John Oliver in his "Last Minute Tonight" segment on credit reports:
A recent report indicates the number of people who have been able to get a home loan has dropped drastically since the implementation of new regulations over the past several years.
What is kind of regulations?
The new regulations that were put in place to take into account an applicant’s combined debt, which includes other loans such as car loans, personal loans, and unsecured lines of credit, which in most cases means credit cards.
This means you have less leniency on how much existing debt you can have when seeking approval for a home loan.
The increasing rate of default occurring with home loans in America that was the spark of the financial crisis several years back. It was the delinquencies, although not enormous, that became impossible for some investment banks to bear due to their already existing debt. As it spread throughout the financial sector in 2008, nervous or cash-strapped banks and other creditors simply stopped lending out money, taking the rest of the economy with it. Deep recessions and big financial rescues then led to a surge in government debt.
A new government study finds up to 40 million Americans have mistakes on their credit reports. "60 Minutes" correspondent Steve Kroft reports on why little is being done to fix the errors. The Credit People are hired every day to save you the headaches of dealing with the credit reporting agencies. Watch the video to learn more.
The second most heavily weighted factor in credit scoring is how much of your available credit you're actually using. The lower your balances compared to your credit limits, the better. Here are a few tips on paying down your debts to best serve your credit score…
What should I do first?
According to the Federal Trade Commission, there is a long list of steps to take after realizing that your identity has been stolen:
1. Contact one of the consumer reporting companies (Equifax, Experian, or TransUnion) immediately. They will place a fraud alert in your credit file and notify the other companies to do the same.
While credit repair will correct the damage to your credit, the process will be more “hands on” for identity theft victims than for others without this circumstance. There will be steps that we will instruct you to do in order to put the brakes on the fraudster who hi-jacked your credit. After we’ve put the brakes on the situation, we’ll then begin to address the accounts on your credit that have been negatively impacted.
Most people don’t think about their credit until they have to use it. Take the example of a newly-wed couple dreaming of owning their first home. Each of them has been working for 5 years now, one or both have recently been given a pay raise, and now they decide that it’s time to buy. They start looking, find the perfect home, and try to get a loan. This is when they learn that their credit score is too low to qualify.
Your credit score is ultimately the main factor when considering you for credit or lending of any kind. In fact, lenders have become so dependent on credit scoring that they now make separate offers available to each credit score “bracket”. In other words, lenders will make unique terms and rates for consumers who fall into a credit score range. For example; if you have a 580-620 score, you qualify for “x” interest rate and “x” terms. If you have a 620-680 score, you qualify for “x” interest rate and “x” terms, and so on.
If you have already gotten your free annual credit reports within the last 12 month period and you don’t qualify for additional free reports, you'll have to pay a fee each time you order a copy of your credit report from a Credit Reporting Agency (CRA). The average cost of a credit report is $10.50 at the time of writing this guide, which totals $31.50 for all three.