Stephen Snyder - Good Credit

A Simple Way to Evaluate How Good Your Credit Really Is, and the Exact Steps You Must Take to Improve It

STEPHEN SNYDER

How Good Is My Credit?

2 | www.stephensnyder.com/collection

IntroductionThis Visual Quickstart Guide is designed to help you rebuild your credit faster.

It’s different because it walks you through exactly what you have to do to start managing your credit scores—the right way!

FICO® credit scores have rapidly become the most powerful numbers in a person’s financial life. They determine everything from your car’s interest rate and terms…to how much your mortgage or rent is…to how much you pay for insurance.

Unfortunately, many people have no idea what their FICO scores are, much less how to use them once they know what they are. I created this Visual Quickstart Guide because I saw a need for a comprehensive, easy-to-understand system anyone could use with their FICO credit scores to understand how to improve their credit quickly and efficiently.

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Step 1Step 2

Step 3Step 4

Step 5Step 6


1 Know Your Real Credit Scores 4-7

2 Understand How Lenders Judge You 8-9

3 Identify Why Your Scores Aren’t as High as They Could Be 10-13

4 Taking Action 14-17

5 In Your Own Words 18-19

6 Monitor Your Progress 20-21

Hi Stephen! I was one of the ones having trouble opening your “Visual Quickstart Guide” and anxiously awaited for the most recent version you sent out that anyone should have been able to open. I opened it April 14th, printed it out, filled in all the blanks (in dismay) and vigorously went to work. I am ashamed to say that when my divorce was all said and done and the dust had settled I was left with an Equifax score of 486. YIKES! That’s where I started April 14th. April 18th, Score Watch sent me an email saying my score went up 37 points! In 4 days! I continued to make phone calls and payments and received another email April 26th that my score went up another 23 points! That’s 60 points in less than 2 weeks! I am hoping to buy a house by the end of the year and I feel like I’m well on my way, all thanks to that Quickstart Guide! Thank you sooooo much!

Tiffany Biggs Las Vegas, NV

© 2009 Eloquent Orator, LLC.


It’s important to know your credit scores. But it’s even more important you know your real

credit scores. There are a lot of fake credit scores being sold to people who think they’re buying the real thing.

Why You Should Ignore Credit Scores From TransUnion™ and Experian®

Not all credit scores are created equal. Trans-Union and Experian have decided to enter into the business of selling credit scores directly to

consumers via TV commercials, the internet, and third-party promotions; but the scores they aggressively market are not the credit scores lenders use. They call their scores “consumer scores” to try to confuse people. TransUnion’s and Experian’s consumer credit scores are mean-ingless to you. Not one major lender uses either of their credit scores to make a lending decision.

Of the three credit reporting agencies, only Equifax® aggressively sells their FICO® credit score directly to consumers.

The only scores you need to know are your FICO credit scores. If the scores you purchased don’t say FICO—they’re fake.

What is a FICO Credit Score? FICO stands for Fair Isaac Corporation—the company that created credit scoring. A FICO credit score is a dynamic 3–digit number, rang-ing from 300 to 850, calculated from credit information that appears on your credit report. You have three FICO credit scores—one from each national credit reporting agency (Equifax, Experian, TransUnion).

Why do you need to know your FICO credit scores? FICO credit scores are what lenders use to decide whether to approve you or not. When you know what your FICO credit scores are you know where you really stand with lenders, and you have a better idea of when and where to apply for credit to get the best possible rates and terms.

February 14th, 2009 From June 11, 2003 to February 13, 2009, you and I had the ability to purchase all three of our FICO credit scores.

It was great while it lasted.

On February 14, 2009, Experian decided to stop selling their version of the FICO credit score to consumers. This left anyone who wanted to know where they stood before they applied for credit in the dark. Very frustrating if you live in an area that predominantly uses Experian as their primary credit reporting agency, or if you want to get approved for a mortgage (since most mort-

KnowYourRealCreditScores

Step 1

The FICO® score certification seal.If you don’t see this certification seal when you look at your credit scores, you may have purchased fake scores.


gage companies use your middle credit score). So how are you supposed to know your middle score when you don’t have access to all three scores?

How to Beat Experian at Their Own GameExperian still sells their FICO® score...but only to lenders. So, in theory, when you apply for credit you should be able to know what your Experian FICO score is, just by asking the lender.

Not so fast, Skippy...

Different lenders use different versions of the FICO score.

Credit card lenders use an enhanced version of Experian’s FICO score made for the credit card industry. Car dealers too...they use an enhanced auto score made just for them. This is NOT what you want to see. It’s like comparing apples to oranges.

Solution The only way to get the most accurate version of your Experian FICO score is to apply, or prequal-ify, for a mortgage.

Yes, a mortgage.

The FICO scores mortgage lenders use are not enhanced, they are your real FICO scores.

And if you aren’t in the market for a home right now...you don’t really have to go through with the mortgage loan. You can simply ask for a mortgage prequalification. As a part of the pro-cess you’ll receive all three of your FICO scores, since mortgage lenders are required by law to disclose them to you.

How to Purchase Two of Your Three FICO Credit ScoresIf you don’t want to prequalify for a mortgage, then the best place to purchase two of your three FICO scores (Equifax and TransUnion) is directly from the Fair Isaac Corporation. Their

Step 1



. . . . . . . . . FAKE

. . . . . . . . . FAKE

. . . . . . . FAKE

. . . . . . . FAKE

. . . . . . . . FAKE

. . . . . . . . FAKE

TheBiggestCreditScamBeingPerpetratedontheAmericanPublicToday!

Numerous companies are taking advantage of you through slick TV, radio, and print ads. They sell you “consumer” credit scores instead of your FICO® credit scores.

When you apply for any credit-related transaction, the lender or bank will look at your FICO credit scores. They will NOT look at “consumer” credit scores.

HowtoTellaLegitimateFICOScoreFromaFake“Consumer”CreditScore

Here’s how to tell the difference between a fake consumer credit score and a FICO credit score…if it doesn’t explicitly say it’s a FICO score…it’s fake. Your genuine FICO credit scores and negative reason codes are only available online. or through a mortgage lender.

If you’re buying your credit scores online, always look for the FICO certification seal (see page 4).


YourFICOcreditscoreswillnotappearonyourconsumercreditreports.

The best way to purchase your FICO credit scores is from: www.myfico.com/12. When you purchase your credit scores from this site you not only get the credit scores that lenders use, you also get your negative reason codes. This is important, because your negative reason codes may be as vital to your recovery as your credit scores.

Just click the “buy now” button and follow the 3 simple steps. The whole process should take less than 5 minutes.

If you’ve visited www.myfico.com before, there’s a “cookie” in

your browser that will prevent you from going to www.myfico.com/12. In order to visit “/12” you will need to delete your “cookies.” Go to: www.aboutcookies.org if you are unsure how to delete cookies from your browser.

Secret Website

The only site where you can get your negative reason codes. These codes, which Fair Isaac hides from the average consumer, are vital to your recovery. If the home page you are viewing does not look like this, you’re not on the special “/12” site.

Step 1 (cont.)

web address is: www.myfico.com. This site is a good place to purchase your scores if you have excel-lent credit. However, I’m going to reveal a little secret…FICO® also has another website where you can purchase your scores. If you know that your credit needs improvement, I recommend you purchase your scores from: www.myfico.com/12.

Why is the “/12” important? When you add the “/12”—in addition to receiving the credit scores that lenders use, you also get your negative reason codes. You do not receive your negative

reason codes through www.myfico.com. This site was created for people with good credit. If you are reading this book, your credit scores probably need improvement. Your negative reason codes are as vital to your recovery as your credit scores. For a full explanation of the two different web-sites, go to: www.stephensnyder.com/yourficos.

I will go into more detail about your negative reason codes in Step 3 of this guide. For now, let’s just focus on your FICO credit scores.


Youhave3FICOcreditscores.

One from each of the three national credit reporting agencies.

A FICO credit score is a 3–digit number, ranging from 300 to 850, calculated from credit informa-tion that appears on your credit report.

Be sure to indicate the date when you obtained your scores.

Then write your 3 FICO scores in the boxes to the left.

It’simportanttokeeparecordofwhereyourscoresarenow,soyouhavesomewaytomeasureyourprogress.

FICO® scores are dynamic. This means that every time something on one of your credit reports changes, your corresponding FICO score will change. As you take steps to increase your credit scores, you can use this form as reference to gauge your progress.

Remember your Experian score is only available through mortgage lenders.

Step 1

IMPORTANT:Write the date that you obtained your scores here

Your 3 FICO ®Credit Scores

Write your Equifax FICO Credit Score here

Write your Experian FICO Credit Score here

Write your TransUnion FICO Credit Score here




Mortgage– 30-Year Fixed 711+ = A680–710 = B640–679 = C620–639 = D<620 = F

Mortgage Refinance 711+ = A680–710 = B640–679 = C620–639 = D<620 = F

Home Equity Loan and HELOC 720+ = A680–719 = B660–679 = C640–659 = D<640 = F

New or Used Car Loan–48 Months701+ = A680–700 = B620–679 = C590–619 = D<590 = F

Car Refinance 720+ = A650–719 = B620–649 = C<619 = F

Bank Credit Card– Unsecured 750+ = A720–749 = B660–719 = C625–659 = D<625 = F

Retail CreditCard750+ = A700–749 = B650–699 = C625–649 = D<625 = F

Credit Card Limit Increase750+ = A720–749 = B660–719 = C625–659 = D<625 = F

Each type of lender sets their own minimum credit score requirements. For example if you

are applying for a mortgage loan, a score of 683 will be good enough to get you the second best rate with many lenders. However, that same score

will only be considered average by a credit card lender. Use the worksheet on page 9 to see where you stand with different types of lenders. This will help you focus your efforts, and know when you should apply for different types of credit.

Step 2UnderstandHowLendersJudgeYou

How to fill out the Letter Grade Worksheet worksheet on page 9.

Example Letter Grade Worksheet

Credit Product Grade Scale:

Bring forward your FICO® credit scores and enter them in the appropriate boxes (see sample worksheet below).

A = You will be approved for the best rates and terms.B = You will be approved for good rates and terms.C = You may be approved. Your rate may be average and you may

have to pay some additional fees.D = You may not be approved. If you are, it will be at a high rate and

with the worst terms.F = You will most likely not be approved. Any loan you receive will be

at a very high rate with fees and other undesirable terms.

Enter the letter grade from the Credit Product Grade Scale that matches your FICO score in the column labeled Your Letter Grade. Continue until you have all 24 boxes filled-in.

Use the Credit Score Grade Key to determine what each grade means when you are applying for credit.

How to Use This Worksheet:

Credit Score Grade Key:

Lenders regularly use your FICO score to make a loan decision, but most lenders will also require a certain amount of time to pass after a bankruptcy. Be sure to ask.

683 629652

BBBBBCCC

CCDCBDCD

DDFCCDDD


Step 2

Letter Grade Worksheet

Write YourEquifax FICO Credit Score Here

Your Letter Grade

Mortgage– 30–Year Fixed

Mortgage Refinance

Home Equity Loan and HELOC

New or Used Car Loan–48 months

Car Refinance

Bank Credit Card Unsecured

Retail Credit Card

Credit Card Limit Increase

Credit Product

Usethisworksheetasabasicguidetohelpyouknowwhereyoustandwithdifferenttypesoflenders.

Fill in your FICO®

credit scores at the top of the worksheet.

Then grade each score using the Credit Product Grade Scale on page 8.

Continue until all boxes are filled in.

If you are unable to obtain your Experian score, fill in the boxes for Equifax and TransUnion

See page 8 for an example of how to fill out this worksheet.

Your Letter Grade


Mortgage Refinance



Car Refinance


Retail Credit Card


Credit Product

Your Letter Grade


Mortgage Refinance



Car Refinance


Retail Credit Card


Credit Product

Write YourExperian FICO Credit Score Here

Write Your TransUnion FICO Credit Score Here




IdentifyWhyYourScoresAren’tasHighasTheyCouldBe

Step 3

HowtoFindYourNegativeReasonCodesfrommyfico.com/12

The secrets in knowing what to do to improve your FICO® credit scores are hidden within your

negative reason codes

What are your Negative Reason Codes?

Negative reason codes are two-digit numbers that accompany each of your credit scores. The great thing about negative reason codes is that they explain everything you need to do to increase your credit

scores. Basically, they tell you the four most impor-tant reasons your credit scores are lower than they should be. When you know what is keeping your scores low, you’ll know what to do to increase them.

You can get your negative reason codes from a mortgage lender or you can get your Equifax and TransUnion negative reason codes when you order your FICO credit scores from: www.myfico.com/12.

Once you have purchased your credit scores on www.myfico.com/12, you will be taken to a results page.

Simply click on the “View” button and you are taken to a summary page where you will find your 4 negative reason codes for each particular credit report.

Continue this process for each credit reporting agency.

Step 3


Example Negative Reason Codes Worksheet

Cracking the Code

Now that we have an idea what negative reason codes are, where to acquire them, and where locate them on your myfico.com/12 credit reports, we can get to the fun stuff. Let’s crack the code and start to put all these numbers to work for you.

You will find the Negative Reason Codes Decoder chart on page 12. This is the key to understand-ing your codes and how you can quickly improve your FICO® credit scores.

Next transfer the codes from Equifax, Trans-Union, and Experian (if you have them) to the worksheet on page 13. You will also transfer the Negative Reason Code Description from the chart on page 12.

Let’s begin...

Start Here Carry forward your FICO credit scores (on page 7) and write them in the worksheet on page 13. Next Write the reason codes you received with your scores in the appropriate boxes in the chart on page 13. Then Using the chart on page 12, write the Negative Reason Code Description next to the code in the worksheet on page 13. To the right is an example worksheet.

Once you have the worksheet completed you’ll have an excellent overview of why your credit scores are not as high as they could be.

Each negative reason code is listed in order of importance when you get them with your credit

scores. By matching the reason codes to your credit goals (as you will be doing in the next few steps), you can create a custom game plan to increase your FICO credit scores.

Action StepsOkay…you know your FICO scores: By knowing your negative reason codes, and their meaning, you now have a good idea why your scores are not as high as they could be.

Tip: Use the chart on page 12 to find the Negative Reason Code Descriptions and write them exactly as they appear in the chart.

In the following two steps we will turn these simple descrip-tions into actions you can take to improve your credit scores quickly.

Your Negative Reason Codes

Negative Reason Code #1 and Description

Credit Score Here




Your 4 Equifax Negative Reason Codes


Credit Score Here





Credit Score Here




Your 4 TransUnion Negative Reason Codes

Your 4 Experian Negative Reason Codes

683

652

629

38 13 10 02

38 13 1018

38 13 20 02

Your credit report

shows a record of having accounts that have been seriously delinquent.

The time since one

of your accounts has been delinquent is too short.

Your credit card

balances are too high for your credit limits.

You have accounts on

your credit report which have a record of payments missed in the past.

Your credit report


The time since one

of your accounts has been delinquent is too short.

You have too many

accounts that show a record of being delinquent.

Your credit card

balances are too high for your credit limits.

Your credit report


The time since

one of your accounts has been delinquent is too short.

The time since your derogatory

public record or collection item reported is too recent.

You have accounts

on your credit report which have a record of payments missed in the past.

© 2009 Eloquent Orator, LLC. www.stephensnyder.com/collection | 11


Step 3 (cont.)

Negative Reason Codes DecoderHowtoUsetheNegativeReasonCodesDecoderTake the “Descriptions” that pertain to your specific negative reason codes and carry them forward to page 13.

NegativeReasonCode

NegativeReasonCodeDescription

01 The amounts you owe on your accounts are too high for you to earn a higher FICO® score.

02You have accounts on your credit report which have a record of payments being missed in the past. This is hurting your FICO score.

03You lack credit card accounts that were issued by a bank or major credit card issuer and this is preventing your FICO score from being higher.

04You have too many credit card accounts that were issued by a bank or credit card issuer and have a balance. This is prevent-ing your FICO score from being higher.

05 You have too many accounts with a balance and this is preventing your FICO score from being higher.

06 You have too many finance company accounts on your credit report. This is preventing your FICO score from being higher.

07 Your credit file doesn’t have enough account experience for you to earn a higher FICO score.

08You have too many inquiries into your credit report in the last 12 months. This is preventing your FICO score from being higher.

09 You have too many accounts that have been recently opened. This is preventing your FICO score from being higher.

10 Your credit card balances are too high for your credit limits. This is preventing your FICO score from being higher.

11 The amount that you owe on your credit card and store card accounts is too high for you to earn a higher FICO score.

12The length of time since you established your credit card accounts is too short. This is preventing your FICO score from being higher.

13 The time since one of your accounts has been delinquent is too short. This is hurting your FICO score.

14 The length of time your accounts have been established is too short. This is preventing your FICO score from being higher.

15You lack credit card accounts that were issued by a bank or major credit card issuer and this is preventing your FICO score from being higher.

16 You lack any type of credit card account information, which is preventing your FICO score from being higher.

17 You lack activity on accounts other than a mortgage. This is preventing your FICO score from being higher.

18 You have too many accounts that show a record of being delinquent. This is hurting your FICO score.

19* You have too few accounts on your credit report showing paid on time. This is hurting your FICO score.

20The time since your derogatory public record or collection item was reported on your credit report is too recent. This is hurting your FICO score.

21 You have accounts that are currently past due. This is hurting your FICO score.

23You have too many credit card accounts that were issued by a bank or credit card issuer and have a balance. This is prevent-ing your FICO score from being higher.

24 You lack recent activity on credit card accounts. This is pre-venting your FICO score from being higher.

28You don’t have the statistically optimal number of accounts on your credit report. This is preventing your FICO score from being higher.

29You lack recent balances on credit card accounts that were issued by a bank or major credit card issuer. This is preventing your FICO score from being higher.

30 The amount of time since your most recent account opening is too short. This is preventing your FICO score from being higher.

31 You have too few accounts that show recent payments being made. This is preventing your FICO score from being higher.

32** You have a lack of recent installment loan account information. This is preventing your FICO score from being higher.

33 Your loan balances are too high for your original loan amounts. This is preventing your FICO score from being higher.

34 The amount that you owe on your delinquent accounts is too high and this is hurting your FICO score.

38Your credit report shows accounts that have been seriously delinquent, and a record of information in the “Public Records/Collections” section of your credit report.

39 You have accounts on your credit report that have a record of being seriously delinquent. This is hurting your FICO score.

40 You have information in the “Public Records/Collections” sec-tion of your credit report. This is hurting your FICO score.

46 The payments due on your credit accounts each month are too high. This is hurting your FICO score.

97 You have a lack of recent auto loan account information and this is preventing your FICO score from being higher.

* Code 19 is 27 for TransUnion only

** Code 32 is 04 for TransUnion only

NegativeReasonCode

NegativeReasonCodeDescription


Step 3

Write your four negative reason codes and a brief description of the code for each FICO® score in this worksheet. (Code descriptions for this worksheet are on page 12.)

Yourreasoncodeswere

providedtoyouinorderofimportance. You should take care to list them in the same order here.


Remember your Experian

score is only available through mortgage lenders.

Your Negative Reason Codes


Credit Score Here




Your 4 Equifax Negative Reason Codes


Credit Score Here





Credit Score Here




Your 4 TransUnion Negative Reason Codes

Your 4 Experian Negative Reason Codes




Step 4TakingAction

Your FICO® credit scores are made of five basic factors (Payment History, Amounts

Owed, Length of Credit, Type of Credit Use, and New Credit). This is the basic information that Fair Isaac provides people to give us an idea about what to do to improve our credit. But if you really want to profoundly impact your credit positively, you need to know the specific actions to take to address each negative reason code.

I’m sure you’ve heard the expression, “actions speak louder than words.” In terms of improv-ing your credit scores, the expression should be, “actions speak louder than numbers.” In the next 2 steps we will look at how to take your

negative reason codes and put them into actions that can dramatically increase your FICO credit scores—fast.

Now that you’ve written down your negative reason codes and their descriptions, you know exactly what is keeping your FICO credit scores from being as high as they could be. Next you need to understand the actions you can take to eliminate or avoid each code that comes with each of your scores.

In the previous step you learned the defini-tions of your negative reason codes. In this step, we will translate those definitions into actual action steps.

SOURCE: FAIR ISAAC

The5FactorsThatMakeUpYourFICOScores

35%PaymentHistory Timely payment habits have a huge impact on your credit scores.

10%TypeofCreditUse You need a healthy mix of credit cards, retail accounts, install-

ment loans, mortgage loans, etc. to maintain a good credit score.

10%NewCredit Applying for too many credit accounts at the same time may

indicate that you are a risky borrower.

15%LengthofCreditHistory In general, a longer credit history will increase your score.

This is why it’s important not to close accounts.

30%AmountsOwed The amount you owe on your credit accounts compared to

the amount you are approved for factors largely into your FICO credit score.

Step 4


Take a look at the Negative Reason Code Action Step Guide on page 16. At first glance, it may look like a wall of words, but it is actually quite simple and, more importantly, useful.

Write Down Your Actions Steps

I’ve found that the best way to learn a concept is to write it down. In this step you will write down suggested specific actions you can take to increase your credit scores.

Now it’s time to write the suggested action steps to take to correct your FICO® credit scores.

Start Here First, carry forward your FICO credit scores from the worksheet on page 13 and write them in the worksheet on page 17.

Next Carry forward your reason codes, also from the worksheet on page 13. Then Using the chart on page 16, write the Actions You Can Take next to the code in the worksheet on page 17. To the right is an example worksheet.

The actions in the chart on page 16 help you translate the reason codes you get with your FICO credit scores into things you can do in the real world.

Tip: Use the chart on page 16 to find the Actions You Can Take and write them exactly as they appear in the chart.

In the next step you will write these action suggestions in your own words.

Example Action Steps Worksheet

Putting it All Together

Now it’s time to take everything you have learned and put it in a context that fits your lifestyle and schedule.

After you complete the worksheet on page 17, go to Step 5.

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Step 4 (cont.)

01 Stop maxing out your credit cards each month. Pay off as much debt as you can as soon as you can to eliminate this reason code.

02Make it a priority to pay your bills early, worst case on time. With time your past late payments will fade and your recent excellent payment history will take prominence.

03Acquire one or two major credit cards. Lenders need to see that you can be trusted with credit from reputable sources before they will take a chance to lend you money.

04 Pay off as many of your credit cards and other revolving accounts that you can.

05 Pay off as many of your revolving accounts as you can, so you are not carry-ing balances on too many credit accounts.

06 Avoid finance companies for loans and credit. Use banks (spelled B-A-N-K) instead.

07 You need to have some established credit if you want to finance larger items (like a house or a car). Lenders need to see that you can handle credit.

08You should only apply for credit when you’re absolutely sure that you will be approved. You do this by knowing your FICO credit scores and interviewing lenders for their credit guidelines.

09 Open new accounts strategically. When you open too many accounts at the same time you appear risky to other lenders.

10A major factor in how your FICO credit scores are calculated is your revolv-ing “utilization.” You can combat a high utilization by either increasing the credit limits on your revolving accounts or paying down as much of your balances as possible.

11 Avoid the “No payments for 90 days” trap. If you finance a large ticket item like furniture or electronics, pay it down or off as soon as you can.

12Don’t close old accounts that are in good standing. Lenders like to see that you’ve been able to maintain good relationships with other lenders over a long period of time.

13Don’t let a lender report you as delinquent even if you believe that you are “right.” Pay what they say you owe, then contact a lawyer to see what your options are to fight them.

14 You need to have a few loans that you keep in good standing for a period of time to earn the trust of other lenders.

15Stay away from credit cards not issued by banks. Be very careful what type credit card you get. You want to avoid cards issued by finance companies, or anything that isn’t a real bank (spelled B-A-N-K).

16 Diversify your credit. Lenders need to see that you can handle various types of credit. Only having an auto loan or a mortgage is not enough.

17 Although it’s good to have a mortgage, you should also be able to show that you can handle credit from other types of lenders.

18Credit reporting agencies are not perfect—far from it. Some accounts reporting as delinquent may be inaccurate, incomplete, misleading, unverifi-able, or outdated. You can dispute these items yourself or hire an attorney to do it for you.

19*Some of your lenders will not report your payment history to all three credit reporting agencies correctly. Make sure you only apply for credit with lenders that report your timely payments and credit limits to all three credit reporting agencies.

20If a lender tells you that your account is about to be sent to collections, either work with them to renegotiate your debt or pay off what you owe. A collection account will have a major negative impact on your credit scores.

21 Make a habit to pay all of your bills early. Convince yourself that “early” means “on time” and “on time” means “late.”

23The more credit cards you have with zero balances, the better you look to lenders. Try to keep as many of your credit cards as possible paid off each month.

24 Having credit is not enough. You have to demonstrate that you can use and manage your credit responsibly.

28 You should have at least two credit card accounts, one store card, an auto loan, and a mortgage (ideally).

29If you never carry a balance on your cards, it may appear as if you have no activity at all. It’s OK to let a small balance ride for a short period of time, just don’t let it accumulate or stay on your bill for too long.

30 Periodically you should be getting new credit to show that you are financially stable.

31 Use your old accounts and pay them off from time to time to show that you are still an active user.

32** Besides being a great investment, a mortgage is one of the best types of credit accounts to prove to other lenders that your are responsible with your credit.

33Do not miss payments on an installment account (such as a house or car). Late fees, penalties, and interest increase the amount you have to pay and the time it takes to pay the loan off.

34Try to pay as much off of old accounts as possible, even if the account has been closed. If an account was included in a bankruptcy, dispute the accuracy of the account with the credit reporting agencies.

38Negative narratives are accounts included in a wage earner plan, bankruptcy, repossessed (voluntarily or involuntarily), and accepted as settlements. Work with the lender to resolve any “negative narratives” or hire an attorney to represent you.

39You should be paying your bills on time, every time. But if you do have to make a late payment, do it before it hits the 90 day mark, or your FICO credit scores will seriously suffer.

40If you’ve had a bankruptcy, the best remedy for this is time. But if you work to eliminate all your other credit mistakes, you can minimize the impact of this negative reason code.

46Don’t take on more credit than you can handle. If your balances are too high on your credit accounts, your minimum payments could be larger than normal, which may be an indicator of risk.

97Having an auto loan adds to your credit mix, which looks good to other lenders, and managing it responsibly shows that you can be trusted with larger types of loans.

* Code 19 is 27 for TransUnion only

** Code 32 is 04 for TransUnion only

Negative Reason Code Action Step GuideNegativeReasonCode

SuggestedActionsYouCanTakeToIncreaseYourCreditScores

NegativeReasonCode

SuggestedActionsYouCanTakeToIncreaseYourCreditScores


Step 4

Carry forward your FICO credit scores and reason codes from the worksheet on page 13.

Write the actions you can take for each negative reason code that will help you increase your FICO® score from the chart on page 16.


Action Steps

Credit Score Here

Action Steps to Increase Your EquifaxFICO Credit Score

Negative Reason Code #1and Action Step




Credit Score Here





Credit Score Here

Action Steps to Increase Your TransUnionFICO Credit Score






Action Steps to Increase Your Experian FICO Credit Score



InYourOwnWords

Step 5

Your situation is unique. This is why it’s important to create your own indi-

vidualized game plan. In the previous steps you’ve learned specific concepts you can use to improve your credit scores by attacking your negative reason codes.

Now that you have a baseline to help you understand how each negative reason code impacts your score and what you can do to improve it, you need to use what you have learned in the previous steps to design your own plan for success.

When you write down what you need to do (in your own words) to correct each negative reason code, and the date you will take action, you create a plan of attack that is tailored to your needs. Coming up with your own plan provides you with a specific step to take your scores to the next level. Finally, writing down a date gives you a goal to reach and account-ability.

Start Here First, carry forward your FICO® credit scores from the worksheet on page 17 and write them in the worksheet on page 19.

Next Carry forward your reason codes, also from the worksheet on page 17. Then Using what you’ve learned in the previous steps, write actions in your own words in the work-sheet on page 19. To the right is an example worksheet.

Tip: Use the Action Step descriptions you wrote down in the chart on page 17 as a guide to help you formulate actions in your own words. Be sure to include the date you will take each action.

Example Actions In My Own Words Worksheet

Manage and Monitor

Now that you have learned how to manage your FICO credit scores, it’s time for the final step. Monitoring your progress.

After you complete the worksheet on page 19, move to Step 6.


Step 5

Carry forward your FICO credit scores and reason codes from the worksheet on page 17.

Write the actions you can take in your own words. Use the worksheet you filled out on page 17 as a reference.


Actions In My Own Words

Credit Score Here

Action Steps to Increase Your Equifax FICOCredit Score In Your Own Words

Date I Will Take Action

Negative Reason Code #1and Action In My Own Words







Credit Score Here

Action Steps to Increase Your TransUnion FICOCredit Score In Your Own Words









Credit Score Here

Action Steps to Increase Your Experian FICOCredit Score In Your Own Words












Once you start taking action to increase your credit scores, it’s important to monitor your

progress. Not only is it motivating to watch your credit scores rise after doing things the right way, it also saves you time and money by not having to purchase your credit scores as often. In addi-tion when you know where you stand, you’re in a better position to, “strike while the iron is hot.”

But sometimes it’s hard to really know where you stand, even if you are making all the right moves. For example, let’s say one of your Action Steps from page 19 was to significantly reduce the balances on all of your credit cards.

You take this action and two weeks go by (enough time for the lender to receive your pay-ment and post it to your account). You call each lender to verify they received your payment.

But, when you go to get your new FICO® credit scores and compare them to the scores you wrote down in Step 1, you see that your scores have not changed.

Credit Reporting Lag TimeAlthough you significantly paid down the bal-ances on your credit cards, you won’t see the effect on your credit reports for up to 45 days—and in some cases even longer. You have become a victim of “credit reporting lag time.”

So how are you supposed to monitor your progress?

It can be expensive to keep purchasing your credit scores every month. That’s why I use a service called Score Watch to monitor my FICO credit score from Equifax—it sends me an email or text message any time my score changes.

Unfortunately, there is currently no service that provides monitoring of all three FICO scores. That would be the ideal service. But for now, you can at least monitor your Equifax score.

MonitorYourProgress

Step 6

ForaFREE, 30-day trial ofScore Watch, you can go to: www.6simplestepstobettercredit.com/scorewatch


ScoreWatch™hassomeverycoolfeatures that help you chart your prog-ress and stay on track with your credit score goals.

Score Watch monitors your progress and imme-diately alerts you by email or text message when your score has reached the target goal. This way you can get financing at the best possible interest rate.

A graphical chart shows how your interest rate improves as your credit score increases. This graphic can be set in 3-month, 6-month, 1-year, or 3-year increments.

Step 6

Instantly get your Score Power Report. This report provides an easy-to-understand breakdown of where your score is and what you can do to take it to the next level.

Your current FICO® credit score from Equifax.




Conclusion

A goal without a written plan is just a wish. Writing down goals is an important step

for getting the things you want. Start with your short–term goal, and develop specific actions to accomplish it. Do the same all the way to your ultimate goal.

Action plans are important if you want to experi-ence change. Let’s apply what you’ve learned.

If you haven’t already purchased your FICO® credit scores, contact a mortgage lender or go to: www.myfico.com/12 now.

Analyze your negative reason codes from each credit reporting agency (use the forms on pages 13, 17, and 19). To increase your scores, deter-mine what credit usage habits your negative reason codes are telling you to change. These hab-its are preventing your scores from being higher. Next, create a game plan using what you discover.

Keep track of your progress. The most efficient way to do this is to subscribe to a credit score monitoring service (see pages 20-21).

Be patient. It may take time to increase your credit scores.

Your goal should be to achieve three FICO credit scores above 700. Anything over 700 is an accomplishment worthy of celebration. However, if you’re like me, you want scores over 800. If that’s the case, you’ll be in an elite group reserved for only 6% of scored Americans.

Let the fun begin.

PersonalCreditGoals

UltimateGoalThe800ClubBy achieving scores above 800, you are in the top 6% of the scored population.

Short-TermGoal

Your short–term goal should be to have each of your 3 FICO credit scores at 640 or higher. With a middle score of 640 you are able to get conventional mort-gage financing. In addition, a few car manufacturers will qualify you at their bottom tier level with a 640 score. If all 3 of your scores are above 640, focus on your Mid-Term Goal.

Long-TermGoal

Your long–term goal should be to have each of your 3 FICO credit scores at 750 or higher. Accomplish this, and you will have the credit world by the tail. After all 3 of your scores reach 750, you may consider focusing on your Ultimate Goal.

Mid-TermGoal

Your mid–term goal should be to have each of your 3 FICO credit scores above 700. You will qualify for good financing through car man-ufacturers and may be approved for unsecured credit cards, credit limit increases, mortgages, and more at competitive interest rates. When all 3 of your scores are above 700, it will be time to focus on your Long-Term Goal.



1.KnowYourScoresPurchase your scores from: www.myfico.com/12, or acquire them from a mortgage lender so you know where you stand before you begin.

2.KnowYour“GoalScores”Ask your lender what score you need to qualify at the lowest interest rate (with the best terms).

3.TakeActionCorrect the mistakes indicated in your negative reason codes by using the recommended actions from Step 5 and the actions you came up with in Step 6.

4.MonitorYourScoreSign up with Score Watch at: www.6simplestepstobettercredit.com/scorewatch so you can get an idea about how your actions are affecting your FICO score from Equifax.

5.PurchaseYourScoresPurchase your scores every 3 to 6 months (or before a major purchase) from: www.myfico.com/12 to learn if your negative reason codes have changed and if your have met your score goals.

6.ApplyforCreditYouWantWhen you know you have achieved the score required from the credit reporting agency the lender uses to qualify for the credit you want—apply.

PuttingitIntoPractice


New From Stephen Snyder... For years, I put all of my information about recovery from bankruptcy into one book, Credit After Bankruptcy. However, as things began to change so rapidly in the “New Credit Economy,” I made the decision to pull my best-selling book from the bookstores and concentrate on individual and more detailed books, on specific subjects. This way, instead of an all-encompassing book with general details that only gets updated every 4 or 5 years, I could provide you with titles that are updated as things change in the credit economy. So…now you are left with a superior product…that is geared for what you need at the time.

To learn more about any or all of these timely resources, just visit:

www.stephensnyder.com/collection

Free FICO® ScoresFor more information go to...

www .allenmichael .com/signup

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All rights reserved. No part of this work may be reproduced in any form, or by any means, without the permission of the publisher. Exceptions are made for brief excerpts to be used in published reviews.

Published by Chapter 20Jackson Hole, Wyoming 83001

Printed in the United States of America110609 v.1

What is Your Credit Score Temperature?

Knowing your credit scores is like determining whether you’re sick. How do you know if you’re sick? Put a thermometer in your mouth and take your temperature. The first thing you must do to determine if your credit rating is sick, healthy, or in need of a little attention is purchase your FICO® credit scores. Credit scores are your credit-worthiness thermometers. The best place to purchase your credit scores is www.myfico.com/12

Knowing where you are is very important to determine where you want to go. It helps you set goals, and gives you a baseline to measure your success from. You can’t have progress without a starting point.

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When it comes to your credit score health, higher is healthier.

Documents

Stephen Snyder - Good Credit