[John Michael Kane]

John Michael Kane's Mastering Credit Datasheet

Ok gents, I've seen a number of threads regarding credit issues, questions and also dealing with debt. As someone who used to have a lot of debt and also poor credit, I'm going to give you all the tools needed to climb out of debt, start building (or re-building) your credit and use credit to your advantage, just like the wealthy do.

If you pay attention to all the information contained within this guide, it will save you tons of money, and if you're really smart, start using credit to make you money. This forum has given me so much great information, now it is time to give back.

This guide is written in two sections:

I. Understanding Where Your Credit Stands & and How to Clean It Up
II. Using Your Credit To Buy Things and Prepare For Your Financial Future (currently under construction, stay posted)


I. Understanding Where Your Credit Stands & How to Clean It Up

First things first:

This guide is written primarily for citizens of the United States. Credit systems work differently in each country, but as an American, I only have experience in dealing with the U.S. system. As such, this guide will cover how to improve and get credit in the United States. Gentlemen from other countries, if you want to chip in with country-specific information outside of the USA, please, be my guest.

1. Basics:

So what is credit? Credit is basically banks gambling money, and betting that you'll pay them back, with interest. Most people are fairly credit literate. Banks benefit from this, and make billions in profit each year based upon the lack of knowledge of the average consumer.

So how does one improve their credit, or build credit if they have none of it? First off, the US Federal Government has dictated that under the Fair Credit Reporting Act (F.C.R.A.) each American citizen is entitled to one free credit report per year, from each of the three major Credit Reporting Agencies or CRA for short.

These agencies are:

+ TransUnion
+ Experian
+ Equifax

The official government website to access your free, annual reports is:

AnnualCreditReport.com

Note: There are a lot of bogus websites telling you that they'll give you free credit reports. Do NOT sign up for them. They are often scam websites trying to get you to give over your Social Security Number and other private information. The only true, free credit report website is the one linked above.

This guy gives a decent explanation of what you want to do:

Note: Disregard any prompts for "add-on" services such as "credit monitoring" or your "credit score". Just pick the options that say "free report". Also, make sure to select that you want all 3 reports.

Why all three?

Well, each CRA reports data separately. You could have a collection show up on one report, but not on another. To make sure all three reports are clean, you need to access all three reports. Doing all three at once is just easier, plus you can put a recurring event on Google Calendar once a year to remind you to check all three reports on the same day.

Once you follow the steps highlighted in the video above, enter in your personal information. That should be name, phone number, address and email, plus Social Security Number. You may need to verify some additional information, such as the street you grew up on, or the name(s) of financial institutions you have done business with in the present, or past.

After you've verified your identity, you should be logged in. The system will randomly give you access to one of the three reports listed above. Click on "Credit Summary" or "Print Out Your Entire Report" or something to that effect.

This is important: Print out your entire report on paper, so you can take notes. Also, make sure to save your report as a PDF! Once you logout of the system, you won't have access to your reports in the future without paying, or waiting another year. Again, make sure to print out and SAVE AS PDF your first report.

After you've saved and printed your first report, move on to the next two and repeat the process. Register for online account access for each reporting agency if they let you. It will make the dispute process easier later. Don't worry if you get a prompt to register, you can do it later.

2. Review Your Reports' Personal Information

Once you have all three reports, you need to check them for inaccuracies. Look at the Personal Information sections first. They will have your First Name, Middle Name (if you have one), Last Name, Phone Number(s), Current Address, Previous Address(es), Current and Prior Employers and Social Security Number.

Carefully pour over the Personal Information section. Make notes of inaccuracies. Is your name spelled incorrectly? Are there phone numbers, mailing addresses or employer information that is outdated, or inaccurate? If so, note the problems.

An ideal Personal Information section has only:

First Name, Last Name: (No Middle Name is necessary, later you request to have Middle Name removed)
Current Mailing Address: (No older mailing addresses, as collection companies often use old addresses to attach to your credit report)
Current Personal Phone Number: (Should be your cell or landline number. If you have old work numbers on here, or old cell phone or home landline numbers that are no longer active, you'll want to dispute these later.)
Employer: (The only employer you want on your report is your current one. Older ones can safely be removed.)

Invaluable Resource: CreditBoards.com

CreditBoards.com is a free, discussion forum for questions and issues regarding credit. There are literally hundreds of great threads and posts to research collection agencies, understand bankruptcies, find the best credit cards, home loans and much, much more.

After you've pulled all three of your credit reports, but before you do anything else, register for a free account on Credit Boards. Once registered, browse on over to the Newbie Section and read all the posts in there. Doing so will save you time later, and avoid getting called out as a n00b who doesn't read sticky posts.

Note: Do NOT dispute inaccurate information online just yet. Do NOT dispute anything until you've completely review your report from top to bottom. Disputing inaccurate or outdated information on your credit report can be a lengthy process, and it must be done in chronological order.

3. Review Your Reports' Account History Information

If you are young, or have never applied for credit, you may not have much or any information on your credit reports.

A short list of accounts that show up on your credit report are:

• Credit Cards
• Home Loans
• Car Loans
• Unsecured Loans
• Secured Loans
• Lines of Credit
  

Each account that shows up will give the following information:

• Name of the bank or financial institution
• Date the account was opened
• If the account is currently opened or closed
• Are the payments for the account current, past due, in collection or charged off/bankruptcy
• Total Amount Owed (If any)
  

All of the accounts above will be split into one of two categories, either Satisfactory Accounts or Unsatisfactory Accounts.

You can disregard all the Satisfactory Accounts, unless the account appears to be fraud, and you know for a fact you didn't open it yourself.

What you really want to focus on are the Unsatisfactory Accounts. So what is an Unsatisfactory Account?

A Unsatisfactory Account or Derogatory Account as they are sometimes called are accounts that are currently, or were in the past, late on their payments. Lenders report late payments on any month where your payment was past due 31 or more days. You'll see either 30, 60, 90 or 120 days "past due" in the legend under each account.

You might also see "collection" (meaning that the debt has been sent to a debt collector, this generally happens when you've been seriously past due. You might also see the debt as "charged off", which is when the original lender has stopped trying to collect the debt, meaning they don't think you'll pay. They often sell your debt to the collection agency, or Junk Debt Buyer (JDB), who will try to collect the debt. If you've ever received really nasty or threatening phone calls for a past due account, you were probably dealing with one of these collection agencies.

Last but not least, if you see the term "Bankruptcy" it means that your account was discharged in Bankruptcy, meaning that you are no longer liable for the debt, but that bad mark will stay on your credit report for up to ten years. Bankruptcy law varies from state to state, so I suggest you bone up on the CreditBoards.com forum for more information based upon where you live. You can also check this handy reference guide.

4. Dispute Only Inaccurate Personal Information

For any outdated or inaccurate information that you may have found in section 2, go to the relevant credit reporting agency website's dispute form:

+ Transunion Dispute Form
+ Experian Dispute Form
+ Equifax Dispute Form

Once logged in to the respective websites, request that all outdated information (Previous Mailing Addresses, Old Phone numbers[/i etc. be deleted. The same also applies in case the personal information of someone else ends up on your report, either due to fraud, or more commonly, because sometimes if your last name is Smith, they might accidentally have you on the report as Smiths.

Refer back to section 2 for the only things you want on your reports. Once you've double-checked your dispute, click submit for that agency. Continue on to the other two and repeat the process. By disputing online, you will receive email updates as to the status of the dispute. Most online disputes are resolved for simple [i]Personal Information requests within 7 days.

On occasion, they may request that you verify additional personal information before they will remove information. If so, follow the instructions on the prompt screen. Usually it involves scanning a copy of your driver's license, a recent utility bill or a birth certificate. Pay attention to the prompt (if it even comes up) for specifics.

Upon successful deletion of outdated and/or inaccurate Personal Information, continue to section 5 below.

5. Create a New Thread on CreditBoards.com

Gather all information that is negative on your report, and compile it into a single New Thread for the CreditBoards.com forum section titled Credit Forum.

Note: If you are copying and pasting from your saved PDF reports, make sure you strip out any personal information first! Don't accidentally copy and paste your Social Security Number, Account Numbers, Phone Number and so on! The only information you should copy to the post are the amounts owed, who the lender is, and if the account is past due or not.

In your New Thread, ask the CreditBoards.com community what can be done regarding your negative accounts, and what are the best ways to tackle them. Also let them know that you've already submitted an online dispute for inaccurate and/or outdated Personal Information as outlined in section 2 above.

Subscribe to email updates to your new thread before submitting to stay on top of new replies. Once the replies start coming in, pay close attention and follow to the letter the advice posted there! These folks are experts at beating the collection agencies and banks at their own games.

Now, depending upon what banks or collection agencies you're dealing with, it may be very hard, or quite easy. It will also depend upon the amount owed.

I repeat, pay attention to the advice of the veteran posters over there. They know their stuff, and will suggest a game plan for cleaning up your reports.

It may take several months to dispute debts, or work out a repayment plan with the lender if you choose to do so. Ask the CreditBoards.com community for all options available to you, given your unique situation.

II. Using Your Credit To Buy Things, Pay Down Debt, Earn Cash Back and Prepare For Your Financial Future


6. How to Acquire Credit if You Don't Have Any or Your Credit is Poor

So what if you're a young man, and have never had any credit? How does one get credit if you have no credit history? There are several ways to accomplish this goal.

Option A: Becoming an Authorized User

The easiest way of doing this is by talking to your parents or other adult family members if you have a good relationship with them. If they have any existing credit cards (Visa, Mastercard, American Express, Home Depot, Best Buy, etc.), you can be added to their account as an Authorized User. What this means is that you will receive your own credit card, but it is tied to their credit card account and credit limit. You become jointly responsible for whatever charges are made to the account. I only reccomend using this method providing the following criteria is met:

• The account you wish to be added to isn't past due. There's no point in being added to account with a poor payment history. Get them to check their free annual credit reports as listed in the beginning of this guide.
• You have no reason to believe they will fall behind on the payments. Remember, once you are added to their account as an Authorized User, their account gets added to YOUR credit report, with the full history of the account for the last 24 months.
• Lastly, if your parents or family members are concerned you can't be responsible with credit, you can still use this technique with a caveat. Agree to be added to their account as an Authorized User, but when your copy of the card arrives, have them take the card for safekeeping. That means you won't be able to charge things to the account, but you'll still benefit by building your own credit history by having their account appear on your credit reports.
• It takes between 30-60 days for the account to appear on your credit report. Once it does, congrats, you now have the beginnings of a credit history! Still, one account doesn't really build up much of a history, so thankfully there's an additional way of building up your credit profile.

Option B: Open a Secured Credit Card Account

• The second way of building up your credit is to go to your local bank or credit union that you currently have a checking or savings account with. Speak with a personal banker and ask them about opening a Secured Credit Card. A Secured Credit Card is a credit card account that is secured by cash held in your checking or savings account. For instance, if you have an extra $800 in your savings you don't need immediate access to, ask the banker to use those funds to become your new Secured Credit Card Credit Line.
• That means you can make up to $800 worth of purchases, and no more. The $800 at the beginning of the account is locked away, often in a CD account or non-touchable account of some sort for about 6-12 months. You'll need additional funds to pay off your monthly balance in full, so don't charge more to your account that you can pay off each month. At the end of 6-12 months, the account will be switched from a Secured Credit Card to an Unsecured Credit Card. That means they'll give you your $800 back, and often increase your credit line beyond the initial amount. (For example, I did this with $500 initially, they gave me a Credit Line Increase to $1,200 after 12 months. There may be a small annual fee during the initial period. I paid $29 the first year with Bank of America, and it was no annual fee past 13 months and onward.
  

After you've built up your credit history for 6-12 months, try applying for a store charge card, which are easier to get approved for than a branded card like American Express or Visa. Just walk into Home Depot, Best Buy or some other store that you might want to make a purchase with in the future, and ask to apply for a Store Charge Card. Make sure it isn't the Visa/MasterCard/Amex version if you don't have much credit history, otherwise you'll likely to be declined!

Once you've been approved for a store card, make a small purchase on it and pay it off. Wait another 6 months or so, then feel free to apply for an actual Unsecured Credit Card like a Visa or Mastercard. For a list of card requirements for different lenders, you can put in the bank's name in this search tool.

(Stay tuned, currently writing this section as you read this)

Additional Resources:

+ Mint.com - A service for tracking your various bank and credit accounts
+ PersonalCapital.com - A service very similar to Mint.com for tracking accounts
+ CreditKarma - A free website for tracking your credit score. It isn't always the same exact score that lenders use, but will give you an approximate as to where you sit on the credit scales. A mobile app is also available for free.

Here's to better credit, stacking more cash and a prosperous financial future gentlemen!

[Vacancier Permanent]

Awesome DS JMK!
Must read for everyone! Should be stickied here! +1!

[John Michael Kane]

Glad to help. If anyone has additional questions, please post them below. I'd prefer it if people didn't PM me, that way the information can be shared with everyone.

[RoastBeefCurtains4Me]

I'd like to see more on how credit ratings are assessed. I've read on this myself, but it's been a while, and I'm not truly knowledgeable. I know that it is important to have available and unused credit. Getting credit cards with large limits, and paying them off every month is a good thing.

However, I'd appreciate a well thought out explanation of this from someone that truly understands it.

I've found that I trust discussions of topics like this more on RVF than other web sources. It's hard to know how qualified the writer is with other sites, but here, between original posters and other members weighing in, I feel I get the most solid information. Even if I go to other sites for further follow up, I feel that RVF is often the grounding point for information like this.

Understanding this stuff is key to being successful as a man, and this forum is focused on achieving success as a man.

[jj90]

Simple Google search will yield quite a bit of quality info across the range of questions. Because a picture speaks a thousand words: http://www.myfico.com/crediteducation/wh...score.aspx

Now here's what isn't apparent from the picture. Installment loans(auto loan, student loan, etc) are weighted less than revolving credit(credit card, LOC, etc). So having a 10K balance on an auto loan is less detrimental than the same on a CC.

Also, revolving credit utilization per product has a large impact. Taking out 5K on a single card which has a limit of 5K is worse than taking out 5K on a 25K limit card. Better yet, take out 5K across multiple cards if you have tradelines to do so.

If you ever applied for a card and got a lower than expected limit and couldn't figure out why even though you have a great credit profile, the answer may be too much credit. Yes that's right. Good news is, take the product and in the future renegotiate to have your credit limit on the product increased.

Which brings me to another point: When dealing with individual card issuing institutions, it is important to have a history with them regardless of what your credit profile is. Because as a new customer, to their underwriting algo/department you carry risk vs an established customer with a lower score.

[John Michael Kane]

(05-01-2016 01:50 PM)RoastBeefCurtains4Me Wrote:  

I'd like to see more on how credit ratings are assessed. I've read on this myself, but it's been a while, and I'm not truly knowledgeable. I know that it is important to have available and unused credit. Getting credit cards with large limits, and paying them off every month is a good thing.

However, I'd appreciate a well thought out explanation of this from someone that truly understands it.

I've found that I trust discussions of topics like this more on RVF than other web sources. It's hard to know how qualified the writer is with other sites, but here, between original posters and other members weighing in, I feel I get the most solid information. Even if I go to other sites for further follow up, I feel that RVF is often the grounding point for information like this.

Understanding this stuff is key to being successful as a man, and this forum is focused on achieving success as a man.

jj90 provided a useful link regarding your credit score below. Credit scores are a helpful way to gauge approximately where you are in the credit game. That being said, your score won't tell you if you have a collection on your credit report. It won't tell you your Debt Utilization Ratio, or in simple terms, how much total debt do you have relative to your total credit limits on each individual account, and also as a total of all debt, divided by total credit limits across all accounts.

I'd be happy to give you some personalized advice, but your first step should be to pull your credit reports, as instructed in the guide above. Once you've done so, you can come back here and give me a summary of what kind of accounts you have, and what shape they are in, and I'd be happy to go from there.

(05-01-2016 03:23 PM)jj90 Wrote:  

Simple Google search will yield quite a bit of quality info across the range of questions. Because a picture speaks a thousand words: http://www.myfico.com/crediteducation/wh...score.aspx

Now here's what isn't apparent from the picture. Installment loans(auto loan, student loan, etc) are weighted less than revolving credit(credit card, LOC, etc). So having a 10K balance on an auto loan is less detrimental than the same on a CC.

Also, revolving credit utilization per product has a large impact. Taking out 5K on a single card which has a limit of 5K is worse than taking out 5K on a 25K limit card. Better yet, take out 5K across multiple cards if you have tradelines to do so.

If you ever applied for a card and got a lower than expected limit and couldn't figure out why even though you have a great credit profile, the answer may be too much credit. Yes that's right. Good news is, take the product and in the future renegotiate to have your credit limit on the product increased.

Which brings me to another point: When dealing with individual card issuing institutions, it is important to have a history with them regardless of what your credit profile is. Because as a new customer, to their underwriting algo/department you carry risk vs an established customer with a lower score.

Very solid post here. I regularly call in to my banks, and ask them to increase my credit limits. I even put a recurring reminder on my calendar to do so every 6 months. Using this method, I've build up over $300k worth of un-used tradelines on dozens of different credit cards. Most people don't need to go to this extreme, but I have tons of leverage if I ever wanted to make a purchase on anything, plus having that much available credit means that even if I spend $5k in a month, that barely affects my scores at all. Granted, it has taken me a decade to build up to this level, but everyone has to start somewhere.

[fortysix]

(05-02-2016 01:13 PM)John Michael Kane Wrote:  

(05-01-2016 01:50 PM)RoastBeefCurtains4Me Wrote:  

I'd like to see more on how credit ratings are assessed. I've read on this myself, but it's been a while, and I'm not truly knowledgeable. I know that it is important to have available and unused credit. Getting credit cards with large limits, and paying them off every month is a good thing.

However, I'd appreciate a well thought out explanation of this from someone that truly understands it.

I've found that I trust discussions of topics like this more on RVF than other web sources. It's hard to know how qualified the writer is with other sites, but here, between original posters and other members weighing in, I feel I get the most solid information. Even if I go to other sites for further follow up, I feel that RVF is often the grounding point for information like this.

Understanding this stuff is key to being successful as a man, and this forum is focused on achieving success as a man.

jj90 provided a useful link regarding your credit score below. Credit scores are a helpful way to gauge approximately where you are in the credit game. That being said, your score won't tell you if you have a collection on your credit report. It won't tell you your Debt Utilization Ratio, or in simple terms, how much total debt do you have relative to your total credit limits on each individual account, and also as a total of all debt, divided by total credit limits across all accounts.

I'd be happy to give you some personalized advice, but your first step should be to pull your credit reports, as instructed in the guide above. Once you've done so, you can come back here and give me a summary of what kind of accounts you have, and what shape they are in, and I'd be happy to go from there.

(05-01-2016 03:23 PM)jj90 Wrote:  

Simple Google search will yield quite a bit of quality info across the range of questions. Because a picture speaks a thousand words: http://www.myfico.com/crediteducation/wh...score.aspx

Now here's what isn't apparent from the picture. Installment loans(auto loan, student loan, etc) are weighted less than revolving credit(credit card, LOC, etc). So having a 10K balance on an auto loan is less detrimental than the same on a CC.

Also, revolving credit utilization per product has a large impact. Taking out 5K on a single card which has a limit of 5K is worse than taking out 5K on a 25K limit card. Better yet, take out 5K across multiple cards if you have tradelines to do so.

If you ever applied for a card and got a lower than expected limit and couldn't figure out why even though you have a great credit profile, the answer may be too much credit. Yes that's right. Good news is, take the product and in the future renegotiate to have your credit limit on the product increased.

Which brings me to another point: When dealing with individual card issuing institutions, it is important to have a history with them regardless of what your credit profile is. Because as a new customer, to their underwriting algo/department you carry risk vs an established customer with a lower score.

Very solid post here. I regularly call in to my banks, and ask them to increase my credit limits. I even put a recurring reminder on my calendar to do so every 6 months. Using this method, I've build up over $300k worth of un-used tradelines on dozens of different credit cards. Most people don't need to go to this extreme, but I have tons of leverage if I ever wanted to make a purchase on anything, plus having that much available credit means that even if I spend $5k in a month, that barely affects my scores at all. Granted, it has taken me a decade to build up to this level, but everyone has to start somewhere.

If you ever decide to purchase a house and want to take out a mortgage, is there a risk that the banks will deny you for having too much available credit as is?

[John Michael Kane]

Quote:

If you ever decide to purchase a house and want to take out a mortgage, is there a risk that the banks will deny you for having too much available credit as is?

Great question. It depends upon the bank's loan officer and underwriting department standards. Some will, some won't. Generally speaking, people can't accumulate "too much credit" unless they've worked at it very hard like I have for over a decade.

Why is that?

Well, for starters, you can't just apply for six new cards per month. If you have too many inquiries in a short period of time, banks will deny you for new credit lines. They think (often rightly so) that you're trying to get in too much over your head. Take my personal example though: If an underwriter looks at my credit report, he'll see that I've never run up more than 10% of my total credit lines, despite having $300k worth of available credit. That means my total monthly spending for all accounts has never maxed $30k, against $300k to borrow against.

They can check back and see that this has been the case for many, many years. A senior underwriter will see that I have "too much" credit relative to what I use, but that I also use it very responsibly. If you are ever denied credit, you can always call the bank's underwriting department and ask for a Recon or Reconsideration. Basically, you are asking the gatekeeper for a chance to explain your situation. Despite having so much available credit, I've never been denied a new account for "having too much credit".

If your income is fairly high relative to your debt loads (and in the case of trying for a mortgage, they'll have you show your recent savings/checking deposit statements anyways to see if you have the cash on hand for a down payment, and monthly payments.) In closing, sometimes a bank will reduce your credit limit on one card if they think you're opening too many accounts. I have dozens of credit cards, and have only had this happen once, with Bank of America. They dropped my credit line on one account from $15k to $13k. Not a big deal, and certainly not something to sweat. If you build up enough accounts, and don't use them, you have better shock resistance against any one bank closing or reducing your lines.

[renotime]

I keep getting offers to apply for credit cards in the mail, but I don't want to lower my credit score.

Is it true that you if you apply for a bunch of credit cards on the same day, your credit will only be checked once?

[John Michael Kane]

(05-02-2016 02:10 PM)renotime Wrote:  

I keep getting offers to apply for credit cards in the mail, but I don't want to lower my credit score.

Is it true that you if you apply for a bunch of credit cards on the same day, your credit will only be checked once?

If you are getting offers in the mail, it usually means your credit is already pretty good, as these offers are pre-screened, meaning the banks send them out to you based upon checking your credit report (which they can do legally without actually putting a credit hit or inquiry.

It is absolutely not true that applying for multiple cards in a single day will only result in one inquiry. That is a myth that has been peddled around among less-informed consumers. Each bank must due its own underwriting to see if you qualify for credit, meaning that each time you apply, your credit will have a hard inquiry show up on your report. This is even true if you are pre-screened for an offer of credit, like the ones you receive in the mail. Pre-screened means that you're very likely to be approved, but you still aren't getting approved without an inquiry.

That being said, if your credit is already pretty good, then applying for a new credit line isn't a big deal. Your score may dip 2-5 points for a single application, but that isn't anything to fret over. If you're approved, it will help your score in the long run, as you'll have more total available credit, and your utilization ratios will be better. What kind of offers are you getting in the mail? What banks? What cards? If they are cash back or miles cards without annual fees, they might be worth it.

Last but not least, if you don't like receiving pre-screened offers in the mail, you can always opt-out of the process here:

https://www.optoutprescreen.com/?rf=t

I don't recommend opting out, unless you're concerned with ID theft with someone stealing one of these pre-screened applications and filling out your information in them, thus acquiring credit in your name ilegally. I used a locked mail box, so that mitigates my risk. Also, I like receiving the offers, because every so often they'll send me one with spend $500, get $100 back in opening account bonuses. I use them to pay off purchases I was going to make anyways, then pay the balance in full before any interest hits.

[jj90]

(05-02-2016 02:20 PM)John Michael Kane Wrote:  

Each bank must due its own underwriting to see if you qualify for credit, meaning that each time you apply, your credit will have a hard inquiry show up on your report. This is even true if you are pre-screened for an offer of credit, like the ones you receive in the mail. Pre-screened means that you're very likely to be approved, but you still aren't getting approved without an inquiry.

I have to disagree slightly with JMK here with a caveat. Depending on the institution offering the credit product, they may or may not hard pull your credit. Usually one would only get these offers if one is already an existing client of said institutions, in which case, they have already soft pulled your credit and approved you from the underwriting standpoint. I've only experienced hard pulls when applying with a new institution, never with an existing relationship. YMMV.

[John Michael Kane]

(05-02-2016 04:30 PM)jj90 Wrote:  

(05-02-2016 02:20 PM)John Michael Kane Wrote:  

Each bank must due its own underwriting to see if you qualify for credit, meaning that each time you apply, your credit will have a hard inquiry show up on your report. This is even true if you are pre-screened for an offer of credit, like the ones you receive in the mail. Pre-screened means that you're very likely to be approved, but you still aren't getting approved without an inquiry.

I have to disagree slightly with JMK here with a caveat. Depending on the institution offering the credit product, they may or may not hard pull your credit. Usually one would only get these offers if one is already an existing client of said institutions, in which case, they have already soft pulled your credit and approved you from the underwriting standpoint. I've only experienced hard pulls when applying with a new institution, never with an existing relationship. YMMV.

You are correct, but only in certain circumstances. For instance, some institutions that you have an existing banking relationship with will allow you to attain multiple credit products under a single inquiry. Penfed Credit Union is one of those. I applied for a credit card and was approved. They also approved me for new car loan up to $55k, using that same inquiry.

Even though they approved me for multiple products, that approved had a time frame of only 60 days. Meaning that I wanted a car loan 61+ days out, they would have to pull my credit again. A good underwriter doesn't want outdated information when making a lending thumbs up or down.

You can also go to Capital One to see if you are pre-approved, and it doesn't cost you a hit on your credit report:

https://findmycard.capitalone.com/en/Pag...E_V20.aspx

They are one of many banks that have pre-approval checkers on their website. If you want to apply for Capital One, or any other bank, ask if they have a pre-approval process that will only give you a soft inquiry on your credit report. Doing so will not hurt your credit score. Watch out though for some unscrupulous bankers that are just trying to get you to apply, and don't care about your credit score. When in doubt, do your research, or ask questions here first before applying.

[DJ-Matt]

(04-30-2016 11:36 PM)John Michael Kane Wrote:  

Option A: Becoming an Authorized User

The easiest way of doing this is by talking to your parents or other adult family members if you have a good relationship with them. If they have any existing credit cards (Visa, Mastercard, American Express, Home Depot, Best Buy, etc.), you can be added to their account as an Authorized User. What this means is that you will receive your own credit card, but it is tied to their credit card account and credit limit. You become jointly responsible for whatever charges are made to the account. I only reccomend using this method providing the following criteria is met:

• The account you wish to be added to isn't past due. There's no point in being added to account with a poor payment history. Get them to check their free annual credit reports as listed in the beginning of this guide.
• You have no reason to believe they will fall behind on the payments. Remember, once you are added to their account as an Authorized User, their account gets added to YOUR credit report, with the full history of the account for the last 24 months.
• Lastly, if your parents or family members are concerned you can't be responsible with credit, you can still use this technique with a caveat. Agree to be added to their account as an Authorized User, but when your copy of the card arrives, have them take the card for safekeeping. That means you won't be able to charge things to the account, but you'll still benefit by building your own credit history by having their account appear on your credit reports.
• It takes between 30-60 days for the account to appear on your credit report. Once it does, congrats, you now have the beginnings of a credit history! Still, one account doesn't really build up much of a history, so thankfully there's an additional way of building up your credit profile.

I was unaware this loophole still worked, as of a year ago it did not.


Also I disputed several old collections records on my credit account and was able to get them removed, boosting my FICO score by at least 100 points. It never hurts to try, if the collections agency doesn't respond fast enough it gets automatically removed. I think in my case they just didn't care because it was fully paid off and closed.

[John Michael Kane]

Quote:

I was unaware this loophole still worked, as of a year ago it did not.

It won't work for every lender. Some lenders consider it as part of their criteria, some won't. Either way, it doesn't hurt to have authorized user accounts on your report, providing they are in good standing. If you get denied for credit, you can always go back to the Secured Credit Card suggestion.

Quote:

Also I disputed several old collections records on my credit account and was able to get them removed, boosting my FICO score by at least 100 points. It never hurts to try, if the collections agency doesn't respond fast enough it gets automatically removed. I think in my case they just didn't care because it was fully paid off and closed.

Good for you. The statutes protect the consumer if the collection agency doesn't respond in time, like you suggested. It is actually best to write pen-and-paper letters than dispute collections online. There's lots of information as to why this is in the Creditboards.com forums. If anyone here on RVF has collections, they should research it over at Creditboards first, to see what agency they are dealing with and how best to overcome their often nasty tactics.

[renotime]

(05-02-2016 02:20 PM)John Michael Kane Wrote:  

(05-02-2016 02:10 PM)renotime Wrote:  

I keep getting offers to apply for credit cards in the mail, but I don't want to lower my credit score.

Is it true that you if you apply for a bunch of credit cards on the same day, your credit will only be checked once?

If you are getting offers in the mail, it usually means your credit is already pretty good, as these offers are pre-screened, meaning the banks send them out to you based upon checking your credit report (which they can do legally without actually putting a credit hit or inquiry.

It is absolutely not true that applying for multiple cards in a single day will only result in one inquiry. That is a myth that has been peddled around among less-informed consumers. Each bank must due its own underwriting to see if you qualify for credit, meaning that each time you apply, your credit will have a hard inquiry show up on your report. This is even true if you are pre-screened for an offer of credit, like the ones you receive in the mail. Pre-screened means that you're very likely to be approved, but you still aren't getting approved without an inquiry.

That being said, if your credit is already pretty good, then applying for a new credit line isn't a big deal. Your score may dip 2-5 points for a single application, but that isn't anything to fret over. If you're approved, it will help your score in the long run, as you'll have more total available credit, and your utilization ratios will be better. What kind of offers are you getting in the mail? What banks? What cards? If they are cash back or miles cards without annual fees, they might be worth it.

Last but not least, if you don't like receiving pre-screened offers in the mail, you can always opt-out of the process here:

https://www.optoutprescreen.com/?rf=t

I don't recommend opting out, unless you're concerned with ID theft with someone stealing one of these pre-screened applications and filling out your information in them, thus acquiring credit in your name ilegally. I used a locked mail box, so that mitigates my risk. Also, I like receiving the offers, because every so often they'll send me one with spend $500, get $100 back in opening account bonuses. I use them to pay off purchases I was going to make anyways, then pay the balance in full before any interest hits.

I keep getting an offers from discover. Just this week they invited me to apply for a personal loan and their DiscoverIt card, which is 0 percent interest for the first year.

I recently just got a Chase Freedom card, so I don't know if I should be applying for another credit card so soon.

[John Michael Kane]

Regarding the personal loan, do you have any debt currently? If so, what percentage interest rate is it at? How does that compare to the loan offered by Discover?

I have both Discover It and Chase Freedom cards. Both are good bets for long-term cash back, with both rotating categories and bonus offers they give from time to time. How long ago did you apply for the Chase Freedom card? Also, how many total credit accounts do you have? How many times have you applied for credit in the last two years?

[Gustavus Adolphus]

JMK- I also like the Chase Freedom and have been using it for everyday expenses to be paid off within the terms due, and using a Citi card for backup/ emergency (I applied for both at the same time and was approved for both- so I kept them).

Now the 0% introductory period is about to end on both. One of the benefits was that I could essentially loan myself money on larger purchases interest-free (such as car repairs/ tires I needed). I don't want to do that with the "new" rates that will go into effect next month.

So I am trying to decide if calling the credit banks and trying to negotiate that rate down is even worth it, or if I should just apply for a new 0% card to use for the next 12-15 months for these types of short term $2-3k purchases.

Any suggestion on best course of action? Should I get a new 0% and call to negotiate the old cards down? I'd like to apply for a new car loan in July, my credit fluctuates on Credit Karma from around 710-685 depending on when the update is pulled and what my credit utilization ratio is at that time. Other than that no major changes expected.

Thanks in advance for your time.

[John Michael Kane]

Gustavus,

Glad to help. The Chase Freedom card is a great card with the rotating categories for earning cash back. It is one of the ones I use most regularly.

Questions:

1. What is the exact date for expiration for the 0% on both cards?
2. Have you checked your credit reports recently, as instructed by the guide to make sure they are clean as a whistle?
3. Assuming your reports are clean, I would highly recommend applying for another 0% card to do a balance transfer for your Chase and Citi cards as they are about to expire. Even with a 2-3% balance transfer fee, it will still save you a lot of money over paying an APR of 14% or more, which is common with most big banks.
4. You should only call the banks to reduce your APR if you were unable to be approved for new, 0% balance transfer cards. That option should only be used as a backup. It will cost you more money to keep the balances on the soon-to-be non-0% cards.
5. If you can apply and are approved for 0% card(s) enough to cover your existing balances, get everything transfered to that card, and also use it for your daily purchases, if there is leftover credit limits. In the mean time, try to minimize your expenses, such that you can save up enough money slowly pay down the transferred balance. By the time 12-15 roles around, you want to have as much paid off as possible.
6. If after 12-15 months you still don't have the cash reserves to pay off the balance completely, look into doing another balance transfer at 0%. The goal is to make headway at paying off your balances, not use balance transfers and new cards as a crutch to live beyond your means.
7. If you haven't done so already, I recommend keeping a household budget to track your income and expenses.
8. A path to wealth is a combination of cutting expenses and increasing income. What are you doing currently on both fronts?
9. I hope you are going to search for a used car, not a new one. Even though you will have a higher interest rate on a used than a new car, the total cost savings will still make a used car worth it in most cases. Do you have a model picked out yet? How about a budget for the car? Also, are you a member of any credit unions? They usually have far better car loan rates than that of a big bank. I can recommend PenFed, NavyFed and also USAA as all being excellent when it comes to car loans and great interest rates.

[Gustavus Adolphus]

JMK- Thanks for your response, but I don't think I was clear in my initial post. There isn't any debt to transfer, both cards will be at zero balance by the end of this month. I don't have any other debts at this time, either.

I was just asking if it is worth it to negotiate the current cards, get a new 0% one, or both? I like having the ability to put travel expenditures, flights, etc., on the card and pay them off over a few months rather than net-30.

I apologize for not being more clear in my initial question.

[John Michael Kane]

Ah, thanks for the clarification.

Given that you aren't regularly revolving a balance and paying interest, you're in pretty good shape.

I recommend applying for a 0% APR to give you the flexibility to pay purchases off over time. As long as you're disciplined and not purchasing things you don't need, I always recommend applying for one new card every year. It won't kill your credit score, especially if you are paying them off and not racking up debt. Seeing most cards give you 0% for 12 months, that works out nicely with one new card per year.

One tip: Before you apply for a new card, make sure to pay off your existing balances, then wait 60 days to apply. Often there's a 60 lag time from when you pay off a balance on a credit card(s) and when it shows up on your credit report as "paid off, $0 balance". To give yourself the best possible chance for getting an approval for a new card, or new car loan, etc., you want to make sure your existing balances are paid off a full 60 days in advance.

[TheBMan]

John Michael Kane,
Appreciate the thread - very useful for a lot of people.

My situation:
I got in way over my head on credit card debt many years ago. Was running of money just paying the minimums while trying to get my own business off the ground. Ended up getting behind on about 4 credit cards, and ultimately taking settlement offers of about 30%. About 3 months later my business took off and I began doing very very well. I am trying to get the negatives off my record and hired Lexington Law. They got one account completely removed w/in the first month or so, but havent done anything since. I'm paying them $99/month, which isnt a big deal, but they havent accomplished much recently. What are the best credit repair services, or what can I do to help get the negative charge off's removed from my record? Thanks in advance.

[John Michael Kane]

TheBMan,

Glad to help.

Lexington Law isn't a bad outfit, but they often take a long time to actually accomplish anything. Honestly, I think you are better off trying clean up your credit on your own.

First off, how many negatives do you have left on your credit reports? Have you pulled all three as recommended in the first post?

Second, who are the firms that put the negatives on your credit report? Each one of them you want to do research on, as they all have different negotiating tactics.

Lastly, I wouldn't pay Lexington Law $99 a month unless you are really busy. If you take the time to do the research yourself, you may just be able to get it removed quicker. Some outfits are notoriously hard to get rid of, but without answering the above questions, I'm just speculating what to do next.

Who are the firms? Are all your outstanding debts paid for via settlement, or do you have additional negatives that are still in collection/charge off?

[TheBMan]

(05-05-2016 08:24 PM)John Michael Kane Wrote:  

TheBMan,

Glad to help.

Lexington Law isn't a bad outfit, but they often take a long time to actually accomplish anything. Honestly, I think you are better off trying clean up your credit on your own.

First off, how many negatives do you have left on your credit reports? Have you pulled all three as recommended in the first post?

Second, who are the firms that put the negatives on your credit report? Each one of them you want to do research on, as they all have different negotiating tactics.

Lastly, I wouldn't pay Lexington Law $99 a month unless you are really busy. If you take the time to do the research yourself, you may just be able to get it removed quicker. Some outfits are notoriously hard to get rid of, but without answering the above questions, I'm just speculating what to do next.

Who are the firms? Are all your outstanding debts paid for via settlement, or do you have additional negatives that are still in collection/charge off?

Chase, Citi, and Barclays. My credit report is a little confusing, but those are who I got behind with. I have my credit reports and each of the 3 different agencies have different things. I have paid them all the settlement amounts so I dont have any outstanding debt. Lexington Law was able to wipe the Amex CO off my report entirely almost immediately.

[John Michael Kane]

So you did you settle with the banks directly, or did you settle with a collection agency/junk debt buyer? You need to know who it is you're dealing with. It wasn't immediately clear to me reading your last two posts.

Homework lesson:

1. Pull all three reports, find out what derogatory items are on each, then come back and report as such. (Example: Chase is on Transunion and Experian, but not Equifax. Showing "settled" etc.)
2. How long ago did you settle? Negative marks should automatically drop off your report after seven years.

[TheBMan]

(05-06-2016 06:16 PM)John Michael Kane Wrote:  

So you did you settle with the banks directly, or did you settle with a collection agency/junk debt buyer? You need to know who it is you're dealing with. It wasn't immediately clear to me reading your last two posts.

Homework lesson:

1. Pull all three reports, find out what derogatory items are on each, then come back and report as such. (Example: Chase is on Transunion and Experian, but not Equifax. Showing "settled" etc.)
2. How long ago did you settle? Negative marks should automatically drop off your report after seven years.

My credit report is somewhat confusing in this regard - on the top it shows the 3 major credit agencies and says I have 1 derogatory on Transunion, 0 on Experian, and 2 on Equifax. But when I scroll through I see chase is a CO on Experian (which has 0 derogs in the summary section) and Equifax, Citi is a CO on Experian, and Barclays is a CO on Experian. Whats a little confusing to me is that I thought I settled the Barclays and Citi directly w/them before CO.

Transunion shows I derogatory -