"CREDIT RESTORATION" GOOD CREDIT IN 90 DAYS
You may have noticed that some credit accounts you have had in the last few years
did not show up on your report, even though you paid them off on time. This
is because some creditors do not bother to report, especially smaller businesses,
because they have to be a member of the bureau and/or pay a filing fee. If
you can document such accounts and the payment history you can have the credit bureau
add them to your profile, giving you "better credit".
Getting three banks to state that your credit is "A+".
Make sure you choose three banks that have PASSBOOK accounts (you may substitute
secured cards, or even CD's owned by a friend or relative). Go to bank 1 and
ask for the smallest personal loan they allow - usually $1000. Tell the loan
officer you do not want the money - you are simply trying to establish credit.
You would like the money placed in a passbook account in their bank. They
hold the passbook so the account is collateral for the loan. Your loan is
100% secured so there should be no problem. Do the same thing at bank 2 and
3. You now have three loans and three passbook accounts. Just make sure
you try to get all three loans on about the same day so that your loan applications
can honestly say you do not have any other loan obligations.
In three weeks, make the first payment on each loan. Three weeks later make
the second payment on each. At this time your payments have freed up a proportionate
amount of your passbook accounts which you can now withdraw. In three weeks
use this money to pay the third payment on each. Withdraw the amount freed
up and in three more weeks make payment 4. Continue doing this until the loans
are paid in full. In about 90 days from the origination date of your loans
you will have made four payments on all loans, all payments made early and you are
even one payment ahead on each. Ask your banks to post your payment history
on your credit report
if they have not already done so. You will then have three banks listed on
your report, all showing perfect credit with them. These references alone
should be enough to get you nearly any credit card you want.
You now have excellent credit. Use it wisely, and guard it with your life,
using the following information...
The importance of good credit cannot be over-emphasized. In today's society
credit is no longer a luxury. It is essential for growth and prosperity.
Understand this very important fact - only 5% of the entire wealth of the world
is ever printed as currency. The remaining 95% exists only on computer chips,
in the form of credit. So, if your credit is not good you do not have access
to 95% of the world's wealth. This limits your plans for financial security
drastically.
America is rapidly becoming a two-class society in which persons without good credit
(nearly 60% of the population) are treated as second-class citizens. You need
not suffer as a second-class citizen, however. By following the strategies
you can erase bad credit
and restore yoour credit, quickly and easily.
Understand, however, that this is only the beginning. Once you have restore
and have good credit the real work begins. You will have to act responsibly
and with self-discipline to maintain good credit. It can be a formidable battle
unless you know more about what credit is how to use it properly and how to avoid
credit traps. For this reason below are these important topics before delving
into the actual methods of restoring or establishing credit.
AVOID IMPROPER USE OF CREDIT
First, you should learn what money really is. Frankly, it is only a tool;
a convenient medium of exchange. Of itself, it has no value - the value is
perceived by those who covet it, and its value constantly changes. Money is
forever moving, never staying in one place. Even when you put it in the bank
it continues to move, being used to supply loans and feed investments. Therefore,
the trick to amassing wealth is not to see how many dollars you can get and keep.
Rather, you must learn where the money is going, and position yourself to be there
to let it pass through you on its way around the world. The better you position
yourself, the more money flows through you. A wealthy person is simply a conduit
for money - a lot comes to him, and a lot goes from him. In the process, large
amounts are constantly in his possession.
If you can understand that concept it is time to learn the "Guns & Butter" theory.
Years ago, before the advent of commercial credit life was much simpler. With
a little luck you earned a living, and then made purchases with those earnings,
according to your needs. As is still true today, about 96% of the people would
spend most or all of their earnings to get the things they needed, and the rest
on little luxuries. (The big difference today is that now we spend it before
we earn it.)
Now that you have a better understanding of the basics involved, it is time to discover
how credit fits in. First understand that you cannot provide for tomorrow's
security by spending tomorrow's income today, unless that income is invested, rather
than spent. In short, a wise person uses credit only when there is a profit
to be made in using it. After all, if you are going to pay 18% interest on
the money, you really should be making more than 18% from it. If not, you
are losing money - your money, your future income, your future security. When
you use credit you are selling your future income at a discount (because you pay
interest for having the money now.) This is no way to generate wealth for
yourself.
Credit is the most valuable tool in the world today. Cash doesn't even come
in a close second - but knowledge does. With credit you can obtain just about
anything, including investments that will create even greater wealth. Knowledge
allows you to make the right choices. For example, for just a few thousand
dollars down you can take advantage of the appreciation and tax advantages of owning
a house. You control $100,000 worth of real estate (and profit from the entire
$100,000) while only investing a few thousand.
Without the right knowledge, however, you can never hope to make the financial system
work for you. When 96% of the population fails to achieve financial security
it is not due to a lack of money - again, money is only a tool. Rather, they
suffer from a shortage of knowledge that could have helped them to amass wealth.
Understand this important concept:
Achieving wealth has nothing to do with collecting dollars, nor is it connected
to how much you earn. All that matters is how you use what you have.
RULES OF WISE CREDIT USE
In using credit, a few simple guidelines will give you a definite edge. These
rules are not cast in stone, but staying close to them will increase your ability
to prosper from credit rather than being eaten alive by it.
1. Credit should never be used for purchasing perishables such as gas, food;
airline tickets or meals out unless you are certain you will pay it off with your
first statement, to avoid interest charges. A good idea is to deduct the money
from your checking account at the time of purchase, as though you had already spent
the money, because you have! Then, when the statement comes due you should
already have the cash in your account to pay it. There are few things worse
than having to pay for something you do not still have, so avoid using credit for
perishables.
2. Credit should be used sparingly for depreciable such as cars, boats, furniture,
etc. Always make the largest down payment possible and finance the balance
for the shortest period of time that you can to reduce excessive interest and a
long-term drain on finances. Realize that you are banking on future income
- income that is never guaranteed, because no one can predict the future.
3. Credit should be used as often as possible for the purchase of appreciables
that increase in value, provided the investment is a wise one. Real estate,
discounted mortgages, silver or gold coin are examples. This is called "constructive debt".
For example, borrow $2000 for one year at 12% interest and use the money to invest
in a tax-deferred IRA. If you are in the 28% tax bracket you immediately save
a few hundred dollars on taxes - $560 to be exact. Invest your IRA in a no-load
mutual fund that earns about 15% and you make an additional 3% for the term of your
loan. Your interest from your fund pays the interest on your loan, with cash
to spare. The $560 tax savings gets you an IRA worth $2000 for just $1440.
Each additional year you hold the IRA you make the 15% interest, tax-deferred.
This creates wealth, particularly if you do it every year.
4. Credit card debt is the most expensive kind of debt due to high interest
rates and annual fees. It is also the easiest to be victimized by. Use
great caution; pay the bill in full when you receive the statement and use cards
that have the lowest interest rate.
5. At no time should your
consumer debt (excluding mortgage) exceed 20% of your income. If it
does, you are in trouble, financially.
To help you keep your perspective on credit, consider: $10,000 cash can leverage
$100,000 worth of investment, such as a house. If the investment earns 15%,
that is $15,000 a year. But only $1,500 of that is being earned by your $10,000
cash (10%). The rest, $13,500 is being earned by your $90,000 worth of credit
- money that wasn't even yours!