The second step everyone needs to have is an Emergency Fund setup. For most, this amounts to $10,000 sitting in a savings account. If your income is greater than $250k a year, you may want to up this number a bit, but for the vast majority, $10,000 will do.

What exactly is an Emergency Fund for you might ask? Well, to start with… emergencies!!

The top two emergencies that affect our financial lives the most unexpectedly are Medical and Auto related. Breaking a leg skiing, getting food poisoning and puking your brains out, or any of the million other things that happen to us can land us in the Emergency Room end up being quite costly to boot. To add insult to injury, most insurance policies have a $500+ ER deductible. That’s where the Emergency Fund kicks in.

What about that car accident you caused while putting on your makeup or eating a McMuffin and drinking coffee and driving with your knee and the $1,000 deductible you have? Or that blown transmission that will set you back $2,000? Again, Emergency Fund.

What if you have credit card debt though? Good question. You still need the Emergency Fund because cash is king and you don’t want to only rely on what credit you have left, if any, on your cards to bail you out of a tight situation. Building your Emergency Fund is A-#1 priority and must be built before you start paying off your credit cards for a number of reasons.

First, I’ve already said, cash is king.

Second, having the $10,000 in savings gives an extra level of that good ole’ peace of mind factor that helps you sleep just that much better at night knowing you’ve got a little financial cushion to fall back on in case you slip on a banana peel.

Third, and this is the BIGGIE… by saving up $10,000 and not touching it, you start building a muscle most don’t even know they have in their body… the Saving Muscle. It is just like any other muscle, it hurts like hell when you work it out the first few times, but the more you use it, the bigger it gets and the more it can lift. If you follow the advice of so many ‘guru’s’ out there spewing their views on ‘being debt free’ and getting everyone to hate ALL debt, even the good ones, you’ll never build this muscle when it counts. If you go and pay off all your credit card debt BEFORE you’ve built the Saving Muscle at all, you’ll have that much harder of a time not going back into debt.

I know, saving money before paying off high interest rate credit cards isn’t the least expensive way to do it, but it’s much, much healthier and will pay off in spades in the long run. A couple of pointers about your Emergency Fund:
-It doesn’t have to earn interest since growth is not the point
-Put it in a CD if you can’t keep your grubby paws off of it and want to tap into it for every Retail Emergency you have
-Think of it as you would the fire extinguisher at work that’s behind the glass that says ‘Break Glass In Case Of Emergency’ and ask yourself if you’d actually break the glass for the reason you want to tap into that money after it’s saved.
-Put a fixed percentage of every dollar that goes into your bank account into savings so that it happens every time, not just on the bigger deposits.

Read step 3 by clicking here

So paying $200+ a year to get access to info about myself is absurd.  Thankfully one of the credit bureaus is starting to ’see the light’ and is allowing certain online services to give you your credit score absolutely free with their other content.

Of those I’ve come across, my favorite is www.CreditKarma.com

This site allows you to check your credit score with TransUnion as many times as you want without any cost whatsoever. The way they make their money is by offering you various promotions for saving money based on your credit score. An example is a new 0% balance
transfer credit card for your 720 score. They then get a referral commission from the credit card company for you signing up through them.

The great thing is that they don’t share your info with anyone and they don’t send you any spam emails trying to upsell you on something else they make money off of.

**If your score isn’t above 720, you have a problem and should address it right away. Go to www.thecreditconcierge.com/coupon.pdf and fill out the coupon for a free Credit Analysis to find out exactly what is keeping you from having perfect credit.

My only caution for using CreditKarma.com is if you have a hard time staying away from promotional offers or so called ‘deals’ since most people shouldn’t be getting new credit accounts since two is more than enough.

Other than that, the service is a great value and it allows you to stay on top of one of your three scores without throwing hundreds of dollars away every year just trying to track what others are saying about you and your trustworthiness.

As for accessing your Experian and Equifax scores, hopefully they’ll ’see the light’ soon enough and start allowing providers like CreditKarma.com to give you access to your scores with them. Even though you can’t access them for free right now, being able to see
your TransUnion score is thorough enough for most people since information across bureaus doesn’t fluctuate drastically in most cases.

There is a secret arrangement that creditors have with the credit bureaus to gain access to your credit report without you ever knowing about it. This arrangement is setup so that the creditors can select prospective clients to send specific offers to and increase the results of their advertising. It’s what causes your mailbox to fill with ‘pre-approved’ credit offers that you’ve never applied for and didn’t come from having a prior relationship with that creditor.

The creditor doesn’t get access to your complete credit report, but they get enough to find out if you’re in the ballpark of their ideal client profile and can match an offer to who they think you are. There are multiple problems with this situation.

First and foremost, it has been shown that this access to your credit report actually causes your score to stay artificially low.

I’m sure you’re yelling out like I did when I first heard this, ‘That is so unfair!’ Well, you’re right, but since the creditors drive the credit bureaus with their monthly reporting fees and memberships, the bureaus are obligated to scratch the creditors back and help them out since the creditors are the bureaus REAL clients, not your or me.

The second problem with this arrangement between the bureaus and the creditors is that it puts you at risk for Identity Theft since your mailbox is filled with offers extending you credit that can be stolen very easily and used without your knowledge, until it’s too late. Mail theft is the #1 way that ID thieves attack.

Finally, getting ‘pre-approved’ offers that you are not actively applying for increases your chances of becoming an impulse buyer. In a time of weakness you may respond to a 0% intro offer on a new credit card and then go charge it up, putting you in a position of weakness financially with more bad debt.

So what do you do to combat this? Go to www.optoutprescreen.com and select the ‘Cl1ck Here To Opt-1n or Opt-Out’ link. Then fill out your information and click on either the ‘Electronic Opt-Out For Five Years’ button or the ‘Permanent Opt-Out By Mail’ button. By selecting the latter, you will have to print out the form and physically mail it to complete the process.

At this point, creditors will no longer have access to your credit report to send you any more offers and your score will benefit from it within the next 30 days as the bureaus are updated of the
change.

Myth #1: Close all of your credit cards once you become debt free.

Big mistake!

15% of your credit score comes from the history of your accounts. A big part of this 15% is how long you’ve had credit. Once you close your oldest account, your history moves up to the next oldest open account. It’s a lousy system and should look at all of your accounts over your credit history, but that would be too logical, so we have to play by their rules.
A client of mine in his 60’s did this BEFORE he came to me for help and his perfect credit score of 750+ dropped to 675 within months after becoming debt free. It was because he listened to the advice of some ‘know it all’ and closed all of his credit accounts, some of which were over 20 years old.

Myth #2: Having low interest rates on your credit cards helps improve your score.
False. Your interest rate has no bearing whatsoever on your credit score. I think this was originated by some creditor offering 0% interest programs who wanted to scam clients into
signing up for the offer since they said it would help their credit and cost them nothing with the 0% rate.

Myth #3: Your score goes down when you have a late fee penalty.
This is almost true. Most creditors charge a late fee the day after the payment is due if they haven’t received your money yet. Mortgage lenders are more generous and give a 15 day grace period before slapping you with the penalty. The truth is though that you have a 30 day grace period with the credit bureau’s before your score is affected.
One way to wrap your head around this is if your next payment is due by May 1st and you don’t pay it on or before then. With the credit bureau, that May 1st payment must be received by the creditor before June 1st, otherwise, the creditor tells them that the payment is now ‘30 days late.’ The 30 day late is what shows up on your credit report and causes your score to drop. There are 60 and 90 day milestones, too, both being even worse for your credit score.
Please don’t use this as an excuse to push the limit on late payments, but realize that you do have some grace period before your score is hammered.

Given the fact that I was your average college student who got a credit card at a baseball game because I wanted the free Giants towel they were giving away when I applied for one, I came out of college with less than stellar credit. As a matter of fact, in my second year of grad school I pulled my credit and my mid score was 510!! Pretty lousy.

I didn’t have the foggiest idea what to do to fix the problem, so I signed up to work with a company (a law firm in Utah) that a friend of mine had recommended because he was using them to try to get his credit cleaned up from his bankruptcy years earlier. He hadn’t gotten any results yet, but figured they must be decent because their website said they helped thousands of people and were only charging $39/mo.

After 12 months of being on their service I didn’t have a single thing removed or updated that was to be done from the $468 I had so willingly sent them. My friend and I both canceled the service that same month.

The problem is that we weren’t just some unique cases that the firm was stumped with… this is the norm! There is no accountability in this industry and no performance guarantee’s are required, and as a matter of fact, one law firm says they’re illegal!! How is that not the ‘Fox building the hen-house’? Telling you they aren’t allowed to guarantee their performance or the results and then charging you for it every month. It just doesn’t add up.

So you must be asking yourself how these firms stay in business month after month if they don’t get the results their clients are hoping and paying them for? One reason is related to a quote I will never get out of my head for the rest of my life from a statistics class I had in college and the professor, Mr. Nichols, said it over and over.

‘Causation does not equal Correlation’

What this means is that if a result happened (increased credit score) while doing an activity (paying a law firm every month), this does not always mean that the activity was what caused the result.

When someone signs up to get a law firm to clean up their credit, what do you think they do about their spending and bill paying habits at the same time? They get them in line, too, because it is consistent with maintaining good credit. So what happens is that over time, as they continue behaving properly (paying bills on time and paying off credit card and collection balances) their scores go up, regardless of what they are doing with the credit repair company.

The problem is that they instantly assume that the credit repair company MUST be doing something productive because their score went up, but they don’t realize they did it all on their own and could have saved the $450+ at the same time.

I’m not saying that these credit repair companies are committing fraud, although some do, or that they are deceiving their clients, because I think they truly want to help, but that doesn’t mean that I need to endorse them or paint a prettier picture. They can help clients who don’t know how to write a letter to the bureau’s
explaining how something is mis-reported and they can help get items that shouldn’t be reported any more due to the limitations in the Fair Credit Reporting Act taken off after their allowed reporting time.

Another problem I have with these companies is that they charge on a monthly basis with no end in sight. This is conveniently done because they’re hoping that you forget about the payment since it’s set up automatically to be paid on your credit card or out of your checking account every month and I guarantee they collect months
after your score is to where you want it or the items are updated that need to be updated. They definitely aren’t going to call you up after your score gets to your targeted goal and say ‘Well you hit your goal, so we’re going to stop charging your account, so thank you for your business and feel free to call us if you ever need help again.’

So what can you do?

First, start implementing the strategies in this email course, because I’m going to give you all the tips and tools I’ve used to not only increase my score from 510 to 700+ in just over a year, but also what I’ve done to increase my clients scores over and over to get them into better financing for their homes.

Second, if your score is horrible and there are a lot of things on your report keeping it down, start interviewing credit repair providers, but be sure to use the following questions that all have to be answered:

1. What is the fee for getting my credit report cleaned up? Is it a flat fee or a never ending monthly charge?

2. How long will this take?

3. What items are you willing to guarantee that you can get removed? When they are removed, do you guarantee that they will never come back or that you’ll get them removed again for free if they do?

4. What will you do if you don’t meet the objectives and goals we agree to when you start my file? Do you have any type of refund process or other guarantee?

If they can’t answer these in a way that gives you 100% confidence, don’t move forward with them and start giving them your money and time.

For most people, this one single tip is all they need to follow to have perfect credit for the rest of their lives. I’ve seen clients have everything else in place, except this one and have their credit stuck at 680.

Here it is… Keep your balances on your revolving accounts (credit cards and credit lines) below 50% of the limit of the account. So if you have a $5,000 credit card limit, keep the balance that is rolled over month to month below $2,500. The real goal is to have the balance at $0 at the end of every month, but I realize that may not be a reality for you right now.

This is also the most responsive strategy to get your score up, meaning if you have a current balance over 50% of the limit and you pay it off in full, your score could go up as much as 50+ points in the next 30 days. I’ve done this myself over the past few years and by paying off a couple small cards that were maxxed out, my score went up as much as 80 points in a month.

There is one potential issue with this strategy. If you are a heavy credit card user and charge a substantial amount to your account AND pay it off every month, your score could still get stuck around 680.

Here’s why… let’s say you have a $5,000 limit like we stated before and you charge $3,000 on it for the month of April. May 1st you get a statement showing a $3,000 balance and you send in your $3,000 check around May 20th since it’s not due until June 1st. But between May 1st and May 20th when the creditor gets the payment,
you charge another $2,000 on the account. Then the creditor reports your account to the bureau on the 10th, after charging another $1,000, but before they get your $3,000 payment. You now show a balance of $4,000 on your account with a $5,000 limit and the credit scoring algorithm slaps you with a nearly maxed out account
calculation and your score goes down.

It’s happened to numerous clients I’ve worked with and took a while to ferret out the root of the issue and create the solution to it.

So, if your score is below 720 and you don’t know why your score isn’t going up and you pay off your balance every month, then here’s what you do…

You can either a) send your payment in the day you receive the bill so the gap between the statement and receiving the payment is reduced as much as possible or b) when you do send in the payment, go online or call the creditor to get the total balance as of that day. Then send in a payment for that total amount so that the
account goes to $0 when your payment is received.

Don’t worry, you won’t have to do this forever. You just need to do it until your score gets up to the 750+ range and gets a stronger foundation under it. Then you can go back to just paying what’s on the statement before the end of the month and you’ll be fine.