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How Good

Is My Credit?
A Simple Way to Evaluate How Good Your
Credit Really Is, and the Exact Steps You
Must Take to Improve It

STEPHEN SNYDER
Introduction
T his Visual Quickstart Guide is designed to help you rebuild your credit faster.
It’s different because it walks you through exactly what you have to do to start
managing your credit scores—the right way!

FICO® credit scores have rapidly become the most powerful numbers in a person’s
financial life. They determine everything from your car’s interest rate and terms…to
how much your mortgage or rent is…to how much you pay for insurance.

Unfortunately, many people have no idea what their FICO scores are, much less how
to use them once they know what they are. I created this Visual Quickstart Guide
because I saw a need for a comprehensive, easy-to-understand system anyone could
use with their FICO credit scores to understand how to improve their credit quickly
and efficiently.

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How Good Is My Credit?

Step 1
Know Your Real Credit Scores 4-7

Step 2
Understand How Lenders Judge You 8-9

Step 3
Identify Why Your Scores Aren’t as High as They Could Be 10-13

Step 4
4 Taking Action 14-17

Step 5
5 In Your Own Words 18-19

Step 6
Monitor Your Progress 20-21

Hi Stephen! I was one of the ones having trouble opening your “Visual Quickstart Guide” and
anxiously awaited for the most recent version you sent out that anyone should have been able to
open. I opened it April 14th, printed it out, filled in all the blanks (in dismay) and vigorously went to
work. I am ashamed to say that when my divorce was all said and done and the dust had settled
I was left with an Equifax score of 486. YIKES! That’s where I started April 14th. April 18th, Score
Watch sent me an email saying my score went up 37 points! In 4 days! I continued to make phone
calls and payments and received another email April 26th that my score went up another 23
points! That’s 60 points in less than 2 weeks! I am hoping to buy a house by the end of the year
and I feel like I’m well on my way, all thanks to that Quickstart Guide! Thank you sooooo much!
Tiffany Biggs
Las Vegas, NV

© 2009 Eloquent Orator, LLC. www.stephensnyder.com/collection |3


Step 1
Know Your Real Credit Scores

I t’s important to know your credit scores. But


it’s even more important you know your real
credit scores. There are a lot of fake credit scores
What is a FICO Credit Score?
FICO stands for Fair Isaac Corporation—the
company that created credit scoring. A FICO
being sold to people who think they’re buying credit score is a dynamic 3–digit number, rang-
the real thing. ing from 300 to 850, calculated from credit
information that appears on your credit report.
Why You Should Ignore Credit Scores You have three FICO credit scores—one from
From TransUnion™ and Experian® each national credit reporting agency (Equifax,
Not all credit scores are created equal. Trans- Experian, TransUnion).
Union and Experian have decided to enter into
the business of selling credit scores directly to Why do you need to know your FICO credit
scores? FICO credit scores are what lenders use to
decide whether to approve you or not. When you
The FICO® score certification seal.
If you don’t see this certification
know what your FICO credit scores are you know
seal when you look at your credit where you really stand with lenders, and you
scores, you may have purchased
fake scores.
have a better idea of when and where to apply for
credit to get the best possible rates and terms.
consumers via TV commercials, the internet,
and third-party promotions; but the scores they February 14th, 2009
aggressively market are not the credit scores From June 11, 2003 to February 13, 2009, you
lenders use. They call their scores “consumer and I had the ability to purchase all three of our
scores” to try to confuse people. TransUnion’s FICO credit scores.
and Experian’s consumer credit scores are mean-
ingless to you. Not one major lender uses either It was great while it lasted.
of their credit scores to make a lending decision.
On February 14, 2009, Experian decided to stop
Of the three credit reporting agencies, only selling their version of the FICO credit score
Equifax® aggressively sells their FICO® credit to consumers. This left anyone who wanted to
score directly to consumers. know where they stood before they applied for
credit in the dark. Very frustrating if you live in
The only scores you need to know are your FICO an area that predominantly uses Experian as their
credit scores. If the scores you purchased don’t primary credit reporting agency, or if you want
say FICO—they’re fake. to get approved for a mortgage (since most mort-

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How Good Is My Credit?

Step 1
gage companies use your middle credit score). Solution
So how are you supposed to know your middle The only way to get the most accurate version of
score when you don’t have access to all three your Experian FICO score is to apply, or prequal-
scores? ify, for a mortgage.
Yes, a mortgage.
How to Beat Experian at Their Own The FICO scores mortgage lenders use are not
Game enhanced, they are your real FICO scores.
Experian still sells their FICO® score...but only to
lenders. So, in theory, when you apply for credit And if you aren’t in the market for a home right
now...you don’t really have to go through with
you should be able to know what your Experian
the mortgage loan. You can simply ask for a
FICO score is, just by asking the lender.
mortgage prequalification. As a part of the pro-
Not so fast, Skippy... cess you’ll receive all three of your FICO scores,
since mortgage lenders are required by law to
Different lenders use different versions of the
disclose them to you.
FICO score.
Credit card lenders use an enhanced version of How to Purchase Two of Your Three
Experian’s FICO score made for the credit card FICO Credit Scores
industry. Car dealers too...they use an enhanced If you don’t want to prequalify for a mortgage,
auto score made just for them. This is NOT then the best place to purchase two of your
what you want to see. It’s like comparing apples three FICO scores (Equifax and TransUnion) is
to oranges. directly from the Fair Isaac Corporation. Their

The Biggest Credit Scam Being Perpetrated


on the American Public Today!
. . . . . . . . . . FAKE
Numerous companies are taking advantage of you through
slick TV, radio, and print ads. They sell you “consumer”
credit scores instead of your FICO® credit scores.
. . . . . . . . . . FAKE
When you apply for any credit-related transaction, the
lender or bank will look at your FICO credit scores. They
will NOT look at “consumer” credit scores. . . . . . . . . FAKE
How to Tell a Legitimate FICO Score From a Fake
“Consumer” Credit Score
Here’s how to tell the difference between a fake consumer
. . . . . . . . FAKE
credit score and a FICO credit score…if it doesn’t explicitly
say it’s a FICO score…it’s fake. Your genuine FICO credit
scores and negative reason codes are only available online. . . . . . . . . . FAKE
or through a mortgage lender.
If you’re buying your credit scores online, always look for the
FICO certification seal (see page 4). . . . . . . . . . FAKE

© 2009 Eloquent Orator, LLC. www.stephensnyder.com/collection |5


Step 1 (cont.)

web address is: www.myfico.com. This site is a good reason codes through www.myfico.com. This site
place to purchase your scores if you have excel- was created for people with good credit. If you
lent credit. However, I’m going to reveal a little are reading this book, your credit scores probably
secret…FICO® also has another website where need improvement. Your negative reason codes
you can purchase your scores. If you know that are as vital to your recovery as your credit scores.
your credit needs improvement, I recommend you For a full explanation of the two different web-
purchase your scores from: www.myfico.com/12. sites, go to: www.stephensnyder.com/yourficos.
Why is the “/12” important? When you add I will go into more detail about your negative
the “/12”—in addition to receiving the credit reason codes in Step 3 of this guide. For now, let’s
scores that lenders use, you also get your negative just focus on your FICO credit scores.
reason codes. You do not receive your negative

The only site where you can get your negative reason codes. These codes, which Fair
Secret Isaac hides from the average consumer, are vital to your recovery. If the home page you
Website are viewing does not look like this, you’re not on the special “/12” site.

Your FICO credit scores will


not appear on your consumer
credit reports.
The best way to purchase your
FICO credit scores is from:
www.myfico.com/12. When you
purchase your credit scores from
this site you not only get the
credit scores that lenders use,
you also get your negative reason
codes. This is important, because
your negative reason codes may
be as vital to your recovery as
your credit scores.

Just click the “buy now” button


and follow the 3 simple steps.
The whole process should take
less than 5 minutes.

If you’ve visited www.myfico.


com before, there’s a “cookie” in
your browser that will prevent you from
going to www.myfico.com/12. In order
to visit “/12” you will need to delete your
“cookies.” Go to: www.aboutcookies.org
if you are unsure how to delete cookies
from your browser.

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How Good Is My Credit?

Step 1
Your 3 FICO Credit Scores ®

You have 3 FICO credit scores.


One from each of the three
national credit reporting agencies.

IMPORTANT: Write the A FICO credit score is a 3–digit


number, ranging from 300 to 850,
date that you obtained calculated from credit informa-
your scores here tion that appears on your credit
report.

Be sure to indicate the date when


you obtained your scores.
Then write your 3 FICO scores in
the boxes to the left.

It’s important to keep a record


Write your Equifax of where your scores are now,
FICO Credit Score here so you have some way to
measure your progress.
FICO® scores are dynamic. This
means that every time something
on one of your credit reports
changes, your corresponding
FICO score will change. As you
take steps to increase your credit
scores, you can use this form as
reference to gauge your progress.
Write your TransUnion
FICO Credit Score here
Remember your Experian
score is only available
through mortgage lenders.

Write your Experian


FICO Credit Score here

© 2009 Eloquent Orator, LLC. www.stephensnyder.com/collection |7


Step 2
Understand How Lenders Judge You
E ach type of lender sets their own minimum
credit score requirements. For example if you
are applying for a mortgage loan, a score of 683
will only be considered average by a credit card
lender. Use the worksheet on page 9 to see where
you stand with different types of lenders. This will
will be good enough to get you the second best help you focus your efforts, and know when you
rate with many lenders. However, that same score should apply for different types of credit.

How to Use This Worksheet:


Bring forward your FICO® credit Enter the letter grade from the Credit Use the Credit Score Grade
scores and enter them in the Product Grade Scale that matches Key to determine what each
appropriate boxes (see sample your FICO score in the column labeled grade means when you are
worksheet below). Your Letter Grade. Continue until you applying for credit.
have all 24 boxes filled-in.

Credit Product Grade Scale: Credit Score Grade Key:


Mortgage– Car A = You will be approved for the best rates and terms.
30-Year Fixed Refinance B = You will be approved for good rates and terms.
711+ = A 720+ = A
C = You may be approved. Your rate may be average and you may
680–710 = B 650–719 = B have to pay some additional fees.
640–679 = C 620–649 = C
620–639 = D <619 = F D = You may not be approved. If you are, it will be at a high rate and
<620 = F with the worst terms.
F = You will most likely not be approved. Any loan you receive will be
Mortgage Bank Credit Card– at a very high rate with fees and other undesirable terms.
Refinance Unsecured
750+ = A Lenders regularly use your FICO score to make a loan decision, but most lenders will
711+ = A also require a certain amount of time to pass after a bankruptcy. Be sure to ask.
680–710 = B 720–749 = B
640–679 = C 660–719 = C
620–639 = D 625–659 = D Example Letter Grade Worksheet
<620 = F <625 = F
Retail Credit How to fill out
Home Equity Loan
the Letter Grade
and HELOC Card
Worksheet
720+ = A 750+ = A worksheet on 683 652 629
680–719 = B 700–749 = B page 9.
660–679 = C 650–699 = C
640–659 = D 625–649 = D
<640 = F <625 = F B C D
New or Used Car Credit Card Limit B C D
Loan–48 Months Increase
701+ = A 750+ = A B D F
680–700 = B
B C C
720–749 = B
620–679 = C 660–719 = C
B B C
590–619 = D 625–659 = D
<590 = F <625 = F
C D D
C C D
C D D
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How Good Is My Credit?

Step 2
Letter Grade Worksheet
Use this
worksheet as
a basic guide
to help you
Write Your Write Your Write Your know where
Equifax FICO TransUnion FICO Experian FICO you stand with
Credit Score Here Credit Score Here Credit Score Here different types
of lenders.
Your Your Your
Credit Letter Credit Letter Credit Letter Fill in your FICO®
Product Grade Product Grade Product Grade credit scores at
the top of the
worksheet.
Mortgage– Mortgage– Mortgage– Then grade each
score using the
30–Year Fixed 30–Year Fixed 30–Year Fixed
Credit Product
Grade Scale on
page 8.
Mortgage Mortgage Mortgage
Continue until
Refinance Refinance Refinance all boxes are
filled in.

Home Equity Home Equity Home Equity If you are unable


to obtain your
Loan and HELOC Loan and HELOC Loan and HELOC Experian score,
fill in the boxes
for Equifax and
New or Used Car New or Used Car New or Used Car TransUnion
Loan–48 months Loan–48 months Loan–48 months
See page 8 for
an example of
Car Car Car how to fill out this
Refinance Refinance Refinance worksheet.

Bank Credit Card Bank Credit Card Bank Credit Card


Unsecured Unsecured Unsecured

Retail Retail Retail


Credit Card Credit Card Credit Card

Credit Card Credit Card Credit Card


Limit Increase Limit Increase Limit Increase

© 2009 Eloquent Orator, LLC. www.stephensnyder.com/collection |9


Step 3
Identify Why Your Scores
Aren’t as High as They Could Be
T he secrets in knowing what to do to improve
your FICO® credit scores are hidden within your
negative reason codes
scores. Basically, they tell you the four most impor-
tant reasons your credit scores are lower than they
should be. When you know what is keeping your
scores low, you’ll know what to do to increase them.
What are your Negative Reason Codes?
Negative reason codes are two-digit numbers that You can get your negative reason codes from a
accompany each of your credit scores. The great mortgage lender or you can get your Equifax and
thing about negative reason codes is that they explain TransUnion negative reason codes when you order
everything you need to do to increase your credit your FICO credit scores from: www.myfico.com/12.

How to Find Your Negative Reason Codes from myfico.com/12

Once you have purchased your credit scores on


www.myfico.com/12, you will be taken to a results page.
Simply click on the “View” button and you are taken to a
summary page where you will find your 4 negative reason
codes for each particular credit report.
Continue this process for each credit reporting agency.

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How Good Is My Credit?

Step 3
Cracking the Code scores. By matching the reason codes to your
Now that we have an idea what negative reason credit goals (as you will be doing in the next
codes are, where to acquire them, and where few steps), you can create a custom game plan to
locate them on your myfico.com/12 credit increase your FICO credit scores.
reports, we can get to the fun stuff. Let’s crack
Action Steps
the code and start to put all these numbers to
work for you. Okay…you know your FICO scores: By knowing
your negative reason codes, and their meaning,
You will find the Negative Reason Codes Decoder you now have a good idea why your scores are not
chart on page 12. This is the key to understand- as high as they could be.
ing your codes and how you can quickly improve
your FICO® credit scores. Example Negative Reason Codes Worksheet

Next transfer the codes from Equifax, Trans- Your Negative Reason Codes
Union, and Experian (if you have them) to the
Credit Score Here
683 Your 4 Equifax Negative Reason Codes
worksheet on page 13. You will also transfer the Negative Reason Code #1 Negative Reason Code #2 Negative Reason Code #3 Negative Reason Code #4
and Description and Description and Description and Description

Negative Reason Code Description from the chart on 38 Your credit


report
13 The time 10 Your 02 You have
since one accounts on
page 12. shows a record
of having accounts
of your accounts
credit card
balances are too your credit report
has been delinquent high for your which have a record
that have been is too short. credit limits. of payments missed
seriously in the past.
delinquent.
Let’s begin...

Start Here Carry forward your FICO credit scores Credit Score Here
652 Your 4 TransUnion Negative Reason Codes

(on page 7) and write them in the worksheet Negative Reason Code #1
and Description
Negative Reason Code #2
and Description
Negative Reason Code #3
and Description
Negative Reason Code #4
and Description

on page 13. Next Write the reason codes you 38 Your credit
report
13 The time
since one
18 You have
too many
10 Your
credit card
shows a record of your accounts accounts that balances are too
received with your scores in the appropriate of having accounts
that have been
has been delinquent show a record of high for your
is too short. being delinquent. credit limits.
seriously
boxes in the chart on page 13. Then Using the delinquent.

chart on page 12, write the Negative Reason Code


Description next to the code in the worksheet on Credit Score Here
629 Your 4 Experian Negative Reason Codes

page 13. To the right is an example worksheet. Negative Reason Code #1 Negative Reason Code #2 Negative Reason Code #3 Negative Reason Code #4

38
and Description and Description and Description and Description

Your credit
report
13 The time
since
20 The time
since your 02 You have
accounts
Once you have the worksheet completed you’ll shows a record of
having accounts that
one of your
accounts has been
derogatory
public record or on your credit
collection item report which have a
have been seriously delinquent is too record of payments
have an excellent overview of why your credit delinquent. short.
reported is too
recent. missed in the past.

scores are not as high as they could be.

Each negative reason code is listed in order of Tip: Use the chart on page 12 to find the Negative Reason Code
Descriptions and write them exactly as they appear in the chart.
importance when you get them with your credit
In the following two steps we will turn these simple descrip-
tions into actions you can take to improve your credit scores
quickly.

© 2009 Eloquent Orator, LLC. www.stephensnyder.com/collection | 11


Step 3 (cont.)
How to Use the Negative Reason Codes Decoder

Negative Reason Codes Decoder


Take the “Descriptions” that pertain to your specific negative
reason codes and carry them forward to page 13.

Negative Negative
Reason Negative Reason Code Description Reason Negative Reason Code Description
Code Code

The amounts you owe on your accounts are too high for you
01 to earn a higher FICO® score. 19* You have too few accounts on your credit report showing paid
on time. This is hurting your FICO score.

You have accounts on your credit report which have a record The time since your derogatory public record or collection item
02 of payments being missed in the past. This is hurting your
FICO score.
20 was reported on your credit report is too recent. This is hurting
your FICO score.
You lack credit card accounts that were issued by a bank or
03 major credit card issuer and this is preventing your FICO score
from being higher.
21 You have accounts that are currently past due. This is hurting
your FICO score.

You have too many credit card accounts that were issued by a You have too many credit card accounts that were issued by a
04 bank or credit card issuer and have a balance. This is prevent-
ing your FICO score from being higher.
23 bank or credit card issuer and have a balance. This is prevent-
ing your FICO score from being higher.

You have too many accounts with a balance and this is


05 preventing your FICO score from being higher. 24 You lack recent activity on credit card accounts. This is pre-
venting your FICO score from being higher.

You don’t have the statistically optimal number of accounts


You have too many finance company accounts on your credit
06 report. This is preventing your FICO score from being higher. 28 on your credit report. This is preventing your FICO score from
being higher.
You lack recent balances on credit card accounts that were
Your credit file doesn’t have enough account experience for
07 you to earn a higher FICO score. 29 issued by a bank or major credit card issuer. This is preventing
your FICO score from being higher.
You have too many inquiries into your credit report in the last
08 12 months. This is preventing your FICO score from being
higher.
30 The amount of time since your most recent account opening is
too short. This is preventing your FICO score from being higher.

You have too many accounts that have been recently opened.
09 This is preventing your FICO score from being higher. 31 You have too few accounts that show recent payments being
made. This is preventing your FICO score from being higher.

Your credit card balances are too high for your credit limits.
10 This is preventing your FICO score from being higher. 32** You have a lack of recent installment loan account information.
This is preventing your FICO score from being higher.

The amount that you owe on your credit card and store card
11 accounts is too high for you to earn a higher FICO score. 33 Your loan balances are too high for your original loan amounts.
This is preventing your FICO score from being higher.

The length of time since you established your credit card


12 accounts is too short. This is preventing your FICO score from
being higher.
34 The amount that you owe on your delinquent accounts is too
high and this is hurting your FICO score.

Your credit report shows accounts that have been seriously


The time since one of your accounts has been delinquent is
13 too short. This is hurting your FICO score. 38 delinquent, and a record of information in the “Public Records/
Collections” section of your credit report.

The length of time your accounts have been established is too


14 short. This is preventing your FICO score from being higher. 39 You have accounts on your credit report that have a record of
being seriously delinquent. This is hurting your FICO score.

You lack credit card accounts that were issued by a bank or


15 major credit card issuer and this is preventing your FICO score
from being higher.
40 You have information in the “Public Records/Collections” sec-
tion of your credit report. This is hurting your FICO score.

You lack any type of credit card account information, which is


16 preventing your FICO score from being higher. 46 The payments due on your credit accounts each month are too
high. This is hurting your FICO score.

You lack activity on accounts other than a mortgage. This is


17 preventing your FICO score from being higher. 97 You have a lack of recent auto loan account information and
this is preventing your FICO score from being higher.

You have too many accounts that show a record of being


18 delinquent. This is hurting your FICO score.
* Code 19 is 27 for TransUnion only ** Code 32 is 04 for TransUnion only

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How Good Is My Credit?

Step 3
Your Negative Reason Codes
Credit Score Here
Your 4 Equifax Negative Reason Codes
Negative Reason Code #1 Negative Reason Code #2 Negative Reason Code #3 Negative Reason Code #4
and Description and Description and Description and Description
Write your four
negative reason
codes and a brief
description of the
code for each
FICO® score in this
worksheet. (Code
descriptions for this
worksheet are on
page 12.)

Your reason
codes were

Credit Score Here


Your 4 TransUnion Negative Reason Codes provided to you in
order of importance.
You should take care
Negative Reason Code #1 Negative Reason Code #2 Negative Reason Code #3 Negative Reason Code #4
to list them in the
and Description and Description and Description and Description
same order here.

See page 11 for an


example of how to fill
out this worksheet.

Remember
your Experian
score is only available
through mortgage
lenders.

Credit Score Here


Your 4 Experian Negative Reason Codes
Negative Reason Code #1 Negative Reason Code #2 Negative Reason Code #3 Negative Reason Code #4
and Description and Description and Description and Description

© 2009 Eloquent Orator, LLC. www.stephensnyder.com/collection | 13


Step 4
Taking Action
Y our FICO® credit scores are made of five
basic factors (Payment History, Amounts
Owed, Length of Credit, Type of Credit Use,
negative reason codes and put them into actions
that can dramatically increase your FICO credit
scores—fast.
and New Credit). This is the basic information
that Fair Isaac provides people to give us an Now that you’ve written down your negative
idea about what to do to improve our credit. reason codes and their descriptions, you know
But if you really want to profoundly impact exactly what is keeping your FICO credit scores
your credit positively, you need to know the from being as high as they could be. Next you
specific actions to take to address each negative need to understand the actions you can take to
reason code. eliminate or avoid each code that comes with
each of your scores.
I’m sure you’ve heard the expression, “actions
speak louder than words.” In terms of improv- In the previous step you learned the defini-
ing your credit scores, the expression should tions of your negative reason codes. In this step,
be, “actions speak louder than numbers.” In the we will translate those definitions into actual
next 2 steps we will look at how to take your action steps.

The 5 Factors That Make Up Your FICO Scores

35% Payment History


Timely payment habits have a huge impact on your credit scores.

10% Type of Credit Use


You need a healthy mix of credit cards, retail accounts, install-
ment loans, mortgage loans, etc. to maintain a good credit score.

10% New Credit


Applying for too many credit accounts at the same time may
indicate that you are a risky borrower.

15% Length of Credit History


In general, a longer credit history will increase your score.
This is why it’s important not to close accounts.

30% Amounts Owed


The amount you owe on your credit accounts compared to
the amount you are approved for factors largely into your
FICO credit score.

SOURCE: FAIR ISAAC

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How Good Is My Credit?

Step 4
Take a look at the Negative Reason Code Action Putting it All Together
Step Guide on page 16. At first glance, it may
Now it’s time to take everything you have
look like a wall of words, but it is actually
learned and put it in a context that fits your
quite simple and, more importantly, useful.
lifestyle and schedule.
Write Down Your Actions Steps
After you complete the worksheet on page 17,
I’ve found that the best way to learn a concept go to Step 5.
is to write it down. In this step you will write
down suggested specific actions you can take
to increase your credit scores. Example Action Steps Worksheet

Now it’s time to write the suggested action


steps to take to correct your FICO® credit
scores.

First, carry forward your FICO


Start Here
credit scores from the worksheet on page 13
and write them in the worksheet on page 17.
Next Carry forward your reason codes, also
from the worksheet on page 13. Then Using
the chart on page 16, write the Actions You Can
Take next to the code in the worksheet on page
17. To the right is an example worksheet.

The actions in the chart on page 16 help you


translate the reason codes you get with your
FICO credit scores into things you can do in
the real world.

Tip: Use the chart on page 16 to find the Actions You Can Take
and write them exactly as they appear in the chart.
In the next step you will write these action suggestions in
your own words.

© 2009 Eloquent Orator, LLC. www.stephensnyder.com/collection | 15


Step 4 (cont.)
Negative Reason Code Action Step Guide
Negative Suggested Actions You Can Take Negative Suggested Actions You Can Take
Reason Reason
Code To Increase Your Credit Scores Code To Increase Your Credit Scores
Some of your lenders will not report your payment history to all three credit
*
01 Stop maxing out your credit cards each month. Pay off as much debt as you
can as soon as you can to eliminate this reason code. 19 reporting agencies correctly. Make sure you only apply for credit with
lenders that report your timely payments and credit limits to all three credit
reporting agencies.
Make it a priority to pay your bills early, worst case on time. With time your If a lender tells you that your account is about to be sent to collections,
02 past late payments will fade and your recent excellent payment history will
take prominence.
20 either work with them to renegotiate your debt or pay off what you owe.
A collection account will have a major negative impact on your credit scores.

Acquire one or two major credit cards. Lenders need to see that you can be
03 trusted with credit from reputable sources before they will take a chance to
lend you money.
21 Make a habit to pay all of your bills early. Convince yourself that “early”
means “on time” and “on time” means “late.”

The more credit cards you have with zero balances, the better you look to
04 Pay off as many of your credit cards and other revolving accounts that you
can. 23 lenders. Try to keep as many of your credit cards as possible paid off each
month.

05 Pay off as many of your revolving accounts as you can, so you are not carry-
ing balances on too many credit accounts. 24 Having credit is not enough. You have to demonstrate that you can use and
manage your credit responsibly.

06 Avoid finance companies for loans and credit. Use banks (spelled B-A-N-K)
instead. 28 You should have at least two credit card accounts, one store card, an auto
loan, and a mortgage (ideally).

If you never carry a balance on your cards, it may appear as if you have no
07 You need to have some established credit if you want to finance larger items
(like a house or a car). Lenders need to see that you can handle credit. 29 activity at all. It’s OK to let a small balance ride for a short period of time,
just don’t let it accumulate or stay on your bill for too long.

You should only apply for credit when you’re absolutely sure that you will be
08 approved. You do this by knowing your FICO credit scores and interviewing
lenders for their credit guidelines.
30 Periodically you should be getting new credit to show that you are financially
stable.

09 Open new accounts strategically. When you open too many accounts at the
same time you appear risky to other lenders. 31 Use your old accounts and pay them off from time to time to show that you
are still an active user.

A major factor in how your FICO credit scores are calculated is your revolv-
Besides being a great investment, a mortgage is one of the best types of
10 ing “utilization.” You can combat a high utilization by either increasing the
credit limits on your revolving accounts or paying down as much of your 32** credit accounts to prove to other lenders that your are responsible with your
credit.
balances as possible.

Do not miss payments on an installment account (such as a house or car).


11 Avoid the “No payments for 90 days” trap. If you finance a large ticket item
like furniture or electronics, pay it down or off as soon as you can. 33 Late fees, penalties, and interest increase the amount you have to pay and
the time it takes to pay the loan off.

Don’t close old accounts that are in good standing. Lenders like to see that Try to pay as much off of old accounts as possible, even if the account
12 you’ve been able to maintain good relationships with other lenders over a
long period of time.
34 has been closed. If an account was included in a bankruptcy, dispute the
accuracy of the account with the credit reporting agencies.

Don’t let a lender report you as delinquent even if you believe that you are Negative narratives are accounts included in a wage earner plan,
13 “right.” Pay what they say you owe, then contact a lawyer to see what your
options are to fight them.
38 bankruptcy, repossessed (voluntarily or involuntarily), and accepted as
settlements. Work with the lender to resolve any “negative narratives” or
hire an attorney to represent you.
You should be paying your bills on time, every time. But if you do have to
14 You need to have a few loans that you keep in good standing for a period of
time to earn the trust of other lenders. 39 make a late payment, do it before it hits the 90 day mark, or your FICO
credit scores will seriously suffer.

Stay away from credit cards not issued by banks. Be very careful what type If you’ve had a bankruptcy, the best remedy for this is time. But if you work
15 credit card you get. You want to avoid cards issued by finance companies, or
anything that isn’t a real bank (spelled B-A-N-K).
40 to eliminate all your other credit mistakes, you can minimize the impact of
this negative reason code.

Don’t take on more credit than you can handle. If your balances are too
16 Diversify your credit. Lenders need to see that you can handle various types
of credit. Only having an auto loan or a mortgage is not enough. 46 high on your credit accounts, your minimum payments could be larger than
normal, which may be an indicator of risk.

Having an auto loan adds to your credit mix, which looks good to other
17 Although it’s good to have a mortgage, you should also be able to show that
you can handle credit from other types of lenders. 97 lenders, and managing it responsibly shows that you can be trusted with
larger types of loans.
Credit reporting agencies are not perfect—far from it. Some accounts
* Code 19 is 27 for TransUnion only ** Code 32 is 04 for TransUnion only
18 reporting as delinquent may be inaccurate, incomplete, misleading, unverifi-
able, or outdated. You can dispute these items yourself or hire an attorney
to do it for you.

16 | www.stephensnyder.com/collection
How Good Is My Credit?

Action Steps

Step 4
Action Steps to Increase Your Equifax
Credit Score Here FICO Credit Score
Negative Reason Code #1 Negative Reason Code #2 Negative Reason Code #3 Negative Reason Code #4
and Action Step and Action Step and Action Step and Action Step

Carry forward your


FICO credit scores
and reason codes
from the worksheet
on page 13.
Write the actions
you can take for
each negative
reason code that
will help you
increase your
FICO® score from
the chart on page
Action Steps to Increase Your TransUnion 16.
Credit Score Here FICO Credit Score See page 15 for
an example of
Negative Reason Code #1 Negative Reason Code #2 Negative Reason Code #3 Negative Reason Code #4 how to fill out this
and Action Step and Action Step and Action Step and Action Step worksheet.

Action Steps to Increase Your Experian


Credit Score Here FICO Credit Score
Negative Reason Code #1 Negative Reason Code #2 Negative Reason Code #3 Negative Reason Code #4
and Action Step and Action Step and Action Step and Action Step

© 2009 Eloquent Orator, LLC. www.stephensnyder.com/collection | 17


Step 5
In Your Own Words
Y our situation is unique. This is why
it’s important to create your own indi-
vidualized game plan. In the previous steps
Manage and Monitor
Now that you have learned how to manage your
FICO credit scores, it’s time for the final step.
you’ve learned specific concepts you can use to Monitoring your progress.
improve your credit scores by attacking your
negative reason codes. After you complete the worksheet on page 19,
move to Step 6.
Now that you have a baseline to help you
understand how each negative reason code
impacts your score and what you can do to
improve it, you need to use what you have Example Actions In My Own Words Worksheet
learned in the previous steps to design your
own plan for success.

When you write down what you need to do


(in your own words) to correct each negative
reason code, and the date you will take action,
you create a plan of attack that is tailored to
your needs. Coming up with your own plan
provides you with a specific step to take your
scores to the next level. Finally, writing down
a date gives you a goal to reach and account-
ability.

First, carry forward your FICO®


Start Here
credit scores from the worksheet on page 17
and write them in the worksheet on page 19.
Next Carry forward your reason codes, also
from the worksheet on page 17. Then Using
what you’ve learned in the previous steps,
write actions in your own words in the work-
sheet on page 19. To the right is an example
worksheet.
Tip: Use the Action Step descriptions you wrote down in the
chart on page 17 as a guide to help you formulate actions
in your own words. Be sure to include the date you will take
each action.

18 | www.stephensnyder.com/collection
How Good Is My Credit?

Actions In My Own Words

Step 5
Action Steps to Increase Your Equifax FICO
Credit Score Here Credit Score In Your Own Words
Negative Reason Code #1 Negative Reason Code #2 Negative Reason Code #3 Negative Reason Code #4
and Action In My Own Words and Action In My Own Words and Action In My Own Words and Action In My Own Words

Carry forward your


FICO credit scores
and reason codes
from the worksheet
on page 17.
Write the actions
you can take in
Date I Will Date I Will Date I Will Date I Will your own words.
Take Action Take Action Take Action Take Action
Use the worksheet
you filled out on
page 17 as a
Action Steps to Increase Your TransUnion FICO reference.
Credit Score Here Credit Score In Your Own Words See page 18 for
an example of
Negative Reason Code #1 Negative Reason Code #2 Negative Reason Code #3 Negative Reason Code #4 how to fill out this
and Action In My Own Words and Action In My Own Words and Action In My Own Words and Action In My Own Words worksheet.

Date I Will Date I Will Date I Will Date I Will


Take Action Take Action Take Action Take Action

Action Steps to Increase Your Experian FICO


Credit Score Here Credit Score In Your Own Words
Negative Reason Code #1 Negative Reason Code #2 Negative Reason Code #3 Negative Reason Code #4
and Action In My Own Words and Action In My Own Words and Action In My Own Words and Action In My Own Words

Date I Will Date I Will Date I Will Date I Will


Take Action Take Action Take Action Take Action

© 2009 Eloquent Orator, LLC. www.stephensnyder.com/collection | 19


Step 6
Monitor Your Progress
O nce you start taking action to increase your
credit scores, it’s important to monitor your
progress. Not only is it motivating to watch your
Credit Reporting Lag Time
Although you significantly paid down the bal-
ances on your credit cards, you won’t see the
credit scores rise after doing things the right way,
effect on your credit reports for up to 45 days—
it also saves you time and money by not having
and in some cases even longer. You have become a
to purchase your credit scores as often. In addi-
victim of “credit reporting lag time.”
tion when you know where you stand, you’re in a
better position to, “strike while the iron is hot.” So how are you supposed to monitor your
progress?
But sometimes it’s hard to really know where
you stand, even if you are making all the right It can be expensive to keep purchasing your
moves. For example, let’s say one of your Action credit scores every month. That’s why I use a
Steps from page 19 was to significantly reduce the service called Score Watch to monitor my FICO
balances on all of your credit cards. credit score from Equifax—it sends me an email
or text message any time my score changes.
You take this action and two weeks go by
(enough time for the lender to receive your pay- Unfortunately, there is currently no service that
ment and post it to your account). You call each provides monitoring of all three FICO scores.
lender to verify they received your payment. That would be the ideal service. But for now, you
can at least monitor your Equifax score.
But, when you go to get your new FICO® credit
scores and compare them to the scores you wrote
down in Step 1, you see that your
scores have not changed.

For a FREE, 30-day trial of


Score Watch, you can go to:
www.6simplestepstobettercredit.com/scorewatch

20 | www.stephensnyder.com/collection
How Good Is My Credit?

Step 6
Score Watch™ has some
very cool features that
help you chart your prog-
ress and stay on track
with your credit score
goals.

Score Watch monitors


your progress and imme-
diately alerts you by email
or text message when
your score has reached
the target goal. This way
you can get financing at
the best possible interest
rate.

A graphical chart shows


how your interest rate
improves as your credit
score increases. This
graphic can be set in 3-
month, 6-month, 1-year,
or 3-year increments.

Your current FICO® credit Instantly get your Score Power Report. This report
score from Equifax. provides an easy-to-understand breakdown of
where your score is and what you can do to take it
to the next level.

© 2009 Eloquent Orator, LLC. www.stephensnyder.com/collection | 21


Conclusion
Personal Credit Goals
A goal without a written plan is just a wish.
Writing down goals is an important step
for getting the things you want. Start with your
Keep track of your progress. The most efficient
way to do this is to subscribe to a credit score
monitoring service (see pages 20-21).
short–term goal, and develop specific actions to
accomplish it. Do the same all the way to your Be patient. It may take time to increase your
ultimate goal. credit scores.

Action plans are important if you want to experi- Your goal should be to achieve three FICO credit
ence change. Let’s apply what you’ve learned. scores above 700. Anything over 700 is an
accomplishment worthy of celebration. However,
If you haven’t already purchased your FICO® if you’re like me, you want scores over 800. If
credit scores, contact a mortgage lender or go to: that’s the case, you’ll be in an elite group reserved
www.myfico.com/12 now. for only 6% of scored Americans.
Analyze your negative reason codes from each Let the fun begin.
credit reporting agency (use the forms on pages
13, 17, and 19). To increase your scores, deter-
mine what credit usage habits your negative
reason codes are telling you to change. These hab-
its are preventing your scores from being higher.
Next, create a game plan using what you discover. Ultimate Goal
The 800 Club
By achieving scores
above 800, you are
Long-Term Goal in the top 6% of the
scored population.
Your long–term goal should
Mid-Term Goal be to have each of your 3
FICO credit scores at 750 or
Your mid–term goal should be to higher. Accomplish this, and
Short-Term Goal have each of your 3 FICO credit you will have the credit world
scores above 700. You will qualify by the tail. After all 3 of your
Your short–term goal should
for good financing through car man- scores reach 750, you may
be to have each of your 3 FICO
ufacturers and may be approved for consider focusing on your
credit scores at 640 or higher.
unsecured credit cards, credit limit Ultimate Goal.
With a middle score of 640 you
increases, mortgages, and more at
are able to get conventional mort-
competitive interest rates. When all
gage financing. In addition, a few
3 of your scores are above 700, it
car manufacturers will qualify you
will be time to focus on your Long-
at their bottom tier level with a
Term Goal.
640 score. If all 3 of your scores
are above 640, focus on your
Mid-Term Goal.

22 | www.stephensnyder.com/collection
How Good Is My Credit?

Putting it Into Practice


1. Know Your Scores 5. Purchase Your Scores
Purchase your scores from: www.myfico.com/12, Purchase your scores every 3 to 6 months (or
or acquire them from a mortgage lender so you before a major purchase) from: www.myfico.
know where you stand before you begin. com/12 to learn if your negative reason codes have
changed and if your have met your score goals.
2. Know Your “Goal Scores”
Ask your lender what score you need to qualify at 6. Apply for Credit You Want
the lowest interest rate (with the best terms). When you know you have achieved the score
required from the credit reporting agency the
3. Take Action lender uses to qualify for the credit you want—
Correct the mistakes indicated in your negative apply.
reason codes by using the recommended actions
from Step 5 and the actions you came up with in
Step 6.

4. Monitor Your Score


Sign up with Score Watch at:
www.6simplestepstobettercredit.com/scorewatch
so you can get an idea about how your actions are
affecting your FICO score from Equifax.

© 2009 Eloquent Orator, LLC. www.stephensnyder.com/collection | 23


New From Stephen Snyder...
For years, I put all of my information about recovery from bankruptcy into one
book, Credit After Bankruptcy. However, as things began to change so rapidly
in the “New Credit Economy,” I made the decision to pull my best-selling book
from the bookstores and concentrate on individual and more detailed books, on
specific subjects. This way, instead of an all-encompassing book with general
details that only gets updated every 4 or 5 years, I could provide you with titles
that are updated as things change in the credit economy. So…now you are left
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To learn more about any or all of these timely resources, just visit:
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Free FICO Scores ®

For more information go to...


www.allenmichael.com/signup
800
What is Your Credit Score Temperature?
Knowing your credit scores is like determining whether you’re sick. How 700
do you know if you’re sick? Put a thermometer in your mouth and take
your temperature. The first thing you must do to determine if When it comes to 600
your credit rating is sick, healthy, or in need of a little attention is your credit score
health, higher is
purchase your FICO® credit scores. Credit scores are your credit- healthier.
500
worthiness thermometers. The best place to purchase your credit scores is
www.myfico.com/12 400
Knowing where you are is very important to determine where you want to
go. It helps you set goals, and gives you a baseline to measure your success 300
from. You can’t have progress without a starting point.

This publication is designed to provide accurate and authoritative information with regard to the subject matter covered. It is sold
with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional advice. If legal advice
or other expert assistance is required, the services of a qualified professional person should be sought.—From a Declaration of
Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Association.

© 2009 Eloquent Orator, LLC.

All rights reserved. No part of this work may be reproduced in any form, or by any means, without the permission of the publisher.
Exceptions are made for brief excerpts to be used in published reviews.

Published by Chapter 20
Jackson Hole, Wyoming 83001

Printed in the United States of America


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