Develop a Powerful Credit Profile With The “Big 8″
To develop a positive, powerful credit profile, qualify yourself in as many categories as you can based on the chart below.
THE “BIG 8″
ELEMENTS OF A POWERFUL CREDIT PROFILE
(In order of importance)
1. A positive, up-to-date credit report
2. A home with a mortgage
3. An American Express card and/or Diners Club card
4. A job you’ve held for a year or more
5. A current or paid-off bank loan
6. A MasterCard or Visa card
7. A department store credit card
8. A telephone in your name
The more categories under which you qualify, the easier it is to get credit when you need it.
Your credit profile, good or bad, will determine how easy or difficult it is to get bank loans, auto loans, personal loans, credit cards, or any other form of financing. Your profile can also determine what interest rates you pay, higher or lower, and in some cases will also be a determining factor in whether you get a certain job or even an applied-for larger life insurance policy. A positive, powerful credit profile does its own explaining so that you don’t have to. Your objective is to consciously and constantly upgrade your credit profile.
You can survive in America if you have poor credit—or, worse yet, no credit—but poor credit is a definite handicap to wealth building. It is easier to play the piano with all ten fingers than with bandaged thumbs.
You must be willing to go public with who and what you are, no matter what the so-called offshore promoters tell you about privacy.
Going public is accomplished by making available your financial statement, your tax returns, and your credit bureau data. The first two you furnish, the third will be obtained from the credit bureau by prospective employers and lenders.
Loan and mortgage applications are usually approved or rejected based on a point system. One to six points are assigned to each item in eight different categories. If the number of points you score overall exceeds a certain total, determined by the lender, your loan is approved; if less than the required total, your loan is automatically rejected.
Following is a model of a credit-scoring process taken directly from the procedures book of a finance company that will let you score yourself . About 18 points is the minimum score required to pass the credit test. The more you score the better your chances.
Owning a home with a mortgage shows stability and scores more points than most items on a credit application. It does not matter if you were required to qualify for the original mortgage, or if you simply assumed a no-qualifying FHA or VA mortgage.
An American Express card has almost as much clout in the financial world as a mortgage. To qualify for the card, you must show an income of over $15,000 a year and pay the balance each month. Diners Club finishes a close second to American Express. Diners Club reports on its cardholders to all major credit bureaus; American Express does not. The American Express green card is good; the gold and platinum even better. Always list your American Express or Diners Club card number first on any credit application. Pay the fee; your credit profile is worth it. If your application is rejected, file a new one every six months until they give you a card, or have a cardholder, such as your parents, issue an extra card on their account until you can qualify on your own.
A current or paid-off bank loan, a MasterCard or Visa, and a department store credit card are indications that others have been willing to extend you credit. If you don’t have these credit references, it will pay you to get them whether you need the credit or not.
Your payment habits, good or poor, are shown on your credit report.