Your first step to building wealth starts with obtaining your three credit reports from the major credit reporting agencies. I can show you how and where to obtain your three credit reports from Transunion, Equifax, and Experian for free. It's important to know what's inside your credit report.
Next, you need to analyze your current credit reports to determine what type of credit you have. Do you have bad credit? No credit? Or, do you have what is considered an average credit rating. Once the determination is made on your credit situation, you can plan to repair your credit or enhance your credit. Lets start with the basic credit repair techniques.
First, you need to correct any inaccurate information that may be reporting to any of the three credit reporting agencies. This could be updating your address, employment information, late payments or collection accounts that may not be yours, or have been incorrectly reported. Any derogatory comments on your credit file will affect your credit scores.
Next, it's important to validate any debt that is listed on your credit reports. These debts are usually from debt collection agencies. The Fair Credit and Reporting Act states that any lender reporting information to the credit reporting agencies must be accurate and verifiable. Simply put, if a lender or debt collection agency can not verify the information on your credit file, all the information must be removed within 30 days from the date you contacted the credit reporting agency. To verify the information requires the lender or collection agency to have copies of contracts, payments, etc to enable them to prove the information they have reported is accurate. Many times the lender or debt collector will not have this information. Since it's possible your debt is sold from company to company and maybe years have past bye, the lender may not have any information to verify your account. If they are able to verify the debt, it may be possible to contact the debt collector and negotiate a settlement if they agree to delete the account from your credit file. You may want to talk to a professional credit consultant before doing this on your own. It may take a few months to correct the inaccurate information and have any items removed from your credit file that could not be validated. After this process is complete, you should see your FICO scores increase.
If you have no derogatory comments on your credit file, you can start with enhancing your credit file. To do this, it takes experience and knowledge of the FICO scoring system. It's important for your credit file to show 3-5 credit card accounts and at least one term loan account. It's also extremely important that you never use more than 30% of your total available credit. Doing so, will have an adverse effect on your credit scores.
Your goal is to reach the magical FICO score of at least 720. Lenders view a 720+ FICO score as excellent credit. Therefore, you get the best loans at the lowest interest rates available. This could mean you will save hundreds or even thousands of dollars in interest over the life of the loan. More importantly, a FICO score of 720+ enables you to get approved for business loans and real estate loans which we know are the secrets to building wealth.
Now you know the secret to building wealth. Your first goal and priority should be to review your credit reports and increase your FICO scores. It's time for you to lease your great credit.