The Personal Credit Maze

The Personal Credit Maze

It’s too often in life that we find ourselves not paying attention to the details. I personally have been in that same situation many times in life. All you can do is learn from your mistakes right? I realized paying attention to the so-called little things can have enormous impacts on our lives.

Let me start with this analogy. If you were summons to court with no documentation would you go? Does that make you guilty if you don’t show? Are you left liable for anything down the road? Much like this situation the Personal Credit Bureaus report information on consumers that may or may NOT be correct. Along the line of the being sued with no paperwork scenario, the credit bureaus have no actual proof showing the consumer actually to have that information reported on their credit profile. This can be stopped there is a way to leave all that bad reporting in the rearview mirror.

I have a quick story to share, this involves a friend of mine. Before he entered into the program he decided he could find his way through the credit maze himself. He thought “I don’t need anyone to help me do it”. Wow was he wrong. What happen was he pulled his reports and noticed that he had some items reporting that didn’t belong to him. At that time in his life he was building new credit so he didn’t have any other open lines except the information reporting that was incorrect! He went ahead and filed a dispute after many hours of trial and error trying to get that far. After a few weeks and tireless hours which he didn’t have to spare) the credit bureaus removed the positive reporting incorrect information and well his score dropped 14 pts. Not a huge drop but not understanding the credit maze I learned the hard way what can and can’t affect your score.

Let’s talk about the 5 things that make up your credit score:

1) Payment History – 35% of your total credit score is based on payment history. Repayment of past debt is one of the leading factors that create your credit score.

2) Credit Utilization – 30% of your credit score is based on the percentage of available credit the individual has borrowed.

3) Length of Credit History – 15% of your credit score is based on 2 key things: the length of time each account has been open and the length of time it’s been since it last been utilized.

4) New Credit – 5% of your credit score goes into how much new credit you have. Applying for too much credit can flag you and make you look financially unstable to lenders. Only if you can see if fit financially or when it makes sense should you apply for new credit.* Remember inquires whether denied or approved still leave a lasting mark on your personal credit score*.

5) Mix of Credit – 5% of your credit score goes into you mix of credit. Experts say that by making on time payments with different vendors shows lenders you’re simply less of a risk. Once again Good behavior Gets Rewarded.

Learn how you can obtain the profile you need to go up against lenders and get the answer you deserve. Learn how to fight back and understand what it is you need to do to stay on track and maintain. We understand each situation is uniquely different! Start to make the change today.

When Was the Last Time You Monitored Your Credit Report?

If every major financial activity of yours is summarized into a single piece of paper, it will turn out to be a very important document, right? Your Credit report is an important document and the one with a positive credit history can be an excellent financial tool. You can use it to get a loan from a bank, a credit union, a private lender or any sort of a creditor when you are in need of funding.

Did you know that 40 million Americans have a credit report that contains at least one inaccuracy? Many of these reports show big mistakes. Why should you have to pay a higher interest rate or not be able to apply for a mortgage because of an error committed by others? These are only two of the possible consequences of having a low credit score.

This is why it is important for consumers to monitor their credit report on a regular basis. If you think you don’t have an eye for detail and doubt you will be able to make out everything that is wrong with your report at just one glace, it’s best that you leave the task to professionals.

People with a low credit rating, who are wondering ‘How I can clean my credit?’, should definitely consider taking the help of credit restoration experts.
A reputed credit services company will be able to spot inaccuracies like:

Numerical errors and spelling mistakes – They may seem to be harmless at first, but these apparently simple mistakes are capable of lowering your credit score significantly. Because creditors handle several reports in a day, they are bound to get a few names or numbers wrong once in a while.

False charges – False charges can be penalties induced over late payments, debts, etc. that are not yours or that you have already made payments against. In addition, it is also possible for the report to feature someone else’s penalties by mistake.

Identity theft – Many Americans experience fraud or theft with their social security numbers, credit cards, and it impacts their credit report negatively. This is something that needs to be addressed quickly.

The three major credit bureaus in the U.S. are Experian, Equifax and TransUnion. All three are legally obligated to provide you your credit report once a year at no charge. It is advisable that you get your credit reports and check for mistakes and consistency.

Which Type of Credit Do I Choose?

Lots of us face this question if we’re in the position to access new credit, and that is what type of credit do you choose? There are several different types of credit extended in numerous ways. For instance there are charge cards which usually don’t set a limit BUT require payment in full every 30 days. Next you have your simple credit cards, where a limit is set and you’re allowed to pay that back in minimum payments if you so choose BUT you also pay lots more interest over time. There are some credit cards that offer 0% interest for your first 12-18 months so it’s best to know what to do. Then of course there is the mortgage for your home or personal line of credit. This type of credit or loan usually comes with origination fees along with interest that is paid back to the lender over time. Depending on what your current credit situation is these fees mentioned above could be higher or lower or irrelevant altogether.

Let’s discuss the Charge Card and Credit Card scenario. First off a charge card will allow you to spend what you need to on purchases. When the lender for a charge card issues credit typically there is no set limit, however they do closely monitor you’re spending to minimize their risk of loss. You do need to pay the credit used back at the end of every month in order to eliminate late fees or closure of the account. Credit cards play a different role. This type of credit issued by a bank or private lender has a set limit after signup. Meaning the lender will look at your credit score and decide how much they are willing to allow you to use before they feel you’re too high of a risk. Some of these credit cards start out low but can quickly have limits raised over time by showing excellent payment history. Remember you can roll this type of credit month to month as long as you don’t miss your monthly payments. Keep in mind you NEVER want to use more than 30% of your available credit. When this happens 2 key things happen:

1) Your credit score drops no doubt about it.
2) Your now looked at as high risk to lenders by using too much credit.

It certainly is a cat and mouse game on knowing how much credit to ask for and how much credit to use – believe me I know. It can be tough. You don’t want to fall into these categories it can be hard to dig out once you do.

Finally let’s talk about the personal loan or line of credit. I have seen this type of credit become what most folks go after; I assume they just heard something and don’t really get it. When deciding what type of extended credit you need the first question asked should be what do I need the line of credit for? There are a few distinct differences you need to be aware of. If you’re doing a home remodel or need to fix some landscaping or build a garage, do you know what type of credit you need to get? A line or credit will have origination fees, interest rates, additional fees and a set term(s) for repayment. This will be true for a credit card except you can get interest free credit lines for up to 24 months in some cases. You can also get a lower interest rate depending on your credit score. Also your ability to show lenders you can pay back the debt with no stress will certainly play well for your case.

Whatever road you travel in life it’s important to be informed. It’s important to do the research and fully understand the situation you’re getting into. I included in this, we all want things yesterday and rush into situations. When we look back we all understand it could’ve been better for us had we took a little more time and did a little more research. That’s okay. Doing nothing gets nothing. Don’t expect life to just present you the answers to your questions, you need to find them yourself. Don’t think you won’t understand or can’t know. We all have the ability to find out. I hope you find your answers. Don’t give up. Only a small percent make it because only a small percent put forth the effort. It’s not science its common sense.