How to build good credit and fix bad credit! This Podcast is a GOLD MINE for credit information.
Building credit:
- Start w a primary (we own it) term loan and a revolving line
- Self Lender or Credit Strong (term loan)
- Kay Jewelers card (revolving line)
- TD Bank (secured credit card min. of $1000 and up to $5000) or CapitalOne Bank “Open Sky” card if no TD Bank local
- (these cards will release the secured interest after 6 to 8 months and convert to an unsecured card)
- Don’t use “reestablishment cards” - OLLO or Credit One Bank or First Premiere Bank
- Open accounts early and get them reporting for as long as possible
- DON’T max out cards
- Pay off cards every month if possible - penalties at 7%, 30%, & 50% debt utilization
- Never miss a payment for 6 to 8 months (or ever really)
- IF you can’t save $1000
- Get secured card for a couple hundred dollars then get limit raised after a few months
Dealing With Bad Credit:
- Bankruptcy: Reestablish credit immediately after bankruptcy (don’t wait)
- Tax Liens: Pay them off and request for them to be removed
- Collections: Typically a debt that’s been sold to a “collection company”. Collections debts can be disputed easily and should NOT be paid until they’ve been disputed!
- Charge offs: When a financial institution goes beyond 120 days on a debt and chooses to write it off. Negotiate with banks yourself rather than pay for debt consolidation company.
- Larger charge offs: You may be sued and get a judgement and will likely have to pay.
- Smaller charge offs: Dispute first, if no luck settle for no more than 50%.
- Once negative items are dealt with begin building credit based on above…
Research credit repair companies - watch out for slow pace of disputes with a high monthly fee
- Look for real reviews - ask good questions (average length of process? How many disputes per month? What do I need to do to accomplish x?)
- Service must be provided before payment due and cannot provide guarantees (but service warranty is a good thing)
How to get leverage (access to other people’s money) once you have good credit
Credit cards:
- Use your credit card consistently and pay it off monthly (or as close to it as possible)
- Ask your lender to reduce interest rate and increase limit every 6 months (assuming good payment history)
- Credit cards are the easiest way to establish great credit
- Cycle expenses through your credit cards as much as possible
- NEVER miss a payment - ALWAYS set up minimum payments auto drafts
- *Dave Ramsey is great at teaching people how to get out of debt but NOT at teaching people how to make money
Inquiries:
- Hard pulls effect your score by up to 10%
- Not all “hard” credit pulls effect credit equally when lenders underwrite you
- Inquiries in different sectors are better tolerated by lenders
- No more than 3 inquiries within 6 months ideally
- Inquiries can be consolidated by day or often removed by credit repair companies if no document was signed for EACH credit pull
- “Soft pull” does not effect credit score
- Freecreditreport.com is the only way to view soft pulls - commercial lenders cannot view them unless you already have credit with them and they are only visible within like industries
Best site to monitor credit:
honestcreditmonitoring.com (Curtis’s company yay!)
If you’re going through loan underwriting use Experian (creditchecktotal.com)
- Updates daily
- Uses FICO8 scoring model
