A mistake on your credit report can cost you literally thousands of dollars, especially in this economy. So what can you expect from a big credit bureau if you ask them to investigate and correct the error?

What a great question and one that Spence Wharton, an NCF consultant shot me recently. Smart Money magazine did an article and one that I thought merits your attention. Just click the link below?

http://www.smartmoney.com/Spending/Rip-offs/Why-The-Credit-Bureaus-Cannot-Get-it-Right/

People ask me all the time how can they, the credit bureaus, do this or that? Why would they not delete this right away? How can they get away with this?

You’ll read about when testifying before Congress, one CEO of an independent Arizona credit bureau likened the dispute process to “having an IRS audit, brain surgery, getting a tooth pulled or going to your own funeral.

So, take a few moments with a hot cup of coffee or perhaps over lunch today and find out some facts on how the credit bureaus basically snub their noses at the average Joe consumer. How they abuse folks just like you and I.

This is just a taste of the battles we fight every day for our members!

Be Bold!

Herschel

A debt threshold is where the report to credit bureaus can hurt or help your credit scores.  When talking about your debt-to-credit limit ratio, there are certain points that can hurt or help your scores depending upon whether you are increasing your debt or decreasing your debt.  One example we teach is that you should never go over 45.91% debt to credit limit on revolving loans or you will lose a significant amount of credit score.  Any time you go below a threshold, you will be gaining significant points and anytime you go up over a threshold you will be losing significant points.  Here are the other thresholds that are important to watch as you are reducing  debt, knowing your credit scores are increasing.  88.78% – 68.72% – 45.91% – 33.37% – 23.69% and 15.89%.

The trick is to stay below 15.89% on all your revolving accounts and keep your credit scores high.

Whenever you have an account that is in good standing, never had any lates and has a history of 7 or more years, these are golden accounts and should be treated like gold. They have the ability to keep your credit score high in spite of the fact that other areas of your credit file may be less than perfect.

For instance, if you had one late on a golden account, then that late really wouldn’t cost you many points at all. The reason is the history and the fact that it is only one late and not multiple lates. One late can be forgiven rather easily, multiples will not. If you have a high debt to credit limit ratio, then the points lost would be minimal because of the long history of the account.

However, don’t get comfortable putting your account in this situation as you can easily destroy the good the history a golden account can create. A second late, keeping a high debt to credit limit ratio can erode your credit score just like anyone else.

Having multiple golden accounts will also increase credit scores as you nurture your accounts into long time good history. Little by little your practice of good financial principles will help you gain credit scores worthy of the best and into the 800’s.

WAIT, this is NEW STUFF and not what you think… Let’s talk about this.  Be punctual – Pay all your bills on time.  Late payments, collections, and bankruptcies have the greatest negative effect on your credit score. But let’s talk about “Late Payments” for this week.

Late payments cost you in points, big time, because of what they mean in increased credit risk to the credit bureaus. Higher credit risk means loss of points and lowered credit score.

OK, so you make your payments on time and your scores are still low. What is causing this to happen? Let’s look at what is happening with your payments. Let’s say you have a credit card that is over the 45% debt to credit ratio. You make your payment on the due date but when you pull your credit report, your points have dropped. What is happening is that the credit card company is getting your payment “on time” but the recording date when they determine your interest charged and when they report to the credit bureaus can actually be before the due date. This creates more revenue for them as well as causing your balance to be recorded higher to the credit bureaus thus causing your scores to drop. When you think your payment has lowered your balance to less than 45% by the due date, they have already charged you interest and reported to the credit bureaus and already your scores have dropped. Surprising, but true.

So, the solution is to look over your free credit card debt solution statement and find when the interest is entered onto your statement. Then make your payment to arrive before the interest is applied to your statement and before it is reported to the credit bureaus. Lower balance, lower interest, lower risk, and higher credit score! Ahhhh…