Page 5 – Improve Your Credit Score, Now!

DON’T DEAL WITH CREDITORS WHO DON’T REPORT YOUR PAYMENTS

Most cell phone companies do not report to credit bureaus. There’s a cell phone company which might not be in our market and its name is Cricket. It’s reported to be the best deal for people who have filed for bankruptcy but it might not be available in Connecticut. Verizon and Cingular are about the same.

There are some credit card companies which say that they report to credit bureaus but they don’t. Some of those cards are Aspire and Wired. You have to pull your credit reports to determine if the credit card is reporting you. If they don’t report your payments, you don’t earn any credit toward improving your FICO score.

USING THE 3 BASIC ERRORS IN PAYING OFF DEBT

If you have debt there are 3 approaches to dealing with debt that people try before they begin to really think. The 3 basic errors in trying to pay-off debt are as follows:

1. Putting your head in the sand – being in denial or simply forgetting about it.
2. “Robbing Peter to pay Paul” is the most popular approach to dealing with debt. Why? It works – for awhile. But a balloon can only expand so far. And then pop! When people are trying to pay on credit card debt they obtain second mortgages, home equity lines of credit, shifting the debt for one credit card to another credit card in order to get a lower interest rate, borrowing on personal loans to pay credit cards are all examples of “robbing Peter to pay Paul”.
3. “Bulldozer approach” – you work all the Over-Time you can, and/or you get a second or even third part-time job and you “Bulldoze yourself into the ground” trying to pay-off the debt. The problem with this approach is that you get sick, tired, run-down, family problems arise and it becomes impossible.

NOT KNOWING THE TRUTH BEHIND ‘PRE-APPROVED OFFERS’

You can be offered an unsecured credit card with a FICO score less than 700 but you won’t get the best terms. Therefore, it’s best first to wait until you have a FICO credit score of over 625 before applying for an unsecured credit card. You’ll get in the mail that you have been “pre-qualified for a credit”. But be very, very careful because “pre-qualified” is not “pre-approved” and even if they say “pre-approved” don’t believe them. Call up the company and ask if it’s guaranteed if you apply for the credit card that you will be approved or could you be rejected? If there’s any possibility that you could be rejected, then don’t apply. Don’t forget, you know your FICO credit score, so you can intelligently discuss their policies for approval. Ask them the minimum FICO score which they will approve for their offer. If they won’t tell you or don’t know, then don’t apply.

If you are receiving offers for Platinum or Gold Cards, then this is actually a sign that you have a good credit score.

NOT HAVING A MORTGAGE AND WORRYING THAT YOUR CREDIT SCORE IS NOT OVER 740

When you have a mortgage, this helps your FICO score because you are considered less of a risk than a person who merely rents. You do not have to have a mortgage in order to obtain a superior credit score but if you are making timely payments on your mortgage, it will help your credit score because FICO rates the “quality of your debt”. As a debt with a “finance company” does not help you because only poor credit risks use a finance company. A debt on a mortgage is viewed favorably for FICO score purposes.

HAVING A CREDIT CARD COMPANY THAT DOESN’T PROPERLY REPORT YOUR ACCOUNT

The credit card industry is a pack of cannibalistic sharks. They don’t want to share their “good customer list” with a competitor. If you have a high credit line, there are some credit card companies who don’t want to report your credit limit because the other sharks will “smell fresh meat” and want to make you a more attractive offer and lure you away from your present shark.

The only way you’ll know if the credit card company is reporting your available credit line is check your credit reports. They should be checked once per year. When you order your credit reports via the regular mail, this will not count as an inquiry on your FICO score. It will be an inquiry called a “soft inquiry” but it doesn’t penalize you. A “hard inquiry” is when a creditor pulls your credit report for the purpose of granting or denying you credit.

If you have a large credit limit and it’s not being reported, this will deduct points from your FICO score because it can appear that you are maxed out on your credit card. Now you can’t make the creditor report your line of credit so if they won’t change their reporting after you’ve called them, then consider another credit card that will report your line of credit.

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