Author: Philip Tirone

Please, thank you … and wow!

Posted on August 3, 2021 by - CREDIT BLOG

Wow! I got tons of responses from last week’s email and blog about how Lily and I created Tirone Family Meetings!
I want to spend a few more weeks responding to some of the comments, and sharing with you some other ideas I have about creating a family with great financial sense.
Here’s one of the comments from Mary:
“… I go out of my way to have impeccable manners with my son – everything from holding a car door open for him (now he opens mine) to phrases like, “May I please have the juice,” followed by “thank you.” While I’ve had friends ask why I “do that” they are also the first to tell me what a joy my son is to have in their homes; that he helps, includes younger siblings in play and is ‘very polite.’”

Okay, so here’s the thing she wrote that really hit me: “Modeling at home is critical to molding a good citizen.”
Right on, Mary! I couldn’t agree more. When it comes to being a good model for your children, this applies to everything, including your financial habits!
So if you have children, now is the time to replace your bad financial habits with great financial habits so that you set a good model.
Here are a few resources for teaching your children to be frugal about money, and also adopt a healthy paradigm about money.

  • Secrets of the Millionaire Mind by T. Harv Eker. What I like about this book is that it explains the financial blueprint that parents leave to their children.

 

Even saying something like, “No, you can’t have a new bike because we can’t afford it” can give your children a negative financial blueprint. It teaches a children that life is something that happens, not something that they create.

True, you might be unable to afford a bike, but imagine how motivated your child will be if you say things like …

“Yes! Let’s figure out how much bikes cost, and then let’s come up with a plan so that you can earn some money and buy a new bike. Here, I’ll help you. In fact, if you want me to put aside $5 each week out of your allowance, that can go into the pot too.”

This teaches children that money is a vehicle for achieving goals. It encourages your children to have goals, and it encourages them to be proactive about finding solutions.

And perhaps most of all, it teaches them to go out and earn money, to save money, and to decide when and how to allocate money to a resource.

  • Read at least one book from David Bach’s Finish Rich series. This includes Smart Couples Finish Rich, The Finish Rich Workbook, and Smart Women Finish Rich.
  • And be proactive about looking for any other financial management books or classes that seem interesting to you. The key is to break whatever bad cycle now so that you can transfer better values to the next generation by setting a great example.

In fact, in next week’s email, I’ll give you a great resource (for free) for teaching children about money, and for setting a good example.

Have you found other great resources for teaching kids about money, or for replacing your own bad habits with great financial management habits? Let us know by leaving a comment here!
Also, if you have questions about breaking bad financial habits, be sure to post them below.
Philip Tirone

Should I Add a Consumer Statement to My Credit Report?

Posted on August 2, 2021 by - CREDIT BLOG, CREDIT SCORING

The Fair Credit Reporting Act allows a person to add a 100-word consumer statement to their credit report. Often, people use the consumer statement as a chance to explain a derogatory mark or a bad credit score.
The consumer statement does not change a person’s credit score; it simply gives the consumer a voice. The statement, which can be 100 words or shorter, can be used to dispute a mistake:
The Visa credit card account ending in 1234 does not belong to me, and I am currently in the process of disputing this with the credit card company and credit bureaus.
The statement can be used after bankruptcy to explain that a person’s bad credit was caused by a medical condition:
You will a bankruptcy on my report from January 2007. I was the victim of a hit-and-run car accident and was unable to work for eighteen months. As a result, I fell behind on my payments and declared bankruptcy.

Some say the consumer statement will hurt a person. After all, it draws the lender’s attention to derogatory information. Others say the consumer statement is pointless as it most often unread.
Still, consumer statements do have their uses. If you are trying to rent a home, the landlord might read the explanation. If you know a potential employer is running your credit score, you can be upfront—let them know about any mishaps, and direct them to the consumer statement.
How to write a consumer statement:
A consumer statement should always be short and to the point. Never place blame on someone else (unless you are a victim of identity theft). If you decide to write a consumer statement:

  • Do not complain or present yourself as a victim (unless you truly are a victim of identity theft)
  • Take responsibility
  • Do not blame anyone or anything
  • Do not justify what happened
  • Keep in 100 words or less

Let’s take a look at two examples:
An effective consumer statement:
I experienced bankruptcy because I naively expected the value of my home to go up. Instead, the payments grew and became unmanageable, so I began charging them to credit cards. Have since gone back to the basics and am working on building my credit and my savings. Also taking classes in financial management.

An ineffective consumer statement:
The bankruptcy is NOT my fault.  I was sold a home that I couldn’t afford, and while the agent earned his commission, I lost my home, racked up huge credit card debt, and was stuck with poor credit! As far as I’m concerned, the mortgage broker should go to jail!
Do you see the difference? The first consumer statement makes the borrower seem responsible and mature. The second might sound entitled, immature, and irresponsible!

Authorized Users—The Secret to Building Your Score Fast!

Posted on July 30, 2021 by - CREDIT BLOG, Credit Cards, CREDIT SCORING

One of the first pieces of advice I give to people who have suffered severe financial crises and want to learn how to build credit is to become authorized users on credit cards. Authorized users are allowed to use credit cards but have no contractual obligation to pay the bills.
For this reason, a person does not need to have a high credit score to qualify for authorized user status on a credit card. However, the credit card’s history will often be reported on the authorized user’s credit report, so long as the authorized user is related to the account holder.
Becoming an authorized user on a family member’s credit card will quickly raise your credit score (even after bankruptcy or other financial disaster) by allowing you to “borrow” the account holder’s clean credit history.
However, the account holder—fearful that you will rack up huge charges you cannot or will not repay—might be reluctant to add your name to his or her account. Let the account holder know that she or he can be protected.

  1. First, the account holder should shred the credit card that arrives for you.
  2. Second, the account holder should never give you the account number, credit card expiration date, or card security code.

In this way, your credit score will increase while still protecting the account holder from any irresponsible behavior on your part.
Authorized users should also protect themselves by choosing the account wisely. Only authorized users who are related to the account holders will see their bad credit scores benefit from this strategy. Therefore, be sure you choose an account holder who is also a relative. Try to choose someone with the same last name and address. Otherwise, the credit-scoring bureaus might not recognize your status as an authorized user, and your credit score might not improve.
To make sure that the credit card company is reporting your status as an authorized user, call them and ask. You can also check your credit report to see if the account is appearing. If not, choose another account holder.
Be sure that you also choose a responsible relative with an account in good standing. If you become an authorized user on an account that becomes delinquent, guess what happens? Your score will drop. As such, be sure to pick an account with a clean history of payments. Be sure, too, that the balance on the card stays low—preferably about 30 percent of the limit. If the balance exceeds 30 percent, or if the account holder makes a late payment, you should immediately remove your name as an authorized user so the negative information does not hurt your credit score.
Authorized users usually see a quick jump in their score. After twelve or eighteen months, you might be able to remove yourself from the account and qualify for loans on your own.

How to Improve Your Credit Score in 5 Easy Steps

Posted on July 28, 2021 by - Uncategorized

There are a variety of reasons why you’d want to improve your credit score. You could be getting ready to make a big purchase such as buying a house, or you may want to make sure your options are open in the case of an financial emergency. In fact, in today’s world, your credit score is a key element to financial freedom. In addition to higher interest rates, low credit scores can affect your life in many other areas as well. Companies run credit checks before employment, and low credit scores can affect your auto insurance rates. All of these are great motivators for making improvements, but there isn’t always a great amount of information on exactly how to improve your score.

To help address these concerns, we’ve compiled a list of five ways you can improve your credit score. Some actions may have an immediate positive result, while others will help improve your score over time. It’s important to remember that there are no fast fixes, however, your efforts will be rewarded with lower interest rates and better credit opportunities. To get started, read on…

1. Keep your credit balance below 30% of your credit limit.
Credit bureaus determine whether you are living within your means by evaluating how much debt you obtain in relation to your credit limit. This is referred to as your utilization rate. The bureaus reward consumers with a rate of 30% or lower. That means if you have a $1,000 credit limit, you will never want your credit balance to exceed $300. In fact, to be safe, it’s better to aim lower than the 30% rate because some credit card companies erroneously report lower credit limits, which would result in a higher utilization rate.

2. Make your monthly payments on time every month.
Your credit history is one of the largest factors in determining your credit score, with your recent activity weighing in considerably. In fact, your payment history makes up roughly a third of your credit score. That’s more than any other factor. If you’re at a loss as to where to start building your credit, creating a good payment history would be the best place to focus.

3. Maintain three to five credit cards and one installment loan.
Credit bureaus need to see credit history to determine whether you are a good investment. To provide this, you need to show credit activity. Having three to five credit cards that never go over the 30% utilization rate and a monthly installment loan that is reported to the credit bureaus each month will help to establish your credit habits. Keep in mind that retail credit cards are NOT a good option. This is due to the fact that they typically have very high interest rates and you are forced to shop at their location to keep the card active. If you do not shop there on a frequent basis, you may find yourself making unneeded purchases to maintain current credit history.

4. Check your credit report for inaccuracies and report them.
Did you know that nearly 80% of all credit reports have errors on them? These errors can negatively affect your score and therefore increase your interest rates resulting in higher payments. As a beginning step to building your credit, you should always get your credit report and check for errors. If you find any, you’ll want to report the credit errors to the appropriate credit bureaus.

5. Don’t close older or unused credit accounts.
Fifteen percent of your credit score is derived from the age of your credit cards, with older credit accounts giving you a better score. If you close these accounts, your average age immediate lowers and can result in a lowered credit score. Instead of closing these accounts, use them to pay small recurring fees such as Netflix or gym memberships. Then set up an auto-payment from your bank to pay the credit card a day afterwards. This way, you never have to actually use the card, however, you still reap the benefits of active payment history and an aged credit card.

Lily Tirone, and the Tirone Family Meetings

Posted on July 27, 2021 by - CREDIT BLOG

I talk a good game about being a family man, but a few months back, my wife (Lily Tirone) and I were put to the test …
I was attending a conference, and a presenter (Warren Rustland) said that if a person’s family culture is weaker than all the other cultures surrounding the family (school, neighborhood, church, etc.), then the kids could learn more from other cultures than from the family’s culture.
It makes a lot of sense… If your family’s culture isn’t strong, your children will be pressured by their peers, coaches, and teachers—and they might end up adopting the wrong values.
A second presenter (Greg Baer) then said that the amount of time parents devote to molding their kids will be in direct proportion to their happiness and success.
A lightening bolt struck.
See, I realized I was spending more time trying to build my company’s culture than I was trying to build the Tirone family culture.
So nine weeks ago, Lily and I implemented daily “family meetings,” which we will continue as long as the kids are in the house.
Lily and I want to create an extraordinary bond with our children, and we want them to have great relationships with their siblings.
So when we considered the structure for our Tirone Family Meetings, Lily and I discussed the answer to this question: What do we want to instill in our family?
1) We start with a prayer.
2) Everyone tells the rest of the family what they are excited about. (My three-year-old son is excited about his water balloons—every day!)
3) Then we review the day and what will happen over the course of the day—Daddy is coming home for lunch; Grandma is taking the kids to the zoo… that sort of thing.
4) Next, we talk about the Tirone Family Value of the Day.
It’s important to note that Lily and I let the kids choose which value they want to discuss. We want our kids to feel important and respected, so we give them choices, and then we follow their lead.
We cover everything—from sharing to being kind to finances.
Our kids are young (the oldest is five), so the lessons are geared to their age.
For instance, we bought the “Savvy Pig,” a piggy bank that has four chambers and four coin slots instead of one. These four chambers represent the four things we want our kids to do with their money—save, tithe, invest, and spend.
As they grow older, we will build on these lessons by discussing credit, investment tools, and vehicles for savings.
Regardless, Lily and I are spending each day building a culture that will allow our kids to thrive.
What do you think? How do you teach your children important values and skills? I’d love to learn what you are doing. Also, share how you are teaching your kids about their finances so that they can learn from their parents’ mistakes and experiences. Share your thoughts here…
P.S. For the first four or five weeks, we struggled to stay committed to having daily Tirone Family Meetings. In fact, one day I started to leave the house without having a meeting when my youngest, Luke, came running to the door to stop me.
“Daddy, Daddy!” he said. “Family meeting?”
At that moment, Lily and I realized that these meetings are a game-changer. Be sure to let me know if you have any ideas for making family meetings stronger!
Philip Tirone

Foreclosure, Bankrucptcy, and Short Sale on Credit Report

Posted on July 23, 2021 by - CREDIT BLOG

Foreclosure, Bankruptcy, and Short Sale on Credit Report
Credit Bad, How to Build Credit, Credit Score
Question submitted by Mike Lavios, Lake Oswego, OR
Question: How long will the following stay on a clients credit report? – Foreclosure, Personal bankruptcy, Business bankruptcy, Short Sale
Mike – here is your answer:
– Foreclosure – 7 years
– Chapter 7 BK – 10 years
– Chapter 13 BK – 7 years
But remember, you do not need a clean credit report to have a high credit score. The key is to reestablish your credit from the beginning, if you do that, your credit score will jump quickly. As I say often, if you reestablish your credit the right way, you will have a 720 Credit Score 7-8 years before the bankruptcy falls off your credit report.
Foreclosure, Bankruptcy, and Short Sale on Credit Report
Credit Bad, How to Build Credit, Credit Score

Everything You Need to Know About Credit Scores and Jobs

Posted on July 23, 2021 by - CREDIT BLOG

A statistic reported by Inc. Magazine could be troublesome for job seekers with poor credit scores. According to a survey cited by the magazine, about 60 percent of employers run credit checks on potential job applicants at least some of the time.
Given the high unemployment rate, this eye-opener about credit scores and jobs could be concerning for people with low credit scores, particularly those searching for jobs that require money management. An employer—fearful that a poor credit score is a sign of irresponsibility—might not offer a job to a candidate with bad credit.
If you have a low credit score and are searching for a job, fear not. Two rules can offset your low credit score.
Credit Scores and Jobs Rule #1: Be sure to highlight other areas of your life that demonstrate responsibility. Have you been entrusted with the position of treasurer for a nonprofit organization? Do you have a glowing letter of recommendation from a previous employer who charged you with tasks that required a tremendous amount of trust, loyalty, and responsibility?
Credit Scores and Jobs Rule #2: If you are able to show that you are trustworthy, your credit score might be overlooked, particularly if you explain the events that caused your bad credit. Your best bet is to be candid with a possible employer who is going to run your credit report. Since the recession has had unfortunate consequences for many people, the employer might be sympathetic to your plight. Pitch your situation as a learning experience so that you can show the employer that you are wiser as a result of your mistakes.
By taking serious steps to repair your credit, your credit report might indicate that you have had a shift in the positive direction. If you walk into a job interview armed with a the facts about your credit score, how you have turned over a new leaf, and what your credit report indicates about your current behavior, a potential employer might be sympathetic, especially if you have extenuating circumstances brought on by the recession.
Though credit checks for job applicants might create barriers in the already-tight job market, employers are also likely to value an honest account of your situation. When it comes to credit scores and jobs, be sure you are ready to be forthright about your past mistakes and able to offer evidence of your progress. In doing so, you allow employers to look past that three-digit number and offer you the job.

Google+, Better Social Media

Posted on July 22, 2021 by - CREDIT BLOG

Did you hear that Facebook’s rival is in town? As I’m sure some of you know, Google released a new social media site called Google+.
If you haven’t received an invitation to join Google+, please let me know! The site is invite- only… and it’s amazing! Where Facebook lacks,
Google+ takes off.
For instance …
1) Google+ is fertile ground for you to build your business (or promote your job skills). It’s really easy to stand out because, unlike Facebook,
there aren’t bunches of people competing in the
same space.
2) The folks at Google+ are ultra-sensitive about privacy issues, so they don’t capture the same personal information that Facebook does.
3) It’s really, really easy to separate friends, family, and co-workers, which means you can share photos and personal information with friends and family
members, but not the guy who sits in the cubicle down the hall!
Like I said, if you want an invitation, let me know. I look forward to connecting!
Px
P.S. You’ll need a gmail account, which you can get at www.gmail.com. (It doesn’t cost anything.) Once you’ve established the gmail account, send me an email at Philip (at) 720CreditScore (dot) com and let me know that you want to be invited!

Keeping your secret

Posted on July 20, 2021 by - CREDIT BLOG

I used to be so ashamed.
You see, I’ve had a lot of secrets over the years:
I barely got into college because I was practically illiterate…
When I first started doing mortgages, I was broke…
I had lousy credit for a while…
And these are things I never wanted anyone to know. I felt like if people saw the real me, they would be horrified.
But that isn’t true, is it?
Everyone makes mistakes. Everyone has flaws. In fact, I have learned that there is always someone more successful than I am who has struggled with the exact some problem! I don’t care whether you are an entry-level employee or the CEO of a Fortune 500 company … your problems are probably more similar than you think!
And the truth of the matter is that hiding your mistakes only compounds them. Then you have to worry about people finding out.
It makes you feel a little sick inside.
Over the years, I’ve learned that transparency is a whole lot easier. I’ve also learned that people are happy to reach out and help when I let them know I need it.
I used to bottle things inside. If I had an important decision to make, I did it in a bubble, and often I wasn’t happy with the end result. If I was ashamed, I kept it from everyone, and then I lost sleep because I was terrified that my secrets would be uncovered.
Nowadays, if I have a worry, the first step I take is to disclose my problem to one other person. I try to pick someone who: 1) won’t be unnecessarily judgmental; and 2) will be solution-oriented.
Being transparent is second-nature to me now. I don’t share every intimate detail of my life with every single person I meet, but I also don’t avoid conversations.
By getting rid of secrets, I have found that I am more likely to work toward solutions because I don’t feel alone and isolated. Instead, I feel surrounded by people who want to help. And this applies to every kind of secret—financial, personal, professional.
Do you keep things bottled up? If so, now’s your chance to open up. You can start small until your confidence builds. The important thing is that you get exposure to supportive people who will inspire you to move forward.
If you worked through a problem by getting exposure to other people’s support, tell me about it here!
Philip Tirone

A three-for-one, by 720 Credit Score

Posted on July 19, 2021 by - CREDIT BLOG

The best thing a person can do to increase his or her credit score?
Reduce credit card debt.
Aside from your past payment history, which you can’t do anything about anyway, outstanding debt is the top factor in determining your credit score. The lower your balance (as a percentage of your limit), the higher your score.
Another thing that is great for your credit score is having an active or paid installment loan on your credit report.
So how can you accomplish both of these goals in one fell swoop?
Visit your local credit union and ask for a debt consolidation loan. Then use this loan to pay off your credit cards. If you are lucky, the interest rate on your debt consolidation loan will be lower than the interest rate you pay on your credit cards.
And there you have it: lower credit card balances, an installment loan on your credit report, and lower interest payments!
Of course, for this strategy to work, you must keep a low limit on your credit cards (though you should be sure to keep them active), and you must pay your debt consolidation loan on time.
At first, your score might drop a little bit. Adding a new loan to your credit report could hurt your score a bit.
But as soon as your credit cards report your new balance, your score will start to jump.
And once you’ve made about six months of timely payments on the debt consolidation loan, your score will climb even higher.
Have any questions on this strategy? Leave them in the comments section below!
Philip Tirone