Posts Tagged ‘Credit Score’
When many people think about credit repair, they think about “ removing negative“ from their credit report. Unfortunately, they stop there. What those people are missing is that there is more to improving your credit score than just removing negative items.
A portion of your score consists of credit utilization, for instance. So while removing negative accounts is great, you’ll be even better off if you can start building positive payment history too.
While many people focus completely on the “historical”aspect of credit repair (i.e. fixing things that have already gone wrong), a much better approach is to not only try to fix things from the past but also work on the future by attempting to rebuild credit.
And how exactly is that done?
Let’s say that you have some late payments, collections, charge-offs, and other negative items on your credit reports. It’s great that you’re attempting to clean up your credit by tackling those things, but there is a lot more that you can do that will help your credit score.
You might do something like…
1. Get a $5,000 or $10,000 line of credit added to your credit report using a merchandise card that reports to at least one major credit bureau. This will raise your high credit limit substantially and may help open the door for pre-approved credit offers.
2. Get a couple more credit cards, such as a sub-prime (high fee) Visa or MasterCard or a secured credit card. Whether you use one type of card or both, make sure that they report to the credit bureaus (as they are useless for rebuilding credit if they do not.)
3. Make regular purchases using your Visa/Master cards and run up manageable balances. Pay them off over the course of 10 months or so, and then do it again. This way you will build positive payment history. Do the same thing with the merchandise card to add to the positive payment history you are building.
4. Be sure to NEVER miss a payment or be late. If you do, you’re working against your goal of rebuilding credit. You must pay on time every time, period.
5. Make sure you are “OPTED IN” to marketing offers based on your credit and relationships with your creditors. This will help insure that you start receiving pre-approved offers as quickly as possible.
6. If you have any existing credit cards that are maxed out or have very high balances, consider moving the balances around or paying off some of the balance so that the usage isn’t so high (though the merchandise card account should help with this).
7. After you have started receiving credit card offers in the mail, pick a good one and apply. You can also try starting with a department store card as sometimes these cards will be easier to get approved for.
The whole point of this process of “rebuilding” credit is to build up payment history and add new positive accounts to your credit report so that your credit will look better to lenders offering loans and credit cards with better terms. Most people will find that their credit score goes up as a result of their efforts, and in anywhere from 3 months to a year they will be getting all kinds of offers in the mail for better credit cards with lower fees and higher credit limits.
As you and I both know there is a ton of free credit building and repair information out there. But how do we separate or know whats valid, useful information and whats a scam, outdated, or just plain wrong? Luckily thats one of our goals. To find, create, and distribute highly effective and actionable information that you can start using right away.
I asked three very well known credit experts one simple question. “What are 2-3 habits that everyone building or rebuilding credit should have or adopt to be successful.” There is so much content out there that is either out of date, misleading, or simply wrong and on of our goals at CR Publishing is to provide a place for the consumer to get honest and effective credit repair help and information!
Many of you know Dan Sater. Dan has been serving as our “In-House” Credit Expert and answering all of your questions on our Members-Only Forum. Dan has also been in the credit repair industry for over 20 years and has helped thousands of his own clients and members of the CR Publishing Family build and rebuild their credit… Here is what Dan had to say when I asked him “What are three habits that someone should have or adopt when building or rebuilding their credit?”
It is hard to pick only three habits to have in building or rebuilding credit.
MAKING TIMELY PAYMENTS
The first must be to Pay Bills On Time!! If you are currently behind on a payment, you must stop the bleeding and bring that account current. A recent late payment will be devastating to building or maintaining a good credit score. If one has a great score, one late payment can drop their scores by over 100 points. Because this is so important, and we all have busy life where it is easy to forget about making a payment, I recommend that you use your banks autopay system to be set up to pay at least the minimum payment in case you forget to make the payment.
KEEPING CREDIT CARDS OPEN
Don’t close credit cards that you decide you don’t want to use. FICO has said for many, many years that you never, never, never get any benefit by closing a credit card – it can only hurt your scores. From a scoring point of view, any credit line you close will reduce the available credit limits and can lower your credit scores. If you have a number of credit cards you don’t want to use, (and they are paid off) put them in a drawer or another safe place. BUT, you need to take them out once, or better, twice a year and make at least a small purchase to keep them active and ensure that they will continue to be scored by the credit scoring model.
USING YOUR CREDIT EXCESSIVELY
The third bit of advice to build and maintain the best scores is not to charge your credit card balances anywhere near your credit limits. We call this maxing-out your credit cards.Let me impress how important this is for your credit scores. If you have good credit, no lates, collections charge offs or even public records appearing on your credit report, youwill lose a lot of points from your scores. How many points? If you have 5 or 6 credit cards and you max out those cards, you will see a point drop of 100 to125 points! This can take a perfect credit profile with no negatives reporting down from a prime, to a sub-prime rating overnight.
The second credit expert that we asked is Jose A. Rodriguez Jr. Jose is the CEO at Clean Slate Credit Solutionsand has personally helped hundred of people rebuild their credit, keep great credit, and even helps businesses build credit and get financing. Clean Slate’s mission statement is something that proves how dedicated they are when it comes to helping people with their credit. “Our mission is to help you escape credit prison and enjoy life with obtaining the credit you always wanted. With our “5 Plates to a Clean Slate” program, we will help you delete or correct inaccurate or unverifiable information from your credit report and empower you with the knowledge you need to maximize your credit scores.” Now lets take a look at what Jose has to say about building habits to build and rebuild great credit:
1. When building or rebuilding credit, you want to ensure that you are applying for the right cards. You can’t expect to get approved for an American Express or top tier Chase credit card, when your credit score doesn’t warrant that type of approval. I always tell my clients to start small. Get a secured credit card with their local bank or credit union, and possibly with Capital One & Discover who offer great credit builder/starter credit cards. They have to be able to show the top tier credit cards that they are responsible and can handle paying their credit cards on time. So in a sense, prove them selves. Even though they might have to put money down to get approved for credit cards in the beginning, it will be worth it in the long run because it is allowing them to get rewarded with a good credit score as they pay their credit card every month.
2. After getting approved for a secured credit card, you want to ask an immediate family member if they can add you as an authorized user to one or two of their credit cards. Please make sure that you are asking someone in your immediate family and not a friend. It has to be someone that you have an actual relationship with. The credit card that you get added as an authorized user to, should not have any late payments and should not be maxed out. By getting added to this credit card as an authorized user, you are adding the positive payment history and the length of history from when that card was open to your credit report. Imagine of the credit card is 10 years old, has a $10,000 limit and was never late. This would really boost your credit score and help you in the credit building process. I must add that you should never , I mean never purchase tradelines or authorized user accounts from a broker or another company. That is actually illegal since you have no direct relationship with person.
3. Now that you have one or two secured credit cards, and one or two authorized user accounts, (make sure they hit your credit report, usually within a month of applying and getting added), you want to continue to make on time payments and pay more than the minimum payment that is due. It is not necessary to pay off the entire balance, just make sure you do not go over 30-40% of the credit limit. If you have a $200 secured credit card, do not put more than $80 on the card or it can drop your credit score. Around the 6 month mark you paying your secured credit cards, you are going to ask the bank that you got the credit card from if they can switch the card to a regular credit card and return your deposit. Then, you want to apply for a department store credit card like Target or Kohls. Then in less than a year, you will have the credit score needed to apply for the top tier cards, like American Express and Chase.
So with these three steps, I promise you that if done correctly, you will build your credit properly and increase your credit score the right way. Another great tactic is that once you start applying for credit cards and are paying your cards on time & not maxing out your credit limit, you want to ask for a credit limit increase with your credit cards every 8 months. By doing this, it will increase your credit limit which will then increase your credit score.
The third expert we heard from was Derrick Harper Sr. of Point Boosters Credit Repair
Derrick was kind enough to hop on the phone with me around 7pm and share some of his amazing wealth of knowledge (you might be seeing more from him later)! He even gave us access to a FB Live Video that answers the question and then goes into some super tactical solutions that you can go and implement right away to rebuild your credit.
Ok so I don’t often rant. Especially in a blog post. But when someone sent me this article (now almost 9 months old) I was disgusted. I felt like I needed to share this with you right away!
An article by Heather Long at CNN Money dropped in January of 2016. The headline “ATM and overdraft fees top $6 billion at the big 3 banks” I will post the link to the article at the bottom of the post! So keep reading…
Now if you’re like me you are probably disgusted at this as well. ATM Fees are often refunded by smaller banks that you might be customers of so I don’t really want to focus on that right now. Even though charging you to access your own money is silly.
What I want to talk about is overdraft fees. The top three banks in the U.S. pulled in over $6 Billion. That’s $6,000,000,000+. But how does this happen? Well the faceless big banks, credit card companies, credit bureaus all spend millions (or more) on getting you the consumer to spend money. After all that is how they make money. Now if you are savvy and many of you are… This doesn’t really affect you all that much. But things can happen and some of us have been there.
If you have ever been in any credit card or other debt you know what I mean. Life becomes hard and it can even be embarrassing to have a ruined credit score, get calls from debt collectors, and to have the stress of debt on your shoulders. But to know that there are companies out there that are spending millions to keep you there and profiting BILLIONS off your pain and your family’s pain. That’s just infuriating. And it should be.
But just getting angry at the big banks is not going to help and its certainly not going to end the suffering. What will help is actually getting motivated, building great credit, and eliminating your debt. And thankfully there is a way to do that without having to sell an arm and a leg!
The Credit Repair Intelligence System and The Debt Free Bible work together to help you build great credit and to get rid of and stay out of debt! Not only that you actually spend less money when you have a great credit score.
Let’s do a quick math problem…
Let’s say you purchase a $200,000 home on a 30 year fixed mortgage at 6% interest instead of 4% (because of your credit score); that 2% is going to end up costing you a total of $88,000 over the term of the loan. Now think about how many “extra” years you’ll have to work to pay off $88,000 just because of an extra 2%. Now this is just one example. But think about everything that is based of your credit score. Car insurance premiums, some jobs you might be applying for, and so much more. You’re throwing money away with a low credit score.
So I’m not saying that you need the Credit Repair Intelligence System or even the Debt Free Bible. I get it they cost money and you might not be comfortable with that right at this moment. But at least get my free e-book! With it I will also periodically send some other reports about your credit and what it means to have a great credit score as well as some ways that you can start to develop better credit.
If you’re as outraged as I am at what banks and credit companies do to keep us in debt to them then you might want to check out our Starter’s Guide. I pay the shipping and handling for you but it’s a great first step to understanding how credit works and how it plays such a big role in your every-day life!
Feel free to shoot us an email email@example.com or give us a call at 1.800.450.1248 to talk with someone about building great credit! We would love to hear how we can help you build a better life, save money, and stick it to the faceless banks, credit bureaus, debt collectors, and credit companies!
Want to read the CNN Money Article?
We all know a low credit score will make everything in the world of finance more expensive because of higher interest rates from lenders due to being considered a greater credit risk (i.e. higher interest rates on car, homes and credit cards). While this may be considered common knowledge by some, it’s truly devastating effects are understood by few.
EXAMPLE: if you purchase a $200,000 home on a 30 year fixed mortgage at 8% interest instead of 6% (because of your credit score); that 2% is going to end up costing you a total of $96,934.11 over the term of the loan. Now, think about how many “extra” years you’ll have to work to pay off $96,934.11 because of an extra 2% in interest?
The part few people talk about is all the other areas in life where a low score will increase your cost of living on an annual basis. For example, in addition to paying more for a car, home and credit cards, a low credit score will most likely have you paying more for the following as well.
1. AUTO INSURANCE. As many as 92% of the 100 largest personal automobile insurers use credit information to underwrite new business, according to a 2001 study by Conning & Co., an insurance-research and asset-management firm.
2. HOMEOWNERS INSURANCE. Many insurance companies see a correlation between low credit scores and increased property insurance claims. Therefore, a low score will result in higher rates.
3. LIFE and HEALTH INSURANCE. Customers who are unable to pay their monthly insurance premium thereby pass along that increased cost to the insurance company whose stuck with the bill… resulting in a loss for the company. Since customers who pay without lapse are more profitable it is felt by many that a low credit score now even affects a monthly life and/or health insurance premium negatively.
One of the more shocking areas where a low credit score will you cost you is in the area of employment. It’s estimated as many as 42% of employers now do credit checks on applicants before hiring them (according to a 1998 survey by the Society for Human Resource Management).
While many employers claim they only do it to “verify” information on your application (such as where you live and where you have worked etc.) we can both assume they are taking the liberty to “have a peek” at how you handle your financial affairs as well. According to the
to Public Research Interest Group (PIRG) as many as 79% all credit reports contain errors — 25% of which are serious enough to cause the denial of credit (according to a 2004 report).
And that’s all the more troubling in light of the increasing impact a bad credit report can have, says Ed Mierzwinski, director of PIRG’s consumer program.
“It’s outrageous that the credit bureaus are claiming their scores are accurate enough to take people’s lives and screw with them like this”.
Remember that nobody else is going to look after your credit for you. The credit bureaus certainly won’t. It’s up to you to make the decision and take action to improve your credit score, your financial well-being, and your life.
Can You Say The Same About Yours? I know I can…
This can have a very interesting affect on the economy as more people have more buying power and can actually inject more money and responsible consumer spending into the economy making it stronger and stronger.
However, it might be a slippery slope. While it’s a good thing FICO Scores are on the rise how do we keep them above the sub-prime rates we have been seeing? It all comes from education. It’s a pretty safe assumption that a bad credit score, whether it comes from unpaid bills or lack of credit history, normally comes from a lack of consumer education.
That’s exactly what we need to keep the levels of sub-prime borrowers below the all time high of 25% in 2005. And we have a proven system that is capable of helping you build and keep your score where you need it!
I’m not say that you need to get our system (that’s proven to work). If you’re content with your credit score right now and you don’t want to build or protect it that’s fine! There is plenty of fun and education materials and videos for free on our site that you can still benefit from.
But…If you are interested in getting and keeping great credit without using a credit repair company and without spending weeks, months, and probably even years of trial and error using “free” out-of-date content you find on the internet then the Credit Repair Intelligence System, The Debt Free Bible, and The Starter’s Guide To Building and Protecting Your Credit are essential.
We did all the trial and error for you and spent a pretty penny doing it. All so you can have the credit score and debt free life that you want to live. So if you are ready to have the life you want and deserve order right now. (I’m even gonna cover shipping when you add the Starter’s Guide to your order).
If you are not ready to do it yourself call us to talk about your options! The consultation is free and can often be the vital first step to better credit and a better life. Call us 1.800.450.1248
Want to read the Wall Street Journal Article:
What Our Lawyers Make Us Say: CR Publishing publishes and provides quality and actionable do it yourself products and information to consumers who want to improve credit and/or to get rid of debt. The articles and information provided herein are for informational purposes only and are not intended as a substitute for professional advice.
FICO is a registered trademark of the Fair Isaac Corporation in the United States and other countries.
Are You The Parent (OR Grandparent) Of A New College Or High School Grad?: A Post From David M. Frees III J.D.
Are you the proud parent of a newly minted and soon to be “independent” adult? Ready to cut the cords and to stop paying their monthly bills?
Well, now’s the time to get ahead of a very dangerous and counter intuitive situation – The FICO credit score. And, this is one area of financial life where what you don’t know can hurt you and your child who is heading out into the world.
And by the way, when they first go out on their own, credit cards seem like a good way for them to pay the bills…. until they have gigantic and unmanageable debt AND as a result a bad credit score.
You see, nobody ever teaches our kids how to build and keep great credit.
And most kids don’t know that their credit score will radically affect whether or not they can buy a home, to buy or lease a car, rent an apartment, get reasonably priced auto or homeowners’ insurance, get a job and more.
That’s right, a good or bad credit score can mean a yes or no on these and many other buying decisions and bad credit or no credit rating can mean higher prices – much higher prices for car, rental, and home mortgage payments and even prevent your new adult from getting a job.
And I don’t know about you but once they move out of your house it’s hard (on both kids and parents) to have them move back in…especially if that could have been prevented with a little good advice and some “credit secrets”.
So let me tell you two stories to help you to understand why teaching our kids (as soon as possible) about how to get and to keep good credit.
Ray told me that he had always paid cash, even for his car and truck, and never had a credit card. He’d never really done anything wrong but……his credit score was only 680. You see that having absolutely no credit history can be just as harmful as a damaged credit history. He just hadn’t done a few things that really mattered.
Now that may not sound too bad, but he and his fiancée didn’t even qualify for a mortgage. His wife-to-be had a better score and could qualify on her own but they really needed their combined income to get the house that they wanted.
Even in the best-case scenario, where they did qualify, their interest rate, and therefore their monthly payment, would have been dramatically higher.
In this case, there was a happy ending.
I knew CR Publishing’s Alex Frees (yes he’s related) and put them in touch with Alex and The Starters’ Guide To Building and Protecting Your Credit.
With a few carefully executed strategies (described in The Starter’s Guide To Building and Protecting Your Credit) he was able to take his score from 680 to over 775. Those kids got their mortgage and their first home as a result of working hard, saving money for a down payment, AND having good credit scores.
So what’s the moral or the story?
Help to educate your recent grads…. before they make credit mistakes…about what to do to build and keep good credit.
Some of the rules are obvious – pay your monthly bills on time – and others are less apparent. For example, did you know that there are good reasons to get a second credit card and some bad reasons that can damage your credit score.
Are you aware that it’s not just how much credit you have available, but how much of the available credit you have used.
Do a few important things right and your score goes up. Miss them, or do them the wrong way or in the wrong order and you can easily damage your score.
Well, if you’re like me – a parent but not an expert on consumer credit scores – then getting your kids access to educational resources like the Credit Repair Intelligence System (a comprehensive guide to building and keeping better credit) and the super inexpensive The Starter’s Guide To Building and Protecting Credit can mean the difference between their life long financial success and independence and that knock on the door where they want to move back in.
Help your new grad to get a better start in life. It’s easy and effective to help them learn…. right from the start…how to build and keep a great FICO credit score.
Enjoy the exciting life of being a parent and grandparent!
Dave Frees, JD
P.S. I promised you a second story so here it is:
I knew another recent grad. He started life with a credit card balance that he couldn’t pay off. That in and of itself isn’t a problem. But, as the balance grew (he was using it to supplement his income) he was also using more and more of his available credit line.
This negatively affected his FICO score and the interest rate on his balance went up…and so did his monthly payment.
The next thing you know he missed or was late with a payment and his score dropped again.
He got another card but did the same thing there (and his interest rate was higher from the start).
It didn’t take long before the rent on his apartment was too much (along with his credit card debt) and he could no longer qualify to buy a new or used car.
Moving back in with his parents was the next step.
All of that could have been avoided with a little advanced help. Help your kids to study up on FICO. To learn more about credit and how it’s computed. And, if it makes sense get them a copy of The Starters Guide For Building and Protecting Your Credit or The Credit Repair Intelligence System.