want you to do. They want you spend money. So that’s not an invitation to go shopping. But what it is going to do is it’s going to give you that bigger break between that limit and that balance.

So then what happens. Say they don’t want to go get credit cards. Maybe they can’t get a preferred along with some alternative options for them.

So I know a lot of times I talk to people and they’re just very credit shy so maybe they went through a bankruptcy or they saw their parents go through financial woes and so they’re just kind of scared of credit or they had a sense that credit cards are actually quote unquote bad or installment loans are bad. They say I’ve everything I’ve got.

That’s great.

But understand that you’re if you don’t have trade lines then FICO has nothing to grade you offer. So it’s kind of like if you don’t turn your homework into your teacher she has nothing to grade you offer. So you’re not going to have a score or if you do have any type of score it’s going to be very very low. And if you don’t have trade lines the only reason why you going to have a score is if you have some type of collections. So you want to make sure that you do have credit cards. Just be responsible for him. You know if you have a you have a shopping problem or some like that you obviously don’t take your credit cards into them all. If you love shoes you don’t take your credit card into a shoe shop. I can’t. That’s me. Yes. So anyway. But you want to make sure that you do have trade lines or you’re going to pay extremely high interest rates if you do end up having to get some kind of loan.

If you don’t have credit cards a lot of times you can’t rent vehicles your insurance rates are going to be extremely high.

There’s some time in the military they’re unable to move up in rank if they don’t have high Vargas score you will not have a high score if you do not have to read minds. I cannot stress that enough. So you just kind of have to play the game guys and it just it is what it is. Be responsible.

No your weak points and avoid those like I do it shoe stores. Everybody knows that knows me. But you do need to write lines or you’re not going to happen by the score. OK. And then I’m just kind of wrapping things up.

So of course we love what we do but what what are they supposed to be looking for in a credit repair company. We’re not trying to push credit Lawson or on them but. What what should they do. They need to do their research of course to figure out what what’s good and what’s not. What should they be looking for.

Yeah I’m glad that somebody ask Is that so important or so many different options out there for credit repair and if you don’t know what you’re looking for sometimes you can get into a situation where you’re paying a lot of money and it’s spread out over a long period of time and nothing really happens. So it’s really important when you’re going out and you’re looking for a credit repair company that you actually find someone that is actually a law firm. And I’m saying it like that not to be condescending but there are companies out there that have the word law in their name and trust and believe they’re not a law firm. So I can only speak for ourselves but we actually have five attorneys in-house and staff that work all day every day going up about you know against the big guys. When I see big guys I mean like Transunion Equifax Experian. Those are the credit bureaus and they fight for the little guys. So you want to make sure that they actually are a law firm. The other saying that you want to do what you want to make sure that you’re only paying for results. There’s no reason for you to pay a monthly fee every single month to hope something happens. Why would you do that. So for example again with credit Lawson or we only charge for what we’re able to remove from a credit report.

So if we go after 25 collections and only remove 15 we’re only going to charge for the 15 we removed not the 25 we went after and then speeds another thing too there’s absolutely no reason why credit repair needs to be drug out for a year year and a half anything like that.

Yeah they’re trying to get the train move into a house like today. Right.

Exactly. So you can sign up for another credit repair company if you want but then you’re looking at a year year and a half hoping that something happens. So our average turnaround time is anywhere between 80 to 120 days. Now if one of our clients need to establish credit that’s just time on the clock because remember as I said earlier you want to make sure that you have your credit established for about nine to twelve months or to really help.

And then also for you to be able to be approved for a home loan. So it’s really important and vital that the credit repair process shouldn’t be long and drawn out and excruciating it really shouldn’t. I mean it takes a little work.

A little bit of skin in the game. We need our clients to cooperate with us and do what we tell them to do. And then the other thing that’s interesting is a wreck regular credit repair company a consumer can actually do more than what they can. So that’s why it’s so important it has to have that lobby. So I’m not saying you have to use us. What I’m saying is that when you find somebody make sure you’re only paying for results make sure they do have. They are really are a law firm and they have attorneys there in-house. And make sure you know what you’re getting into. Don’t don’t get caught up on the phone when you listen to a sales pitch.

So just to kind of recap or to wrap it up.

You know we are always about education and continuing to help clients because we don’t want to have repeat clients. So we do things like this where we’re continuing to educate. We really want to think less mortgage for asking us to be part of this this week. Yes. Thank you. And then the other thing too is if you’ve got any questions feel free to reach out to us at anytime. Visit our Web site w w w dot credit law center dot com. We’re constantly educating.

We’ve got blogs follow the Facebook Instagram whatever you want to do. We are never going to push our company on you. We want you to come to us. If there’s anything that you’ve got questions on our advisors are always there to help. And again thanks for having us this week. And you guys have a great weekend.