This edition of Footsteps Along the Path was initially issued by Clear Path Financial Education Services which has now become Kuehn Financial Education Services LLC. For more information about Kuehn Financial Education Services LLC, please email or visit www.kuehnservices.com.

Clear Path Credit Consultants believes:
If you build on your own skills,
Rely on your own abilities,
Increase your range of knowledge,
And get help when you need it,
You are the investment that will succeed above all others.

Welcome to the seventeenth edition of Clear Path Financial Education Services' Footsteps Along the Path. The goal of this newsletter is to provide relevant and succinct information on financial management to consumers and small business owners. It is designed to build upon previous issues, developing a clear path to financial freedom. Reader feedback is encouraged.

Please feel free to forward Footsteps Along the Path. If you have received this from a friend or colleague, and wish to be added to the newsletter distribution list, simply provide a response e-mail with this request. The same applies if you do not desire further contact. Your name will immediately be deleted from the list. dkuehn@clearpathservices.com

In this issue:
* Article: What Creditors Are Purposely Doing to Hurt Your Credit Score … and Why
* A Knowledgeable Consumer is Powerful
* Service List for Clear Path Financial Education Services
* Seminars Worth Your Time
Visit www.clearpathservices.com

What Creditors Are Purposely Doing to Hurt Your Credit Score … and Why
Financial institutions are in the business to make money off your money. Charging interest is one way they do this. The interest rate paid on credit cards and mortgages is determined by credit scores. Credit scores reflect the ability to manage debt. By not reporting on time payments and accurate credit limits to the credit bureaus, lenders are purposely injuring consumers’ credit scores. This is done for two basic reasons. First, they greedily want to charge you higher interest rates. Secondly, banks don’t want other banks soliciting their good customers with better offers. Are you as outraged as I?

Congress and the three major credit bureaus are attempting to fight this injustice. But, you need to get involved and fight back also. Step by step this is what you need to know to safeguard your credit score and be approved for credit at the appropriate interest rate.

Step 1) Review your credit bureau reports. You may receive an annual free credit report from Trans Union, Equifax and Experian by calling 1.877.322.8228 or visiting www.annualcreditreportcom.

Step 2) Look at your payment history by creditor. Does it indicate your diligence in paying on time? Lenders are not required by the FTC to update credit files monthly. However, credit reports indicate when the last update occurred and the status. An example of a status comment is “In the prior 4 months since last update never late.” Trans Union very recently revitalized its format to a visual system of blocks representing months and payment standing.

Step 3) Examine your credit limits. Are they accurate? For example, if Visa increased your credit line from $6000 to $8000 this needs to be noted on your credit bureau report. Why be concerned? Let’s say you carry a balance of $4000. At the correct $8000 credit limit, you have utilized 50% of your credit line. At the incorrect $6000 you have utilized 67% of your available credit. The balance to credit limit is a key factor in calculating credit scores. The lower the balance to credit limit, the better your score.

Step 4) Congress’ The Predatory Lending Consumer Protection Act of 2000 states that mortgage payments must be reported at minimum every quarter. Why is this important? Credit scores are improved by secured debt. Your mortgage is secured debt. Not having your timely mortgage payments included in the statistical calculation that creates your credit score enables lenders to charge you higher interest rates on credit cards, auto loans, home refinancing, insurance rates and more. Check to see if your mortgage company is reporting your payments at least quarterly.

Step 5) Evaluate your credit reports for missing accounts. For example, are you paying on a car or furniture loan that is not listed on your credit reports? You want your ability to pay off debt reflected in your credit reports. It is important that you pull all three credit bureau reports. Major financial institutions typically report to all three bureaus. However, lenders are not required to report to each major credit bureau. It is an expense for businesses to update credit files with Trans Union, Equifax and Experian. Small companies that extend credit may find reporting to credit bureaus cost prohibitive. If you are looking to establish or rebuild credit, simply ask the lender if it reports to the major credit reporting agencies.

Step 6) Contact the credit bureaus and lenders regarding inaccuracies. Credit reports come with dispute forms. In addition, you may write a letter. Attach a copy of documents to support your statements. For example, if your Visa credit limit is incorrectly posted on the credit report as $6000 instead of $8000 write a straight forward letter to the credit bureaus asserting the credit limit should be $8000. Enclose a copy of the correspondence the credit card company sent announcing the increase. The credit bureaus will contact the creditor asking it to verify your claims. In some instances, it is very helpful to call the creditor and alert them to their error.

Trans Union, Experian and Equifax are combating lenders not reporting credit data by blocking their use of credit bureaus’ marketing services. The policy maintains lenders not disclosing data on new credit lines, balances, and payments can’t view information of other company’s customers. Credit reporting agencies make money by selling certain portions of your credit report to financial institutions. Lenders uses this info to decide if marketing to you would be profitable to them.

The most vulnerable and impacted consumers are those rebuilding poor credit along with people with newly established credit. Current and accurate information allows the credit system to function efficiently and the cheaper the credit for you and me.

A Knowledgeable Consumer is Powerful
We pay interest to lenders, but what interests lenders about us? Financial institutions are curious about a borrower’s stability.

1) Stable job: What is the total length of your employment history? How many years have you been at your current workplace? Do you have a responsible job title?

2) Stable style of living: Have you been at your residence for 5 or more years? Do you rent or own the home?

3) Stable financial decisions: Have you been disciplined to put money in a bank account? Do you have a checking account without overdraft problems? How many recent creditor inquiries appear on your credit bureau reports and ChexSystems? ChexSystems is basically a credit reporting agency for banks that monitors how well you manage your savings and checking accounts.

4) Stable payment history: Are you promptly paying current lenders? Have you made on time payments to previous lines of credit? Is your past credit free of charge offs? Have you ever declared bankruptcy? Do liens or other signs of financial mismanagement appear on your credit reports?

5) Stable use of credit: Do you have a favorable debt to income ratio? Do you present a picture of over extended credit?

Clear Path Services
Consumer Services:
Money Management Skills Session
Spending Plans / Budgets
Relationships & Money
Debt Repayment Consulting
Credit Bureau Report Analysis

Business Services:
Cash Flow Budgets
Start UP & Expansion Consulting
Credit Education

Seminars Worth Your Time
April 4: Money Forum: Simple Ways to Make the Most of Your Money
7:00 pm Foothills Christian Church, 3951 W. Happy Valley Road, Glendale AZ
To RSVP contact Allison Albertson 623.516.9192
Do you want to make the most of the money you have? Do you want to make this money grow and work for you? Do you want to confidently control your money? Please join financial experts, Allan Bobbe, Charles C. Scott and Debi Kuehn, on April 4, 2005 from 7:00 to 8:30 pm for enlightening panel discussions and audience questions. For panelist bios and presentation topics please visit www.azfoothillscc.org.

April 14 – May 5: Write Your Business Plan in 4 Weeks!
1:00 – 3:30 pm The Arizona Small Business Association, 4130 E. Van Buren St. Phoenix AZ
RSVP by April 12 at www.asba.com, Cost for all 4 weeks is only $60
Whether you are starting a business or changing your company strategies, a business plan is the essential tool that gives you focus and competitive advantage. The four-week course is lead by Valley entrepreneurs who know the value of this living document. ASBA TIME sponsors this program. Debi Kuehn is a TIME facilitator and creator of Write Your Business Plan in 4 Weeks!

Deborah A. Kuehn is the owner, educator and consumer advocate of Clear Path Financial Education Services. Clear Path believes knowledge is power and prosperity.

PH: 623.580.9293

Written by Deborah A. Kuehn, MBA
All rights reserved
Clear Path Financial Education Services is a registered trade name

Issue XVII

March 24, 2005

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