Worshiping At The Altar of the FICO

This past weekend, the Today show on NBC, had a story entitled, "7 ways to improve your credit score." It is clear from not only the title, but also their guest that they are worshiping at the altar of the FICO score.

So what are the 7 tips?

1. Fix your credit report
   

The fastest way to raise your score is to fix errors on your credit report. Go to www.annualcreditreport.com to get a free report from each of the three credit bureaus every 12 months. It’s important to fix mistakes on all three credit reports. You have a separate credit score based on each bureau’s report, so your scores could be very different if one report contains errors.
- Kiplinger’s Personal Finance magazines, Kimberly Lankford on NBC's Today Show


I personally agree that if there is errors on your credit report, they need to (and must) be removed. I am a big proponent of checking all 3 credit reports once each year.



2. Pay your bills on time
   

   About one-third of your credit score is based on your payment history. If you’re having trouble paying the total balance, pay at least the minimum by the deadline. Making that deadline is more important to your score than the amount you pay (although the more you pay off, the less interest you’ll owe). If you do miss the deadline, pay up as soon as possible, the later you are, the more you’ll hurt your score.
   - Kiplinger’s Personal Finance magazines, Kimberly Lankford on NBC's Today Show
   

   This is a commonsense no brainer. If you are late paying your debts, utilities and other bills, it is going to negatively affect your credit. Always, let me say that again, always pay your bills on time.
   
   
   
3. Keep your balances low
   

   Another big part of your score is the share of available credit you’ve used. Lenders get worried if it looks like you’re maxing out your cards. Keep card balances below 25 percent of the credit limit, 10 percent is even better. It’s the amount you charge that counts, even if you pay the balance in full every month.
   - Kiplinger’s Personal Finance magazines, Kimberly Lankford on NBC's Today Show
   

   If we are going to be debt free, why do we need to keep low balances? This is one area, where this lady and the banks are trying to keep you in debt, by trying to tell you closing the account will negatively affect your credit. The only reason banks want you to keep any balance at all, is so they can relieve you of your hard earned money and make themselves richer.
   
   
4. Don't close old accounts
   

   Keeping old accounts with a good record can help because the age of your oldest card and the average age of your cards are key elements of your score. Closing accounts also lowers your overall credit limits, which makes it look like you’re closer to maxing out your available credit. If you do want to close some accounts, especially ones with high annual fees, close only one every few months and don’t close any accounts within six months of applying for a loan.
   - Kiplinger’s Personal Finance magazines, Kimberly Lankford on NBC's Today Show
   

   I pretty much answered this one in my last response. As Dave Ramsey has repeatedly said on his show, the only thing a good FICO score shows is that you love debt. If we are going get out of debt, we don't need a score at all. Plus, if you want to get a mortgage and don't have credit, you can still get that mortgage. Mortgages being the only debt Dave Ramsey, backs away from being critical on, can be obtained by using a mortgage broker that uses manual underwriting.
   
   
5. Pay off old debts
   

   Even a small library fine or disputed electric bill can crush your credit score if the debt goes into collection, dropping a high score by as much as 100 points. Now that more municipalities and utilities are sending small, old bills to collection agencies, I’ve been hearing from many more readers whose scores dropped significantly because of a very old bill for less than $100. Even if you pay off the bill after it’s gone to collection, the damage is already done. Negative information generally remains on your credit report for up to seven years, but the impact on your score lessens through time. Don’t lose track of small charges that can come back to haunt you, and pay the bills off quickly before your score suffers.
   - Kiplinger’s Personal Finance magazines, Kimberly Lankford on NBC's Today Show
   

   Yes, I agree. Going back and paying off debts that may have gone to collection is not only a legal obligation but us a moral one, because we are to honor our agreements.
   
   
   
6. Order your credit score
   

   You can’t get your score for free, but you can order it when you get a free copy of your credit report at www.annualcreditreport.com. Or you can go to www.myfico.com and get your score directly from Fair Isaac, which created the popular FICO score. Some credit bureaus also offer their own versions of credit scores, which can give you a general idea of how your record stacks up, but most lenders use the FICO score when setting your rates.

   
   
   I have even heard Dave Ramsey talk on his radio show about going to www.myfico.com and checking his FICO score. In his case it is 0 on all three credit bureaus. Meaning he doesn't have an "I love debt score," because he doesn't.
   
   
   
7. Don't ignore your score
   

   Buying or refinancing a house is the biggest reason to be concerned about your score. But your credit score also affects your credit-card rates and terms, car-loan rates and auto and homeowners insurance premiums. Insurers found that people who have low credit scores are more likely to have insurance claims, and your score can have a big impact on your premiums in most states. Potential employers and landlords may also check your record. Don’t worry about micromanaging your score, you’ll usually look good with anything above the high 700s. But your score can affect your personal finances at any time.

   
   OK, I have gave my thoughts on this. Unless you are going to make the banks richer and go into debt again, I strongly urge you to ignore your score. You can get a mortgage by using a manual underwriter rather then a bank that leans purely on the FICO score.
   
   With that said, I do know my scores. Last Month, the last month WaMu checked my credit from the old Providian Credit Card that i just paid off, they put me at a 688 with TransUnion.
   
   However, on April 14th of this year I logged into and got all 3 FICO's. I must say there is quite a bit of difference and I haven't been late on anything recently nor have I applied for any new debt.
   
   *** TransUnion 619 *** Equifax 550 *** Experian 624 *****
   
   Two of the three did however, have a public record on them that even though it was paid and the lien released had not been removed from my credit reports. In fact, the state actually just sent me the court papers dated some 3-years after they were to have been filed. Go figure.
   
   

Finally, Suze Orman who most recognize as a person who worships at the altar of the FICO score, has a product called, the Suze Orman FICO Kit Platinum that is available when you sign up with myFICOscore.com. The video below is from VideoCreditScore.com, and is an intereting review of the product. While I certainly to hold to the belief of fixing your "I love debt score," unless you want to put yourself into debt further (or again as the case may be), it is certainly worth viewing.






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Suze Orman on Oprah and NBC this Week

Last night, Suze Orman was on both Oprah and the NBC nightly news.


On Oprah, she discussed the rumored recession we are in.

Money expert Suze Orman says recessions are a natural part of economic life. "People should be concerned more than worried," she says. "This is not the first time that we have had a recession. A recession is nothing more than a contraction. I'd like you to think about it like your breath. You breathe, you expand. And then you have to contract in order to have breath, in order to have life. Money is the same way. It has to expand and it has to contract for the economy to have life."

Suze says recessions will come and go—so it is important to be prepared. "People think, 'The economy did this to me. When is the economy going to change?' As if the economy is going to save them. And what have I always said? Only you can save yourself. Nobody can ever save you."
- Suze on Oprah

Suze also reiterated something I have said repeatedly by blaming consumers for wanting something for nothing. Consumers currently tend to want to own material possessions and live for now. You could see this in some of the questions asked by viewers and the studio audience. Almost every question, dealt with people wanting to spend their future now.

Suze Orman was on NBC’s Nightly News last night to, and is expected every night this week. She and Brian Williams mentioned how the current economic crunch times are especially tough on those with “fixed incomes.”

Most people define “fixed incomes” as the retirement incomes of folks in their 60s and older, and I am sure that was her meaning as well. Well let me tell you, I would love to have the income of those on "fixed income." Compared to the working poor, it is fixed pretty high. If the economy is especially difficult on them, it would be even more difficult for the working poor.

I won't be able to see her tonight, because of work, but it will be interesting to hear what she will have to say tonight. Also, I missed last nights segment on CBS on debt. It is amusing to see two network's doing a series on debt during the same week. Wonder if ABC is doing one to. Because of work, I won't be able to see CBS tonight, or most of the week, either.

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"Christian Money Management" Verses Secular Money Management

Anyone who has been reading my blog for any length of time, knows that I hate credit and am a follower of Christian or somewhat Christian money management systems. Especially since, I am a churchgoer.

What Is Christian Money Management?


Christian money management consists of training people to manage their money better, using Christian principles. This is an effective way to reduce misery, save marriages, and even prevent spousal abuse.

It is also of great spiritual importance because how you use your money is how you express your choices in all areas of life, not just church activities.

For example, if you can train yourself to wait to buy something you want, you are also more likely to wait for sex. IE: you are less likely to participate in premarital or extramarital sex.

There are two people or organizations that are considered leaders in Christian money management. A third person is much more about the money and doesn't offer any free information on his website. Of course all three sell their books and tapes as well as seminars, but the two big ones offer "free" advice via their radio programs and websites.

The original idea of financial training at church was vigorously promoted by the late Larry Burkett, whose Crown Financial Ministries is still the leader in the field. Dave Ramsey also has a loyal following; he is a bit more of a financier, and less of a spiritual adviser, than Burkett.

The third, Ron Blue is the founder of the largest Christian CPA firm in the world, who retired in 2003 and started what is now known as Kingdom Advisers.

How is "Christian money management" different from anybodyelse's money management? To a large extent, it's not. What works, works. However, four Christian doctrines loom very large:

God owns everything and we are just His stewards - Put simply, all of our property isn't really our own.

Higher standard of Honesty - We are held to a higher standard of honesty because God is always watching. Ethics isn't just whatever you can get away with.

Marriage is a permanent commitment - I know this doesn't sound like a financial issue, but it is. Secular counselors such as Suze Orman often advise couples to break up when they disagree strongly about money. For the Christian, that is not an option. Nor can marriage be viewed as temporary in the first place

Money does not buy happiness - There is much to be said for the old-fashioned virtue of contentment, the art of realizing that if you aren't happy now, you still won't be happy if you simply acquire more money or possessions.


Who Are the Secular Money Management People


There are a large number of advisers that would fall into this category. However, there are some leaders. Two of which have radio or TV shows (Suze Orman and Clark Howard). One which sells his tapes via radio commercials (John Cummuta). Another, that might be considered a leader, has appeared numerous times on Oprah. His name is David Bach.

All of these people teach reducing your debt load. In addition, they also all teach saving for retirement. However, there are some big differences.

The ones that tend to be Christian all tend teach paying cash for everything. Even business debt is to be avoided by the Christians. One of the secular teachers, John Cummuta, teaches this for personal debt but not business debt.

I personally like Cummuta and his teachings because they so closely resemble Dave Ramsey's. However, as I said there are some differences. Cummuta for example teaches debt reduction mathematically. IE: largest interest rate first.

Whereas, Dave Ramsey teaches that if we were thinking mathematically, we would never have gotten into debt in the first place. It is this reason, that he teaches a psychological method of paying the smallest debt first, regardless of the interest rate. The reason is paying off a debt relatively quickly will motivate you to move on towards your next debt. Both teach paying as much as you can on the first debt, then adding that payment to the payment of your next debt until you are completely debt free.

Wow, maybe I should place John with the Christian Advisers. However, even though, he tends to quote scripture like Dave Ramsey, he isn't considered in most Christian circles as a Christian Adviser.

What's wrong With Suze, Howard and Bach?
To start with Suze Orman worships at the alter of the FICO score. While she does encourage people to get debt free, she is concerned with what your FICO score is. The reason, she believes in, like most of the secular money people, "good debt." She believes in car and home loans, if you can afford it. To her credit, most of the people calling into her show tend to be told they can't afford a loan, at least for something as big as they are wanting.

For Clark Howard, I am not very familiar with him. I don't get his radio program in my area, so I can't say to much about him. However, I have seen his website and one big issue I have with him is he has an article teaching you to use credit cards rather then debit.
The good thing, he seems to be great at alerting his listeners and readers about scams. That is one area that no one can be to careful in. For financial advice, I would suggest, with this limited knowledge of him, avoid Howard. However, listen to his advice when it comes to his scam warnings.

As for Bach, I have so many problems with him. I have never heard him say anything about getting debt free. He teaches reducing your credit card debt, moving everything to lower interest cards, but never close those low interest cards. Additionally, he thinks there is actually something called "good debt." Avoid this guy, he will not seriously help the vast majority of people of have trouble handling debt. He might be ok, for the very small percentage of people who can manage to pay their credit cards in full every month. However this is not most people, and is not most of the readers of this blog.

I hope this post explains why I tend to follow Dave Ramsey, John Cummuta and to a certain extent Crown Financial. I know it only scrached the surface and didn't get into as depth as I would have liked. But then the post would have been extremely long, and very few people would have even finished reading it.

So what did you think? Did this post help you? Do you have anything to add? I want to hear from you.

Suze Orman Endorses John Cummuta's TDIW

With my blogiversary only 12 days away. I thought I would revisit some of my most popular posts in the past year. In some cases most controversial posts as I count down to the big day. Today, I am revisiting one of those controversial posts from June of last year.

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Using John Cummuta's Transforming Debt Into Wealth Course, you'll discover (as I did) "saved money" while you are in debt is really an illusion perpetuated by the very institutions you owe money to. Here's a clue: Who does it profit more to keep your money in a bank at less than 1%? You? Or your bank?

Rapid Debt Payoff is catching on in some enlightened financial circles:

sources:
http://journals.aol.com/brujonte/TheFredBlog/entries/357

and on CNN & fortune Magazine:
http://money.cnn.com/magazines/fortune/fortune_archive/2003/06/16/344218/

"Everyone should be aggressively paying off MORTGAGE debt as fast as possible."
- Suze Orman, financial planning self-help guru and author of six best-selling financial self-help books

Suze has always advocated paying off credit cards. Now she includes your mortgage, highlighting the devastating impact of debt on ordinary families.

Pay off all of your debt in 5-7 years using the money you already make. Find out why financial guru and best-selling author, Suze Orman, is advising her millions of followers to "Pay Everything Off as Fast As Possible!"
Free Lesson - Debt Freedom Course

As those who have been following my blog since I began a couple months ago (March 25, 2006), know that I started off hard touting John Cummuta. Since then I have brought in Dave Ramsey, and have tried to merge the teachings of two of the greatest financial teachers I have ever heard. Cummuta makes since when he talks about eleminating debt before building your savings. However, Ramsey also makes since in having that $1000 emergency fund in place first, so that you don't use the credit card at all anymore.

"Today we live in a world with more unknowns than I have ever seen in my life," she says, sitting in the lobby of the CNBC building in Fort Lee, N.J. Orman tends to infuse even one-on-one conversations with oratorical intensity. "Having talked to literally tens of thousands of people, I can say that what is good for America--and not just what is good theoretically, or for some financial wizards, but what is good literally--is not having credit card debt, not leasing a car, and not having mortgage debt. This is not good for a human being. It's just not. All these financial shows spending all their time telling people what to do with their money ..." She waves her arms toward the rest of the CNBC studio. "Well, get out there and talk to people like I do. The truth is, they haven't got any money. Who has money to invest anymore? Invest what?" - Suze Orman

I am glad to see Suze come on board and recomend paying off all your debts including the mortgage. I think it's time that I look up her program again on CNBC and give it a watch to see what she has to say. It's been to long since I have watched her.

"It may be fabulous for you to get a tax write-off. But if something happens to you, ladies and gentlemen...I promise you one thing: Uncle Sam is not going to let you move in with him." - Suze Orman

Blog Madness: Top 64 battle for Number 1

OK, so Money blog Site is conducting the Personal Finance blog version of March Madness. Becoming and Staying Debt Free has made it into the top 64 and now the battle is on for number one. This site is listed in what money Blog Site calls region 2. Voting is conducted via the appropriate posts. IE: since my blog is in region 2, your votes for this site would be on the region 2 post. Please follow the link below and vote for Becoming and Staying debt Free. The post he links to is the controversial post from last year about Suze Orman endorsing John Cummuta.

Please Click Here To Vote for Becoming & Staying Debt Free in Blog Madness

Suze Orman: Pay Off Mortgage Early; Never Lease A Car

I am a little hesitant of Suze's mortage advice, but it does somewhat lean towards what Dave Ramsey and John Cummuta teaches. I just wish it was a little more hard hitting, like the other 2. However, her advice on vehicles, absolutely hits the mark.

the following excerpt comes from Larry King Live - April 17, 200

KING: Victoria, British Columbia, hello.

CALLER: Hello, Suze and Larry.

KING: Hi.

CALLER: I think this is a pretty simple question. I'll get into more detail if you need it. Is it more advantageous for me to pay down my mortgage, thereby investing in myself, or to invest in mutual funds?

ORMAN: It will depend on what makes you feel more powerful. For many women out there, they get extreme power knowing that one day sooner than later they're going to own their home outright. I happen to be one of those women who -- I like knowing my house is my house, no matter what happens, nobody can take it from me.

So I don't think it has to be, however, an either/or situation.

Do you know if you have a 30-year mortgage and you just pay one extra mortgage payment a year, you will change a 30-year mortgage to 22 or a 15-year mortgage to 12. You could do that at the same time that you're invested in mutual funds.

Please don't look at your money as if you have -- this is all you can do. You can only do this, you can only do that. Do a little of it all. Diversify and pay down mortgage and diversify into a mutual fund as well. KING: Is the same true, you should buy a home that's about equivalent of if you have -- if you make $100,000 a year, you can buy a $400,000 home? Is that about right?

ORMAN: That's what they say.

KING: What they used to say. Is that still true?

ORMAN: What they say is still true. However, I have to tell you I'm not so sure I believe what they say.

KING: What is a good rule of thumb?

ORMAN: You figure out what you can afford truthfully after taxes. You do the calculations. What you can afford after taxes, after you want to live a nice lifestyle, after your vacations, after whatever it is that you want. How much money do you have left over to put toward real estate? Otherwise we become cash-poor and we start to hate the property that we bought.

KING: Is it ever intelligent to live in an apartment?

ORMAN: It absolutely is. There are some areas right now that are so overextended in real estate prices. So between the property taxes and the mortgage payments -- and most people don't have 20 percent to put down. And when they don't have 20 percent to put down, they're going to pay something called PMI, or private mortgage insurance. When it's all said and done, they totally have no money left to do anything. But yet, they can have a nice apartment that's at one-quarter. That's to live in an apartment. But save the money so that you can do it one day.

KING: If you can pay off your car, should you?

ORMAN: Absolutely. And you should not, in my opinion, in most cases, be leasing a car.

KING: Really?

ORMAN: Yes. It's, you know, it's -- a car. And what is this thing about having a car for three years and getting another one? If you have to finance a car, fine. But after you've financed it, keep it. There's nothing wrong with keeping a car for 10 years, 13 years if you take good care of it. And then take that money and invest it in your future, you'll get a lot further mileage out of that than you will your car.

KING: We'll be back with more moments with Suze Orman, the bestselling author of "The Courage to Be Rich." Don't go away.

Suze Orman Endorses John Cummuta's TDIW

Using John Cummuta's Transforming Debt Into Wealth Course, you'll discover (as I did) "saved money" while you are in debt is really an illusion perpetuated by the very institutions you owe money to. Here's a clue: Who does it profit more to keep your money in a bank at less than 1%? You? Or your bank?

Rapid Debt Payoff is catching on in some enlightened financial circles:

sources:
http://journals.aol.com/brujonte/TheFredBlog/entries/357

and on CNN & fortune Magazine:
http://money.cnn.com/magazines/fortune/fortune_archive/2003/06/16/344218/

"Everyone should be aggressively paying off MORTGAGE debt as fast as possible."
- Suze Orman, financial planning self-help guru and author of six best-selling financial self-help books

Suze has always advocated paying off credit cards. Now she includes your mortgage, highlighting the devastating impact of debt on ordinary families.

Pay off all of your debt in 5-7 years using the money you already make. Find out why financial guru and best-selling author, Suze Orman, is advising her millions of followers to "Pay Everything Off as Fast As Possible!"
Free Lesson - Debt Freedom Course

As those who have been following my blog since I began a couple months ago (March 25, 2006), know that I started off hard touting John Cummuta. Since then I have brought in Dave Ramsey, and have tried to merge the teachings of two of the greatest financial teachers I have ever heard. Cummuta makes since when he talks about eleminating debt before building your savings. However, Ramsey also makes since in having that $1000 emergency fund in place first, so that you don't use the credit card at all anymore.

"Today we live in a world with more unknowns than I have ever seen in my life," she says, sitting in the lobby of the CNBC building in Fort Lee, N.J. Orman tends to infuse even one-on-one conversations with oratorical intensity. "Having talked to literally tens of thousands of people, I can say that what is good for America--and not just what is good theoretically, or for some financial wizards, but what is good literally--is not having credit card debt, not leasing a car, and not having mortgage debt. This is not good for a human being. It's just not. All these financial shows spending all their time telling people what to do with their money ..." She waves her arms toward the rest of the CNBC studio. "Well, get out there and talk to people like I do. The truth is, they haven't got any money. Who has money to invest anymore? Invest what?" - Suze Orman

I am glad to see Suze come on board and recomend paying off all your debts including the mortgage. I think it's time that I look up her program again on CNBC and give it a watch to see what she has to say. It's been to long since I have watched her.

"It may be fabulous for you to get a tax write-off. But if something happens to you, ladies and gentlemen...I promise you one thing: Uncle Sam is not going to let you move in with him." - Suze Orman

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