Business Credit Cards - A Credit Score's Best Friend

The following is an article by Edward Jamison, who frequently comes out with insightful credit score management tips, and helps consumers repair damaged credit scores. More info about Jamison follows the article...

You have probably already established personal credit...so now it is time for you to strengthen your financial fortress and safeguard your credit score by building business credit.

Business credit comes with good news and bad news. The good news is more times than not it does not get reported on your personal credit report...and the bad news is also that it does not get reported on your personal credit report. That is why it is so important that you have established personal credit before heeding this advice.

Unless you're Microsoft, chances are good that you have to sign personally in order to qualify for a business credit card. But other than the inquiry that shows up on your credit report when you apply for the business credit card, 90% of all business credit cards do not get reported on your personal credit report unless you default on the payment. If you do, then the account will get reported to your personal credit report and your credit score will be affected negatively.

Now why is this good for your credit score?

Well, the credit score only analyzes what it sees on your personal credit report. And given the fact that 30% of the credit score is derived from the ratio between your credit balance and limits on your report, not having a "maxed-out" business credit card showing on your credit report can be a very helpful thing for your score.

For example, let's assume you have $50,000 in revolving credit available to spend. Let's also assume that your credit score is a 730. If you were to go and max out these credit cards the next day, once the balance reflects on your credit report, your 730 credit score may drop to a 650. Now let's look at the same situation where you have a 730 credit score but the $50,000 you spend is on business credit cards that do not report to your credit report. Your 730 credit score will remain a 730 credit score, and you will be able to get favorable financing even though you are carrying the same debt load as the previous example where the score dropped to 650. The credit score only scores what it can see; business credit that is not being reported on the personal credit report does not affect the score whatsoever.

But it is important to pay on time - if you do get business credit that shows on your personal credit report even if you are not late, that credit is treated exactly as if it was personal credit and having the business credit will not yield any benefit to your credit score whatsoever.

I suggest building your personal credit first before you attempt to build your business credit card portfolio because you do have to have good credit being reported to qualify for these business accounts. More good news - the credit card companies do not require that you have a business license or a corporation, and the simple classification of being "self-employed" is typically enough to pass muster.

My two favorite banks for business credit cards are American Express and MBNA. A good start would be to apply for a regular American Express charge card that needs to be paid in full each month and also an American Express revolving business card like "Blue for Business" that you can pay minimum monthly payments on. MBNA has a business credit card called Platinum Plus for business, which affords a low rate and a high credit limit. American Express will not report to your personal credit report regarding your business credit card unless you are approximately 120 days late. MBNA on the other hand will report the account to your personal credit report once you become 30 days late.

The flexibility and control that business credit cards give you with your personal credit score are worth their weight in gold, and in many cases will allow you to save countless thousands in interest on your next mortgage by affording you the highest credit score possible.

-Edward Jamison, Esq.

For a limited time, get Edward Jamison's highly acclaimed Credit Scoring Educational DVD and Book "Credit Savvy" at almost 90% off the retail price. Click here to learn more.

Edward Jamison is a credit scoring expert and concentrates his law practice solely on credit related issues. Since graduating from Duquesne Law School in 1999, Edward Jamison has helped hundreds of clients dramatically increase their credit scores in order to get better rates on their loans. A true master of the credit system, when needed to, he has successfully sued the three major credit bureaus and creditors to obtain results for his clients.

Edward Jamison is the brainchild behind the product Credit Savvy, numerous computer software products, and has appeared on television shows to educate consumers on credit scoring and identity theft. Edward has also written nationally published articles on the Fair Credit Reporting Act and Credit Scoring.

Certified by the State Bar of California to give CLE seminars to California Attorneys, he is a nationally recognized speaker on the issue of credit scoring and identity theft and is the Attorney of choice for credit related issues for contacts at the following companies: Platinum Capital, Washington Mutual, California Association of Mortgage Brokers, Merrill Lynch and numerous law firms.

Identity Theft Report

3.6 Million households discovered that at least one member had been the victim of identity theft during the previous 6 months.

Department of Justice-Special Report - April 2006

Identity theft is the crime of obtaining the personal or financial information of another person for the purpose of assuming that person's name to make transactions or purchases. It has become the most common crime in America and it happens every day to good, hard-working individuals all over the country.

It can happen to anyone, at anytime ... and it can happen to you too!

In the blink of an eye, unscrupulous identity thieves can gain access to your personal and/or financial information and ruin the good name you've worked your whole life to establish for yourself. And If you're unprepared and don't recognize that the crime has taken place, months or even years worth of damage can accumulate before being noticed and action can be taken to resolve the problem. The effects can be devastating, putting your and your family's well-being in jeopardy.

No one is safe from Identity theft ... and regardless of what steps you take to prevent it, there is no guarantee you will not become a victim.

The means by which identity thieves obtain an individual's personal or financial information are so numerous that it is impossible to guard against them all and the possibility of becoming a victim always exists for everyone. But precautions can be taken to reduce the chances and safeguards set in place to minimize the effects in the event you become a victim of identity theft. Reduce the chances ... DETER, DETECT, DEFEND!

Here's some good news... the information contained in this report can reduce your chances of becoming a victim of identity theft ... and minimize the effects if you ever do. By taking just a few minutes right now, you can learn how to DETER, DETECT, and DEFEND against identity theft! Read on to learn what you'll need to do before and after the crime.
In the new Deter, Detect, Defend campaign, The Federal Trade Commission has broken the process of dealing with identity theft into 3 helpful phases, and outlined steps to be taken in each.

DETER - Deter identity thieves by safeguarding your information

Shred financial documents and paperwork with personal information All bills and account statements, credit card offers, and any other pieces of mail that contain your personal or financial information should be shredded and not just thrown in the trash.

Protect your Social Security number Don't carry your Social Security card in your wallet or write your Social Security number on a check. Give it out only if absolutely necessary or ask to use another identifier.

Don't give out your personal information Whether on the phone, through the mail, or over the Internet don't reveal your personal information unless you know who you are dealing with. Check with the Better Business Bureau if you have questions about a company's legitimacy.

Never click on links sent in unsolicited emails If it is a company you know and have an existing relationship with, type the web address you know directly into your web browser. Use firewalls, anti-spyware, and anti-virus software to protect your home computer. Keep them up-to-date to guard against the latest threats.

Don't use obvious passwords Common and simple passwords like your date of birth, your mother's maiden name, or the last four digits of your Social Security number are too easy for a thieve to guess.

Keep your personal information in a secure place at home This is especially important if you have roommates, employ outside help, or are having work done in your home.

DETECT - Detect suspicious activity by routinely monitoring your financial accounts and billing statements

Be alert to signs that require immediate attention:

• Bills that do not arrive as expected
• Unexpected credit cards or account statements
• Denials of credit for no apparent reason
• Calls or letters about purchases you did not make

Inspect:

• Your credit report. Credit reports contain information about you, including what accounts you have and your bill paying history.
• The law requires the major nationwide consumer reporting companies-Equifax, Experian, and TransUnion-to give you a free copy of your credit report once a year upon request.
• Your financial statements. Review financial accounts and billing statements regularly, looking for charges you did not make.

DEFEND - Defend against Identity Theft as soon as you suspect it

Place a "Fraud Alert" on your credit reports and review the reports carefully A Fraud Alert tells creditors to follow certain procedures before they open new accounts in your name or make changes to your existing accounts. The three nationwide consumer reporting companies have toll-free numbers for placing an initial 90-day fraud alert; a call to one company is sufficient. Placing a fraud alert entitles you to free copies of your credit reports. Look for inquiries from companies you haven't contacted, accounts you didn't open, and debts on your accounts you don't recognize and can't explain.

Close accounts Close any accounts that have been tampered with or established fraudulently.
Call the security or fraud departments of each company where an account was opened or changed without your consent. Follow up with copies of supporting documents.
Use the ID Theft Affidavit to support your written statement. Ask for verification that the disputed account has been closed and the fraudulent debts discharged. Keep copies of documents and records of conversations about the theft.

File a police report File a report with law enforcement officials to help you with creditors who may want proof of the crime.

Report the theft to the Federal Trade Commission Your report helps law enforcement officials across the country in their investigations.
Online: www.ftc.gov/idtheft
By phone: 1-877-ID-THEFT (438-4338)
By mail: Identity Theft Clearinghouse, Federal Trade Commission, Washington, DC 20580

More Ways to Protect Yourself Sorting through credit card offers and other unwanted mail may be frustrating and seem like a waste of time, but think twice about just throwing them in the trash ... unless you don't mind increasing your chances of becoming a victim of identity theft. "Dumpster Diving" is a technique where identity thieves rummage through your trash in search of bills, credit card offers, and other pieces of mail that contain your information. It is just one of the numerous ways your personal and/or financial information can be stolen. You won't even know it's happened until one day you get a notice from a collection agency for unpaid bills in your name, with a company you've never heard of, in a city and state you've probably never been in!

Eliminate the Source The best way to deal with a problem is eliminate the source. So if you didn't have those credit card offers and other unwanted junk-mail coming in, you won't have to worry about how to handle them. Guess what? With a quick phone call, letter or online request ... you can save time and energy, as well as give yourself additional protection against identity theft. Here is some information that will help you eliminate the source of the problem.

Credit Card Offers The credit bureaus offer a toll-free number that enables you to get out of having card offers mailed to you for either five years...or permanently. Just phone 1-888-5-OPTOUT (567-8688). You will be prompted to provide some personal information, including your home telephone number, name, address, and social security number. All information provided is confidential and is used only to process your request. And if over time you get lonely for some junk mail and decide that you want to receive the card offers again, simply phone the same number and you will be added back on the list.

"Junk" Mail The Direct Marketing Association has a Mail Preference Service that allows you to reduce the amount of commercial advertising mail that you receive at home for five years. There are several ways to have your name added to the "do not mail" list. The quickest and most efficient way is to hit the Do Not Mail Website. From the website, you can enter the required information, print the letter, and mail the letter to the address listed below. Or for a nominal fee of $5, enter the required information and hit the "register online" button.
Don't want to enter your information online? No problem, just mail a letter that includes a brief paragraph requesting to be excluded from the marketing lists, your name - be sure to list all name variations including, Jr, Sr, etc. - current and previous address, and signature to:
Direct Marketing Association Mail Preference ServicePO Box 643Carmel, NY 10512

Important note: You will not stop receiving mailings from organizations that are not registered with the Association's mail preference service, but at least this measure will greatly reduce the amount of advertising mail you receive.

Email The Direct Marketing Association also has an Email Preference Service that allows you to get out of receiving unsolicited commercial email for five years. Visit Do Not Email Website. Enter up to three email addresses and a confirmation will be sent to each email acknowledging the request. Replying to each email confirmation within 30 days is required by DMA, or the email address will be deleted and the request will not be processed. Unfortunately, this measure will not eliminate most "spam" email, but again, will at least help to reduce the amount of junk email you may be receiving.

Phone It's so well worth the time - if you haven't done it yet, do yourself and your family a favor, and get on the National Do Not Call Registry. Wouldn't it be great that knowing every time the phone rings...it's actually someone calling for you or your family, not someone out to sell you something? Protect yourself from annoying telemarketers and phone solicitations by putting your home number on the Do Not Call list via this link: Do Not Call List Removing your information from the above lists will not only save you a lot of time and frustration, it will also help protect you against identity theft.

What if it happens to you?

Knowing what to do once the crime has been committed is crucial in minimizing the damage and putting your accounts and credit status back in good-standing as quickly as possible. If you become a victim, just knowing what steps to take can save you from many wasted hours and dollars when dealing with the situation. If you or someone you know has been a victim of identity theft and would like information about how to erase the effects of identity theft, ask me for a free copy of - CREDIT SAVVY - "How To Erase the Effects of Identity Theft in 10 Days" - written by Edward Jamison. Mr. Jamison is the founder of Jamison Law Group, P.C., and is an attorney who specializes in consumer credit, identity theft and numerous software products tailored to the mortgage industry. Jamison is a nationally recognized expert on credit scoring.

The Federal Trade Commission offers a more in-depth report including the explicit steps to take in the event you are a victim of Identity Theft.

Call us for a complete review

Our team is here to help you... we can do a complimentary identity theft check for you today, by pulling your credit report and analyzing each line to ensure no fraudulent tradelines have been opened or activity has taken place. So please call our office or reply to this email, and we'll get started right away.

Where to find more information:

http://www.consumer.gov/idtheft/index.html
http://www.ojp.usdoj.gov/ovc/help/it.htm
http://idtheft.about.com/
http://www.privacyrights.org/index.htm
http://www.ncjrs.gov/spotlight/identity_theft/facts.html

created with help from Mortgage Market Guide

Dealing with Old "Bad" Debt

Credit Line Financial provides a great newsletter this month with advice for understanding and dealing with credit collectors and bad debt in general. There is a huge industry in trying to collect on old debt, and what might surprise the consumer is how giving in to their aggressive tactics might actually harm your credit history... And some of these collectors are crossing the legal and ethical "do not pass" line (shocking!) in an effort to shake you for a few bucks. This is a good piece to review to keep you on your toes and aware of your credit health.

One note - in the finance business, we have a different definition for "bad debt" than in the credit business. Read the newsletter for an understanding of what they are talking about... In mortgage planning and financial management in general, "bad debt" generally refers to costly or prohibitive debt, whereas debt with low cost, or tax advantages is considered "good debt" to have. Its benefit is that it allows you to pursue other financial objectives through the power of leverage without weighing you down with the costs of borrowing. Contact me if you want to learn more.

Raise Your FICO Score 100 Points in 45 Days

Many individuals today have blemishes on their credit reports. Whether it is from a dreaded case of Identity Theft or not being punctual about paying bills on time, these credit mishaps can cost you thousands of dollars in interest expense if not corrected. Some simple things can be done to improve a credit score as much as one hundred points in forty-five days…


Understanding Credit

What makes up a credit score? A credit score is made up of five components. Payment history (35%), balances carried (30%), credit history (15%), mix of accounts (10%), and inquiries (10%).

Payment History is based on paying bills as agreed and on time. The majority of the payment history is based on the most recent six months and the highest weight is on the highest pay history. For example, a mortgage loan would be rated first and then the next biggest payment, whether it is an auto loan or credit card with a high payment, would rate next.

Balances Carried is rated based on the balance to limit ratio. Being that this component makes up 30% of the credit score, it is best to keep the balance to limit ratio low. For example:

Let’s say a borrower has two credit card accounts, one Visa with Citibank and one Visa with Bank of America, and both accounts have credit limits of $10,000 but, one is maxed out and the other has a zero balance. If the credit accounts are left as is, it will result in a lower credit score because balance to credit limit ratio is 100% for the one card.

On the other hand, if the borrower spread the balance between the two accounts and owed $5,000 on each, the balance to credit limit ratio would only be 50% resulting in a positive affect to the credit score and would create a higher credit score.

It is important to note, mortgage and / or installment loans do not require the same approach as they have less of an impact with the balances carried component.

Credit History simply means the longer the account has been open, the higher the credit score. However, to achieve the higher credit score the accounts need to be paid as agreed.

Additionally, many people have been advised to close accounts that they never use. Not the case! This can actually have a negative impact on the credit score. Never close old credit accounts, especially if the accounts have a long history.

Mix of Accounts. The ideal credit score is made up of both installment and revolving accounts and looks like this:

-Mortgage Loan
-Auto Loan
-3-5 Credit Cards (Or More)

Helpful Tip Additionally, when obtaining an Equity Line of Credit apply for a loan amount greater than $40,000. If the HELOC is greater than $40K, it will fall into the mortgage category. If the HELOC is equal to or less then $40K, it will be classified as a revolving account. Max out the HELOC where the maximum line amount is below $40K, and it will have a negative impact on your credit score.

Inquires have several factors to consider. First, if shopping around for a mortgage or a car, borrowers have forty-five days to complete their shopping spree. If all credit reports are pulled within a forty-five day period, it will only count as one inquiry. For example, if a borrower applies with one Mortgage Company and decides to switch to another mortgage company both inquiries will only count as one as long as the second mortgage company pulls the credit report within 45 days. However, if the borrower is shopping for both a mortgage and an auto, one inquiry will count for each.

Each inquiry made averages about five points. After ten inquires per year, inquires will no longer affect the score.

Several types of inquiries do not affect the credit score at all. When applying for a job, a job related inquiry does not affect the score. When submitting an application for insurance or to start a new utility account (e.g., phone, cable, etc.). When a lender automatically reviews your credit account to confirm that other accounts have been paid on time and credit limits are not maxed out. When an individual obtains a personal credit report through http://www.annualcreditreport.com/, and when promotional pre-approved credit card offers are received in the mail.


Making Corrections

Blemished credit can be very costly and can result in higher interest rates on mortgage loans, auto loans, credit cards, and insurance premiums. By taking the following steps to improve your credit score, you could save hundreds even thousands of dollars over the term of a loan.

Here are five simple steps to raise your credit score 100 points in forty-five days. 1) Pay past due accounts, 2) get rid of late payments, 3) have credit limits increased, 4) become an authorized user, and 5) do not close old accounts. Let’s take a look at each.

Pay all accounts that show a past due balance on your credit report. Past due accounts do not necessarily mean 30 days late, past due accounts can be 1 day late and show as past due on a credit report. This can severely hurt a credit score. Pay all past due accounts as quickly as possible to increase the credit score.

However, past due accounts do not include judgments and collections. It is best not to pay judgments or collections when applying for a mortgage. Wait until the close of escrow, if possible, and pay them at closing. Paying judgments or collections could create a negative impact on the credit score as the “recent activity” date will update if the account is paid and the collection will appear to be more recent than it may have been which will cause a negative impact with the credit score.

Have late payments removed by contacting creditors and requesting to have any late payments removed. If your first attempt is not successful, try again and work your way up the ladder to a manager. Be persistent, as each time you phone a new representative will answer the phone.

If you are successful and the creditor agrees to remove the late, be sure to request a letter. The letter needs to be on the company letterhead of the creditor, needs to be signed by an employee and the letter must document your name, address, account number, and the specific late payment or late payments that should be removed.

Additionally, be sure to obtain the name of the representative that you spoke with as well as a contact number and extension, just in case you do not receive the letter and need to follow-up.

Increasing your credit limits can increase your credit score. Every six months or so call each creditor and request that each increase your credit limit. Be sure to request that the increase be made based on your great credit history. If the creditor insists that a credit report must be pulled, think twice before you agree as this will count as an inquiry and will have a negative impact on your credit report.

Become an authorized user on a relative or friend’s credit account. But, if they agree, be sure to confirm that the account has been paid on time and the current balance to limit ratio is below 10%. If the account has late payments or has a high balance to ratio limit, it will create a negative impact on your credit report.

Be sure to tell your relative or friend that there is no risk as the credit card is mailed to the account holder and you cannot use the card unless they provide you with the card.

Do not close accounts even if you have heard that old accounts that you no longer use should be closed. Keep accounts open and use accounts that have become inactive periodically. However, if you charge on the account be sure and pay the balance in full as soon as the bill arrives. Purchasing a tank of gas and paying it off will activate inactive accounts and report them current and in good standing. Closing accounts can actually lower your credit score, especially if the account has a long credit history.


Summary

To achieve a high credit score be sure and do the following:

-Borrow money when you do not need it, when you do need money creditors may not give it to you.

-Keep the balance to limit ratio low; do not max out credit cards. If you have to use credit cards, be sure to spread it over several accounts.

-For a quick boost to your credit score, when a creditor removes a late and provides a letter, request a credit rescore. For a fee, in just a few days, your credit score will increase and this could help you obtain a better interest rate.

-Never payoff a judgment or collection when applying for a mortgage loan. Try to negotiate that the account will be paid in escrow.

Increasing a credit score by just 10 points will save you $100,000 in interest on a $500,000 mortgage over the 30-year term.

Overall, it pays to invest the time to clear up the blemishes on your credit report. If you would like further help in restoring your credit, please contact us and ask for a referral to a credit repair professional.

The John Glynn Team * New Century Financial / Home123 * 201 Mission #1300 * San Francisco CA 94105
http://johnglynn.home123.com

created with help from Edward Jamison Law Group