In relation to just removing negative items, these are techniques which you can use even if you have NO derogatory information
on your credit report. We'll start with the most overlooked strategy first and that's your...
DEBT to CREDIT RATIO: The most fraudulent belief I've been hearing for over 15 years is "I have excellent
credit, I pay all my bills off in full every month!" This is a false belief for one to buy into and understanding your debt
to credit ratio holds the key to getting your "credit mindset" right.
Your debt to credit ratio is your ratio of debt to total available credit you have been extended (revolving accounts
only). For example. If you have $10,000 in total unsecured revolving credit accounts and you're currently in debt $2500, then
your debt to credit ratio is 25%. Since the main way lenders make money is by charging interest, one of the elements of the
credit scoring model is driven by your ability to maintain balances and pay over time. This shows your true (long term) credit
worthiness which is most profitable to lenders since they make money primarily via interest and not annual fees.
Over the years we've discovered without question that carrying the proper debt to credit ratio will boost your score
faster than paying off your bills in full each month. I have argued with the Better Business Bureau on this topic for and
they still disagree (despite my sending them proof from Fair Isaacs own website www.MyFico.com the organization which invented
the credit scoring software used by credit bureaus).
Of course, what do you do if you're like most Americans and your debt to credit ratio is too high? For example. You have
$10,000 in unsecured revolving accounts but you owe $8500, thereby giving you an 85% debt to credit ratio. How can you bring
it down without selling everything you own? The answer is simple and takes us to the next technique which is...
SUB-PRIME MERCHANDISE CARDS: The single most cost effective (and powerful) tool for consumers to increase
their high credit limit and decrease their debt to credit ratio is the use of Sub-Prime Merchandise Cards which report to
one of more of the major credit bureaus.
Unfortunately, despite their immense benefits, these are the most misunderstood cards in the credit industry. A large
portion of the misunderstanding is due to marketers misrepresenting the cards and the growing number of companies promoting
them. When you learn how they work one quickly understands why they have been the subject of much misrepresentation.
A Sub-Prime Merchandise Card is nothing more than a card attached to a line of credit which allows you to buy merchandise
from a specific vendor (usually the company that sold you the card). The merchandise (in most cases) will be purchased through
a catalog or online mall.
Where the problem arises is that the cards are marketed almost exclusively to the sub prime market via email, telemarketing
and direct mail etc. The reason for this is they can advertise almost irresistible offers like "$5,000 Credit Card... GUARANTEED!
No Credit Check! NO Cosigner! You cannot be turned down!" or "Unsecured $10,000 Credit Line! Everyone Approved!". I'm sure
you get the idea...
While there are many companies which do this and are a "shady at best", there are a few which do it legitimately and
it's the best kept secret to build your credit and build it fast.
Here's how it works: the company approves anyone with a pulse (literally) and gives them a card for $2,500 to $12,500
with NO credit check and NO cosigner. However, the card is only good for merchandise through their website or catalogs and
the consumer is required to put down a deposit on whatever they purchase. After the deposit is paid, the remaining balance
is financed on the card. For example. A person buys $1,000 worth of merchandise. Their deposit is $300 so they then finance
$700 on their merchandise card and make payments. Sound like a scam? If you say "Yes" like most people then you're missing
the point... big time.
With a legitimate Sub-Prime Merchandise Card your credit line WILL be reported to at least one major credit bureau (or
more). This means if you get a $5,000 card and you finance $500, on your credit report it will look like any other credit
card and will do three extremely important things for you.
1.) It will increase your current "High Credit Limit" by $5,000 almost overnight as the account "looks" like any other
unsecured revolving account.
2.) By carrying a small outstanding balance it will positively impact your credit report by building and showing potential
lenders your credit worthiness.
3.) With a good payment history you are virtually guaranteed to receive "legitimate" pre-approved credit offers in the
future due to other lenders renting your name from the credit bureaus.
This technique is hard to beat for both cost and effectiveness. Of course, the whole key is knowing exactly which cards
report to the credit bureau and offer the best rates. The only thing more effective is...
PIGGYBACKING: Despite its virtually unlimited potential, piggybacking is not used by nearly as many
consumers as it should be. It's easy, effective, and extremely fast. Unfortunately, it's mostly used among parents and siblings
while those who can really benefit stay in the dark.
How it works. Almost every credit card or credit account will allow the primary account holder to add on (at a later
date) what's known as an "Authorized User" or "Secondary Account Holder". In most cases, when this is done, the entire account
history (retroactively) gets posted to the authorized users credit report regardless of their current age or credit history!
For example. If it's a credit card with a $10,000 limit which has been paid as agreed for the last 10 years, then that
complete history will be posted to the authorized users' credit report. I once saw a clients' credit report who used this
technique with his mother. He was only 24 at the time and he had a $15,000 Gold credit card on his report with history going
back 11 years! I laughed as I thought to myself that this kid would have had to be approved when he was 13 years old for this
account to be his!
As you can see, this strategy is usually only used by parents and their children and in most cases with no regard to
the benefits the children are reaping credit wise! In fact, in recent years, due to its' effectiveness, this technique has
led individuals with excellent credit scores to "rent out" authorized user accounts on one or even multiple credit cards in
return for a fee! I once recall seeing an ad in USA TODAY for just such an opportunity. Like most good credit loopholes, I'm
sure this methods' days are numbered much like what may be the case with...
ADVANCED CREDIT PROFILING: This is a strategy while not complex, can be taken to very complex levels.
Even in its' most basic form, it's taken advantage of by very, very few. It involves intentionally building your credit report
in a way which creates a "profile" that closely fits the criteria of most lenders (as well as the overall credit scoring system).
Again, this is a technique which can be used in a myriad of complex ways, but for simplicity I will explain it in its' most
basic form.
While many consumers will boast when they have 10, 20, 30 or even 50 thousand dollars worth of credit cards on their
report, many of these same people do NOT have even one mortgage, automotive loan or lease, equipment loan or a even a line
of credit with a local bank or credit union. These other forms of credit create a much more well rounded credit profile for
the consumer. This is achieved by showing greater credit account diversity and experience with multiple types of credit due
to the various lines held.
For example. A person with $50K in credit cards does not represent near the credit experience as a person with the same
$50K along with a mortgage, an automotive loan and an equipment lease. We have clients who have financed vehicles not because
they had to (or even wanted to) but because they "needed to" in order to create a credit profile that would position them
in the future to secure the lowest possible rate on a mortgage when they applied and needed it.
More complex forms of Advance Credit Profiling involve one subscribing to affluent or semi-affluent business and professional
publications and organizations. These would include magazines, newsletters, trade journals and national associations. The
goal is to get ones name into the databases of these publications and organizations. Why? To get on highly targeted lists
in order to receive select credit offers.
Marketers of credit offers have found that simply renting names of consumers from the credit bureaus does not provide
enough information about the person as a credit risk anymore. Therefore, it is speculated that many will rent a list from
the credit bureau and then cross-reference this list against another list they have secured from a consumer source such as
an affluent business or professional publication, trade journal or organization.
By crossing the two lists together the marketers find the names contained on both lists. This in turn provides them with
one highly refined and targeted list to mail their offer to. This results in shortening the process of securing a new quality
account holder thus lower the overall account acquisition cost of new accounts.
When a consumer learns how to intentionally put themselves into these databases to wind up on these refined lists, the
credit building process is sped up exponentially. Of course, many would call this "highly speculative" but we have undeniable
experience that it works.
DEPOSIT LOAN PROGRAMS: This is a technique so unbelievable that I myself proclaimed it had to be a scam
before researching the facts. It allows the consumer (or business) to have a $25,000 to $250,000 loan appear on their credit
report as "Paid as Agreed" by way of very creative financing. This method is extremely effective and not within the budget
of most ($750 to $7,500 upfront). Also, because this technique takes advantage of certain banking laws, I have reason to believe
it could be made unavailable at any time if those banking laws were to change. This method can be used with consumer credit
files on SSN's as well as business and corporate credit files done on TIN's as well as Dunn and Bradstreet. In the end, all
of us need to remember that today our credit score is more important than it has ever been in the history of the credit reporting
system. While credit miracles don't happen overnight, you can create your own credit miracles by applying simple insider strategies
consistently over time. Before you know it, you're a proud member of the 700 Club. The "700 Plus Credit Score" club that is!
In the next segment we'll talk about...
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The "CREDIT SECRETS BIBLE" has been in print since 1994 and is published by Consumer Publishing Group. For more information
on the "CREDIT SECRETS BIBLE" click
here.
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