I just found the great website called mint.com if you have not been here before I suggest you check them out. Free accounts to help your money management. As I was toying around the site I found this great article about the “10 commandments to credit.”

Forget making changes to your credit card usage – it’s what you don’t do that can increase your credit score (or at least keep it from going south).

Just as you can’t buy happiness, you can’t buy a high credit score – 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.

How to Improve Your Credit Score – 10 Credit Score Commandments | MintLife Blog | Personal Finance News & Advice

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I found this article posted by National Home Loan Advocates. I find this to be critical to your success in building a solid understanding around credit and tyhe importance it plays in your future. Enjoy your read and keep htis article bookmarked for safe retrieval on your desktop.

FICO 08 – National Home Loan Advocates LLC – FICO 08 and Your Credit Score

Fair Isaac recently announced plans to change its credit scoring formula to ensure the continued reliability and predictive powers of FICO scores. The new model, named “FICO 08″ has been making its way into the credit scoring process since late 2008. The model replaces the existing FICO model, which has remained relatively unchanged since the 1980s.

Essentially, FICO 08 will be more forgiving to periodic late payments as long as other credit remains strong, and will have a bigger negative impact on your score if you have multiple late payment accounts.

Calculating FICO Scores

A quick summary on the FICO scoring model calculates creditworthiness based on information in five dimensions:

* Payment History (35% of score) – account payment information for credit cards, lenders, and retailers. Used to measure your ability to pay your bills on time.
* Amounts Owed (30% of score) – the total amount of credit you have outstanding relative to the maximum amount creditors are willing to extend to you.
* Length of Credit History (15% of score) – a measure of the length of time your accounts have been open with creditors and lenders.
* New Credit (10% of score) – the number of times you’ve applied for credit in the recent past.
* Types of Credit (10% of score) – this is the diversity of credit you have in your portfolio.

Changes Planned in FICO 08

The primary reason for the switch to FICO 08 had do with the forecasting powers of the new model. Fair Isaac believes that FICO 08 will do a better job at predicting the likelihood of default on a loan by making two changes to its existing model:

* Authorized Users – An authorized user is a person that is permitted by another account holder to use their account. Normally, this situation applies to a family member who is trying to manage credit for the first time, such as a college student. The new scoring model eliminates “piggybacking” which allowed individuals with bad credit to leverage the payment histories of “stronger” credit card holders by becoming an authorized user on their accounts.
* Delinquencies – The second change in the scoring model has to do with payment patterns – especially those that are greater than 90 days late in making a payment. The FICO 08 model will be more forgiving to consumers that are in arrears in one area, but have a number of other accounts that are in good standing.

Fair Isaac predicts the above two changes will reduce the default rates on consumer debt by 5 to 15% for those companies switching to the new model.
Impact of FICO 08 on Credit Scores

Many consumers have been asking:

How will FICO 08 affect my credit score?

Keep in mind that credit scores are used by many lenders to determine the amount of credit to extend a borrower. These creditworthiness thresholds are usually based on predetermined bands of credit scores. To make it easier for lenders to adopt FICO 08, the new scoring model will retain the same numerical range (300 – 850), minimum scoring criteria, and parameters as the prior model.

Credit Score Examples

The following examples help illustrate the rules-of-thumb that apply to FICO 08, and how this model might change individual credit scores:

* If you have at least one major account in delinquency, but you also have a number of accounts in good standing with creditors, then your credit score would likely increase / improve with the new model.
* If you have at least one major account in delinquency, and you demonstrate a poor payment pattern with several other accounts with creditors, then your credit score would likely decrease / deteriorate with the FICO 08 model.

Examples provided by Fair Isaac indicate that consumers might experience a 20 to 25 point adjustment to their credit scores where the above situations apply. As emphasized in other publications, the most effective way to improve your credit score is by ensuring the information used to generate the score is accurate. This includes obtaining a copy of your credit report and looking for errors.

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Have you considered using a debt settlement company for your over leveraged credit lines? What’s the best method, service provider and option for you as a consumer? These are questions that many people should be asking before they answer an ad for a company who “specializes in debt consolidation.”

Many companies that perform debt settlement and consolidation have a couple of pitfalls. First off many of them negotiate with your creditors and set up a payment plan, then the funds that they collect every month are accrued and collected for their fees first, then after a period of time up to six months your capital is being applied to their costs and not your debt.

Secondly they are consumer advocates and not necessarily attorney based there for when your creditor decides to sue you for settlement trying to force your hand into financial turmoil or bankruptcy you get dropped from the debt settlement company.

Scenario case and point we had a client in our office who needed a debt settlement service so we directed them to a known source. The payment plan was negotiated and set up for three years. Soon after the program started the clients proceeded to make the required payments. After three months and $7,500 later the clients received a notice from their mortgage company.

They were being sued, after contacting the debt settlement company 3 days before the end of the refund policy they talked it over and decided to file bankruptcy. The couple called the debt settlement company back and they were informed of two issues.

1. Yes we see you have been issued a lawsuit by the mortgage company & that they would not be receiving any refund.

2. You are also being dropped from our program because we do not have an attorney on staff,

Needless to say we had some very, very upset clients for the obvious reasons of loss of thousands of dollars and now being dropped for something totally out of their control. Now they had to file a bankruptcy to save their home, which translated into more of an expense and more headaches.

Another scenario plays the same way; the debt settlement company charges a fee of $14,000 up front on $100,000 in debt. The credit card company receives no payments for several months and issues a lawsuit. The clients are out the months of payment for debt settlement, they received a total of three months and simultaneously were dropped from the debt settlement company because they did not have an attorney on staff.

When it comes to debt settlement you need just as much legal protection in this arena as you would to modify a loan or start a corporation and draw up the documentation. Time and time again people fall victim to companies who are out for their own agenda and business gain.

It’s sad yet people make decisions based on emotions and not necessarily on well thought out or planned out strategy and they wind up with either a band-aid on a sever wound that needed proper medical attention; or they wind up with a situation that is far worse than the one they started off with.

Also besides having the professional advise of an attorney you have the representation to assist you when those creditors retaliate against you. This way you can rest assured that you are protected and safe from those unexpected bumps in the road.

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Learn to empower yourself immediately by increasing your credit card limit, call your creditors and get what you deserve. A bigger line of credit at a better rate and with less fees.

When you call to speak to our customer service the call should go something towards this effect… First off make sure to introduce yourself to the operator as follows;To Operator: Hi, my name is _______ What is your name please?

(Operator Answers). Thank you, Well, (Operators Name) I am thinking about making a large purchase in the near future, and I called to find out my credit limit?

(Operator Answers). Hmm…(as if you are not happy) What is the maximum amount of credit you can give me today?

Operator: how much do you want? I would like a limit of __________ (ask for $100,000.000

Operator: do we have permission to run your credit? Yes Operator: Do you still have the same job? Yes, and I have added additional income from a separate business.Operator: What is the name of your business? It it ______ (Decide ahead of time a name you will call your business, but don’t include Real Estate in the name.)

Operator: How much money do you make? I expect to make____________ (use your current income plus $200,000 from real estate)

How much of an increase can you give to me today? I would like to make a large purchase today for my business? Okay now that we have adjusted my limit, it occurs to me I should check my interest rate. What is my current rate?

(Operator Answers). Hmm… I would like to use this card for my purchase, but that rate seems high What’s the lowest interest rate you can give me today? In addition, can you give me access to credit card checks at the lowest interest rate you offer? While we’re at it, would you check and see if I have any annual fees?

(Operator answers) Hmm…I don’t think all of my cards have those fees. Could you have them removed?

Here are some script success notes you’ll want to familiarize your self with before you make the call. Own the conversation, be confident and powerful. You always want to be calm cool collected never brash and rude.

Be friendly but detached. You aren’t talking to Johnny or Betty these people aren’t your friend they want and need your business.Be friendly and firm. More bees come from honey than from vinegar.

PRETEND – If this is hard and scary to you,be an actor! Don’t take no for an answer. Go up 1 or 2 levels as needed. Assume your success, and you will succeed.

These are the basic tactics to making any persuasive phone call to a debtor, credit issuer or any other type of phone call be it sales or relational conversation.No matter what the outcome is your skills will become razor sharp and you’ll be able to finesse your way through most any situation that requires skill and negotiating skills. Keep up the good work.

For more information you can search for negotiation books and audios at yiur local library, search engine, or book stores.

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