Per the “Wall Street Journal,” headline today, “Bank Lending Keeps Dropping.”
Big surprise.
As I’ve said in previous posts, lending guidelines are getting more stringent. How are banks going to lend more money if it’s tougher to borrower? The irony is that this is so simple, yet, the smartest economist in the world are missing this simple point.
“The Wall Street Journal” published an article today how foreclosures will start ramping up because the temporary moratorium (on foreclosures) is over. Over the next few months the number of foreclosures will increase tremendously, because people will be unable to pay their bills.
If this is you, do not let this be the end of your credit.
People think, because they have a foreclosure, their credit will be impacted forever. This is NOT true.
7 Steps to a 720 Credit Score is designed to get people with a foreclosure on their credit to a credit score of 720, four to five years sooner than letting the foreclosure fall off your credit report. You are going to be judged by your credit score whether you like it or not. The foreclosure will have a significant impact; however, it doesn’t have to have a significant impact for long.
I guess it’s fair, after all, it’s their company… no wait, it’s us, the taxpayer who saved them. So after the bank accepted billions and billions of dollars in taxpayer stimulus, they have decided that credit card interest rates are too low, even though rates are much lower. That makes sense.
Not only are they cutting our credit limits (previous posts), which impact our credit score, but also are raising our rates, which is going to impact how much we can pay, which will also impact our credit score.
Bottom Line: If you get a notice of a your credit card raising its interest rate; call the bank and agree not to charge any more on the credit card, and they will keep your previous rate. Per my book, 7 Steps to a 720 Credit Score, make sure that your balance is under 30%, so your credit score won’t be negatively impacted.
LOS ANGELES (PRWeb) — Over 100 million Americans are overpaying on their loans because of errors on their credit report. Worst of all, these errors are fixable and consumers don’t even realize it.
Eighty percent of Americans have an error on their credit report. Twenty-five percent of those errors are so bad that if the consumer applied for credit today, they would be turned down (2004 U.S. Public Interest Research Group Study, http://tinyurl.com/d2w5un). This is costing America billions of dollars per year and it is completely fixable!
Forty-six percent of Americans are missing at least one credit limit on their credit report (2004 Federal Reserve Board Study, http://tinyurl.com/d9dvlz), which could lower their credit score artificially.
According to My FICO, a person with a 720 credit score versus a person with a 659 credit score — only 61 points — will pay an ADDITIONAL 5.685% in interest rate … meaning the person with the 720 credit score will get an interest rate of 3% and you with a 659 will get an interest rate of 8.685% (http://www.myfico.com, April 6, 2009).
Sixty-one points can easily be lost in an instant, simply by having the “wrong” error on your credit report.
Errors on credit reports inadvertently cost Americans hundreds of billions of dollars per year and it is completely avoidable!
“There are two types of errors, High Priority Errors and Low Priority Errors,” says Philip Tirone, author of “7 Steps to a 720 Credit Score” (http://www.7StepsTo720.com). “Since statistically speaking we will always have an error on our credit report, it’s better to focus on High Priority Errors — the errors that have a 20-100 point impact on your credit score. Low Priority Errors sometimes do not affect your score at all.”
“Credit Literacy is the salvation to our struggling economy as it’s the money that people are wasting every month,” says Tirone. “By educating consumers on the errors, we could infuse billions of dollars into our economy, without a tax increase. This infusion would happen, year after year, forever.”
Examples of High Priority Errors: Active Collection Account that is listed more than once, someone else’s social security number, someone else’s name.
Examples of Low Priority Errors: Wrong date of birth, incorrect employer information, incorrect account information.
About Philip Tirone:
Philip’s book, “7 Steps to a 720(R) Credit Score” dispels the misconceptions around our credit scoring system and guides consumers who are struggling with Bankruptcy, Foreclosure, Short Sale, Divorce, and many other experiences that impact a person’s credit score.
Philip and his programs have been featured in the Los Angeles Times, The Wall Street Journal, Woman’s World Magazine, the San Francisco Chronicle, Bottom Line Magazine, and the New York Times bestseller “Secrets of the Young & Successful.” Additionally, Philip has been a frequent guest lecturer at UCLA Anderson School of Business and Management.
Contact:
Danielle Fairlee, DSF Communications
Danielle@dsfcommunications.com
(818) 346-7110
The Los Angeles Times published an article today about the UN’s Security Council split response about North Korea testing the rocket. Big Surprise.
Since when do we expect the UN to actually give a firm demand? They are master hedgers. It reminds me of our credit bureaus. It reminds me of our banks. It reminds me of the credit card companies.
It’s very clear that North Korea acted unfairly by breaking the rules that they agreed to. Isn’t it equally unfair that our credit reporting system impacts 80% of Americans with errors and that those American lives are being impacted because of those errors?The UN will not take action, just like our government has not taken action. The only difference is that the credit reporting system can be fixed via education. North Korea… well, it’s a little more difficult to negotiate with tyranny.
The Wall Street Journal published an article today about why banks started lending to small businesses even though “on paper” their financial statement didn’t look like they could pay back the loan. A 1995 study by Fair Isaac Corp. and Robert Morris Associates, found that a small business cash flow and financial statement had little correlation with how the owner would pay his bills. “A stronger prediction was the business owner’s personal credit score,” says the article. Now the year is 2009 and credit is tight. If your credit score was important 5, 10, and 15 years ago, today it’s absolutely critical. Per the small print on the agreements with your credit card companies, they can run credit checks anytime to make sure your on time on other bills. If your not, be prepared to have your interest rates raised or your credit limit dropped.
According to USA Today, 11% of US Consumers (about 22 million people) had their credit card limits cut, even though they pay their bills on time and have good credit. For many small business owners, this can be a big problem as they use their credit cards to help keep their business running. If you don’t want your lenders to cut your limit, it’s very important that you do not change your spending habits. Meaning, if you typically pay your bills in full each month, then do your best to continue to pay them in full each month. If you typically pay 50% of your bill each month, then do your best to continue to pay at least 50%. Banks are looking for changes that will show “financial hardship,” and many times they will jump to conclusions.
There is an article in the Wall Street Journal today how home prices have dropped just under 30% in the 10 biggest cites in America. At the same time, we’re getting reports from the National Association of Realtors how “sales are going up and that this is the time to buy.”
Well whether it’s the time to buy or not, I don’t know. What I do know is that lending guidelines are continuing to get tougher and tougher. Part of the reason is because the credit scoring requirements are continuing to go up and up.
Here is the disconnect: the lending guidelines and credit scoring requirements continue to go up and there is no education about the guidelines or credit scoring. People think if you pay your bills on time, you’re going to have perfect credit, which is WRONG. So until more people can qualify by teaching individuals that paying your bills on time is not necessarily going to guarantee you a perfect credit score… there is going to continue to be disconnect, which will impact how significantly the real estate market can recover.
This weekend I had a conversation with well educated attorney, probably around 65 years old, she asked me, “How are you doing in this economy? What do you do?” I responded, “I’m in education and finance; we sell products on saving money and specifically, how to raise your credit score to reduce your monthly payments.” She said, “Oh yeah, I understand all about credit. That is one problem I don’t have to deal with.” She continued by saying, “I only have one American Express card and that’s all I use.” I said, “Well statistically speaking, if you have one credit card it’s going to hurt your credit score.” She said, “I do know that, in fact, I had 11 cards, and I closed them all down.” My response, “Well, statistically speaking when you close down your accounts it will hurt your credit score.” She said, “I did know that, but it’s not a problem for me because I don’t need credit.” From there, I let the conversation die. The bottom line, I hear this every single day. Every day, I hear that, “I’m different.” In reality, if you are living in America, we are all the same when it comes to your credit score. Even though this woman thinks she “doesn’t need credit,” she does and let me explain. Does she have car insurance? Yes, and that could be impacted because of your credit score. Does she have a mortgage? Most likely, and that WILL be impacted by her credit score. Does she have kids? Yes, she had three of them. Most likely, her kids don’t have her resources and if she is teaching her kids this information; they are starting down the wrong path. This woman thinks that she doesn’t have problems, just like the 100M Americans who don’t think they have a problem.
LOS ANGELES (PRWeb) — With Millions of Americans facing a foreclosure or a short sale in their very near future, many are asking the same questions (with answers):
1) Will I ever be able to get a loan again? Yes, if you follow the right steps.
2) Should I let my property go into foreclosure or do a Short Sale? Depends on your situation.
3) I heard I need to wait 4 years to get another home loan, it this true? Not Necessarily. Some programs require 2 years.
4) What will have a bigger impact on my credit score? Most of the time, a Foreclosure will have a bigger impact on your credit score. However, that will depend on each situation.
5) How can I recover my credit after this? How long will it take? If you follow the right steps, you should have a 720 Credit Score 4-5 years sooner than waiting for it to fall off your credit.
“This is all I get asked lately,” says Philip Tirone, author, speaker and activist on the credit scoring system.
If a consumer is going to have a Foreclosure or Short Sale in their future, the most important item they need to focus on is their credit score. How they handle this one action can cost them thousands of dollars in future payments on their car, credit cards, and future homes.
After the Foreclosure or Short Sale is completed, there are many things that consumers are not aware they need to do. One of which is re-establish credit from the beginning. Relying on their previous credit record will not work, even though other accounts had no late payments.
About Philip Tirone:
After closing $500 Million in residential home financing, Philip became attentive to the thousands of dollars in extra interest payments being wasted by Americans because of their credit scores. His mission is clear: educate Americans on how to increase their monthly disposable income, without changing their lifestyle, simply by understanding the credit scoring process.
Realizing the strain this lack of credit transparency has on the American financial system, Philip has made a personal commitment to educate consumers on how to navigate our credit system until our credit laws are changed and are fair to consumers.
Philip’s book, “7 Steps to a 720® Credit Score” dispels the misconceptions around our credit scoring system and guides consumers who are struggling with Bankruptcy, Foreclosure, Short Sale, Divorce, and many other experiences that impact a person’s credit score.
Philip and his programs have been featured in the LA Times, WSJ, the SF Chronicle, among others. Additionally, Philip has been a frequent guest lecturer at UCLA Anderson School of Business and Management.
Contact:
Danielle Fairlee, DSF Communications
Danielle@dsfcommunications.com
(818) 346-7110
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