Misunderstood Credit Basics, Simplified!!!

RED PHOENIX NATION!!!! The credit battle goes on and I'm happy to have all of you with me leading the charge. Credit is such a hot topic right now yet at the same time it seems almost taboo to chat about it. Lots and lots of embarrassment can go into a conversation and pride often gets in the way. Then enter in the internet and your Google searches! Google can find you so much information on credit, credit repair, credit scores, checking your credit, ect. SO MUCH INFORMATION SAYING THIS SAYING THAT! It all can overwhelm a person and cause confusion when it could matter most. So, let's get to some basics you can carry with you.

FICO, Fair Isaac's Company! They are the worlds largest when it comes to evaluation of risk and 85-90% of banks use them for a credit score.

3 credit bureaus = 3 different scores. Trans Union, Experian and Equifax. All separate from one another and separate from FICO. None of which are owned by the government.

Here is what you need to know about re-building or re-establishing credit. Keep in mind this isn't an exact science but this will help. Get an installment loan of some kind! It will create depth, won't get you in trouble like a credit card.

After a month or two of paying on an installment loan, add a credit card. Get a small one so you don't find yourself in trouble like you may have before. If you're just starting out its still a good idea to get a small one. It is so easy to put it on the card when you come out of a tough personal economic cycle then you rack it up again.

Here is why the above statement is important! Anytime your credit card balance reaches 50% and higher of the available credit limit, it will start to reduce your score. If you have a lower limit card it will become much easier to pay it down to maximize your score when needed. Plus, I'm a believer if you don't have the cash, don't buy it. EX: $500 limit, $250 is 50%. Paying $25 to get below the 50% balance. Much easier than $100's or $1,000 to get that balance below 50% to maximize your score! However, you need credit to get credit which means a home, car, or even to rent a place to live. Insurance rates and employment (employment is debatable) also have a credit element to them.

Have a mix of credit, revolving and installment debt. Minimum of 3 accounts, 5-6 would be ideal. If you start getting above 5 or 6 take a look at what all those accounts are and start getting rid of the ones you really don't need. Getting to many accounts can create trouble, I'm telling you!!! ***The definition of insanity is repeating the same action expecting a different result***

Last but not least, having those re-established accounts are great. If you have negative items it's going to take some time to re-build. Outstanding collections are going to hurt a bit too. ***Remember, paying a collection doesn't mean it comes off your credit even if they say it will. It will remain for 7 years, unless you know a person like me. If you need help getting some of the negatives deleted, and adding the positive accounts the right way?!?! Let me help you Red Phoenix Nation!!! I'm always around....

john@redphoenixco.com
Twitter, @deletebadcredit

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