I was going over my tri-annual credit report the other day, and noticed some things I needed shared with you guys when examining your credit report. Yes, I do mean tri-annual. There are three major credit bureaus, and they each give out free reports once a year, so I spread them out evenly throughout the year to read.

Anyways, first and foremost, blitz significant errors. Attack them and correct them head on! Your credit score is calculated based on the information in your credit report, so certain errors there can really cost you big. However, not everything that’s reported in your file matters to your score.

Here’s the stuff that’s usually worth the effort of correcting with the bureaus:

1. Late payments, charge-offs, collections or other negative items that aren’t yours. These are the big ones. If you notice any of these, blitz, yes blitz, them immediately like your life depended on it! Because, you know what, it just may when you’re looking to close that big loan.

2. Credit limits reported as lower than they actually are. You need to get credit for what you’ve earned. Simple.

3. Accounts listed as “settled,” “paid derogatory,” “paid charge-off” or anything other than “current” or “paid as agreed” if you paid on time and in full. This should actually be number two if I was listing this in order of importance. In any case, blitz these too.

4. Accounts that are still listed as unpaid that were included in a bankruptcy. This is the same as getting credit for what you’ve earned. If you spent the last ten years paying for your bad financial habits, consider your sins paid for. They shouldn’t be on your record still. Get rid of them.

5. Negative items older than seven years (10 in the case of bankruptcy) that should have automatically fallen off your report. This is the same as number four. Consider your debt paid.

You actually have to be a bit careful with this last one, because sometimes scores actually go down when bad items fall off your report. Believe it or not, it’s a quirk in the FICO credit-scoring software, and the potential effect of eliminating old negative items is difficult to predict in advance.

Now, here are some of the stuff that you typically should not worry about:

1. Various misspellings of your name. Believe it or not, I have an alias of Alexander J. Leigh on my credit report. I don’t know how it got there but it’s never bothered me for the last ten years it’s been on there.

2. Outdated or incorrect address information. This one is simple. People move all the time. As long as your identity has not been stolen, it’s okay to have an incorrect address. There may be someone with the same first and last name as you who has lived there.

3. An old employer listed as current. As with the old or incorrect address, this is okay. Fix it if you like, but I wouldn’t bother.

4. Most inquiries. These are not hard pulls, so the companies had only limited access to your information. Many credit card companies tend to do this so they can send out credit offers.

Just a note about number one and two, if the misspelled name or incorrect address is because of identity theft or because your file has been mixed with someone else’s, that should be obvious when you look at your accounts. You’ll see delinquencies or accounts that aren’t yours and should report that immediately. However, if it’s just a goof by the credit bureau or one of the companies reporting to it, it’s usually not much to sweat about.

Oops, here are two more items you don’t need to correct:

1. Accounts you closed listed as being open. If it has a zero balance, I would leave it alone for the time being. It should drop off by itself.

2. Accounts you closed that don’t say “closed by consumer.” Closing accounts can’t help your score, and may hurt it in the short run. If your goal is boosting your score, leave these alone. Once an account has been closed, though, it doesn’t matter to the scoring formulas who closed it. If you messed up the account, it will be obvious from the late payments and other derogatory information included in the file.

Hmmm, while we are on this topic, here are some other actions to beware when you’re trying to improve your score:

1. When you ask a creditor to lower your credit limits, it will reduce that all-important gap between your balances and your available credit, which could hurt your score. If a lender asks you to close an account or get a limit lowered as a condition for getting a loan, you might have to do it, but don’t do so without being asked.

2. When you make a late payment, it will ironically hurt a good score more than a bad one, dropping a 700-plus score by 100 points or more. If you’ve already got a string of negative items on your credit report, one more won’t have a big impact, but it’s still something you want to avoid if you’re trying to improve your score.

3. When you try to consolidate your accounts, and apply for a new account, it can ding your score. So, too, can transferring balances from a high-limit card to a lower-limit one, or concentrating all or most of your credit-card balances onto a single card. In general, it’s better to have smaller balances on a few cards than a big balance on one.

4. On the other hand, when you apply for and get an installment loan, it can help your score if you don’t have any installment accounts, or you’re trying to recover from a credit disaster like bankruptcy.

Oh, and just FYI, all these suggestions work best if you have poor or mediocre scores to begin with. Once you’ve hit the 700 mark, any tweaking you do will tend to have less of a positive impact.

And if your scores are in the “excellent” category, 760 or above, you probably won’t be able to squeeze out any more than a few extra points despite your best efforts. There’s really no point, anyway, since you’re already qualified for the best rates and terms.

Whew! Okay guys, hope this helps a bit. See you in a few!

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Hello guys! Sorry for the late post this week, but I had to head up to Alaska and pick out my turkey (that’s a Senator Palin joke, guys). Just kidding!

With a decrease in buyers as of late, people have had to make their wares (house) more attractive to potential buyers. People are no longer overlooking the minor details, and nit pick on the smallest problems. Therefore there has been a trend of refreshing of homes, or remodeling projects in all areas.

Here are some tips that hopefully will come in handy when you do decide to hire a contractor.

1. Get at least three written estimates. Chances are you got a high quote and having two more to compare it with is just good sense. In this market, you may be able to use the lower two to leverage a better price with the contractor you like best.

2. Get references and call to check on the work. If possible, go by and visit earlier jobs. This is just good sense. you want to be able to examine and preview the goods or workmanship before you buy. It’s also a good idea to check with previous customers.

3. Check with the local Chamber of Commerce or Better Business Bureau for complaints. If nothing else, they keep records of any disciplinary actions or suspensions that your potential contractors have received in the past. You can also check to see if they are bonded or even licensed! Although I have to warn you from personal experience, a contractor has to do something really really bad to have a black mark put onto his record.

4. Be sure that the contract states exactly what is to be done and how change orders will be handled. Don’t leave anything up in the air. It is better to get things straight and clear before any work starts. You don’t want someone to tear down your roof and stop while it rains because you guys could not come to terms with something minor like who pays for the paint.

5. Make as small a down-payment as possible so you won’t lose a lot if the contractor fails to complete the job. I always like to structure the last final payment to be as much of the total contract price as possible. That way, I hold all the leverage.

6. Be sure that the contractor has the necessary permits, licenses, and insurance. You don’t want to get sued later, after you sell the house, by the new owners, and find that you have no one to file a cross-complaint against.

7. Be sure that the contract states when the work will be completed and what recourse you have if it isn’t. Also remember that in many instances you can cancel a contract within three business days of signing it. Please check with the local laws in your area though. I usually put in a penalty clause, such as a $100 per day charge for delays in completion. Keeps the contractors on time. Of course, if there are extreme circumstances, I always have the option of waiving it.

8. Ask if the contractor’s workers will do the entire job or whether subcontractors will do parts. It’s good to know who exactly is working on your property. As with the above tip, if there are subcontractors, you need to get their information, in case you are ever sued. More cross complainants.

9. Get the contractor to indemnify you if work does not meet any local building codes or regulations. This may be a bit difficult. By human nature, no one wants to be liable for anymore than they have to be. So, I suggest you write it right into the contract. If they complain, choose another contractor!

10. Be sure that the contract specifies the contractor will clean up after the job and be responsible for any damage. Don’t give them the final payment until the site is clean. You have no idea how much throwing away garbage costs at the dump. Simple rule, you make the mess, you clean it up.

11. Guarantee that materials used meet your specifications. I always like to purchase my own materials. Especially the simpler, smaller things such as light fixtures and what not. That way I know exactly how much is spent. Some contractors buy cheaper products and still charge you for the more expensive ones to make a few bucks.

12. Don’t make the final payment until you’re satisfied with the work. Period.

I don’t have anything against contractors! Don’t get me wrong. I don’t think all of them are bad, or think ill of them as a group. I am merely sharing some tips on how to protect yourselves when hiring a contractor to work on your home. Hope you can use some of these! See you in seven (or fewer, this week).

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Now is the time to buy. I am pretty sure you have been hearing that everywhere. Prices are low, and it seems everyone is selling. Why not take the plunge now? I mean, prices can only go up from this point right? Ah, but no one is lending, and what you have saved up isn’t enough. Kind of a catch twenty two eh? Well, if your income and savings are making homebuying a challenge, consider these options.

1. Investigate local, state, and national downpayment assistance programs. These programs give loans or grants to cover all or part of your required downpayment. National programs include the Nehemiah program, and the American Dream downpayment fund from the Department of Housing and Urban Development.

2. Get the seller to provide financing. In some cases, sellers may be willing to finance all or part of the purchase price of the home and let you repay them gradually, just as you do with a mortgage. This is called “owner carry” locally.

3. Consider a shared-appreciation, or shared equity, arrangement. Under this arrangement, your family, friends, or even an third-party may buy a portion of the home and thus share in any appreciation when the home is sold. The owner/occupant usually pays the mortgage, property taxes, and maintenance costs, but all the investors’ names are usually on the mortgage. There are companies that can help you find such an investor if your family can’t participate.

4. Get help from your family. Perhaps a family member will loan you money for the downpayment and/or act as a cosigner for the mortgage. Lenders often like to have a cosigner if you have little credit history. Time to hit up mom and pop, or that rich uncle of yours.

5. Lease with the option to buy. Renting the home for a year or more will give you the chance to save more toward your downpayment. And in many cases, owners will apply some of the rental amount toward the purchase price. You usually have to pay a small, nonrefundable option fee to the owner. This will also let you see what the economy will be like. You may decide to bail after a year, and this give syou the option to.

6. See if you can qualify for a short-term second mortgage to give you the money to make a higher downpayment. This may be possible if you have a good income and little other debt. This is more difficult as of late, but it is still possible. Talk to your local banker to see if you qualify.

Hope this helps guys! See you in seven!

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Hi guys, I have noticed in the past few months that many of my clients are “downsizing” their properties. Whether it is due to forclosures or just down to plain wanting to save more money, many are trading their houses for more modest dwellings. A popular alternative has been condominiums. However, I have gotten many questions about moving into one as many are not used to having to pay HOA (Homeowner Association) fees, and such.

So, before you buy into a condminium, contact the condo board with the following questions I have prepared for you. In the process, you’ll learn how responsive, not to mention how organized its members, your potential neighbors, are.

1. What percentage of units is owner-occupied? What percentage is tenant-occupied? Generally, the higher the percentage of owner-occupied units, the more marketable the units will be at resale. Remember, the goal is to eventually move back into a house when the ecomomy gets better.

2. What covenants, conditions, and restrictions (CC&R), and bylaws govern the property? What grandfather clauses are in place? You may find, for instance, that those who buy a property after a certain date can’t rent out their units, but buyers who bought earlier can. Ask for a copy of the bylaws to determine if you can live within them. And have an attorney review property docs, including the master deed, for you. Better safe than sorry, I always say.

3. How much does the association keep in reserve? How is that money being invested? If you are going to be making payments each month to a fund, you better well know what it’s being spent on. And that you are seeing some type of return in enjoyment in the form of landscaping for example. Much like your paid taxes, isn’t it?

4. Are association assessments keeping pace with the annual rate of inflation? Smart boards raise assessments a certain percentage each year to build reserves to fund future repairs.To determine if the assessment is reasonable, compare the rate to others in the area. Most of the information is usually a phone call or email away.

5. What does and doesn’t the assessment cover? Some general things include common area maintenance, recreational facilities, trash collection, and snow removal, depending on your area.

6. What special assessments have been mandated in the past five years? How much was each owner responsible for? Some special assessments are unavoidable. But repeated, expensive assessments could be a red flag about the condition of the building or the board’s fiscal policy.

7. How much turnover occurs in the building? Are people coming and going constantly? Why? Did they move in just to find soemthing seriously wrong? You never know.

8. Is the project in litigation? If the builders or homeowners are involved in a lawsuit, reserves can be depleted quickly. And more importantly, why are they being sued? Did they cut corners in the waste management? Or maybe they skimpped on the building materials?

9. Is the developer reputable? Find out what other projects the developer has built and visit one if you can. Ask residents about their perceptions. Request an engineer’s report for developments that have been reconverted from other uses to determine what shape the building is in. If the roof, windows, and bricks aren’t in good repair, they become your problem once you buy.

10. Are multiple associations involved in the property? In very large developments, umbrella associations, as well as the smaller association into which you’re buying, may require separate assessments. Find out!

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Earlier in the month, the Environmental Protection Agency (EPA) released its list of the ten most fuel-efficient vehicles for model year 2009, in addition to the list of the least fuel-efficient vehicles. And of course, no suprise, the Toyota Prius took the top spot in the EPA’s list of most fuel-efficient vehicles for 2009.

So, the Prius is awesome right? No suprise there. Well, I hate that car! And not because I am a diehard automobile enthusiast either. It’s also not because it’s a stereotypical white person yuppie car. What I truly can’t stand is that fact that people buy into the hype that they are somehow saving the environment by driving one. It is the ignorance that this car inspires in people that truly infuriates me.

To help prove my point, I am going to reprint a commentary written by the president of the 60 Plus Association, a national nonpartisan senior citizen organization based in Arlington, Va, James L. Martin, called Hidden Cost of Driving a Prius. Totaling all the energy expended, from design to junkyard, a Hummer may be a better bargain.. Enjoy, while I go cool off…

When it comes to protecting the environment, senior citizens should concentrate more on
the total energy consumed in building and operating a car than its fuel efficiency - no
matter how impressive the statistics appear on the window sticker at the showroom.

Fully armed with all the facts, seniors may want to zip down to their nearest Toyota
dealer and trade in their Priuses for Scion xBs. That would be the equivalent of reducing
their energy footprint from a size 24D to about a size 5A. In the case of global warming,
one small step for man may turn out to be a giant leap for mankind.

Hah? Well, what do you think now of your underpowered, cheese-wedged, death machine now huh? Still think you are saving the environment now, you snooty, soy latte with skim milk sipping yuppies? Ha!

Drive what you want and can afford people. Or don’t drive at all, and take public transportation. Ride a bike. God forbid, walk! Me? I’m going to continue to drive. But you won’t ever catch me in a Prius!

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