5 Things You Should Stop Doing Right Now For Better Credit Scores

May 31, 2013 | Posted by Blair Warner | 1 Comment

Improve Your Credit Scores By Stopping these 5 Things:

1. Waiting for a better time
There is never a good time to start something.. yet it is also true that often there is never a better time than the present. With the myriad of activities vying for our attention and time these days, admittedly, working on improving one’s credit score is not the most exciting option. However, we usually make time for things that are important to us. Is it important to you repair and improve your credit scores, stop waiting for a better time. The time is now!

2. Blaming others and whining
This may sound harsh, and it is not the intent at all, but if you want to improve your credit scores, blaming others and whining about your credit woes is NOT allowed. You can blame your spouse, or ex-spouse, your parents, the government or economy, the list goes on, but it won’t change a thing. No crying over spilt milk. Take responsibility and move on with a plan to change the future. Nuff said.

3. Not planning and setting goals
Failing to plan, is like planning to fail. If we don’t set credit improvement goals, not only can we expect to not get far, but how would we know if we have arrived? We can’t control everything. Life has the tendency to decide some things for us and take us down routes we never thought we would ever consider for ourselves, but don’t let it dictate everything. We have a certain power to influence our future. Having a specific plan for better credit scores, even if not complete, at least sets you in a direction of achievement and is a guide of sorts for a better tomorrow. We often give up and just let events take over, but reacting all the time is not the same as acting of your own free will with a specific plan to improve your credit standing. Take control, set targets and get a strategy, because just living the same way that got you here won’t work. For some tips on how to do that click here.

NOTE: These last two are very important to improving your credit scores. Without them it won’t happen.

4. Making your payments late
In just about every article one reads about credit repair and credit rebuilding the admonition to make your payments on time as the best way to get good credit scores is abundant. The reason is that 35% of FICO’s credit scoring model is based on payment history. There is no getting around it. The good news, though, is that FICO also weighs most heavily on the most recent 12 months’ history, which means it is never too late to start making your payments on time and turning the corner from back credit to good credit. Start this month never making late payments and watch your credit score rise!

5. Robbing Peter to pay Paul
While writing this post, my daughter asked me to explain what this idiom means, and after explaining she asked me “why Peter, and why Paul?”. I didn’t have an answer for her except that it must mean that it is a very old idiom. This means this concept of taking, or borrowing from one place to pay your debt somewhere else goes back ages. It doesn’t work, though, for it is essentially an endless cycle. You never get out of debt. Rarely does this series of activities bring about a positive benefit. If you find yourself in this never-ending rut, stop it. I know it is easier said than done, but a plan must be put in place to be ruthless with yourself, and find a different way to satisfy your debors. A better solution is the snowball debt reduction method.

Helpful Online Resources for Getting Out of Debt
->> The Snowball Method of Paying Off Debt.
->> Snowball Method Tools, spreadsheets, calculators. – GO HERE….

By Blair Warner

Does my credit score consider information not on my credit report?

March 28, 2013 | Posted by Blair Warner | 2 Comments

There are a lot of myths surrounding credit scores and how they are calculated, or, put another way, what information is and is not considered in your credit score. Credit scores are based upon information on the credit report. This is the only information used to calculate scores, and predict credit behavior. Since there is often confusion of what is and what is not used in credit score calculations, below should help out a lot.

Which data is and is not included in a credit report?

Personal Information such as name, address, date of birth, Social Security Number and employment data (where you work(ed) only) are included.

Account information. Account information includes loan amount, credit limit, balance, payment dates, payment rating and history, to name a few.

Collections by 3rd party collection agencies.

Public records like judgements, tax liens, bankruptcy, etc. are reported.

Inquiries, when and where, but not for how much, and why you applied for credit. Inquiries initiated by you are called “hard” inquiries, which are results from applying for new credit such as credit cards, vehicle loans, mortgage, etc. Go here for more on inquiries and the myth surrounding their impact on your credit score.

Information NOT included in credit reports:

No salary or income history whatsoever is included

Medical history is not included, although medical collections via a 3rd party collection agency may be.

No arrest or criminal records are reported.

Property tax records are not included.

Insurance premiums or insurance claims are not reported.

Personal information like gender, marital status, race, religion, nationality, political affiliation and personal lifestyle is not a part of your credit reports.

Payday loans (unless in collection), debit cards and prepaid debit cards are excluded

Inquiries initiated by you online, called “soft inquiries” are not reported and have no effect on your credit score.

Financial Institution accounts like checking accounts, savings accounts, CD’s, or investment accounts. NSF checks will appear if sent to collections.

While some of the above information like income and assets may be considered by lenders such as mortgage banks, and auto finance companies, etc., in their decision process, you need only be concerned about the information that is reported on your credit reports as far as your credit score in concerned. Information not reported on your credit reports does NOT impact your credit score.

By Blair Warner (see About US page for more info.)

Tags: credit, credit repair, credit score, FICO, upgrade my credit

After Credit Repair: How to Avoid Credit Card Debt Again

March 1, 2013 | Posted by Blair Warner | 2 Comments

So, you are out of debt? How do you avoid going into credit card debt again?

by Blair Warner

You have finally done it! Congratulations! Your hard work paid off! You pulled yourself out of credit card debt and restored your credit rating through credit repair, and now, no doubt, want to avoid making the same mistakes that drove you into debt in the first place. In one sense, it is easy, but, as we all know, it is just as easy to get back into credit card debt again unless some habits are changed, and systems in place to avoid it.

Consider the following simple strategies for credit and financial management.

Make a budget

The best way to avoid going back into credit card debt is by making yourself a budget. You will want to be realistic about your budget. Think about what your spending was before that got you into debt and figure out how you are going to avoid overspending on the same things. The secret to budgeting success is to keep on track with your budget. You may want to enter in your expenses every day, weekly or pre-determined, regular times so that you do not get behind without realizing it. If you spend too much in one area, try to make up for it from another one.

Think about whether you really need all of your credit cards, and possibly get rid of some.

Some people will just spend what they have available. If you do not need all of it, which most people don’t, then you might want to start cutting down on them. This is a tricky one, though. You don’t want to get rid of all of them, yet you have to be a bit strategic on which ones to close and which ones not to, so that the hard work of building a new credit score is not wasted. If done right, it might also help your credit rating. Here are some suggestions:

You might want to start with all of the miscellaneous store credit cards that you have. Not only might this make it less likely for you to go shopping when you really don’t need anything, but store cards often charge more interest, and don’t report to the Transunion, Experian and Equifax as often as credit cards like Visa, Mastercard, Amex, etc. — not adding as much benefit to your credit scores.

You do NOT need a gas card. It is better to use a general credit card and then pay it off each month. Things like gas and groceries really shouldn’t be bought on credit anyway, but if you want to use your credit card as a type of debit card (it is not, though. It is indeed credit), then paying it off each month is important.

During your previous credit repair journey you should have been advised which cards to close and which ones to leave open. If you have not done that yet, consider closing the younger ones first, and/or the ones with higher interest rates. Again, this must be done somewhat strategically. Ask your credit specialist for advice.

Pay with cash most of the time.

Some people who are survivors of credit card debt want to deal with credit cards as little as possible. They may just take out how much cash they want to spend at any given time and just bring that with them when they go to the store. They will not have the option of overspending.

Do not go shopping. (easier said than done, right?)

Some people just cannot help themselves when they are at the store. Do you get a “Must have it, gotta have it, can’t live without it” mentality when you go shopping? If this is you and caused you problems in the past, then you might want to just avoid the stores altogether. That also goes for the online shopping websites if that is your weakness.

When you get the urge to spend, think about how hard you worked to get out of debt and repair your credit. Be proud of yourself when you see your bank account growing and as you see yourself getting in charge of your finances. This simple tips above will help you stay out of credit card debt for good.

Learn more about this author, Blair Warner.
Click here to send this author comments or questions.

Tags: budget, credit repair, debt, financial, goalsetting, new blog

10 New Year Resolutions For Better Credit

January 5, 2013 | Posted by Blair Warner | 2 Comments

2013 it here! Now what?

Well, it’s that time again—time to start rolling out the New Year’s resolutions. Some of us will vow to eat less, exercise more, live in the moment, be more grateful. You may even decide to bury the hatchet with the family member who makes you so crazy.

This time of year is a great time to start making—and keeping—financial and credit management resolutions, too. But sadly, like other type goals, we often make them year after year with sincere intent only to see them quickly fall by the wayside, as we revert to bad habits that we have vowed to break.

But what about the most financially successful people and their resolutions? Have you noticed how the most accomplished people just seem to identify important things and consistently get them done? Study successful people long enough and you start to pick up on the resolutions they seem to consistently make.

Here are ten for better credit:

#1 Spend some time making a general plan Successful people plan, period. There is no getting around it. You have probably heard of the old axiom “aim for nothing and you will hit your target 100% of the time”. That holds true for resolutions and making plans to do something different this year that will improve your credit and debt standing. If you don’t know what you want or where you are going, you will not make much progress. Get out paper and pen, a calendar, and be like Nike, just do it, and you will see how it flows. To prime the pump, start with asking yourself some questions, beginning with general, and getting more specific using the 5 W’s, who, what, where, when, why, and lastly, how. Emphasize what and when questions. Go here for more on setting goals.

#2 Determine all possible major expenditures over the next year When scoping out your year to plan and budget think what possible major expenditures may be coming up. Will you need to replace an air conditioner this spring, or a major appliance? Are any kids starting – or graduating from – college, or getting married? Is your car on its last leg? The possibilities are endless and specific to your situation and family. Try to determine the exact month the expenditure will occur. If this is your year to improve your credit, though, don’t purchase anything not necessary. Since these may require the use of credit, also consider how it will effect your credit score and debt load. Call us anytime for a free consultation.

#3 Create a budget As a type of sub-plan under your general plan is a budget, which focuses on your finances. There are two kinds of budgets, one that considers all your current expenses and income over a specific period of time, usually monthly, and one that includes a deliberate, aggressive plan of debt reduction, often called debt snowball-ing. The debt snowball is more than just paying the minimum payment. More on debt reduction below. If you have never made (and tried to keep) a personal/family budget, It’s time. 2013 is the year! A whole blog could be written on how to create a budget, so for now here is a link to an example. The trick is to be realistic and as accurate as possible, and stick to it. Sometimes having an accountability partner helps.

#4 Make a “vow” to make all payments on time. This one should be self-explanatory. It is the cornerstone of good credit. There is no getting around that since 35% of FICO credit score is calculated from your payment history, you have to make yourself the promise to make your payments on time from here on out, and keep it. You will be amazed how much your score will go up if you do nothing else different in 2013 over 2012 except make your payments on time on your current debt each month. Try using your bank’s auto-pay system online. Call your banker to find out how if you are not already set up with online banking.

#5 Create a debt reduction plan As mentioned, this is also called the debt snowball. It is a specific plan of reducing or getting out of debt that requires paying more than the minimum payment each month and the availability of extra cash to do so. The concept is that you start out small, and on specific accounts, that as paid off frees up money you were paying on those accounts to then apply toward remaining, and probably, higher balanced accounts. It may or may not be done in a year, depending on your debt load and it is most importantly applied to unsecured, credit card type debt. A future post will be written explaining it in more detail. Warning: Don’t just jump into to randomly paying off debt. In order to improve your credit standing and increase your score as desired, it needs to be done strategically.

#6 Cut back on expenses One of the best ways to free up some money for debt reduction and financial goal setting is to cut expenses. Even when you think you can’t get blood out of turnip look at your expenses and spending habits and see if you can find something to cut out or down on. Only you know what can be cut out or not, but remember, since 2013 is going to be your year to improve your credit and reduce or get out of debt, be ruthless with yourself. It may take some sacrifice. See Cut Utility Costs – Improve Your Credit for some tips as a place to start.

#7 Check your credit reports and scores As we have mentioned in our article Ten Commandments of a Good Credit Score, it is crucial to know what is on your credit reports and monitor it regularly. If you are looking for a place to pull them, try www.privacyguard.com. it only costs $1 the first 30 days, then if you want to monitor them monthly it is reasonably prices at $14.95/month. We suggest monitoring your credit during times of credit repair and rebuilding, but it is not necessary.

#8 Deal with any derogatory or erroneous items on your credit reports Once you have pulled your credit reports, go over them with a fine toothed comb, checking for any errors, accounts that don’t belong to you, and making a note of all derogatory items. You also need to make sure you have plenty of good credit. Analyzing your credit reports can be confusing, call us, or go here for a free credit report evaluation by a credit professional at Upgrade My Credit.

#9 Refinance your home to 15-year mortgage with a lower interest rate (if applicable) This may not apply to everyone, but sometimes refinancing your home to a lower interest rate will save you significantly each month, freeing up more money for debt reduction and credit building, especially if you can reduce it to a 15-year mortgage. Here is a free mortgage calculator to compare. If you think this may apply to you, or are just want to inquire more about it, we have many mortgage lender partners we can introduce to you. Give us a call. 817-886-0302

#10 Finally, get a free credit consultation from Upgrade My Credit. We love to help people reach their financial goals that require good credit, and we have an even softer spot for folks who have poor credit and just don’t know where to start to repair and re-build it.

This was a bit longer than most of our articles, but hopefully well worth the read. You will probably want to return here through out the year to refresh your determination and keep on track.

By Blair Warner – Sr. Credit Consultant, Upgrade My Credit

What do mortgage rates look like for 2013?

December 26, 2012 | Posted by Blair Warner | No Comments

Special Report: Mortgage rate outlook

We like to offer you the best information and resources for your home-buying plans. Here is a good article on mortgage rate forecasts for next year from a mortgage partner Total Mortgage Services.

Click here for the article Mortgage Rates: Naughty or Nice?

If you are looking to buy a house in 2013, make sure your credit and debt house is in shape. If you need credit repair help, don’t hesitate to contact us.

Happy 2013

By Blair Warner

Credit Scores Used By Consumers and Lenders Can Differ

October 1, 2012 | Posted by Blair Warner | No Comments

CONSUMER FINANCIAL PROTECTION BUREAU STUDY FINDS CREDIT SCORES USED BY CONSUMERS AND LENDERS CAN DIFFER

One out of Five Consumers Likely to Receive Meaningfully Different Score than Creditor

WASHINGTON, D.C. – Sept. 25, 2012, the Consumer Financial Protection Bureau (CFPB) released a study comparing credit scores sold to creditors and those sold to consumers.

“This study highlights the complexities consumers face in the credit scoring market,” said CFPB Director Richard Cordray. “When consumers buy a credit score, they should be aware that a lender may be using a very different score in making a credit decision.”

The complete Analysis of Differences between Consumer and Creditor-Purchased Credit Scores is available at: http://files.consumerfinance.gov/f/201209_Analysis_Differences_Consumer_Credit.pdf

The Dodd-Frank Wall Street Reform and Consumer Protection Act directed the CFPB to compare credit scores sold to creditors and those sold to consumers by nationwide credit bureaus and to determine whether differences between those scores harm consumers.

THE STUDY DETERMINED:

One out of five consumers would likely receive a meaningfully different score than would a creditor:

Score discrepancies may generate consumer harm:

Consumers unlikely to know about score discrepancies:

RECOMMENDATIONS:

Shop around for credit.

VERY IMPORTANT – Check the credit report for accuracy and dispute errors. Credit scores are calculated based on information in a consumer’s credit file. Inaccurate information may be the difference between a consumer being approved or denied a loan. Before shopping for major credit items, the Bureau recommends that consumers review their credit files for inaccuracies

Thanks to contributions from the California Association of Mortgage Professionals

By Blair Warner

Tags: credit repair, credit score, FCPB, FICO, upgrade my credit

Keller Williams Realty Ranked Highest in Customer Satisfaction

September 16, 2012 | Posted by Blair Warner | No Comments

Congratulations Keller Williams’ agents!

According to the J.D. Power and Associates 2012 Home Buyer/Seller Satisfaction StudySM released earlier this month, Keller Williams Realty, Inc. ranks highest in customer satisfaction in both the home buyer and home seller segments. Keller Williams Realty, Inc. achieved the highest scores in all measured factors across both segments, receiving the highest JDPower.com Power Circle RatingSM among its competitors overall.

“We are so proud to have our associates be recognized once again for leading the industry with the influence and reputations they have in their local communities. They continually demonstrate not only their level of talent, but their commitment to serving our communities with the utmost integrity and highest level of service,” Mark Willis, CEO of Keller Williams Realty, Inc., stated. “Congratulations to all Keller Williams Realty associates. They have certainly earned this prestigious distinction.”

The fifth annual J.D. Power and Associates study measures customer satisfaction with the largest national real estate companies within the home buyer and seller segments. Scores are determined by examining three factors of the home-buying experience: agent/salesperson; office; and variety of additional services. For the home-selling segment, agent/salesperson; marketing; office; and variety of additional services are examined.

J.D. Power and Associates stated, that “the uncertain economic times present a challenge for the real estate companies to really work closely with the customers and really hold their hand through the entire process to make them feel more comfortable in the decisions. Keller Williams has set itself apart by performing high in all the areas that are most important to customers specifically with the agent, the offices, and the services that they provide.”

“Our agents go above and beyond to help their clients at one of the most personal times in their lives – when they are buying or selling a home. We are incredibly honored and humbled that our associates have been recognized yet again for their incredible levels of service,” says Mary Tennant, President of Keller Williams Realty, Inc.

TO VIEW THE PRESS RELEASE, CLICK HERE

Disclaimer: Keller Williams received the highest numerical score among full service real estate firms for home buyers and home sellers in the proprietary J.D. Power and Associates 2012 Home Buyer/Seller StudySM. Study based on 2,994 total evaluations measuring five firms and measures opinions of individuals who bought or sold a home between March 2011 and April 2012. Proprietary study results are based on experiences and perceptions of consumers surveyed March-May 2012. Your experiences may vary. Visit jdpower.com

About Keller Williams Realty, Inc.:

Founded in 1983, Keller Williams Realty, Inc. is the second-largest real estate franchise operation in the United States, with 675 offices and almost 77,000 associates across the globe. The company, which began franchising in 1990, has an agent-centric culture that emphasizes access to leading-edge education and promotes an economic model that rewards associates as stakeholders and partners. The company also provides specialized agents in luxury homes and commercial real estate properties. For more information, or to search for homes for sale, visit Keller Williams Realty online at www.kw.com . Information about Keller Williams Realty’s international expansion can be found at www.kwworldwide.com.

By Blair Warner

Cut Utility Costs – Improve Your Credit

August 2, 2012 | Posted by Blair Warner | 2 Comments

Click for a free credit evaluation

I admit, the title was designed to get you to read this posts. However, it’s true; when trying to get out of debt and improve your credit profile, it is often important to look at your finances and expenses and come up with ways to save money so that you can pay down any debt you may need to in order to increase your score and reach your financial goals. One of the biggest expenses we have, besides food and shelter, are utility bills like electricity, water, telephone, etc. Today’s blog looks at some tips for saving money on your electric bill, the biggest portion of your utility bills.

First, Reevaluate your monthly electric bills. Read through your bills and understand what all the charges are for. Start by determining how much electricity you use. Understand what each itemized fee is, and even look at the kilowatt usage. Compare each month and season’s usage, and use the monthly usage from the previous 12 months to determine the approximate value. (Follow the same process for your water bill, telephone bill and internet bill. Some people have an HOA bill as well.)

Consider the amount of energy you use at night. Many people burn a great deal of energy at night, leaving lights on and appliances running while they sleep. Make sure your T.V., computers, and any unused ceiling fans are turned off, as well as unplug gadgets such as cellphone and radio devices, as they can suck energy. (It’s not good for your device batteries anyway, to keep charging after a full charge).

Change your lighting. If you use a particular light more than 30 minutes a day it is economically worth it to replace the bulb with a high-quality LED or compact flourescent bulb to save money.

Pay attention to heating and air-conditioning. The heating and air-conditioning systems probably account for the largest portion of your monthly electric bill. There are several good tips you can follow to save electrical use for these items.

Make sure and change your filters regularly. Don’t use the so-called permanent filters. They can cause your system to not function at full capacity, and put strain on the unit, even requiring a sooner-than-normal replacement.

Is your house properly insulated? A well-insulated home will not leak heat or cool-air.

Use a fan instead of an air-conditioner when you can. It is far less costly. Also, turning your thermostat up a little, to even 77 or 78 degrees and using a fan will do wonders in cutting costs.

Decrease energy use by your refrigerator and freezer. They use a great deal of energy. Of course, you can’t very well turn off the refrigerator. There are a few things you can do. Make sure the door is closed when not in use, and check all the sealing gaskets around the doors to make sure they seal well. Lastly, make sure there is plenty of ventilation by leaving plenty of space between the refrigerator and the wall.

Use the oven and stove in ways that uses less energy. When using the stove, use the right pots for the right burner size. Turn the stove off five minutes before the cooking time ends. Keep the oven door closed as much as possible and try not to preheat it if possible. Finally, turn off the oven 10 minutes before the food is ready.

Use energy-efficient appliances. Technology has come a long way in developing energy-efficient appliances, especially for the most often used ones.

As a last tip, make sure the washing machine and dish washer are as full as possible before each use so as to reduce the number of times they are used. Furthermore, in most cases, it is ok to use cold water which will reduce energy use more than you would think.

As David Horowitz says “Being energy-efficient is not only good for the environment, but is one of the most important ways in which you can cut costs.”

I know this is not your typical blog topic you see on a credit repair and credit counseling website, but I hope you received some great ideas on how to save money.

By Blair Warner

Tags: budget, credit, creditrepair, upgrade my credit

How Soon Can I Buy A Home After a Short Sale?

June 21, 2012 | Posted by Blair Warner | No Comments

How soon can I buy a home after a Short Sale? This is one of the many questions that buyers ask us before they decide to move forward with a short sale on their home. Many times it is one of the last obstacles to moving forward with a short sale. I heard of a family delaying their decision over a year which ultimately delayed resolving their problem and being ready to buy a new, more suitably priced home the same length of time. The sooner you can move beyond your fears and hesitations and get the information you need, the sooner you will be able and ready to buy again when your credit is repaired.

How soon can I buy a house after a short sale? As soon as 2 years! This will vary from borrower to borrower and from lender to lender but the avg recovery time to purchase again seems to be roughly 2 years after a short sale. Please consult with your mortgage expert to be sure.

How soon can I buy a house after a foreclosure? 3-7 years depending on circumstances and the original lender and loan. It is VERY IMPORTANT to speak with a specialist in the areas of real estate, mortgage lending and credit before making any decisions about a short sale or foreclosure. It might even be wise to consult your attorney if he is familiar with short sales.

In many cases (not all) buyer’s have worked with a credit repair organization to move the process along further and faster. This may or may not be the best option for you and your family. We would encourage you to get the information you need by taking advantage of our FREE consultation so you can make an informed decision. Additionally, after a short sale, take your time, save and prepare yourself for the right buying opportunity.

We would love the opportunity to chat with you about your unique situation and about your buying options after a short sale. Give us a call at 888-586-2261 or contact us through the form on this page of our website and we will be in touch.

I hope you found this helpful.

By Blair Warner

Tags: credit repair, foreclosure, mortgage, short sale

The 10 Commandments of a Good Credit Score

June 3, 2012 | Posted by Blair Warner | 5 Comments

A common question I get asked is, “what is the secret to a good credit score?” I always hate to answer it so matter-of-factly and quickly because I know they are hoping I can perform magic. The simple answer is, though, the only way to get one is to demonstrate financial responsibility. “Creditors don’t care about how many millions you may have in your investment account, it’s how you use your credit,” says Maxine Sweet, vice president, public education for Experian.

However, there are some tips for using your credit, and like many things in life, it’s what you don’t do that can have a positive effect on your credit score.

Steer Clear of These 10 Things:

1. Thou Shalt Not Avoid Using Credit. If you don’t use credit, you won’t have much of a credit score. To Quote Sweet again, “A credit score is an important tool companies use to protect themselves”. The lower the score, the higher the risk, and this can affect whether or not a loan is approved.

2. Thou Shalt Not Miss Payments. Paying a bill late will hurt your credit, but missing a payment will damage it even more. “If you do so, you can’t make it up,” Sweet says. In other words, making two payments in the next billing cycle will not remove the blemish from your credit history. Whether or not you pay your bills on time determines 33% of your score.

3. Thou Shalt Not Limit Loan Types. Despite what your bank account may think, a car payment and a mortgage may not be enough. Also managing an installment debt, such as a credit card, is a good indicator of credit savviness. There are five elements to the credit score model and revolving credit, which allows consumers to charge and owe different amounts each month, is one of them. “It’s 10% of the score,” says Gail Cunningham, vice president of public relations for National Foundation for Credit Counseling.

4. Thou Shalt Not Close Unused Credit Card Accounts. Actually, just use caution, says Sweet. A factor in credit score models is your utilization, which is your debt vs. how much is available. For instance, if you owe $4,800 on a card with a $5,000 limit, you’re using most of your available credit and this “utilization” will have a negative impact on your score. Counting toward 30 percent, your utilization is the second highest factor in your credit score. You should charge no more than 30% of your available credit, recommends Cunningham.

5. Thou Shalt Not Be A Credit Tease. Don’t run up charges all over town or apply for several cards at once while looking for the best rewards program. Recent inquiries means that you have accessed your credit and this can affect your score negatively. “This signals that you’re desperate for credit and don’t have enough cash available for your purchases,” says Cunningham. She adds that if you are shopping for a major purchase, such as a mortgage or car loan, the inquiries will usually roll together into one.

6. Thou Shalt Not Rob Peter To Pay Paul. Don’t charge anything unless you know how and when you are going to pay it back. One of the benefits of credit is the ability to spread out payments on a big purchase, not to delay paying with hopes that the money will come in – from somewhere. If you need to use a credit card for convenience, use a prepaid card or a secured card that enables you to make payments to your own line of credit.

7. Thou Shalt Not Get On The Call List. When a debt turns into a collection account, it’s an indication that you got yourself in hot water. Once a collection agency jumps into the arena, it becomes the owner of the debt, which will show on your credit history. Trying to make payments to the original debtor will not make the collection agency or the negative mark on your credit go away.

8. Thou Shalt Not Forget The Little Things. That library fine you didn’t pay or the health club contract you signed but didn’t honor can show up on your credit report. Any debtor has the right to report unpaid bills to the credit bureaus, and many of them exercise that right.

9. Thou Shalt Not Negotiate. On paying less than what you owe, that is. If you cannot repay a debt in full and a creditor agrees to settle for less than you owe, you haven’t won the battle. The transaction will be reported as a settled account and this will hurt your credit score. Instead of negotiating to lower the overall amount of the debt, ask to have your interest rate or monthly payment lowered so that you can continue to pay the debt off in full. (Sometimes negotiating is the best choice. Each case is different)

10. Thou Shalt Not Give Up. If you have late payments, missed payments, defaulted loans, and similar credit mess-ups in-between, don’t give up and think that your credit history is ruined. Although offenses like these generally stay on your credit history for seven years, the recovery clock doesn’t start ticking until you have one full month of paying all of your debts on time, says Sweet.

Adapted from FreeCreditReport.com, a part of Experian. (excluding introductory paragraph)

Posted by Blair Warner

Tags: 10 Commandments, credit, credit score, FICO

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