3 Steps You Must Take To Recover From Credit and Financial Hell

Changes 3 Steps You Must Take To Recover From Credit and Financial Hell

It’s been 3 and half months since I started the Amateur Consumer Blog and created the Better Credit Blueprint video series.   But it’s been 2 year since I started this long and arduous road back from credit and financial hell!  As I have shared my stories and experiences of being pushed off the financial grid and being treated as “less than”, I discovered from those very experiences that there are 3 steps you must take in order to recover from credit and financial hell!

Step #1: Change Your Mindset

If you want to change your life, you have to start by changing your mindset first because your mind will decide what type of changes you can, and will make in your life. As I said in my very first blog post; you have to come to the realization that “it is what it is” and there is nothing you can do about the road behind you.  But there is definitely something you can do about the road ahead of you and that’s where you need to understand that you can’t change your circumstances with the same mindset that helped get you into them in the first place.  Truly, it will become what you make it!

One of the best blog posts I have read recently was from the Marc and Angel Hack Life Blog titled “10 Habits You Must Quit to Be Happy”.  Let me share habit #6 from that list:  Quit talking down to yourself.

Nothing will bring you down quicker than berating yourself.  The mind is a superb instrument if used right, but when used incorrectly, it becomes very destructive.  Be aware of your mental self-talk.  We all talk silently to ourselves in our heads, but we aren’t always conscious of what we’re saying or how it’s affecting us.

As Henry Ford once stated, “Whether you think you can, or you think you can’t, you’re right.”  One of the major causes of why we fail is due to self-doubt and negative self-talk.  The way to overcome negative thoughts and destructive emotions is to develop opposing, positive emotions that are stronger and more powerful.  Listen to your self-talk and replace negative thoughts with positive ones, over time you will change the trajectory of your life.

And after all, isn’t this what you’re looking to do?  Change the trajectory of your life?  Start by changing your mindset!

Step #2: Secure Your Finances

I’d love to say this is the hardest of the 3 steps you must take but fact is; without taking the first step, step number two may not matter anyway!  I was a loan officer and mortgage broker for the better part of the last decade but after my bankruptcy, foreclosure, and overall financial meltdown, my credit went to hell with it and so did my mortgage career thanks to new credit requirements with the Nationwide Mortgage Licensing System & Registry.  Truth be told; I was burned out and needed a new start anyway so I wasn’t entirely heartbroken about it!

For me, that new start really became a “restart”.  Since I had performed over 500 plus real estate transactions over the last decade, I went out and obtained my State of Florida Realtors License in 2011 to take advantage of that experience. But it took me until now, September 2012, to find my stride as well as a broker who knew my story of success and failure, collapse and reinvention, and wasn’t judging me because of it!  We all need a helping hand back up and honestly, I had to re-find my inner entrepreneur as well and learn how to “make money” again.  Which brings me back to the Marc and Angel Hack Life Blog and habit #7 you must quit to be happy; Quit running from your problems and fears.

Trust me, if everyone threw their problems in a pile for you to see, you would grab yours back.  Tackle your problems and fears swiftly, don’t run away from them.  The best solution is to face them head on no matter how powerful they may seem.

Fears, in particularly, stop you from taking chances and making decisions.  They keep you confined to just the small space where you feel completely comfortable.  But your life’s story is simply the culmination of many small, unique experiences, many of which require you to stretch your comfort zone.  Letting your fears and worries control you is not ‘living,’ it’s merely existing.

My fears and worries were definitely stopping me from taking chances!  I had forgotten that by definition, being an entrepreneur is being a “risk taker” and I was no longer willing to stretch my comfort zone.  I finally realized it was keeping me from taking control of my finances and I needed to stop ‘existing’ and start ‘living’  once again!  More importantly, my family was depending on it!  You must regain control of your earnings if you are to regain control of your finances as the second step to recovering from credit and financial hell.

Step #3: Accelerate the Process of Credit Recovery  

You may think you have to wait 7, 10, or more years for your credit to recover after bankruptcy, foreclosure, and financial hell; but you’d be wrong!  In fact, I’m going to tell you something you never hear any personal finance or credit guru tell you; your credit report will be even more screwed up because of it!  That’s right! And I’m talking from experience.  Don’t believe me?  Then click on the Better Credit Blueprint Tab and take my free video course where I show you exactly how chock-full of errors my credit report was!

Let’s be clear here:  I’m not talking about removing my bankruptcy, foreclosure, or tax liens from my credit.  I’m talking about making sure everything pertaining to those negative credit events on my credit report were being reported with 100% accuracy.  I’ve been in credit and lending for over 20 plus years and it absolutely makes a difference while rebuilding your credit after surviving credit and financial hell if liens are being reported as “paid” and show no monies due.  After a $1.6 million dollar bankruptcy, I also found many of my accounts included in the bankruptcy not reporting a “zero” balance or discharged in bankruptcy as they should have.

I found accounts included in the bankruptcy showing as active and currently delinquent with “past due” balances.  Hell, I even found accounts that weren’t even mine!  Unfortunately, if you have gone through credit and financial hell like I have, you may think you can do nothing about your credit and assume creditors, collectors, and the credit bureaus have reported everything accurately.  And again… you’d be wrong! In order to correct those errors and inaccuracies from your credit report, you need to learn how to perform a Credit Audit & Verification of your credit report which I show you how to do, step by step, in my free Better Credit Blueprint Video Series.

Let me share with you one more habit I had to stop doing from the  Marc and Angel Hack Life Blog – habit #9; Quit trying to be someone you’re not.

One of the greatest challenges in life is being yourself in a world that’s trying to make you like everyone else.  Someone will always be prettier, someone will always be smarter, someone will always be younger,  but they will never be you.  Don’t change so people will like you.  Be yourself and the right people will love you, and you’ll love yourself more too.

By taking these 3 steps, you will begin the process of recovering from credit and financial hell.  By being yourself,  the “right” people will love you regardless of what you have been through and I”m talking from experience!  I have also found that I love myself a whole lot more too!

Are you recovering from credit and financial hell?  If so, did you take any of these same steps I did to get yourself pointed back in the right direction?  Were there other steps you took that helped you change your circumstances?  Please share your stories and experiences here with me  and if you haven’t already done so, visit the Mark and Angel Hack Life Blog and read the entire“10 Habits You Must Quit to Be Happy” post.  You’ll be glad you did (even if it does take you away from my blog. Just make sure to come back :))

What Does Your “Credit” Resume Say About You?

Credit Resume Post Picture1 1024x681 What Does Your Credit Resume Say About You?

Use to be when you got a job after graduating high school and college, you could depend on working and retiring at that job like our parents did.  Not anymore!  In fact, a Bureau Labor of Statistics news release published in September 2010 examined the number of jobs people born from 1957 to 1964 held from the ages of 18 to age 44.  Guess what that number was?   11 different jobs held from ages 18 to 44; that’s a new job for every 2.36 years!  If you are part of this statistic, think you need to make sure your resume is accurate and up to date?

You might be reading this post and currently be unemployed and looking for a job, or employed and looking for a better job to improve your economic reality.  You’ve got a resume; right?  Now imagine for a second that every bit of information contained in your resume was put there by someone else.  Would you want to make sure what they were saying about you was 100% accurate and true?  You better freaking believe it!

You would want to know things like “did they get my name and address right” or “did they have the correct dates of my employment listed”?  What if, god forbid, they put something derogatory in there that would stop you from getting that job or bettering your economic circumstances; would that piss you off?  I hope your blood is boiling at the thought of something like this actually happening…because it is!  Every single day…on your credit report!

Time To Grow Up

Let’s get something straight; if you don’t think your credit report is a resume, you need to change your mindset and become a better, more informed consumer!  Hell; let me take that one step further and say you need to learn how to become a Credit Adult!  This is exactly what Adam Levin pointed out in an article in the Huffington Post titled “5 Ways to Become a Credit Adult.”  In it, Adam states that a lot of people see credit — good, bad or indifferent — as something that happens to them, not something that can be nurtured and managed properly and, of course, protected.

He goes on to say something I’ve been pushing for years; no one has a greater knowledge of what you do, nor a greater stake in your financial security, than you!  So let’s go back to that resume question again; if every bit of information contained in your resume was put there by someone else, would you want to make sure what they were saying about you was 100% accurate and true?  What if you found errors and inaccuracies; would you want them fixed immediately?  Then why don’t you feel this way about your credit report?

Whose Report Is This Anyway?

Picture this scenario – but first FYI, while not blogging, I’m a realtor here in South Florida which actually pays the bills :).  I had a gentleman call me from a New York phone number who was moving here with his fiance and starting a new job on October 1st.  He told me he had already been in South Florida for 2 weeks and couldn’t find a place to rent.  Naturally, I asked him why he thought that was.  Any guess to the answer?  You got it; his credit!

So I asked him; did you think anyone would run a credit check on you? He answered yes.  To which I replied and….   He started explaining how this was wrong in his report , how that was wrong…  Here’s what I asked him next; did you use a resume to get your new job here in South Florida?  His answer was – yes!  I asked him if he checked the work of the person who created his resume for him to which he replied; what person?  It’s my resume – I did it!  If it sounds like he was getting a little annoyed with me, it’s because he was.  I asked him to bear with me a second because it was leading to a point he will use for the rest of his life.

So I then asked him if the credit report the realtors and landlords had pulled on him was his; to which he answered – of course!   I asked him since it was his report, how did it manage to have so many mistakes as he claimed, to which he replied; I didn’t create the report! My point exactly; you didn’t, someone else did!

LIGHT-BULB! What Does Your Credit Resume Say About You?

I asked him if he thought his resume gave employers an idea of who he was as a potential employee?  He answered yes.  So I asked him if he thought his credit report might create an economic reputation about him for potential landlords?  As Gru said in the movie Despicable Me; LIGHT-BULB!  The light bulb had just turned on in Mr. New York’s head and he realized something for the first time in his life; his credit report was his – but not created by him.  He needed to find out what was in it, what it was saying about him, and more importantly; if it was 100% accurate as the Fair Credit Reporting Act states it should be!

The moral of the story is this; credit report accuracy is first and foremost a consumer protection issue.  No one is a better guardian of your economic reputation than you so learn how to protect yourself!  You wouldn’t trust someone to create your resume without checking it, so why would you trust that the information being reported about you in your credit report is accurate and true? The answer is; you shouldn’t!  You might not have created the report, but the information contained in it is yours and will influence people to make decisions about you– just like your resume!

Ever have something like this happen to you?  Do you agree, or disagree, that your credit report is your economic resume?  Have you ever even thought about it in these terms?  This is a great topic to share with others so please pass it along by clicking on one of the social media buttons icon smile What Does Your Credit Resume Say About You?

The Credit Score Myth and Why it’s Wrong!

Chicken before the egg TAC Picture1 1024x681 The Credit Score Myth and Why it’s Wrong!

What came first, the chicken or the egg? As I sat at my computer laughing about this question, seriously speaking, it’s one that has baffled scientists and academics alike for ages.  But when it comes to credit, what came first; the credit score or the credit report?

One look at the T.V, one listen to the radio, or one browse through the internet and we are constantly being bombarded with jingles from companies like “freecreditscore.com”, or ads on how to “fix your credit score”, or seeing online “tips, tricks, and advice” on how to fix your credit score.  So that settles it, right?  The credit score came first. WRONG!

Let Me Explain

Let’s begin with the question; what is a credit score? According to the “learn about scores” section on myfico.com, you have three FICO scores; one for each of the three credit bureaus: Experian, TransUnion, and Equifax. Each score is based on information the credit bureau keeps on file about you. As this information changes, your credit scores tend to change as well.

Let’s break that statement down a bit.  We have 3 FICO scores – check! (more on this later)  Each score is based on information the credit bureaus keep on file about you – check!  Wait a minute; my credit score is based on the information the credit reporting agencies, Experian, TransUnion, and Equifax have on file about me?  Contained in my credit report? YES!

Information = Credit Score

Additionally, the same page at myfico.com states that for your three FICO scores to be calculated, each of your three credit reports must contain at least one account opened for at least six months.  Each report must contain at least one account that has been updated in the past six months as this ensures there is enough information – and enough recent information – on which to base a FICO score on.

So if the credit score is based off the information that is contained in our credit report, wouldn’t that information be more important than the actual credit score itself? Bingo; of course it does!  But that’s not where the revenue is generated from.  It’s generated in getting you to buy that credit score and buy products and services that promise to “fix”  or “monitor” that credit score.  In  fact, it costs the credit bureau’s money every time they have to address a dispute.  In case you didn’t know, they are not “non-profit” organizations.

Time For A Shift In Mindset

When was the last time you heard a jingle about credit report correction? When was the last time you heard a commercial on how to correct your credit report?  When was the last time you saw a Google Ad for correcting mistakes?  What we get instead are catchy tunes and advertising about “fixing” our credit scores!  I don’t know about you, but when I hear that song from “freecreditscore.com” it takes me hours before I can get it out of my head!

What I want you to do right now is take a deep breath because the next line you read  is about to totally disrupt the thought process you have been “conditioned” to believe; there’s no such thing as “fixing” your credit score!  You read that right!  The only thing we can do as amateur consumers is “correct” the information contained within our credit report by making sure it’s accurate and complete!

Just to clarify; you can improve your credit score, which is inherently different than saying ‘fix’.  The technical reason why you can improve your credit score is because the credit reporting companies apply an in-depth mathematical model (called an “algorithm”) to the information in your credit file to yield your credit score.  As such, it will respond to improvement in the different factors used by the algorithm to determine your score.  But again, that’s different than “fix” and I explain what these factors are in my free video series, The Better Credit Blueprint.

Only 3 Credit Scores? Kind of….

So FICO says there are 3 scores; one for each of the three credit bureaus, right?  But in a recent article for The New York Times, Ann Carrns, a freelance writer based in Fayetteville AR wrote that we have 49 different FICO scores.  Wait a minute; didn’t FICO say there were 3?  Well – kind of.  You see,  in the same article, Ann had John Ulzheimer, a nationally recognized credit expert, share this infographic showing a total of 49 different versions of your credit score under the FICO umbrella. Oh…there’s a FICO umbrella?  Why didn’t you just say so? icon smile The Credit Score Myth and Why it’s Wrong!

Of course, Ann asks, ” why so many?”  Guess what; we all do!  That is those of us who strive to understand credit and how to manage it in order to become a better, more informed consumer!  But herein lays the problem.  John points out that all of this can be confusing to, what I call, the “amateur” consumer.

Is My Credit Score Ready?

Ann writes that credit data is collected by the three major credit bureaus (Equifax, Experian and TransUnion) and analyzed by FICO to create a single, three-digit score. For further clarification I would add; at the time your credit is pulled.  That’s right.  Not only are there many differing scoring models, but they are scored at the time your credit report is being requested.  It’s not just sitting there in some credit bureau’s computer.

For instance, you could be shopping for a car and have your credit report pulled from two different dealerships – 2 hours apart, and your scores could be different!  How, you ask, if nothing has changed with your credit over those 2 hours? Welcome to the confusing and nonsensical world of credit scoring where we, as truly Amateur Consumers, really are clueless!

Clearly, The Report Comes First!

John goes on to say that the main point to keep in mind is that the same general principle applies to keeping your scores attractive to lenders: Pay your bills on time, maintain low credit-card balances and apply for credit only when you really need it, “not to save 10 percent at the mall”.  That’s good solid advice and surely he doesn’t need my endorsement.  However, I would argue that the main part as consumers is to understand that credit report accuracy is first and foremost, a consumer protection issue, and you have to make sure the information contained in your credit file is 100% accurate. Then you can worry about actually improving it.

The fact is we place too much importance on credit scores and not enough importance to the actual information contained in our credit report!  Sufficed to say, if your credit score is determined by the information contained in your credit report, before you do anything, you should make sure that information being reported about you is correct.  After all, the best guardian of your economic reputation is you!