Quick Tip #4

The lower your revolving balances, higher your credit scores.

The higher your revolving credit balances, the lower your credit scores.

Quick Tip #2

If given the option to pay down a car loan or credit card debt, pay down your credit card debt.  Paying off a car or other installment loan will not give your score the boost you are looking for.  Pay down pay down your existing credit cards first, then make additional payments to your secured cards and make sure you pay off credit card in full balances each month before the statement drop date.

Just think of all the interest you are saving and put these savings to work by paying down your installment debt!

Pay Down Car Loan vs. Pay Down Credit Card Debt

Dear Katrina:


I have been working to improve my credit score by paying down my debt so my wife and I can finally buy a home.  Last month we were really excited and proud of ourselves for paying off one of our vehicle loans and have been eagerly anticipating the bump to our scores. 


As you suggested, we have been subscribed to Equifax's Credit Watch.  The other day we received the alert that the loan had been paid in full.  We were surprised and extremely disappointed that there was not a boost to our credit score.  We can't understand this at all.  We paid off one of my wife's credit cards that was maxed out and it boosted her score almost 50 points.


Why didn't our credit score increase? What did we do wrong?


Mike and Kelly
Atlanta, GA

Secured Credit Card Comparison Chart

I created a spreadsheet for comparison of the secured credit cards available and have uploaded the file to 4shared.com.  It is a free download, is not able to be modified but you can sort it.

Please let me know what you think!

Secured Credit Card Comparison Chart.xls

Quick Tip #3

Low-limit unsecured credit cards are not only costly, they may actually hurt your credit score in the long run. Accounts issued by creditors who are "marked" as second chance lenders, are not given the same scoring weight as the big boys.

Secured Credit Cards to Improve Your Credit Score

In this day and time, I am a big proponent of secured credit cards, this was not always the case.  But with large credit card companies trying to save their own tails, cutting peoples credit lines in half (or less) for little or no reason, closing accounts for one reason or another, secured credit cards seem to be the a way for consumers to have a little control over their credit. This is especially true for those who are trying to rebuild their credit.

The biggest benefits of a secured credit card over a standard unsecured bank credit card is:

• You have control over the credit limit.
• Some secured credit cards will turn into unsecured credit cards, with timely payment history. 
• Secured cards, when compared to low-limit cards for rebuilding credit, have a relatively low APR.
• Because you have control over the credit limit, larger credit lines are possible, resulting in a higher credit score.

Credit Repair vs. Credit Rebuilding

I have been assisting hopeful homebuyers improve their credit score in the hopes of mortgage approval for over 20 years.  The term "credit repair" has long been used to refer to the process of improving a person's credit report and subsequently increasing their credit score.  But in the past few years, the term has been tarnished with credit repair companies that lead their clients to believe that they can get all negative items removed, regardless of their validity.  

The scams by these so called credit repair agencies became so ram-pet in the past few years, the government enacted the Credit Repair Organizations Act to govern the business and protect consumers from unscrupulous practices.

At the same time, creditors and the credit bureaus reacted swiftly to close the loop holes exploited by those trying to "repair their credit".  In this day and time, if anyone tries to tell you they can remove negative information from your credit report, regardless of the validity of that debt, beware!

The best approach to improving and maintaining your credit score is to become an informed consumer and focus on rebuilding your good credit name.  The Credit Rebuilding Process is a three step process where the consumer:

• Ensures that the information in their credit report is accurate.
• Disputes any incorrect or outdated negative items with the credit reporting agencies.  
• Develops a plan to lower their debt, increase their available credit and raise their credit score.

This blog aims to arm consumers with the correct way maintain their credit score and rebuild their credit profile in a manner that overpowers any blemishes they may have.

I do not repair credit, I teach those looking to improve their credit rating the proper way to rebuild their credit reputation quickly and efficiently to reach their financial goals and long term credit success.

Do I Really Need Credit Cards?

Most peoples first reaction to a financial hardship is to cut up and cancel their credit cards, having the ultimate goal of paying cash for everything.  Although this extreme way of thinking and doing may work for some, for most of us this just won't cut it.

A lot of people wonders, "I have a VISA debit card, why do I need a credit card too?"  Actually, credit and debit cards are two totally different payment options.  There are many benefits a credit card offers that a debit card does not.  Some of these are: 

1. Bank cards report to your credit report and if handled properly increase your credit scores.
2. Convenience.  It is virtually impossible to rent a car, book a hotel room, or purchase airline tickets without one.
3. Liability.  Credit cards offer consumers protection under the Fair Credit Reporting Act (FCRA) for purchases over $50.00  Most debit cards, either pre-paid or tied to a checking account, and business credit cards do not.
4. Fraud Protection.  Purchasing scams, especially on the internet, are ram-pet.  Using a credit card for telephone and online purchases reduces risk to your cash flow.
5. Purchase Protection.  Some credit cards offer card holders Purchase Protection.  This added benefit guarantees the items you purchase from theft, accidental breakage, etc...Be sure to ask your card issuer about this valuable option.

Quick Tip #1 - Number of Credit Cards

It is always better to have one credit card with a $5,000.00 credit limit than 10 credit cards with $500.00 limits.