Consumer Overview

What Type of Consumer Are You?

In the credit world there are three different kinds of people:

• The first type are the consumers that have bad credit and need to learn how to raise their credit score fast by correcting as many negative items in their credit report as soon as possible and also by removing some of the negative items they have.

It is really important to improve the credit score, but is just as important to learn how to rebuild the credit fast. For example, if you have four accounts that are in bad shape, you can remove the four accounts, try to paid them off and close them, but if you do that, what happens? You have NO credit.

You need to learn how to turn those four negative accounts into positive ones, and the fastest the better.

• The second type of people is people with high debt. These are consumers that have good credit but they are almost buried in debt. They need to pay off as many as their debts as they can and keep their “debt-to- credit ratio” between 10% to 30%. If you have $4,000.00 in debt and $5,000.00 of good credit and you are making payments, it is not the end of the world but you have an 80% debt-to-credit ratio. That can tell lenders that you spend frivolously. You need to learn how to negotiate his debts and pay them off while preserving your credit rating.

Once again, changing the negative into positive is paramount; the goal is to learn to establish positive items where there were negative ones.

• The third kind of people is the consumers that do not have credit. This is in many ways the easier class, because they just need to learn how to establish their credit and maintain it.

Sadly, the average American has no idea how to build their credit fast. In order to build good credit fast and keep it you need to know how the credit system work and what can you do to get ahead.

There are some very important points you should always keep in mind:

1. The first things is that you have to understand about the credit system is- it’s a system. And like with any system, those who understand the system have a tremendous advantage over the people that don’t.
2. 2.    The second thing is that taking the steps to fix your credit and improve your score is probably the highest paid job you will ever do. Let’s say it takes a total of 40 hours of work over the next 6 to 12 months. So let’s say that because of your improved credit you are able to finance a home at just 2% lower interest rate. This is going to save you around $100,000.00 over a 30 year loan term. If you take that amount and divide it by the 40 hours of work it took you to fix your credit, you will see that you made about $2,500.00 an hour for your time.
3. 3.    The biggest fallacy you can hear out there is people saying that if you pay off your credit cards in full every month you will have excellent credit. The same way a doctor only makes money when people is sick, credit cards companies, lenders and banks make money when people are in debt. The more in debt you are the more money they make, is as simple as that, provided that you can continue making payments.
4. You want to make yourself look like a solid financial risk. The two primary things that build up your credit rating are your High Credit Limit and your Debt-to-Credit Ratio. Your High Credit Limit simply means the total amount of unsecured revolving accounts that you have in your name. For example, Visa, MasterCard, Discover, American Express and any type of unsecured credit. Debt-to-Ratio is a figure that lenders look at and it has a lot do with how much credit you will be approved for because it shows the lenders how you use your credit.
5. Another is the type of address you use. Sometimes people uses mail boxes (UPS) or post office boxes to receive their mail and that comes up in the Credit Bureaus as not being a real address. You want to show stability, so a residential address and a land line in your name help tremendously in building a good credit profile.

The Credit Profile, your credit file is basically, many different layers. One layer might be that you are a male or female. Another layer might be that you are single or married. Your job and the place you live might be the next layer. And even if you are a member of a certain trade or non-profit organization will make an extra layer in your credit profile.

It is not only what kind of credit or loans you have, how many payments you have made or if you have missed any payments that make your credit profile. Each one of the layers in your Credit Profile will help you make it or break it in the Credit System.