Author: Philip Tirone

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

I’ve been wrong about something …
I’ve always considered “The Big Why” to be really important.
The Big Why is basically your vision. What big goal or dream are you working toward that gets you pumped up and excited to start the day?
Proponents of The Big Why say that if you don’t know where you are going, any road will take you there. In other words, if you don’t have a Big Why leading you, you’ll end up somewhere …
But you might not like where you end up.
The Big Why is supposed to dictate how you live your life so you don’t waste your time doing things that don’t move you closer to your Big Why.
In the past, I told people that they absolutely must have a Big Why, no ifs, ands, or buts.
But I was wrong, and I take it back …
I still think the Big Why is a great tool, but I no longer think it is appropriate for everyone at every part of his or her life.
You see, I have a lot of exciting professional opportunities on the horizon. Some of them weren’t things I’ve ever considered, but now that they have presented themselves, I’m excited about them.
But I’m not entirely sure where I’ll end up.
In his famous commencement address to Stanford, Steve Jobs said: “You can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something — your gut, destiny, life, karma, whatever.”
And that’s where I’m at today. I can’t connect the dots regarding what will happen in the future. Instead, I make sure that each day feels purposeful, and that I’ve working with integrity and passion.
I’m trusting in God that someday, I’ll look back and connect the dots, happy with where I am and how I got there.
But today, I’m just thinking about what I’ll do today …
What do you think? Is it more inspiring to live day-to-day, or do you prefer to be led by The Big Why? Leave a comment below and let me know!
Like I said, I still think having a Big Why is a great tool for people who have a crystal-clear vision. If you have one, share it with my other readers so they can start thinking about their own Big Why.
Philip Tirone

It doesn’t discriminate between people who make a ton of money…
And people who make just a little money.
One way or another, it will bite you.
I’m talking about bad credit…
See, I just read two articles (which I reference at the end of this email) that explain the big difference between bad credit and good credit in today’s economy.
Here are some of the shocking statistics:

• On credit cards, a consumer with a great credit score (720+) will pay about 12.9% in interest; a person with a 659 credit score will pay about 20.3% in interest.

This means that on a $5,000 balance, borrowers with poor credit who pay $150 a month will pay an extra $1,186 in interest. That’s almost double the interest paid by those with great credit.
And it means the borrower with poor credit will be making those $150 payments for eight extra months!

• The difference between a 740 credit score and a 679 credit score on a $10,000 five-year car loan is about $2,760 over five years—or an extra $552 a year.

• And on a 30-year mortgage, borrowers who take advantage of today’s low interest rates still end up paying an extra $3,312 each year in interest if their scores are low (on a $300,000 loan).

So let’s do the math and see how this adds up…
Let’s imagine two people:
1) Person #1 has great credit, a 30-year mortgage on a $300,000 house, $5,000 in credit card debt, and a new car loan of $10,000.
2) Person #2 has all of the above, but poor credit.
Over five years, Person #2 will pay an extra $20,506 in interest!
It bears noting that these days, borrowers with less-than-stellar credit might not even qualify for loans. The Wall Street Journal article notes that 90 percent of all loans originated in 2011 were given to people with high credit scores!
In one of the articles, the author writes: “Lenders say the premium for poor credit is necessary to manage their exposure to risk.”
What do you think? Is this “credit divide” fair? Leave a comment below, and let me know what you think!
If you want to read the articles in their entirety, here are the links:
Fed Wrestles with How Best to Bridge U.S. Credit Divide
by Jon Hilsenrath
The High Cost of Low Credit Score
by AnneMarie Andriotis
– Philip Tirone

Learning how to become an authorized user on a credit card is a strong and quick strategy for building your credit, and building it fast. In fact, I have seen people’s scores jump as much as sixty points just by becoming authorized users.
Before discussing the mechanism for becoming a an authorized user on a credit card, let us take a look at the definition of an authorized user. An authorized user is a person who has permission to use another person’s credit card. The credit-scoring bureaus treat an authorized user just like they treat the account holder. If the account is delinquent, the authorized user’s credit score will suffer. If the account is in good standing, the authorized user’s credit score should improve.
For this reason, people with bad credit scores can become an authorized user as a strategy for building their credit scores.
To go about this properly, you will need to do several things. First and foremost, choose a family member (preferably a relative who lives with you) with good credit. The credit-scoring bureaus only include authorized users who are related to the account holder. If you have the same address and same last name as the account holder, the credit-scoring bureaus will be more likely to consider your authorized user status as valid.
Next, make sure the credit card company reports authorized users to the credit bureaus. You can simply call the credit card company and say: “I want to become an authorized user. Will you report my status as an authorized user to the credit bureaus?”
If the creditor does not report authorized users, this strategy will not help repair your credit score, so you should find a different credit card to which you can be added as an authorized user.
This brings me to my next point. In trying to implement what you have learned about how to become an authorized user, you might find that your family members are hesitant to add your name to their accounts, especially if you have a history of bankruptcy, repossession, or other financial disasters. What if you buy a bunch of things using the credit card that you cannot afford? The account holder will then be forced to either pay the bill or harm his own credit score. (And your relationship with the account holder might also be harmed.)
Here are some strategies so that the account holder can protect himself or herself:
1. First, the account holder should tell the credit card company not to issue a card to you. If you do not have a physical credit card, you will have a very hard time making purchases!
2. The account holder should not disclose the account number, credit card expiration date, and card security code from you.
In other words, you will be added in name only, without the ability to use the credit card. You can borrow the account holder’s positive credit history, but you will not be able to tarnish the account’s standing.
Keep in mind that account holders will not be affected by your behavior on any accounts that are separate. So long as the account holder does not allow you to access the authorized user account, his credit score will not suffer.
But yours will surge, so long as the account holder keeps the balance low (preferably below 30 percent of the limit) and continues making on-time payments. In fact, you might be shocked at how quickly your score starts to improve. After all, learning how to become an authorized user is among the most powerful tricks for repairing your credit.

I recently read that smartphone owners experience a greater incidence of fraud and identity theft, and here’s why…
About 32 percent of smartphone owners save login info on their device, and 62 percent of them don’t use a password on their home screen, which means anyone who finds their phone can access their login info!
Here’s another problem with keeping personal info in your Smartphone – anyone who repairs it can download your personal info, and then use it to wipe your accounts clean or apply for credit in your name.
As the owner of 7 Steps to a 720 Credit Score, I’ve seen the effects identify fraud first-hand, so I wanted to pass this information along to you …
Protect yourself by:

1. Putting a password on the home screen of your Smartphone
2. Storing personal information in a file that cannot be accessed by someone who gets a hold of your Smartphone. If you ever need to get your phone repaired, the repair technician will have access to everything on your phone, so be sure to keep sensitive information somewhere else!

Any other tips for keeping your Smartphone safe? Post them below!
Sincerely,
Philip X. Tirone
P.S. Another thing you might consider is turning off your phone’s “location services,” which stores your location within every photo you take—this is bad news particularly if you have children. Imagine that you take a picture of your toddler eating spaghetti, and then post it online. Unless you disable location services, anyone who saw the picture could find the exact address of your home!