One tragic outcome of a divorce is that each partner more than likely will have damaged credit and be in need of credit repair.

But, a large number of my students and coaching clients  are severely damaged by divorce. There are a few things to consider to keep your credit protected.

Most couples merge all their finances during marriage and then one spouse manages everything. During divorce you will want to separate all accounts. Be aware of what accounts you have and whose name is on them. A joint account has both spouses names attached and both are responsible for seeing that any debt is paid. If the divorce decree states that one spouse is responsible for paying the credit card bill both parties are still responsible for the balance. Creditors do not know who agrees the pay the card and they do not care.

Quite often a joint account will remain open and one spouse will run up a large bill. Both spouses are responsible for this even after divorce. If you and your spouse have a joint account you will want to call the creditor and change it to an individual account. Creditors are not obligated to do this. They can require you to reapply as an individual. An account must be paid in full before it can be closed or changed.

If you have an individual account with an “authorized user” you will want to remove the authorized user. As long as they are authorized they can fully charge the card. The only person responsible for any debt is the account holder. Typically, the account is reported on the card holder’s credit and the authorized user’s credit. If you are an authorized user and the account goes negative it may affect your credit.

You will also want to dissolve any other joint accounts including bank accounts. When cancelling a bank account be sure to do it together, the legal way. You also may want to just remove one of the spouses name and divvy up the funds accordingly. You will also need to remove one spouses name from any joint loans including auto.

Deciding what to do with the house can be a little trickier. On a home loan it is not as easy to just drop one person’s name from the account. If one person decides to keep the house they will need to refinance the home in just their name. If this is not possible, the best thing to do to protect every one’s credit is to sell the house and divide the profits. Many divorcees have found their credit destroyed after their former spouse let the home foreclose. Informing new creditors that you are divorced and not responsible for the debt will not help you.

Once you dissolve all joint accounts you will probably be left with some liquid assets. With the help of your attorney you can divide any remaining cash. This is the legal and most sensible thing to do.

You will also need to notify all creditors and banks of your divorce. If a collector is calling on a debt that you are not legally responsible for you will want to let them know that you are no longer married and therefore not responsible. You may also want to notify them in writing to expedite the filing,

Once you get all your joint accounts closed and everything settled it is important that you check your credit regularly. Quite often people are surprised when, months later, something belonging to their former spouse pops up on their credit. Be sure to read over your credit report carefully looking for accounts that are not yours. Even if it is a positive account you will want to have it removed. You never know what might happen with an account. Be sure to check your credit on a monthly basis. If there is a problem, you may want to learn how to improve credit score

Divorce can be a very difficult and emotionally challenging time. Credit issues and high court fees do nothing to ease the situation. If you are separating from your spouse or thinking about divorce, take the proper steps to separate your finances and all accounts. Our world today is run off credit so it is important to protect it. By taking these measures early in the process you will prepare yourself for a new life that is not held back by a low credit score.

To learn more tips on how to fix bad credit, visit my website at www.CrushingTheCreditBureaus.com

I recently read another article about credit repair companies scamming consumers. Remember, there is nothing one of these firms can do for you that you can’t do yourself…cheaper, better, and faster!

Improve your credit score can be done in short order if you follow proven principles.

Here is the full article -

Jefferson City, Mo. – Attorney General Chris Koster said today difficult economic times have created profitable opportunities for credit repair scam artists.

Koster said credit repair scammers target consumers with credit problems and charge big up-front fees with the promise to clean up their credit file.  He reminded consumers that it is against the law in Missouri to require payment before these types of services have been provided.

“The fact is, no one can clean up your credit report if it’s accurate,” Koster said.  “Companies that tell you they have an ‘in’ with credit bureaus, know about secret loopholes, can convince a creditor that you don’t owe a debt, or can get you a new, clean credit report are simply being untruthful.  If there are genuine errors on your credit report, you can get those removed yourself at no cost.”

Koster said he is filing a lawsuit today against Credit Repair and Counseling Specialists, LLC, and Brenda Lynne Coday in Springfield, charging fraud, deception and failure to comply with statutory requirements placed on firms offering credit repair services.  According to the lawsuit, the business did not perform all the services for customers it promised, and did not provide refunds for services not provided.

Koster is asking the court to issue a permanent injunction requiring Credit Repair and Counseling Specialists and Coday to comply with the law; require the defendant to provide full restitution to victims; pay a civil penalty of $1,000 per violation; pay the state 10 percent of the total restitution; and pay the cost of investigative and prosecution fees.

   I hope everyone’s Holiday Season is going well and not frustrating you too much! I have been attending several holiday parties and various functions the past few weeks and one question that I keep getting over and over when people find out what I do is…”Hey Mark, I have things in my credit that I want to get removed, do I really need to hire a credit repair expert, or can I do it myself?”

   I always answer the question with “It Depends.” You see, every credit report is different. And every person’s situation is different. Some need credit repair RIGHT NOW due to a probable real estate transaction and others can wait a bit. I also ask the question of how organized and disciplined a person is with mundane tasks such as repetitive phone calls and letters. While there is no easy answer, allow me to shed some light on the subject:

   If you have been having credit problems and your score has been lowered due to these struggles, you may want to check with a credit repair expert to get the help you need.  Credit problems can affect all areas of your life.  Unfortunately, for most americans, more and more companies are now wanting to pull people’s credit reports for every reason imaginable. 

   With the economy in the shape that it is, more and more lenders, credit card companies, and banks do not want to lend to people any longer or give out good loans, unless you have perfect credit.  Not only that, but many companies that you may not even think about want to pull credit reports now as well.  Companies like car insurance agents, health insurance companies, and even jobs as well. 

   The idea that if you have a negative credit score that will mean you will not pay your premiums or be reliable at your job.  Many times you can lose job opportunities or receive poor health and car insurance costs.  These are not the only companies that want to do this, more and more companies are looking for reasons to pull consumer credit reports.  With this happening, repairing your credit report becomes even more vital than ever.  Consulting with a credit repair expert means you will have a better chance of fixing your credit and eliminating these problems from your life forever.  There are few things that a credit repair expert can do for you, they are:

• Help you get your credit reports from all three credit bureaus.
• Go over your reports and make sure that all information is correct and accurately reflect your credit score.
• Help you to remove negative marks and incorrect information.
• Help with the letters and phone calls that will need to be made to make these corrections happen.
• They know all the credit rules and procedures to make sure that the information is corrected in a timely manner.
• Help with negotiations between you and the credit card companies and banks and lenders.
• Help you to lower your payment, remove the interest, remove late fees and over limit fees as well.
• If the credit repair expert you went to is a lawyer, they can also help to reduce the balances that you to pennies on the dollar.  Meaning you will end up only about half of what the original balances were.
• Many times all payments can be made to the credit repair expert for them to disperse out on your behalf.  They will make the payments to the credit card companies and banks for you, further eliminating some of the hassles for you.

   Going to a credit repair expert means you will be getting the advice and help you need.  You will be on your way to eliminating credit problems and on track for financial success and security again.  These experts specifically deal in these situations and problems, they know how to make sure the job gets done correctly and the way it is supposed to.  Achieving the raised credit score that you are looking for.

  Remember, there is nothing a credit repair company or credit repair expert can do for your credit that you can’t do for yourself. Usually, as with most things in life it comes down to two choices…money or time.

   Which one do you want to spend in getting your bad credit repaired and increase your FICO Credit Scores?

Talk Soon,

Mark

Hello All,

  I am attending a 3 day real estate training here in San Antonio. I will post more info and some very relevant informational nuggets that have been shared about credit repair for real estate investors. It’s comforting to know that his philosophies fit almost exactly with what I have been teaching to my students and clients all along. 

Stay Tuned!

Mark

   Yesterday the U.S. Government announced its plans to invest more than a third of the $700 Billion bailout money into nine of the largest banks in America. The biggest reason for this move was to restore confidence in our financial system.  Several European governments did the exact same thing last week.

   Why is this important and should you be concerned? Good questions on both accounts. Before I go into the details about how I feel this will help and possibly hinder our credit system, allow me to shed some light on the current state of things.

   Listen, in the U.S. we have been through many “financial crisis” before. Anyone remember the S&L bailout from a few years ago? How about the “Black Monday” stock crash in October 1987 where the market lost well over 20% in one day? And of course, remember after 9/11 where the exchanges were closed for 4 days afterwards. In each of these cases, doom and gloom were being reported everywhere! Most people were predicting the fall of our economy and that the markets would never recover!

   Just to give you a quick history lesson…less than 1 year ago our stock market was at an all time high. Now one short year later, we are at historical lows. There is an ebb and flow to the markets – they go up and they go down. Guess what, in the future we will have the same process repeated over and over again.

   My point to all of this is that there is no need to panic and fear that the sky is going to fall. Now, don’t get me wrong, this current crisis is for real and will be far reaching. There are going to be people who suffer from it and there will be people who will profit from it. My counsel would be to remain calm and focus on getting your credit scores as high as you possibly can. 

   Why? Because in the coming months, only those with sterling FICO credit scores will have access to money at the most attractive rates when the banks start lending again. Remember, banks for the most part only make money when they lend money. (Yes, I know that the fees and other B.S. charges they ding us with are MAJOR profit centers for them).

   Right now there is so much opportunity for real estate investors because the marketplace is filled with panic and fear. There is too much inventory, too many foreclosures, and people who were counting on their home being their own personal ATM are realizing that those days are over.

  Our economy is still chugging along despite all of the fiascos on greedy Wall Street and from the politico’s in Washington who desperately want to keep their cushy jobs. Think about it – did you put gas into your car this week? (at a reduce per gallon price by the way), did you buy groceries, did you use your cell phone, did you log onto the internet, did you go see a movie? I think you get the point.

   While we are not out of danger just yet, the key fundamentals are still in place, and more importantly we have gone through this cycle before. Those of you who are old enough may remember the Oil Embargo in the early 1970′s where OAPEC at that time cut off the supply of oil to countries that supported Israel during the Yom Kippur war. On a dollar cost adjusted basis, gas went from the currently $3.35 per gallon up to about $17 per gallon almost overnight! Do you think people were predicting gloom and doom and the end of the world back then? Guess what happened. Over a short time things rebounded and we got through it!

   We will get through this, not by help from the next President or the riff raff on Wall Street, but by the same principals that have always gotten this country back on its feet. The tenacity of all of us. Perhaps even some good will come out of this latest crisis. Maybe we will think twice next time about giving people loads of free money when they have demonstrated over and over that they do not know how to handle or manage that money. Money, Credit, Mortgages, and such are a privilege, not a birthright.

   I am all for folks having the American dream of home ownership, but guess what…not everyone qualifies! I am for educating people on how the system works, not automatic inclusion. Listen, my daughter will be driving soon, just because she has a license doesn’t mean she gets to race in the Indy 500 next year.

  Stay tuned, we have many, many great credit opportunities ahead of us!

Mark

*******

There are many strategies, tips, and techniques available on the Internet on how to repair your bad credit. Unfortunately most of them are old, outdated and ineffective!

Having great credit scores is THE most effective way to improve your finances and financial independence. When you build and maintain excellent credit, you control your future.

Discover how to repair bad credit and improve credit scores.

Sign-Up right now for Mark Garcia’s FREE online newsletter to find out how to do exactly that

Go here:  http://www.CrushingTheCreditBureaus.com

What would you do if you received a phone call or letter from your bank that you have been doing business with for years and they suddenly told you that not only had your credit card limits been reduced but now your Home Equity Line of Credit has been frozen…Yikes!

I recently had one of my students called me to share the details of this frantic phone call. Now, several months ago we had worked on her FICO scores and raised them to the high 700′s and one into the low 800′s. I share this with you so that you can see that a credit crunch can happen even to people with high credit scores. That is why it is so important that you arm yourself with the knowledge of how the credit game works and more importantly what to do about it when things change.

With everything that is going on in the economy right now, phone calls like the one above are not surprising. However, I want to share with you her story with you for a couple of reasons;

First off, my student has a problem…she is in-between jobs and was relying on the HELOC to be her nest-egg until she sells one of her real estate properties. Not good right now in this environment.

You see, the time to get, maintain, or increase your credit limits is when you don’t need it – not when you’re in crisis mode.

I was a bit curious as to what caused her bank to call her and freeze the line of credit. It turns out she was 30 days late on her primary mortgage with the bank for the first time ever. Bingo, that is what caused her bank to freak out.

Banks are running scared right now – and for very justifiable reasons. The second that there is any indication that you as a borrower are in the slightest bit of trouble, they immediately take action to “cut their exposure” to you. Is it any wonder though? Just turn on any of the news channels to hear about the latest meltdown or bank takeover.

I think that my student was a bit taken aback by this phone call…listen, when you have the extremely high FICO scores like she has, you tend to think that you are untouchable and that this “credit crisis” is affecting other people. She believed-as most folks do- that her long-term business relationship with her bank was worth something…that her impeccable credit rating made her untouchable, and that her letter perfect payment history would shield her from the woes of Wall Street, Main Street, and every other street.

The hard, cold truth is this; banks, lenders, and credit card institutions don’t give a rip about you or me – they only car about getting paid…period!

Now if you think that just freezing your line of credit or reducing your available credit line is the only thing they can do…think again. How about raising your interest rate? I personally have seen my students get their credit card interest rate doubled or tripled from where it was the month previous.

How scary is that? One month you have a 9.75% APR on your credit card and BLAMO, this month it is increased to 30% because you paid one account late.

Want another example of how screwy things are right now? Ok then-  I was speaking at a Real Estate Investor Summit in Austin with my mentor Bob Leonetti and a gentleman came up to me after my credit presentation and mentioned to me that his bank recently offered him a bribe to close his $300,000 home equity line of credit. They offered him a cash sum on the spot!

This all goes to show you how desperate the banks and the banking system are right now.

So what is the best way to survive the current credit meltdown? 

Make sure that you pay all of your bills on time, no matter what.

I know that I have said it before, but I believe it is worth repeating again. If you have the choice of paying your creditors on time vs. paying for the electric bill…pay the creditor that reports to the credit bureaus first. Now, I know that may seem like strange advice, but you can work out payment arrangements with the electric company. The creditors will report you as 30 days late and then an avalanche of bad things start to take place.

If you pay your bills through “auto pay”, internet billing, or over the phone, make sure that you allow extra time for the payments to post to your account. This will make sure that you don’t get charged late fees, but this will also decrease your chances of receiving “the phone call”  from your banker or creditor wanting to raise your interest rate, lower your credit limit, or freeze your line of credit completely.

*******

There are many strategies, tips, and techniques available on the Internet on how to repair your bad credit. Unfortunately most of them are old, outdated and ineffective!

Having great credit scores is THE most effective way to improve your finances and financial independence. When you build and maintain excellent credit, you control your future.

Discover how to repair bad credit and improve credit scores.

Sign-Up right now for Mark Garcia’s FREE online newsletter to find out how to do exactly that

Go here:  http://www.CrushingTheCreditBureaus.com

You may not spend much time thinking about  your debt-to-credit ratio, but it weighs heavily on your FICO credit score and can affect your ability to get a loan.

Most of my students and clients know all too well that charging up to their credit limit on their credit cards will result in a “over limit fee”, a possible interest rate adjustment upwards, and a guaranteed hit to their FICO credit scores.

I wanted to remind you that not only going over your credit limit can cost you, but just approaching your credit limit can have costly consequences as well.

How you ask? Well let me explain…

There is a factor in the FICO Scoring Algorithm that takes into account the amount of credit you have on each of your unsecured credit accounts (credit limit) and how much of that limit you are using.

Why is that so important you ask? It all comes down to your debt-to-limit ratio, or “debt utilization”.

Your debt-to-limit ratio is calculated by dividing what you’ve spent by your total credit limit.

If you have a $5,000 limit and you’ve charged $4,000 this month, your debt-to-limit ratio is 80%, which is enough to signal to lenders that you are a high risk borrower.

As a result, lenders may increase your annual percentage rate (APR) or deny you a loan – even if you pay off your credit card balance every month and have never exceeded your limit. Some folks are even finding that their credit limits are being reduced to lessen the exposure to the banks.

More importantly though is that your FICO Credit Scores will be negatively affected.

About 14% of Americans use at least 50% of their available credit, according to Experian‘s 2007 national score index study. But, experts recommend keeping your debt-to-limit ratio under 30%, or even under 10% if possible. My students know the EXACT percentage to use that will result in the highest possible FICO Scoring Algorithm.

That means if your limit is $5,000, then you should aim to charge less than $500 a month.

The lower your debt-to-limit ratio, the better your credit score will be. And to that end, there are two basic ways to improve your debt utilization: raise your credit limit or lower your debt.

Raise Your Limit, Lower Your Debt

Your credit card limit is listed on your monthly bill, but it can change from one billing cycle to the next. That’s because credit card issuers can raise or lower your limit as they see fit.

But even though credit card issuers generally dictate what your limit is, consumers do have a say. You can call and request that your limit be raised, as the more available credit you have, the better your debt-to-credit ratio will be.

If you have a good credit history,  your credit card issuer will up your limit, but if your history isn’t great then they can say ‘No,’ which isn’t necessarily a bad thing. You also need to be current on your payments and not overcharged your credit limit.

Getting turned down for a higher credit limit may be a blessing in disguise. Chances are it’s a signal that you should reduce your spending or pay down yourcredit card balances instead.

When paying down debt, it’s important to consider that your debt utilization is calculated per card and cumulatively. That means that leaving one card nearly maxed out will negate all the hard work you’ve done paying down the balances on other cards.

And a higher limit isn’t always better. If you are a spender and the temptation is there to spend more than what you can really afford, [then a higher credit card limit] can send you into the debt spiral.

It’s also possible that potential lenders will view a sky-high credit limit as potential debt, which can count against you if you are trying to get a mortgage or a car loan.

Ultimately, it boils down to how you handle debt. If you handle debt responsibly, then go for a higher limit. But, consider whether that higher credit limit is going to represent temptation to run up additional debt.

Pitfalls to Avoid

Closing unused cards is a bad idea.  Account history is a major part of your FICO credit score and having older accounts with positive history is key.

When you close an account the amount of overall available credit decreases, which could cause an increase in your [debt] utilization and inadvertently lower your score.

*******

There are many strategies, tips, and techniques available on the Internet on how to repair your bad credit. Unfortunately most of them are old, outdated and ineffective!

Having great credit scores is THE most effective way to improve your finances and financial independence. When you build and maintain excellent credit, you control your future.

Discover how to repair bad credit and improve credit scores.

Sign-Up right now for Mark Garcia’s FREE online newsletter to find out how to do exactly that

Go here:  http://www.CrushingTheCreditBureaus.com

You will be surprised how easy and uncomplicated credit repair can be when you just apply yourself and follow the golden rule…”treat others the way you wish to be treated”

Having bad credit and low FICO credit scores is serious business, and fixing that problem should be done in a business-like manner. Picking up the phone and yelling at the lender’s customer support representative is not going to help repair your credit; in fact, it may make it worse.  Think about the person on the other end of the phone. Oftentimes they are simple, hard working people who take a lot of crap everyday on the phone. Not to mention they probably don’t get paid very much and work in a small cubicle in some windowless call center.

I discuss in other postings how to handle these type of folks when you make a phone call to them, however for now I want to discuss what to do when you send out a letter to a creditor.

When you write a letter to anyone other than the credit bureaus (more on them later), make sure that your words are simple, concise, and professional. 

A simple credit repair letter can help you in a variety of ways:

 
1. Reduce your debt by negotiating repayment plans with your lenders, in writing. Especially in the current meltdown of banks, Wall Street, and the general market, this is probably the BEST time to be negotiating with your creditors. Debt negotiation letters can settle your debts, and erase bad credit, for a fraction of what you currently owe.  Your lenders will always want to recoup some of their losses, as opposed to having to write all of off your bad debt.  A simple letter can be very powerful in reducing the amount of money you owe, and perhaps avoid bankruptcy for you.

2. A well-crafted letter can also stop collection agencies and attorney debt collectors from harassing you.  It is your right to not be called in the middle of the night or while you are at work.  These companies sometimes “buy” your debt from the original lender, for a percent of the value.   Get these annoying parasites out of your life by putting it in writing.

3. Stop identity theft with a fraud alert letter.  If you suspect that an ID thief is using your personal identifying information to open a new credit account for their personal gain, place an “initial fraud alert” on all three of your credit reports (TransUnion, EquiFax, and Experian).  

This can only be done if you feel your personal information has been compromised.  The initial fraud alert letter requires that lending institutions call you at the phone number listed on your credit report to confirm any new transactions, effectively stopping any new ID theft, at least for the next 90 days.

4. Raise your credit score by removing inaccurate or negative information from your credit report.  Write to the credit bureau that is distributing the bad information, and spell out exactly why the data should be deleted from your report.  Perhaps you have paid off a loan that your report shows as outstanding.  Always include any copies of proof you may have, such as cancelled checks showing timely payments.  It never hurts to include the consequences that have resulted from the credit bureau including the inaccurate information as well.

Be sure to make a copy of all credit repair letters and any attachments for your own files.  It is all good evidence that you are working to establish a good line of communication with your creditors.

The impact of your credit repair letters will not be instantaneous.  But in a month or so you will likely find that your credit report will reflect the requested changes, that the identification theft has stopped, or that your lenders are negotiating in good faith with you in good faith to reduce your debt.  Keep in mind that you are repairing not only your credit, but also your good name and reputation.  

The pen is mightier than the sword.

*******

There are many strategies, tips, and techniques available on the Internet on how to repair your bad credit. Unfortunately most of them are old, outdated and ineffective!

Having great credit scores is THE most effective way to improve your finances and financial independence. When you build and maintain excellent credit, you control your future.

Discover how to repair bad credit and improve credit scores.

Sign-Up right now for Mark Garcia’s FREE online newsletter to find out how to do exactly that

Go here:  http://www.CrushingTheCreditBureaus.com

At my last Increase My Credit Scores Workshop  I took an informal survey and asked the attendees:

“What Do You Most Want To Accomplish After Fixing Your Bad Credit & Increasing Your Credit Scores?”

The 22 Most Common Responses Were:

1. Purchase A Home – Owner Occupied or Investment Property
2. Refinance Out Of My 1st or 2nd Mortgages
3. Get A Fresh Start After Bankruptcy
4. Obtain Non-Secured Credit Card 
5. Get A Better APR (annual percentage rate) On My Car Loan
6. Consolidate My Bills
7. Get Business Lines Of Credit
8. Get Higher Credit Limit Credit Cards
9. Get A Credit Card For My Business
10. Get A Sexier Car For The Same Payment On My Current Junker
11. Get Prestige Credit Cards (Platinum, Gold, Etc)
12. Reduce My Interest Rates On My Credit Cards, Take The Savings To Pay Down Debt
13. Not Have To Put Any Money Down When I Buy A New Car
14. Get Lower Insurance Rates
15. Get Lower Utility Rates
16. Qualify For An Apartment Lease
17. Stop Fighting With My Wife About Our Bad Credit Scores
18. Stop Fighting With My Husband About His Bad Credit Score
19. Get Married, My Fiance Won’t Marry Me Until My Bad Credit Is Fixed
20. Get More Sex! When We Are Not Fighting About Debt And Bad Credit, I Get More Sex
21. Pay Off Bills
22. Prove To Myself That I Can Survive On My Own Without My Ex-Husbands Credit