I have been helping people with their credit since 2014. I love to help people get new cars or homes. Since I have started laws have changed left and right. Every day these bureaus, FTC, and CFPB come up with new ways to stop companies from helping people. Let’s talk about it…
The fact is most people have information that is inaccurate on their report. According to the FTC it’s something like 80% of people found errors on their report. So, they know, and you know that something is wrong. But like anything else this is big business. So, they make it extremely difficult to fix your credit.
One thing to understand is that you can hire a company to dispute on your behalf. You can also do it yourself if you so wish. The choice is completely up to you. Don’t ever let them lie to you and say you can’t. I recently read a law suite that Experian won. It said they don’t have to investigate claims if a credit repair company sent it off for you. But after reading further I see many errors the company made in this area. But this is an example of how they try to make it hard for you.
What you need to understand is that every time you dispute something they have to pay the credit bureaus. It makes sense for them to keep it on your report. If you keep disputing the in accurate information they can keep getting paid. It wasn’t always like this. They used to actually take care of the clients.
So, make no mistake this is a war. Its you versus them. So, what can you do about this? One you need to have some good credit monitoring. You need this so if anything happens you can stay on top of it. I don’t like credit karma because they only show you 2 reports. The also do not give you all the information you need to dispute, they inflate scores, give or take 20 points. You need a paid subscription.
Once your monitoring is setup stay alert. A good credit monitoring will alert you to the slightest changes. If you notice some suspicious activity you can do a credit freeze or place a fraud alert on you credit. To place a fraud alert on your credit you can call or mail one in. This is basic defense for protecting yourself.
So, understand this is a war. A war against companies, bureaus, and government agencies. It is not always easy, and it will take some skill and finesse, but it can be done.
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I’m going to dispel some credit repair myths for people. All too many times do we fall for people lying to us. They dangle flashy things in front of us and we fall for it. So, let me dispel some myths.
I Can Do Credit Repair On My Own
Yes, you can repair your own credit. The law says you can dispute whatever you want. When you hire a Credit Repair company you are asking them to do the work for you. It no different then doing your own oil change or getting your taxes done.
I Guarantee Your Score Will Increase
Nobody can legally guarantee anything. Fixing credit is unpredictable. You can do something to increase your chances but that’s about it. The more supporting documents you have and the less they have the better your chances. But as far as a guarantee that’s illegal and a flat out lie.
Why Do I Need Credit Monitoring?
You need a good credit monitoring website to monitor your credit. The free credit monitoring websites always omit certain information. They make it harder to fix your credit. So yes, you need a paid service where you can get all your information at least once a month.
When He Did It, He Got 300 Points In Less Than A Month
Everyone’s results will vary. Just because one person got great results in a short period of time doesn’t mean you will. Everyone has a different situation. All situations are not created equal.
I have started a lot of businesses and helped a lot of people. One of the businesses I started was a Credit Repair Businesses. I have tons of stories from how I got started to common simple mistakes I see all the time. But today let’s answer the question. Should I get my credit fixed?
This is a real question that most never ask. The answer to that question is it depends. If you're trying to buy something in the future or want to clean up your credit that's fine. If you can afford to pay all your bills fell on hard times, then understandable. Yes, get your credit fixed.
However, if you are struggling to pay your bills then NO. Some people believe they can stop paying bills, do a credit repair and get it removed from their credit. That is the wrong answer. Before fixing your credit, you need to be in the position to pay all your bills with no problem. Fixing your credit is another bill. You will need a good credit monitoring website and that cost. But more importantly you may have to mess up your credit a little more to fix your credit.
This is what I mean by mess up your credit to fix your credit. Some months you may have to be late or make a partial payment on a bill. Take that money and pay off another bill. Especially those with high interest rates. That will hurt your credit. Let me use myself as an example. At one point I went from a double income to a single income. I couldn’t afford to pay all my bills. So, what did I do? I took the money I was using to pay the mortgage and payed all the bills. I chose the mortgage because it was the biggest bill, but I also know they won’t foreclose for one month late. I then started saving money until I could make a double payment on the mortgage. So, every month I would pay them, I was just a month behind. I did this until I could make that double payment. There are other ways I could have done this like move the payment to the back end of the mortgage. This is just an example of you may have to mess up your credit a little to get your finances in order.
In conclusion, if you do not have your finances in order you should not be working on your credit. That’s backwards and will only hurt you in the long run. Stop trying to get over stop trying to be slick just work. Don’t fake it until you make it, just make it…
One of the most important lessons I learned I didn’t get as a child. I never learned about credit until I was in my mid to late 20s. Even to this day my parents still don’t use credit. In this article where going to re-frame what credit cards are and how to get increases on your credit. Let’s talk about it…
What is a credit card really? A lot of people look at it as more debt and spending money you don’t have. They don’t trust themselves with the card. The way I look at credit cards are that they are just prepaid loans. Its money the bank gave to you to use but you will have to pay it back. No different than going into the bank and asking for a loan for a car. The only difference is the money is already approved and can be increased and decreased. Let’s talk about ways to increase your credit limit.
Here is what I did step by step. I messed my credit up before I even knew what it was. So, for me I had to fight out of the whole. My own bank wouldn’t give me credit card. So, I applied for a few cards but the one that gave me a shot was capital one. They gave me a $300 credit card. What I was doing at first was maxing the card out then paying it off, not realizing that was hurting my credit. Once I got a little smarter, I kept my balance around 30% or lower. After 3 months I applied for an increase and got denied. I applied again in 6 months and they increased it to $500. Then I waited another 6 months and applied again, and they gave me $1000. So, I waited a year and asked for another increase and they gave me $4000. After that out of nowhere they increased my limit to $5500 I was like wow okay. In about a year after that they increase me again to $8000. But you get the point and see the trend every 3 to 6 months apply for an increase.
These are some of the things you should be doing to increase your chances of getting that increase.
1. Keep your credit limit balance under 30%.
2. Make all your payments on time.
3. Pay more than the monthly amount.
4. Ask for an increase ever 3 to 6 months.
Credit is so simple but so confusing. But hey, we can only play by the rules were given. Because of this gray area there is so much contradicting information. In this blog we will go over some common mistakes people make with credit cards.
Mistake 1 is not having any credit cards at all. This makes up about 1/3 of your credit score. So credit cards are pretty important. Where I’m from, and the way I grew up, we pay cash. We don’t use credit at all. But that was a mistake and hurt me when I was older trying to buy my first home. So, get a credit card.
Mistake 2 not know how to use the card. Keep your balance under 35%. I tell clients 30% to stay on the safe side. Anything above that and they start looking at you as a risk. To do the math on this, find out how much your available limit. Multiply by .3, whatever you get is how much you’re allowed to spend.
Mistake 3 closing old credit cards. When you close a credit card you lose all that credit history which, in return lowers your credit score. Especially if you don’t have anything to balance it out. You also lose that available credit. So, your debt to income ratio is now changed. If you had $5000 in credit cards and close one card now you only have $3000 in credit which will lower your credit score. You don’t want to close a card unless you have to. There are strategies to make money from credit cards which we will get into later.
If you follow these three strategies credit cards will help your score. If you do not follow these three strategies, they will hurt you. Every thing you don’t know, someone is using it against you and you don’t even know it. So, educate yourself, these are simple and common mistakes people make. Don’t be one of them.
The way many of us grew up credit was not talked about. Our parents feared credit and we always heard about credit nightmares. But once we grew older figured out that we need credit. Not only do we need credit we are behind on the power curve. I am going to give you a strategy to help you build your credit from scratch.
Step 1: Getting credit
The 1st step will be to get some type of credit. Its 3 ways to do this. The 1st way is to find someone with a credit card and ask them to add you as an authorized user. This will give you all their credit history and if it is good credit history it will boost your score. The 2nd way is to apply for a small credit card. The 3rd way is to go to your bank and tell them you would like to apply for a secured credit card. These are 3 of the easiest ways to get some type of credit.
Step 2: Building the credit
You want to make all your payments on time. You want to keep your credit limit to below 30% of your available credit. Every 3 to 6 months you want to apply for an increase on your credit card. You may not always get the increase buy apply anyways. Every time you get the increase it will boost your score up.
Step 3: Apply for a bigger loan
In this step you want to get a car loan or a mortgage. These will help your credit score a lot. At first you will take a small hit. But after you have been paying on it for a few months your score will increase. Don’t miss any payments. If you miss some payments your score will drop a lot.
Use these 3 steps to build your credit. Don’t be afraid of credit cards or credit. Play the game and reap the rewards later. If you need a credit audit so that you can see what’s going on with your credit go to the contact me and schedule a call.
We are in Tax season, many of you are going to get some things you dont need and cant afford and mess up your credit. But I have good news for you, there are some steps you can take right now to help mitigate that damage.
Get a copy of your credit report and look for errors. Truth is 1 in 4 people have errors on their credit report and don’t even know it. Most people never even check their credit report. One thing you could do is get a Credit Audit. A Credit Audit is a detailed report explaining what’s going on with your credit.
Write out a budget. Some of you have never wrote a budget before so I will briefly go over a strategy I personally use. I get a Microsoft Excel spread sheet and on the left-hand side I write down all my bills. Then going across the top, I write down each month. Every month I write down and track my bills. I then look at how much spending money I have left over. Use this strategy it has helped me my entire adult life without fail. It’s different when you see it on paper.
Keep your credit cards around 30%. Here is the formula, whatever your limit is on the card multiplied by .3 that’s how much you should be spending. When you go over 30% the credit card companies look down on that. It puts you in a higher risk factor and it will lower your credit score. If you max out a card you can expect to lose 30 to 50 points. The best thing you can do is avoid overspending at all cost.
Start disputing items now don’t wait until the last minute. If you don’t have time hire a company to do it for you. The sooner you get started the sooner your score will increase. You cannot win a game if you don’t get in the game. Meaning your credit won’t fix itself, it will take some effort from you whether you do it yourself or hire a professional to do it for you.
Many of us apply for credit at different places. But for some reason they all have different scores. Every company that pulls your score has their own algorithm based off your credit report. Other companies simply use old recycled credit reports which may not be the most up to date. So yes every time you pull your credit from a different company you may have a different score. Rule of thumb, give or take about 20 points. But don’t be discouraged there are ways to manipulate these scores to your advantage. The credit system is not perfect but you must know what you’re doing. So, lets break down what makes up a credit score.
Payment history this makes up 35% of your credit score and probably the most important. A late payment can destroy your score in the blink of an eye. You never really want to be late these are probably the hardest things to get removed from your credit report. Some things that have personally seen drop a score overnight are being late on a mortgage or car payment. If that happens you can expect to lose 30 plus points. Also, if you have 2 or more late payments on a mortgage they will deny you automatically for a new home.
Credit Usage makes up 30% of credit score. You want to keep your credit cards under 35% and I would say 30% just to be on the safe side. Once you start going over that your score starts to decrease. God forbid you max out a credit card. Your score will drop 30 plus points. Monitor these things and be disciplined. The good news here is once you pay it back down your points will come back pretty quick.
Length of Credit History makes up 15% of your score. When it comes to this you want to keep your oldest positive account open. Some people make the mistake of paying things off and then closing the account. But as soon as you do that you lose your credit history. Even if it was positive.
Inquires make up 10% of your credit score. You acquire these every time you apply for credit cards, apartments, cars, homes, etc. They stay on your credit report for up to 2 years. Now some companies will say that if you applied for something all in a short amount of time that counts as one and won’t hurt your score that much. That is not true. Every time you apply your score drops. It happened to me. They ran my credit 11 times when I was trying to buy my first house at 21 and before I even had established my credit it dropped almost 100 points. The good thing here is they can be removed.
Types of Credit makes up 10% of your score. This is your mix of credit. So when you have things like a home loan and car loan it looks good on your credit. When you have a mix of credit cards that are on time it looks good on your credit. When you first apply for these loans and get approved initially you will take a loss of points. But they will come back plus some especially if you are paying them on time.
During your life, never stop dreaming. No one can take away your dreams.