I received a question from one of my readers to this blog and I thought it was relevant enough for all of my readers to see and learn from.

Dear Mark,

I have four major credit card accounts in my name. I use one of them for my work expenses, one for household expenses, a Cabela’s card which I like for the points, and another one that I don’t use much.  It has a zero balance. Does this hurt my FICO scores by having a zero activity  and zero balance? Will it hurt my credit score more if I close the account?

Sherry M. Austin, TX

Hello Sherry,

Thanks for writing in. I have a short answer for you to your question….if your main goal is to keep your current high scores, you should leave the account open, but you must start USING the card! Keep the activity small so that you don’t boost up your credit utilization.

You don’t want the bank to cancel the card because you are not using it. Remember, the banks are in business to make money, if they have given you a product and they aren’t making any money, then they may make a decision to close it. As you know this will hurt your scores because your available credit ratios will change.

Regardless of who closes the account, your credit score may fall due to a change in a key credit scoring ratio. “Closing an account causes you to lose the available credit limit associated with it. Your utilization rate, also called your balance-to-limit ratio, will increase as a result of closing the account. That may cause a temporary decline in your credit scores.

To get an idea of how your utilization ratio could be impacted by closing an account, let’s say each of your four cards has a credit limit of $1,000, for a combined total of $4,000 in available credit. Let’s also say that across those four accounts, you’ve got a total debt burden of $2,000. Then your unused card gets closed, taking your available credit down to just $3,000. Now, instead of using 50 percent of your credit lines, you’re suddenly using about 66 percent of your total available credit. That higher proportion makes you appear to be a riskier borrower, since you’re that much closer to maxing out your available credit.

Your credit score should reflect that change, although the actual scoring damage will vary from borrower to borrower. The FICO score assesses all the information on your credit report.  So the score impact from any one action, such as closing an account, will depend on what other information is present on the credit report.

Stay tuned,

Your Credit Repair Expert

Mark

• Number 3 - What specific results you are seeking
• Number 1 - What exactly you are disputing
• Number 2 - Why you are disputing it

• Your Date Of Birth
• Your Address
• Please delete. Thank You.
• Your Social Security Number
• Dear Credit Bureau Name
• I am disputing the Sears account appearing on my credit report, number XXXX, for the reason of (mention one of 13 reasons below).
• Your Name
• Re: (account and reason for your dispute goes here)

• Obsolete Account
• Opened/Not Accurate/Inaccurate Terms
• Account Type Inaccurate
• Account Closed By Consumer
• Not Liable For the Account
• Inaccurate Remarks
• Inaccurate Late Pays
• Account Transferred To Another Lender
• Creditor Classification
• Incorrect Date
• Original Creditor Not Listed
• Incorrect Account Designation
• Incorrect Balance Being Reported

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

It isn't complicated to Improving Your Credit Score if you know whose advice to follow. First, your dispute letter to the credit bureaus needs to be short and to the point. Don't cite the constitution or threaten them with a lawsuit. All you need to do is present a simple case with these three points: It's not necessary to be a lawyer-in-training; just give them these three points to consider:

• Number 1 - What exactly you are disputing
• Number 3 - What specific results you are seeking
• Number 2 - Why you are disputing it

Write every dispute letter with these three points. Take a look at this example of a simple dispute letter: YOU MUST NOT COPY THIS LETTER WORD FOR WORD!!

If the credit bureaus receive hundreds or thousands of the same letter, they will consider your letter frivolous and possibly dismiss it the dispute.That said, here is an example of a letter to send to the credit bureaus:

• Your Date Of Birth
• Please delete. Thank You.
• Your Name
• Your Address
• Your Social Security Number
• Re: (account and reason for your dispute goes here)
• I am disputing the Sears account appearing on my credit report, number XXXX, for the reason of (mention one of 13 reasons below).
• Dear Credit Bureau Name

As you write the letter, choose one of these 13 reasons:

• Opened/Not Accurate/Inaccurate Terms
• Incorrect Date
• Obsolete Account
• Incorrect Balance Being Reported
• Original Creditor Not Listed
• Account Transferred To Another Lender
• Account Type Inaccurate
• Not Liable For the Account
• Inaccurate Late Pays
• Inaccurate Remarks
• Creditor Classification
• Incorrect Account Designation
• Account Closed By Consumer

Credit restoration begins with one of these targeted reason of dispute-no threats, no wannabe legalese, and no boiler plate letter from some cheesy, outdated credit repair book. The beauty of this system is twofold- if the credit bureaus verify your first dispute letter as accurate, then craft a different dispute letter using another reason or item. By providing a different reason for each account with each bureau, you will repair your credit little by little with each credit bureau.

Most credit repair books will tell you to dispute the account as not being yours and then hope that the bureau will not respond to your claim within the required 30-day period (like the credit repair books tell you to do). But by being an informed consumer, you now have a treasure trove of reasons to choose from.

The truth about credit repair is this: Don't believe the myths that credit courses push on you. There are also hidden secrets that the credit bureaus don't want you to know about how to fix your credit and only a select few have this knowledge. I hope you can now begin restoring your credit with effective methods rather than false myths. For More Information on credit repair Click the link below and go to our website. Author Bio: Mark Garcia will teach you how to Improve Your Credit Score fast with his FREE Instant Access to a 3 minute video about his own credit repair story. You can also download a special report on the "10 Most Dangerous Mistakes That People Make When Trying To Fix Bad Credit" available at Crushing the Credit Bureaus.

Improving Your Credit Score is not that difficult if you follow competent advice. Foremost, your letter to the credit bureaus disputing your bad credit needs to get to the point quickly. Don't quote your lawyer or imply an impending doom for their legal department. Instead of playing at law, just present a simple case that includes these three points:

• Number 3 - What specific results you are seeking
• Number 1 - What exactly you are disputing
• Number 2 - Why you are disputing it

Every dispute letter must contain these three elements. Here is an example of such a letter: Below is an example of a dispute letter that I would write: DO NOT COPY THIS LETTER WORD FOR WORD!!

Credit bureaus don't like letters that appear to be copied out of a credit repair course. That said, below is a sample letter to the credit bureaus.

• I am disputing the Sears account appearing on my credit report, number XXXX, for the reason of (mention one of 13 reasons below).
• Your Date Of Birth
• Dear Credit Bureau Name
• Your Name
• Your Social Security Number
• Re: (account and reason for your dispute goes here)
• Please delete. Thank You.
• Your Address

Next, pick one of the following 13 reasons for your dispute:

• Account Type Inaccurate
• Original Creditor Not Listed
• Account Transferred To Another Lender
• Opened/Not Accurate/Inaccurate Terms
• Inaccurate Late Pays
• Inaccurate Remarks
• Incorrect Date
• Incorrect Balance Being Reported
• Not Liable For the Account
• Incorrect Account Designation
• Obsolete Account
• Creditor Classification
• Account Closed By Consumer

Credit restoration begins with one of these targeted reason of dispute-no threats, no wannabe legalese, and no boiler plate letter from some cheesy, outdated credit repair book. The benefits of this system can be powerful because if the credit bureau approves of the first reason, you can send them a second letter citing another reason from the list. Fixing your credit one piece at a time is simple when you provide a different reason for each account with each credit bureau.

Most credit repair books will tell you to dispute the account as not being yours and then hope that the bureau will not respond to your claim within the required 30-day period (like the credit repair books tell you to do). But now you are equipped with an armory of reasons.

Let me reassure you of some important truths: Credit repair myths are abundant; don’t believe them. Credit bureaus also have secrets about how to navigate the credit disputation system that only a handful of experts know. Now that you are informed, it is my hope that you will avoid becoming a victim of false information as you restore your credit. For More Information on credit repair Click the link below and go to our website. Author Bio: Mark Garcia will teach you how to Improve Your Credit Score fast with his FREE Instant Access to a 3 minute video about his own credit repair story. You can also download a special report on the "10 Most Dangerous Mistakes That People Make When Trying To Fix Bad Credit" available at Crushing the Credit Bureaus.

Improving Your Credit Score isn't that complicated if you listen to good advice. First, your letter of dispute with the bureaus needs to be short and concise. Don't send lawsuit threats or quote supreme court decisions. Fixing your credit is not about legal intimidation; it's about these three points:

• Number 3 - What specific results you are seeking
• Number 2 - Why you are disputing it
• Number 1 - What exactly you are disputing

Every dispute letter must contain each of the above three elements. Below is an example of how I would write a letter: DO NOT COPY THIS LETTER WORD FOR WORD!!

If the credit bureaus receive hundreds or thousands of the same letter, they will consider your letter frivolous and possibly dismiss it the dispute.That said, here is an example of a letter to send to the credit bureaus:

• Your Date Of Birth
• Your Address
• Your Name
• Dear Credit Bureau Name
• I am disputing the Sears account appearing on my credit report, number XXXX, for the reason of (mention one of 13 reasons below).
• Your Social Security Number
• Re: (account and reason for your dispute goes here)
• Please delete. Thank You.

As you write the letter, choose one of these 13 reasons:

• Not Liable For the Account
• Inaccurate Remarks
• Creditor Classification
• Original Creditor Not Listed
• Incorrect Account Designation
• Opened/Not Accurate/Inaccurate Terms
• Obsolete Account
• Account Closed By Consumer
• Incorrect Date
• Incorrect Balance Being Reported
• Account Type Inaccurate
• Inaccurate Late Pays
• Account Transferred To Another Lender

Credit restoration begins with one of these targeted reason of dispute-no threats, no wannabe legalese, and no boiler plate letter from some cheesy, outdated credit repair book. The benefits of this system can be powerful because if the credit bureau approves of the first reason, you can send them a second letter citing another reason from the list. This simple method will repair your credit a little bit at a time by providing a different reason for disputing the faulty account with each credit bureau.

You might have been lured into believing that disputing your account as "not yours" would be the best way. However, now you have a store-full of causes. But now you are equipped with an armory of reasons.

The truth about credit repair is this: Credit repair myths are abundant; don’t believe them. There are also hidden secrets that the credit bureaus don't want you to know about how to fix your credit and only a select few have this knowledge. I hope you can now begin restoring your credit with effective methods rather than false myths. For More Information on credit repair Click the link below and go to our website. Author Bio: Mark Garcia will teach you how to Improve Your Credit Score fast with his FREE Instant Access to a 3 minute video about his own credit repair story. You can also download a special report on the "10 Most Dangerous Mistakes That People Make When Trying To Fix Bad Credit" available at Crushing the Credit Bureaus.

A scary development is taking place in the housing market, even though all of the talking heads in the media keep saying the recession is over. Well, here is some data straight from the folks who watch our  monthly “habits” not “intent”. All the more reason for my readers to learn the value of credit repair!

A growing number of struggling consumers are doing what was once considered unthinkable: paying their credit card bills instead of their mortgages. A recent study developed by TransUnion found the percentage of Americans who were current on their credit cards but behind on their mortgage increased to 6.6 percent in the third quarter of 2009, up from 4.3 percent in the first quarter of 2008. Meanwhile, the share of consumers making mortgage payments on time but behind on their credit cards moved in the opposite direction, sliding from 4.1 percent to 3.6 percent over the same time period.

The data reflects a “fundamental paradigm shift” in the way consumers prioritize payment of debt obligations, says Ezra Becker, of TransUnion. “This is dramatically different,” he says. “It is a clear manifestation of the dynamics that lead up to the recession and the recession itself.”

Before the housing crisis, bankers typically operated under the assumption that homeowners would do whatever possible to remain current on their mortgage–even if that meant falling behind on other bills. But a combination of factors linked to the current economic mess–falling home prices, high unemployment, and tight consumer credit–have lead many consumers to prioritize credit card payments above mortgage bills.

The development is rooted in the housing bust. When home prices turned south–falling roughly 30 percent from their peak in the second quarter of 2006–a great deal of borrowers watched the value of their homes drop below what they owed on their mortgages. Today, roughly one in four homeowners finds himself in this position, which is also known as being “underwater.” Without equity in their homes, such borrowers are more likely to default. “They don’t see any value in putting money into an asset that has lost that much value and will probably never regain that value to offset the mortgages,” says Celia Chen, of Moody’s Economy.com.

Happy New Year!

Well we made it through 2009 and even though things were a ‘bit shaky, the upcoming new year is going to be great!

There are some interesting events coming down the pipe with regards to improve your credit score in 2010.

If you have had issues with negative credit scores in the past then you may want to look into DIY methods to clean bad credit. By improving your credit score in 2010 you can save yourself a significant amount of money. The better your credit score the less you are going to pay in interest over the course of your lifetime. With this being the case it should be your goal to make sure your credit score is as high as it can be.

There are many companies that currently offer credit repair help but it is important to make sure they are government approved. If they are not government approved then it might be a situation where a business wants to make some quick money and run. Many credit repair companies or counselors claim that they can fix your credit instant or they can eliminate your debt. If you see these claims then you will want to look to another credit repair company.

By doing some Google searches you are likely to find many companies that can assist you that are government approved. It also might be a good idea to do some research on improving your credit score without assistance. Something that these credit repair companies have prefected is the inaccuracies on credit reports. If you have purchased a credit report and you notice that there are many mistakes then you will want ot seek a credit repair company.

WIth any major financial decision in your life it is important to weigh your options when it comes to money. If the credit repair company is trying to charge you hundreds of dollars then you might want to pick another company or do reseach on fixing your credit independently. It may take a little more time and effort but it could save you a significant amount in the long run.

I look forward to sharing more with you in 2010!

Mark

Myth #1 – Credit Repair Isn’t Legal

Not only is credit repair legal, you are guaranteed these rights by the Federal Fair Credit Reporting Act. The credit bureaus try their best to undermine the process, but it was their misdeeds that caused the law to be passed in the first place. The Fair Credit Reporting Act is your defense against them.

The Federal Trade Commission receives more complaints against credit bureaus than any other type of business. If you call the FTC today to report a complaint about the credit bureaus, their phone mail system will ask you to press one if your complaint is about the credit bureaus, and press another number if your complaint is about anything else. Clearly, this situation evolved out of deep consumer frustration with the uncooperative nature of the credit repair process.

Not surprisingly, the credit bureaus have declared war against companies that help people repair their credit. The bureaus criticize these companies in the media and send anti-credit repair literature to anyone who they suspect is getting help.

Remember, the credit bureaus are primarily interested in protecting their profits. Investigating your challenge consumes these profits. The credit bureaus do everything in their power to discourage consumers from making progress with their credit repair and repair credit report , so you need to do whatever you can to protect your interests.

Until Next Time

Mark

The current mortgage crisis has left many individuals ‘upside down’ on their homes – owing more than the home is worth. Learn how to protect your credit scores and repair your credit report if this happens to you

A common strategy in these situations is to have the mortgage adjusted, generally with more favorable payment terms for the borrower. These loan modifications, some of them sponsored by the federal government, can be beneficial for individuals who need to gain control of their debt and reduce mortgage payments at the same time.

However, some borrowers are discovering that these mortgage readjustments and loan modifications are having a detrimental effect to their credit scores. This is because loan modifications are reported as partial payments, and may even be reported as late payments by lenders. Under the Credit Data Industry Association rules, loan modifications are typically reported as a partial payment, which can lower your credit score 50 to 100 points, or more, depending upon your particular situation.

Unfortunately, lenders are not required to tell you that they will report your loan modifications as a partial payment or a late payment. You may not find out about the damage to your credit scores until you attempt to apply for new credit or see lower limits on the credit that you are to have. Even if you make all agreed-upon payments under the new loan modification consistently on time, you may find that your credit report shows you as delinquent with regards to your mortgage payments. The only way to correct this is to contact the lender directly — the credit bureaus have no control over how your loan modifications are reported to them.

So what can you do to protect your good credit score if you need to have your mortgage modified? Your best option is to speak directly with the lender and find out how your loan modifications will be reported. By working directly with your lender upfront, you may be able to avoid the damage to your credit scores. If you are already taking advantage of a loan modification, it’s in your best interests to check your credit report and be sure that your timely payments are being ported accurately by your lender. If your bank has a policy of reporting loan modifications in a manner that is detrimental to your credit scores, you may wish to try to negotiate more equitable terms for your particular situation. Some banks are willing to work on a case-by-case basis with borrowers, so you may be able to get your credit report adjusted if you speak directly with the lender.

A final option is to place a notation on your credit report, detailing your situation. While this may not make a big difference in your actual credit scores, lenders who pull your credit report will have a more accurate picture of your current financial situation, as well as an understanding of your commitment to pay your creditors on time. By being aware of the potential damage to your credit scores before you enter a loan modification agreement, you can take steps to minimize the negative effects.

To learn more about how to repair credit report, visit CrushingTheCreditBureaus.com for more free tips, tactics, and techniques on how to protect your credit rating

Mark