FICO's new Score 9 is a win-win for credit reporting accuracy, consumers with medical debt.

This week, the credit reporting giant FICO reported they’re rolling out an update to their scoring model, FICO Score 9.  Once implemented, it will provide a more accurate and fair way to gauge consumer collections for credit scoring.  The highlight of FICO Score 9 is that it will differentiate medical collections from other consumer credit accounts in collections.  Up until now, those two types of accounts were lumped in together once they hit collections – hurting credit scores the same way.  But with a reported 46 million Americans without health insurance and up to two thirds of bankruptcies caused by unpaid medical bills according to the American Journal of Medicine, a change to the way FICO reported and scored those debts was sorely needed. 

Of course the credit company has a goal of assessing and predicting risk of consumer default for future lenders, and unpaid or overdue medical bills have little real-life correlation to default on other consumer debts.  FICO Score 9 will treat them differently, so a consumer’s score won’t be affected as negatively just from medical bills in collections – better representing the accurate risk. 

While more than a third of Americans have at least debt in collections on their credit file according to a study by the Urban Institute, FICO believes the new model will be able to gauge degrees of risk instead of treating all collections the same.

How much will these changes help or hurt a consumer’s score?  If someone had a clean credit profile except for one major medical debt in collections, their score would increase by an estimated 25 points once FICO Score 9 is implemented.  The changes will be widespread, as FICO is the preeminent credit scoring model in the U.S.  90% of consumer lending decisions take FICO scores into account, with 25 of the largest credit card companies, 25 of the largest auto lenders, and tens of thousands of other businesses looking to them for consumer risk assessment and federal compliance.  

“FICO Score 9 uses a more refined treatment of consumers with a limited credit history and those with accounts at collection agencies, so that lenders can grow their credit and loan portfolios more confidently,” said Jim Wehmann, Executive VP at FICO.

The downside?  It will take a while for FICO Score 9 to be implemented – maybe even a couple years, as software and systems are updated.  Also, Fannie Mae and Freddie Mac haven’t adopted this new scoring model as of yet, so the scoring changes won’t benefit consumer lending. 

If you have significant medical bills, accounts in collections, or any questions about FICO Score 9 and your credit score, feel free to contact us for a no-risk consultation.  It could save you big money!

Does the average person really understand credit?

I came across this info graphic today and wanted to share it with you.  It illustrates the need for education and a better understanding of credit and credit scoring.  Blue Water Credit is happy to help!

In a random survey of 1,000 Americans:

20% of respondents admitted their knowledge of credit score was poor.

71% failed to answer a question about how companies and service providers use credit score.

Only 59% of Americans consider themselves to be highly knowledgeable about personal finance.

The majority of those polled agree there should be a ban on an employer’s right to use a potentially employee’s credit report in the hiring process.

Only 50% have checked their credit score in the last year.

The majority of those polled were confused about how credit score is determined – thinking that employment history, interest rates on current debts, and personal savings were factors.

Almost 40% thought that their age was a factor, and 1 in 4 thought the state they lived in was a determining factor!

20 Surefire ways to muck up your credit score.

1. Pay late.

Even missing a bill’s due date by a few days may trigger a 30-day later reporting, which will damage your score and take a lonnnnnng time to come off your credit report.

2. Not pay at all.

Of course if missing one payment is bad, not making it at all magnifies the damage to your credit.  A 90-day late is where things get really serious and your score may sink like a stone.

3. Max out cards.

One of the determining factors of your score is the ratio of available credit to your balances.  So if you max out your cards, even if they are in paid on time, your score could be affected.

4. Have an account charged off.

Generally after a 90-day late, the next step is that the credit card company/bank, etc. charges off the debt, sending it to a third party for collections.  This further damages your score.

5. Be a cosigner for someone who doesn’t pay.

If you cosign for someone else’s loan, whether it’s a car or an apartment lease or an installment loan, you are jut as responsible for paying the debt as they are!  That means you better make sure they are paying on time because if they slip up, your credit will be affected – and you may not even realize it.

6. File bankruptcy.

Filing a Chapter 7 or 13 Bankruptcy is one of the most damaging events to someone’s credit score.

7. Foreclose on your home.

The other is foreclosure, which hurts your score for a prolonged period and in some ways is more damaging that Bankruptcy.

8. Get a judgment against you.

If you don’t pay your debt obligations, your lender or third-part collection agencies may take you to court, trying to secure a judgment for the amount you owe (plus late fees, penalties, and court costs.)  

9. Apply for new credit like wildfire.

If you start filling out credit card and loan applications frequently in a short period, it signals financial desperation and risk to the credit scoring algorithms, and your score will go down accordingly.

10. Have no mix between credit and installment.

Remember that your credit score is calculation based on a mix of different types of credit – mortgage, installment, revolving, credit cards, etc. so make sure to overload on just one type.

11. Close old credit cards in good standing.

By cancelling a well-seasoned credit card or credit line that was in good standing, you’ve just effectively erased a positive track record of paying on time, so your score will go down as that’s taken out of the equation.

12. Rent a car with a debit card.

When you rent a card with your bank card, not credit card, they run a hard credit check to make sure you’re a good risk, which could lower your score.

13. Take payday loans, cash advances, or finance through rent-a-centers.

All credit is not created equal, and when you take out loans that are deemed risky or on the lower strata of the economic spectrum, it could hurt your score.

14. Finance a major purchase.

Additionally, when you finance furniture, boat, timeshare, or other big purchases outside of the big three – house, car, credit cards – it signals some risk to the credit bureaus.

15. Try to get slick with balance transfers.

Too many people try to outthink the credit card companies, taking out 0% interest or cash-back offers and moving balances around to stay one step ahead.  That works…until it doesn’t work, and at some point it always doesn’t work, leaving you with a big mess.

16. Get a new cell phone.

Of course we need a new phone from time to time, but be aware that many of the cell phone companies run a hard credit check when you apply, which could hurt your score.

17. Open an account at a credit union

Likewise, credit unions run hard credit checks when you open a new account.  We love credit unions for their service and great rates, but inquire if they’ll be running a hard credit check before you get started.

18. Not using your credit at all.

If you don’t use it, there is no established good payment history for the credit bureaus to judge you by!

19. Close cards with available credit. 

When you do this, you mess up your ratio of debt owed versus available credit, which could negatively affect your score.

20. Dispute credit cards.

This may come as a surprise, but even disputing an account on your credit report may lower your score, at least temporarily.  That’s because when it’s in dispute, the bureaus will remove it from consideration in their algorithms, which may erase a positive history, throw your debt-to-available credit out of whack, etc.

What makes Blue Water Credit different from other credit repair companies?

Your credit score is more important than ever these days, whether you’re trying to buy a home, save money on your car loans or credit cards, or just trying to clean up your finances.  You have a lot of choices who to work with to help raise your credit score, but Blue Water Credit would love the chance to earn your business and your trust.  We’re a national credit restoration company that works with clients and creditors to improve credit profiles by challenging questionable, inaccurate, outdated, misleading and or unverifiable data on consumer credit reports.

Here’s why Blue Water Credit is different than the competition and the best choice to help you repair your credit score:

Legal and ethical.

We raise credit scores legally and ethically, in compliance with all state and federal laws and the credit bureaus own procedures.  What we do takes a lot of hard work and dedication, but the results for our clients are tremendous and lasting.

Brick and mortar.

We have an office right in the same communities where we all live and work, in Roseville, California right outside Sacramento.  We pride ourselves on having a professional, comfortable atmosphere for our staff to work, and you’re free to drop by and say hello any time! 300 Harding Blvd Suite 205, Roseville, California.

We only charge after services are successfully performed.

You only pay if we do the work and your credit score improves, which is how it should be.  We always offer a free consultation to review your situation and offer advice, so you have no risk in working with us and can proceed with confidence.

Family owned.

Blue Water Credit was founded by Jeff and Natalie Sipes, who live and work in the communities they serve.  The Sipes also raise two children and are involved in their sports, schools, and local charity work.  

We care.

We believe there is more to life than making a living so we want to make a difference in the lives of those around us.  On behalf of every client we make a  donation to the Compassion First Campaign.  Our team also volunteers at the Placer Food Bank once a quarter.

Professional, trained, dedicated staff.

Our staff of credit counselors receive the best training in the industry and operate by the highest professional standards.  We invest in our people because they are the ones who take good care of you.  Our tight-knit staff; Melanie Jackson, Stacey Jennings, Jennifer Sopenski, Natalie Sipes, Jeff Sipes, Heather Champlin, Carmen Luci, Yana Kalenyuk, and Kirsten Vidosh, have all been in the industry and working for Blue Water Credit for the long term.  

Experience.

There are so many fly-by-night credit repair services that open and close rapidly, just to chase a buck, but Blue Water Credit is one of the more seasoned and experienced firms with almost a decade of service and thousands of happy clients. 

Number of files per desk.

Other credit repair companies assign a ridiculous number of clients to each employee – sometimes up to 1,000 files per desk!  As you can guess, there is no way they can give that many files the attention and work they deserve.  We make sure each of our dedicated credit counselors have a maximum of 120 files to work at any given time, a very comfortable number.  That way they can not only go the extra mile and do a fantastic job to repair their credit, but get to know each person we help and always have time to answer questions or communicate.

You can always talk to us and track your credit repair progress.

Our clients have a professional credit case manager assigned to help them and are always available for questions.  Also, clients can log in to our software system at any time to track the progress of their own credit repair efforts.  We want our clients to be involved and active, and you can always communicate with us via phone, email, or by coming in the office. 

Education.

We’re dedicated to not only helping repair your credit score, but getting you to a much better place financially.  That includes a continued educational campaign, with weekly educational articles about credit, real estate, mortgages, saving money, and even lifestyle topics like local news, health, and the holidays.  You’re welcome to search through our extensive educational catalog here, or let us know what you’re interested in and we’ll send you those articles.  

Cutting-edge software.

Our credit repair system features industry-leading software that helps us analyze and repair your credit the moist effective way possible.  You can also log in to our computer system at any time to track the work we’re doing and see the results. 

Our results.

On average our clients are seeing their scores go up an average of 10-15 points per month. Our track record speaks for itself!

Score increase in 35 days: 


10 points or more 93% 


20 points or more 71% 


50 points or more 20% 


100 points or more 10%

Score increase in 90 days:

10 points or more 97%


20 points or more 82% 


50 points or more 35% 


100 points or more 20%

But don’t take our word for it - here’s what just a few of our clients are saying:

“What a tremendous gift you have given to us!  And... You have been such a delight to work with.  Thanks for all of the attention to our credit needs.  Mission Accomplished and Well Done!”

-Lori and Mark Welch

“Blue Water quickly and successfully raising my credit score 54-100+ points which helped me get my mortgage refinanced and lowered my payment over $500. per month. Thank you so much for your help!” 

-Lisa T.

“I just wanted to let you know that because of your excellent service over the past few months, our lives have taken a great turn for the better!  Our credit has improved in almost every way!  As a result, we have been able to once again buy a home after 4 years of renting, and have been able to purchase needed cars for both of us as well.  We appreciate you all and the great help you have given us!”

-Carmen

So feel free to call us any time to talk about your credit report and how we might help you!

(916) 315-9190 or (877) 577 7496.

How much will a 30-day late payment drop my credit score?

We all try to keep on top of our bills, but every once and a while there’s a bump in the road and we might miss a payment.  Unfortunately, a 30-day late payment will report on your credit report and lower your score.  How much will your FICO drop?  There are a lot of factors that go into it, which we’ll go over here.

First off, if you realize you’re late on a payment call your bank or lender immediately.  It may not be too late to salvage the situation and keep the late reporting off of your credit report.  Different lenders report on different days of the month, so if you are proactive they might work something out to get you paid up.  Some of the bigger credit card companies, for instance, have their own internal systems of late reporting that will keep the issues out of the credit bureau’s site for longer than you may expect.

However, if the 30-day late does hit your credit score, what damage will it do?  There are five major factors to determine how much your score will drop:

1. How long ago did the late payment occur?
Since credit reporting is set up on a chronological metric, recency of late payments are perhaps the biggest factor in score changes.  Simply put, the more recent the late payment occurred, the lower your score will drop.  As time goes on (and you make your payments responsibly) the negative impact will diminish.  All items report for 7 years, but the more recent the late payment, the bigger the hit.

2. How severe were any late payments (30, 60, 90-day late or charge off?)
Of course a 60 or even 90-day late payment is exponentially worse for your credit score than one 30-day late.  Why? Credit reporting is all about gauging risk, and a 60 or 90 shows that instead of an accident or isolated incident, there is some serious financial trouble and your score will drop accordingly.  Avoid a 90-day late payment at all costs.

3. How many accounts have had late payments?
If you only have one account with a late payment or payments, it will hurt your score less than if you have missed payments scattered over multiple accounts.

4. What kind of account is it?
A 30-day late payment on a mortgage loan might hurt you more than on a store retail card with a $200 credit limit.

5. Length of history.
Accounts that are well seasoned – that have been open and in good standing or a long time – will take less of a hit than newer accounts.  Remember that payment history comprises up to 35% of your scoring model so these factors are all important.

With all of that said, here is the direct answer:

If you have a 30-day late on your credit report, your score may drop around 80 points if you’re in the 680 range, or up to 90-110 points if you’re 780 or higher.  Counter to common sense, the better your credit score is, the bigger hit it will take if you miss a payment.

How many credit reporting agencies are there? If you said 'three,' you're way off!

If we asked most Americans how many credit bureaus there were, their answer would almost always be, “three.”  A good number of people could probably even name them as Experian, Equifax, and Transunion, and feel proud of their knowledge of the credit industry.  But very few people realize that there are actually a multitude of credit bureaus reporting your every mortgage, credit card, and occasional late payment, more than 35+ lesser-known ones at last count. 

Why are there so many?  Some of them replicate the scoring models and functionality of the big three, while others serve specific esoteric niches in the financial market.  It’s estimated that up to 50 million Americans have little or no data reporting with the major credit bureaus, so alternate reporting services help credit-light borrowers to qualify for basic loans or services, like utilities, cell phones, and rental housing.  Business loans, employment hiring decisions, and insurance coverage are all affected by what’s on your credit report, but better served by alternate reporting agencies.

For instance, payment information from your medical records is a totally separate form of credit, and businesses have their own commercial credit score.  Bank accounts, bankruptcies, liens, rent-to-own companies, pay-day lenders, subprime auto loans, check fraud, courthouse information, day care payments, and billing from club memberships are even documented by alternative credit reporting agencies. 

For most people, three reporting agencies keeping tabs on their every financial move is more than enough, but if you have an issue with something more than just mortgages, credit cards, and installment loans, you might want to check into what these alternate reporting agencies are saying about you.  Just like with traditional credit score, there’s usually a process for disputing incorrect items or engaging in certain responsible financial behaviors to raise your score. 

Here’s a rundown of some of the alternative credit reporting agencies.  They are under headings but any of these agencies offer reporting on several and overlapping types of reporting, so contact us if you need clarification or need help. 

Banking and Check History CRAs: 


ChexSystems

Certegy Check Services

Telecheck 


Payday Lending Reporting Agencies: 


Factor Trust 


Clarity Services 


CL Verify Microbilt

CoreLogicTeletrack

DataX 


Auto and Property Insurance Reporting Agencies: 


Insurance Services Office (ISO) (A Plus Property Reports)

Insurance Information Exchange

L.N. (Clue Personal Property Report)

L.N. (Clue Auto Report) 


Supplementary/Alternative Credit Reporting Agencies:  CoreScore Credit Report

L2C

Pay Rent Build Credit (PRBC)/Microbilt

ID Analytics

Innovis

Lexis Nexis Screening Solutions. Inc. 


Fico Expansion Score

Utility Credit Reporting Agencies: 


National Consumer Telecom and Utilities Exchange 


Rental Reporting Agencies:

Core Logic SafeRent 


LexisNexis Screening Solutions Inc. Resident History Report

Leasing Desk (Real Page)

Tenant Data Services and Medical Reporting Agencies: 


Medical Information Bureau

MillimanIntelliScript 


Employment Reporting Agencies: 


Accurate Background

Contemporary Information Corp. 


Early Warning Services 


EmployeeScreenIQ 


First Advantage

GIS

HireRight

Infocubic

Intellicorp

Pre-Employ.com

Trak 1 Technology

Verifications Inc.

The Work Number