A credit score is basically a numerical representation of your credit history. It reflects your history of making payments, and is used to predict your ability to make future payments toward debt. Credit scores range from 300-850.

In today’s economic climate, a few lenders have lowered their minimum credit score requirements in an attempt to bring in new business. However, the majority of lenders have actually developed stricter lending practices in an effort to ensure that they are working only with those borrowers who are least likely to default. Therefore, by and large, credit scores are becoming more important in evaluating the qualifications of potential borrowers. Other factors that are considered include a person’s income, job history, current debts and current assets (including checking and savings accounts), any property that he or she may own, and other investments.

Continue reading "Your Credit Score: What it Means to Your Financial Health" »

Posted 11:22 AM | Permalink | Comments (0)

Book Review

Get Rich by Getting Smarter About Money

Increase Your Financial IQ: Get Smarter with Your Money by Robert T. Kiyosaki (Business Plus, 2008)

In what may be his best book to date, Robert Kiyosaki challenges his readers to wise up about their own financial situation and what they need to know to become financially intelligent because, he says, if you can increase your financial IQ, you can become richer.

Continue reading "Get Rich by Getting Smarter About Money" »

Posted 06:05 AM | Permalink | Comments (0)

FICO (the credit scoring company) sends out a e-newsletter with interesting information. The latest one included a question about the impact foreclosure has on credit scores. If you are a foreclosure investor, you should understand this. Here’s the question and answer as published by myFICO.

Continue reading "How do foreclosures and bankruptcies affect credit scores?" »

Posted 10:31 AM | Permalink | Comments (2)

A real estate investor in Flagler Beach, Florida didn’t know a computer problem at Fifth Third Bank had dumped bad information on his credit file, sending his credit score into the basement, causing him to lose deals because he couldn’t get financing, and causing his line of credit with another bank to be cut off. (See “Real-estate investor sues Fifth Third Bank over computer error”)

The problem, which Fifth Third says occurred when it was consolidating with another bank, was not disclosed to customers unless they complained—and most didn’t complain until they applied for a loan and were turned down.

Real estate investing can be a fast-moving business. While it’s possible to delay closings while problems are worked out, not every deal will wait. That’s why it’s important to keep an eye on what’s going on in every aspect of your financial life—especially in your credit file.

Posted 06:39 AM | Permalink | Comments (0)

If you’re investing in foreclosures, you may encounter prospective sellers who can’t pay their mortgages and are considering bankruptcy. In fact, as a foreclosure investor, your biggest competitor is not other investors, but bankruptcy. You’ll find it helpful to have a good understanding of the bankruptcy process and what it can and can’t do for debtors.

Here’s a link to a post on MyFico.com that discusses bankruptcy basics: click here to read Bankruptcy FAQ.

Posted 05:20 AM | Permalink | Comments (0)

As you pay off your debt and work on increasing your credit score, remember that closing old credit card accounts can work against you. Credit scoring systems consider the age of your accounts as well as available credit and payment history in calculating your credit score. An established account with available, unused credit will actually boost your score. New, maxed out cards will work against you – even if you pay them on time.

So when you pay off an account, don’t close it. Either use it only for purchases you know you’ll pay in full every month, or stash the card someplace safe – but leave the account open.

What are some effective strategies you’ve used to raise your credit score? Or what have you done that backfired?

Jackie

Posted 06:39 AM | Permalink | Comments (0)

You might think that wealthy people have high credit scores just because they are wealthy – but that’s actually not true. Whether or not you have money is not always a good indicator of whether or not you pay your bills on time. Certainly prospective creditors will look at your income to see if you can handle the debt service, but your income isn’t considered in your FICO score calculation.

Click here to read a discussion of this issue on the MyFico.com forum.

Posted 02:29 PM | Permalink | Comments (0)

You may have heard that it’s possible to raise your FICO credit score by becoming an authorized user on the account of someone else who has a high score.

FICO addressed that in a recent issue of their online newsletter, Ask myFICO. The short answer is that FICO is changing its credit scoring formula so that it no long considers accounts on which you are an authorized user but not actually responsible for the account. You can learn more about FICO scores at www.myfico.com.

Here’s the full message from FICO:

Continue reading "Raising your FICO score – FICO changes credit scoring formula" »

Posted 10:23 AM | Permalink | Comments (0)

Another aspect to the current high foreclosure rate investors should be aware of is this: With lenders stung by losses related to mortgage defaults, the amount of available credit may be restricted and that may prevent some potential buyers from purchasing their own homes. One solution is to help buyers with strategies such as lease options.

The credit issue is discussed in “Credit Crunch May Follow Mortgage Crisis, Warns Study.”

“New mortgage laws that restrict access to certain loans would be an overreaction to the current foreclosure situation and deprive hundreds of thousands of Americans the opportunity to own their own homes, according to a study released today by the American Financial Services Association (AFSA).

The study, conducted by the Center for Statistical Research (CSR), finds that more restrictive mortgage regulation would deny credit not only to those who would actually experience a foreclosure, but also to the whole class of borrowers in a particular risk category -- the vast majority of whom would otherwise use the credit successfully.”

To read the entire article, click here.

Jackie

Posted 10:39 AM | Permalink | Comments (0)

According to a recently released Administrative Office of the U.S. Courts study, "baby boomers", Americans age 55+ , are filing bankruptcy at a faster rate than the rest of the population and predictions are that this will continue to increase as the baby boomers grow older.

The median age for bankruptcy petitioners in 1994 was 37.7, in 2002 it increased to 41.4 years. The study also concluded that Chapter 7 petitions are becoming more prevalent for older filers. Between 1994 and 2002, the percentage of filers opting for Chapter 7 (liquidation), as opposed to Chapter 13 (reorganization), proceedings increased 87.1%.

Posted 02:08 PM | Permalink | Comments (0)

Need a new credit card? Don’t just call your own bank or respond to the next ad you get in the mail. Shop around. The terms credit card providers offer can vary widely and you want to be sure you’re getting the best deal for your particular needs.

Click here to learn more about comparing credit cards

Jackie

Posted 05:35 PM | Permalink | Comments (0)

Late payments for most consumer loans rose in the third quarter of 2006, according to the American Bankers Association’s (ABA) Consumer Credit Delinquency Bulletin. Credit card late payments increased to 4.57 percent in the third quarter, compared to 4.41 percent (seasonally adjusted) in the second quarter of 2006. However, credit card delinquencies improved from the third quarter of 2005, when late payments reached 4.74 percent.

James Chessen, ABA's chief economist, said, “With savings rates negative and home values stagnant, the spring has gone out of shock absorbers that handle life’s financial bumps in the road. Fortunately job and income growth remain strong and the stock market shows renewed strength.”

Click here to read the full news release.

Jackie

Posted 01:29 PM | Permalink | Comments (0)

Pretexting is one of the latest ways identity thieves steal your information. The technique is so named because the scammers use a pretext to get data—either they pretend to be you and try to get your information from someone else or they pretend to be someone you do business with and try to trick you into divulging information they can use to steal from you.

Federal officials don’t know how widespread the use of this technique is, but they know it’s happening and they know that pretexters are very resourceful.

Never give out information over the phone, through the mail, or over the internet unless you’ve initiated the contact or know whom you’re dealing with. It’s a sad fact, but when it comes to your personal information, you need to be suspicious of everybody these days.

Jackie

Posted 07:57 PM | Permalink | Comments (1)

To find the best deals on credit cards, check out Very Best Credit Cards. This is a useful, easy to navigate site that lists excellent credit card offers in a variety of categories (low interest, airline miles, student, business, debt, etc.).

If you’re looking to restore your credit rating, check out the “bad credit credit cards” link on the site. You can also sign up for the free credit card newsletter.

Of course, use your credit wisely—and only use credit to buy appreciating assets that will help you build wealth.

Jackie
Chief Blogger, Wealth Intelligence Academy

Posted 10:14 AM | Permalink | Comments (0)

The Government Accountability Office (GAO) recently released the results of a study on credit card fees and other practices and how cardholders have been affected.

The GAO report noted that: “Originally having fixed interest rates around 20 percent and few fees, popular credit cards now feature a variety of interest rates and other fees, including penalties for making late payments that have increased to as high as $39 per occurrence and interest rates of over 30 percent for cardholders who pay late or exceed a credit limit.”

The report also said that required disclosures of rates and terms were difficult for consumers to understand.

For most real estate investors, credit cards play an important role in your business strategy for a variety of reasons, including contributing to your credit rating, convenience, record-keeping, and even providing short-term cash for investments. That’s why it’s important that you fully understand the terms of each of your credit cards.

To read the GAO’s report, go to: http://www.gao.gov/new.items/d06929.pdf

Jackie
Chief Blogger
Wealth Intelligence Academy

Posted 09:11 AM | Permalink | Comments (0)

You know the importance of a high credit score: it can affect whether or not you can get loans and what sort of interest rates and terms you’ll be eligible for.

So how do you raise your credit score and keep it high? Here are a few tips:

Pay your bills on time. This may seem obvious, but it’s important. Depending on how the creditor reports information, missing a due date by just a few days can damage your credit rating—not to mention cost you in late payment fees.

Maintain credit card balances of approximately one-third of your total available credit. Maxed out credit cards can lower your credit score. If you have a credit card with a $5,000 limit, keep your balance no higher than $1,700. If you have credit cards that are maxed out, apply for a credit line increase—but don’t use it!

Don’t close older unused accounts. Creditors like to see history, and the longer the better. So if you have an older account you don’t use anymore, don’t close it. Or, if you’ve transferred a balance to get a more favorable rate, don’t close the old account; just stop using it.

Have and use more than one credit card. This lets lenders see that you can manage multiple debts.

Apply for credit only when you need it. Don’t be tempted by offers such as “get 10 percent off your purchases today if you apply for a card with us.” Multiple credit inquiries can reduce your credit score. Make credit applications only when you need it and consider them carefully.

Review your credit reports regularly and correct inaccuracies immediately. Get a free copy of your credit report once a year (one from each of the three major agencies) at www.annualcreditreport.com.

Jackie
Chief Blogger
Wealth Intelligence Academy

Posted 03:25 PM | Permalink | Comments (0)