Glossary

 

 

Account

An account represents a relationship between a company (the account owner) and consumer, where the consumer purchases a product or service in such a way that represents the transfer of money over time.

Account Holder

The person(s) and or guarantor(s) in whose name an Account was established; the person or entity who or which is obligated to repay an Account, or if there are multiple persons or entities obligated to repay an Account, all such persons or entities collectively; the obligor or obligors on an Account.

Adverse Action

An unfavorable action, such as the denial of credit, insurance or employment, taken by a creditor or other entity, affecting a consumer. Under the Fair Credit Reporting Act (FCRA), creditors must disclose the reasons for any adverse action.

Balance

The amount of money that you owe to a particular lender.

Bankruptcy

A legal proceeding that relieves you of the responsibility of paying your debts or provides you with protection while attempting to repay your debts.

Bankruptcy Discharge

The release, by the Bankruptcy Court, of the debtor from all of his dischargeable debts, whether then payable or not. A permanent injunction against any collection action for pre–filing dischargeable debts. The goal a debtor seeks when filing for bankruptcy protection.

Chapter 7 Bankruptcy

The chapter of the Bankruptcy Code that provides for court-administered liquidation of the assets of a financially troubled individual or business.

Chapter 11 Bankruptcy

The chapter of the Bankruptcy Code that is usually used for the reorganization of a financially troubled business. Used as an alternative to liquidation under Chapter 7.

 

Chapter 13 Bankruptcy

The chapter of the Bankruptcy Code in which debtors repay debts according to a plan accepted by the debtor, the creditors, and the court.

Charge Card

A credit card that requires full payment of the bill each month; no interest is charged. The American Express Card is an example.

Charge-Off

A loan or credit card debt written off as uncollectible from the borrower. The debt, however, remains valid and subject to collection.

 

ChexSystems

ChexSystems is a check verification service and consumer credit reporting agency. It provides information about the use of deposit accounts by consumers.

Collection

When a borrower falls behind, the lender contacts them in an effort to bring the loan current. The loan goes to “collection.”

 

Consumer

A “consumer” is defined as an individual.

Consumer Report

A “consumer report” is any written, oral, or other communication of any information by a Consumer reporting agency that bears on a consumer’s creditworthiness, credit standing, Credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected, in whole or in part, for the purpose of Serving as a factor in establishing the consumer’s eligibility for:

1. Credit or insurance to be used primarily for personal, family, or household purposes

2. Employment purposes; or any other purpose authorized under section 604 (15 U.S.C. § 1681b).

Consumer Reporting Agency (CRA)

An agency that is a clearinghouse for information on the credit payment history of individuals or firms. There are three major credit bureaus, Equifax, Experian and TransUnion, and they are regulated by the federal Fair Credit Reporting Act (FCRA).

 

Consumer Financial Protection Bureau

The Consumer Financial Protection Bureau (CFPB) is an agency of the United States government responsible for consumer protection in the financial sector. CFPB jurisdiction includes banks, credit unions, securities firms, payday lenders, mortgage-servicing operations, foreclosure relief services, debt collectors and other financial companies operating in the United States.

 

Credit

A trust or promise to buy now and pay later under designated terms for goods or services.

 

Credit Card

A card that allows a consumer to pay a portion or all of the outstanding amount each month and has a credit limit. Visa, MasterCard, and Discover are examples.

 

Credit Check

An inquiry to confirm a consumer’s credit payment history.

 

Credit Fraud

A case when someone has stolen a consumer’s identity by fraudulently using that consumer’s social security number or other personal information to acquire credit in his or her name.

 

Credit Dispute

To request an investigation of the accuracy of information on a credit report.

Credit File

The collection of information each of the credit reporting agencies maintains in their databases.

 

Credit History

The record of a consumer’s credit accounts and manner of payment (MOP). Credit history includes high credit, current balance, credit limit, and 24 months or more of MOP history.

Credit Inquiries

Credit inquiries are a notation listed on your credit report that a lender has checked your credit file. “Hard” inquiries can impact your Credit Score, while “soft” ones don’t. Creditors see only your “Hard” inquiries.

 

Credit Limit

The maximum amount you are allowed to borrow from a lender under the terms of your agreement for an account.

 

Credit Monitoring Service

Services that monitor activity in your credit file and alert you to key changes in your file.

 

Credit Repair

Credit repair is a general term used to describe the practice of improving or rehabilitating one’s financial reputation (creditworthiness) with creditors.

 

Credit Report

A record of the information in your financial credit file that is used by a lender, employer, or others to help evaluate you when you apply for a loan, job or in certain other circumstances.

 

Credit Risk

An assessment of a consumer’s likelihood of fulfilling the terms of a credit agreement.

 

Credit Score

A credit score is a numerical index which represents an estimate of an individual’s financial creditworthiness. It is based on a subset of the information in an individual’s credit report.

 

Creditor

Person or business to whom a debt is owed.

 

Creditworthiness

An assessment of a consumer’s past credit behavior that allows a potential lender to decide whether or not to extend credit. Credit reporting agencies are private, for-profit companies that collect and sell information about a person’s credit history. Typical clients include banks, mortgage lenders and credit card companies that use the information to screen applicants for loans and credit cards.

 

Current Balance

(a) the unpaid balance for each account;

(b) the Account balance, which does not include any finance or late charges assessed after Charge–off Date.

 

Date of Last Activity (DOLA)

The date when when one of three things happens on any active account: the consumer makes a payment, misses a payment, or the balance of the account increases

 

Debt Consolidation

Debt consolidation entails taking out one loan to pay off many others. This is often done to secure a lower interest rate, secure a fixed interest rate or for the convenience of servicing only one loan.

 

Debt Settlement

A process to reduce or pay off old debt by negotiating a lower amount due with the creditor.

 

Debt-to-Income Ratio

Your income compared to the debt you owe.

 

Default

Failure to fulfill an agreed-upon financial obligation, such as making a loan payment.

 

Delinquency

Past-due payment on a loan.

 

Dispute

If you have reviewed your credit report and found some data to be inaccurate, you can contact the companies involved to have it investigated and/or removed. This is considered a dispute.

 

Fair and Accurate Credit Transactions Act (FACTA)

A federal law that amended the federal Fair Credit Reporting Act in many areas. The law provided, among other things, additional protections for consumers in connection with the prevention and remediation of identity theft and the accuracy of credit reports. It includes your right to a free copy of your credit report from each of the three major credit reporting agencies every 12 months, which must be requested through the centralized source established under the FACT Act.

 

Fair Credit Billing Act (FCBA)

This Act, amending the Truth in Lending Act, requires prompt written acknowledgment of consumer billing complaints and investigation of billing errors by creditors. The amendment prohibits creditors from taking actions that adversely affect the consumer’s credit standing until an investigation is completed, and affords other protection during disputes. The amendment also requires that creditors promptly post payments to the consumer’s account, and either refund overpayments or credit them to the consumer’s account.

Fair Credit Reporting Act (FCRA)

Fair Credit Reporting Act (effective April 25, 1971) is part of a group of acts in the Federal Consumer Credit Protection Act. The Act protects information collected by consumer reporting agencies such as credit bureaus, medical information companies and tenant screening services. Information in a consumer report cannot be provided to anyone who does not have a purpose specified in the Act. Companies that provide information to consumer reporting agencies also have specific legal obligations, including the duty to investigate disputed information. Also, users of the information for credit, insurance, or employment purposes must notify the consumer when an adverse action is taken on the basis of such reports. Further, users must identify the company that provided the report, so that the accuracy and completeness of the report may be verified or contested by the consumer.

 

Fair Debt Collection Practices Act (FDCPA)

Under this Act (Title VIII of the Consumer Credit Protection Act), third-party debt collectors are prohibited from employing deceptive or abusive conduct in the collection of consumer debts incurred for personal, family, or household purposes. Such collectors may not, for example, contact debtors at odd hours, subject them to repeated telephone calls, threaten legal action that is not actually contemplated, or reveal to other persons the existence of debts.

 

Federal Trade Commission (FTC)

A federal agency whose duty is to investigate unfair methods of competition in business, fraudulent advertising, etc., and to restrain or prosecute those charged with such practices. The Commission’s primary purpose is to protect consumers.

 

FICO Score

A FICO score is a credit score produced from models developed by Fair Isaac Corporation. The score is used to measure a consumer’s creditworthiness and risk, and is in use worldwide. FICO scores range from 300 - 850 and are available through all of the major consumer reporting agencies in the United States: Equifax, Experian, and TransUnion.

 

Foreclosure

The legal process by which a lender, usually a bank or other financial institution, acquires real property because the borrower failed to pay the mortgage.

 

Freeze

Also known as a security freeze, you restrict access to your credit report, which in turn makes it more difficult for creditors to see your credit report.

 

Furnishers

Any company that submits information about you to be included on your credit report.

 

Garnishment

A legal process whereby a lender who has obtained a judgment on a debt can receive full or partial payment by seizure of a portion of the debtor’s assets (wages, bank account, etc.).

HIPAA

HIPAA is the acronym for the Health Insurance Portability and Accountability Act that was passed by Congress in 1996. HIPAA Mandates industry-wide standards for health care information on electronic billing and other processes; and requires the protection and confidential handling of protected health information.

Identity Theft / Identity Fraud

A crime that involves using another’s name, Social Security Number or other personal information to acquire credit, make purchases or commit a crime in that name.

 

Inquiry

An examination of a consumer’s credit history. When your credit report is made available to another party, such as a lender, landlord or insurer.

 

Installment Loan

A credit account in which the amount of the payment and the number of payments are predetermined or fixed.

 

Interest

The cost of borrowing or lending money, usually a percentage of the amount borrowed or loaned.

 

Interest Rate

A percentage of money charged by a lender, for borrowing money. For example, you might get charged 12.5% interest on any credit card balance carried over, or you might qualify for a 4.5% car loan.

 

Judgment

A final court ruling resolving the key questions in a lawsuit and determining the rights and obligations of the opposing parties.

 

Late Fee

A fee attached to a delinquent account.

 

Late Payment

A delinquent payment; a failure to deliver a loan or debt payment on or before the time agreed. Late payments are reported to the credit bureaus by creditors, and appear as negative items on your credit reports.

 

LexisNexis

LexisNexis (which acquired ChoicePoint) is the largest data-broker in the world and reseller of credit information. As of 2006, the company has the world’s largest electronic database for legal and public-records related information.

 

Lien

A legal claim upon real estate or personal property for the satisfaction of a debt. Liens you agree to are called security interests, and include mortgages, home equity loans, car loans and personal loans for which you pledge property to guarantee repayment. Liens created without your consent are called non consensual liens, and include judgment liens (liens filed by a creditor who has sued you and obtained a judgment), tax liens and mechanic’s liens (liens filed by a contractor who worked on your house but wasn’t paid).

 

Line of Credit.

Credit limit established by a creditor.

Open account

An account that is active or still being paid.

Paid as agreed

A designation on the credit report that indicates the consumer is repaying the credit account according to the terms of the credit agreement.

 

Public Record

Information obtained from court records about such things as state or federal tax liens, bankruptcy filings and judgments against you in civil actions. Public records are open to any person who requests them.

 

Reaged Account

An account that is brought to a current status, even though the total past due amount has not been paid. Some unscrupulous companies may do this in order to start the Date of Last Activity over again, in an effort to reset the typical 7 year clock for a negative item to automatically fall off of your credit report.

Repossession

The action taken (usually by a financial institution) to recover an object that was used as collateral, rented or leased in a transaction.

 

Revolving Balance

The total balance of all revolving credit accounts.

 

Revolving Charge Account

Credit automatically available up to a predetermined limit so long as a consumer makes regular payments.

Revolving Credit

An account that requires at least a specified minimum payment each month plus a service charge on the balance, which can fluctuate up to the credit limit. As the balance declines, the amount of the service charge, or interest, also declines.

 

Secured Credit Card

A credit card secured by a savings account.

 

Settled In Full

The Debtor has satisfied the Account obligation with full payment of the amount due.

 

Settlement

(a) payment of the adjustment amount of an account, including principal, interest and fees; or (b) a copy of a written settlement agreement or other written documentation evidencing a settlement.

 

Small Claims Court

Small claims court is a special court where disputes are resolved quickly and inexpensively. In small claims court, the rules are simplified and the hearing is informal. Attorneys are generally not allowed. The person who files the claim is called the plaintiff.

Tax Lien

A charge upon real or personal property for the satisfaction of debts related to taxes.

 

Term

The amount of time in which a loan must be repaid in full.

 

VantageScore

First announced in March 2006, VantageScore® is the latest addition in consumer credit scoring models. Its methodologies and algorithms were cooperatively developed by the three major consumer reporting agencies: Equifax, Experian, and TransUnion. VantageScores range from 501 - 900.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Fix Bad Credit 1. DELETE COLLECTION ACCOUNTS Did you know that paying a collection account can actually reduce your score? Here's why: credit scoring software reviews credit reports for each account's date of last activity to determine the impact it will have on the overall credit score. When payment is made on a collection account, collection agencies update credit bureaus to reflect the account status as "Paid Collection". When this happens, the date of last activity becomes more recent. Since the guideline for credit scoring software is the date of last activity, recent payment on a collection account damages the credit score more severely. This method of credit scoring may seem unfair, but it is something that must be worked around when trying to maximize your score. How is it possible to pay a collection and maximize your score? The best way to handle this credit scoring dilemma is to contact the collection agency and explain that you are willing to pay off the collection account under the condition that the all reporting is withdrawn from credit bureaus. Request a letter from the collector that explicitly states their agreement to delete the account upon receipt/clearance of your payment. Although not all collection agencies will delete reporting, removing all references to a collection account completely will increase your score and is certainly worth the involved effort. 2. DELETE PAST DUE ACCOUNTS Within the delinquent accounts on your credit report, there is a column called "Past Due". Credit score software penalizes you for keeping accounts past due, so Past Dues destroy a credit score. If you see an amount in this column, pay the creditor the past due amount reported. 3. DELETE CHARGEOFFS AND LIENS Chargeoffs and liens do not affect your credit score when older than 24 months. Therefore, paying an older chargeoff or a lien will neither help nor damage your credit score. Chargeoffs and liens within the past 24 months severely damage your credit score. Paying the past due balance, in this case, is very important. In fact, if you have both chargedoff accounts and collection accounts, but limited funds available, pay the past due balances first, then pay collection agencies that agree to remove all references to credit bureaus second. 4. DELETE LATE PAYMENTS Contact all creditors that report late payments on your credit and request a good faith adjustment that removes the late payments reported on your account. Be persistent if they refuse to remove the late payments at first, and remind them that you have been a good customer that would deeply appreciate their help. Since most creditors receive calls within a call center, if the representative refuses to make a courtesy adjustment on your account, call back and try again with someone else. Persistence and politeness pays off in this scenario. If you are frustrated, rude, and unclear with your request, you are making it very difficult for them to help you. 5. CHECK YOUR CREDIT LIMIT(S) AND EVENLY DISTRIBUTE BALANCES Make sure creditors report your credit limits to bureaus. When no limit is reported, credit scoring software scores the account as though your current balance is "maxedout". For example, if you know that you have a $10,000 limit on your credit card, make sure that the limit appears on the credit report. Otherwise, your score will be damaged as severely as if you were carrying a balance of the entire available credit. Credit scoring software likes to see you carry credit card balances as close to zero as possible. If it is difficult for you to pay down your balances, read the following guidelines to maximize your score as much as possible under the circumstances: There are different degrees that scoring software can impact your score when carrying credit card balances. Balances over 70% of your total credit limit on any card damages your score the most. The next level is 50% of your balance, then 30% of your balance. In order to maximize your score without having to pay down your balances, evenly distribute your credit card balances among all of your credit cards, rather than carry a large balance on one credit card. For example, if you are carrying a $9000 balance on a credit card with a $10000 limit, and you have two other credit cards with a $3000 and $5000 limit, transfer your balances so that you have a $1500 balance on the $3000 limit card, a $2500 balance on the $5000 limit card and a $5000 balance on the $10000 limit card. Evenly distributing your balances will maximize your score. 6. DO NOT CLOSE YOUR CREDIT CARDS Closing a credit card can hurt your credit score, since doing so effects your debt to available credit ratio. For example, if you owe a total credit card debt of $10,000 and your total credit available is $20,000, you are using 50% of your total credit. If you close a credit card with a $5,000 credit limit, you will reduce your credit available to $15,000 and change your ratio to using 66% of your credit. There are caveats to this rule: if the account was opened within the past two years or if you have over six credit cards. The magic number of credit card accounts to have in order to maximize your score is between 3 and 5 (although having more will not significantly damage your score). For example, if a card was opened within the past two years and you have over six credit cards, you may close that account. If you have more than six department store cards, close the newest accounts. Otherwise, do not close any at all. 7. BECOME AN AUTHORIZED USER (Note: Although this tactic is no longer effective for Experian, both Trans Union and Equifax consider authorized user accounts when calculating your credit score.) If you have a short and limited credit history you can ask someone who is a primary account holder to add you to their account as a joint account holder or an authorized user. When added, the primary account holder's credit card will appear on your credit report. Credit scoring software will treat the added account as though it is your account and you will benefit from the low balance and the long payment history for that account. It is important to remember that being an authorized user is helpful for your credit score only if (1) the person is carrying debt below 10% of the credit limit and (2) has had good payment history on the card for seven years or longer. The longer the history, the better. Being an authorized user is potentially detrimental to your credit score if, for example, the primary card holder carries a high balance on the card and has had it less than five years. 8. KEEP YOUR OLD CREDIT CARDS ACTIVE 15% of your credit score is determined by the age of the credit file. Fair Isaac's credit scoring software assumes people who have had credit for a longer time are at less risk of defaulting on payments. Therefore, even if your old credit cards have horrible interest rates, closing those cards will decrease the average length of time you've had credit. Use the old card at least once every six months to avoid the account rating to change to "Inactive". Keeping the card active is as simple as pumping gas or purchasing groceries every few months, then paying the balance down. An inactive account is ignored by Fair Isaac's credit scoring software, so you won't get the benefit of the positive payment history and low balance that card may have. The one thing all credit reports with scores over 800 have in common is a credit card that is twenty years old or older. Hold onto those old cards! 9. What About Professional Credit Repair? Reparing credit is a slow and time consuming process. Full knowledge of your credit profile and how it represents you to creditors and credit bureaus is pivotal to full credit restoration success. Credit bureaus always advise individuals that they have a right to dispute their own credit files, but when the Credit Bureaus slow you down there are professional Credit Repair services that you can turn to for help. 10. It is possible using some Prepaid Mastercards to improve your credit rating. Request a copy of your credit report from a credit bureau. If there is an error, write to the bureau and ask it to fix the mistake. It might also help to contact the creditor who reported the error. Some creditors will contact the bureau on your behalf. 2 If the bad marks on your credit report result from outstanding debts, repay them as quickly as possible. Pay off those with the highest interest rates first. 3 If your debts are overwhelming, contact a nonprofit credit-counseling organization to work out a **** plan. A counselor will help you consolidate your debts and will contact your debtors on your behalf to reduce or eliminate finance charges. This can reduce your monthly payments by up to 40 percent. 4 Steer clear of any services that offer you credit-repair or **** loans. These companies will plunge you further into debt. Be suspicious of any company that advertises aggressively or sends unsolicited mail or e-mail. 5 Close your credit accounts and cut up the cards. Sell valuables or liquidate assets that will help you repay your debts. Buy the bare essentials (food and gas) and use the rest of your earnings to pay off your consolidated debts. 6 Work with your credit counselor to repay all of your debts. Meanwhile, live a life that will help you re-establish good credit. Pay rent and utilities or mortgages promptly, keep the same residence and job, maintain savings and checking accounts, set a budget and stick to it. 7 Once you have repaid your debts, apply for a new credit card to build a good credit history. It might be easier initially to get a department-store or gasoline credit card or one from an employee credit union. 8 Promptly pay off the balance of the credit card monthly to build good credit. Use the card responsibly. 9 If you don't qualify for a regular credit card, apply for a secured one. With a secured credit card, you fund an account up front and then "charge" expenses on it. This card will show up as a credit card on your credit report and, if used responsibly, can help you build a good credit history. Read more: How to Fix Bad Credit Building or rebuilding a credit score seems like an impossible task. Young people starting out think they'll never qualify for the best interest rates. Homeowners who may be facing foreclosure think their scores will never recover. - advertisement - We asked readers what they wanted to know about FICO scores, and we had many requests for guidance on building or rebuilding them. We posed these questions to Fair Isaac product support manager Barry Paperno, who has worked for the credit-score company since 1995. A reader who hasn't used credit cards in 15 years and has paid off the car and the mortgage wants to know how to build a credit history again. Any suggestions? A misconception is that it takes a lot of credit, or that you need a long history or a lot of credit to establish credit, and that's not true. You can get by with one account on your credit report, because the minimum criteria are an account that's at least six months old and one that has been reported to the credit bureau or updated at the credit bureau within the last six months. It doesn't even need to be active; it just needs to have been reported by whoever issued that account. It can be the same account you've had for over six months that gets reported every month -- then you have a credit history with that account. Or, like in this person's case, let's say that the mortgage that they paid off is still on the credit report from 15 years ago. That would meet the requirement of being on the report for six months. Then let's say he gets a new credit card -- the first day that that gets reported to the bureau and shows up on his credit report, he's got a FICO score. That's basically what the score requires. In terms of the strategy to go about doing that, there may be some pitfalls to avoid and things to do to get the most bang for your buck. When you're in the Catch-22 -- you don't have credit and before somebody's going to issue credit they want to see some credit -- one thing that people do is get a secured card. Credit unions are good for that or a bank that you've had a good relationship with for some time. You would use it in the same way as you would a credit card, any bank card. It would be a Visa or MasterCard, for example, but the lender would require collateral from you, usually in the form of a deposit. That deposit usually corresponds to the limit that they're going to extend you. So, for example, if you'll put a $500 deposit down in their bank or credit union, they will give you a $500 limit. You can run your balance up to that and you can pay it every month just like you do a credit card, but of course there's more security for the bank. If you default, they can just take the money you have on deposit. The thing to make sure of is that it functions like a credit card, and to make sure that it's going to be reported to the credit bureaus as such. It doesn't do your score any good if that's not reported to the credit bureaus. You want to make sure that it's reported to all three credit bureaus, if possible. Ask the bank or the credit union. They should be able to tell you where they report. That's one of the features (of a secured card), and that's what most people do it for, so they're used to that question. But there might be some unscrupulous ones who will try to get your money and imply that they're going to report them and they don't. You do want to be aware of that. Or they may just report to one of three bureaus, in which case, if it's a great deal you're getting, that's OK. But ideally you want it to be with all three, because down the road, when you're going to be applying elsewhere, you don't know which bureau the future creditor is going to use. It would be a shame to have a couple years of history now with this one bureau, and you need a car and there's a good rate being offered and unfortunately they pull the bureau that your card isn't being reported to. At what point would someone establishing credit be creating too many inquiries? Inquiries are going to weigh more heavily, but it depends on the overall profile of the report that's being scored. For example, an inquiry is going to matter more on somebody that has a very short and minimal credit history vs. somebody that's got a long and robust history. For example, a student with a student loan on his credit report, if he gets a few inquiries, that's going to affect his score more negatively than maybe that person's parents, who've got years and years of credit history, a good mix of that stuff. Once you do get that secured account and then you start going to all of the big banks and the national department stores, and the oil companies and that kind of thing, you start generating all these inquiries, and that's going to have a negative effect on your score. Not as bad as missing payments on that account or maxing out that one account -- those will trash your score, to use a technical term. Inquiries have a minimal effect, but they are something to be aware of. The question of what's a good number of cards to have, ideally, while this varies, it's definitely good to have more than one, and I would say for somebody that's starting out, less than five. What's going to be most important again is not even being 30 days late. Don't be a minute late because you have no track record and everything you do is going to be under a magnifying glass. You want that to be spotless in terms of your payments and also in terms of your credit card utilization. If you just have that one secured card with a $500 limit and your income is such that you charge up $500 and pay it off every month, that's not a problem. But if they pull your score and you have a $500 balance on a $500 limit and that's the only account you have, your score is going to take a hit. There's where it's going to be good to have more than one account. At that point, nobody's going to give you a huge limit. It's probably good to have two or three and spread the debt around a little bit or use one one month and use (another) one the next. You can have just as good a score if you have three accounts and your utilization overall is 25 percent as having that one account with your overall utilization at 25 percent, everything else being equal. It's more important to have one account paid on time with low balances than to work too hard at getting multiple ones. In getting those additional (credit cards), you want to do your homework and make sure you're going to qualify -- if possible, even ask them what kind of score they require. They're not always going to tell you and they're not always going to know, but if you can get that information, you might save the trouble if you're not there. There are Web sites out there where people talk about what credit card lenders require and what bureaus they pull and that type of thing. Well, they should definitely give it a lot of thought. There's no particular amount of time and the score does not penalize you for being turned down. It doesn't know if you've been turned down. But you're going to have an inquiry from that one that was turned down, so that's one more than you probably want to have. In terms of how long you should wait, as long as you have one account -- like for this person that's getting back into the credit world -- if you can live with the limit that you have on that one account, I would say, ideally wait a year before opening another one, six months minimum. I would definitely wait six months, keeping in mind that inquiries only are looked at by the score for one year. I don't want to make too big a deal about inquiries, but when you have a very thin file, there's not a lot on there and those can kind of take on larger proportions. Getting back to the guy or the gal that's re-establishing after all these years, in the short term, opening a few accounts is probably going to do him (or her) more good than harm. With so many homeowners having difficulties with their mortgage payments, we've had questions about the credit score and foreclosure. How many points will your credit score go down if you have a foreclosure? How much if you sell your house in a short sale? This gets into one of those "it varies" answers. No. 1, it's going to depend on where your score was before the foreclosure or the short sale because if you already had a lot of late payments on it, it's not going to fall as far, because it doesn't have as far to fall. If you had pristine credit and then you have that on your file all of a sudden, your score will easily drop more than 100 points, probably quite a bit more. But then that all depends, too, on your credit card balances, your length of history and all that stuff. The idea here is how far does it have to fall? In terms of foreclosure vs. short sale, they are treated the same by the score. There really is no difference. So, what I'm saying about one will apply to the other. If you're interested in how long it takes to recover from that, then the thing to be aware of is the date or how recently that short sale or foreclosure took place and to what extent are there any other negatives on your credit file. If you were, say, up to date on all your credit cards and your auto loan when they reported the foreclosure or short sale, it's going to take less time to recover, which would be somewhere between two and four years if you kept everything up to date and kept your balances low and did that kind of thing. What matters most in those cases is how long since that event took place, more so than how many dollars were involved -- whether you foreclosed on a half-a-million-dollar home or $200,000 mortgage does not really come into it so much, but it's mostly how long ago it was. auto loan bad credit, auto loans, auto loans for bad credit, auto loans for people with bad credit, auto loans with bad credit, bad credit, bad credit alliance, bad credit apply, bad credit approval, bad credit approved, bad credit apr, bad credit auto financing, bad credit auto loans, bad credit bank, bad credit banks, bad credit business loans, bad credit car financing, bad credit car loan, bad credit car loans, bad credit car loans no money down, bad credit card, bad credit cards, bad credit cash loans, bad credit cell phone, bad credit checks, bad credit consolidation, bad credit consolidation loans, bad credit credit card, bad credit credit repair, bad credit dealers, bad credit debt, bad credit debt 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