Complete Book of Dirty Little Secrets From the Credit Bureaus

Money Saving Strategies the Credit Bureaus Won't Tell You

Jason R. Rich

• Publisher: Entrepreneur Press
• Year: 2009
• ISBN:
  9781613080399
• Topic: Betriebswirtschaft
• Subtopic: Kleinbetrieb

Bestselling author Jason R. Rich joins forces with top credit experts to bring you this insider’s guide to credit. Revealing jaw-dropping secrets, strategies and tools, Rich and his team of industry insiders show you how to get out from under any credit crunch, and get back in control of your financial future—in less than 12 months! Discover how to increase your credit score, remove incorrect and negative information from your credit reports, rebuild destroyed credit, and ultimately, save hundreds, possibly thousands, of dollars every month! • Boost your credit scores and overall rating • Work with collection agencies, creditors, and lenders to pay off debts and overcome past mistakes • Get the best rates on credit cards, auto loans, and mortgages and start saving • Avoid the most common financial and credit-related mistakes made by millions • Learn how to identify and avoid "credit repair” and "credit score boosting” scams • And more Includes worksheets, exclusive interviews with credit experts and supplemental resources!

1

Determining Your Current Financial and Credit Situation

This book is all about understanding credit—how to obtain it, utilize it, manage it and avoid getting financially devastated by it. To make the best use of credit, without overpaying for it, it’s important to understand your relationship with creditors and lenders; the purpose of the three credit reporting agencies; what credit reports are all about and what’s contained within them; and the impact your numeric credit scores have on your overall credit rating, as well as your ability to acquire credit and get approved for loans.

What’s in This Chapter

• Understanding what debt is

• Determining your current financial situation

• Planning your short and long-term financial goals and objectives

Building a solid credit rating and achieving high credit scores takes time, yet it’s possible to utterly destroy your credit rating and see your credit scores nosedive as a result of just one month’s worth of financial indiscretions and mismanagement. Missing a mortgage payment, paying credit card bills late, or allowing any type of bill to get turned over to a collection agency, will all have immediate and negative impacts on your credit rating and credit scores.

Information about you as a consumer, your relationships with your creditors and lenders, and your utilization of available credit is maintained within your credit reports, which are compiled by Equifax, Experian, and TransUnion—three credit reporting agencies that you’ll be learning more about shortly. Your credit scores are determined by your credit reports, which are constantly being updated with information reported to the credit reporting agencies by your lenders and creditors. Again, how this all works will be explained shortly.

What you need to understand right now is that any negative information that appears within your credit reports stays there for seven to fifteen years. So to fully understand your financial situation, you’ll need to take a look at your past and present as you plan for your financial future.

This chapter will help you gather information about your financial past and determine how it’s impacted your credit rating to date. Once you understand where you stand right now from a financial standpoint, you can better make plans for your future by setting realistic goals for yourself.

Once you understand where you’ve been financially, where you are now, and where you want to be in the future from a financial standpoint, the next focus of this book is to help you understand how credit works, improve your credit situation, and fully utilize your available credit without overpaying for it. A major goal of this book is to help you avoid the common mistakes people make when it comes to utilizing and managing their credit.

What Is Debt?

When you utilize credit or acquire a loan, you take on debt. Debt is simply borrowed money. Whether the amount borrowed is secured or unsecured or for a long term or short term, when you borrow money for whatever reason from a creditor, lender, or even your best friends, you’re acquiring debt. When you acquire debt, there are always fees, interest charges, and/or finance charges associated with it. It’s these fees that earn lenders, creditors, banks and other financial institutions money.

Acquiring credit is a form of debt; it allows you to spend more money than you currently have in order to purchase something you couldn’t otherwise afford. In some cases, you can actually utilize debt to your advantage in order to leverage the money you already have, but more on that later.

When you take out any type of loan and acquire debt, the amount of interest you pay and how long you have to pay the loan back is determined by how the loan is initially structured. The interest rate associated with the loan or credit can be fixed (meaning it doesn’t change for the life of the loan), or it can be variable (meaning it changes based on changes with the prime lending rate, for example). Interest you pay over the life of a loan, combined with the fees imposed by the creditor or lender, are considered the costs associated with borrowing money.

Tip

Every loan or type of credit you apply for will have costs associated with it. In addition to the monthly interest, you’ll be responsible for paying various fees and charges to your creditors or lenders. It’s essential that you take both the interest charges and the fees into account when calculating the cost associated with utilizing credit or taking out any type of loan.

Even for the same type of credit or loan, the interest rates and fees/charges you’ll be responsible for will vary greatly between lenders and creditors, which is why it’s essential that you always shop around for the best deals.

The deals you’ll be offered, however, will be impacted directly by your credit rating, the information displayed within your credit reports, and your credit scores. People with a below-average credit rating or credit scores will always be charged higher interest rates and fees than someone with an excellent credit history and above-average credit score. People with poor credit are considered much greater risks by creditors and lenders.

In Chapter 7, for example, you’ll discover strategies for improving your credit rating and boosting your credit score that, over time, will allow you to qualify for much better loans and credit offers and ultimately save money each and every month in interest charges and fees when you utilize credit or any type of loans.

People with a proven track record of properly managing their finances, paying their bills on time, making timely payments toward loans and outstanding debts, and appropriately using their credit, will ultimately receive the best deals from lenders and creditors, and are charged the lowest fees when they acquire or utilize new loans or their available credit.

Beyond maintaining above-average credit scores, your ability to receive the best credit terms, financing deals, and loan terms from most creditors and lenders will depend on your ability to successfully shop around for the best deals and then fully understand how the credit or loan you’re applying for actually works.

The most important question to ask is, “By borrowing this money, will I be able to achieve my financial goals and receive the financial benefits I desire, or I am paying interest charges and fees for a loan I don’t want, don’t really need, and/or can’t afford to pay back?”

As you manage your finances, it’s acceptable to borrow money and acquire debt for a variety of reasons. Your ability to properly manage your debt, keep it under control, pay off your debts, and ensure the costs of utilizing debt don’t get out of control all relate to your ability to manage your personal finances and protect your credit rating.

Types of Debt

Throughout this book, you’ll learn about a wide range of loans, credit and financing opportunities, plus other ways to borrow money and acquire debt. You’ll also discover how to save money and properly manage your finances as you take on these various types of debts.

Some of the most common types of credit and loans include:

• automobile loans

• business loans

• credit cards

• mortgages

• unsecured loans, such as “payday lending” and borrowing money from friends and relatives

• overdraft protection related to your checking account(s)

• second mortgages, home equity loans, and home equity lines of credit

• student loans

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Determining Your Current Financial Situation

Before we start exploring all of the different types of loans and credit opportuniti...

Table of contents

• Title Page
• Preface
• Acknowledgements
• Introduction
• 1 - Determining Your Current Financial and Credit Situation
• 2 - The Credit Reporting Agencies: Who They Are and What They Do
• 3 - Credit Reports 101
• 4 - Solving Credit Score Mysteries
• 5 - Obtaining Your Credit Reports and Credit Scor es
• 6 - How to Update or Fix Your Credit Report
• 7 - Ten Strategies for Improving Your Credit Rating
• 8 - Credit Card Management Strategies
• 9 - Finding and Obtaining the Best Rate on an Auto Loan
• 10 - Finding and Obtaining a Mortgage in a Tough Economy
• 11 - All About Refinancing in a Tough Economy
• 12 - Getting the Help You Need to Fix Your Credit Problems
• 13 - Preventing and Dealing with Identity Theft
• 14 - Final Note
• Glossary
• About the Author
• Index
• Additional Books by Jason R. Rich
• Subscribe to Entrepreneur Magazine
• Copyright Page