You’ve seen the ads, “Get your credit score now” “Instantly get your credit score” and so on.  Buyer beware! Not all credit scores are created equal.  Fair Issac and Company set the standard for the credit scoring model that we use in the United States.  Most lenders will use the FICO score to determine your credit worthiness.

In an attempt to compete with FICO the big three credit reporting agencies, TransUnion, Equifax, and Experian have come up with their own scores. On the surface this does not sound like a bad idea.  But, here’s the rub.  Many lenders only use the true FICO score.  So, the score most consumers buy is worthless.

I have many clients come to me not understanding why when they pull their credit they have a different score than what the lender has. Typically this is because the client bought the wrong score.  True FICO scores can be purchased from myfico.com .

I urge my clients to concentrate not on their credit score, but on managing their credit. I urge them to pay their bills on time, keep revolving credit balances  low or at  zero dollars, and do not open unnecessary lines of credit.  Unless you are looking to purchase a home, auto, or need to take out additional credit,  you do not need your credit score.

Tags: banking, budget, credit, Credit Education, credit score, Credit Scoring, credit tip, debt collection, dominate your destiny, Empowerment, FICO, FICO.credit, finance, savings, Wealth

Everyday hundreds of Americans apply for a home  mortgage. Unfortunately, many lenders do not instruct their clients on the do nots of home financing. Consequently, before the loan process is complete, an approved buyer becomes unapproved.

Chuck Bricker of Bank of America  and his team has put together a list of what they call  “Thou Shall Not”.   According to Chuck Bricker of Bank of America the following  things  should NOT be done between the time of submission of your home loan and closing.

Chuck Bricker goes on to state, “Some of these may seem very rudimentary and even silly, but I promise you that each one is from at least one real life event in my years of experience.”

Thou Shall Not:

1. Quit your job.
2. Overdraft your checking account.
3. Stop paying your rent or mortgage.
4. Change employers or compensation structure with current employer, at least without notification to your loan officer first.
5. Open any new accounts – including to finance appliances, etc, for your new house.  Tempting as it may be, get the keys first, please.
6. Make any CASH deposits to your account(s).
7. Liquidate any major accounts, like 401k, without, first, getting proper instructions on documenting the withdraw or loan & deposit into your checking account properly.
8. Get gift funds from a friend or family member – Contact me first for proper instructions on how to transfer the money from donor to you & document it for your loan file.
9. Do anything that will result in a new collection, judgment or tax lien, etc.
10. Finance a new Harley Davidson & make your first excited phone call about the new purchase to your me, your loan officer.  Sorry, I probably will not share in your excitement.
11. Change your marital status without notifying your loan officer.
12. Change your target closing date without notifying me first.
13. Forget to inform me that the home has a huge hole in the roof that could second as a shower when it rains.
14. Withdraw a large sum of money from your account(s) to make a major purchase – appliances, automobile, Michael Jordan rookie card, etc.
15. File bankruptcy.
16. Stop making payments or pay late on your current debts.
17. Get an loan of any type for your down payment.

Situations that reflect these items above do sometimes arise.  If a client has the possibility of experiencing one (or more) of the above items – or anything similar – please contact  your loan officer.  There are others involved in helping during the loan process, such as  processors, assistants, etc… According to Chuck Bricker, for matters like the above, your loan officer is best equipped to help you navigate potential problems.

Finally, Chuck Bricker suggest that if you have applied for a home loan and perceive any bumps in the road, be proactive and up-front with your loan officer.

Tags: banking, credit, Credit Education, credit tip, Home Buying, home purchase, money, Money Tips, Real estate, saving, savings

Effective May 21, 2010  – Housing and Urban Development (HUD)  has issued a one year temporary waiver of the  “flipping rule” permitting FHA financing of a resale within 0-90 days of the seller’s acquisition of the property.

Tags: banking, budget, Credit Education, home purchase, homebuyer, low downpayment, money, Money Tips, Real estate, savings

Today on  the Transform Your Credit From Good to Great show, Co-Host Jeff Dalverny and I spoke with special guest Scott Doerhman of  The Finance Coach in a episode called Taking Control of Your Money.

There were several nuggets from the show that I thought were very important.

1. Families need to budget monthly not yearly and divide by 12. Each month your needs change. For example, some months children are out of school and usually requires more food to be brought into the home.
2. Put your budget on paper. By writing down your budget, adjustments can be made if necessary.
3. Look at your cash flow. Many people do not know how much they actually make and/or  bring home monthly.
4. Have a goal. Studies show that when we have set goals and we write down our goals we are more likely to achieve them.

I also promised the link regarding Parents’ 5 other card choices for college-age children. Click here to read the article in full posted on creditcards.com.

For more information contact The Finance Coach at 317-858-7270 or call Integrated Credit Specialists LLC at 317-527-1440.

Tags: budget, business, credit, Credit Education, debt collection, finance, money, Money Tips, saving, savings, small business

It is not wise to make credit decisions based upon your credit score. Base any credit decision on the following:

1. Your overall financial situation
2. Your need for the account
3. Your ability to repay the debt

If you make the right decision based upon the above criteria, your credit score will take care of itself.

Tags: banking, budget, business, credit, Credit Education, Credit Scoring, credit tip, finance, money, Money Tips, savings

I know you are wondering how in the heck can paying off an account lower my credit score. Yes, I know it sounds backwards that by trying to do the right thing you get penalized. Here is he scoop. I have long taught that 35% of your credit score is past delinquencies. Obviously, paying your accounts in full and on time has the greatest positive impact on your score. So why would paying a collection potentially lower your score?

Here’s why, the last 24 months of activity has the greatest impact on your score. The newer the item the more impact it has. The credit scoring model uses the date of last activity to determine when the 24 month countdown starts. (Note: accounts older than 24 months still have an impact on your credit score). If you have an older collection that has not had any activity on it and you make a payment, you have restarted the clock because you have moved the date of last activity.

Many times collection agencies will try to contact you in order to have you make a payment so that they can keep the account on your credit bureau longer. Per the Fair Credit Reporting Act, collections can stay on your report up to 7 years plus 180 days from the date of last activity. Do not fall for it!

I am not suggesting that you not pay your debts. I am letting you know that there is a strategic way to handle past collections. Here are 3 simple steps:

1. Begin with accounts reporting in the last 12 months.
2. Before you pay anything, write to the credit bureaus and request validation of the debt. Validation is not verification. Federal law specifies what is considered validation. See Fair Debt Collection Practices Act for more information.
3. If debt comes back verified, contact the collection company and negotiate for a lower payment. We suggest that you ask for a pay for delete. A pay for delete is a request that the collection company deletes the entry from your credit report when payment is received. Pay for deletes are becoming increasingly more difficult to get. But, a paid collection is better than an unpaid one.

If you are applying or going to apply for  a home, we suggest you wait until you are instructed by your lender to pay off ANY collections. If your lender tells you pay off a particular account, then they have prepared for the impact it may have on your credit score.

There is nothing anyone can do for you that you can not do for yourself when it comes to your credit. However, if you want guidance and education about credit please contact us at info@intcredit.net.

Tags: budget, collections, credit, Credit Education, Credit Scoring, credit tip, debt collection, Fair Credit Reporting Act, money, Money Tips, Real estate, savings

Don’t let your credit keep you in bondage. You are more than your credit score. Do not let a three digit number stop you from realizing you financial dream. This is an open forum where we invite listeners to call in with their questions. http://www.blogtalkradio.com/victoriafinch

Tags: budget, business, collections, credit, Credit Education, Credit Scoring, credit tip, debt collection, Fair Credit Reporting Act, finance, money, Money Tips, savings

Past delinquencies make up 35% of your credit score. Obviously paying your bills in full and on time will have the greatest positive affect on your credit score. The credit scoring model looks at the level of delinquency. For example a judgment will have a greater negative impact on your score than a collection. Always try to avoid  public records such as bankruptcy, tax liens, and judgments.

Also, activity in the last 24 months has the greatest affect on your score. When looking a credit repair strategies concentrate on activity in the last 24 months first. Pay off collections in Escrow NOT before. By paying an old collection you will make it new again because the date of last activity will change.

If you would like to learn more about credit scoring  and how past delinquencies affect your credit score, please contact us at info@intcredit.net.

Tags: banking, budget, collections, credit, Credit Education, Credit Scoring, credit tip, debt collection, Fair Credit Reporting Act, finance, money, Money Tips, savings

Today credit is more important than ever. Financial institutions are supposed to loosen their lending requirements, but the opposite has happened. As recently as 18 months ago,  you could qualify for prime lending with a 720 credit score. Now,  in most cases, you need at least a 750 credit score.

As lending requirements go up, so must your credit knowledge. When it comes to credit what you don’t know will hurt you. Below I have listed  five reasons I believe consumers do not get the credit help they need.

1. Credit denial. “My credit is not THAT bad.” Your credit may not be THAT bad, but if your score is not a 750, you need to work on it.

2. Procrastination. “I’ll get around to it.” The fact is that many consumers do not get “around” to working on their credit and the financial damage continues.

3. Timing. “I am not going to apply for credit, so I can wait to fix my credit.” Credit restoration can be a long, drawn out process. If you wait until you need it, it may be too late.

4.Affordability of credit repair. “I can’t afford to pay someone to fix my credit.” The fact is, there is nothing a credit repair company can do for you that you cannot do yourself. If you are not going to take the time to work on your own credit, you cannot afford not to get help. Which brings me to number five.

5. Underestimating what your credit is costing you. Even with today’s rates you could be paying more than over $3400 per year in interest on a $200,000 home if your credit score is a 620 versus a 760. That’s OVER $280.00 per month. Could you use an extra $280.00 per month? For more information see mortgage calculators on banrate.com and myfico.com.

Do not play into the hands of the banks by not working on your credit. If you do not have the time, knowledge, and patience to work on your own credit, hire a professional. Working with the right professional will save you thousands of dollars in the long term.

Tags: Credit Scoring, credit tip, FDCPA, homebuyer, Money Tips, saving, savings

According to Moebs Service, an economic research firm, banks in the United States are poised to make $38.5 billion in customer overdraft fees this year.  Most of these fees will come from financially strapped customers.  I often hear clients complain about bank fees. There are steps you can take to avoid these bothersome fees.

1. Keep track of how much money you have in your checking account by keeping your account register up-to-date.
2. Pay special attention to your electronic transactions. Don’t forget to record your ATM withdrawals and fees, debit card purchases, and online payments.
3. Don’t forget about automatic bill payments you may have set up for utilities, insurance, or loan payments. I advise you do not use automatic bill payment. Online bill pay is a better option. You can control the date something gets paid.
   
4. Know your banks cut off time for deposits. Most banks will post deposits to the next business day if the deposit occurs after 4:00p.m.
5. Take advantage of overdraft protection program that your bank offers.
6. Avoid making deposits at the ATM. They can take longer to post.
7. Ask the bank to only honor your debit VISA/MASTERCARD purchases if you have the available funds.
8. Avoid point-of-sale fees by opting to sign for purchases instead of using your pin.
9. Ask your bank to waive fees. It never hurts to ask.
10. Review your account statements each month. Between statements, you can find out which payments have cleared and check your balance by calling your bank or by checking online or at an ATM.

If you find yourself constantly getting bank fees, I would advise you to stop using your bank account and pay with cash or money order. Beware of using money orders unless they are from the post office. It may be difficult to get your funds back if you decide not to use it.

Tags: bank fees, banking, checking, Money Tips, savings