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HomeBlog BlogBest News Ever For People With Low (Or Zero) Credit Scores!
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Best News Ever For People With Low (Or Zero) Credit Scores!

April 6, 2015 by National Debt Relief

poor credit scoreDo  you know how lenders view credit scores? They view them in ranges as follows:

• Between 700 and 850 – Very good or excellent credit score. One
• Between 680 and 699 – Good credit score.
• Between 620 and 679 – Average or OK score.
• Between 580 and 619 – Low credit score.
• Between 500 and 579 – Poor credit score.
• Between 300 and 499 – Bad credit score.

What this means is if you have a credit score of 700 or above you should be able to get just about any credit you would want whether it’s a new credit card or auto loan. On the other hand, if your credit score is below, say, 500 good luck. You’ll have a problem getting a new credit card and if you are able to get one it will likely have a very high-interest rate, although you could look into getting a secured card which may offer you a better interest rate.

What if your credit score is zero?

A credit score of less than 350 probably means you’ve been a reckless spender but a zero doesn’t mean this. What it means is that potential creditors just don’t know what to do about you. In the past if you wanted to have any sort of a score you would need to have had a debt and paid if off. We know this might sound counterintuitive but the fact is that you need to have debt to have a good score. To have any score at all, you need to play by the rules, which includes having and paying off some sort of debt. If you have a credit score of zero you haven’t proven your ability to borrow money and pay off loans as quickly as possible.

It will soon be a whole new ballgame

There is the best news ever for people with low credit scores or a credit score of zero. A new plan is being rolled out that will make it easier for these people to get a Visa or MasterCard.

FICO, the company that invented credit scoring and whose scores are used by 90% of all lenders, has a pilot program designed to help millions of us get easier access to credit. This is because it will be based on their record of paying utility bills and not their history of making loan repayments. It is estimated that 53 million Americans don’t have a credit score and could be reached by this program. That’s about one fourth of the US adult population. Banks typically deny credit to anyone that doesn’t have a credit score or they charge them dramatically higher interest rates because they are viewed as being risky.

Immigrants and the young

As you might guess the majority of these consumers are very young people that don’t have an established credit history or immigrants that are new to the US. And many of the “unscorables” are members of a minority – especially Hispanic and black consumers

Two years in development

It took two years to develop this new program. It’s based on the idea that people that have a history of paying their utility bills on time would also pay credit card bills on time. The way it will work is that FICO along with LexisNexis and a credit bureau Equifax will use a person’s utility bills and public property records to create a payment history profile. This pooled data will then be used to determine what’s being called an “alternative” credit score that will be applied when a person with a zero credit score or a poor credit history applies for a Visa or MasterCard. While it is known that FICO will make the scores available to the 12 largest credit card issuers it is not known at this time, which banks will be participating.

Quick tips for improving your credit scorehow debt relief affects credit score

If you have a bad credit score this new program might help you get a new credit card. If you have a poor or bad credit score there are some things you could do fairly quickly to improve it.

Dig out that old card

The first is to start using that old card that’s just been sitting in a drawer. The older a credit history you have the better. If you had stopped using that old card your card issuer might choose to close your account or not update it to the credit reporting bureaus. The accounts will still be there but won’t have as much weight in the credit-scoring formula as your active accounts. You could improve your credit score by charging a recurring bill to that old card or by taking the family out for dinner and a movie occasionally. Of course you will need to pay off your balance in full every month.

Dispute negative items

Second, you should dispute old negative items in your credit reports. Let’s suppose you got into an argument with your utility company regarding a bill several years ago and as a result the account went into collection. This gets a bit sneaky but you could dispute a bill like this as “not mine.” If it’s an old and a small account and you dispute it, the collection agency might not take the time required to verify it when it’s investigated by the credit reporting bureau.

If you have significant errors in your credit reports you need to focus on them. The things that are really worth the time and effort to correct include late payments, collections, charge-offs or other negative items you believe aren’t yours. You should dispute it if you see credit limits that were reported as lower than they really are, as well as any accounts that were listed as “paid derogatory,” “settled,” “settled for less than owed” and any other items that isn’t listed as “paid as agreed.” You should also dispute negative items that are more than seven years old (or 10 in the case of bankruptcy) as they should have dropped of your reports automatically.

Improve your credit utilization

The second most important factor in your credit score is your credit utilization or debt-to-credit ratio. It accounts for 30% of your score and is something you can control – unlike your credit history. The way your credit utilization is calculated is by dividing your total credit limits into to the amount you’ve used up. Let’s say that you have total credit limits of $10,000 and total balances of $2000. This would yield a credit utilization score of 20%, which would be considered very good. On the other hand, if you had balances totaling $5000 of that available credit your debt-to-credit ratio would be 50% and would be having a very negative effect on your credit score. There are two ways you could improve your credit utilization. The first would be to pay down some of that debt. Again going back to our example of $10,000 in total credit limits with total balances of $5000 if you were to pay it down by $2000 your debt-to-credit ratio would drop to 30%, which would definitely have a positive effect on your credit score. If you are unable to do this you might be able to get your credit limits increased, which would have the same effect as if you had paid down some of your debts.

Finally, here’s a helpful video with more good tips for quickly improving your credit score.

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National Debt Relief is one of the largest and best-rated debt settlement companies in the country. In addition to providing excellent, 5-star services to our clients, we also focus on educating consumers across America on how to best manage their money. Our posts cover topics around personal finance, saving tips, and much more. We’ve served thousands of clients, settled over $1 billion in consumer debt, and our services have been featured on sites like NerdWallet, Mashable, HuffPost, and Glamour.

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By clicking "Get Free Quote", you agree that the phone number you are providing may be used to contact you by National Debt Relief (including autodialed and prerecorded calls, as well as text/SMS messages). Msg. and data rates apply, and your consent to such contact is not required for purchase.
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Moderate National Debt Relief Caller: Charlotte Transcribed WE 1/24/2021 Charlotte: Before I begin, I have to let you know that our call may be recorded. Can you tell me, how did you first hear about our National Debt Relief? JOAN: Oh, I don't know. I don't remember. I don't know how I heard about it. Charlotte: What made you decide to work with them? JOAN: Well, obviously, I needed to consolidate my debt. Charlotte: Tell me about the service program that they provided you with. JOAN: Well, I'm not done. But for me, it’s costly. What I did not like about it was that they add on. They say it's going to be X amount of dollars. But then what they do is they say, “Oh, well, we found another creditor that you need to…” So that'll be at a different part of the month and I don't like staggered bills. If I'm gonna pay a bill, whether it's to the phone company, the insurance company, whatever it might be, I want to pay that bill once a month. That's the only drawback. Charlotte: So let me get this. Normally, they are collecting the bills upfront. And then they work to get them paid off at a different rate. So everything wasn't collected all at once, if that's what I'm hearing correctly. JOAN: No, no, no. Every month, money is taken out of your account. And they pay X amount of dollars. Like let's say you owe $5,000 with Citibank, $500 in Credit One, whatever. They work out a deal with them and then they say, “Well, you have to pay $350 a month.” And they'll pay $20 a month towards -- they give you like around about how long it's going to take. Two years, two and a half years. And then they work it out that way. Charlotte: Now, what did you think about your negotiator? JOAN: I don't know. I just called up. It's a completely different department. So when you call up to sign up, it's very different. I don't remember that. It's just that they collected all the information. It was easy for me. I didn't have to go through and find whatever bills I wanted to put in the debt relief. They did that. Charlotte: So say you have questions or concerns. How did you get your questions or concerns addressed? JOAN: I would just ask and they answered it. They're very helpful like that. They'll answer any questions you have. And if they don’t know, they will find out. Charlotte: So was there not a particular person that you spoke with? JOAN: No, you don’t have one person that you deal with that just handles your account. Once you do – they’re like headhunters. Until you sign up, you're going to have that one person and even other people calling. Once your name is out there, they're going to keep calling you. So, once you sign up, then it's whoever answers the phone. It’s customer service. Charlotte: How comfortable did you feel working with National Debt Relief through this process? JOAN: I felt very comfortable, very safe. I was not worried about anything. Charlotte: Is there anything about this process that you would have liked to seen handled differently? JOAN: Yes. The way the payments come out. I'd rather have them one instead of … Charlotte: Everywhere. JOAN: Right. Well, not everywhere. For the most part, the bulk of them were. But then if there's one here, one there, they don't just extend it to another payment. And then the payments change, like the payment amount. You could pay $20 for six months, and then all of a sudden, it's $80 for the next three months, so you really don't know. Charlotte: So if you have to rate this experience on a scale of one to five, five is you’d recommend to friends, one you're pretty dissatisfied… JOAN: No. I would definitely recommend it to a friend. Charlotte: How would you say working with National Debt Relief has impact your life? JOAN: Well, it did help until I hit a speed bump. I'm in the middle of a divorce and my husband closed our checking account, of course. But so far, as a matter of fact, that's why I thought you were calling. I have to postpone the next month, so hopefully, they'll be able to postpone it, because I've been postponing it for a few months. Charlotte: Would it be okay if I posted your comments as a review on our public website for National Debt Relief? Because you did give us some really good feedback. JOAN: Yes, but not using my name. Charlotte: Okay, I will make it anonymous for you. I will also send over a link so that you can have it as a record for yourself at jdola20@yahoo.com. JOAN: Yes, but do not put that public. Charlotte: Oh, no, no, no. That doesn't go public. Definitely. How would you say working with National Debt Relief has impact your life. JOAN: Well, really, it would have helped if I could have stayed on the program. Charlotte: We’re recorded.

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