When Life happens (Murphy’s Law)

When Life happens (Murphy’s Law)

Murphy’s Law definition:

The rule that states, “If something can go wrong, it will.” An addition to this law reads, “And usually at the worst time.” The identity of “Murphy” is unknown, but the saying was first used during the 1940s.

So why mention this is a credit repair blog you ask?

Life of course…..

However in relation to credit which is my specialty and I can state I am an expert in the matter I want to talk about things I see that may be able to help you avoid people like me for this particular situation.

Starting out on the subject of life many times if you are making a certain amount of money ( or finally do ) for your income you start making a lifestyle that fits that income.

Many times I have people coming to me who end up paying the minimum amounts on these credit cards due to fact of several possibilities such as:

  • Income was cut either your own or a spouses
  • Job loss so not making what you were & took time to find another job so playing catchup.

Both of these are life changing events unless you have a healthy amount of savings tucked away that you can tap into to cover bills until your back on your feet. No one likes dipping into savings but at least it’s there.

Many people do not have this option thus the domino effect starts.

As a life example many, many many years ago (probably longer than I care to admit) I joined a direct sales company (aka: network marketing) they became publically traded and was solid so I joined. And actually they had a product a few years later which became the catalyst for getting me into the credit industry.

Regardless of those details I met an airline pilot for a major airline and we became friendly. This was around the time that the airline filed for chapter 11 bankruptcy and many were laid off and incomes cut. At the time he was making $300,000 a year and was cut 30% to $210,000.

When he told me that the look on my face at the time basically said, “Yeah, you still make over $200,000 a year”.

He saw the look at you could tell it wasn’t the first time and said the problem I have is I have a lifestyle that needs a 300k income to support.

SO THAT IS TODAYS BLOG TOPIC FOR THIS WEEK!

Many times I have clients come to me with so much credit card debt it sometimes blows my mind. I have seen some credit reports with people owing $7,000 to Macy’s or JCpennys. And I think how can you buy so much from a clothing store or let it get to that high an amount?

Ultimately it comes down to discipline. Many consumers just do not have it and it’s something you may need to work on if this blog applies to you. You cannot negotiate with the credit card companies as they have all the leverage.

If you want to settle with them for less you have to trash your credit. Until they have not received a payment for 90-120 days they will do nothing to help you.

I have a friend who lives paycheck to paycheck and have all of her credit cards maxed out so she is a good example of a possible game plan. She finally got a standard 3% raise which only gives her an extra $50 per paycheck but it’s better than nothing.

Her company finally put together a bonus plan if they reach certain goals set for them.

She hit them 2 months in a row totally at moment $1,200. She needed to catch up on a few things, treat herself as well and put a money back into a separate account to start building her savings again. I explained to her which she hates when I do this but she knows it’s needed, if she gets an average of $600 per bonus and does that every other month at least but she expects to hit that every month she needs to put half of the bonus in savings and the other half towards her credit cards starting with the small cards first to get rid of them quicker.

She has 3 credit cards with approximately $600 on each. So within less than six months she can have those 3 cards paid off. Then when she gets excited at how that is progressing she may decide to start taking the full bonus towards paying the bigger one and have that one paid off in a few months.

In her situation she could have all of her credit cards paid off in a year depending on her discipline and goals.

Now in order to get her to focus on that goal other than the freedom of no credit card debt she has a certain car that is her dream car.

I told her after assessing her finances that  these cards are paid down her credit score will jump up tremendously and she could qualify for that car easily.

NOTE: it’s going to be a 1 year pre-owned which she won’t care about as the mileage will be low and will still be exactly what she wants.

This is what you need to do to yourself. Other than being debt free you need to have an additional goal or treat if you want.

Many times it is just not enough, everyone will be different so it has to be something you want so you have to decide on what will give you the determination to be discipline enough to focus on paying down your debts.

As I always say to all future credit repair clients, “I will tell you the truth whether you like It or not”. One of the reasons why I have such a good reputation in the industry is I’m honest and direct.

That combination is not really found in our industry, plus combined with the fact I have been doing this over 12 years the odds are if I can’t help you can’t be helped in the credit repair industry so I may need to guide you towards a different professional to do what’s best for you and your family.

Want to learn more? Contact me at the email below to buy my book “The Real World of Credit” or go to www.bn.com and get the digital version.

Any questions just contact me on the number at the top of my website or email me at: wayne@waynethecreditguy.com

What you need to know about Credit Karma

What you need to know about Credit Karma

The commercials are everywhere, GET YOUR FREE CREDIT SCORE!

Constant media commercials telling you to check your credit for free!

HOWEVER…

Did you ever hear the phrase, nothing in life is free or you get what you pay for?

As you’re mostly likely an adult over the age of 18 years old, I assume the answer is yes. So then the question is why would a company offer to give you the consumer a free credit score?

A quick little back history on credit karma that many of you probably do not know is they were sued a few years back by the federal trade commission which is why all of their tons and tons of commercials which seemed EVERYWHERE suddenly disappeared. They were sued due to glitches in their online app to keep consumers personal information secured and safe. This is of course a general explanation, if you want to read everything on it just google it or click this link from the federal trade commission https://www.ftc.gov/enforcement/cases-proceedings/132-3091/credit-karma-inc .

As the lawsuit was settled approximately about 2 years ago or less the commercials came back with a vengeance and everywhere, some actually twice an hour on some TV shows.

SO….

Why give something for free when everywhere else you have to pay for it?

It’s simple actually if you think about it, they SELL YOUR PERSONAL INFORMATION that you give to them in exchange for it.

Now of course this is my opinion and there is really no way to prove this as credit karma is a privately owned company. BUT let’s put some financially incentive logic behind my theory/opinion.

They get all of your updated personal information including of course your phone number and address. Collection agencies and banks that you owe money too can now sell that updated new information to those companies.

Think of the concept like a bank, ever wonder why they try to get you to open a checking account, savings account, money market account and other products?

The more products you have with them the harder it is and the more effort you have to expend if you decide to leave them as now there are many products you have to switch over.

That’s why the free credit score is offered. To entice you to help get you to sell their other products and get even more information on you to sell.

In addition any product you happen to partake in or buy they are financially compensated. So it’s kind of like how lending tree used to work (or still does as I have not paid attention to them in a while). They advertised apply with them and then sold those leads to mortgage banks and lenders; typically they sell the same number too many lenders. I know as I did this over a decade ago and got called about 17 times and even up to six months later.

Another reason…..

What they don’t tell you and you can’t seem to find ANYWHERE on their website until you are a member is they do not use the FICO scoring model they use the credit bureaus own created scoring model Vantage Score. This was created awhile back and the credit bureaus went to court with Fair Isaac and company over this and won.

Think there is a possibility that the credit bureaus may be offering the information for free to them or at an incredibly discounted price in order to push their scoring model? You would be naïve to think that is not somehow in the master plan.

Vantage score has undergone many changes since it started as initially in my opinion the credit bureaus were so arrogant as they thought they were going to change the scoring model system which originally was 500-990 (vantage score 1.0).

That backfired as it confused everyone when they tried using it so I’m not sure what made them think the way they did but fast forward approximately 7 years and they are at Vantage Score 3.0 which is the same as FICO scoring 300-850.

BUT the basics of how that score is calculated is different than FICO scores and just like with FICO scores each industry FICO scores will be different which can lead to even more confusion when people think they have scores that get get them approved

NOW, Experian for whatever reason chosen does not work with them however Equifax and Transunion does.

###

SIDE BAR:

The credit bureaus collect data, that’s all they do, when a lender comes to them they have specific information they want and assign a number to it. So what’s important to a mortgage lender may not be as important to a car lender or credit card lender so that’s just one little reason why credit scores are different.

This was just a little public service announcement to give you some clarification in case you were ever wondering why you see so many credit karma ads and wondered why you take those scores to other lenders and they tell you something different.

As I tell everyone, I will tell you the truth of your situation whether you like it or now and if your credit file has the potential to improve to the goal you are trying to reach I will tell you that and discuss how it can be possible so call me now!

Of course as a disclaimer everything I am saying in this blog is mostly my educated credit opinion from being in the credit industry for over 12 years. This is my experience in dealing with this company and some of my research.    =)

Want to learn more about how credit actually works and how lenders view you? Buy my book “The Real World of Credit” on my website www.waynethecreditguy or go to www.BN.com and get the electronic version on Barnes and Nobles website!

WANT a HARD COPY in full color? Just contact me below to get one!

OR

Get a copy of your credit report and contact Wayne to review today at:

wayne@waynethecreditguy.com