Home Loans
Kris Kringle and the Credit Crisis: Why Christmas is Killing Your Credit
(presented by www.refinance-refinance.net - mortgage lenders)
By ian hollander
The holidays are here and with them come the inevitable gifts that The months of November and December always leave in their wake -
About 10 Unwanted Pounds -
5 Frozen Fruit Cakes -
And invariably - a precipitous drop in your credit score.
Along with the 5 frozen fruit cakes, 12 extra pounds of padding and another year of Uncle Elmer singing drunken christmas Carols - the biggest thing thing that Americans share each Christmas is an alarming and ever-increasing amount of debt.
Did you know that the average unsecured credit card debt per household is pushing 20,000 Dollars?
Most people I meet have such erroneous understanding of what goes into their credit Worthiness -
Your Credit Score is now the most singularly important component to any lending
Decision you are involved in - it’s not how nice you are - how crisply your suit
Folds when you apply for the loan - or how eloquently you can communicate that the credit
Crisis you had in 2002 wasn’t really your fault - rather - it was that old crazy girlfriend Who stole your Bloomingdales’ credit card.
Just because you pay your bills on time - does not in of itself guarantee you an above
Average credit score. I remember being rejected for a home loan several years ago - not
Because I had any delinquent marks on my credit - but rather because my “debt to limit”
Ratio was too high - and according to the mysterious algorithms created by the FICO
Mathematical model - the chances I would default on a further extension of credit - were,
Well - lets’ say much higher..:-)
(Just paying my credit cards down considerably the next month led to a huge jump in my
Credit score - and I was approved for that very same loan 60 days later.)
Credit issues are often times the most confusing and confounding issues we face as
Consumers - as more and more of our culture moves to a paperless society - the more
Dependent we become on having a healthy and positive credit rating. The cost of bad credit
Isn’t must measured in interest rates - or amortization charts - but in the very real and
Tangible psychological scars that accompany being denied for employment, housing and
Opportunity on account of what “number” a computer generates to measure our worthiness/. I
Can personally remember spending years being embarrassed at my credit rating, accepting less
Than I was worth in a whole host of areas of my life, just because I knew the score that
Represented me to the world wasn’t too my liking - so rather than open that wound up to the
World - I settled for what I had and waited the torturous “7″ years that they tell you it
takes to remove the stain of past credit blemishes.
The truth is - I was young and un-informed and believed the myths I was told about credit
and credit bureaus. But after one particularly embarrassing rejection, I said - “enough is
enough” and began the process of learning the Keys to credit correction. Along the way - I
came face to face with the many myths that permeate the scrapheap of bad credit information
that exists in the general consumer’s mindscape.
Let’s review a few of those “Myths” here:
3) Adding a “consumer statement” on your credit file to explain past sins or problems is a
Good thing. In my experience - adding an explanatory statement to your credit file is not
only a bad idea - it is an absolutely terrible one. The notion that a forgiving and
understanding human being named Hank is going to carefully considering your lower back
problem in 2001 that caused you to miss three months of work is a credit bureaus created
Fallacy - in today’s impersonal world of credit scoring and profiling - there is just no
merit ( in the vast majority of scenarios) to adding a subjective, personal story to your
file. If anything - it just adds one more obstacle to the the credit repair process - if
you decide that information on your report is incorrect and needs to be challenged - you
have your own “admission of guilt” to contend with
information in your credit report as incaccurate - this right has been provided to you by
Congress in the Fair Credit Reporting Act and all of its subsequent revisions and
Amendments - and rightly - puts the oneness on the credit bureaus to verify and validate
all of the information they are reporting on you to others. Credit Bureau errors are
common, widespread and on occasion, so egregious that consumers like you and I have
Suffered for years in Credit Purgatory - unable to get employment, insurance and other
Benefits they were deserving of - purely as a consequence of information in their credit
Files that was erroneous, injurious, misleading and often - not even theirs. And that is
why the credit repair process - and the laws that allow for it - are an important part of
our rights as American Consumers - no one should have the right to report false information
On your willingness to pay your debts - such an instrumental part of our ability to survive
and get ahead in today’s credit culture - without having to verify that the information they
are reporting is indeed correct and does indeed belong to you. If they cannot - for
Whatever reason -that information should be - and is required - to be purged from your
file.
5) Paying old bills off is a wise idea once you have the money to do so. Well of course -
Philosophically ( and ethically, too) paying your bills is always the right thing to do.
But when it comes to your credit rating and credit score - actually paying your bills
Months or even years after they originally fell delinquent can be the most catastrophic
decision you can make - and will - almost always - cause an immediate drop in your credit
rating? No matter how good your intentions - or how ridiculous it sounds - paying off old
bills hurts your credit - unless you understand the proper process that needs to be
followed to ensure your accounts aren’t “re-aged” for further damage to your score - and
credit future.
7) You need a Professional credit agency to repair your credit - absolutely not! You can
most definitely fix your credit yourself - with nothing more than a word processor - some
good old fashioned motivation -and a decent dose of knowledge and research. The same laws
that the professional firms utilize to challenge and dispute erroneous, outdated and
Unverifiable information on your report is available for use just as well. The key is to
Understand your rights - to be informed - persistent and knoslbdbzbld - and you can
Achieve great results. It’s analogous to fixing your transmission - or - representing
You in a court of law - these are skills that can be learned by anyone willing to
Invest the time and energy - the larger question is only weather it is worth the investment
Of time and energy - or - would you rather hire someone to do it for you and stick to what
You do best?
Either way - don’t let anyone tell you differently - you can achieve great results in
Keeping your credit in tip top shape - regardless of how flabby it may be right now - with
The appropriate amount of care and exercise.
But remember - as we approach Christmas and the beginning of yet another new year - keep the
credit cards safely stored in your sock drawer when you do your last minute shopping and
You won’t be faced with the daunting dilemma of starting 2007 with a credit score crisis -
care of Kris Kringle and the Christmas crunch..:-)
Ian Hollander is a life coach and business consultant and is a contributing editor to http://www.creditreportsecrets.com. To learn the 5 steps you can take right now to improve your credit score - visit http://www.creditreportsecrets.com
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