What is in a Credit or FICA Score?
Credit card companies can be evil, so YOU need to learn to play their game. Even let them win a little bit, but let them win at 3.99% or 7.99% and not 24.99%. Once you understand how they play the game you can take advantage of their system. You will need to learn to read your statements and follow the interest rates. I use an excel spread sheet. You will need to stay proactive by calling them every 6 months or more to ask to lower your interest rates or increase your limit. Below is a brief outline of what is in a FICA or credit score and “How to Play the Game”.
There are 3 Credit Repositories:
1. Equifax (www.Equifax.com)
2. Trans Union (www.transunion.com)
3. Experian (www.experian.com)
Notes: You may want to consider becoming a member of at least one if not all three. If money is an issue you can sign up though Discover card and they will monitor for 7.99 a month.
What makes up your credit score?
Credit Score Percentages
35% Payment history
30% Debt to available credit
15% Credit history
10% New credit
10% Types of credit used
35% Payment History:
1. Things coming off after 7 years is a myth
2. Always ask for a letter of deletion
3. Always ask to get a supervisor on the phone
4. They list your account number as *******5555. You can dispute that *****555 is not your account number.
30% Debt to available credit
1. Actually—Debt to available balance
00-30 Green light
31-70 Yellow light
70-100 Red light
2. Open only investor friendly cards
3. Call you credit card companies to raise your limits every 6 months. Ideally right after you paid your current bill off in full.
4. Two Great credit card sites: (Look for promotional rates and low interest cards)
www.creditorweb.com
www.creditcards.com
5. Always ask for credit card checks. These are often better than going to a bank for a loan.
6. Build both personal credit and business credit. If your personal credit is bad you need to fix that but you can also build you business credit though credit cards
15% Length of Credit History:
1. Start a good credit history as soon as you can
2. Open a bank account and secure credit card for bad credit cases and those opening first time credit cards
3. It’s never to early or late to start the credit process
4. Start your kids early (get credit cards in their name to build their FICA score)
5. Banks to avoid are Cap One and US Bank
10% New Credit (2 types):
1. Hard hits (You want to limit these to a few a year)
a. Loan inquires
b. Utility start ups (Cable, Electric gas etc.)
c. Car loan
2. Soft hits (These do not affect you score very much)
a. You puling your credit score from one of the big three agencies
b. Appling for a credit card
c. If you get the card offers in the mail then they have pulled a soft hit on your credit.
10% Types of Cards Used:
1. Store Cards (Avoid the cards unless you have had for more than 10 years or Home Depot, Lowes or Sears and you use for rehabbing or business) These will hurt your credit score.
2. Visa, Master Card, Discover, Amex are all good options
Three ways to dispute items on your credit report:
1. Call (Trans Union is the only one that will answer the phone)
2. Internet (email)
3. By sending a letter (Certified)
How do you repair your credit??
1. Dispute derogatory or incorrect information on your credit report
2. Dispute by phone, email and certified letter
3. Letter to creditor for deletion of information on your credit report
4. Letter requesting account statement
5. Letter to Federal Trade Commission in regards to the removal of the item
Good cards for investing or doing rehabs:
1. Amex Blue
2. Discover Platinum
3. MBNA
4. American Express Platinum Business
5. Skymiles card
Action Items:
1. Call all your credit card companies and ask them to lower your rate or ask for a promotional rate.
2. If you are going to use an advanced strategy to use credit cards as short time loans you will need to apply for a new card about every 3 months. This is often better than going to a bank or hard money.
3. Get rid of all you department store cards unless you have had them for more than 10 years and have a good credit history.
4. Pull your free credit report at one of the 3 agencies and dispute any derogatory items on your credit report. You will need to contact all three about the item on your report.
5. Set up business credit cards to build credit for your business. This will be especially good if you have poor credit that will take you a few months to clear up.
You must take action. In this day and age, life is not about “hunting and gathering” –It is about FICA. How things have changed and they will only get more interesting as we continue to move forward. The rules seem to change daily with the new administration, so stay abreast to the changes and be proactive!
Jim Galvanek
HLA Properties
www.hlaproperties.com
No comments:
Post a Comment