Home purchase is another area where many people go and shop for a loan thinking that the inquiries won’t hurt them. Again, pull your own credit at www.MyFico.com, print it out and take it with you to shop for a loan. The lender will see everything he needs to see to make a preliminary decision before you decide to go with them and then they will need to pull your credit. They would need to do it anyway if you are going to use them as a lender, so it’s ok to do.

Having a mortgage on your credit report is a good thing and will boost your credit scores. Getting the loan down below the 80% debt to credit ratio is good and will help to boost your credit scores. Not having too many inquiries is a good thing and will keep your credit scores from dropping. Keep all these things in mind and go get the home of your dreams and live happily ever after.

NOTE – As a former loan officer, I had a couple come in after shopping for mortgage companies to get a loan for them. They had started loans with 4 other companies and finally came to us because they heard that we could do hard cases. Well, the couple had shopped so much that their credit scores explained had dropped below where they could get a loan from anybody because of inquiries. The drop in score was over 80 points. Another couple went online with one of those mortgage-shopping services. When all was said and done, their score dropped over 120 points just from going to one mortgage shopping service and having their credit pulled by 27 companies. Beware, do your own shopping with your own credit report with scores.

Auto purchasing has an interesting twist that needs to be discussed because of the nature of the business is sometimes questionable. You have heard of the “car salesman” that refers to dishonesty. Well, I have met some very honest and very honorable car salesmen and also some very dishonest salesmen. So, buyers beware. Let’s talk about how it relates to your equifax credit scores.

When going and buying a vehicle there are several mistakes buyers start out doing. They first go to one showroom and then another with salespeople hot on their tail to get them to qualify for a loan. So, they sit down with a salesman and the first thing he asks for is their social security number. The reason is he wants to find out what the buyer can qualify for. You can already see the problem. The salesman is going to pull their credit and see what their credit score is. This is just fine if this is the only place you look and the only place you purchase from, but most people go shopping and then you have a problem of multiple inquiries. This gets complicated right here because depending upon what scoring module the auto dealer uses to pull the credit, determines whether each credit pull is counted. Multiple inquiries can be very damaging to your credit score. The solution is to go to www.MyFico.com and pull your own credit, print it out and then go shopping. Ask the dealer to see what you can get with your score and find out pricing, rates, etc. before making a decision.

Another unique challenge with auto dealers is the fact that most do financing in house and actually make more money by financing you than by letting you get your own financing. Be forewarned… the auto dealer that offers credit-building financing is probably not helping you at all and is probably helping to further damage your credit. They will use a finance company that is a permanent damage on your credit reports whether you pay on time or keep your balances low just as long as you have the finance company on your credit reports. The reason is that finance companies are bad credit anytime you have them on your credit reports. The credit bureaus see them as companies that only deal with high-risk borrowers, have high interest rates and low qualification standards. Stay away from finance companies. (See secret # 62)

The solution is to go to your bank, credit union, etc, get your financing in place before you go shopping, negotiate a deal with the auto dealer then let them know that you already have your own financing. You will get a better deal and a lot more car for your money if you wait till the contract is signed before letting them know that you have your own financing.

It’s important to be “pro-active” with your credit. That is why we are going to teach you to do some things that will greatly enhance your credit card knowledge and help with increasing your credit score quickly. The principle of using your credit cards wisely includes using only 50% of your credit card limit. Let me explain why and what this does to your credit score.

Because the credit bureaus determine part of your credit score by how much credit you use, then keeping your credit score below the point of costing you points is where we want to teach you to be. That point is 45% debt to credit limit ratio or less. There are points that increase your credit score and points that lower your credit score. Some points to remember are this. Up to 14% debt to credit is the same as 0% used to the credit bureaus, plus or minus a few percent. Over 84% is the same as maxing out your credit cards and that is very costly in points on your credit report. Rule of Thumb – stay below 45% and or stay below 14% to keep your credit scores moving higher.

A trick to use if you need to use the capacity of your credit limit is to simply raise your credit limit. Call the number on the back of your credit card and talk nicely to the representative and say this… “Hello, I have a credit limit that is just too low for my needs, I would like to raise my credit limit, is that possible?” They will then ask you for your credit card number, verify that you are you and then check on your credit to see if you are worthy of raising your limit. This may work best after 4 months of being with Vantage Credit Alliance and the lawyers working to clean up items on your credit report or you have good credit at this point anyway. Then you will have the best chance of your credit card company saying “Yes… how much do you need?” That is when you say to them… “Oh, could you double it?” or if you have a business… “I need $40,000.” Or what ever you feel that your business may need.

Some businesses could use up to $100k or $200k. Don’t go overboard if you are not in control of your spending… otherwise… ask whatever you want. Now, they may not give you what you ask for but if they double what you already have, then you have instantly increased your credit score, because increasing your limit, just lowered your debt to credit ratio. AWESOME!!!

Here are the facts… when you refinance a loan, we are assuming it is an installment loan and not a revolving loan, because you don’t refinance a revolving loan unless you crashed it and it is closed and they just want their money back. This is a bad thing and just cost you a ton of points. I have seen a revolving loan closed because of bad payments cost up to a hundred points by scheduling a payment program to pay off the loan. So, we are talking only about refinancing installment loans. This will cost you 7 different ways because it will touch upon 7 different scoring “reason codes”.

Reason codes are the codes found on credit reports that a creditor pulls when you apply for credit and explain to them why they don’t want to let you apply for credit because these codes explain the problems associated with your credit report. Guess what, the credit bureaus get a credit fixmycreditsite.com don’t put these on your credit report. We are really curious why not, because it would be really helpful for you if they did. Perhaps they don’t want to help you get a good score? Hmmm… I have my own suspicions.

Ok, back to the problem at hand… refinancing installment loans. When you refinance an old loan into a new one, you have started with a hard inquiry (1), have now lost the history of the old loan (2) and at the same time created a new loan (3). There is no payment history (4) and the credit bureau doesn’t have enough information to calculate a score (5). It has a 100% debt to credit limit ratio (6) and increases your overall debt to credit limit ratio (7). All of these factors will cost your points and lower your credit scores.