Tax & Credit Implications

Credit Scores

If you have a bad credit score your most likely paying more for your car loans, credit cards, insurance and mortgages.

The first thing you need to know about your credit score is the three digit number, ranges from 300 to 850. This score is the key to your borrowing costs. You can obtain your Fico credit scores from My fico.com.

7 fast fixes for your credit score

According to Liz Pulliam Weston from an article on MSN.com

1. Pay down your credit cards - the credit–scoring formulas like to see a nice, big gap between the amounts of credit your using and your available credit limits. Getting your balances below 30% of the credit limit on each card can really help. MAKE SURE TO HAVE LOW BALANCES

2. Use your cards lightly - Racking up big balances can hurt your score, regardless of whether you pay your bill in full each month. What’s typically reported to the credit bureaus, and thus calculated into your score, is the balance reported on you last statement.
(That does not mean paying off your balance each month isn’t financially smart—it is—just that the credit score doesn’t care)

3. Check your limits - your score might be artificially depressed if your lender is showing a lower limit than you’ve actually got. Most credit card issuers will quickly update this information if you ask.

4. Dust off an old credit card- the older your credit history the better. But if you stop using your oldest cards, the issuer may stop updating those accounts at the credit bureaus.

5. Get some good will - a lender might agree to simply erase that one late payment form your credit history. (It cant hurt to ask) A longer-term solution for more troubled accounts is to ask that they be re-aged. The account is still open, the lender might erase previous delinquencies if you make a series of 12 or so on time payments.

6. Dispute old negatives - the older and smaller a collection account, the more likely the collection agency won’t bother to verify it when the credit bureau investigates your dispute. Some consumers have also had luck disputing old items with a lender that has merged with another company, which can leave lender records a real mess.

7. Blitz significant errors - This is really worth the effort of correcting with the bureaus:

• Late payments, charge offs, collections or other negative items that aren’t yours
• Credit limits reported as lower than they actually are
• Accounts listed as settled, paid derogatory, paid "charge off" or anything other than current or paid as agreed if you paid on time and in full.
• Accounts that are still listed as unpaid that were included in bankruptcy.
• Negative items older than seven years (10 years in case of a bankruptcy) that should have automatically fallen off your report

2007 Debt Forgiveness Act

Click here for more information on the 2007 debt forgiveness act, its requirements, and how it applies to you.

Helpful links for Credit & Tax

• www.ftc.gov
• www.mymoney.gov
• www.efanniemae.com
• www.irs.gov