Credit

Your credit score is what lenders and credit companies use to determine whether or not they should extend you credit. If you have a low credit score you are too high of a risk and in this case you will not be granted more credit or any other type of loan. The better your credit score is the lower your interest rate will be when you do get approved for a loan. Creditors need to know if they can trust you to pay them back according to the schedule that you agree on and looking at your credit score is the primary way that they determine your reliability.

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FICO Score: In 1956, math whizzes Bill Fair and Earl Isaac left the Stanford Institute to consult with the computer services industry. After creating a billing system for Hilton Hotels, Fair Isaac and Company created a credit evaluation method for a southern lender accused of racial bias. As credit cards emerged, Fair Isaac created a way for card issuers to quickly screen masses of candidates. Banks started using the company's scores, referred as FICO scored, to evaluate their own loans. In 1995 the nations two biggest purchasers of home mortgages, Fannie Mae and Freddie Mac, announced that they wanted their loans to include a credit score. Fair Isaac designed a credit scoring system for all three bureaus to use and soon after, all loan processing agencies joined in and hence, the FICO score. FICO scores are what the majority of mortgage lenders use to evaluate applicants creditworthiness. The scores are based on complex statistical methods that analyze credit information on nearly every adult in the United States. In barely 3 years, credit scoring has swept the loan business. Credit scores have existed for 40 years, but were applied to home loans only recently. If you've received a pre-approved credit card application in the mail, it was based on your credit score. High score, high credit line and low rate. Likewise, if a car finance dealership says that would be happy to process a loan on a car, but.... That is credit scoring at work again, except they will need a higher down payment or you need to pay a higher rate. Low credit score, higher down payment, higher rate. Your ability to get a loan depends on your score. The people affected most are lower income borrowers. Most lenders get reports and scores from the 3 credit reporting bureaus, Experian, Equifax and Trans Union. That is because the credit bureaus rely on creditors to report borrowers' histories, and creditors don't always report to all three bureaus. Hence, the scores can differ. Most lenders will access all three scores and then average them. These numbers, based on past behavior, really predict a persons future likelihood to repay a loan. Studies have shown that regardless of race or income, borrowers with low scores defaulted much more often than people with higher scores. Your credit report is a list of accounts that banks, merchants, government agencies and courts report that you are responsible for either solely or jointly. Each will show the accounts age, credit limit, current balance, high balance and payment history. All of this information is used in the credit scoring calculation. A credit score, based on the report information, is likened to a camera snapshot that captures your creditworthiness at the moment the score is calculated, so you can see how important it is to make sure that the information is correct and up-to date.

STATUE OF LIMITATIONS   Real Estate Statue of Limitations In real estate you must begin the lawsuit within a legally prescribed time period. If you fail to initiate the lawsuit withing the time period, you may have no remedy in the courts. Four examples for real estate: 1) Three years to bring action for removal of encroachments. 2) Four years to bring action on a written contract. 3) Five years to bring action for recovery of title to property. 4) Ninity days after filling a mechanic's lien.     Individual State of Limitation: When you are in debt and cannot pay it off, a creditor legally can collect their money from you. We all know how they do it, from letters to phone calls asking to you to pay it off. Statue of limitations gives creditors certain number of years to collect their money. If they are not able to collect that money in a certain years, legally they no longer come after you.  Let's say that you live in Alabama and you have applied for credit card with limit of $5,000. For some reasons you are not able to repay that money on time and you fall behind your payment. Creditor starts to call you and send you letters that your account is in collection. Here is a tricky part. Creditors in this case has right to collect their money in 6 years period, as stated in our table below. After 6 years they can no longer come after you and it will take anywhere 2-5 additional years until negative collection will be removed from your credit report. Ok, now about the tricky part. How does the creditor know when the 6 year period start? It is not necessarily the day you applied for your credit card. It is the day you stopped paying off your bill. But here is the tricky part. Let's say that you got a credit card in January 2000, than in April 2000 you stopped paying your credit card. You are in default, and this is the start of 6 years period for creditor. Now let's say that in January 2001 you make a payment, thinking you would like to pay it off. Well, the 6-year period is erased and starts again when you default. This process is called "restarting a clock" as called by most creditors. Once you default on a credit card make sure you fully understand statue of limitations. Our table below shows limitations for each state. Statue of Limitation Table: Oral Contract - You agree to pay money loaned to you by someone, but this contract or agreement is verbal; i.e. no written contract. Remember, a verbal contract is legal. Written Contract - You agree to pay on a loan under terms written in a document, which you and your debtor have signed. Promissory Note - You have agreed to pay on a loan via a written contract, just like the written contract. The big difference between a promissory note and a regular written contract is that the payments are scheduled and interest on the loan is also spelled out in the promissory note. An example of a promissory note is a mortgage. Open Ended Accounts - These are revolving lines of credit with varying balances. The best example is a credit card account State Oral Agreements Written Contracts Promissory Notes Open Accounts Alabama 6 6 6 3 Alaska 6 6 6 6 Arizona 3 6 5 3 Arkansas 3 5 6 3 California 2 4 4 4 Colorado 6 6 6 6 Connecticut 3 6 6 6 Delaware 3 3 6 3 D.C. 3 3 3 3 Florida 4 5 5 4 Georgia 4 6 6 4 Hawaii 6 6 6 6 Idaho 4 5 10 4 Illinois 5 10 6 5 Indiana 6 10 10 6 Iowa 5 10 5 5 Kansas 3 5 5 3 Kentucky 5 15 15 5 Louisiana 10 10 10 3 Maine 6 6 6 6 Maryland 3 3 6 3 Massachusetts 6 6 6 6 Michigan 6 6 6 6 Minnesota 6 6 6 6 Mississippi 3 3 3 3 Missouri 5 10 10 5 Montana 5 8 8 5 Nebraska 4 5 6 4 Nevada 4 6 3 4 New Hampshire 3 3 6 3 New Jersey 6 6 6 6 New Mexico 4 6 6 4 New York 6 6 6 6 North Carolina 3 3 5 3 North Dakota 6 6 6 6 Ohio 6 15 15 - Oklahoma 3 5 5 3 Oregon 6 6 6 6 Pennsylvania 4 6 4 6 Rhode Island 15 15 10 10 South Carolina 10 10 3 3 South Dakota 6 6 6 6 Tennessee 6 6 6 6 Texas 4 4 4 4 Utah 4 6 6 4 Vermont 6 6 5 6 Virginia 3 5 6 3 Washington 3 6 6 3 West Virginia 5 10 6 5 Wisconsin 6 6 10 6 Wyoming 8 10 10 8