With the latest move by the Fed, I have received many questions about what will it mean, and by when for all of us in the real world. The Federal Reserve has cut interest rates by 50 basis points. I will give you my 2 cents on what exactly you can expect and what you need to be doing about it for your finances.

Action: Home Equity Loans

How Soon Will You Be Affected? 1 or 2 Billing Cycles

   The latest rate cut will eventually mean lower borrowing costs for those of you who have a Home Equity Line Of Credit (HELOC). Most of these loans are indexed to the prime lending rate. This rate moves in tandem with the Federal Funds Rate.

    Rates on new home equity loans are a bit trickier to predict where things are headed. These loans don’t follow the Federal Funds Rate. Also, these loans tend to have fixed interest rates.

Action: Mortgages

How Soon Will You Be Affected? Impossible To Know

   The recent rate cut will have an unpredictable effect on mortgage rates. The banks and lending institutions are still “freaking out” and are processing VERY few new loans. At this time it is impossible to tell when – or even if – rates will come down. I suspect they will due to the simple fact that we have to get the flow of credit running again and start to stabilize the housing market.

Action: Car Loans:

How Soon Will You Be Affected? Be Afraid, Be VERY Afraid!

   The rate cut will probably not factor into any kinds of savings for car buyers. As many readers of my Crushing The Credit Bureaus         e-book will remember, my ex-father-in-law used to own a Ford Dealership. He tells me that we are at the beginning of seeing a meltdown in the car business like we have seen in the residential housing market.

   He mentioned that his colleagues are telling him that to get someone approved for a car loan, many of the major auto finance companies are requiring  a FICO Credit Score of 720! That is huge. Less than 15% – 25% of the population have credit scores that high. 

   If the already troubled auto industry can’t sell their vehicles and inventory start to pile up, how long do you think it will be before some of those corporate giants will need a government bailout? YIKES

Action Credit Cards:

How Soon Will You Be Affected? 1-3 Billing Cycles

   This gets a bit tricky…since rates will be lowered that doesn’t mean they will necessarily give you a rate cut. Far from it – many credit card companies are actually raising the interest rate on many of their customers.

   Floor rates could prevent some variable-rate cardholders’ APRs from falling, as could lower credit scores. Certain behaviors can trigger a rate increase or lower credit limit, such as paying late, habitually paying the minimum balance or charging close to the card limit. 

   Regardless of what happens, pay attention to your statements and any notices of a change in terms that arrive in the mail. Make sure your issuer hasn’t made an unfavorable adjustment to your APR or credit limit. 

   The latest reports indicate that there is almost triple the default rate on credit card accounts over one year ago. Think about that for a moment – all of those credit card companies and credit issuers will have losses in the billions!

I can’t stress enough though about making sure that your credit scores are healthy and the highest they can possibly be.

The near term is a bit scary with regards to all of this credit mess. You can find more credit repair tips by visiting www.CrushingTheCreditBureaus.com.

Stay Tuned

Mark

   We have all seen the advertisements – You know the ones that promise “Instant Credit Repair Overnight…Guaranteed!” or “Fix Your Credit Before The Sun Sets”

   Many of these same advertisers want you to purchase their books, dispute letters, or gimmicky software programs, but in the end they are just like the supermarket tabloids and instant diet plans; they provide a pinch of truth with a dollop of wishful thinking. Can credit repair be instant and guaranteed?

   The simple answer is no.

   There are no instant fixes when it comes to fixing credit. Even if you were to pay off all of your current debts today, it could take at least a month for that action to be reflected on your credit reports. Yes, there are some things you can do to increase your scores quickly, the problem is the credit bureaus. They do not move fast when it comes to updating your credit report.

   Rapid re-scoring can help if you are in the middle of a real estate transaction, but even then, the fastest I have ever seen a credit bureau update their records is 5-10 days.

   There are some techniques I have used in the past with the VIP departments at the various bureaus to get scores updated rapidly when a unique situation presented itself. However, I wouldn’t recommend taking advantage of those relationships too often.

   A little insight into the credit reporting process will help you understand why 24-hour credit repair is not possible. Your credit report is compiled by three, independent companies (Equifax, TransUnion, and Experian). These credit bureaus write up your report based on information they receive about you from companies that gave you credit in the past. This includes your payment history, the length of your credit history, the types of credit you have, and the amounts you still owe.

   This all takes time. Assuming that you can, indeed, pay off the balance on all your credit cards today, it takes time for that action to be acknowledged by the credit card companies. For the sake of argument, let’s even say that you paid them with an electronic funds transfer, so they do not have to wait for your checks to clear. It will still take time for them to report this good news to the three credit bureaus.

   But do you notice that when you make a purchase with a credit card or debit card, the system automatically scans your available balance and will either approve or reject the transaction in real time. Hmmmmm, it seems as though every other retailer or merchant can fund a transaction in real time, but the credit card companies and credit bureaus need to “wait” for those funds to clear???!!!

   The credit bureaus then take time to incorporate the new data from your lenders, and compile a new credit report that reflects your current no-debt situation. But, and this is a big but, your credit rating is not just based on your financial situation as of today. Credit bureaus tend to weigh the financial events of the last 12 or 18 months when they generate your credit rating. The exact length they consider when scoring you depends on your specific history.

   But still, you have to wait for many months, or maybe even a year or more, before your bad credit reports have passed into credit-bureau history. So, it is virtually impossible for your credit score to rise within a day after you have bought a book offering a miracle 24-hour cure. How long do you have to wait until you can see some significant improvement in your credit score? Experts say that 3 to 12 months is reasonable amount of time.

   But who wants to be reasonable??? Three to twelve weeks sound more like the results my students and clients have achieved!

   There are proven techniques that you can apply to your credit problems that will help speed the healing. But there is no miracle cure. Some diligent work on your part, and some good communication with your lenders, move the process along. And just for the record, let’s be clear: Paying off the balance on all your credit cards at once is NOT a good technique.

   The credit bureaus will rate you more highly if you actually carry a reasonable amount of debt. That is how the credit card companies make money…you must learn to play the scoring game or else they will penalize you for not “working the system” and giving them a chance to make some money.

Talk soon,

Mark Garcia

P.S. If you haven’t downloaded your copy of my online eBook “Crushing The Credit Bureaus”, then you need to do that immediately. You can download it to your computer and be reading it within a few minutes.

It’s here: www.CrushingTheCreditBureaus/eBook 

   The cost of having a poor credit rating is growing higher each and every day. It literally pays to improve your credit score. You’ll get better interest rates on loans, lower premiums on insurance, and maybe even a better job. But, is it possible to repair your credit for free In this article we will answer that question, but also ask some more questions for you to answer.

>NOTE: If you’d like to learn how to repair your credit… boost your credit scores… and qualify for any loan you want FAST… then go and check THIS out now:

www.CrushingTheCreditBureaus.com/ebook

   You see the ads for credit repair services everyday on TV and in newspapers. You may even get calls from telemarketers offering “instant credit repair – 100% guaranteed.” The Federal Trade Commission, the government agency responsible for looking out for consumers, says in plain English;

   “Do yourself a favor and save some money. Don’t believe these statements.” The Federal Trade Commission (FTC) goes so far as to say that everything a credit repair company can do to improve your credit rating, you can do for yourself, for free. Is that true Maybe.

   If you have the right information on how to work with your creditors, debt collection companies, and the credit reporting agencies, and you if have the time to spend, then you can make headway in repairing your credit. For free.

   The vital “IF” in that statement is related to the “right information.”  Reputable credit restoration companies have extensive experience in dealing with creditors, the credit bureaus, and collection agencies.

   It’s all they do, every day. If you want to be as successful, you’ll need access to the information and proven techniques the reputable credit repair companies employ. Improving your credit report is not as easy as sending a couple of form letters and waiting for your score to magically rise.

   You’ll be waiting for a long, long time. The FTC says that only time, a conscious effort, and a personal debt repayment plan will improve your credit report. Yes, but that is also too simplistic. There is an unpredictable aspect to credit repair. You’ll have to be prepared to respond in different ways to individual creditors and credit bureaus in order for your efforts to be successful.

   How much of the credit restoration process you can do yourself, and for free, is based on your availability to the right information and techniques, and your skills and experience. How polished are your written and verbal communication skills How much legal experience do you have Can you get your point across on the phone, without letting your temper flare up?

   Let’s hope your math skills are adequate. All these factors will come into play if you decide to take on your creditors yourself. In the end, it comes down to how much can you do yourself based on your current skills and experience, and how much would you benefit by hiring someone to handle the more technical aspects of repairing your credit.

   So, the answer to the question, “Is free credit repair possible” is a definite “maybe.” Your first action should be to arm yourself with the vital information you’ll need. There are a variety of public sources of this information, including the Federal Trade Commission.

Get access to some incredibly powerful credit increasing score info: http://www.CrushingTheCreditBureaus.com/ebook

Talk soon, Mark Garcia

P.S. If you haven’t downloaded your copy of my online eBook “Crushing The Credit Bureaus”, then you need to do that immediately. You can download it to your computer and be reading it within a few minutes.

It’s here: www.CrushingTheCreditBureaus/eBook