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Welcome To The Special Report On Building Your Credit
Discover the 10 Secrets To Building Your Credit Below...
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Building Your Credit
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Rebuild Your Credit and Redefine Your Retirement
“Credit” is the ability to borrow money, and qualifying for credit is vital to being able to make purchases such as real estate, automobiles, large appliances, etc. Credit can be a scary concept if you are not familiar with how it works, yet it is also one of your most important assets. your creditworthiness takes in many factors and is commonly reflected in what is called your credit score. A credit score is an indicator of your ability to repay future loans, based on a series of three algorithms derived from your debt repayment history. Those three numbers can be a huge asset to you, or they can feel like they are preventing you from accomplishing things you really want to do.

Credit scores will generally range from extremely low, in the 400’s, up to what is considered perfect credit at 800 (or higher). Credit guidelines are constantly shifting, and lenders require different credit score thresholds in order to approve you for a loan, credit card, mortgage etc. Below are the five criteria that credit bureaus use to determine your score, and the percentage each one contributes to your overall score:
The Five Criteria That
The Bureaus Use
Bill Payment History
Account Balances
Length of Time Opened
New Accounts
Types of Credit Used
Percent Contribution 
To Overall Score
Checking Your Own Credit History
In order to see where you currently stand on your credit history, you need to see what credit is currently being reported to the credit bureaus. The website allows you to view your credit report for free once a year from each of the three main credit bureaus. To maximize the usefulness of this free annual report, choose one bureau to request credit from now, and save the other two for 6 and 9 months later (respectively) so you can track how your credit improves throughout the year. You can also use the services of DFY’s in-house mortgage company, Strategic Lending, once a year for a credit review.

Please note that your credit score is typically not provided as part of a free credit history review. Many companies will offer to disclose your credit score to you, but these will never be legitimate scores.

Such scores will be based on a similar algorithm, but will not reflect the actual scores reported to potential lenders. Only companies offering you financing can see your real credit score.

When you pull your credit report you will see how many lines of credit you currently have, the type of credit, the amount you still owe, and whether you have been on time on your payments. You may also see open lines of credit that you did not open. If you do, it is imperative that you contact these institutions IMMEDIATELY and inform them that someone has opened accounts in your name without your permission. If there are charges on these fraudulent lines of credit, you may also want to hire a credit repair company to help you dispute these charges. 
10 Credit Secrets That Can Improve Your Score
This report will offer a few definitions, and then explain 10 credit secrets that can boost your credit score and help you maintain a good credit rating.


Debt-to-Credit Ratio: Debt-to-credit limit ratio is how much debt you have compared to how much credit you have available.

Revolving Account: Revolving accounts are credit cards, department store cards, gas cards, etc. - anything with a credit limit that can be added to and paid off, then added to again, up to the credit limit.

Installment Loan: Installment loans have a set number of payments and a set payment amount, such as a car loan, a student loan, or a mortgage or trust deed.
1. Pay Your Bills On Time
Be punctual — pay all your bills on time. Late payments, collections, and bankruptcies have the biggest negative effect on your credit score.

Late payments cost you a lot in terms of points on your credit score because you are viewed as an increased credit risk to the credit bureaus. Higher credit risk means loss of points and a lower credit score.

But what if you make your payments on time and your scores are still low? What is causing this to happen? It could be the timing of your payments. Let’s say you have a credit card that is over the 45% debt-to-credit ratio (see next section). You make your payment on the due date, but when you pull your credit report, you score has dropped. The credit card company received your payment “on time,” but the recording date when they determine your interest charged can actually be before the due date.

This creates more revenue for them, as well as causing a higher balance to be reported to the credit bureaus, thus causing your scores to drop. When you think your payment has lowered your debt-to-credit ration to less than 45% by the due date, they may have already charged you interest, and your credit scores may have already dropped. Surprising, but true.

The solution is to review your credit card statement and find the date when the interest is recorded. Then make sure your payments arrive before the interest is applied to your statement. The result is a lower balance, lower interest, lower risk, and a higher credit score.
2. Reduce Credit Card Balances Under The 45% Debt-to-Credit Limit Ratio
Carrying a credit card balance close to the card limit is very costly to your credit score, because it demonstrates in the credit bureau scoring modules that you are in need of more credit. You become a “higher risk” and your credit scores drop significantly. Staying below 45% of the credit card’s credit limit will increase your credit score, while going over will cost you points.

There is another limit you need to be aware of that will either cost you or give you points on your credit score. Less than 14% “user credit” is viewed the same as a zero balance, except for one crucial point. If you have even $1 on an account, that is considered an “account with a balance.” The more “accounts with a balance” you have, the more it can negatively impact your credit score.

Paying off your card in full each month is a great way to build credit cheaply. Most cards will not charge any interest if the balance is paid in full on or before the due date. In order to build credit your cards have to be used regularly, but it is more expensive to leave debt on a card that you could have paid off. One strategy is to dedicate a certain type of expense (like gas or groceries) to throw on the card, and then pay it off in full each month. Just make sure that the outstanding balance is never above 45% on any given day, because the credit card will use this balance when they report to the credit bureaus even though you paid it in full.
3. Reduce Installment Loan Balances Below 80%
Just as you can reduce your balances on revolving credit to 45% or less of the debt-to-credit limit to increase your credit score, you can also reduce your installment loan balances to 80% or less to increase your score.

Credit bureaus know that it is harder to get an installment loan, and they are usually bigger loans. They also know that installment loans include fixed payments for a fixed amount of time. Credit bureaus are typically mare lenient on the balance percentage of installment loans. However, above 80% is still “too much” debt and usually doesn’t show sufficient payment history for them to consider you low risk. As soon as you reduce the best to below 80% of the original balance, your scores will begin to increase.

Taking out a car loan in order to build installment loan history is one of the most expensive ways to build credit. If you are new to the world of lending, it may be wise to see what options your local credit union or bank have for building credit. Most of them will have lending programs that are fully collateralized and will build the same type of credit history, but because there is little or no risk to the institution if you default, the interest rates are generally much lower. Please consult with a dedicated DFY specialist, or a pre-qualification specialist at Strategic Lending before taking on new debts in order to build credit history. 
4. Raise Your Credit Limits
It’s important to be “proactive” with your credit, and there are several things you can do to increase your credit score quickly. One principle of using your credit cards wisely includes using only 45% of your credit card limit.

Because credit bureaus determine part of your credit score by how much of your total credit you use, you want to keep your credit balance below the point where it costs you points. That point is 45% or less debt-to-credit limit. Further, there are thresholds that increase or lower your credit score. The credit bureaus view up to 14% debt-to-credit the same as 0%, plus or minus a few percent. 

Over 84% debt-to-credit is viewed the same as maxing out your credit cards, which is very costly in points on your credit report. An important rule of thumb is to stay below 45% and stay below 14% to keep your credit scores moving higher.

One trick to use if you need the full capacity of your current credit limit, is to simply raise your credit limit. Call the number on the back of your credit card, and speak politely with the representative about raising your credit limit. You can say something like, “Hello, I have a credit limit that is just too low for my needs, and would like to raise my limit. Is that possible?” They will then ask you for your credit card number, verify your identity, and check on your credit to see if you are worthy of raising the limit

A strategy that can increase the likelihood of being granted a credit increase is hiring a “credit repair” company that uses lawyers to clean up negative items on your credit report. That will improve the chances of your credit card company responding positively. If the credit card company asks how much you want to raise your credit limit, ask if they will double it. Or if you have a business you can respond, “I need $40,000” or whatever you feel is the appropriate amount your business may need.

Some businesses could use up to $100,000 or more. Don’t go overboard if you are not in control of your spending. The credit card company may not give you what you ask for, but if they double what you already have, then you have instantly increased your credit score since increasing your limit automatically lowered your debt-to-credit ratio.
5. Be Careful Not To Close A “Positive” Account
Don’t close any accounts until you understand the consequences of your actions. There may be times when you should close an account, but there are several things to consider before taking this action.

Credit history is a very important part of credit scoring. The longer the history, the more it will count toward a better credit score. Even if you don’t use the card, keep it active by buying a small item each month and then pay it off at the end of the month to keep the history alive and working for you.

A new account with “derogatories” could be closed and increase your score, because a new account affects your credit score seven different ways. A new account could be considered “new” for up to four years.

If you have too many new accounts, then closing one that is rarely used could be helpful in increasing credit scores. Refer to the Balancing Accounts section for more details. For the time being, look at keeping an equal number of revolving accounts with installment accounts.

Department stores are notorious for offering a discount when you sign up for their credit card in the checkout line. Be cautious when tempted to accept such offers as it can cost you points, and may not save you any money at all. Let’s give an example…

You have a $100 purchase at XYZ Company and they offer you a store credit card at 17% interest. They will give you a 10% discount if you sign up for the credit card right there. They will charge the full amount, then give you the discount and save you $10 immediately. You accept the offer and feel good about saving $10 on your purchase. You then get the first bill and notice you have been changed $1.27 in interest charges. If you pay it off immediately, you may actually end us saving a little money on your purchase and positively impact your credit score. However, if you don’t have the cash, then you pay the minimum and your savings from the sale is reduced to $8.73. If you are late, then there’ll likely be an expensive late fee assessed, and your interest rate may be increased to 23%, 29% or 33% - making things even worse. The moral of the story is that saving money through a promotional credit card offer can become quite expensive, if you aren’t careful.
6. Shop Smart With “No Inquiries”
Avoid excessive credit inquiries. A large number of credit inquiries incurred over a short period of time may be interpreted as a sign that you are opening numbers credit accounts due to financial difficulties, or overextending yourself by taking on more debt than you can easily repay.

Credit bureaus weigh the number of times you “go shopping” for credit, but they are also aware that many financially savvy consumers shop for the best loan, interest rates and terms. Recently they have become more lenient with inquiries, but within reasonable standards.

Here are some rules to live by: When “shipping” for loans, rates, and terms for a house, car or business loan, etc., be sure to do your shipping within a 14-day time frame and don’t make more than five inquiries. More than this and you risk a heavy point loss on your credit reports. Also, be sure that you are really going to get your loan or the five inquiries will count against you, costing you up to 30 points because you didn’t actually get the loan you shopped for. That’s good and bad news, so be sure that you are going to get the loan when you begin applying.
7. Never Use A Finance Company
Have you ever gone to the auto dealership and been hustled into a loan that just seems too expensive? Have you found that you needed a new washer, dryer, or refrigerator and been offered a great incentive to use the “house financing”? BUYERS BEWARE! The financing offered could be through a finance company.

There are many finance companies to choose from, and some even have well respected names such as Wells Fargo, House Hold Finance, Chase Finance, and many others. The fact is that any finance company on your credit report, even if all payments are on time with no late fees, will reduce your credit score.

Why does this happen? A finance company is different from a mortgage company, bank, or credit union. Finance companies typically specialize in loans on expensive consumer goods, and cater to consumers with less than perfect credit. Consequently, finance company loans tend to have higher interest rates, larger late fees, and greater costs to your credit score. Don’t do it!

Instead, go to your credit union or bank before you need an appliance or car, and apply for a line or credit or a loan. You can then “shop” for your appliance or card knowing the interest rate and charges ahead of time with no surprises. Don’t tell your sales person that you already have financing or you may not be able to negotiate as good a deal for your purchase. Just sign the contract for the purchase, let them know you already have financing, and smile all the way to the bank!
8. Get A Mortgage On Your Credit Report
Because mortgages are typically much harder to qualify for the credit bureaus’ scoring modules assign more points for individuals who have a mortgage on their credit report. Having a mortgage also indicates there will usually be equity in the property, owners will be more reliable in making their payments, and will be more permanent. However, there are several challenges to remember when you get a new loan:

-It’s a new loan with no history
-It has a 100% debt-to-credit limit ratio
-You have created an inquiry

There are some additional potential problems to consider when getting a mortgage:

-Too many inquiries
-Too many account with balances
-You might have to use a finance company
-It could drive your debt-to-credit limit on accounts too high

If you shop for a mortgage, avoid making too many inquiries, don’t use a finance company, and pay down your balance below80% as soon as possible.
9. Use Only “Valuable Lenders”
Valuable Lenders are lenders who are reputable nationwide. You will see lots of advertising from “not so valuable” lenders. They are considered not so valuable because they don’t include all the information needed on a credit report to raise the individual’s score as high as possible. For instance, if your credit card account shows the “high balance” but not the credit limit, as soon as you use that card you have a debt-to-credit ration of 100%. This can lower your score dramatically.

Valuable Lenders are national or international banks and financial institutions that are ethical and reliable in their lending and reporting practices.
10. Balance Accounts
To raise your credit score into the 700’s and 800s it is important to balance your credit portfolio. Let’s look at what it means to balance your accounts. An ideal consumer would have two credit cards, a car loan and a mortgage. This creates a balance with two revolving accounts and two installment accounts. Credit bureaus like to see a one-to-one balance of revolving to installment accounts. It is a myth that the more credit cards you have the better off you will be. Look through your credit cards and installment loans and see what you have. 

Credit bureaus want to see no more than 8 to 10 of any type of account, revolving or installment, in equal numbers. The optimum is one or two mortgages, with one or two other installment loans, then the rest in credit cards or revolving accounts.

If you have more accounts than this, it would be a good idea to pay off these loans or credit cards and/or transfer balances to other cards and let those accounts lie dormant, but not closed.

Remember, credit history is king and is worth its weight in bold. Keep the credit cards open - just don’t carry balances on them.

Remember the other strategy of making sure you don’t use any more credit than 45% of the available credit on each card. Get the limit raised before you use what you need, staying under 45% of the credit limit.
What To Do When You Run Out of Credit
Once your credit is corrected, you will have limits on how many mortgages you can have in your name. Generally speaking, you can have up to ten mortgages including your personal residence.

At some point you will run out of resources or credit. At this time you may need to partner with others in order to accomplish your game plan goals.
Keeping your credit score clean and in the 700’s or higher is like a financial insurance policy. You may need it when you least suspect it. View your credit score as an asset, because it truly has great value. Good credit can save you money through availability to better lenders with lower interest rates and lower fees. Additionally, the lending possibilities available through good credit can offer valuable business and investment opportunities that may not otherwise be available. If you currently have good credit, be careful to protect it like you would any other valuable asset.

If your credit score needs improvement, use the tips in this report to begin improving your credit score now. Recognize that raising your credit score won’t happen overnight. Nevertheless, with focus and concerted effort you could potentially improve your credit score by as much as 100 points within the next 6-12 months*. The key is to get started today!
*This statement doe NOT apply to those with a bankruptcy or foreclosure in their financial history. In such instances, the time frame for becoming eligible for financing varies widely depending on the specific circumstances. Generally speaking, those with a bankruptcy or foreclosure in their history won’t be personally eligible for financing on a primary residence for 3-5 years, and won’t be eligible for investment property financing for a number of years. Your personal financial situation is unique, and information obtained by DFY may not be appropriate for your situation. DFY does not give financial or investment advice. You should consult your investment, legal and tax professionals regarding your specific situation. See Terms and Conditions at
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