How to Fix Your Credit

by Luis Cortes, Karin Price Mueller

Overview

You're not alone. About 51 million American households carry credit card debt at an average balance of nearly $12,000. Credit trouble is a problem you can't ignore. No matter how much money you earn or where you live, if you've made mistakes with credit in the past, those mistakes will haunt you — unless you empower yourself to fix them. And you can.

Managing your credit can be a complicated issue, but the Reverend Luis Cortés Jr. provides an easy-to-follow guide to help you handle the process. Any amount of debt, no matter how scary the number, can be paid off with a little planning and a lot of determination. The sooner you begin, the easier your task will be. Let Reverend Cortés help you today before your situation becomes worse tomorrow.

Product Details

ISBN-13:	9780743287913
Publisher:	Atria Books
Publication date:	10/03/2006
Series:	Esperanza Series
Edition description:	Original
Pages:	128
Product dimensions:	5.50(w) x 8.50(h) x 0.30(d)

About the Author

The Reverend Luis Cortés Jr. is the president and CEO of Esperanza USA, the largest Hispanic faith-based community-development corporation in the country. In January 2005, he was featured as one of Time magazine's "25 Most Influential Evangelicals."

Read an Excerpt

INTRODUCTION

Credit is a tool that allows us to enjoy something today with the money we will earn tomorrow. It also provides insight into who we are as spiritual beings. Sacred scripture shares many texts that refer to money or finance. Among them we find one of the most often quoted scriptures, "For the love of money is a source of all kinds of evil. Some have been so eager to have it that they have wandered away from the faith and have broken their hearts with many sorrows" (Good News Bible, American Bible Society, 1 Timothy 6:10).

This scripture explains how money can switch from being simply a tool to becoming the focus of one's life. We must understand that credit is available to us for the immediate purchase of a necessary and affordable item. As people of faith, it is important that we understand when it is appropriate to use credit. Too many of us borrow from the future to acquire things that we really don't need in the present. If you are thinking of borrowing from your future, you should ask yourself, Why am I borrowing from my future earnings? Am I borrowing from the future to invest in the present so that my future can be better? Can I save for this instead of using credit? For most of us the decisions we make are either/or decisions. We purchase one thing or another on credit, but too many of those purchases are not investments for the future but purchases that take up our future earnings, plus interest, to serve an unnecessary immediate desire. I am not advocating that we not have a new TV set or a new car, but that we use good judgment. Credit should be used first and foremost to help you, your family, and your community. If we can focus on what is most important — the development of our spiritual, academic, and intellectual lives — we are on the way to healthier economic status. So let's learn about credit, and if we need to, let's repair yours.

Copyright © 2006 by Luis Cortés, Jr.

Table of Contents

CONTENTS

INTRODUCTION

PREFACE

STEP 1. HOW LENDERS SEE YOU

YOUR CREDIT REPORT

WHAT'S IN YOUR REPORT

GETTING A FREE COPY OF YOUR CREDIT REPORTS

WHAT YOUR CREDIT REPORT LOOKS LIKE

WHAT TO DO WITH YOUR REPORTS

IF YOU FIND A MISTAKE

YOUR CREDIT SCORE

GETTING YOUR FICO SCORE

NEW KIND OF CREDIT SCORE

IMPROVING YOUR CREDIT SCORE

BEWARE OF CREDIT REPAIR SERVICES

STEP 2. UNDERSTANDING DEBT

HOW MUCH DEBT DO YOU HAVE?

HOW MUCH DEBT IS TOO MUCH?

UNDERSTANDING HOW INTEREST RATES WORK

REVOLVING DEBT

INSTALLMENT DEBT

GOOD DEBT VERSUS BAD DEBT

STEP 3. STOP OVERSPENDING

LIVE ON A CASH-ONLY BASIS

EVALUATE YOUR SPENDING HABITS

WANTS VERSUS NEEDS

SET A BUDGET

SHOP SMARTER

STEP 4. NEGOTIATE WITH YOUR CREDITORS

WHY BANKRUPTCY ISN'T AN OPTION

HOW BANKRUPTCY WORKS

CHAPTER 7

CHAPTER 13

LET'S MAKE A DEAL

RESPONDING TO DEBT COLLECTORS

IF YOU'RE FACING EVICTION

STEP 5. PAY ON TIME

SET YOURSELF UP FOR SUCCESS

ORGANIZE YOUR PAYMENTS

WHO'S HELPING WHOM?

USING CREDIT CARDS WISELY

SHOPPING FOR THE BEST DEALS ON CREDIT CARDS

STEP 6. PAY IT OFF

WHAT TO PAY FIRST?

CREDIT COUNSELING SERVICES AND DEBT CONSOLIDATION

SHOULD I TRANSFER MY CREDIT CARD BALANCES?

STEP 7. ADD POSITIVE INFORMATION TO YOUR FILE

MANAGE THE CREDIT YOU HAVE

APPLY FOR A SECURED CREDIT CARD

APPLY FOR A SMALL LOAN

THE COSIGNING OPTION

PATIENCE IS THE KEY

STEP 8. DON'T GET RIPPED OFF: PART 1

AUTO FINANCING

KNOW WHAT YOU CAN AFFORD

NEGOTIATING THE PRICE

EXPLORE YOUR FINANCING OPTIONS

IF YOU CAN'T PAY

A NEW SCAM EVERY DAY

MORTGAGES AND PREDATORY LENDING

TYPES OF MORTGAGES

COSTS AND FEES

SIGNS OF PREDATORY LENDING

GOVERNMENT PROGRAMS

STEP 9. DON'T GET RIPPED OFF: PART 2

PAYDAY LOANS

REFUND ANTICIPATION LOANS

COSIGNED DEBT

STEP 10. AVOID MAKING THE SAME MISTAKES AGAIN

MAINTAIN SELF-CONTROL

PAY YOURSELF FIRST: SAVINGS PLANS

EMERGENCY FUNDS

THE STOCK MARKET

LONG-TERM SAVINGS PLANS

OTHER TAX ADVANTAGES

EARNED INCOME TAX CREDIT (EITC)

CHILD AND DEPENDENT CARE CREDIT

CHILD TAX CREDIT

EPILOGUE

ACKNOWLEDGMENTS

SOURCES