How Many Points Will A Collection Affect Your Credit Score?

how many points will a collection affect your credit score

Not only can a good credit score help you get mortgages, loans, or higher card limits, but it can also help if you’re seeking employment. A survey by CareerBuilder found that of employers who run background checks, 29% check credit reports of potential employees.

When you have late payments that are past due, the debt can be sent to a collections agency. The agency will then try to recover the money you owe, which is all recorded on your report. The effect it has on a credit score is usually devastating.

But how many points will a collection affect your credit score?

Read on to find out how collections work, what you can do to bring your score back up, and ways to avoid collection accounts from damaging your credit score.

How Do Collections Work and How Can You Remove Them From Your Report?

Charge-Offs & Collections

After 180 days of no payments, a creditor thinks you will not pay anything at all on your credit card bill and they charge-off your account. A charge-off is a highly detrimental entry that stays on your report for seven years from the date it first became delinquent.

After a charge-off, after an account has been charged off, creditors often utilize third-party debt collectors to attempt to collect payment. The original creditor may continue to own the account, but assign it to the third party for collection. In that case, only the original charge off with the balance will be reported.

However, if the creditor sells the debt, a new collection account will report to your credit file, so now you have two major negative items all on the same debt: a charge-off (with zero balance) and a collection (with a balance). It takes a toll on your credit score.

It’s a good idea to consider settling with the original creditor before they sell the debt, and the collection account shows up. Payment should also stop any further account updates and allow the charge-off to age.

The more severe the delinquency, the more money that is past due, and the more recent the collection all produce a devastating hit to your credit score.

How Many Points Will a Collection Affect Your Credit Score?

If your credit scores are in the 700s, the first collection can cost you well over 100 points. If you have lower scores and other types of negatives, the new collection will have less impact, but it will still be significant.

Since the FICO algorithms are extremely complex, and the details of how they work are kept highly secret, we cannot describe exactly how many points your score will drop due to a charge-off or a collection. However, any credit score drop can be devastating. To gain a better idea of the impact on your score, you can run what-if simulations described below to see what may happen in your particular case.

The Amount of the Collection Debt is Irrelevant

Regardless of how high the dollar amount is, your collection debt impacts your credit score the same way. In other words, if the debt is over $1, it does not matter how much you owe.

For example, if you have a debt of $200 and it lowers your score by 50 points, a $100,000 debt would drop your credit score by the same amount—50 points.

The Number of Collection Debts Matters Somewhat

The biggest hit to your credit score will occur when the first collection account is reported. Each additional collection will have a smaller impact. As long as the collection agencies are not continuing to update the account every month, the negative impact on your score will lessen over time.

Paying off a Collection Debt Can Lower Your Credit Score

The date the collection debt shows up on a report is very significant.

For example, a debt may have been defaulted on with a bank in 2011, but when it got sold to the collection agency in 2016, they will report the open date as 2016. That date does affect scores—the more recent, the more negative the impact.

A collection account is a derogatory “event” on your credit, regardless of whether it is paid or unpaid.

In most cases, the payment of a collection will have zero impact on scores (payment of an original creditor account is very different—we are just talking about third party collections here). Furthermore, if the reporting of a collection has not been updated at all for two or more years, paying that collection could drop your score because the date of the last payment will become current.

But yes, there is a way to pay a collection and have it improve your scores. Keep reading to learn how.

Are Medical Collections Left Out of Your Credit Report?

No, not when you’re dealing with FICO scores. Many argue that medical debt is separate from other kinds of debt. This is because it is often beyond your control.

The current FICO algorithm does not differentiate between medical collections and any other type of collections—they all impact scores equally. It can drop your score more than 100 points and can stay on your report for up to seven years.

Some of the confusion which arises regarding medical debt is due to the fact that when you are getting a mortgage, medical debt may be subtracted from your Debt-to-Income Ratio. But that is a separate qualification criterion that has nothing to do with FICO scores.

Removing a Collection Account Will Usually Result in a Score Boost

Many people facing collections wonder, “How many points will my credit score increase when collection accounts are removed from the report?”

While it is difficult to predict the exact numerical increase, there are advantages to deletion.

Here’s how to go about removing a collection.

When contacting a collector to settle, you should always try to get them to agree to a “payment for deletion.” There is a good chance it will boost your score. The only way to know in advance of calling to settle is to run a “what-if” simulation. Basically, you will want to run a scenario that shows how many points you would gain if you paid the collection (typically 0) versus how much your score would increase if the account was completely removed.

Truth be told, paying off collections won’t necessarily raise your credit score at all. But if you can secure payment for deletion, the chances of boosting your score are much higher.

Here’s How to Run a What-If Simulation

There are two ways to do it. Here are your options:

  1. If you are working with a mortgage company and they have pulled your credit in the last 30 days, they can run such a simulation.
  2. You can sign up for and run the analysis—this three-bureau monitoring site has excellent simulation capabilities. The scores are consumer scores, not FICO. But the question here is which collection(s) should you try to pay or delete, based on the potential score improvement you may see.

Of course, there may be other reasons for you to pay a collection you believe you owe, but if you are looking for score improvement, follow the instructions above.

Note: Not all collection agencies will agree to pay for deletion. These agencies have contracts with the bureaus to pull and report credit. The bureaus don’t want collections removed from credit reports (for several reasons that tie to protecting their business model).

If the bureaus see too many deletions, they can stop doing business with the collector (which means the collector is out of business). If you go through the simulations above, you will know whether deletion is required, and it will help guide your decision whether to pay.

Remember, collections will fall off your report seven years from the date of your first missed payment with the original creditor. It doesn’t matter how many times the debt gets resold unless the collector re-ages it (which can happen).

Moreover, every type of debt has a statute of limitations for collection (which varies by state and type of debt) where, when reached, you are no longer legally obligated to pay. Knowing whether your debt is time-barred will help you in settlement negotiations.

Need Help Repairing Your Credit?

We hope that this article answers your question, “How many points will a collection affect your credit score?”

Collections can happen to anyone, whether you are already responsible for managing your credit or if you have arrived at difficult times financially. The trick is to rebuild your credit and Go Clean Credit can help.

Need to know more about how many points will a collection affect your credit score? Let us know! To enlist the help of a trustworthy, effective credit repair company, contact Go Clean Credit today.

No matter what your situation, Go Clean Credit has a solution. We have many credit repair programs that are available to help you overcome your credit situation and place you back on the path to financial success. Real credit restoration is not a one size fits all model, and we tailor your needs to the right program, but most people can start for just $99 per month.

We have fixed price programs that get you back on track in as little as five months, debt resolution solutions, programs geared toward people who have had recent short sales or foreclosures, and many others. Help is just a free phone call away, or you can fill out an appointment request. Contact Go Clean Credit to schedule a free consultation today.

What Credit Score Do You Start With?

what credit score do you start with

When embarking on your personal finance journey, the idea of a credit score may seem confusing. Your credit score has a large impact on your financial and lending future.

What credit score do you start with when establishing your credit?

Keep reading to learn all about credit score, your starting score, and how to build your score from scratch!  

What is a Credit Score?  

First things first, what is a credit score? And why is it so important? 

Simply put, a credit score is a number that reflects the financial trustworthiness of an individual. The more likely a person is to pay back borrowed money, the higher their score will be. Credit scores can range from 300 to 850, which is considered perfect credit.  

Here’s what each credit score range means: 

  • Excellent: 800 – 850
  • Very Good: 740 – 799
  • Good: 670 – 739
  • Fair: 580 – 669
  • Poor: 300 – 579 

How Are Credit Scores Calculated?

Credit reports provide data about a person’s financial history. Five key components are used to determine a person’s credit score:

  1. Payment History: Lenders want to ensure a borrower is reliable and on time with payments. This area of the credit report displays whether an individual consistently pays credit bills on time or if they make late payments
  2. Amounts Owed: This is also known as credit utilization. It looks at how much credit is available to a person and how much of it that person is using. 
  3. Credit History Length: This examines how long each credit account has been open and how long it has been since each one was utilized. It can provide a longterm picture of a person’s financial habits. 
  4. New Credit: This metric looks at the number of accounts a person has recently opened as well as those they have applied for. Opening many accounts in a short time frame can signal that you are a risk to lenders. Therefore, those with a short credit history should avoid doing this. 
  5. Credit Mix: Credit mix refers to the different types of credit you have taken out. Student loans, mortgage payments, and auto loans are some examples that get factored into the mix. If you do not have a long credit history, the credit mix will be given more weight in determining your credit score.   

What Credit Score Do You Start With?

So, what credit score do you start with? It’s actually none at all. Credit scores are based on reports from credit bureau data. Thus, they can’t generate a score for someone who has never had credit. Until you’ve had some form of credit in your name for at least six months, you will not have a score. 

Having no credit score may sound harmless. However, this can impact you negatively as lenders have no way of measuring your risk. Without a credit score, you will likely pay higher interest rates, or you may even get turned down for loans altogether. 

But there’s good news! Having no credit is better than having bad credit. You have a blank slate and a foundation upon which you can build good credit.    

To obtain a credit score, you must open up a line of credit in your name. Once you pass that initial six month period, credit bureaus have enough information to generate your starting credit score. Your first score will depend on the five factors mentioned above. This means the way you handle your credit is pivotal in setting yourself up for a good credit score. 

It is very rare to begin with a low credit score. Nevertheless, certain practices can send the wrong message to lenders and weaken your initial score. On the other hand, prudent financial moves can help increase your score.   

Read on to discover best practices for building a great credit score if you’ve never had credit.  

How To Build Your Credit Score From Scratch

There are some simple ways you can build good credit fast, so you are more trustworthy to lenders. For example, make all your credit card payments on time and use less than 30% of your credit limit. Here are some other tips to help build your new credit

  1. Apply for a secured credit card. A secured credit card requires a cash deposit when the account is opened. The amount you put down will typically equal your credit limit. If you pay your credit card bill on time each month, you’ll get that deposit back. If you do not, the lender can withdraw the money from your account. Simply pay your bill on time each month to build credit.   
  2. Get a Cosigner. Another way to maintain a good credit score is to ask a financially responsible adult to cosign for you when you take out a loan. A cosigner will take the brunt of the financial burden if you are unable to make payments. This option allows you to pay lower interest rates and apply for cards that may have turned you down had you applied without a cosigner.
  3. Landlord Reporting. Do you pay rent on time each month? This can show lenders how responsible you are. You can request that your landlord report your payment history to credit agencies. This is a great option to begin building credit without applying for a loan or card. 

Want to Learn More About Building Yout Credit Score?

Establishing and building credit is not as intimidating as it first appears. Slowly but surely, you can build a great credit score. Need more advice?

Check out this beginner’s guide to credit to navigate the world of credit with confidence!

Go Clean Credit is committed to helping individuals restore their credit and pursue their financial goals. Since 2003, Go Clean Credit has helped thousands repair credit issues and build up low credit scores. 

Go Clean Credit realizes how stressful and challenging credit problems can be. That is why they offer support from credit specialists who are knowledgeable and well versed in the industry. 

If you need aid, don’t hesitate to contact the dedicated professionals at Go Clean Credit!  

Why Did My Credit Score Drop? 7 Common Reasons

why did my credit score drop

Why did my credit score drop?

If your score recently just dropped, you’re probably asking yourself why. The thing is, many factors make up a credit score, and there are even more reasons it dropped.

Keep reading to find out what caused your score to drop and learn how to repair it!

Why Did My Credit Score Drop? Here’s the Answer!

1. Missed or Late Payment

Missing a payment deadline is a common mistake. However, few people realize how drastically it can impact their score.

Payment history is the most heavily weighted item on your report, making up 35% of your overall score. Therefore, if you miss just one payment on a credit card or loan, it could drop your score by as much as 75 points!

More specifically, if you are more than thirty days past due on a payment, it will be reported to at least one of the three credit bureaus and cause a drop in your score. If it’s sixty to ninety days late, your score will likely drop even more.

If your payment is more than 180 days, the lender can send your debt to a collections agency. Collections show up on your report and can drop your score by as much as 100 points. Moreover, collections typically stay on your report for seven years. 

In the end, missing payments drastically harms your score, and maybe the reason why your score dropped.

2. High Credit Utilization

What is credit utilization?

Credit utilization is the ratio between the amount of money on your credit card balance divided by your total credit card limit. In other words, the more credit you spend, the higher your credit utilization.

When analyzing how to use a credit card, it’s a good rule of thumb to keep your credit utilization under 30%.

For example, if you have a credit limit of $10,000, then don’t use your credit card to spend more than $3,000. Always keep your credit utilization under 30%

What happens when you spend more than 30% of your credit limit? 

The thing is, your credit utilization, or amounts owed, makes up about 30% of your overall credit score. If you have recently charged a large amount of credit to your card, this may be the reason your score has dropped.

Moreover, if you tend to spend more than this, lenders may see you as someone who is overextended financially and isn’t in a great place to take on new debt. This can make it difficult to qualify for loans.

If you believe high credit utilization may be the reason why your score has dropped, consider spending as little as 10% of your credit utilization in the coming months. This way, you can keep your credit card balances manageable and improve your score.

3. Lowered Credit Limit

Perhaps you haven’t utilized more than 30% of your credit. However, credit utilization may still be the culprit! Let me explain.

Let’s take the example from above. If your credit limit changes from $10,000 to $6,000 and you spent $3,000, your credit utilization ratio is no longer 30%, but 50%! In this case, high credit utilization may not be your fault. 

If you think this may be why your score has dropped, it’s a good idea to contact your credit company to check if your limit has been lowered. This way, you can be sure to stay on top of your credit utilization ratio.

4. Errors on Your Report

According to the Federal Trade Commission, one in every five consumers have at least one error on one of their reports. Errors could be the result of someone simply recording inaccurate information, or it could be something more serious like identity fraud.

Therefore, it’s a good idea to take a look at your credit reports and check for mistakes. If you believe there might be an error on your report, you’ll want to collect as much documentation as you can to dispute the error with all three bureaus. The credit bureau must prove that the item on your report is true and if they can’t, they must remove it.

If you aren’t sure how to find the error on your report or how to dispute the errors, it may be a good idea to contact a credit repair agency. These agencies work hard to fix any errors on your report and even remove other negative items, such as the ones listed in this article.

5. Loan, Mortgage, or Credit Card Application

Have you recently applied for a loan or filled out a credit card application?

Each time you apply for a loan, mortgage, or credit card application, the lender will request a copy of your credit score. This can damage your score.  

Inquiries about your score can impact your score and stay on your report for up to two years.

If you’ve applied for more than one credit card application, all of those hard inquiries can hurt your score.

It’s a good idea to keep old credit cards for as long as possible rather than apply for new ones. Why? The length of your average credit history makes up 15% of your score. While old credit accounts can help your score, new applications may harm it. 

6. Missed Payment on a Co-Signed Loan

Have you accurately made all your payments on time, been super responsible with your credit, and have no errors in your report? 

The reason your credit dropped may not be your fault.

If you have ever co-signed a loan, your credit score can be affected by the other person. For instance, if the person you co-signed for missed a payment, it will affect your score just as if you missed the payment, even though it was the person you co-signed for who missed it.

If possible, contact the person you co-signed for to see if that could be the reason why your score has dropped. 

If you are thinking about co-signing for someone, make sure they can make all the payments on time. Your score won’t be impacted just by co-signing. However, you are in charge of the full amount. So if they miss even one payment, your score could suffer.

7. Paid off a Loan

Have you recently paid off a loan or a credit account?

Remember that your credit history makes up 15% of your score. So if you pay off a loan, that means you have one less credit account active. 

While paying off a loan is a huge achievement, know that your score could suffer a small drop because of it!

Do You Need Credit Repair Help?

If you are asking yourself, “Why did my credit score drop?” know that there are many ways you can improve your score fast.

If you need help disputing errors on your report, removing negative items, or you need help with other credit-related issues, a qualified credit repair agency can help!

Go Clean Credit is a passionate credit repair agency that is dedicated to helping you achieve financial success. They know that restoring your credit score can feel overwhelming, and Go Clean Credit is there to support you every step of the way. They will help you understand how to read your credit report, and then they will dispute any negative items and errors that are on it.

In the end, Go Clean Credit wants you to feel financially secure to take on the future. Do you want to purchase a house, a car, or become financially more secure? This top credit repair agency wants to help you succeed!

To learn more about how Go Clean Credit can improve your credit score, give them a call at 1-866-991-4885 for a free consultation or fill out a contact form today!

Do Credit Builder Loans Work?

credit builder loans

Credit builder loans, otherwise known as “fresh start loans” or “starting over loans” are not widely advertised. Therefore, few people know what they are and whether or not they work. 

So do credit builder loans actually improve your credit? Read on to find out!

Everything You Need to Know About Credit Builder Loans

What is a Credit Builder Loan?

When you take out a loan, lenders will take a look at your credit score to determine whether or not you qualify for the loan. In addition, if you do qualify for a loan, your credit score will also affect your interest rate. That goes to say, the lower your credit score, the harder it is to take out a loan and qualify for low-interest rates.

Credit builder loans are significantly different than a traditional loan. Credit builder loans are typically offered by smaller financial institutions, such as credit unions, Community Development Financial Institutions, online lenders, or lending circles. Your credit score does not affect your eligibility for a credit builder loan. Instead, lenders may have strict policies to ensure that you repay the loan. For example, you may have to meet an income threshold.

Do Credit Builder Loans Improve Your Score?

The payments you make on your credit cards and loans have the most significant impact on your credit score—making up 35% of your credit score!

Moreover, the payments you make on your credit builder loans are reported to the three major credit bureaus. Therefore, when you make payments on time, you can boost your score significantly over time. 

That’s often why these types of loans are called “credit builder loans.” Anyone can take one out as long as they have the necessary income to make payments, and it allows you to build your credit score when you aren’t able to take out other loans.

The Danger of Credit Builder Loans

As mentioned, when you make payments on time, you can raise your score. However, this isn’t guaranteed.

When you miss just one payment by thirty days or more, your score could drop as much as 100 points! The missing payment may go to collections and stay on your report for up to seven years.

While a credit builder loan is a great option if you are determined to make every payment on time, it won’t be of any help if you end up missing even one payment.

Additionally, you will want to be careful who you borrow money from. There can be many risks involved with no credit check loans.

Keep in mind too that you don’t have to take out a loan to increase your score. If you use your credit card the right way, you can improve your score over time. Additionally, you can try to remove negative items on your report.

Do You Need to Repair Your Credit?

If you need to repair your credit, partnering with a credit repair agency can help! 

Go Clean Credit is a leading credit repair agency that is passionate about helping individuals achieve their financial dreams. They are a team of consumer advocates who are focused on your goals as an individual. That being said, they will work closely with you to repair your credit quickly and efficiently.

Go Clean Credit can help with a number of issues, including mortgage derogatories, mortgage correction, collections, late payments, bankruptcies, tax liens, student loans, identity theft, and more! 

To learn more about how Go Clean Credit can help you, contact them today or give them a call at 1-866-991-4885 for a free consultation!

Do Payday Loans Help Your Credit?

do payday loans help your credit

Have you ever taken out a payday loan? 

Whether you have taken out many payday loans or are just researching what they are, you’re probably wondering how they affect your credit score.

Do payday loans help your credit?

This article will explain everything you need to know about payday loans and how they relate to your credit score! Keep reading for answers!

Do Payday Loans Help Your Credit? Here’s the Answer!

What is a Payday Loan?

what is a payday loan

A payday loan is a small loan with high-interest rates. Payday loans must be repaid when the borrower gets his or her next paycheck.

Do Payday Loans Affect Your Score?

Payday loans generally not show up on a person’s credit report. 

However, some credit reporting agencies may collect your payday loan history. If you do not pay back your payday loan on time, your file may be sent to collections, who will then report it to the major national credit bureaus.

When this happens, your score can drop dramatically. In fact, if you miss even one late payment, it can drop your score by as much as 75 points! Therefore, if you can’t pay your payday loan, contact your lender immediately.

Do Payday Loans Help Your Credit?

As mentioned, your payday loan history does not show up on your credit report. Therefore, taking out a loan and paying it back on time doesn’t help your credit score.

The only time your credit is affected by a payday loan is when you miss a payment.

Are Payday Loans Worth It?

Payday loans can seem like a lifesaver because they allow people to get cash quickly.

However, the interest fees are very high, often making it difficult to pay it back with such short payment terms. This can easily lead to a cycle of debt.

As discussed, debt can be turned over to collections, which can hurt your score drastically.

Rather, it may be better to explore some payday loan alternatives. 

Payday Loan Alternatives

Here are some alternatives to a payday loan.

  • Paycheck advance
  • Debt settlement
  • Emergency personal loan
  • Credit Union Loan
  • Credit card
  • Family or friend loan
  • Your savings
  • Credit counseling

Do You Need Credit Repair?

In the end, do payday loans help your credit? No. In fact, the only time they impact your score at all is when you can’t pay the loan back. Then, it can drastically hurt your score!

If your credit score has been affected by missing payments on loans, you can benefit from a quality credit repair company! 

Go Clean Credit knows that good people can have bad credit, and they know exactly how to help! They are passionate about helping you reach financial success!

In fact, Go Clean Credit can help with issues like collections, charge-offs, late payments, student loans, tax liens, bankruptcies, and other derogatories that might be on your report. They will also remove any errors on your report so you can get a better credit score promptly. 

To learn more about Go Clean Credit’s services, contact them to get a free consultation today!

Credit Report vs Credit Score—What’s the Difference?

credit report vs credit score

Perhaps you’ve heard of your personalized credit score or credit report. But do you know what they are?

Your credit report determines your credit score, which can have a huge impact on your life. 

This article will tell you everything you need to know regarding your credit report vs. credit score. Find out the difference between a credit report and score, and why each matter!

The Difference Between Credit Report vs. Credit Score

Credit Report

What Is It?

A credit report is a detailed document that breakdowns your credit history. These reports are prepared by three major credit bureaus: TransUnion, Equifax, and Experian

These credit bureaus record your credit history and create a report based on it. Therefore, you have three main credit reports out there.

What’s Included in a Credit Report?

While every credit report is different, some items will be found on all reports. Here is what will be included in every credit report:

  • Your personal information
    • Name
    • Address
    • Social security number
    • Date of birth
    • Employment information
  • Your credit accounts
    • The types of credit accounts you have opened (credit card, loan, etc.)
    • The date the account was opened
    • Your credit limit/loan amount
    • Account balance
    • Payment history
  • Collections and overdue debt
  • Bankruptcies
  • Credit inquiries (when you take out a loan, creditors will request a copy of your credit report. This tracks the number of times a creditor inquires about your report.)

Credit Score

What Is It?

Your credit score is at the heart of how credit works. Basically, all the things listed above come together to create your individualized credit score. 

A credit score is a number that indicates how reliable you are at repaying loans and credit. Your credit report ultimately determines your score.

How is Your Credit Score Calculated?

Your score is calculated based on the following factors: 

In other words, because it makes up 35% of your total score, one late payment can damage your score by up to 75 points! Your credit utilization, or amounts owed, make up 30% of your score. This means that if you go over your credit limit, you can damage your score by 40-50 points. Moreover, a long, well-maintained credit history makes up 15% of your score, while mixed credit and new credit make up another 10% each. 

What is Your Score?

Here is a breakdown of credit scores so you can see if your score is good or bad:

  • Excellent Credit: 750 or higher
  • Good Credit: 660-749
  • Fair Credit: 620-659
  • Bad Credit: 619 and below

Why Your Credit Score Matters

Believe it or not, but your credit score can have a huge impact on your life.

For one, a bad credit score can prevent you from taking out loans. That means that if you want to buy a house, a car, or make another large payment, you may not get approved for loans! 

At the same time, your credit score will determine how much interest you pay for loans. In fact, over the course of a loan, a fair or bad credit score can cost you tens of thousands of dollars more than if you had good credit!

You Can Fix Your Credit Score!

So what’s the difference between a credit report vs. credit score? A report documents your credit history and your score determines how reliable you are at paying back borrowed money.

Do you have a bad credit score?

Don’t worry! Credit repair companies help to remove errors and negative items on your report to improve your credit score.

Go Clean Credit is a leading credit repair company in Arizona. They are passionate about helping you improve your score, overcoming credit-related challenges, and reach your financial goals. In the end, their mission is your success. While fixing your credit may seem like daunting, Go Clean Credit is ready to simplify the process and teach you about your report and your score.

For more information about how Go Clean Credit can help you, contact them today for a free consultation! They are ready to help you with all your credit-related issues!

Does Unemployment Affect Credit Score?

does unemployment affect credit score

Does unemployment affect credit score?

Perhaps you’re newly unemployed and are worried your score will be affected. Maybe you’re wondering whether or not filing for unemployment will affect your score. 

This article has all the answers you need, as well as some helpful advice to help you avoid bad credit if you are unemployed!

Does Unemployment Affect Credit Score? Here’s the Answer!

Your credit report does not record whether you are employed or unemployed, nor does it record if you file for unemployment. Rather, it only shows credit and debt-related information. 

So the short answer is no. Unemployment does not have a direct relation to your credit score. However, it’s important to note that some lenders will not provide loans to unemployed individuals, even if you do have a good credit score.

While unemployment itself doesn’t affect your score, the effects of being unemployed could negatively impact your credit score. Here’s how!

How Unemployment Can Affect Your Credit Score

If you are unemployed, it may be difficult for you to pay off your debt, and funds may be limited. Here are some ways not having a steady income can affect your score:

1. Missing a Payment

Missing or even being late on a payment can have a huge impact on your credit score, dropping it by as much as 100 points! In fact, your payment history makes up 35% of your credit score. That means it’s one of the most heavily weighted components to your total score. Missing even one can be catastrophic. 

If you are late by ninety days or more, it’s considered a serious delinquency by the credit bureaus, and your score will drop even more.

Therefore, if you are unemployed, make sure you don’t miss a payment!

2. Using Your Credit Card Too Much

The available credit you have makes up 30% of your credit score. Therefore, as a rule of thumb, you should never use up more than 30% of your credit card limit. Otherwise, you could damage your score. Additionally, if you can’t pay the minimum payment at the end of the month, it could damage your score. 

In the end, never use more than 30% of your credit card limit and use cash when you can. This will help you avoid accidentally going over and harming your score. Additionally, it will help you use your credit card to build good credit.

3. Bounced Checks Could Wind Up in Collections

If a check bounces, it won’t directly affect your score. However, if you can’t cover checks you have written, a check could wind up in collections, which does appear on your credit report. This can also cause problems with your bank account credit. 

Before writing a check, always make sure you have enough funds in your account. In other words, if you need to make a payment on something, ensure you have the funds to pay it.

Find Credit Help

In the end, does unemployment affect credit score? No, but if you don’t make payments, use over 30% of your credit card limit, or acquire a collections account, your score can drop fast.

If you find yourself with bad credit, a qualified credit repair company can help. Go Clean Credit is a leading credit repair specialist in Arizona. In fact, their credit restoration services can help resolve collections, late payments, bankruptcies, student loans, identity theft, and so much more! 

Go Clean Credit’s mission is your success. They know that good people sometimes have bad credit, and their goal is to help individuals like you reach your financial goals. Even though credit repair can seem overwhelming, Go Clean Credit is here to partner with you to make the process easy. 

Contact them today for a free consultation and learn how they can help you get a great credit score!

3 Risks of No-Credit Check Loans

no credit check loans

When you apply for a loan, lenders will check your credit score and credit report to determine how trustworthy you are at paying back your loan. The lower your credit score, the more interest you will pay for the loan. If your score is too low, you may not qualify for the loan at all. In fact, there are different loan approvals at each credit score.

However, a no-credit check loan is a type of loan where a lender does not check your credit score before giving you the loan. 

If this seems too good to be true, it’s probably because it is. Read on to learn about all the risks involved with taking a no-credit check loan!

Be Aware of These No-Credit Check Loans Risks

1. No-Credit Check Loans are Notorious for Predators

Lenders who don’t check your credit score before giving out a loan are probably using predatory practices. Nine times out of ten, you’ll be scammed. 

Think about it: if a lender doesn’t check your score, it means they don’t care if you pay back the loan. So how does the lender make money if you don’t pay back the loan?

Exorbent interest fees, hidden charges, and late fees. 

2. A Cycle of Debt

No-credit check loans are common among payday lenders. These lenders give loans to people they know are unlikely to make payments on time. Payday lenders will then make extra cash because they charge you additional interest and late fees. When this happens, you owe more money, making it harder to make the next payment on time.

In addition to the high fees and interest rates, they force you to make payments on time. The lender may ask you to write post-dated checks that they will cash once the payment is due, or they may force you to give them access to your bank account so they can take out auto-withdrawals when payments are due. If you can’t make payments, they may even make you take out another loan!

It thus turns into a cycle of debt in which the lender continues to make money off of you, and you continue to fall short of paying off the loan. It can be a scary cycle that’s difficult to crawl out of. 

3. There are Consequences of Not Making Payments

As mentioned, no-credit check lenders will often force you to make payments on time. If you can’t make those payments, there could be more consequences than just more debt.

For example, say you take out a car title loan, which is sometimes offered as a no-credit check loan. The lender may require you to put your car up for collateral. Therefore, if you can’t make the payments, your vehicle could be repossessed

Get Credit Help To Get a Trustworthy Loan

In the end, taking out no-credit check loans can be extremely risky. However, that doesn’t fix the fact that you need a loan and don’t have the credit score to get a good one. 

So what do you do?

The best way to qualify for a loan is to repair your credit. The best way to repair your credit is with a qualified credit repair company. 

The thing is, you could have a bad credit score because there are errors on your report, late payments, derogatories, unpaid debt, or something else. Credit repair companies work to remove those negative items on your report so you can improve your score fast!

Go Clean Credit is one of the top credit score companies in Arizona. They help with all of the issues listed above and so much more! In the end, Go Clean Credit wants your financial dreams to come true, and they want to work with you to help you achieve your goals. Their mission is your success.

So contact Go Clean Credit today for a free consultation and learn how they can help you qualify for trustworthy, risk-free loans!

How to Remove Medical Collections from a Credit Report

how to remove medical collections from credit report

A single medical collection can hurt your credit score by as much as 100 points! But what is a collection?

A medical collection is a medical debt that is sent to a collection agency. The collection agency will then try to recover the money you owe. This is recorded on your credit report and drastically effects your credit score.

In this article, you will learn exactly how to remove medical collections from a credit report. Read to learn more about how you can increase your credit score fast!

Find Out How to Remove Medical Collections from a Credit Report!

1. Dispute the Collection

One of the most common ways to remove medical collections from a credit report is to dispute the collection. How do you do that?

If you have a debt recorded on your report you don’t think is accurate, it’s a good idea to ask for proof that the statement is accurate. If the debt collector cannot validate the collection, it will make it easier to remove the collection.

Next, you’ll be able to file a dispute with the credit bureaus. To do this, you can contact the credit bureaus directly or get the help of a credit repair company.

Once a credit bureau receives your dispute, there are several ways a collection agency will handle it. Eventually, they will contact you, and you will either resolve the debt through negotiation or repayment.

2. Check How Old the Debt Is

After a certain period, typically seven years, a collection will disappear from your credit report. Check the lifespan of your collection. If it is almost due to disappear off your report, you may not have to pay it. Additionally, the debt collectors won’t be able to sue you to collect. In some states, the debt is revived, and it won’t disappear from your report. 

3. Pay for Delete

One way to completely remove a medical collection from a credit report is to negotiate with the collectors to pay the amount. In exchange, the collection will be removed. Make sure the debt collector sends you a pay-for-delete letter in the mail. Otherwise, you won’t have any assurance that the debt collectors will remove the collection from your account once it is paid off. 

Moreover, paying off a medical collection can boost your credit score. However, the number of points your score increases by will depend on your unique situation.

Get the Help You Need!

Even though you now know how to remove medical collections from a credit report, it doesn’t mean you will be 100% successful. However, there is a more foolproof way to get rid of the collection for good! How?

Enlist the help of a credit repair company! Go Clean Credit is one of the leading credit repair companies. They have over a decade of experience removing collections from reports. 

Go Clean Credit knows that good people have bad credit, sometimes through no fault of their own. They are dedicated to helping you find financial success and achieve your goals! For more information about how Go Clean Credit can help you remove medical collections from your report (and so much more!), contact them today!

Almost There? Here’s How to Increase a Credit Score to 800

how to increase credit score to 800

Do you have great credit, but just can’t seem to reach 800? 

If so, congratulations! Most people don’t have a credit score that good. 

However, to learn how to increase a credit score to 800, you have to understand what makes up your credit score. According to MyFico, your score is calculated from the factors five different factors:

how to increase credit score to 800

In other words, these five factors determine your overall score. Based on these numbers, this article will show you exactly how to increase a credit score to 800!

Learn How to Increase Your Credit Score to 800 in a Few Simple Steps!

Never Miss a Payment

Your payment history alone makes up over one-third of your credit score! 

So how does this impact your score?

Missing one payment can drop your score by 50-75 points! If you keep paying your bills on time, you’ll not only maintain awesome credit, but you can increase your score fast!

Use a Fraction of Your Credit Limit

Your credit utilization, or amounts owed, make up 30% of your overall credit score.

Going over your credit card limit can drop your score by 40-50 points. However, as a rule of thumb, you should try to only use about 10% of your credit card limit.

The most effective way to do this is to have high credit card limits, but only spend a small amount. Moreover, if you have a tough time staying this far below your credit limit, you can try to raise the limit. 

Acquiring high limits and restricting your credit usage will improve your use-to-limit ratio. As a result, your credit score will improve! 

Maintain a Long Credit History

It’s best to keep old credit cards rather than opening up new ones. Why? 

Well, the length of your credit history contributes to 15% of your score. What does that mean exactly?

Let’s say you got a credit card six months ago and paid off all your bills on time. That’s a good start, but it doesn’t look as good as if you had a credit card for ten years and paid all your bills on time. 

Typically, your average credit history age plays a role. For example, say you opened an account ten years ago and another six years ago. Your average credit history is eight years.

On the other hand, say you opened a credit account every two years for the next decade. Your average credit history would only be five years. Therefore, a good rule of thumb is to have a few old accounts rather than have multiple new accounts. Moreover, don’t close old accounts—they dramatically increase your credit score!

Pursue a Mix of Credit Types

There are two types of credit you can pay back: revolving accounts like credit cards and installment loan accounts like mortgages or student loans. 

Credit cards are revolving accounts, which means the amount you owe will change from month to month. As mentioned before, it’s best to keep this balance low. 

On the other hand, installment loans have a fixed number with a set number of scheduled payments. When you pay off an installment loan, you no longer owe money. Paying off these loans can actually help to improve your score, though usually only a minimal amount. The important thing to remember is to make payments regularly.

Overall, having at least one of each type of credit will actually benefit your score. This is called your credit mix and makes up 10% of your credit score. 

Remove Derogatory Items

Derogatory items on your account include bankruptcies, judgments, collection accounts, charge-offs, late payments, and accounts that are settled for less than the full balance. 

These items on your credit report can significantly lower your credit score. In fact, if you are close to 800 but just can’t seem to reach it no matter what you do, it is worthwhile to check your credit report for derogatory items.

There are a few ways to remove these negative statements. For example, to remove a late payment, you may have to negotiate with the creditor.

To remove a bankruptcy, however, you will have to wait until enough time has passed—usually between seven and ten years. Another way to remove derogatory statements is to get the help of a credit repair specialist, who can expertly negotiate the removal of any negative items on your report.

Get Professional Credit Help!

Do you need derogatory items removed from your credit report or simply want some expert advice on how to increase your credit score to 800? A credit repair company has the answers you need!

Go Clean Credit is one of the best credit repair specialists. They are passionate about making your financial dreams come true through their personalized credit repair services. Moreover, they can help with a number of issues that may be on your report. If you need help getting your score to 800, contact Go Clean Credit today for more information!