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True client story:

Marissa (not her real name, and the first name that popped into my head) called our offices several weeks ago via a Google search. Now, we all know that this is the coldest lead in the world. We much prefer referrals from past clients and from our referral partners. Via Google search, we get emails, calls, inquiries from our Contact Us page, and even texts reaching out to us about our credit repair and debt consulting services every day. The majority of the time, folks who end up becoming a client through Google search go through several “touch points” from first contact to becoming a client. I won’t bore you with marketing and sales stats, but suffice to say, Marisa was no exception. Here is the activity from A -Z:

1. Marisa calls us via a Google search where she found our webpage
2. We talk and explain our services and offer a free credit report evaluation, with no obligation.
3. She goes to (link) and orders her credit reports, and we set up a 20 min. consult in the near future.
4. After going over her reports with her – showing her how we can help, how long it may take, and giving her some tips – she decided to hire us. but…
5. She could not afford it at that moment.
6. We stayed in touch with her for several weeks, and finally on October 1 she was ready.

“I’ll be honest, I’m both excited and nervous”

She was all signed up and ready to go and an hour later I received the above text.

We have all been there!

We have all been there! Buying a car, or airline tickets for a vacation in the future, a deposit on our first apartment or escrow on a new home purchase, even buying a new iphone (that we probably don’t need, but want), the list goes on. Anytime we are launching on a new endeavor that is going to cost us something, those proverbial butterflies in out stomach often show up. Did I make the right decision? Is this going to really be what I think or hope. What if it doesn’t turn out as envisioned? Will I regret this?

Time and money are valuable!

I remember one time when a friend of mine was selling his car. He needed to sell it fast and was willing to sell it 50% below book value. After deliberation, I decided to buy it from him with the intent of flipping it – turning right around and sell it at full price for a profit. What went through my mind as I wrote that check? What if I can’t sell it? What if it takes forever to sell? What if a major issues pops up in the meantime? What if? The “what if’s” invaded my mind. To make a long story short, it turned out ok, but to be honest, I was “both excited and nervous”at the same time.

Back to Marissa. As soon as she sent me the above text I knew exactly how she felt. At my next available time I picked up the phone and gave her a chance to expound and “let it all out”, so to speak. I already knew why she was excited from our earlier conversations. She has a one year plan of buying a house for herself and her daughter, and knew it had to start with repairing and building up her credit profiles and scores which she thought was near impossible. She also mentioned how she was tired of apartment life and that her lease would be up next August, and did not want to sign another year lease. She was/is excited because she thought for years that she could never buy a home, and now it is in her sights. She can envision it. Almost taste it. She is taking the first step toward a goal that is very important to her.

First steps toward a goal are very exciting but scary at the same time.

When I asked her why she was nervous (I could guess, but I wanted to hear her express it), she answered thus:

(Paraphrased, but pretty close)
“Well, Blair, I am nervous that this won’t all turn out like I need it to. This is important to me as a single-mother taking care of my child. My money is limited and I can’t waste a dollar if I wanna reach my goals. What if this doesn’t work out? I mean, can you guarantee my scores will go up? Without good credit scores I can’t improve my situation, my life. This is very important to me!”

I could hear it in her voice. That slightly high-pitched, increasingly rapid speaking with excited, yet reticent tone when you are “making sure” you made the right decision. Say out loud “are you sure?” with a little healthy skepticism, and you can probably hear her talking now.

I told her I completely get it, and that she is not alone. While I can’t legally guarantee a certain point increase as in “your score will go up x amount in x amount of months”, and I wouldn’t even if I could because there are so many factors involved, I assured her that with her credit report situation, and all other things considered, my experience tells me a year is more than enough time. In fact, I did promise her her score would go up, just not a certain amount, and that she would be in a position to buy a house credit-wise next year if she does everything I guide her to do, combined with our efforts. I also told her I would help her with budgeting and not to do anything on credit or make any large purchase without talking with me or one of my assistants, first.

She was mostly relieved, but to be honest, I could still hear a little hesitancy. “Ok, I am trusting you.”

It has only been 3 weeks, but all is going well as we put into action personalized, strategic first steps. Marissa is a great client.

Thank you for putting your trust in us, Marissa!

Best,

Here are a few changes in credit score models in recent years:

1. Data sources such as rent, utility and cellphone bill payments are being added.
2. The new models also treat medical collection debt more fairly by ignoring settled delinquencies.
3. Many ignore paid collections accounts entirely.

Additionally, from a recent American Banker article:

“Credit file data is also changing for the better (in July, 2017). In March, the Consumer Data Industry Association, a trade organization representing the three national credit bureaus and companies that collect and sell consumer information, announced stricter standards on including information from civil judgments and tax lien data, which will result in the removal of much of this information from consumers’ credit reports. Under the standards, consumers will have a 180-day grace period to settle insurance claims for medical bills.”

Obviously, these changes are positive, but there is a small problem: lenders and banks are slow to implement the new models, and the benefits will only be received by consumers when lenders put these scoring risk models into use. So far, lenders are continuing to rely on older credit models that are less predictive.

Why? Go here to read the complete article on American Banker.

There is hope on the horizon, though, as more and more lenders test the waters. In the meantime, until the new score models are more widely accepted, it is important for consumers to understand their credit reports and the many factors that go into calculating their score so they can qualify for the credit they need.

Check out these past articles for help:

Learn what mortgage pre-approval is here.

Here are three of the biggest mistakes to avoid if you want to keep your score high— and your interest rates down:

1. Most importantly, make sure you pay every bill on time each month. Missing only one payment can cost you dearly. Missing a payment is defined as being 30-days late, or, said another way, missing a payment and not making it until the next month when you make two at once, called “catching up”. If you have excellent credit and become 30 days or more late on one account, you can expect to lose 90 or more points. For some people, the easiest way to avoid a mistake is to set up auto-pay with all of your creditors.

Most people are not surprised that a late payment can hurt their credit score, but they are often shocked by how many points you can lose for a single late payment.


Tweet this: If you become 30 days or more late on ONE account, you can expect to lose up to 90 pts on your credit score.

2. Second, watch those medical bills closely. Unpaid medical bills are often quickly referred to collection agency and become a collection item on your credit report. Although many of these bills end up with agencies because of confusion during the billing process, the collection item reported to the credit bureau looks like a default. Take control, and aggressively follow up with your medical providers and insurance company. It is a good practice that if you think you owe the doctor or hospital money, do not wait for them to initiate calling you.

A collection item like this can take 70 points or more from your score. The balance does not have to be big. Even if the balance is relatively small it has essentially the same effect as a large balance.


Tweet this: Unpaid medical bills are often quickly referred to a collection agency and become a collection item on your credit report.

3. Third, pay close attention to your utilization ratio. You may not be familiar with this technical term used throughout the lending and credit industries. To calculate utilization, divide the statement balance on your credit cards by your total available credit. For example, if you have a $1,000 balance on a $10,000 credit card, your utilization is 10%. People with the highest credit scores have a utilization across all of their accounts below 10%. It is recommended to be below 30% utilization ratio at minimum. Higher than that you begin to reap the biggest damage to your credit score. Have you heard of “maxing out your credit cards”? That is basically 100% utilization ratio. If you have only one credit card and use the full limit every month, your 100% utilization ratio could be costing you 90 points.

Pay down your balances and keep old credit cards open to ensure your utilization stays low. It is worth repeating: Keep your revolving (credit card, etc.) utilization ratio lower than 30%, and preferably 10%.


Tweet this: Pay close attention to your utilization ratio on your credit report. Go here to learn how to avoid a high ratio.

Hope this has helped. Here are some more articles you might be interested in:

By Blair Warner, Sr. Credit Consultant, Chief Editor

This short, but concise article will show you how to get your free credit reports.

How do I get my free credit reports?

As mentioned above, under federal law, the three major credit reporting agencies – Equifax, Experian and TransUnion – are each required to provide consumers with one free copy of their credit report each year. The official website is AnnualCreditReport.com.

you can request your report from each of the big 3 credit reporting agencies, by either ordering and viewing each report online, or requesting that a copy be mailed to you. You’ll have to provide personal information to verify your identity and current residence when you order.

It’s a good idea to print a copy of your report if you find you need to dispute information on your report, or at least save it as a .pdf file for later review.

You may prefer not to order your report online, or have trouble answering the security questions. You can order your reports by phone by calling 1-877-322-8228. You can also request your file by mail, which will require you to print the order form you’ll find online and mail it to each agency with the required identifying information.

Note: Getting your free annual credit report does not hurt your credit rating.

Some experts recommend staggering your requests for your reports so that you get one from each agency every four months. For example, January you order your Transunion report, May your Experian report, and September your Equifax Report. This approach is fine if you are one who stays on top of their debt payments well, with pretty good scores, and you are not planning on applying for any new credit in the near future.

One of the problems with this approach is that these agencies don’t share information with each other, not to mention that not all data furnishers report to all three agencies. This means your reports will more than likely vary significantly, not giving you a complete picture of the credit profile lenders see. Furthermore, if there are errors on your reports, or if you become a victim of identity theft, you won’t discover it for several months.

Finally, please note that the free credit reports at AnnualCreditReport.com do no supply you with your credit scores.

Related Article: 3 Good Reasons To Question What’s On Your Credit Report

Credit Monitoring Services

If you’d like to have regular access to your credit reports as they are updated, you will most likely have to subscribe to a credit monitoring service, for which there will probably be a recurring monthly fee. Be careful. There are some credit monitoring sites not as good as others. Our favorite paid site that we have been using for years in our credit consulting business is Privacyguard.com and instructions for pulling your credit so that we can give you a free credit report evaluation can be found here. You get all three full reports, and all three VantageScore credit scores. Privacyguard.com gives you a 14-day trial for $1, and then only costs $19.95 per month for monitoring. Monthly monitoring is not necessary all the time, but we do recommend it if you are in credit repair and re-building phases, or looking to do something requiring credit in the near future. If you only want your credit reports for one month, you can order them for the $1 and make sure and cancel before your 14-day trial is up by calling the 800-number. (We are NOT affiliated with privacyguard.com)

Has this been helpful? Please feel free to comment or share on social media. We like helping people.

Tweetable Takeaways Include:

• There is only one place where your credit report is 100% free, with no bait and switch, or small print (Click to tweet)
• The Fair Credit Reporting Act (FCRA) requires the three major credit bureaus to provide one free credit report per year. (Click to tweet)
• Most lenders use FICO (credit scores), especially mortgage lenders. (click to tweet)

My friend’s biggest regret was that he didn’t monitor the process and details enough. I hate to say it, but he put too much trust in the hands of his builder. It’s not that builders can’t be trusted, most can, but the fact remains, they are building YOUR house, FOR YOU, and it is in your best interest to stay on top of things.

When it comes to your personal finances and debt management, including how items are reported on your credit reports, it is no different. It is your responsibility to “stay on top of things”, because it is in your best interest to make sure everything on you credit report is yours, and is correct.

One or two errors can have as much as a hundred point influence on your score, depending on the circumstances. It is important to question what is on your credit reports. Tweet this….


3 Good Reasons to Question What’s on Your Credit Report


1. Credit data furnishers make mistakes
I am sure this comes as no surprise, but the furnishers of your credit data make mistakes. Credit furnishers include anyone that has extended you credit and reports to the credit bureaus like banks, credit unions, auto lenders, credit card companies, cell phone providers, delinquent medical bills, even unpaid taxes, just to name a few. They either have your information incorrectly in their files and when they send it to the credit bureaus it is reported incorrectly, or the error actually occurs in the transmission of data. There are some that even intentionally and unscrupulously report your information wrongly so that they can get more money out of you or, at the very least, make life difficult for you when you apply for new credit somewhere else. To make matters worse. The credit bureaus are not required to verify the accuracy or validity of information sent them until you, the consumer, initiates it.

2. The big 3 credit reporting agencies are separate, independent companies
Unfortunately, it is not common knowledge that the big 3 credit bureaus, Experian, Equifax and Transunion are 100% independent of each other. They are not government agencies or even GSEs (government-sponsored enterprises), like Fannie Mae or Freddie Mac. They are for-profit companies no different than Walmart or Apple, and are publicly traded. This means they are competitors in this fiercely competitive, and lucrative credit reporting and data market. Not surprisingly, then, they do not share or cross-check information about you or your credit history with each other, and an error caught and corrected at one does not effect the others. Additionally, since not all credit data furnishers (creditors) report to all three bureaus, your reported credit information will be different for each bureau, resulting in different profiles and scores.

3. Identity Theft
Someone’s identity is stolen once every 2 seconds in the United States. Need I say more? If you don’t monitor your credit reports on a regular basis, and question anything that looks suspicious, especially if you don’t recognize it as your debt, you could be a victim of identity theft and not know it until it is too late. The sooner you can catch it, the least damage will occur. Believe me, you want to catch it early. We help people who have been a victim of identity theft, and it is a nightmare. This reason alone should be enough to prompt you to check your credit reports regularly.

There are a few other good reasons to question what is on your credit report, but we will go over them in our next post. Stay tuned.

Don’t regret not “staying on top” of what is reported on your credit reports. We at Upgrade My Credit recommend checking your credit reports as often as possible, but at a minimum, a couple of times a year. There are two ways to get and monitor your credit reports, and we cover them in a recent post. How To Get Your Credit Reports

Related Article: Can you really get your credit reports for free?


If you remember only one take away from this article it is this:

If you see something on your credit reports that is not yours or looks suspicious, let your doubts turn to questioning it, and do something about it. Don’t delay! Click to Tweet


If you need help, we are here for you!


By Blair Warner – Certified Credit Consultant

When it comes to securing financing for a new house or an existing property, getting a great mortgage rate is at the top of all of our lists. This is probably because even a small difference in your mortgage rate can make a BIG difference to the total interest you’ll pay over the lifetime of your mortgage and overall amortization.

The truth is that getting a great mortgage rate often comes down to having great credit.

But did you know that having no credit can be just as damaging as having bad credit?

Did you know that credit reporting agencies don’t verify the information that is given to them? Or did you know that your credit can affect more than just your ability to qualify for loans? In fact, it can affect many of your everyday purchases, from cell phones to insurance to public utilities!

So if you’re looking for tips to improve or repair your credit, read on for valuable advice and recommendations to manage your credit and improve your financial situation you can start today!

First, always make at least your minimum payment on time on every loan, credit card or other debt you owe.

You may think that you can miss a month and then pay extra the following month—but that’s not how the credit card companies operate (or calculate interest). Instead, your required payment will be considered late or delinquent. Most companies will report even one missed payment to the credit reporting agencies – and this can damage your credit score. So make at least the minimum payment on every loan, no matter what, to keep your credit healthy and in good standing with any debtors you have, as well as have the best chance of a high FICO credit score.

Related Article: How Are FICO Scores Determined

Second, set up pre-authorized payments so your bills are paid automatically.

As I mentioned above, missing even one payment can affect your credit. Debtors don’t care if you intentionally or accidentally forgot to make a payment. They only care if you make your payments on time, every time.

Maybe you simply forgot to pay a bill because all of your bills are due on different days and you don’t have an organized system to keep track of them. In that case, setting up pre-authorized payments can be a lifesaver.

If you prefer not to use preauthorized payments, setting a reminder on your cell phone or computer can be another great way to make sure your bills are always paid on time. Paying your bills becomes effortless so you never miss a due date. You’ll also save money by avoiding unnecessary interest charges.

Lastly, request a copy of your credit report at least once a year and review it thoroughly.

In Canada, you can contact one of two credit bureaus (Equifax or TransUnion) directly to request a free copy of your credit report. In the U.S. you can go to http://annualcreditreport.com to get all 3 credit reports from Equifax, Transunion and Experian.  Verify the accuracy of ALL information, including your personal information, loans, credit cards, etc.

Take note: Credit bureaus don’t verify the information they get from your creditors so it’s up to you to make sure all the information is accurate! Otherwise, you could get a nasty surprise since inaccurate information or information about a loan you don’t recognize could signal that someone may have opened an account in your name, or even possible identify theft.

Address any inaccurate information as soon as possible so that you can be on your way to improving your credit.

For more tips on managing and repairing your credit you are in the right place. Upgrade My Credit is here to help. To get straight forward advice and tips so you can qualify for the best Barrie mortgage rates, visit my website or give me a call.

By Darren Robinson, Mortgage Broker

I suggest going to your bank where you have an account with a financial banking history, first. If you prefer to go somewhere different, then credit unions are usually the most CD-loan friendly. When my 18-year old daughter wanted to start building credit she went to our local Educational Employees Credit Union (no affiliation), opened a checking account, then proceeded to get a CD-secured loan. Search the internet for credit unions in your area, or ask around for for the best options. In order to save time, pick up the phone and call, asking if they offer CD-secured loans, and what their requirements are.

Here is how it works:

1. Find out the minimum amount required for opening a CD. Every place is different. For the purposes of building credit it doesn’t matter how big the CD or loan is, just that you make your payments on time. In my daughter’s case she only needed $500 to open a CD, actually opened two of them.

2. After the CD is set and the certificate in your hands, walk directly over to the loan department and tell the loan officer you want to open up a CD-secured loan. She will know what you are talking about. Borrow the same amount of the CD, dollar for dollar. The CD secures (backs) the loan in the case of default and since it is almost like cash and at the same bank as the loan, easy to liquidate in the case of default – which you are not going to let happen, right?

3. Take the loan proceeds and put it in an account at the same bank with auto draft set up for making the loan payments. Again, the loan officer and any banker will know how to set that up for you. It is a common procedure. At the end of the loan term your loan is paid off, and you still have the money in the CD earning interest. Granted, these days, CD rates are not very attractive, but remember, the purpose is to build credit.

Tip: You can ask the loan officer to amortize the loan for 3 years with a balloon note (when the loan note is due) for 12 or 18 months in order to lower your payments if necessary. Keep in mind, though, that this means the loan will still have a balance at the end of the loan term. (Definition of amortization)

The key to this method of building credit is that you don’t go into more debt, per se. You are using your own money to build credit. Also, the interest rate is only 2% above the CD rate. For example, if you are earning 1% on your CD, you only pay 3% on your loan.

Note: This type of loan is an installment loan. Go here for a definition of an installment loan. There are only three types of loans: installment, revolving and mortgage. FICO likes to see all three on your credit report for a good mix of credit.

There you go. If you need to build better credit, new credit, or even recover from a bankruptcy, a CD loan is one of the best ways to add credit history showing you can pay back an installment type loan. Good luck!

By Blair Warner, Sr. Credit Consultant

What is a mortgage pre-approval?

First, let’s clarify what a mortgage pre-approval is NOT. It is not the same as a pre-qualification. The pre-qualification process most often includes pulling your credit score and getting some information from you either verbally or from an application. No verification of any kind occurs. Mortgage pre-qualification happens when your lender approves you as the borrower for a certain amount to buy a house (how much house you can afford), and that you qualify on a least a preliminary basis. A pre-qualification is a minimal first step before most Realtors will begin showing you houses.

A mortgage pre-approval is more detailed. This process also includes pulling your credit score, but includes verifying income with paystubs or a W2 tax form, collecting bank statements, etc. and can sometimes even be submitted to underwriting. Mortgage pre-approval positions a buyer to better negotiate a purchase because the seller knows your offer is backed by a lender. Mortgage approval comes after pre-approval.

What do you do if you don’t qualify for a mortgage pre-approval?