A 12-Step Action Plan to Improve Your Credit Score

As seen on AOL’s Walletpop:

Your credit score impacts your ability to get out of debt and stay out of debt. The worse your credit score, the higher the interest rate you will be charged on money you borrow. The better your score, the less your debt will cost you and the quicker you’ll be able to pay it off.

So it’s not only important to know your credit scores from all three major credit rating bureaus — Equifax, TransUnion and Experian — but to know how to raise your score. The simple truth is that raising your credit score isn’t that hard if you know what to do.

Over the years I’ve coached literally thousands of people on how to fix their credit scores, and based off of that experience I have developed a 12-step action plan to raise your score quickly and keep it there. Regardless of where you start from, if you follow this plan and utilize the online tools I discuss — in six months your score will be higher than you ever thought possible.

Step 1: Get Your Credit Report and Check it For Errors

Under the Fair Credit Reporting Act, the Big Three credit bureaus are required to provide every consumer who asks with a free copy of their credit report once a year. You can get yours by going to annualcreditreport.com. This step is important because it is extremely likely there are errors.

A study by the National Association of State Public Interest Research Groups found that one in four credit reports contain a mistake serious enough to keep you from getting a loan, credit card or in some cases a job.

Once you get your report, go through it with a fine-tooth comb. If you find any errors (for example, late payments that were actually paid on time or credit limits that are lower than they should be), get them corrected as quickly as possible. You can do this by sending the credit agency a certified letter that explains what information was inaccurate, including copies of documents (such as bank records) that verify your claim, along with a copy of your credit report with the disputed issue highlighted.

Under the Fair Credit Reporting Act, the credit-reporting agencies are required to correct inaccurate or incomplete information in your report within 30 days. Go to the “Free Stuff” tab at www.finishrich.com to access sample correction letters. Also, go to Finishrich.com and sign up right now and take advantage of the free Debt Wise 30 day trial. By signing up, you will be entitled to a free Equifax Credit Score, so you can see where you stand.

Step 2: Automate Your Bill Paying.

This may be the most important tip. Missing payments or being late on payments can quickly ruin your credit score. For this reason, I strongly recommend that you use your bank’s online bill-paying service to automatically transfer a pre-set amount every month from your checking account to cover at least the minimum payments on all your credit accounts. I have practically every bill of mine automated in this way. You can also use your credit card company online bill payment system to notify you through email when you are close to going over your credit limit, which can help you avoid more damage to your score.

Step 3: If You Have Missed Payments, Get Current.

It’s never too late to clean up your act. Get yourself current as quickly as you can and stay current. Your score will begin to improve within a few months, and the longer you keep it up, the more noticeable the increase will be. The negative weight that FICO gives to bad behavior like delinquencies lessens over time, so as long as you stay on the straight and narrow, those black marks will eventually disappear from your record for good.

Step 4: Keep Your Balance Well Below Your Credit Limit.

Of all the factors you can control — and improve quickly — how much you owe is probably the most powerful. Since the credit crunch, credit card companies have been cutting customers’ credit limits without warning.This can be devastating to your credit score. Say you’ve got a $1,000 balance on a card with a $2,000 limit-and then the card company slashes your limit to $1,000. Suddenly, you’ve gone from 50% credit utilization to being maxed out, which can shave 45 points from your credit score. The credit bureaus recommend that you keep your usage below 33% of your available credit.

Step 5: Beware the Credit Card Transfer Game.

For years, people have saved money by transferring high-interest credit card balances to low-interest cards.This can still be helpful, but be aware that using one credit line to pay off another sets off credit score alarm bells — even if all you’re doing is consolidating your accounts. All other things being equal, your credit score will be higher if you have a bunch of small balances on a number of different cards rather than a big balance on just one or two.

Step 6: If You Rack up High Balances, Pay Your Card Bill Early.

The “Amounts Owed” part of your credit score is based on the balance due listed on your most recent credit card statements. So even if you pay your bills in full each month, running up high balances can still hurt your score. Avoid this problem by paying down all or part of your bill before the end of your statement period, thus reducing the balance that will be reported to FICO and the credit bureaus.

Step 7: Hang On To Your Old Accounts

Part of your credit score is based on how long you have had credit accounts. Closing old accounts shortens your credit history and reduces your total credit — neither of which is good for your credit score. Keep the older accounts open even if you aren’t using them.

Step 8: Use Your Old Cards.

The credit card industry has gotten much stricter about closing inactive accounts. This can hurt your credit score, since it reduces the average age of your credit accounts. To prevent this from happening, you should pull out your old cards and start putting at least one charge on them every month.

Step 9: Demonstrate That You Can Be Responsible.

The best way to raise your credit score is to demonstrate that you can handle credit responsibly — which means not borrowing too much and paying back what you borrow on time. Don’t open new accounts just to increase your available credit or create a better variety of credit. You should open new credit accounts only if and when you need them.

Step 10: Shop For Loans Quickly.

When you apply for a loan, the lender will “run your credit” — that is, send out an inquiry to one of the credit-rating agencies to find out how credit-worthy you are. Too many such inquiries can hurt your FICO score, since it could indicate that you’re trying to borrow money from different sources. Of course, you can also generate a lot of different inquiries by shopping for the best mortgage or auto loan. The FICO scoring system is designed to allow for this by considering the length of time over which a series of inquiries is made. So, try to do all of your loan shopping within 30 days.

Step 11: Know the Difference Between a “Soft Inquiry” and a “Hard Inquiry.”

The credit bureaus all recognize the difference between you checking your own score (a “soft inquiry”) and lenders checking your score (a “hard inquiry”). While too many hard inquiries can lower your score, soft inquiries don’t count at all. Feel free to check your score as often as you want.

Step 12: Buy a 3-and-1 Report And a Credit-Monitoring Package and Identity Theft Service.

Your credit score and credit report are so important that it makes sense to pay for a 3-and-1 Report (which provides you with your credit scores from the three bureaus) as well as an identity theft monitoring service. In most cases, these services will cost you between $14.95 and $19.95 a month — I personally pay for these services myself because I think it’s worth the investment.

Congratulations! You now know more than 95% of all Americans about what may well be the most important influence over your financial life — your credit record and score. Make lifelong monitoring of your credit part of a debt-free lifestyle! For more resources and tools go to finishrich.com.

January 26, 2011 – Teleseminar Tonight!

January 26, 2010


Friends and FinishRich Community Members,




news! My friend Philip Tirone is hosting a "Credit and Debt Summit"
where top experts share their darkest and most closely guarded secrets,
teaching you how to improve your financial life. As part of the summit,
Philip is interviewing me tonight, Wednesday January 26th
at 9pmEST/6pmPST. The purpose of this FREE "Credit and Debt
Summit" is to show you how to get rid of your debt and achieve total
financial freedom as fast as possible. It’s for this reason I’ve
volunteered to be on the panel of credit and debt experts.

Listen in on
e "Credit and Debt
Summit" call
at 9pmEST and hear my debt busting tips for 2011!




  • The
    secret to negotiating lower credit-card interest rates
  • How
    to DOLP Automatically with Debt Wise
  • Specific
    tips to first cut and then repay your student loans
  • How
    to erase certain debt obligations with 3 simple words
  • Why
    you should NEVER pay off your credit card debt with your home equity
    or retirement accounts
  • And
    much more!




dial-in to the below number at 9pmEST/6pmPST

6pm PST/ 9pm EST

(877) 756-4904




at http://www.creditanddebtsummit.com/bach/
and you’ll receive an email with the dial-in details for tonight’s
call.  If you can’t make the call, be sure to register and Philip
will send you a replay. Enjoy! 


David Bach

Founder FinishRich Media
Join us now at

To subscribe to our newsletter and join our community, please click

The FinishRich Newsletter is written and produced by
David Bach

and FinishRich Media. If you have any questions or comments, you can
contact us via our online form by clicking

This newsletter is purely informative and does not represent an investment
or tax recommendation of any kind. Please consult your financial or tax
advisor before making any investment decisions.


? 2010 FinishRich
Media 295 Greenwich St. Suite 529

New York



Click here to go directly to our Web site

January 20, 2011 – can you chat today? – January 20, 2011

January 20, 2010


Friends and Finish Rich Community Members,


I will
be answering all of your financial questions in a LIVE chat TODAY from 3pmEST
– 4pmEST. Go to www.facebook.com/davidbach
and click on the "Chat" tab at 3pmEST. Make sure to give us a
"like" if you haven’t already to access the chat!


If you
can’t attend the LIVE CHAT, post your financial questions on my facebook

anytime before 3pEST today (Thursday, January 20th).
I will try and answer as many as I can in the chat and the full Q&A
will be posted on my facebook page tomorrow night! 


A big
thank you to everyone who ordered Debt Free For Life! The book was
an instant New York Times, USA Today and Wall
Street Journal
bestseller! I received so many amazing emails from
those of you who purchased the book and took advantage of the free bonus
offer, so I decided to extend it! If you haven’t purchased Debt Free
For Life
, order before MIDNIGHT next FRIDAY, JANUARY 28TH
and receive over $500 in FREE BONUS GIFTS!!! Don’t miss out. Click
to order the book and instantly receive your FREE bonuses.



I want
to hear from you about how this book or any of my past books have affected
your life. We receive hundreds of success stories each week and I love
hearing your feedback! Just a minute ago, I received a success story from
a friend who read The Automatic Millionaire. He gave me permission
to share his inspiring story with all of you, so here it is!

I recently (re)read The Automatic Millionaire, I decided to take ACTION on
all of the great tips. So, today I contacted my bank and had them change
my monthly mortgage to a biweekly payment. I also added an additional $800
to every payment to pay down the principle even faster. Not only did this
reduce my mortgage by over 15 years, it will save me $547,000 in interest!
Amazing! Thanks David. This is brilliant.

Be the
next to share your success story by clicking


David Bach

Founder FinishRich Media
Join us now at

To subscribe to our newsletter and join our community, please click

The FinishRich Newsletter is written and produced by
David Bach

and FinishRich Media. If you have any questions or comments, you can
contact us via our online form by clicking

This newsletter is purely informative and does not represent an investment
or tax recommendation of any kind. Please consult your financial or tax
advisor before making any investment decisions.


? 2010 FinishRich
Media 295 Greenwich St. Suite 529

New York



Click here to go directly to our Web site

The Debt-Free Mindset: Seven Questions to Help You Get Out of Debt

As seen on AOL’s Walletpop:

You’re probably ready to begin getting out of debt. But I’ve learned that if you want your motivation to stick, you need to be really clear about why you want to be out of debt. I’m going to ask you seven simple questions about your debt. Don’t get nervous. There are no RIGHT answers — only honest answers. By answering these questions, you can see whether or not you’re really ready to make this journey.

By the way, if you are married or in a committed long-term relationship where you share finances, discuss these questions with your partner. Working on your money together significantly improves the chances of succeeding financially and of staying together happily as a couple.

1. Why Do You Want To Be Debt Free For Life?

You could write, “I’m carrying $10,000 in credit card debt, and it stresses me out, and I’m worried every month when the bills come. I’m paying 19% in annual interest, and I feel stupid wasting this money — so the faster I pay it down, the better. I know when I pay it off I will feel GREAT.” That’s a simple answer, but you get the idea. Then again, you might read that question and come up with a deeply personal, more spiritual reason.

2. Why Are You in Debt?

My goal with this question is not to have you beat yourself up, but rather to have you face the truth about how you got where you are today. Did something tragic happen, like a medical problem? Did you lose a job? Did you buy a bigger house than you could afford? Did you live beyond your means? What happened? Answer the question from your heart as honestly as you can.

3. How Much Debt Do You Have?

If you completed the DOLP worksheets from last week, you should have a clear idea of your total debt. Go ahead and just write it down now: “I estimate that my total debt (house, cars, student loans, credit cards-you name it) as of [today's date] is $________.

4. What Percentage of Your Income Goes to Pay Interest Charges on Your Debt?

This may be the most eye-opening question. If you’ve completed the DOLP worksheets, you can use that information. If you haven’t, then pull out the most recent statement for every loan you have — mortgage, car loan, student loan, and credit card. You’re going to use this information to figure out exactly how much of your monthly payment goes to interest charges.

For example, say your mortgage payment is $2,000 a month. Chances are that less than $150 of that goes toward paying down the principal. The rest is going to interest. Look at this for each loan; call your lenders for the facts if you have to. Once you add up all the interest you are paying, you may find that more than half your take-home pay is going right into the lender’s pockets — without helping you make one inch of financial progress.

Now it’s time to figure out the percentage of your pay that goes to interest:

  • My total interest payments each month are:
  • My take-home pay each month is:
  • (Divide your total interest payments by your take-home pay.)
  • The percentage of my take-home pay that goes to pay interest charges is: ____ %

5. Who Can Help You Get Out Of Debt?

If you follow the plan I lay out and use the tools I provide, you should be able to get yourself out of debt. But maybe you’re not the do-it-yourself type. Maybe you feel you’ll need a professional credit counselor to help guide you through the process. If that’s true for you, then great — write it down. And even if doing it yourself is not a problem for you, if you have a family, you are going to need their support to get out of debt. It’s hard to get out of debt if the people around you are spending you back into it. So if you have a spouse and/or kids, you may want to add them to your answer here. Also, you should definitely add me to your list — because I am committed to helping you. I can start by offering you a free trial to my new revolutionary debt reduction tool called Debt Wise. Learn more about this tool and get your FREE trial by clicking HERE.

6. What’s The Worst Thing That Could Happen if You Don’t Get Out of Debt?

It’s important to face your fear about debt. What is your life likely to look like in the future if you don’t deal with your debt? Facing your fear about your debt is not being pessimistic — it’s being honest. The more honest you are right now, the better. So tell yourself the truth. Write down your worst-case scenario. It will motivate you to act decisively to start dealing with your debt.

7. When Will You Start to Get Out of Debt?

Below you will find the “Debt Free For Life Pledge,” which I’ve created to mark your new commitment to leading a debt-free life. By signing it, you are making a promise not to me but to yourself and your loved ones — a promise that you are truly headed toward a new life of financial freedom. Signing this pledge you will be automatically entered to win $10,000 to put toward paying down your debt! Here is how you join the movement — you can just copy and paste the pledge below and sign it (without entering to win the prize). If you want to join the challenge community and the chance to win $10,000 go to www.finishrich.com and take the Debt Free Pledge online or go to directly to the challenge site by clicking HERE http://www.debtwise.com/debt/

As of today over 11,000 people have made the pledge and started the challenge towards a debt free life — now it’s your turn. Let’s start a movement together!


I __________________________ [insert your name] commit to being out of debt by __________ [insert date]. I believe that paying down my debt and being DEBT FREE FOR LIFE is critically important, and I am ready to work to make it happen.
I will start my journey to being out of debt on __________ (insert date).
Signed __________________________

Congratulations on taking the time to read my questions and answer them. I’m proud of you. Now let’s continue working on getting out of debt!


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