That Little Three Digit Number

Did you ever think that one of the most powerful three digit numbers in your life would be your credit score? That number predicts to lenders, employers, insurance companies and landlords your character and whether or not you’re trustworthy enough to do business with.

Having a good credit score, upwards of 650, will open doors for you in the world of credit but, anything less than that and you enter into the sub-prime zone and that will be very expensive. Credit scores that are about 580 and below can cost you thousands and thousands of dollars over your lifetime.

Just as a quick example, let’s say you want to purchase a vehicle and the amount you need to finance is $25,000.00. Most manufacture supported lenders like Ford Motor Credit and GMAC offer special financing as low as 0% but, for argument sake, let’s say that if you have good credit you could secure 5% interest. Compared to someone with bad credit, a credit score of around 550, you could expect to pay about 19.95% interest or higher.

On a $25,000.00 auto loan the person with good credit would pay $403.41 per month for 72 months. The total finance charge would be $4045.34. Now, are you sitting down? The person with bad credit on the exact same amount to finance would pay $602.69 per month for 72 months. (That would be if they got approved with no cash down.) The total finance charge would be $18,393.50! That’s $14,348.16 more than the person with good credit! On just one credit purchase, a person with bad credit is penalized $14,348.16!

Now apply this scenario to all of their credit purchases like credit cards, mortgages, small personal loans not to mention higher costs for auto insurance! We’re talking thousands and thousands and thousands of dollars!

How you handle your credit is a very serious matter. The good news is this; you can change your credit situation starting today. The absolute first step you need to take to correct your credit situation is to obtain a copy of your credit report from all three credit reporting agencies, Equifax, Experian and Transunion. You are allowed one free copy of your credit report per year and requesting that copy does not affect your credit score. You can get your free credit report by clicking on the advertisement on this page.

Once you have your credit report, you need to have all mistakes corrected. I promise you, you will find mistakes. The quickest way to get your credit report and to make corrections is to do it online. You can also call each credit reporting agency and they will mail you your report with supporting documents for disputes.

Whichever way you choose doesn't matter, just choose one and get the mistakes corrected first.

If you have questions about your credit situation feel free to contact me.

Credit Score Myths

There is a ton of misinformation out about what does and doesn't hurt your credit score. The surprising thing about this is the sources of this misinformation: credit advisors, mortgage brokers and auto finance managers. These people should know better!

I must say, there are also many professionals out there that really know their stuff and offer great advice to their clients. Be careful who you take advice from when that advice directly affects your credit score and ultimately how much obtaining credit will cost you. Bottom line, if your source for credit advice gives you any of the following misinformation, get a new source.

Myth #1 Closing accounts will improve your credit score

Wrong, Wrong, Wrong. Closing accounts does not help your credit score it will lower your credit score! Having a large number of revolving accounts (credit cards) open will in fact lower your score. Once that has happened, it has happened and the damage is done. Closing a few of your revolving accounts does not correct the damage.

One of the factors that determines your credit score is the length of time you have had credit. Closing older accounts will make it appear as though you have had credit for a shorter amount of time, therefore lowering your score. To make the best of the situation, it is a much better move to payoff as many credit cards as you can. That will increase your balance to high credit available ratio. The conclusion from most lender's scoring models is that you have a high number of revolving credit accounts but you don't abuse your credit and you don't have a large number of accounts with balances or high balance to available credit ratio. If you have a large number of revolving debt with balances your credit will in many cases score in a lender's system as being a high risk for future bankruptcy.

The best move, pay off as many revolving accounts as you can and do not close any accounts.

Myth #2 Checking your credit score lowers your score

By obtaining a copy of your credit report directly from Equifax, Experian and Transunion you will not lower your credit score. I highly recommend that you check your credit often. You can check what is on your credit and See your credit score on FreeCreditReport.com by clicking here. FreeCreditReport.com is a service offered to consumers by Experian. I personally use Equifax's Credit Watch Gold 3-in-1 service and you can Get Equifax Credit Watch Gold 3-in-1 Now! by clicking on the link. Both offer a great service to consumers and it's important that you know what is on your credit and what your score is.

Applying for new credit will temporarily lower your score. You can minimize the damage caused by credit inquiries by shopping for new credit over a very short period of time. Multiple inquiries in a 30 day period are treated as just one inquiry. Don't shop till you drop, do your research first, then choose your lenders and minimize your inquiries.

I am amazed by the number of people who go from car dealer to car dealer shopping for the best deal and allowing each dealer to submit their credit. I have seen people end up with 30, 40, 50+ inquiries while trying to find the best deal. Listen up people, that will lower your credit score and destroy your chances for the best loan rates and terms. Don't do it.


Myth #3 Chapter 13 bankruptcy is better than a Chapter 7 bankruptcy

This cannot be farther from the truth. I have been in the auto finance business for 22 years and I can tell you this is false. People think when filing bankruptcy that they are doing the best thing by paying back as much of the debt as they can. Wrong. I know this may be hard to fathom, but filing for Chapter 13 is not the best plan.

Right now, I use 14 special finance lenders and only 2 of them will even consider a loan for a person who has an open Chapter 13. If the bankruptcy is open, you have to have permission from your trustee to make an installment purchase. If the loan is approved, the loan parameters are very difficult and the interest rate is 24.99%! If the Chapter 13 is discharged, there are a couple additional banks that will consider the loan but the parameters and rates for the loan only improve slightly.

A person who files a Chapter 7 bankruptcy and it is discharged has many more options. Many banks will consider offering a loan and the parameters and rates are much much better. You may even qualify with a primary lender instead of a sub-prime lender. Rates can be as low as 9% and the terms, such as downpayment can be as low as zero down.

The bottom line, pay your bills on time, correct errors on your credit reports, pay down your debt and apply for credit sparingly.

Need a Car Loan? Try Roadloans!

If you have been trying to get approved for an auto loan recently to no avail...I've got a hot tip for you, RoadLoans! I have processed quite a few Roadloans over the last few months and I have to say that I am quite impressed. It's fast and simple. You apply online and once approved they send you the loan paperwork and a check that can be used at any franchise dealer. (Ford, Chevrolet, Chrysler etc.) I have sold cars to people that I couldn't get approved by using RoadLoans. Their loan to value ratios are great, meaning if you owe more on your trade in than the value this loan just might work! The rates are reasonable and I just can't say enough about them. So click and apply and you just might be surprised! Good luck and be sure to let me know about your RoadLoans experience!

Consolidate Your Student Loans

Paying for your college education may seem overwhelming. You made the sacrifices and now you're set to graduate. Wonderful. Now you're faced with the bills. The absolute best thing you can do for yourself is to consolidate all those student loans into one bill, one payment. Don't wait until you run into problems making all those payments. You need to act quickly to qualify for a Federally Backed Student Loan Consolidation Program.

Defaulting on your student loans can be detrimental to your credit rating and that is no way to start your new journey in life. I highly recommend Student Loan Consolidation because you can get a low fixed rate for the term of your loan and cut your expenses by up to 64%. Consolidate Student Loans with Student Loan Solutions, their comprehensive student loans are unsurpassed in the industry.

Student Loan Solutions makes applying for and getting your consolidation loan quick, easy and painless. They have customer service experts that can guide you through the process and answer all your questions. Check it out and let me know how much you save! This is a smart move for your credit and sanity!

Improving Your Credit Score

Hopefully, you have obtained a free copy of your credit report and made all the necessary corrections to your file. I highly recommend signing up for a credit monitoring program so that you can track your progress in raising your FICO score. If not, Get Your Equifax Credit Report Now! or you can click here to Get Equifax Credit Watch Gold 3-in-1 Now!

If you have bad credit, (under 600), improving your credit score is going to take time, discipline and dedication to make it happen. The days of just adding yourself as an authorized user onto an already established credit card account are certainly over. Recently, the credit reporting agencies have stopped using authorized user accounts in their scoring models. Even if you have fair credit, it will take the same effort to improve your score. Rest assured, it will eventually happen.

1. The first and foremost thing to do, stop spending on credit cards and pay your bills on time. If you have open accounts on your credit report, you must start paying them on time, now. Today is a new day. Sit down and put onto paper your monthly budget. Write down every bill that you have, when the bill is due and the amount due. Get a calender/day planner and write in on each date what bills are due. Then pay them by that date. Paying your debts on time is the foundation to improving your score. If you don't pay your bills on time, you're not going to improve your score.

2. If you have open open credit cards, hide them from yourself! Take them out of your wallet and put them in a safe place. Not carrying your credit cards will save you from those impulse purchases. Whatever you do, do not cancel the cards, ever. Cancelling your credit cards will lower your credit score and defeats the whole purpose.

Another important issue concerning credit cards is the ratio between what your high credit limits are verses your balances. If your high credit on a given credit card is $1000.00 and your balance is $998.00, your ratios are going to be too high and that lowers your score. Start to eliminate your debt by paying off the open credit card account that has the highest interest rate. If you're past due, call the credit card company and work out a repayment plan. Most credit card companies will work with you to get your account current. Be nice when you call them, you want their help. Once that card is paid off, move onto the next credit card account with next highest rate. As you lower your credit card balances, your score will start to improve. You also are getting out of debt at the same time. If you have credit card accounts that are closed, even if it's been a long time since you've paid a dime, start sending them a payment and get them paid off. The last thing you need while you're trying to improve your score, is new credit judgements on your credit report. Once a collection agency is awarded judgement against you, they can seize your bank accounts and garnish your wages to collect on the debt.

3. If you have bad credit and you don't have any open credit cards, here's the bad news, you need to get a couple credit cards. I know this sounds horrible, but you have to do it. This is especially important if you are coming out of a bankruptcy. There are many companies out there that issue credit cards to high risk consumers. If you Google search bad credit credit cards, you will find many opportunities. Do not, I repeat, do not apply for several credit cards! Apply one at a time. After 2 or 3 tries and you are not getting approved, STOP. Do not apply for multiple credit cards. Applying for multiple credit cards will adversely affect your credit. I recommend Capital One, Orchard Bank, New Millennium Bank or First Premier.

4. If you aren't having any success, you will have to get a secured credit card. Typically, you will have to deposit money with the issuer and your credit limit will be based on the amount that you deposit with them. Usually the minimum amount is $300.00 and that would also be your credit limit.

Be prepared to pay very high interest rates and fees on these credit cards. It's the price you'll have to pay for not having a good credit score but it will be worth it in the long run. Once you've received your new credit cards, either secured with your funds or not, make a very small purchase to activate your card then pay the balance in full when you get your bill. At this stage in the game, it is imperative that you pay these accounts on time. Make sure you remove your cards from your wallet and put them away in a safe place.

5. If you are a full or part-time student, a good option would be to apply for a Student Card. The good news is, you don't even have to attend a major university. Many issuers will consider students of community colleges and online colleges. I recommend Discover, Captial One and Citi for these type cards.

6. An excellent way to re-establish your credit is to get an auto loan through a franchise dealer. Find a dealer that has a separate Special Finance Department. Call and ask the receptionist specifically if they have a Special Finance Department separate from their Primary Finance Departments. Dealers will go the extra mile to get you approved. Dealers that have departments that handle credit challenges will have a wider variety of lenders that accept severe to moderate credit problems. Expect there to be limitations to what you will qualify to buy as well as higher interest rates.

7. Another important move, is to start paying off your collection accounts. Take your credit report and write down all the collection accounts that you have. Let's say for example, you didn't pay your $235.00 gas bill at the apartment you lived in last year and they turned your account over to a collection agency. Call the collection agency and find out what they will offer you in discount to pay the account in full. Offer them $100.00 to clear the account as paid. They just might accept the offer or they will counteroffer. You can expect to get 50% off the amount owed in most cases. After you've worked out a deal with them and paid the account off, be sure to get a letter from them stating that they are paid off. When you get the letter, send a copy to each credit reporting agency and ask them to report the account balance as zero.

8. If you have more than one student loan that you are making payments on or not, I highly suggest that you consolidate your loans into one payment. This will help you pay your student loan debt off much quicker as well as free up more of your disposable income that you can use to pay off other debt. Click and Consolidate College Loans Online with Student Loan Solutions.

Be careful obtaining new credit. If you are deep in debt and are applying for a new account, the lender may consider you to be over extended. Your debt to income ratio is a very important factor when obtaining credit. Don't just get new credit accounts in effort to increase your score and not pay on time or pay off debts. That tactic most definitely won't work to improve your credit.

If you have any questions about how to obtain credit, feel free to email them to me at kreynolds02000@yahoo.com or post a comment on my blog.

KNOW WHAT'S ON YOUR CREDIT REPORT!

Today, more than ever, it's crucial to know what's on your credit report, who is looking at your credit and what your credit score is and what it means. Your credit report/score reflects to lenders your reputation for repaying your debts. In this age of computers, most lenders use internal scoring systems to determine whether or not they should lend you money. Typically, with most lenders, the reason you didn't pay on time is of no matter. It's all about your score and payment history combined with your high credit to available credit ratios. There are very few lenders left where an actual human solely makes the lending decision. In some cases, they have tolerances they can maneuver within based on their internal score cards but their authority is very limited. So if you want to buy a car, get a mortgage or even a credit card, your score will determine if it happens or not and if it does, how much interest you're going to pay.

You are entitled to one free credit report per year and I advise you to get it. Get Your Equifax Credit Report Now!
Believe me when I tell you, you will more than likely find many errors on your credit report. Even if you have relatively good credit, you need to clean up the errors on your report. It could make a big difference in the amount of interest you are charged when you apply for credit. The goal here is to get your credit score as high as possible. You can obtain your report from each of the major credit reporting services individually, Equifax, Experian and Transunion, or you can use a service like Equifax's 3-in-1 Monitoring product.

If you have credit issues, I highly recommend a service such as this to help you make corrections, improvements and to watch your progress. For $12.95 per month, you have immediate online access to a line by line comparison of your 3 major credit reports. You will have daily monitoring of all 3 credit reports with customizable alerts of any key changes to your report, like a new credit card application that you did not initiate. Customer service and Fraud Specialist are available to you 24/7. Equifax will also provide you with up to $20,000.00 complimentary identity fraud expense coverage with no deductible.

While we're on the subject, it's important that you know that identity theft is the fastest growing white collar crime in America. One in five families have been affected by this epidemic. We all know someone who has been a victim in some way shape or form. Did you know that more than 27 million Americans have been identity theft victims over the last five years? Consumers have spent nearly $5 billion dealing with identity theft. That my friends is totally outrageous! The scary news is that this year alone more than 500,000 people will be robbed of their identities. So, the advise to monitor you credit shouldn't be taken lightly.

When you obtain a copy of your credit report, you will be sent forms to dispute incorrect information in your file. You can do this online as well. Notate all errors and supply copies of proof so that the verification process will move more smoothly . Don't wait until your car blows up and you're under the gun to get a car loan. Cleaning errors off your report takes time.



Once you've made all the necessary corrections to your credit report, you can then begin the process to make improvements to your score. Check out my upcoming blog, "Improving Your Credit Score".

Fear of Failure

I want to begin with a quote that I think we can all apply to our lives...

"Don't hang around with losers, if you're going to be successful, hang around with successful people. Successful people know that failure is part of success. The people that avoid failure also avoid success. It's guts, it's instinct, it's intuition, that's what gets you ahead in the world of business." Robert Kiyosaki, Investor and Multimillionaire, author of RICH DAD POOR DAD.

Achieving success is as simple as making the decision to be successful. Once you've decided to change your life and be successful you have to make the effort to follow through. You begin by changing your unsuccessful environment. Begin by identifying and removing the cynics and negative people from your life. Granted, we all have people in our lives that are a drain on us and usually they are family members that we can't just totally remove from our lives but we can limit our exposure to their negativity. It's crucial to identify them and counteract their negativity with positive people and personal development. Don't encourage their negativity, change the subject. These people have the ability to destroy your motivation and inspiration. Limit your exposure or remove them from your life. It's that simple, relationships drive your success. Find your mentors, you don't have to know them personally. Robert Kiyosaki, Jack Canfield, Donald Trump, many successful people share their wisdom freely, you just have to make the effort to listen.

Get focused, get clarity about what you want to achieve. Writing down your reasons for wanting success, writing down goals and formulating your game plan paves the way. Your why is more important than the how. If you commit and align yourself accordingly the how will come.

Along your journey, study your successes as well as your failures. Understand, mistakes are lessons only if you learn from them. Know you're going to make them and choose to learn from them not hide from them. It's better to approach things regardless of your fears and make mistakes than to take no action at all. Take risks. You have got to climb out of your comfort zone. You have got to get up off the couch. You have got to invest in your education and personal development. You have got to take action, right or wrong, just move.

Bad things are going to happen in your life, deal with them, dust off, don't wallow and just keep going. Learn your lessons and use them during your journey. You'll learn more from your mistakes and failures than you will from studying how. Remember, every successful person experienced their fair share of mistakes and failures before they reached their ultimate goals. When they faced challenges they didn't say to themselves, "oh this isn't for me, I can't do it or this might work for them but not for me." Don't quit before you even get started. So what, you made a mistake or something didn't work out exactly how you planned. Analyze what went wrong and learn from it. No matter what you choose to go for to achieve success it's going to be hard, you will get beat up. Stick with it and remind yourself why you are pursing your dreams - don't wallow in your failures and never, never give up.

What is your plan of action? What are you going to do to be successful? What are you waiting for? If you do nothing, where will you be in 5 years?