Year: 2013

Making 2014 the best year of your life…

Posted on December 15, 2013 by - Uncategorized

When I got back from Lifebook, I started thinking about you. You may be reading my emails because you want to know how to improve your credit score, and many of you are finding out that it is much easier than you thought!
But is that really what you want?  Do you really want a high credit score, or is it what you think a high credit score will give you? I believe it’s what you think a high credit score will give you.
So, let’s finish up this year a little different… and let’s focus on all of us making 2014 the BEST year of our lives.
Want to play this game with me?
Here are some questions I have for you, please comment below:
1) On a scale of 1-10 (10 being high), does this message excite you?  If you are reading this post (and yes, I can tell how many people read this) and you don’t comment, I’m going to assume that this message doesn’t excite you (which is fine).  I’m just curious what percentages of the readers are into this topic.
2) Do you have anyone in your life that you could play this game with?  Meaning, do you have a friend, family member, or co-worker that you could have a conversation with about making 2014 the best year of your life?  I know some of you don’t, which is okay.  If you do, find and identify them.  Either way, let me know below.
3) Write down the three things you want in 2014 in each of the following categories (don’t feel you have to comment on this below, however, you are welcome to):

  1. Your Health and Fitness
  2. Your Financial Life (job, finance, savings)
  3. Your Love Relationship
  4. Your Social Life (which includes your family)

Look forward to reading your responses… depending on the response, we will have more exercises next week.
Sincerely,
Philip Tirone
P.S. “Are you excited about 2014?” These are powerful words. Ask them to your friends… and anyone who says yes would be a good partner for you on this journey.
P.P.S. The class I took, called Lifebook, can be found here.  The class is expensive, however, if you want to take it, let me know and I’m sure I can get you a discount.

Preventing holiday hangovers

Posted on December 6, 2013 by - Credit Score, CREDIT SCORING, Personal Finance

Just a quick reminder…
Don’t get carried away with your credit cards when shopping for holiday presents. Before the holidays are over, many consumers will charge an extra $600, $1,000, or $2,000 to their credit cards. Most shoppers don’t plan for this—it just happens. But by the time January rolls around, they have giant credit-card hangovers that leave them wondering how they can preserve their finances when they have migraine-size debt looming over them.
And remember: one of the keys to a high credit score is to keep a balance that is no higher than 30 percent of the limit. So not only will extra credit-card debt hurt your pocketbook, it will also hurt your credit score.
Keeping the right credit card balance is one of the most important things you can do this holiday season to protect your credit score. Here is my time-tested tip for avoiding the holiday credit hangover.
1. First, create a holiday spending budget.
I know a lot of parents who want to create lasting memories for their children, so they go overboard, buying tons of presents for their kids.
But think back to your own childhood. How many gifts are etched into your memory?
Probably not many. Your children will remember the time they spend with you more than the gifts they will receive.
And if you are racking up your credit card bills, you probably feel stress and anxiety, which will detract from the time you spend with your children.
So create a reasonable budget and determine how much you can afford to spend on each person on your list.
2. Leave the credit cards and debit cards at home.
I’m totally serious about this. If you don’t take credit cards or debit cards, you cannot overspend. It’s that simple. If you do take credit cards and debit cards, you can overspend and induce that hangover. So just leave them at home.
In fact, the more radical this idea sounds to you, the more important it is that you implement it.
Taking credit cards with you is just too tempting, even to the most disciplined shopper. The allure of “buy now, pay later” will allow you to make impulse purchases.
If you take only cash, on the other hand, you will limit your spending to the cash in hand. Those impulse purchases will be impossible.
3. Create “wallets.”
This is where my “envelope system” comes into play …
Before jumping in your car and hitting the local mall, pull out some plain white envelopes and write the name of each person you are going to purchase a present for on individual envelopes. (If you have eight people to buy presents for, you should have eight envelopes.)
Within each envelope, place the appropriate amount of cash you have budgeted for this person—no more and no less.
Each of these envelopes represents the wallet you have for each person on your list.
You might want to bring a little extra money for lunch, but be sure to leave your credit and debit cards at home.
When you purchase a present, use the money from the appropriate “wallet.”
This method will create a psychological barrier to impulse shopping. If you are tempted to splurge on a gift, you will be dissuaded when you consider whose wallet you will withdraw money from in order to cover the impulse shopping.
What do you think? Does this help you avoid the “holiday credit card hangover”? Leave a comment below and let me know.
Cheers!
Philip Tirone
P.S. And don’t forget to ignore the retail-store credit card offers this holiday season (and always!).

“Cash Only” Is Dead Wrong, by 720 Credit Score

Posted on November 27, 2013 by - Credit Score, CREDIT SCORING, Personal Finance

Many so-called experts say that you should adopt a cash-only policy and ignore credit cards. But here’s the truth…
They are dead wrong.
Avoiding credit won’t make life easier. In fact, it will make life a heck of a lot harder. It also won’t make your credit score improve. In fact, it will make your credit score drop like a lead balloon.
If you adopt a cash-only policy, you’ll end up with no credit. And no credit is just as bad as poor credit. You see, the credit-scoring bureaus want to see that you can responsibly handle many different types of credit before they award you a good credit score. If you don’t accumulate a proven track record, you won’t get a good score.
Now, a lot of people who have been through a financial meltdown decide that the only way to turn their lives around is to stop using credit. But think of it like this: Let’s say you took a math test in school, and you failed. Your grade was an F, so you decided to stop taking math tests—to just wipe your hands clean of math tests.
Would your grade improve? Heck no. And your credit score won’t improve if stop using credit cards either. I always say that having no credit score is just as bad as having a poor credit score. They credit-scoring bureaus won’t have any information on which to judge you, so they will think: Better safe than sorry. And they will give you a low credit score.
This means

  • You’ll have a hard time getting great insurance premium rates.
  • You might be unable to find a job.
  • Landlords might not want to rent to you.

And if you ever need a loan (and you probably will!), you will get lousy terms and pay an arm-and-a-leg in interest.
So they next time someone tells you to wipe your hands clean of credit, ignore them!
This doesn’t mean that you should get yourself into debt with your credit cards. It means you should use your credit cards wisely. Keep a low balance (less than 30 percent of the limit), and pay your bills on time every month.
And if you have any questions, be sure to leave a comment below.

Don’t make this mistake on Friday, by 720 Credit Score

Posted on November 22, 2013 by - Credit Cards, Credit Score, Personal Finance

Every year on Black Friday, a ton of consumers make a huge mistake that ends up hurting their credit scores and their bank accounts…
They sign up for retail store credit cards.
Excited to get that one-time discount that is usually offered with a brand new retail store credit card, shoppers ignore all of the ramifications. My advice? Don’t ever agree to a retail store credit card. You won’t save money in the long run, and you might hurt your credit score.
Let me explain…
Imagine that you doing some Christmas shopping, and you approach the cashier with a few sweaters for your sisters, clothes for your kids, and a belt for your husband. The total is about $157. The cashier immediately makes you an offer:
“Do you want to apply for a retail store credit card? You’ll save 15 percent on today’s purchases.”
No matter how tempting it is to save that $24, don’t say yes.
Think about it: The banks and the retail stores that promote these store-specific credit cards offer these promotional savings because they know they are going to recoup the discount … and then some.
Consider all the ways the banks and the retail stores can make money off you:
1) First, you will pay interest on whatever you buy on the day you open the card. Most retail store credit cards have a high interest rate—usually in the range of 20 to 30 percent. So unless you pay your balance in full right away, you are going to pay more than you saved.
2) Have you ever bought something just to take advantage of a coupon? A lot of people have. By signing up for that retail store credit card, you will be put on the store’s mailing list, and you will receive coupons that are just for cardholders. They are intended to entice you to the store.
3) In the future, you will be more likely to engage in a little “retail therapy” if you have store-specific credit cards in your wallet. Using credit cards is always easier than using cash; it’s also an easy way to get into debt.
4) If you are given a one-time offer to save on today’s purchase, you just might pile a few more items into your shopping card.
Suddenly, that $24 savings doesn’t seem worth it, does it?
Keep in mind, your credit score could also suffer if you use retail store credit cards. Here are three reasons…
1) Keeping these cards active can be tough. Credit-scoring bureaus want to know that you can responsibly manage your credit cards. If you let your credit cards go inactive, the bureaus have no idea whether you are able to manage balances and debt. In other words, inactive credit cards do nothing for your credit score.
But keeping a retail store credit card active can be tough. Are you going to buy a dishwasher from Sears each and every month just to keep your Sears card active? Are you sure you need a new pair of jeans from the Gap twelve times a year? Most likely, you will either keep the card active by making unnecessary purchases (which costs you money), or the card will go inactive. Either way, it’s bad news.
2) Let’s talk about the second reason I’m opposed to retail store credit cards: You might end up with too many credit cards. The credit-scoring bureaus are the happiest if you have the right number of credit cards (between three and five). If you do not have at least three credit cards, they don’t have the information they need to make a judgment about whether you are responsible. If you have more than five credit cards, they know that you are in danger of getting in over your head.
Three to five is the sweet spot. So if you are limited to just three to five credit cards, why waste one on a card that will only be accepted by one merchant? You cannot reserve a car using your Banana Republic card, but you can purchase a suit from Banana Republic using a Visa.
Too often, people apply for retail cards each time they are offered a discount. These people must also carry American Express, MasterCard, and Visas for everyday expenses, traveling, and business needs. And they quickly find themselves carrying a lot more than five cards.
3) Finally, let’s talk about the third reason a retail card could hurt your credit score: You will definitely add a credit inquiry to your score. Ten percent of your credit score is based on the number of credit inquiries you have on your credit report in the past year. If you apply for a retail store credit card, your score could drop a few points, and this could cost you a lot of money in interest on future loans and credit cards.
So come Black Friday when the holiday-shopping-season officially starts, be a savvy shopper and just say no to retail store credit cards.
I want to know how many times you were offered a store-specific credit card on Black Friday, so please let me know below!

When It Comes to Student Loans and Credit Scores, Know 10 Things (Part 2), by 720 Credit Score

Posted on November 15, 2013 by - Credit Score

In my last post, I told you the first five things you should know about student loans and credit scores. Here are five more…
Student Loans and Credit, Fact #6:
About 30 percent of your credit score is determined by your outstanding debt: the ratio of how much you owe versus how much you have paid. The more you have paid and the less you owe, the better your score. If your payments are being deferred until you have graduated, or if you have deferred payments for another reason, the ratio will not be in your favor, and your score might drop. However, it will start to increase after about six months of timely payments.
Student Loans and Credit, Fact #7
Once you begin repaying your loan, never miss a payment without first asking the lender for a forbearance or deferment. Here’s something you might not know about student loans and credit: 35 percent of your total credit score will be drawn from your payment history on credit cards and loans.
Student Loans and Credit, Fact #8:
Keep in touch with your lender. If you are struggling with your payments, never wait until the lender approaches you or until a delinquency notice is logged on your record. Instead, initiate communication with your lender. Talk about forbearance or student loan consolidation.
Student Loans and Credit, Fact #9:
Making regular payments on your student loans is a great way for young adults to begin building their credit score, setting the foundation for better loan terms and lower interest rates on future loans, and saving bundles over the course of a lifetime. But this isn’t enough. As you move on after school, you should try to incorporate different types of credit into your finances while keeping current on your payments. The mix of credit you have makes up 10 percent of your score. The credit scoring bureaus want to see that you can handle a variety of types of loans—from credit cards to student loans to car loans.
Student Loans and Credit, Fact #10:
Student loans can almost never be discharged during bankruptcy. That said, if you are ever struggling to pay your student loan debt, you can and should meet with a student loan attorney because some people qualify for income-based payments, others qualify for total forgiveness, and many people working with an attorney can shave a couple hundred dollars a month off their payments. Watch our videoes for more information.

When It Comes to Student Loans and Credit Scores, Know 10 Things, by 720 Credit Score

Posted on November 8, 2013 by - Credit Score

When it comes to student loans and credit scores, there are ten facts you need to know…
But before we get to that, let’s talk a little bit about student loans. These loans are “unsecured loans,” meaning that there is no collateral backing them. Whereas your car can be repossessed if you do not pay your car loan on time, no one can take away your education!
That said, as with any other loan, your credit score will drop if you are late or skip a student loan payment; it will increase when you pay your student loans on time.
Making payments on student loans offer a great opportunity for young adults to begin building their credit score. If lenders see that you can make payments on time and in full, your credit score will go up and you will be more likely to get larger loans in the future.
This is important because you will need credit upon graduating from college. Your first employer might run a credit check, assuming that your credit score is a good indication of whether you are responsible or not. And a landlord will definitely run your credit before renting a home to you.
With all this in mind, here are the first five things you should know about student loans and credit. (And if you already have student loans, be sure to watch the video for more facts that will help you manage your payments.)
Student Loans and Credit, Fact #1:
In 2001, 31 percent of college graduates were living at home. That number grew to 45 percent by 2013.
Why?
Because it’s harder than ever to find a job, so before you take out an endless stream of student loan debts, remember that the economy might not allow for you to repay your student loan debt.
Student Loans and Credit, Fact #2:
Before you leave college, avail yourself of the opportunity to receive exit counseling, a service most schools offer to prepare their students to repay federal student loans. This counseling can provide you valuable information about your rights and responsibilities and the terms and conditions of your loans. You will learn about things like “income-based payments,” which allow you to base your student loan payments on your income.
Student Loans and Credit, Fact #3:
If you cannot make a payment, ask for forbearance, a short-term agreement that allows you to make smaller payments, or no payments at all. Otherwise, you will harm your credit score. Keep in mind that if you do not make payments, interest will continue to accrue and the amount due will grow larger.
Student Loans and Credit, Fact #4:
When you apply for a student loan, your credit might or might not be pulled. Some lenders do require a credit score, but others do not. If your credit score is pulled, a credit inquiry will be added to your credit report. This might cause your score to drop, but the impact will be minimal.
Student Loans and Credit, Fact #5:
With this in mind, consider that students who are positioned to pay back their loans before graduating will enjoy a faster ride to good credit. Even though a lot of student loans do not require repayment until you have graduated, your credit score might be higher if you start repaying the loans immediately. Keep in mind that some employers will run a credit check when you apply for your first post-college job, so having a high credit score could behoove you.
Some people have speculated that if borrowers pay back their student loans too fast, they will lose credit points (presumably because the maximum interest on the loan will not be accrued if the loan is paid off early). I think this is a bogus claim. Credit-scoring bureaus are not interested with your creditor’s ability to earn the most interest, but rather with your ability to repay your loan on time. The bureaus want to know that you will pay your debts on time. Paying your student loans sooner rather than later is a wise thing to do because your debt-to-principal ratio will drop and your score should increase.
Stay tuned. In my next post, I’ll share five more things…

How to Get Your Credit Limit Increased, by 720 Credit Score

Posted on November 2, 2013 by - CREDIT BLOG, Debt

A while back, a student of mine called into my one-on-one Q&A session with a problem: She’d unexpectedly had her credit card limits reduced, which affected her debt-to-limit ratio, which in turn caused her score to drop.
Credit card companies do this regularly—they promise you a big limit, and then a few years later, they lower your limit out of the blue. This hurts your credit score, which is in part based on the debt you carry as a percentage of a limit.
In fact, 30 percent of your credit score is based on the debt you carry as a percentage of the limit.
For instance, let’s say you have a $5,000 limit and a $1,000 balance. Your balance would be 20 percent of your limit, which would be looked upon favorably by the credit-scoring bureaus.
But if the credit card companies went and dropped your limit to $2,000, your balance of $1,000 would be 50 percent of your limit, which would be looked upon negatively by the credit-scoring bureaus.
The credit-scoring bureaus will respond most favorably if you never carry a balance higher than 30 percent of your limit. So if they drop your limit, watch out! Your credit score will drop, too.
Well, like I said, this happened to one of my clients, and I told her how to fight back. Then I got this letter (which I’m editing slightly so that you have the complete context):
“I had one card with a limit that had been lowered, and I decided to try to get it raised a second time. The credit card company refused my request the first time, so I called back. After spending 1.5 hours on the phone with five or so people (who by the way, got a little more patronizing each time they transferred me to someone new), they still would not do it.  
“But … during the conversation, one of them mentioned something about calling the “Portfolio Risk Department.” After just five minutes on the phone with ONE person in the Portfolio Risk Department, they restored my full credit limit! Done!
“I never would have known to even try this if not for your fabulous program and awesome encouragement! Thank you so much once again!”
At times like this, I love my job more than usual. I’ve said it before: Your credit score is your financial reputation, and I’m tickled pink to help people fight back when their reputations are being tarnished!
So if you need to increase your credit limit, call and ask for the Risk Department. Let them know your credit score is being adversely affected.
With that in mind, let me know if you have any questions about rebuilding your score. From time-to-time, I answer them in my weekly email/blog. Leave a comment below, and I’ll try to answer it in the coming months.

If You Believe You Cannot Discharge Your Taxes During Bankruptcy, by 720 Credit Score

Posted on October 27, 2013 by - Bankruptcy

Most people believe that taxes cannot be discharged through a bankruptcy. And while this is true in most cases, there are some exceptions …
Did you file your taxes more than two years ago? And was the due date at least three years ago? As long as you aren’t evading taxes, in certain cases, you can have federal tax debt discharged during bankruptcy.
I bring up bankruptcy a lot in my emails because I want to demystify it. A lot of people who feel tremendous financial pressure are scared of bankruptcy, But bankruptcy can be a great solution to financial problems. It allows you to wipe the slate clean and regain control of your life.
And listen … living with constant anxiety and fear about what the government is going to do because you cannot pay your taxes? Well, it is no way to live. You should be able to get out of bed and embrace life. If you cannot enjoy your life because of financial stress, you owe it to yourself and your family to explore your options.
And fortunately, I have connections to some of the best bankruptcy attorneys in the country, so if you are up to your neck in tax debt, just talk to a bankruptcy attorney. The phone call won’t cost you a dime, and you will probably walk away from the call feeling relief, hope, and the promise of a better future.
Click here for an introduction to a bankruptcy attorney in your area.
Sincerely,
Philip Tirone
P.S. The bankruptcy attorney I will introduce you to will help get you on the path to financial recovery. My attorneys offer so much more than bankruptcy services. After filing your bankruptcy, then they focus on helping you reclaim your life. If relieving your financial pain sounds appealing, click here for an introduction to a bankruptcy attorney.

How to Remove a Bankruptcy From Your Credit Report

Posted on October 18, 2013 by - Bankruptcy, Credit Report

One of my readers recently asked me if there was a way to get her bankruptcy removed from her credit report.
The answer is that no, there isn’t. At least not legally. But beyond that, there’s a deeper issue at play here. A lot of people worry about their credit scores and their credit reports. They worry about past delinquencies. They worry about their public records. They spend countless hours trying to get information removed from their credit reports.
My advice: You are worrying about the wrong thing.
You see, items that are older than two years—even major items like a bankruptcy—don’t matter nearly as much as the behavior you have taken in the past two years. A lot of credit “repair” companies have their clients spend hours and hours of their lives trying to suppress every single derogatory item on a credit report.
I don’t agree with that strategy. First off, it’s illegal. The Federal Trade Commission itself says, “No one can remove accurate negative information from your credit file. It’s illegal.”
Second of all, even if you do somehow manage to skirt the system and get negative information suppressed, it will rear its ugly head later on down the line. And in the future, the credit bureaus will be unlikely to spend their time helping you remove any true errors from your credit report.
My third point is that it’s just not where you should be spending your time. I know how attractive it is to think that you can erase your past, but you can’t. And if you spend your time trying to cover up the past, you will waste invaluable time living in the present and creating a better future.
There’s only one solution: Learn how to build credit. Educate yourself so that you have the tools to have a great score for life. Learn from your past, but don’t focus on what happened yesterday.

Does this make you angry?

Posted on October 10, 2013 by - Credit Score

I’m considering lobbying the government to close a huge loophole (that I frankly think is a scam), but before I do that, I’m wondering if you will give me your feedback. If I get enough interest, I’ll push forward. First, though, let me give you some background information that leads up to the big scam …
In 2003, Congress passed something called the Fair and Accurate Credit Transactions Act (FACTA). Among other things, FACTA required the three major credit bureaus—Equifax, TransUnion, and Experian—to give consumers a free credit report annual.
FACTA was promoted as a big consumer-protection law. In response to FACTA, the three credit reports joined forces to create AnnualCreditReport.com, which is where any consumer can go to get a free credit report once a year.
Sounds great, right? But not so fast … Notice that you can get a free credit “report.” You can’t get your credit score for free.
This brings me to the first problem. Having a credit report without also getting a credit score is like having a doctor hand you a brain scan reading, and then walk out of the room before explaining the results.
Would it cost more to just print the credit score on top of the credit report? Of course not. But the bureaus want to make money off you, so they found a loophole in the law. Or maybe Congress intentionally wrote the loophole in the law to help out the banks and bureaus.
Regardless, FACTA made a big deal about protecting you, the consumer, but the end result is that credit bureaus have an easy way to profit off you. They charge you for your credit score.
This in and of itself makes me boil. But the problem goes even deeper …
You see, the credit score they sell you isn’t even the same credit score a lender would use to determine your creditworthiness.
They give you a generic, worthless credit score based on their own formula instead of the FICO formula that lenders use. In fact, the credit bureaus actually admit to this in fine print. For instance, when downloading your free annual credit report from Equifax, you will be offered your Equifax credit score, which you have to pay for. Check out the fine print I received when I last pulled my free credit report from AnnualCreditReport.com:
“The Equifax Risk Score [Equifax’s version of a credit score] and the credit file on which it was based may be different than the credit file and credit scoring model that may be used by lenders.
The truth is: It is different than the score used by lenders, and it infuriates me. Almost every lender out there uses FICO, so any other score is worthless—total garbage.
In fact, I tested this on my own score. One day, I bought my credit scores from each of the bureaus, and on the same day, I pulled my FICO score. The difference between my FICO score and the generic scores provided by the bureaus was huge: 237 points in one case.
237 points!
So not only did FACTA end up creating a loophole that allows the credit bureaus to sell junk to people like you and me, it also creates an artificial sense of security that allows the banks to profit down the line.
You see, the generic scores are almost always higher than a true FICO score. In my case, the difference was a whopping 237 points. So let’s imagine that there’s only a 70-point difference. You buy your generic score and think it is 722, so you think you have great credit. You don’t do anything to increase your credit score because why would you? Your score is great!
A few months or years later, you apply for a loan, and guess what? Your actual credit score—your FICO score—is 652, which his way too low to get the best interest rates.
So not only do you spend money on junk, but you also get false information that results in higher interest rates down the line.
Does this make you angry? I’m asking because I want to lobby our elected officials to close the loophole and require the bureaus to provide a true credit score once a year. Your three-digit credit score is your financial reputation. You should have a true indication of what this reputation is.
If you agree with me, leave a comment below and let me know what you think. What do you like about this message?  What don’t you like?  I know how confusing this can all be, so help us refine our message by pointing out anything that is confusing.
Philip Tirone