Major Credit Woe

Major Credit Woe

According to Forbes magazine 7 out of 10 young adults made major credit mistakes before age 30. Sadly to say I was among this statistic. But how much does young adults really know about protecting and guarding their credit. If financial and credit management was a part of high school curriculum it could possibly reduce a friction of the credit mistake young adults make. Thinking back I don't recall discussing credit but I do remember applying for my first credit card at Macy’s at age 18. These common mistakes affect many young adults years later by either remaining on their credit report unknowingly or resulting in a high interest rate on other credit obtained later in life. 

Connect with Santasia:

Website: www.creditdonesimple.com
Twitter Handle: @mscandihill
Instagram Handle: @i_am_candihill
Facebook Handle: Santasia "Candi" Hill
Linked In: Santasia L. Hill

Collections & Charge-Offs

Collections & Charge-Offs

When it comes to charge-offs and collections both can really impact and harm your credit score. Having numerous of credit cards, high balances, and late payments affects your score negativity as well. When an account reaches the point that creditors turn your account over to a collection ion agency it has already caused your credit harm. Collection agencies are hired by creditors to collect on accounts. Most creditors turn accounts over to collection agencies when the account reaches 90-180 days past due. Collection agencies will try to collect as close to 100% of the amount owed as possible, because a percentage of the amount collected goes to the collection agency. By the account reaching a collection status it can be displayed on your credit report twice, once by the creditor and once by the collection agency. This can cause your score to drop by nearly 75 points. That's a huge drop on a credit standpoint.

If creditors determine your account is uncollectible the process of a charge off takes places and the account is closed, sold or transferred. This means the creditor will “write off” this account. However, if you ever plan to get any other credit it will be hard based off another creditor has classified you as unworthy of maintaining credit. But there are other creditors that will extend credit to you with a collection and/or charge off but the interest rate will be outrageously high. Please be smart about your credit because if you are not the cycle could repeat itself in another round of collections and another charge off. 

Santasia H~

Connect with Santasia:

Website: www.creditdonesimple.com
Twitter Handle: @mscandihill
Instagram Handle: @i_am_candihill
Facebook Handle: Santasia "Candi" Hill
Linked In: Santasia L. Hill

How credit is calculated

“How your credit score is calculated”

The most used credit scoring company is the Fair Isaac Corporation “FICO”. Over 80% of creditors use FICO scoring. Below is the breakdown and factors of what makes up your FICO score. Credit is based off several different factors however payment history makes up 35% which is why it's very important your accounts are “paid as agreed” or “paid on time”. By making only one payment late can negatively affect your credit score. A good FICO score is 750+ on a scale 300 to 850.

How credit scores are calculated

Payment History:
Accounts paid as agreed
Number of past due items
Current negative marks
Amounts owed

Secured vs unsecured 

Number of accounts with balances:
Balance to credit
Balance to loan amount

Length of credit:
Time since account opened
Time since account activity 

New Credit:
Recent credit inquires
# of inquires
Recent opened accounts
Time of recent opening

Types of credit:
Mortgage
Installment loans
Retail cards
Credit cards

Santasia H.~

Connect with Santasia:

Website: www.creditdonesimple.com
Twitter Handle: @mscandihill
Instagram Handle: @i_am_candihill
Facebook Handle: Santasia "Candi" Hill
Linked In: Santasia L. Hill