Tag Archive for: debt

Common Credit Traps to Avoid: Part 1

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Now that you’ve gained a decent grip on what credit is and how it affects the mortgage application process, let’s dig deeper.

Here are four common credit traps good people fall into:

  1. Keeping credit card balances too high compared to the amount of credit available. For example, if you have a $1,000 credit card with a $900 balance, FICO will think you have financial issues. Not good! Instead, try and keep your balance at $300 (or 30%). It’s safer, smarter, and—from an outsider’s perspective—financially healthier.
  2. Paying bills late.
  3. Thinking credit is out of reach. Guess what? Even if you don’t have any credit, you can still get credit. You just have to work for it.
  4. Cosigning for others. It’s tempting to help a friend or loved one by cosigning a loan for them, but it has a significant impact on your credit. If they pay late (or fail to pay completely), it’ll hurt their and your credit score.

Look for next week’s post with part two of common credit traps!

Ready to take the first step to improving your credit and buying a home? Download our free Home Mortgage Success worksheet. 

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Steps to Take Before Paying Your Collectors

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Before you run off to pay your collector to boost your credit score, remember these tips:

  • Once a collector gets your money, they’ll forget about you the next day. Any verbal agreements you might’ve made with them will be quickly forgotten.
  • Make sure everything is in writing! For example, tell a collector to write the following in your file: “If I pay this, I will be paid in full, settled in full, and you will remove it from my credit report.”
  • Negotiate at the end of a period since collection agencies work on quarterly or monthly statistics.

Believe it or not, collection companies aren’t all that bad. Although they want your money and they can be obnoxiously persistent about getting it, they’re also willing to work with you. If you cooperate with them, they’ll cooperate with you.

Ready to take the first step to improving your credit and buying a home? Download our free Home Mortgage Success worksheet. 

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Motivational Monday – Everybody Wins

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The Big Bad Collector

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We’ve all been there. We get a call or a letter from a collection agency demanding we pay an overdue bill.

Right. Now!

Let’s face it, collection companies are the worst! They hound and hound us until they get what they want: our money.

And, well, that’s their job, so we can’t get too upset with them…right?

Although it’s tempting to hide from these “baddies,” it’s also smart to cooperate with them. A paid collection helps improve your credit score, but a collection that disappears completely does wonders for it.

But, wait. Before you run off to pay your collector(s), read our collection tips first. Download our book or visit smartwithdebt.com to learn more.

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How Fast Can You Improve Your Credit Score?

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Have you ever wondered how fast you can improve your credit score? Most cleaning credit companies would like you to think it takes 1-2 years, but that’s not true.

Realistically, you can improve your credit score in 3-6 months (not years). All it takes is:

  • Understanding the mistakes you made and the traps you fell into early in life.
  • Having an income to support a new loan.
  • Learning how to use a broader product mix, more aggressive underwriting, and companies who actually take on extra risks.

We truly believe we can teach you how to negotiate your debt, and how to do it right.

And how to do it fast!

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