Since the mortgage meltdown basically killed off all of the easy-to-acquire credit that flourished like so much financial kudzu a few years ago, My followers are even more concerned about how to get and keep a great credit score.

As many of my readers of Crushing The Credit Bureaus are aware of, FICO Credit Scores can go as high as 850, but very few people ever attain that “perfect” credit. You’re not alone if you’re wondering: What is a good credit score, anyway?

Well, for starters, it’s a lot higher than it used to be. Earlier this decade, you could easily get credit with a score of 650 or so, and 720 was top-of-the-line. Today, the “new” 650 is around a 720. For big loans such as a mortgage or car loan, lenders may want to see a score of 750 – a full 100 points higher than the norm that characterized the borrowing spree of the boom years.  You might want to read that last paragraph again…a FICO credit score of 720 is now considered “ok” but not great!!

Now that having a higher credit score is necessary if you want to borrow money at less-than-onerous terms, here are a few tips on how to get – or keep – a gold star-worthy score:

1. Don’t pay your bills late. This seems like a “well, duh,” piece of advice, but this is far and away the biggest component that goes into creating your credit rating – it counts for 35 percent of your entire score. If you blow off a bill, you could get a double-whammy on your credit score: once, when the vendors lists you as late-paying, and a second time if they send your account to a collections agency.

While credit cards and other installment payments (like home, car and student loans) are what people usually have in mind when they think about bills due, don’t think you can waffle on other financial obligations. The bad news is that while you don’t get any credit for paying other bills, such as utilities, on time, failing to pay them could impact your score, especially if the company you owe takes you to collections. Yes, it seems unfair to only have the negative count, but that’s how credit-scoring works.

2. Keep your balances well below your credit limit. In a perfect world, you’d carry balances of no more than 25 percent of your available credit limit on your credit cards or any other lines of credit you keep. Experts call this a “utilization ratio.” In the current economic climate, you might find this difficult; card issuers are cutting the credit limits of customers, even those with good credit scores who always make their payments on time. If one or more of your credit limits has been chopped, it’s not necessarily your fault, but it can impact your score. Basically, lenders want to see that you have credit but don’t use it. Sounds counterintuitive, but that’s the way the system works.

3. Don’t open a lot of new accounts at once. It raises a red flag when you open a lot of accounts, because the conventional wisdom is that you’re going to use all of those new cards to borrow a lot of money, which makes you a statistically higher risk. Whether or not you do borrow to the hilt or manage to pay it off doesn’t matter; it’s going to lower your credit score either way.

4. Limit balance transfers to once annually, and don’t open more than three cards (retail-branded ones count, too) in a one-month period. If you’re planning a big buying spree – say you’re moving from a teeny apartment to a spacious house with little more than a futon and a mini-fridge – secure that all important mortgage first before signing up for credit cards at the furniture outlet, the electronics superstore, etc.

5. Don’t have too many credit cards – or too few. This one always confuses folks when I make presentations at credit seminars. Credit ratings agencies frown upon anyone with too many credit cards, but only having one for emergencies – or non at all – can also lower your score.
If you only have a few credit cards, closing even one could lower your score. Hang onto it and just use it occasionally, or set up an automatic payment for one monthly service (such as your car insurance or your TV service) and pay it off in full every month.

Stay tuned for more tips, tactics, and techniques on how to get and keep GREAT credit scores.

Mark

One of the quickest ways to improve credit score that I preach about is getting out of debt as much as possible.

Yes, you must maintain small amounts of certain debt to keep your FICO credit scores high. We must take personal responsibility for our debts and then force the government to do the same. Here is a snapshot of our current national debt

Click Here For The Debt Clock Live

Think about this next time elections come up and candidates are asking for your support and vote.

Until next time,

Mark

     One of my reader’s recently sent in a question about wanting to know the difference between the Fair Issac Corporation’s FICO Score and the Vantage Score from Trans Union and Experian.

I have covered this in previous articles and posts before, but I found a terrific explaination from a great credit blog we have just started to follow.

Click Here  to get the full scoop.

Coming up, a new technique to stop Debt Collectors and Attorney Debt Collectors dead in their tracks!

   In this short video I share with you why just performing credit repair is not enough to achieve high credit scores.

Enjoy

Hello Again,

   While I like to mention that great credit scores will help you with lower loan rates, higher limit credit cards, and business lines of credit, I don’t want to forget to share with you some lesser known benefits of having GREAT credit scores.

> Note: What if everything you ever thought you knew about credit repair, credit scores, and how to fix your bad credit was just plain wrong? Would you keep doing the same things and getting the same results? Or would you try something new and radically different? To end the nightmare of bad credit and start living life to its fullest, go to www.CrushingTheCreditBureaus.com before this site is removed.

   It is common knowledge that bad credit means higher interest rates. If you have had a history of being late on your monthly bills, are running a large balance on your credit cards, or maybe even have filed for bankruptcy, your credit score has suffered. When you apply for a new car loan or need to update your mortgage, your lender looks at your credit report, sees the low FICO score, and socks it to you.

   They feel you are a credit risk, so they charge you a higher interest rate (sometimes a much higher rate). And each percentage point increase in your interest rate equates into bigger monthly bills for you. Fix your bad credit, and in time, the interest rates will fall. But you knew that.

   This blog will share some unadvertised benefits of credit repair that you might not have known.

Unadvertised benefit #1: Lower insurance premiums.

   The insurance companies have convinced themselves that a higher credit rating means people will be less likely to file claims on their insurance policies. So people with good credit are paying less in insurance premiums than you are, year after year. This is true for everything from auto insurance and health insurance, to homeowner’s insurance.

Unadvertised benefit #2: A better job.

   More and more employers are doing credit checks on job applicants before hiring them. While the employers may get your credit report to verify information that you put on your job application, what is to stop them from seeing how you handle your financial affairs, too?

   Those with good credit reports will avoid potentially embarrassing explanations at the job interview. It would be a shame to lose out on a good-paying job just because you were late on some credit card payments.

Unadvertised benefit #3: Lower deposits.

   If you are renting an apartment you can bet your landlord will check your credit rating. Those with good credit may well pay a lower security deposit. It can be assumed that this applies to a variety of other service providers too. Did you have to put down a deposit with the electric utility or phone company before they would hook up service?

Unadvertised benefit #4: Lower fees.

   Some people call them “nuisance fees” but they can really add up. Are you paying a monthly fee for your checking account? How about a high “processing fee” when you apply for a credit card? Families with a high credit rating will get free checking. They seldom pay “application fees” when opening a new credit account.

   And they are much more likely to be able to talk their lenders out of late-pay fees than you. These extra fees are just another way that lenders hedge their bets with dealing with folks with a poor credit rating. How can you reap the benefits of good credit? Make a plan to reduce your overall debt, and be sure to pay your all your monthly bills on time. Of course, that’s just a start.

   There are many more techniques you can employ to fix your problem credit. But in the end you’ll find your money goes much further when you have a good credit rating.

Let’s Talk Soon, Your Credit Score Insider,

Mark J. Garcia

Follow Me On Twitter – twitter.com/ChefMarkGarcia

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 Credit Bureaus exist for one reason, and one reason only…to make money! Each and every one of the credit bureaus is is a publicy traded company. They make most of their revenue by selling information (i.e. credit reports) to lending institutions, insurance companies, utility companies, credit card issuing banks, and employers.

   They DO NOT make money by researching your credit disputes…in fact, it costs them time, money, and resources to investigate them. Is it any wonder then who the credit bureaus ultimately serve?

Credit Bureau Secret #1

Credit Bureau Reports – Your 92 Credit Scores

   Credit reports and scores are created “on the fly” whenever they are requested by you, a creditor, or a lender. In fact, you can have up to 92  different credit scores…23 different credit scores for each Bureau: Transunion, Experian, Equifax and don’t forget the little known “other” credit bureau named Innovis.

   Remember your credit scores can vary drastically  depending on who pulls the report and the particular credit profile applied to you.

   This Credit Bureau process is especially problematic if you are thinking of getting a home loan or mortgage. The credit score you see if you request it from a Credit Bureau or an on-line service WILL be different – and probably much higher than the credit score you receive from a Mortgage Broker.

   Why?

   One reason is that when you pull a report from an online service 18 elements of identification have to match exactly. For example, all of the letters of your last name need to match. That means you are more likely to get accurate information.

   When the credit bureaus pull reports for lenders, usually only 9 elements have to match, for example only 2 letters in your last name. So, more errors and erroneous information will appear on your score – lowering it.

   Why do the Credit Bureaus provide different – and LOWER – scores to lenders? Because they’ve decided that by reporting lower – more conservative credit scores to lenders, they would be less likely to be sued by lenders if the borrower defaults on the loan.

   Do you think the Credit  Bureaus care about showing Lenders your true credit worthiness? I am here to tell you that they don’t!

   Matter of fact, if you would like to find out more information about how the credit bureaus are royally screwing over the American Consumer, click the link below to find out more shocking secrets the credit bureaus keep from you and I…

 http://www.crushingthecreditbureaus.com/

Credit Bureau Secret #2

Credit Bureau Reports – Your Scores are NOT Accurate

   Did you know that your credit score is probably inaccurate?

   According to a recent Public Interest Group Research study, more than 70% of Credit Reports contain errors. Oh sure the Credit Bureaus say to the public that only 20% of credit reports contain errors, but that’s a bunch of Credit Bureau bologna, because when they are in court under oath they admit that more than 50% of credit reports contain errors.

   What kind of errors are probably on your credit report – and making you pay more for your home, auto loan, insurance, credit cards and student loans?

The study found that:

- 29% of credit report accounts contain serious errors that don’t belong including false delinquencies that can kill your credit score.

- 41% of credit reports contain personal demographic information that was incorrect, outdated, or misspelled.

- 20% of credit reports – 1 in 5!!!! were missing major credit loan mortgage or other information to demonstrate the credit worthiness of the consumer.

- 26% of credit reports contained accounts that were in incorrectly listed as open (or) “closed by credit grantor.” When your account is “closed by grantor” it looks like you did something wrong and that’s bad for your credit score.

Credit Bureau Secret #3

What Is Your Real, Accurate, and  True Credit Score?

   Did you know that over 90% of the financial institutions in the world will use credit scores from one organization only? The name of that company is Fair Isaac Corporation or as they are more commonly known FICO and FICO Credit Scores.

   The location where I recommend that you purchase your credit scores from is from the Fair Isaac Corporation at their website www.myfico.com/12

   This website will not only give you the most current status of your credit reports, but it will also show you your FICO Credit scores from all 3 credit bureaus. This is the only place you should ever get your credit scores, because your FICO scores are the ones from where most lenders will base their acceptance of your credit application.

   I find it interesting that the major credit bureaus also have their own version of credit scores that they try to sell to you and I.  However  none of the people you are trying to get to extend you credit will even look at those credit scores!

It is just another example of the greedy credit bureaus trying to squeeze more and more money from us.

Let’s Wrap This Up… 

   So as you can see, there are many myths disguised as truths when it comes to credit and credit repair. There are also hidden secrets that the credit bureaus don’t want you to know. I hope that since you are now armed with this knowledge, you won’t fall victim to false information that exists out there.

   Inside there are over 150 pages of credit repair tips, techniques, and tactics to skyrocket your credit scores.

   Click the link to download Crushing The Credit Bureaus for only $97

Speak to you soon,

Your Credit Score Insider,

Mark J. Garcia

   With all of the chaos that is happening in our economy and with our lending institutions, I thought I would share some wisdom that I have learned on my 7 year journey of credit repair.

   For the foreseeable future, having excellent credit and high FICO credit scores is quickly becoming crucial to your financial life.  The mortgage meltdown and the credit crunch have resulted in lenders being much more cautious than they ever were about extending credit and making loans, particularly to borrowers with a less-than-excellent credit rating.

   Improving your bad credit not only means raising your credit scores, but also conditioning your credit reports so that you score as high as you can within the FICO Scoring Algorithm. I cover this topic in much greater detail in my book Crushing The Credit Bureaus, but I wanted to share with you 7 principles that you can use to improve your credit scores at little or no cost.

Principle #1:  Purchase A Copy Of All Of Your Credit Reports.  You can’t fix what you don’t know.  Find out what your potential creditors already know about your credit history by requesting a copy of your reports from the three major credit bureaus.  There is also a fourth credit bureau that almost no one ever talks about, yet more and more lenders are using this “Secret Credit Bureau”  all the time. Find out about it on page 22 of my book.  I recommend to all of my students and clients to purchase their credit reports online from the Fair Isaac Corporation’s website directly.  

I recommend a certain section of their website only because you get the exact reasons why your credit score is what it is. That web address is www.myfico.com/12. That is not an affiliate link or anything, it is just a little known insider tip that you have learned by subscribing and reading my blog. When you go there, you will receive in order the reasons (good or bad) of why your score is what it is. This will help you create your game plan for increasing your scores. Yes, there is a cost for these, but you are seeing exactly what lenders see when making a decision on whether or not to lend to you and at what rate based upon your scores.

 
Principle #2:  Review, Update, and Remove.  Carefully read your credit reports, keeping an eye out for any outdated, not reported, erroneous, or inaccurate information.  It is your right to get any incorrect data removed from your credit reports.  You can also request that negative information be deleted, but you will have to substantiate your claims.

 
Principle #3:  Keep Your Credit Card Balance Low.  High outstanding debt will negatively impact your credit scores.  Utilizing your full credit limit is dangerous, and quite frankly DUMB! I don’t mean to sound harsh, but if you really took a look at what that money is costing you in interest alone, you would never use a credit card again. I realize that in today’s society we absolutely need credit cards for some basic functions in the financial world, but please just view them for what they are…a convenience tool, not a habitual method of paying for things.

Going forward, lenders will now favor heavily those customers who carry a manageable amount of debt on their cards.  Here’s a  tip:  Don’t pay off your entire balance every month.  Believe it or not, that may hurt your credit score.  After all, lenders make their money by charging interest on the balance; if you’re not paying at least a little interest each month, you’re not profitable to the lender.  And more importantly you are not playing the “game” of credit.

 
Principle #4:  Increase Your Credit Limits Consistently.  Each of your lenders typically assign you a credit limit-an amount which you cannot exceed. Have you noticed though, that these same credit card companies will often let you exceed your credit limit, then charge you an “over limit” fee! Yikes…is it any wonder that the credit card companies make millions of extra dollars from us consumers from these fees alone?

If you add up all your lines of credit you have your “high credit limit.”  An equally important number is your debt-to-credit ratio.  Lenders would like you to carry a reasonable amount of debt for your high credit limit.  Unfortunately, many Americans have a debt-to-credit ratio that is way too high.  For example, if you have $10,000 in unsecured revolving accounts and you owe $8,500, your debt-to-credit ratio is 85%.  That is bad news for your credit score. Typically that will cost you anywhere from 30-85 points on your FICO Scores.

Principle #5:  Pay All Of Your Creditors That Report To The 3 Major Bureaus On Time, Every Time.

Notice I specifically mentioned the creditors that report to the bureaus. Listen, I am not trying to tell you how to manage your monthly budget, but I will suggest that you protect your credit rating at all costs. If you have to make the choice between paying a credit card account or your cable bill…pay the credit card first! You can always work out a payment plan with the cable company, but just one 30 day late pay can affect your credit scores 12-55 points! That’s no joke, and I have seen even bigger drops on credit scores from some of my students in the past.

Principle #6: Monitor Your Credit Scores Like A New Mother Monitors Her Newborn Baby.

I teach and preach to all of my students and clients that our credit scores are constantly moving and fluctuating with every passing credit transaction we complete. They are not static, when you charge on your credit card, that transaction is recalculated against your credit limit. When you make a payment that is late, your score is affected. When someone makes an inquiry, your score is affected. My point to all of this is to not simply pay attention to your scores for a short time until they improve and then forget to watch over them. For all of my fellow parents out there, this is the one area of your life where being an “overbearing, overprotective nag” is perfectly acceptable! 

Principle #7: Constantly Educate Yourself About The Credit Scoring Game

I truly appreciate and am humbled by the fact that you are a subscriber or a potential student of mine. I am trying to share with you my knowledge and experience of what I went through with my credit nightmare. I would welcome the chance to earn your business, but if we never do business together, please make sure that you are keeping yourself up to date and educated on the subject of credit, credit scores, and credit repair. Find yourself reputable sources of information and more importantly put that information into action to help you achieve the credit scores you desire.

 
Get access to insider tips, tactics, and techniques to increase your credit scores by clicking here: www.CrushingTheCreditBureaus.com

Your Credit Score Insider

Mark

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