We noticed for the past few months that the average credit scores we are seeing are lower than they were even at the beginning of the year. It is possible that this is because the people we are seeing right now just have lower scores. I don’t believe that is the case.
We all know that the American budget is getting zapped from every direction. People are just trying to keep up and many are using their credit cards to do it. When those cards get maxed out, they are getting another one and the cycle continues. I can tell you from personal experience that this is a difficult cycle to break and yet you have to break it in order to get ahead.
Some research with the credit companies yielded no hard facts. They won’t admit to changing any of the factors used to calculate credit scores. This didn’t surprise me because they have always been pretty secretive about how they calculate those scores in the first place.
Here is what our local credit company will say: Unofficially
They have seen overall lower scores over the past four months. Those scores of people with debt over 30% of their credit card limits are getting hit hard. Those with debt over 50% of their credit card limits are getting pounded. If those people just apply for any kind of additional credit like another card, a car or a mortgage, their scores are getting hit again.
Credit lenders are concerned about the debt people are taking on. When you combine this with the fact that most people don’t have any money to fall back on, it creates some real problems for the working family.
In my book, The Money Thing Made Easy, we talk about how to get back to solid ground with your spending.
Here is what you must do:
1. Sit down today and put together your family budget. The forms can be found on the resources section of our website. www.theeverydaymillionaire.com
2. Fill out the "Know your debt" worksheet so that you make sure you are clear on what you owe.
3. If you have credit card debt. Look at whether it is possible to pay it off all at once or if it will take some time. If you can take out any kind of loan to clear it out like a personal loan or even a loan from a family member. You should do it. But only do it if you have already set up your budget so you know that you will not run your credit card debt again.
4. Work toward the goal of NO CREDIT CARD DEBT. This will raise your credit scores and help you in the future to assure yourself that you get the best financing terms on whatever you buy.
Once you do this. If you have questions about the system or need some ideas from me. Email me at howard@theeverydaymillionaire.com.
Just get started. It really works.
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