Four Ways to Optimize Your Credit Profile in today's economy

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Whether you’re looking for ways to dig out of your financial hole in today's economy or ways to avoid getting into one, the importance of actively managing your credit and debt profile has never been greater. Americans have become well-versed in asset management but not necessarily liability management. Until recently, easy access to credit has made our current generation feel immune to the real risks of overextending your credit.

In today’s difficult economic environment, as banks get more restrictive about who gets approved for credit and which consumers get the preferred rates, we are advising all our clients to spend more time analyzing the types of credit they have and how it is used. The reality is, we all need to change our behaviors and adapt to the realities of the current environment. When it comes to liability management, here are some simple first steps to take from credit consultants, Approvalguard.com:

1. Understand How Credit Works. Now is not the time to be content with understanding 80% of what you need to know about your credit. Ninety-four percent of consumers are challenged with understanding the basics of how personal credit works. In most cases, they build credit over a lifetime of trial and error. Invest some time in researching and understanding the current credit climate and/or contact your financial advisor or a trained credit professional.

2. Continually Evaluate and Monitor Your Current Credit Profile. The second step is to evaluate your current credit and debt profile and establish a plan based on your short- and long-term credit needs. Continually monitoring your credit report and profile is no different or less important today than getting a physical exam by your doctor.

3. Optimize Your Credit. Each of your debts should be periodically reviewed and analyzed. Are there options you can take to improve your overall credit profile so that you’re more desirable to creditors for their preferred interest rates? Should you consolidate some of your debt? Once you strengthen your credit and debt profile, do you have options on your home, auto and credit cards to negotiate lower interest rates and terms that would save you money monthly?

4. Rethink New Purchases. Excellent credit is like an insurance policy. When you need to use it, you want to qualify for the preferred interest rates and terms. Maintaining your credit “insurance policy” is critical for special purchases like a home, car or major appliances when needed. Don’t wait until there’s an immediate need because your chance of making a material change in your profile overnight is very difficult.

Remember, the credit environment just isn’t what it used to be. There has never been a more critical time to build, optimize and manage your personal credit and debt profile.

If you would like to learn more, please e-mail us, and be sure to pass this article along to your friends, family and colleagues. We can all benefit from this important information.

Improve your credit score will make home buying a piece of cake

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We are often asked if there is anything that can be done to improve your credit score and make your home buying process easier. There are, in fact, several steps you can take.

Here are five great suggestions from Bankrate.com:

1. Order your credit reports. You can do it for free once a year at annualcreditreport.com. If you've been denied credit, you are entitled to a copy of your report from the reporting agency. The company you applied to must supply the contact information and you have 60 days after denial to request a copy.
2. Examine your credit reports. Creditors do not necessarily report to each agency, so you may find differences in reports—and credit bureaus do not verify the information they get from creditors. Note any errors, such as incomplete or outdated information or inaccurate account histories. If you find errors, such as a paid-up account that was not reported or a difference in the amount owed, proceed to step number three.
3. Dispute and document. Complete the dispute form that came with the credit report or write a letter identifying each mistake and stating why it is wrong. Include a copy of the report with errors circled and copies of any supporting documents. Keep copies of everything you send. The credit bureau must investigate disputes within 30 days of receiving your letter. Items not verified as accurate by a creditor are removed and you will be sent a free, updated report.
4. Fix negatives. Call your creditors and ask for reduced monthly payments to help you keep current. See if the repayment schedule for fixed-rate loans can be extended. This may end up costing you more, but may keep you from being reported as delinquent. Arrange to pay off accounts in collection. Slowly close out unused credit accounts. Don’t cancel them all at once, as this may negatively affect your score. Remember, cutting up a card is not the same as closing the account.
5. Add positives. If you have a good credit history from a company that does not report to a credit bureau, ask them to do so. Apply for a secured credit card and build a solid payment history. Open a savings account to show creditors you are working to save and have reserves to help pay down debt.

Remember that your credit score is not always set in stone. There are actions you can take immediately to raise your score both in the short term and long term. If you would like more information on other ways to change your credit score, please e-mail us; and please also be sure to forward this important article to others who may be caught in the credit-score