Do you have good credit?  or  Are you credit challenged?

If you fall under the category of a “good credit risk” you can only help your credit scores by carrying zero balances on revolving debt.  In fact, history shows that when a consumer carrys 3-5 open tradelines kept at zero balances, most good credit consumers have approximately a 720 or higher FICO score.

However, if you are credit challenged, carrying a zero balance on revolving credit can actually hinder any increases in your FICO score.  Remember that in order for 30% of your credit score to be in tact, a consumer must be able to demonstrate an on-time payment history.  By carrying a zero balance you are not able to demonstrate any positive payment history which will negatively impact the score.  So the general rule of thumb is that a person wanting to see quick increases in a FICO score will want to carry small balances and make timely payments for 6 months or longer.  Doing this will start to increase and repair credit scores.

Get more useful tips by reading other posts on our credit repair service blog.

The things you carry in your wallet form your identity:  driver’s license, debit cards, credit cards and many other forms of ID that could be sinister in the wrong hands. Thus, a stolen wallet can become the basis of identity theft. Be sure you’re prepared to act quickly in order to minimize your risk of identity theft in the event of a lost wallet or stolen wallet.

Smart Wallet Tips:

• Don’t carry anything you don’t need in your wallet or purse. This includes your Social Security card, extra credit cards, birth certificate, voter’s registration card and never keep PIN’s or passwords in the vicinity of the corresponding cards.
• Know what’s in your wallet so you know whom to contact in the event it becomes lost or stolen. You can make copies of the front and back of your cards, including driver’s license and medical insurance, or write down the account numbers and contact information. Store the copies or list in a secure file at home.  Beware, these copies could also be an identity risk so they must be kept somewhere secure.  Do not leave them out on a desk or in plain site.
• If available, request credit and debit cards with your photo on the front.  This may be just enough deterrent to keep a thief from attempting to use a stolen card.
• Help prevent fraud by alerting local law enforcement, your bank, your credit card issuers, your medical insurer, your state’s DMV and other appropriate agencies immediately if you realize you have a lost wallet or stolen wallet situation on your hands.  You may also want to contact the credit agencies and request that an alert be placed on your accounts.  This will “alert” the credit agencies if anyone tries to apply for new credit using your name and social security number.

Thieves today are getting smarter and smarter!  The time to protect yourself is BEFORE something bad happens.  Take necessary precautions and be smart with your personal information.

Get more information and credit help from Dedicated Credit Repair!

Here are a few suggestions for building and maintaining a good credit history:

Tip #1
Create a budget so you know exactly where all of your money is going. Keep daily records of everything you spend for a month and decide where you can cut. Sticking to a budget means you’ll always have money to pay the bills and therefore avoid late and missed payments.

Tip #2
Start a savings account and commit to contributing to it regularly. One reason people run into credit problems is that they don’t have cash on hand for everyday purchases.

Tip #3
Balance your checkbook regularly to prevent checks from bouncing. Too many bounced checks can have a negative impact on your credit report. Plus, bounced checks lead to increased bank fees, late fees from creditors, and derogatory marks on your credit. Often, you could be declined for a loan if you have even one late payment on a major account such as a car or mortgage in the past 90 days.

Tip #4
To avoid late fees from creditors, schedule automated minimum monthly payments directly debited from your checking account. This prevents potential issues such as mail delivery delays and forgetting to send in payments on time.

Tip #5
Review your credit report at least once a year. Mistakes do happen and if you erroneously have negative items on your credit report, you’ll want to know about it and address the issues sooner rather than later.  Credit repair service is much easier when the proper action can be taken right away.

For more credit-building tips, contact Dedicated Credit Repair for help. You can also learn more on our website, http://www.dcrusa.com

We need to help them realize that the “head in the sand” method of dealing with credit is not working.  Help them realize that the FICO score is designed to very easily move from the low scoring ranges to the mid ranges.  In other words, moving from a low 500 FICO to a high 600 FICO is fairly easy to accomplish.  In fact, most of our clients realize an average increase of at LEAST 90 FICO score points in 90 days.   No joke.

The hardest part is taking the first step… scheduling the consultation.  It’s a NEW YEAR so it’s time to start thinking about over-all health.  Spiritual, emotional, financial, and of course CREDIT HEALTH.

Let’s face it, we know that there are very few legitimate credit restoration companies out there.  We get it.  We have completely tailored our programs around the FHA loan guidelines and underwriting requirements of most major lending institutions.  We know what you are trying to accomplish for your clients and we can be a huge resource to you.

Help your clients realize that putting their head in the sand isn’t the right approach.  One foot in front of the other.  We can help!  Call us for a NEW YEAR consultation.  Why not? It’s free!

We have invested thousands of dollars to uncover the hidden truths about the FICO score and how it relates to the three major credit bureaus’ reporting practices.  You may not realize this, but the contributing factors of the FICO score were designed specifically by the credit card companies.  What does that mean to a consumer?  Simply put, “Common sense” and “Fico Score sense” rarely are the same.

A perfect example is this:

Have you ever paid off a large revolving account and then closed the account afterwards?  Common sense would tell you that once you have successfully met your financial obligation, it would “help” your score to then close the account.  “Common sense” would mean that less financial obligation shows responsibility.  The contrary is true.  “FICO score sense” means that if you pay off an account and close it your scores will rapidly depleat.  What does that tell us?  The credit card companies do NOT want you to have closed accounts.  How can they earn money from a consumer if the consumer closes their revolving credit card debt?

Yet another example:

Have you ever noticed that 30% (the second largest piece of the FICO score calculation) is based on the idea that a consumer should ideally carry 3-5 open lines of credit at all times.  “Common Sense” might tell you that if you have no credit obligations you are a better risk than someone who has 3-5 lines of credit open and used. “FICO Score sense” tells us that if you do not have any open credit, you will actually have worse credit than someone who has had a history of missed payments.

Last example… the concept of paying off collection accounts.  Have you ever had an account sent to collections?  Did you know that if you pay off a collection account to a zero balance you could actually lose FICO score points?  If you pay off a collection and do not negotiate to have that derogatory account deleted upon payment, the account will re-activate the recency factor of the account causing your points to drop again!

If you have common sense questions relating to credit, and would like an honest answer, please give our office a call.  We can set up a complimentary consultation with you to discuss how you can quickly and permanently repair your credit challenges.

Closing a positive credit line (referred to as a tradeline by lenders) is one of the quickest ways to almost immediately lose FICO score points. Why? Well for several reasons. First, the FICO score has multiple calculations that are affected negatively by the action of closing an account. 30% of your FICO score relates the idea that a consumer should ideally have 3-5 open tradelines at 35% or lower balances to limit ratios. If you close an account, you can essentially lose all the positive payment history that was being reflected on that account because the account no longer looks good on a credit report. All the months and years of positive payments are no longer active on the account. Therefore a substantial decrease in FICO score occurs.

Another reason why your score will be negatively impacted by closing an account is that the FICO score calculates 15% of it’s weight on the idea of account SEASONING or “length of credit history”. So when we see an account that has substantial credit seasoning (a year or more) get closed by mistake, we cringe. It doesn’t seem fair that a consumer should lose credit points for paying off a debt and closing the account. But once again, “common sense” and “Credit Sense” rarely align.

So what’s the best way to avoid a decrease in FICO score points? Pay off an account and LEAVE IT OPEN! Would Susie Orman agree? Probably not. Most financial “gurus” will caution you to avoid credit temptation and avoid paying fees on credit cards you’re not using (which would make common sense) but in order to keep your credit integrity intact, you will need to think outside of common sense and more in line with what will bring your FICO scores up.

Doesn’t it almost feel like the credit card companies have a little more to do with the factors of a FICO score than we think? Hmmm… perhaps that should be another blog topic all of it’s own.

For more questions relating to credit ratios, closing or opening accounts, please contact our office directly.

Consumers are also lured into believing that there are credit reporting sites that are free.  The only “FREE” site that you can go to, is www.annualcreditreport.com.  This site will allow you to receive ONE FREE report per all three credit bureaus.  There are two things wrong with this site though.  They, just like all other sites will CHARGE YOU for your score.  So essentially you can have a “free report” but if you want to know your score you have to buy it.  The same is true for all major consumer driven report sites.  The other major issue with pulling credit through www.annualcreditreport.com  is that if you read the fine print on that site, it will tell you that should you wish to dispute one of the items on that site, the credit bureaus will allow themselves over 30 days to review and varify the information that you are disputing.  The Fair Credit Reporting Act only allows them (the credit bureaus) 30 days to fully review all information.  Therefore, this is NOT a site that we would like our clients to visit.  But, it IS the site that all three credit agencies spend hundreds of thousands of dollars to promote.  Go figure.

So where SHOULD a consumer go if they want a “real-deal” no nonsense credit report and accurate score?  A consumer should visit www.myfico.com and buy their scores and their report DIRECTLY from the founder/creator of the FICO score model.  Costs vary from site to site.  If a consumer can not afford the cost of www.myfico.com then they can visit any other consumer site as long as they realize that the scores will look far better on a consumer site (60-80 point variance) than a true FICO score pulled through a lender.

Keep in mind though, that if a consumer wishes to pull his/her own credit… they WILL NOT lose points on their FICO scores.  Consumer inquiries are called “soft inquiries” and they never ever impact a score negatively.  Any other type of inquiry is considered a “hard inquiry” and will indeed affect one’s score in a negative way.  We have seen a hard inquiry drop a score as much as 5 points.

Another misconception regarding credit scores is that that scores remain stagnent.  We have found that credit scores can change within days, weeks, etc of a consumer maxing out a credit card, acquiring additional loans, etc.  Therefore, it is essential to check your credit often.  We recommend that clients check their reports quarterly.  We also recommend that they print their reports and file them away.  Most places do not keep your report in an archive form.  Therefore it is impossible to look back to see “where you were” a few months back.  You are only able to see reports based on TODAY.

We would love the opportunity to review your credit report.  Contact our office for a free consultation today!

Is it better to keep balances at zero or completely paid off?  This varies depending on whether you are credit challenged or already have good credit.  A credit challenged person should keep small balances and make timely payments to re-establish any missing FICO score points.

Opening many new credit accounts in a short period of time will also cause your credit score to drop.   The reason for this is because lenders view “credit inquiries” as a sign that a consumer is about to take on new debts; thus making them appear to be “Credit Needy”.  The best way to appear less of a risk, is to keep credit inquiries to an absolute minimum.

Then work your way down…work on maintaining length of credit history or “seasoning”. Then stop running credit inquiries (10%) and keep your credit diversification in mind. As you can see, one factor can easily impact another. So over time, it is possible to make significant changes in your credit by simply understanding how the FICO score is calculated.