I had the chance to interview Hudson Henley with Henley and Henley PC. He answers a lot of questions pertaining to loan modifications, debt settlement, judgments, etc. He explains in detail what to do if you’ve been served with papers due to bad debts.
He also lets us know about the title industry and what to look for. If you want more information on how to get rid of nasty judgments, click here and enter your information. You can also call me directly in the office at 877.337.2673.
Justin and I put this together for you to understand how a credit score is calculated. It starts off a little shaky so please hang in there. I think I ramble a little towards the end but seriously this is really important. We break down the entire make up of a credit score and put it into a 26 minute video with commentary. Enjoy.
This is a really cool and inexpensive way to restore your credit if you are on a budget. It’s a direct competitor of mine but I know the owner so it’s cool.
Credit repair is 100% completely legal if done the correct way. Consumers have the right to dispute incorrect and erroneous line items on their credit reports. It is also legal to hire a credit repair organization to dispute the accounts for, or on behalf of, the consumer, as long as the disputing and tactics follow the guidelines and laws declared in the Credit Repair Organizations Act. Other different laws such as the Fair Debt Collection Practices Act, the Fair Credit Billing Act, and the Truth in Lending Act also allow all consumers to dispute inaccurate information on their credit reports.
If you are planning on hiring a company, make sure the company is reputable, bonded, and licensed with the Secretary of State. You should typically be able to find this information on the company’s website. Never deal with any credit doctor agencies that recommend you obtain a new social security number, attempt to create a consumer credit profile under a EIN, or create fake credit profiles by intentionally reporting false data. This is considered highly illegal and/or unethical. If one is caught doing this, it can result in significant personal liability. Do your research on the company, and make wise decisions regarding your credit. If you elevate your credit, you will elevate your life!
Your payment history is a detailed track record of your credit and every loan or line of credit you have obtained. This has the greatest effect on your FICO score, at a whopping 35%.
Three different factors are considered when reviewing payment history. First, severity is looked at. This is basically asking “How bad are the delinquiencies?” Next, recency is an issue. Depending on how long ago the consumer defaulted or paid late on an account will determine how many points the score is docked. Lastly, the frequency of the delinquencies is very important. Paying late on a line of credit over and over will absolutely crush your credit scores.
Amounts Owed
Be careful here… your balance to credit limit ratio is a HUGE factor in determining your credit score, 30% to be exact! If you have 3 credit cards that are all maxed out, your credit score is going to affected GREATLY. I will let you in on a little trick though. If you pay your accounts down to roughly 30%, you have hit the sweet spot. It shows use of your cards, but also keeps the balances at a percentage under 50% and helps your credit scores build each month, keeping your history stable.
Length of Credit History
Starting with this category, we bring down the weight percentage a little bit, but still a substantial amount at 15% of your score. As I said under “Amounts Owed”, your length of credit history DOES hurt you at first, but as the life of the loan or line of credit extends, it begins to help and build your scores. If you have a derogatory account (let’s go with a collection), then it is going to substantially weaken your score for up to 24 months. After the 24 month mark, the detriment to your scores is less, but still has an effect.
New Credit
Let’s say you go get an auto loan. You have just put a substantially large amount of debt onto your reports, showing as basically maxed out. This is going to hurt you for the first six months of the life of the loan, but after that, going forward, it will actually help you out, help build your scores, and show more good credit history and good standing, current, open accounts. Also, if you apply for any type of credit, there will be an inquiry for each one on your reports. An excessive number of inquiries labels you as a risk factor, and will typically be denied the credit. The weight of this factor is 10%.
Types of Credit Used
I have previously talked about having at least three revolving lines of credit and two installment loans. You want to mix up your accounts with credit cards, retail cards, car loans, mortgage, and so forth. A variety is a good thing… a “healthy” mix! This is also 10% of your score makeup.
Keep up the great work on maintaining great credit, and this economic crunch won’t take such a harsh toll on you and your family!
A good analogy is a great way to put real life images and situations into something a little more complicated to understand or mentally grasp. It is clarity for the ones whose forte may not be the topic of discussion. I titled this blog “The Credit Plant” to confuse you at first, because you are probably wondering what on Earth that is, but to clarify the topic by pointing out to you the following analogy (and no, it does not have to do with money growing on trees!).
We do credit restoration. We don’t do the typical “open-ended contract, $99 a month for the rest of your life, flood the bureaus with letters until they suffocate” credit restoration. We coach, teach, build relationships with our clients, and perform intense audits on the credit bureaus and creditors. If there is anything to know about credit, I will either know it off-hand, or I can find the correct answer VERY quickly. Here is one of the main coaching tips or points of view that we go over with all of our clients to really show them a good analogy in keeping their credit clean and beautiful. When I talk about “The Credit Plant”, it is a metaphor for how to grow your credit scores, credit history, and credit worthiness. So here we go…
Believe it or not, your credit IS like a plant. Let’s get visual here and go with a Tulip. You can pick whatever type of plant you wish for your credit, but I’m going with Tulips for the sake of a pretty mental image, because that’s what you want your credit to look like… pretty. So you have your plant, the Tulip, and you want to grow that plant to where everyone can see it for its beauty and purpose, or maybe you just want to add a little color to your front yard, who knows. However, you’re having a difficult time growing the tulip because of all the weeds growing around it, it’s dying of thirst, and it needs more sunlight. Well let’s begin pulling those weeds to clear out some room for your pretty Tulip. That is what we do as a company to start the credit restoration process. You have this potentially beautiful credit report, but a rough past has caused a multitude of derogatory and negative line items, the weeds, to spring up and damage your scores. We help you pull those weeds by auditing the creditors and credit bureaus. While we’re pulling those ugly weeds by the roots, we still have to give your Tulip some water and sunlight. It doesn’t matter if we help get every single negative line item off of your reports if we don’t shed some light on them to help grow that score. So how do we feed that flower water and give it some rays? We add positive trade lines. We can dispute to the bureaus and creditors all day, maybe resulting in 100% deletions of negative line items on your credit reports, but those credit scores are not going to bloom unless you add trade lines, the water and sunlight, to give your scores the most potential. Keep in mind that drowning a flower also kills it, so make sure you add a reasonable amount of credit cards and installment loans, and don’t get “application happy” while surfing the internet. As long as you have a healthy mix of credit, minimal negative line items, and the will to keep working to stay financially stable and credit worthy, then your Tulip is going to bloom with color, vibrancy, and maybe even a new boat!
This may come off as a silly analogy to many people, but it is the truth, and a great visual. There are different factors in having great credit. You have to push yourself to keep up with your payments on bills, open new trade lines if needed, and understand the concept of what I just went over. Let your Tulips bloom healthily and visually resonate all the way to your new home!
Spending money is easy. The tough part is getting the best value for your money. When it comes to our lifestyle, it’s not so much what we earn that counts, but how we spend it. By paying attention to why and how we spend money, it may be possible to boost our standard of living virtually overnight.
Two Good Reasons to Spend Money 1. Necessity: To provide food, shelter, education, and other fundamentals for ourselves and our loved ones. This always gets our top priority.
2. Fun: The things we purchase that give us enjoyment. This may include donating money to a favorite charity, jetting off to the islands, or just treating yourself to an evening out.
Two Worst Reasons to Plunk Down Your Hard-Earned Cash
1. Boredom: As in, “I think I’ll go shopping.” This reduces spending to a fairly expensive sport or hobby.
2. Indifference: As in, “I have it, so I guess I’ll spend it.” This is also known as the “flush factor,” because we tend to spend money more freely when we are flush.
Set a Goal A smart money goal: Seek to obtain maximum value for every cent you spend - whether it’s a new car, a vacation, or even a candy bar. Unfortunately, that can be more easily said than done. A key stumbling block is that value is a highly subjective commodity. It’s more than just a matter of getting what you pay for or getting the best price. For instance, some people might find a $50 jar of caviar well worth the cost; others might question $1.50 for a can of tuna. It’s just a matter of taste.
One Way to Measure Value
There are several ways to measure value; the first method is highly personal. Take the following “value test” to see if you’re getting full value for the money you spend:
1. Make a list of what you spent money on last week and record the price you paid for each item or service.
2. Circle items that you would willingly buy if you had the choice to go back and decide again. Ask yourself: “Did I get my money’s worth?”
3. Total up the money spent on the other items, those that in retrospect you wouldn’t have purchased. That’s how much value you lost last week.
4. Change your spending patterns, reducing money spent on low-value items or services in the future.
The payoff: you will have more money for the things you really want and need. A Second Way to Measure Value
The second way to measure value is more objective; it’s based on the way goods and services are sold. For instance, why will you pay $450 for a television at one retailer, but only $375 at another? Or face the dilemma of shelling out $2,500 per person for a winter vacation on one cruise line versus $1,700 on another?
It can be determined by a simple formula based on three factors: quality, price, and service. The general rule is that you can definitely obtain one of these - either high quality, low cost, or excellent service. You can even receive two. But you will almost never receive all three. In other words, you may have to sacrifice service if you want good quality at a low price, or expect to pay a higher price if you want top quality and service. While there will always be exceptions, this is still a good way to measure the value you’re spending on goods and services.
Take Control
Apply this formula by deciding which factors are important to you. Keep in mind that they will vary depending on the item and your own personal situation. Depending on your objectives and needs, you can control the quality and price of the goods and services you purchase, and get the best possible value for the money you spend.
By-line:
Braden Howell is a Financial Services Professional with New York Life Insurance Company and is licensed in the states of Texas, California, Georgia, Indiana, and Washington. For more information, please contact Braden Howell, New York Life Insurance Company, at 972-774-2313.
How many times have you said to yourself: If I only had a few extra thousand dollars a year, all my problems would be solved? The truth is that money usually has very little to do with your personal level of happiness. In and of itself, money possesses no value. It’s not the money - it’s how you use it that determines its worth. It’s important to realize that achieving your goals lies in your ability to see money for what it really is—a tool, no more, no less. Just as your car gets you from one destination to another, money is a financial tool that, when used correctly, can help you reach your goals. Establish a "Wish List"
Deciding what is important to you is the first step to effective money management. Make a wish list of what you want for yourself and your family. Items such as a new home, new car, vacations, funding retirement or future college costs, or charitable donations may appear on your list. Next, prioritize your goals by deciding what is most important to you. Why? Because in a world of unlimited choices, you may have only limited resources. Finally, put a realistic price tag on each of your goals. For example, you may want $100,000 for college in 20 years. Or, you may like to retire with a $500,000 nest egg in 30 years. How Do You Achieve These Goals?
Now that you have prioritized your goals, look to achieve short-term objectives through daily money management. A household budget may help you decrease credit card debt, build a savings account, save for vacations, etc. A budget may help you to revise your spending habits, cut costs, and achieve short-term goals.
For long-term objectives, your best bet is to start saving a specific amount on a systematic basis. The more disciplined you are, the better your chances. For example, to accumulate $500,000 for retirement in 30 years, you will need to save about $6,000 a year, or approximately $500 a month. You will need to put aside nearly $2,600 a year, or $210 a month, for a $100,000 college fund in 20 years. (These examples assume a 6 % rate of return and do not take into account the effect of current income taxes. They are for illustrative purposes only and do not represent the return on a specific financial product.)
Set Realistic Goals and Manage Your Money Effectively
Money is not the source of happiness. But when used correctly, money can help you receive the most satisfaction out of what you earn, spend, and accumulate. When it comes to your money, it makes sense to seek the advice of professionals whose job it is to help people realize their goals. Talk to your insurance agent about insurance and other financial products that can help you achieve some of your goals.
By-line:
Braden Howell is an Agent with New York Life Insurance Company and is licensed to sell insurance in the state of Texas. For more information, please contact Braden Howell, Agent, New York Life Insurance Company, at 972-774-2313.
