Your credit score has never been more important than it is today.

Having a poor credit score can hit you hard in all kinds of places.

As lenders tighten up their credit standards in this credit crisis, you may find that you need a FICO score about 20 to 40 points higher than last year just
to get the same kind of rates you got then.

Obviously with a low credit score, if you try to buy or refinance a home, you’re likely looking at a higher mortgage rate. Same goes if you need to finance a new or used car. And, that can cost you thousands of dollars! But, did you know that a spotty credit score can also affect things not even related to a loan?

For example, prospective employers may look at your score before deciding to hire you. (Just what you need during the current slowdown in hiring!) Also…some of your day-to-day costs, such as home and auto insurance — andeven your cell phone and utility bills — can dramatically increase based on a less-than-perfect score.

We remember counseling one couple who learned that particular lesson the hard way. The couple's auto insurance company had just raised their premium for two cars by $200 a year — based on a credit record that put them in a “high-risk” bracket.

The couple wanted to know what their credit record had to do with their auto premiums. The answer?? It tells insurers and lenders that they are running a risk of getting late payments from you...so they charge you more to hedge themselves.

So, if you don’t pay your bills on time, do yourself a "credit" favor and START.  And, if you already have either major or minor problems in your credit report, now is the time to start cleaning it up. 

This report will show you how you can do just that in a short time frame… AND save money on insurance, mortgages and anything else that requires an excellent credit record.

Let Us Introduce Ourselves…

We’re Ken and Daria Dolan, and we’ve often been called the “First Family of Personal Finance.”

We have over 25 years of experience helping people just like you improve their financial health. 

We’ve hosted both our own national television shows (CNN, CNN.fn and CNBC) and national radio show heard across North America and Hawaii  and we’ve written six books on personal finance as well as guesting on numerous television shows and  we have spoken all over the world.  (And we’ve been married — to each other — for nearly 40  years in case you want to know...but that’s another story.)

We wrote this report to show youthe “ins and outs” of how the credit scoring system works...and how you can dramatically improve your credit in a very short period of time.

What, Exactly, IS a Credit Score?

A credit score is a number — generally ranging from 300 to 850 — based on an analysis of your credit history.  Its purpose is to demonstrate your creditworthiness, which is what lenders look at when deciding how likely you are to pay your debts on time.

Lenders use credit scores to determine who qualifies for a loan, at what interest rate and at what credit limits.

Your credit score is calculated based on the contents of your credit report, which is sourced from the major credit bureaus — Equifax, Experian and TransUnion.

The FICO® score is the most well-known of the credit scores, and it’s used by 90% of all lenders in the U.S. and Canada.

THIS is the one to which you should pay the most attention (and work on if you need to)!

Here’s the good news: The higher your FICO score, the less money you’ll pay in interest. 

Take a look at a example below of mortgage interest rates (and payments) as calculated for each type of FICO score — from “high” to “low.” 

It illustrates how, if your score is sitting at 650 now and you raised it just 100 points, you can save almost $250 per month in payments.  That adds up to a whopping $390,000 in interest over a 30 year loan!

What Factors Go Into Your Credit Score?

Because it’s the most widely used, in this report we’re going to focus on how to improve your FICO score.  But first let’s take a look at how it’s calculated. Your credit score is determined by the following estimated % breakdown:

• 35% Payment history
• 30% Outstanding debt
• 15% Length of your credit history
• 10% Recent inquiries on your credit report
• 10% Types of credit in use

1. PAYMENT HISTORY.

This takes your track record into account and accounts for 35% of your score. The first thing any lender wants to know is how timely you’ve been in paying loans in the past.  Late payments will automatically drop your score, while a good track record on most of your credit accounts will raise your score.

Public record and collection items such as bankruptcies and foreclosures will show up in this section, but if they are more than ten years old…they shouldn’t do too much damage if your current payment obligations are up-to-date. 

2. OUTSTANDING DEBT.

Approximately 30% of your FICO score is based on this category. When you have hit, or almost hit, the credit limit on all, or most, of your accounts, your credit score will be lower. To a lender, this means that you’re over-extended...and may be at risk for making late payments (or, worse, NO payments). 

3. LENGTH OF CREDIT HISTORY.

15% of your score is based on this category.  FICO looks at the age of your oldest account, your newest account and the average age of all your accounts.  Generally speaking, a longer credit history — especially if it shows a steady record of timely payments — will increase your FICO score. 

4. NEW CREDIT.

If Your Have Old Accounts…  If you only have a few credit accounts and some of them are old and never used, consider buying something small with those to keep them open. Then pay them off in full. This will keep those creditors from closing your accounts and will also make it easier for them to give you new or higher credit if you need it.

10% of your FICO® score is based here.

If you’ve opened several credit accounts in a short period of time, it presents a greater credit risk and can lower your score.

By the same token, if you’ve submitted applications to several different creditors, this could also affect your score.  Every time you apply for credit, an inquiry is placed on your credit report. This inquiry can temporarily lower your credit score as much as 5 points per inquiry.

Also, potential creditors will assume too many new accounts or too many
inquiries mean you are about to jump into a heap of debt…so you may no
longer be a good risk at that point.

5. TYPES OF CREDIT IN USE.

10% of your score is based on what kind of credit accounts you have — FICO looks at your mix of both revolving and installment-type accounts including credit cards, retail accounts, finance company accounts and mortgage loans.  You don’t have to have one of each to get the highest score.

For more than 20 years, we have tirelessly worked for the American consumer through our television shows, radio programs, best-selling books and financial roundtables. Put that experience to work for you! Check out our 10-Steps to Living Debt Free.

How is YOUR Score?

Generally speaking, if your FICO score is over 700, you’re considered an excellent or, at least, a very good credit risk, and you won’t have problems getting an attractive ;loan rate.

680 to 699 is still considered good, but lenders may not offer you the same rate deals as they do to those who have scores over 700.

620 to 679 is considered "fair," and anything below that is considered "poor." 

Remember that your FICO score is based on information in your credit report, so it’s mission-critical to make sure the information in your report is accurate.  So, the first order of the day is to get a copy of your credit report.

You can request a FREE copy  once per year from www.AnnualCreditReport.com.

AnnualCreditReport.com is the official site to help consumers to obtain their free credit report.

This central site allows you to request a free "credit file disclosure," commonly called a credit report, once every 12 months from each of the nationwide consumer credit reporting companies: Equifax, Experian and TransUnion.

Take a look at a example below of mortgage interest rates (and payments) as calculated for each type of FICO score — from “high” to “low.” 

It illustrates how, if your score is sitting at 650 now and you raised it just 100 points, you can save almost $250 per month in payments.  That adds up to a whopping $390,000 in interest over a 30 year loan!

How to Read Your Credit Report

An agency credit report contains three sections, in addition to your identifying information — credit history, public records, and inquiries.

Section 1: Credit History

Apply Only When Needed! Credit inquiries take as long as two years to drop off a credit report, but every month, inquiries are dropping off and your score is going up.  So try to apply for new credit only when necessary, and try not to apply for credit for at least three months when planning a large purchase.

The credit history section is supposed to list your credit accounts and how much you owe on each one, as well as your record for keeping up with payments. Experian's reports will state whether you have a record of paying on time, as well as whether a creditor has ever "charged off" the account; that is, given up on collecting.

You will also see payment codes that are the credit industry's long-used method of grading your payment patterns for credit card accounts, installment loans, mortgages and lines of credit.

Section 2: Public Records

The public records section is a place you want to keep blank. It lists finance-related matters such as bankruptcies, judgments and tax liens. Most of these problems, however, do not stay on the report forever as long as you take care of them.

For example, a “Chapter 7 bankruptcy,” in which all of your debts are wiped out but your assets are sold and the proceeds distributed among your creditors, is supposed to be cleaned off your record 10 years after the filing date. A bankruptcy filed under “Chapter 13,” also known as "wage earner's bankruptcy," in which you set up a repayment plan, is usually deleted seven years after the filing date.

Less onerous reports, such as late payments or non-payments, settlements, and tax liens, should be deleted seven years after you make good on the problem. An unpaid tax lien can be reported forever, but reporting agencies often delete them 15 years after the filing date.  However, recent changes in the law have made it more difficult to file for bankruptcy.

Section 3: Inquiries

The final section, inquiries, is a list of everyone who has asked to see your credit report. These are divided into two sections: "hard" inquiries, which you initiate by filling out a credit application, and "soft" inquiries, which come from companies that want to send out promotional information to a prequalified group or current creditors who are monitoring your account.

Having a large number of “hard” inquiries as a result of your applying for credit can affect your rating, because lenders perceive consumers who are seeking several new credit accounts as riskier than those who aren't seeking additional credit.

The good news about this, however, is that, contrary to a widely held belief, the impact is not that large unless the rest of your credit history is problematic.

Frankly, we could go on like this for hours.  This report is just a small sample of the types of solutions you’ll find at Dolans.com.

There are a lot of pesky money questions and dilemmas out there — and you’ll find the answers and guidance you need at Dolans.com.

This is your chance to start saving more…erasing debt…making more…spending wisely…investing successfully — using money as a tool to better the lives of you and your loved ones, instead of letting it be a constant source of anxiety...and make a better life for yourself and your family.

Also…you’ll find both our step-by-step actionable information and directions on dozens of money issues and our message of EMPOWERMENT.

Click here to visit Dolans.com today!

Important Changes to the Way Your Credit Score Is Calculated

At a time when more people than ever are falling behind on their credit card, mortgage and auto loan payments, Fair Isaac Corporation, the creator of the popular FICO credit score formula, has introduced what they say is the most powerful upgrade to their scoring system.

Dubbed "FICO 08," it's supposed to do a much better job of predicting who will pay on time and who won't.

So it's more important than ever to stay on top of your credit reports and scores. Here are 7 ways that the new credit FICO formula changes could affect you:

#1: You Get A Little Leeway If You're Late

If you've ever missed a payment on an account that shows up on your credit report, you may have seen your credit score drop like a rock. With FICO 08, however, an isolated late payment affects your score less than it does now, provided that your other bills are paid on time.

But fall behind on several bills, and the impact to your score will likely be even worse. Keep in mind that, under any version of the FICO formula, a very recent late payment can have a significant impact on your score. If you've fallen behind, click here to get back on the right track.

#2: Small Collection Accounts Ignored

If you've ever had a bill wind up in collections, you know it can be a serious blow to your credit. And, it's even more frustrating when that collection account is due to something like a small medical bill that slips through the cracks.

FICO 08 will ignore collection accounts where the original balance is less than $100. That doesn't mean you shouldn't pay those accounts, of course, but it does mean they shouldn't hurt your credit scores.

If you've been unfairly treated by debt collectors, learn how to fight back.     

#3: Avoid Debt? Watch Out!

This one falls into the “crazy but true” category.  If you're one of those responsible people who does NOT have a car loan or mortgage, and you rarely use credit cards, you may see your FICO score drop because FICO 08 places an even greater emphasis on a solid mix of credit types. It's completely absurd, but that's the way it is.

It's better for your credit score if you have both installment and revolving accounts. An installment account includes a car loan, student loan or personal loan.

#4: Maxed Out? Watch Out!

You may have heard that it's a good idea to keep your credit card balances below 50% of your available credit limit. But the ideal ratio is actually closer to 10%!

With lenders closing accounts and lowering credit limits for even the most creditworthy customers, it's getting harder and harder to maintain a low "utilization" ratio. FICO 08 will be even harder on consumers who get close to their credit card limits–just one more reason to pay down those balances!

Now that you know how your score is calculated, let’s look at ways you can clean up your credit score.

4 PROVEN Steps to Clean Up Your Credit Rating

You have your latest credit report in hand.  You know your credit score.  We’re sure you must be asking, “Okay, Dolans... now how the heck do I clean this thing up?”

So, what follows are four time-tested steps to clean up your credit and raise your score.  Keep in mind we’ll spell out more details later in this report, along with a few other tips that may surprise you.  For now, get started with:

STEP 1: CHECK REGULARLY

Warning: Beware of Rate Shopping!  If you have been "rate shopping" for a mortgage or auto loan, this action should be counted as a single inquiry. Contact the credit-rating bureau if you've been penalized for your thoroughness with a list of multiple inquiries. Typically, inquiries are purged from the credit bureau files after two years. Also, you can call Opt Out (888-5OPT-OUT or 888-567-8688), which tells the credit-reporting agencies that you don't want them to sell or rent your name to marketers. Here's one more strong reason, as if you need one, to throw out – after shredding – all of those unsolicited credit card offers that clog your mailbox and, nowadays, your e-mail box, too. Americans get bombarded with more than 3.5 billion credit card offers a year. Don't succumb to temptation.

Now that you have a copy of your latest credit report (see page 2 for details on how to order it), be sure to get a new one once a year.

First…go through your report with a pen, and mark things that you think are inaccurate or incorrect.  If you see something inaccurate, make sure you dispute it with the Credit Agency.  We’ve outlined specifics on how to do just that on page 4 of this report.

STEP 2: PAY ON TIME

Don’t forget that payment history is the single most important factor in determining your credit score, making up 35% of the total. Put positive credit information in front of the bad. Prevent any new red marks from showing up on your credit report from now on. Today, make sure that you're not behind on any payments.

You may consider having your bills automatically deducted from your bank account or pay them online before they are due.  Being consistently late with payments is the easiest way to lower your score.  Conversely, if you’re consistently on time, your credit score will improve month after month.

Even if you can only swing the minimum payment (not a good idea), get the payment there before the due date. Most credit card companies allow you to pay online, so, if you feel comfortable doing so, make sure you take advantage of this and don't waste time and money on stamps and mailings. 

Keep the number of credit cards you have to a minimum so you don't forget to pay each of them. Remember, only apply for cards for which you believe you will be approved.  

Make sure you have an American Express, Visa, MasterCard or Discover card and keep on top of your payments. If you can't get approved for one of these cards, try a “secured” credit card, which requires a cash collateral deposit that becomes the credit line for your account. For example, if you put $500 in the account, you can charge up to $500. Some banks may even reward you for making payments on time and will add to your credit line without requesting additional deposits (many banks are VERY quick to do that…to your possible detriment!).

A Word on Secured Credit Cards Before you sign up for a "secured" card, make sure that the card issuer will report your credit information (i.e. your record of on-time payments) to the major credit bureaus.  Some secured cards won’t. FYI: Gasoline cards or small bank loans aren't usually reported to credit bureaus, unless, of course, you don't pay on time!

STEP 3: CLEAN UP & NEGOTIATE

Clean up old credit blemishes. Credit bureaus can keep accurate credit information on your credit report for up to seven years. But they only report the information creditors give them. So, try to negotiate with the creditor who reported the information to have it removed from your record.

For example, if you have a Visa card on which you were late on a payment or two in the past, but are all paid up now: Call Visa and ask them to delete the late payment information. Creditors may also be willing to negotiate if you have unpaid debts that you can now pay off.

You’ll read more on how to negotiate specific items, one by one, on page 4 of this report.

STEP 4: DISPUTE

If you think information on your credit report is inaccurate and you have tried to get it corrected but can't, put a letter of explanation in your credit file. This letter must be given to anyone who looks at your credit report. To have the greatest impact, make your letter brief, unemotional and factual.

You can also request — and the credit bureau must comply — to have the word "disputed" listed next to any item on your report with which you disagree.

One last word about credit cleanup: Avoid “for-profit” credit repair clinics and seminars.

Many cost you big bucks (that you don’t have) and, at best, may give you the same results you'll get using the steps listed above yourself — which won't cost you a penny! (At worst, they’ll take your money and do nothing to help you.) Click here to read the truth about credit repair services. Check out www.NFCC.org and  www.aiccca.org for more information.

Now…in the next section…we outline some more details re: how to dispute negative items.

More on Negotiating and Disputing Bad Records

Creditors WILL remove negative items from your report, but typically not without some push from you. (Unless, of course, these records have been naturally purged from your account due to age — way too long, in our opinion, for them to reside on your credit report!)

Getting this unfavorable information removed all boils down to a few negotiating skills and a little paperwork.  And time. So get busy!

Here are a few tips to help shorten the lifespan of those credit dings on your report:

Tip #1: Ask For a Little “Goodwill”

To remove “late pays” (30, 60, 90 days, etc.) from your credit report, mail a letter to your creditor explaining why you were late in that particular instance... and ask your creditor for their "goodwill" to remove it.  This usually works well for accounts that are still open with a current line of credit.

Tip # 2. Make Offers

For items that are in collections or are way past due, you’ll likely have to directly contact the collection agency.  If the item has gone to a collection agency, deal with them and don't bother calling the original creditor.

If you have the funds to pay a percentage of the outstanding debt for example, 50% of it — offer to pay it if they remove that item from your report.  (Note: They need to remove it and not just mark it “Paid”!) As always, get the agreement in writing.

Tip #3. Dispute Specific Items

 

A Word of Caution... If you’re carrying a balance on a credit card, do NOT use it for everyday purchases.  You’ll pay interest from the minute you make a new purchase with that card.  Instead, opt for the card that has no balance — you won’t be charged any interest as long as you pay it back in full every month.

You can dispute items with each creditor by way of phone, letter, online or via e-mail. If you have negative items on your credit report that are older than 7 years, immediately contact those creditors to have those items removed.

Here are some tips to help you handle the dispute:

1. Start your dispute directly with the credit bureau, not the creditor.
2. Contact the creditor in writing with the disputed information and a letter.
3. Maintain all records of your dispute, and when sending mail, send it "return receipt requested."
4. Take notes of any telephone conversations you have and make note of the other party's name, date and time of day. If you file online, print out everything and save your records.
5. Be patient. Resolving disputes can take months, especially if your report contains multiple errors.

Tip #4. Make Them Prove It

By law, within 30 days, the creditor must prove that the item that you’re disputing is accurate. If they don't, the item will be removed from your credit report. If you have additional evidence that it’s incorrect, be sure to submit that evidence along with your letter.  Remember: The burden of proof is on THEM.

Lastly, if, after all is said and done, you don't have a resolution on a large discrepancy, consider hiring a lawyer. Credit errors cost higher interest rates when you need to borrow.

More Tips on Raising (and Keeping) Your Score High

* Use credit cards for everyday purchases — then pay your credit cards in full every month.   By regularly using your credit cards (and paying them on time), you help build credit history, and this helps increase your credit score. 

Keep in mind that debit card transactions do not usually appear on credit reports. 

* Pay down as much of your debt as possible. The lower your ratio of “current debt to available credit” limits the higher your credit score will be and the better you’ll look  to a lender. Word of warning here, though: Do NOT open additional credit card accounts to increase this ratio, since that may hurt your credit.

* Don't be afraid of credit counseling. If you're seriously behind on payments or are simply overloaded with too many debts, you may want to consider working with a non-profit agencies found at www.nfcc.org and www.aiccca.org. These services can negotiate lower interest rates and help you pay off your bills within a few years and, despite what you might think, they shouldn’t hurt your credit score.

Any and all references to credit counseling will be removed from a credit report after you’ve paid off your debts. So, no lasting reminders for you and future creditors.

For 5 quick tips on what to AVOID in a credit counselor, click here.

* AVOID BANKRUPTCY! This is obvious, but you need to know that bankruptcy can knock 200 points, or more, off of your credit score!  Once a score is pushed below 620, which bankruptcy inevitably does, a loan becomes much more expensive.  Not only that, but a bankruptcy will stay on your record for up to TEN years.  Avoid this at all costs!

* Don’t unnecessarily close accounts. A closed account will still show up on your credit report, and its history will be considered by your credit score.

Avoiding (and Correcting) Identity Theft

Even if you mind all your “P’s and Q’s” and your credit is truly stellar (and even if it’s not), it’s not uncommon for credit reports to have errors that have nothing to do with your true payment history. Some lenders estimate that as many as 80 percent of all credit reports contain some kind of inaccurate information.

How? Sometimes the credit report contains information about someone else, possibly with the same, or similar, name.  Or it could also be because someone “stole” your identity — Social Security number and all.

Identity theft is a growing problem and yet another reason you should check your credit report to make sure that you aren't taking the rap for someone who has snatched your credit card number and made charges on it.

Nothing is more frustrating than getting to a zero balance on a credit card account, then getting billed for more charges that you didn't make. Clear that up with the credit card company right away, and you won't have to pay anything when you prove that the charges are not yours — but you want to make sure it doesn't haunt you on a credit report. For more information on preventing identity theft, go to www.privacyrights.org.

As if you need it, here's another good reason to winnow down the number of credit cards in your name. Don't carry around credit cards that you rarely use. Also…if you want to use an ATM machine, pick a personal identification number (PIN) that isn't an obvious set of digits, such as your birthday, that someone could find in your wallet. A PIN should reflect numbers that mean nothing to anyone but you — the date you fell in love with your high school sweetheart or something.

Make ALL Lenders Aware of Incorrect Items If you're sitting in front of a loan officer to discuss a car or mortgage loan and you have a bad credit report due to a mistake, tell this person about the problem before you even begin to talk about the loan. Few reports are read by humans now; they're handled almost completely by computers, and computers can't interpret. So, the burden falls upon you to show the loan officer exactly what went wrong and why the information is incorrect.

MyFICO's report comes with a form to fill out if your bad credit rating is attributed to an account that isn't yours or a disputed amount. You should also contact the credit company that put the mistake up there and get them to correct it. If they don't correct it within 60 days, or if they disagree with you and won't change it, you have the right to put in an addendum of 100 words saying why that piece of information is incorrect.

The process takes time, because the creditors have 30 days to respond to a charge of a discrepancy. As long as a charge is in dispute, that dispute will still show up on your report.

For more information on the dangers identity theft, read 5 Simple Steps to Protect Your Identity and Report Identity Theft Quickly to Minimize Damage.

0% Financing — Great Deal or Not?

With an excellent credit score, 0% financing on a new car can indeed be yours. Something to strive for?  Maybe, maybe not.

You may find you can get a better deal on an auto loan by going to your local bank or credit union.  (Better than 0%, you ask?  Read on...)
Here’s the thing: Before you sign on the dotted line, you need to be aware of the caveats (not to mention all the fine print details) associated with 0% financing. 

1. Limited Models. 0% financing is normally offered on vehicles that have a very low demand. These vehicles typically depreciate faster and have a lower resale value than higher-demand vehicles.  Another negative is that some dealers force you to choose vehicles that are in stock, so you can’t choose color or options or other features that you may want. 

No-Nonsense Way to "Lock In" the Best Mortgage Deal After you identify for the best “net” interest rate (weighing points and the rate), talk turkey with the best lenders. ASK these three questions, and get the answers in writing: 1. What is my interest rate and how long will you guarantee or "lock in" that rate from the date of mortgage approval? We recommend getting a 45- to 60-day lock-in period in case there's a delay in processing your application. 2. If interest rates fall during my lock-in period, will you give me the lower rate? The answer you want to hear is "Absolutely!" 3. How long will it take to complete the entire application process? Your application should be processed at least 10 business days before your scheduled closing.

2. Factory Rebates Don’t Apply. Generally, consumers must forfeit the factory rebate on their new vehicle in order to take the 0% financing deal.

3. Shorter Loan Periods. Most 0% offers are for short time periods — usually 12, 24, or 36 months.  As a result, your monthly payment may be higher than you had originally planned. 

4. You May Not Be Eligible. Dealers often restrict 0% financing to those buyers with immaculate credit records and/or may require a large down payment.  If you don’t qualify for 0% financing, you’ll likely be bumped up to a much higher interest rate.

In general, it’s important to carefully analyze all components of your dealer’s offers and compare them to other lenders.  Take a look at things such as annual percentage rate (APR), length of loan and vehicle cost, because ALL of those factors will affect the final price you pay.

The following illustrates the advantages of an outside auto loan at 3.99% compared with a 0% dealer loan.  When the rebate is used as a down payment on the vehicle to reduce the amount financed, the savings are clear. 

Because of that $2,000 rebate, the loan amount was knocked down to $23,000 from $25,000.   At 3.99%, interest only amounted to $1,442 over the life of the loan, saving the buyer $558 more than the buyer who took the 0%, no-rebate deal. 

Our advice? Look at ALL options, including 0%, but also different loans and rates where you can keep all of the dealer perks and incentives. 

Good Credit Gives You OPTIONS

We hope you’ve enjoyed this report...and we hope that we have convinced you that you CAN clean up your credit and save money on more things than you may have even realized. 

If you are serious about conquering your credit, you may want to read more free credit advice at Dolans.com, including:

• 10 Steps to Debt-Free Living
  
• Dolans’ Credit Clinic
  
• Fight Back Against Debt Collectors

This may sound corny, but we consider it our mission in life to help people like you not only SAVE more money — but MAKE more money, invest more wisely, and build the kind of lifestyles that only the wealthy dream about!

Imagine being able to wake up every day with the comfort of knowing you have plenty of money in the bank...zero debts...stellar credit...a rock-solid investment portfolio...a secure financial future.  It can all be yours!

Stick with us at Dolans.com and we can help you make that dream a reality.  Dolans.com is chock-full of easy to understand, proven advice you can trust on all your important money matters.  Visit us regularly and let us help you save more, conquer your debt, invest wisely and make smarter, more confident money decisions each and every day.

Ken and Daria Dolan
Dolans.com: Money Made Simple

P.S. Before we close out this credit piece… we thought that you might be interested in seeing an e-mail that we often get from our dolans.com family and our answer:

If I negotiate a settlement on the debt on my credit cards, how is this perceived by the Credit Bureaus and by banks if I attempt to purchase property in the future?

Unfortunately, credit card companies don't negotiate settlements with consumers who are able to keep up with their minimum monthly payments.

In order to settle your credit card debts for less than the full balances, you are going to have to stop paying each month and fall behind on them.

So, at a minimum, your credit reports are going to list late payments for the accounts you stop paying.

In addition, once you settle a credit card debt it will typically be reported to the credit reporting agencies as either a charge-off or as "settled for less than the full balance." As you can imagine, be seriously negative remarks will dramatically affect your credit scores.

If you do decide to settle your debts, it will take time for you to rebuild your credit in order to qualify for new loans. How long it will take will depend on many factors, including how pro-active you are about rebuilding your credit. But you probably shouldn't anticipate that you will probably be able to buy property in the next couple of years if you go this route.

Of course, if you are having trouble paying down your debts, then the alternative - continuing to chip away slowly at the debt - may make it difficult for you to qualify for loans as well. Ultimately, you need to make a careful financial choice here and not just base your decision on your credit reports and scores.

Super book:

A very dependable source of actionable information on matters of credit is available both at www.UltimateCredit.com and in an excellent book written by our friend and credit expert, Gerri Detweiler..."Reduce Debt Reduce Stress: Real Life Solutions For Solving Your Credit Crisis" available at UltimateCredit.com and on Kindle.