Frequently Asked Questions

Q: What is credit and how does it work?

A: Credit refers to money that a person is allowed to borrow.  This can be money loaned from a financial institution, such as bank loan, a car lease, a home mortgage, credit cards, department store credit cards, and so on.  A person’s credit history refers to their payment of utility bills, rent, interest and principle on loans and other financial responsibilities.

Q: What is a credit (FICO) score and how does it affect my ability to get credit?

A: Credit scoring is a system creditors use to help determine whether to give you credit and how much to charge you for it.

Information about you and your credit experiences, like your bill-paying history, the number and type of accounts you have, late payments, collection actions, outstanding debt and the age of your accounts is collected from your credit application and your credit report.  Using a statistical formula, creditors compare this information to the credit performance of consumers with similar profiles.  A credit scoring system awards points for each factor.  A total number of points-a credit score-helps predict how credit worthy you are; that is, how likely it is that you will repay a loan and make the payments on time.  Generally, consumers who are good credit risks have higher credit scores.

You can get your credit score from the three nationwide consumer reporting companies, Equifax, Experian, and Trans Union, but you will have to pay a fee for it.  Many other companies also offer credit scores for sale alone or as part of a package of products. 

For more information, see “Need Credit or Insurance?  Your Credit Score Helps Determine What You’ll Pay” at www.ftc.gov/credit.

Q: What influences a credit (FICO) score?

A: Factors include:

• Payment history (35%)
• Amounts Owed (30%)
• Length of Credit History (15%)
• New Credit (10%)
• Types of Credit Used (10%)

Q: Who has access to my credit report?

A: The Fair Credit Reporting Act restricts access to your credit report for the following situations:  Response to a court order, insurance underwriting, employment screening, eligibility screening for a government grant, legitimate business transactions (e.g., offering credit, collecting debts, or checking credit report of current customer), disclosure to the consumer (you), determining the risk of loans for investing purposes and determining someone’s ability to pay child support (government inquiry).

Q: Can’t I just repair my own credit?

A:  The cliché is usually true—you get what you pay for.  If, in this case, you try to save money by repairing your own credit, you probably won’t see the caliber of results that a professional team of credit restoration specialists could give you.  It’s certainly possible to repair your own credit, but the work involved is considerable and time consuming.  With a professional team in your corner, you can sit back while we do the legwork.

Q: How expensive is credit repair?

A:  The services offered by New Financial You are reasonably priced.  While credit restoration, maintenance and wealth accumulation does cost money, remember that you are probably paying almost 40% more in interest rates now because of your blemished credit.  Not having to pay this money in the future is worth making an initial investment to get back on track.

Those derogatory items on your credit report are costing you.  You are paying more in interest rates, late fees and penalties than you realize.  Reading up on credit restoration information is a great first step to putting a stop to the financial madness.  Credit restoration provided by New Financial You can help you get back on track.  Don’t waste another cent on those sky-high interest rates.

Q: Who sees my credit information?

A: There are a number of people and institutions that can request a “credit check” on an individual, including lending institutions, landlords, employers and credit card companies.

Q: Can my credit be repaired?

A: Everyone’s credit can be repaired.  If there is inaccurate information contained on your credit report, it can be disputed and corrected.  Those who have negative, but accurate, information on their credit reports can repair their credit rating over time, by paying off debt and bills in a timely fashion and ensuring that they keep all payments and obligations in check.  How to fix credit scores depends greatly on the items that must be addressed.

Q: How many points will an inquiry hurt my credit score?

A: Every three to five inquiries will lower your credit score 10 to 35 points.

Q: How can I get my credit score?

A: To get the most accurate credit score, have a mortgage company or a bank pull your credit.

Q: Where do I get my credit reports?

A: You can request copies of your credit reports from the three Credit Repair Agencies.  However, the best way to access all three of your credit reports is through www.annualcreditreport.com, which is a website that provides a central location through which individuals can request copies for free, once annually.

Q: Who can report information about my credit history?

A: Anyone who subscribes to a credit bureau terminal can report negative information to the credit bureaus.  Furthermore, nearly all collection agencies have terminals.  When your debt is turned over to a collection agency or the creditor seeks a judgment, that account will probably find its way onto your credit file.

Q: Is it legal to remove items from your credit report?

A: The Fair Credit Reporting Act gives consumers the right to dispute their credit reports and to have any item deleted that is inaccurate, obsolete or unverifiable.  The truth is, consumers delete thousands of negative credit listings every month through legal dispute letters.

Note that while this is true, it is illegal to lie on a credit application.  If you have ever declared bankruptcy, for example, you must always reveal that information on any credit application.

Q: Will I be notified before a debt is reported?

A: In most states, a creditor does not have to inform you before they report a negative listing on your credit report.

Q: What happens if I have negative information on my credit report?

When negative information appears on your credit report, only the passage of time can assure that it is removed.  A consumer reporting company can report negative information for seven years and bankruptcy information for 10 years.  Information about an unpaid judgment against you can be reported for seven years or until the statute of limitation runs out, whichever is longer.  There is no time limit on reporting information about criminal convictions, information reported in response to your application for a job that pays more than $75,000 per year and information reported because you’ve applied for more than $150,000 worth of credit or life insurance.  There is a standard method for calculating the seven-year reporting period.  Generally, the period runs from the date that the event took place.  However, with the help of New Financial You credit reports can be cleaned up sooner.

Q: Do joint credit cards help build good credit?

A: When another person adds you to a credit card as an authorized user, the credit card company places the account on your credit report as well.  Often, the account will carry a note indicating that you are an authorized user rather than the primary cardholder.  Even so, this serves to substantially improve your credit history.  On the other hand, the account will not typically show up with the entire account history, but will show only from the time you were added as an authorized user.

Note that if the account goes delinquent, it may negatively effect your credit report and the credit card company may even attempt to recover payment from the authorized user.

Avoiding Scams

Q: What are the ads that refer to debt relief about?

A:  Whether your debt dilemma is the result of an illness, unemployment or overspending, it can seem overwhelming.  In your effort to stay afloat, be on the alert for advertisements that offer seemingly quick fixes.  And read between the lines when faced with ads in newspapers, magazines, or even telephone directories that promise debt relief.  These ads rarely say “relief” and portray bankruptcy as the only answer.  While bankruptcy is only one option available to deal with financial problems, it’s generally considered the option of last resort because it has a long-term negative impact on your creditworthiness.  A bankruptcy stays on your credit report for 10 years, and can hinder your ability to get credit, a job, insurance, or even a place to live.  What’s more, it can cost you attorney’s fees.

Q: What are advance-fee loan scams?

A:  These scams often target consumers with bad credit problems or those with no credit.  In exchange for an upfront fee, these companies “guarantee” that applicants will get the credit they want—usually a credit card or personal loan.

The upfront fee may be as high as several hundred dollars.  Resist the temptation to follow up on advance-fee loan guarantees.  They may be illegal.  Many legitimate creditors offer extensions of credit, such as credit cards, loans and mortgages through telemarketing and require an application fee or appraisal fee in advance.  But legitimate creditors never guarantee in advance that you’ll get the loan.  Under the federal Telemarketing Sales Rule, a seller or telemarketer who guarantees or represents a high likelihood of your getting a loan or some other extension of credit may not ask for or receive payment until you’ve received the loan.

Ads for advance-fee loans often appear in the classified ad section of local and national papers and magazines.  They also may appear in mailings, radio spots and on local cable stations.  Often, these ads feature “900” numbers, which result in charges on your phone bill.  In addition, these companies often use delivery systems other than the U.S. Postal Service, such as overnight or courier services, to avoid detection and prosecution by postal authorities.

Q: How do I protect myself against these ads?

A:  Most legitimate lenders will not “guarantee” that you will get a loan or a credit card before you apply, especially if you have bad credit or a bankruptcy.

• It is an accepted and common practice for reputable lenders to require payment for a credit report or appraisal.  You also may have to pay a processing or application fee. 
• Never give your credit card account number, bank account information, or Social Security number over the telephone unless you are familiar with the company and know why the information is necessary.

Q: What are the warning signs of Credit Repair Scams?

A: If you decide to respond to an offer to repair your credit, think twice.  Don’t do business with any company that:

• Wants you to pay for credit repair services before any services are provided;
• Does not tell you your legal rights and what you can do yourself for free;
• Recommends that you not contact a consumer reporting company directly;
• Suggests that you try to invent a “new” credit report by applying for an Employer Identification Number to use instead of your Social Security number.
• Advises you to dispute all information in your credit report or take any action that seems illegal, such as creating a new credit identity.