Aug 16th, 2010
Fixing bad credit, building new credit, and how to be the tail that wags the dog
Well, the floodgates are officially open. Since I wrote the article on fixing your credit, if my email were normally a like sprinkle like a seattle afternoon, it has now reach Atlantic hurricane status. It seems that a lot of people are struggling with bad credit from past bad decisions, bad luck, and bad ex’s. Lets start with the great news; you are reading The Penny Saved so your decision making is obviously taking a turn for the better and soon your credit will be following right along. The part about bad ex’s I can’t help you with, though I have some excellent whiskeys I can recommend.
So you fixed any mistakes on your credit score but now you need to deal with the mistakes that aren’t by credit bureaus or banks but rather by that good looking person in the mirror. Here is our goal, you are going stop being slaves to credit, the tail on the dog getting whipped everywhere with no control. Some people, such as David Ramsey espouse that you should snowball payments, pay off debt and cut up credit cards for the rest of eternity. WRONG ANSWER. You are going to be methodical. You are going to fix the bad credit, build new great credit, you are going to become the tail that wags the credit dog.
What does this mean? It means improving credit score, using it to your advantage and actually profiting off it. Here are the steps to take;
Part One: Credit Damage Control
Do not hire a thief credit counselor
You do not need a credit counselor. I am your credit counselor, this site is your credit counselor and you are your own credit counselor. I promise you that free trifecta right there is better than any $100/hr pipsqueak you will find in the yellow pages (oooh here comes the hate mail from credit counselors). If you see any credit counseling ads in my sidebar, don’t click them. Or click them to satisfy your itchy finger, and then close them and come back. I have had many different emails from people on the verge of hiring a credit counselor. Don’t, don’t don’t.
Get everything current and pay off liens/judgments/collections
This is sort of the self explanatory step but you cannot start to rebuild until you have taken care of the worst of the worst. I had several people ask about waiting and letting things get written off and then fall off the credit report. There are several problems with this. The first is that just because a credit card company writes off your debt does not mean that is the end of the ordeal. There is a lot of misinformation going around about this, the main thing to remember is, that unless it is not possible that you will be able to make any progress at all on your debt, pay it off. One thing to remember is that once you are this far in trouble, the debtors are expecting less and less that they are going to be able to recoup money. Use that to your advantage, tell them that you plan to pay it off, and would like help reporting the positives to the credit bureaus or removing all reporting about the collections. If it increases the odds they will be able to collect, they will be happy to oblige. Use this as much to your advantage as possible and you will be able to avoid the “reset the clock” problem you may have heard about. The best bet is to get things in writing, so just be careful when dealing with collections.
Part Two: Steady as she goes aka the repair
The Paydown
If you have credit cards with balances get them on auto-payment, pay as much as you can per month but keep in mind the important thing is that you need to make consistent payments on-time. That’s the key, consistently paying, and improving your credit to debt ratio.
Keep all payments on time
This means everything, including mortgage, car payments, utilities, and of course revolving (aka credit) debt.
Redistribute debt load
I know this one sounds a bit weird but here is the skinny;
First off, make sure any creditors report your credit limits to bureaus. When no limit is reported, credit scoring software scores the account as though your current balance is “maxed out”. For example, if you know that you have a $10,000 limit on your credit card, make sure that the limit appears on the credit report. Otherwise, your score will be damaged as severely as if you were carrying a balance of the entire available credit. Credit scoring software likes to see you carry credit card balances as close to zero as possible. If it is difficult for you to pay down your balances, read the following guidelines to maximize your score as much as possible under the circumstances:
- There are different degrees that scoring software can impact your score when carrying credit card balances.
- Balances over 70% of your total credit limit on any card damages your score the most. The next level is 50% of your balance, then 30% of your balance.
- In order to maximize your score without having to pay down your balances, evenly distribute your credit card balances among all of your credit cards, rather than carry a large balance on one credit card. For example, if you are carrying a $9000 balance on a credit card with a $10000 limit, and you have two other credit cards with a $3000 and $5000 limit, transfer your balances so that you have a $1500 balance on the $3000 limit card, a $2500 balance on the $5000 limit card and a $5000 balance on the $10000 limit card. Evenly distributing your balances will maximize your score.
If you do not have a credit card, get one, charge something on it, and pay it off
If you have no cards at all, find a low balance card and get it. Having a card that is paid on time will help your credit in the long run. No card means you are not building credit.
Part Three: Wag the dog aka make money
Use a cash back credit card
By getting a card that gives a good cash back, you can actually make money on regular spending. The steps are
1) Pay with card
2) Pay card off immediately
3) Repeat
4) Receive cash back
Use a points card
The usage is the same as above, however sometimes you can get better return when you use a points card. The trick is get one that gives you extra points on things that you actually want and use. An example would be the frontier visa if you fly frontier often (as I do).
Set up auto-pay
You get all the rewards without having to do anything at all after initial setup. Pretty awesome!
1) Find a card that will let you use it to automatically pay bills. American express is one such example.
2) Setup auto-pay for all of your bills
3) Setup your bank account to auto-pay that one credit card
Plus you get to save on ATM fees, Stamps, Letters etc.
Interest Free Loans
This is where we get even trickier. If you have a credit card with a billing cycle that ends the first of each month, your payment may not be due until the fifteenth. Finance charges (interest) are typically assessed only on the previous balance on your card, meaning that if you pay it off in full each month, you pay no interest. This means that all the charges you make between August 1st and September 15th are interest-free, which is like getting a 0% loan from your bank. Even banks pay interest on overnight loans from the Federal Reserve (albeit not much right now), so you’re really getting a great deal.
Protection from Theft
As anyone who has ever lost a lot of cash knows, carrying around cash is risky. When I had my wallet stolen, the person immediately started racking up bills. Imagine if I had had cash in there. I was able to cancel my credit cards quickly. Cash however would have been gone forever.
If you haven’t read part one, Fixing your credit score – Fight for your score go read it now! Also featured in the Carnival of Personal Finance
- 18 Comments
- Credit Cards , Motivation
In 1920, Ehrhardt Koch founded his own hat company, E. Koch Cap Co personalized baseball hats
. His company started with 14 employees and was located on the third floor of 1830 Geneese Street on the corner of Bailey in Buffalohard hats , New York. In 1922, the company name was changed to New Era Cap Company. In 1932, the company designed its first version of a baseball cap. In 1934 the company started producing its first professional baseball team’s caps: The Cleveland Indians home and road caps. This was in the years before exclusive licensing hat display
, so New Era was competing with other cap-producing companies at the time. Their main competitors were Wilson,snapback fitted hats Spalding, Rawlings, McAuliffe (later KM Pro, then Roman Pro), and a number of other companies. New Era also manufactured caps for some of those companies under private labeling. By the 1940s, New Era was producing caps for many professional baseball teams.cheap hats In the late 40s New Era unveiled their adjustable cap. However the company still mainly manufactured fitted http://www.hatbrandshop.com/cheap-1109-crushable-hats-Rockstar-hats-Blue.html
.
In 1920, Lewis Lacey, an Argentine Irish haberdasher and polo player, began producing a shirt that was embroidered with the logo of a polo player, a design originated at the Hurlingham Polo Club near Buenos Aires. The term polo shirt, which previously only had referred to the long-sleeved buttoned-down shirts traditionally used in polo, soon became a universal moniker for the tennis shirt; no later than the 1950s, it was in common usage in the U.S. to describe the shirt most commonly thought-of as part of formal tennis attire. Indeed, tennis players often would refer to their shirt as a “polo shirt,” notwithstanding the fact that their sport had used it long before polo did.yangchengbin/201112
I will continue to focus on. Never done in the article comments, this is my first network comments, appreciate you sharing.
is a good article for us ,i have been find everywhere for this kind of point ,All Moncler products are produced by Original Brand from Manufacturer. We strives to be the most stylized, most robust, and most functional site for Moncler Clothing on the web. In the case of an online experience,yangchengbin/201112
You are right.We should not hire a credit counsellor .They usually trap us into another debt.In my view ,to get good credit scores payment must be made in time.
The UGG Bailey Button Boots is the perfect cold weather boot to sport stylishly all winter long.
UGG Bailey Button Boots offers cute-as-a-button look with some fierce comfort features.
His times using the Bears started to be numbered using the signing of Marion Barber, and any attempts to business him went nowhere. but do not exercise using the team. He is anticipated to participate in Wednesday’s workout and be available when Arizona opens its time period Sunday at house against the Carolina Panthers.yangchengbin/201112
The Canada Goose Chilliwack Parka Canada Goose Chillwack is perfect for those people who loves outdoor activities much. Beautiful design and practical functions made it outstanding.
Meanwhile, Canada Goose Parka label also earns people’s appreciation. An increasing number of customers both at home and abroad have much faith for the model of Canada goose.
The newly developed Canada Goose Expedition may meet your satisfaction, it is made up of high quality technology fabrics, it can bring you a comfortable feeling and also give the best protection for our hands.
The goods synonymous with increased Canada Goose Sale excellent top quality coat Canada Goose jackets, which can be well-known in the world, with when you use by using customers and ” experts ” to protect their own chilly. Europe Goose Jackets will heighten the draw within the character. Since favored type of Nova scotia parka purchase has long been identified by anyone, Nova scotia goose overcoats have a very Christian Louboutin excellent volume of purchasers. Even so, down goods are not easy to stay excellent throughout seem, therefore to ensure will let you sustain your Canada Goose Parka throughout great performance, we”ve a number of strategies Monster Beats for yourself washing that.
Girls generally shell out particular thought Canada Goose parka to their visual appeal. As much as achievable, they would like to physical appearance excellent and fully feel exceptional. For a lot of, therefore tending to their own health by means of training and consuming things somewhat. Other individuals bite the bullet about custom clothes as well as add-ons, caring precisely how classy and classy they look of these outfits. Canada Goose Coat might be rather outstanding with regard to substantial frosty climate, covering the entire world. The merchandise and also options symbolic of greater best excellent jacket, that’s popular within the entire world, together with although utilizing using clients along with authorities to protect their own chilly. Since jacket styling associated with high-quality weathering chemical, lessen covered jumper stimulated possess a venture and also Canada Goose outlet architectural to protect attain customers fully severe Upper Ocean gale gusts of wind inside the Antarctic chilly reduce mental performance.
You can find total selections of ideal merchandise within our North america Goose Coats sale online store Canada goose outdoor jackets; you”ll find your quite Europe Goose Hat at most effective volume. Canada Goose Jackets Affordable http://www.cheapmonsterbeatsfactory.com North america Goose overcoats are perfect, simply occur and have the seem that i’m sure it is possible to find the correct Nova scotia goose to get upon in different seasons. Whatever your thing is actually, you will discover your someone which usually suits for your requirements greatest. Help you save Canada Goose Jackets Canada Goose outlet money from your Nova scotia Goose Store on the web preserve, be sure to make contact with to be able to all of us straight away.
North america Goose Coats will heighten the allure of your respective character. Because the favored type of North america parka sale may be accepted by every person, Nova scotia goose overcoats use a amazing level of Canada Goose purchasers. They”re made having a cozy indoor coating to help you preserve your body warm as well as get deep storage compartments and also long lasting, they”ll carry your own fingertips heat and cozy.
These kinds of exterior North Canada Goose america Goose Outdoor jackets press with the distinctive create collectively along with your cabinet which could obtain people identified. They deliver with regards to jumper charges which may quite possibly become unrealistically reduced, http://www.cheapmonsterbeatsfactory.com which can allow for that it is impossible for authorized Nova scotia Goose suppliers to be able to compete. Inside The european union it is possible to learn fully the primary also more serious winter seasons you Christian Louboutin happen to be at risk of assume, and I applied upward my own most beneficial full life-style underneath. Europe goose coats can be extremely well-known to maneuver to end up being several when employing very best hunting jackets in the planet, even just in months that will not consist of geese.
Notify you clean Canada Goose outdoor jackets, doing these a lot more extended brand new. Nova scotia Goose overcoats work best choice inside winter season, since they’re filled with soft along components preserving us all warm. If you happen to get a North Monster Beats america Goose jacket, therefore you tend to be meant to be seriously interested in its shape-keeping as well as warm-keeping just after comparatively use. Having said that, straight down items are not Canada Goose Sale easy to keep excellent in physical appearance, if you decide to want that may help you maintain your North america Goose jumper throughout excellent perform North america goose outdoor jackets, now we have some suggestions available for you about laundering the idea.
In my view ,to get good credit scores payment must be made in time.
Article is very interesting,thanks for your sharing. I will necessarily add it in the selected works and I will visit this site.
that was established in 1968. Douglas Tompkinsand Dick Happ are two hiking lovers who was so passionate about mountaineering that they put up their very own small mountaineering retail shop. They developed, manufactured, and offered technical mountaineering gear and apparel. They had over 40 years of combined knowledge in
This has lasted for 2 months of flood affected Thailand three-quarters of area, affecting many millions of people. Thailand all 77 provinces have 58 once flooded, including 25 provinces still serious disaster. Thai disease prevention and treatment of the department official said, and the number of affected terms,
The best guarantee of insuring your less stressful moving experience, is to hire professionals, such as vacate cleaning Melbourne for example.
I am very impressed with your concept of credit damage control.I must say several people will get their way to build good credit after reading your post. Keep sharing such nice posts..
This is one of the flexible and good site .I like your blog collection.This is one of the perfect post.thanks for your support.