No Credit

Category: Finance, Credit.

She was beautiful.

I wanted her and nothing was going to stop me. One look and that's all she wrote. I was determined. Her looks could kill. Her body glistened in the sun. She was every young man's dream. She captured my heart. and that was the problem.

Of course I' m referring to the used, Mazda Miata I, red tried so desperately to finance shortly after my bankruptcy. Common sense went out the window and I began making choices based on wants rather than needs. That's the same type of thinking that led me to file bankruptcy. It didn' t matter who financed that car for me or at what interest rate I just wanted it. MISTAKE# 1: Allowing emotions to influence your decision- making. Homes that they. .have three mortgages on. have no equity in. .owe more on than the appraised value. (this is called negative equity) .are too emotionally invested in. People tell me all the time that they filed bankruptcy to save their homes.

What the@ #? Allowing emotions to creep into your credit or financial decisions is dangerous at best. Geez Louise. When my wife and I and I bought our first home after bankruptcy it wasn' t our dream home. Before every spending decision we made with that home we asked the question: Will this increase the resale value of the home? We looked at it as an investment.

Same thing when we purchased our first commercial building. It's easy to get caught up in the emotion of the moment and start doing things to( and spending money on) a house or car to make it special just for you. Every decision was based on whether it would increase the value of the building. And you should make your house a home. within reason. For example. My best advice: only put money into a property you own, and only in things that make the home appreciate. Instead of adding a swimming pool.

Instead of adding a storage shed in the back yard. Add landscaping around your home. Paint the interior walls a neutral color. Install new carpet or hardwood floors. Instead of purchasing expensive furniture. Your Realtor or real estate appraiser can offer advice on where it's best to invest money in your home to increase its value. Negotiate a deal that will benefit you before you do anything to improve a home that you do not own.

And for you renters. putting money into the home you' re renting helps the owner more than it helps you. You get the idea. It's just plain silly how kids these days spend money on fancy rims or high- end stereos and speakers for their cars please tell me your car doesn' t look like this. Same goes for your car. My brother did this to his first truck a Mazda B2000 pickup truck. It looked ugly. really ugly.

He installed a custom stereo system complete with walnut trim. I teased him about it so much that he finally removed the stereo. That's one reason why I lease most of my cars. Generally, a car is a terrible investment because it's a depreciating asset. But, we all have to get around don' t we? But, I guarantee you that having expensive rims on your car won' t do a thing for its value. And we' d like to get around in style.

Spend your money on assets that increase in value. MISTAKE# 2: Believing everything you hear. It's a principle that separates the middle- class from the rich. Be skeptical of the credit advice every car dealer, banker, mortgage broker, well- meaning friend or family member, or credit union employee gives you they' re usually wrong. Always, always get a, always second, fourth, third, fifth, and even a, sixth seventh opinion. Unless the person you' re talking to filed bankruptcy or has a long history of helping bankrupt people take what they say with a grain of salt. Don' t stop until you find what you want. or simply keep on reading Life After Bankruptcy.

A lot of lenders are going to say, No, to you when you apply for a loan. A quick glance through the back issues should give you most of the answers you need. They' re going to tell you can' t get a loan or you can only get financing from a finance company at an outrageously high interest rate. Just because a person tells you NO doesn' t mean the correct answer is NO. Don' t listen to them! It simply means you should go to another lender. You must have hope. not be hopeless.

You must be diligent. NO must mean absolutely nothing to you. MISTAKE# 3: Shopping for credit the wrong way. When a lender told me, No, I just went to the next lender. Did you know lenders don' t need your signature or Social Security number to review your credit reports and credit scores? Just stepping on a car lot gives the dealer permissible purpose" to review your credit. It's true!

If you allow them to make a copy of your driver's license, you' ve just given them all of the information they need to pull your credit reports. The car dealer can review your credit reports using only your name and address, and that could lower your FICO credit scores. Don' t believe the myth that your Social Security number is required to pull your reports. it isn' t. Fortunately, most lenders don' t practice this. As you should know by now, almost every time a lender reviews your credit, they post a credit inquiry on your credit reports. But some do. And credit inquiries can lower your credit scores.

First, you make it very clear to every lender you speak to that you do not want them to review your credit reports until you' ve made a final decision to work with them. I talked all about it in Life After Bankruptcy Issue# 1 So how do you control the situation? You do this by giving them NO information about yourself. After you' ve interviewed several lenders and have found one that you' re comfortable working with, give your information to only that lender. This means no credit application. no Social Security number. and no driver's license. MISTAKE# 4: Not creating a written game plan.

But don' t make this more complicated than it needs to be. You need to put your game plan in writing. Your plan can be as simple as: Get a secured Visa card. Raise my FICO credit scores to over 600. Get a secured MasterCard. Finance a new car. Get approved for a gas card.

Obtain a secured bank loan. Raise my FICO credit scores to over 640. Raise my FICO credit scores to over 700. 1Get a home equity loan. 1Pay off all my revolving debt. 1Purchase my first investment property. Mortgage a new home. However, goals without deadlines are just wishes. Once you have your game plan in writing, you should make a goals folder and place a copy of your game plan in it for future reference. A much better game plan includes specific dates and may look like this.

Put another copy where you can see it every day, then visualize how to obtain each goal. Some people need a cooling off period after filing bankruptcy. a time when you live on a cash- only basis. MISTAKE# 5: Delaying your re- entry into the credit world. No credit. No checking account. No credit cards.

Nothing. How do you know if you need a cooling off period? Michele and I did this. Ask yourself, When was the last time I saw a loan as the solution to getting out of debt? My wife and I chose to pay cash for everything from the time we filed bankruptcy up until we received our discharge papers in the mail. A better question would be, How can I increase my income to accomplish my goal of getting out of debt?

We didn' t have to pay cash until we were discharged. we chose to because of what the discipline would teach us. I' m not kidding. Then we mailed our secured credit card application the very same day we received our discharge papers. We had the application and cashier's check ready we were just waiting for the discharge letter. Most people plan their vacations better than they do their financial lives. You see, we took time and made the effort to create a written game plan, and then simply followed the plan. Don' t let this be you.

Even if you don' t use your credit cards that much it's better to get them as soon as possible. The longer you delay getting back into the credit world the longer your credit scores will suffer. Why? So the longer you have credit accounts the better your scores. One of the key characteristics that makes up your FICO credit scores is how long you' ve had established credit accounts. These are just five of the most common mistakes bankrupt people make on a regular basis.

There are many more.