Credit In A Nutshell

January 10, 2012 By Richard Leave a Comment

Credit In A Nutshell

Maintaining good credit or fixing bad credit is something that we know is important, but gets lost in the shuffle of every day life. Just like we know we should drink more water and hit the gym a little more, fixing bad credit can be a chore. Unlike those other two problems, it may not be so clear cut in how to actually get it done.

Credit scores are complex and confusing, so it’s understandable that most people wouldn’t want to deal with them. To help you get started I’ve written a primer to understanding your credit.

Credit Score Basics:

There are 3 Credit Reporting Agencies: Transunion, Experian, and Equifax. Each has a slightly different way of compiling your score and each has several different versions of your score that they offer to potential lenders. That means that no matter how many different places you go, you could have many different scores that are pulled all from the same companies. The factors that effect your score are basically weighted differently depending on the risk profile the Lender is looking for.

Credit Scores typical range from the 300-850 and the closer you are to 850 the better.

What’s a Good Credit Score?

It really depends on what type of loan you’re applying for but anything over 700 is usually considered to be pretty good. The thing to keep in mind is that with the Credit Crisis of 2008, Lender’s basically rewrote all of their underwriting guidelines – so that means that even with a decent score of 700, you could be turned down for a loan.

Besides Credit, What Other Things Do Lenders Look At?

One question I’m often asked is, since I’ve been a customer here for so long, does that help me out even if my credit is poor? The answer is no. Banks and Credit Unions love loyal customers, however having a long relationship with a financial institution really only matters if the underwriter is on the fence about your application and you have a good history of paying off loans with the institution.

Financial Institutions look at Debt to Income Ratio, Work History, and the collateral that is being financed, if it’s a secured loan. This means that even if you have great credit and plenty of income, an institution may not fund your recreational purchase of an old Hearse or customized monster limo.

How Do Loan Approvals Work?

Generally your application is underwritten (or reviewed) by an automated underwriting system. This system takes a look at a number of factors, including income, debts, work history, and credit score and makes a decision based on a set of guidelines programmed into it. If the computer program cannot make a decision it will send it to manual review – meaning that an actual person will review your application and make a decision based on underwriting guidelines and on policies regarding making exceptions to those underwriting guidelines. Exceptions can be made, but they are what the word implies…exceptions and not the norm.

How Are Credit Scores Figured Out?

Credit Scores are based on the Fair Issac formula. The formula is a trade secret and so it’s not really known exactly how they determine your score. The way your score is generally configured is by:

35% Payment History
30% Credit Utilization
15% Length Of Credit History
10% Type of Credit Used
10% Recent Searches For Credit

For a more complete set of information see myfico.com.

What Things Build Credit?

Loans build credit. Many people believe that having utilities or cell phone commitments in your name or apartment rental history contribute to your credit score. This is not true. These types of activities are considered by Lenders to be “unconventional credit” and can be considered in some instances for people who lack credit history.

What Things Hurt My Credit:

Collections, judgements, bankruptcy, late payments, too much new credit, using too much of your available credit, too many credit inquires, charge offs, settling for less than the full balance owed, repossessions, foreclosure, delinquencies (even on accounts that do not contribute to good credit – like Medical Bills or Bounced Checks that are in collection).

Yes, having utilities put into your name doesn’t build your credit, but if you stop paying your bills and the company puts out a collection for you, then it will damage your credit. This holds true for any type of account that is capable of putting out a collection for you which would typically involve any one who does a credit check. Keep in mind that bouncing a check to a company and refusing to pay it can also result in a collection item put on your credit report.

How To Fix Bad Credit:

1: Repair

2: Rebuild

Repair Damaged Credit:

The only way to repair your credit is to fix the negative things that are reported. The first thing you should do is grab a free copy of your credit report from annualcreditreport.com, the official website of all three consumer credit reporting agencies. The companies are required by law to give you a copy of your report once a year. You will not see your score on this report as your score is a product that belongs to the company.

Review your report for any negative items and if you’re unsure of the debts being reported you can contact each agency and dispute them.

Late payments and other delinquencies such as charge-offs, foreclosures, repossessions, and balances negotiated for less than full balance are reported for seven years from the date of delinquency and can only be resolved through disputing them with the consumer reporting agency (Transunion, Equifax or Experian) or waiting for them to fall off of your record.

Collections can only be resolved by paying them in full, disputing them, declaring bankruptcy or waiting for them to fall off of the report. Debts reported as collection items stay on for different times depending on state laws and on the agreement you entered into when borrowing.

It’s recommended that if you have serious credit issues speaking to a qualified Bankruptcy Attorney or a reputable Credit Counseling company is advised.

Keep in mind that once the damage has been done and all issues resolved, your credit score will not automatically improve. If you do nothing at best your credit will report with a message that says Not Scored – Insufficient Credit History.

Rebuild Credit:

Many people wait to try to fix their credit problems until they really need a loan – for example their car breaks down, which they need to get to work, and they need to borrow some money to finance the repairs. Often times there isn’t enough time to repair a person’s credit to help them get the loan that they need.

Once you have either declared bankruptcy, paid off your debts, or have had them otherwise removed from your credit history you’ll need to start rebuilding your credit. If you have late payments or other delinquencies showing up on your report, you’ll have trouble convincing a traditional lender to extend a loan.

There are a few hard money lenders out there that will extend a credit card to just about anyone. These credit cards are offered at extremely high interest rates and usually carry substantial annual fees due to the high risk the lender is taking on.

The most cost effective way to rebuild your credit is to take advantage of Secured or Partially Secured Loans. A secured loan involves putting up money as collateral and pledging it against your loan, meaning that if you default, the bank keeps your money. If you don’t actually have the funds to secure a credit card, many smaller community banks and credit unions offer Credit Builder Loans. These loans allow you to borrow money from the bank and place it into a savings account. The funds are secured meaning that you’re unable to use them, until after you have paid them back to the bank. You’re essentially borrowing future funds, paying a nominal amount of interest, and at the end of it all you’ll have 12 monthly payments reported on your credit file and some cash in the bank. It’s a great way to get started, but it only helps if all of your collection items have been taken care of, although some do use this method to force them to save up enough money to pay off their collection items. I advise against this generally as this type of loan is a poor choice of a savings vehicle as you do pay interest to have it.

So there you have it in a nutshell. To summarize, good credit is valuable and it’s within reach of anyone. Credit works the same way for everybody and it isn’t based on how much money you make – just how you treat the money you’ve borrowed. The less you borrow, the less you have to worry about!

Don’t wait to try to fix your credit when you need it, speak to a qualified credit counselor or bankruptcy attorney as soon as possible.

Filed Under: Economics, Minimalism, Strategy

NAC – Cheap OTC Wonder Drug You Haven’t Heard Of:

January 9, 2012 By Richard Leave a Comment

NAC (N-acetylcysteine)

Disclaimer:

NAC, like all supplements, is not regulated by the FDA. Before taking NAC speak to your doctor about any concerns or interactions you may have. I am not a doctor and am not licensed to give medical advice, as such, nothing on this website should be misconstrued as medical advice. NOTE: After reading this post, I highly recommend reading this study on Glutathione and N-Acetylcysteine found at Medline.

How I discovered NAC (N-acetylcysteine)

About a year ago I came down with tinnitus. For those of you who don’t know what it is, it’s a noticeable and annoying ringing in the ears. Initially it was much worse but after figuring out that it was possibly due to a virus or congestion in my ears, and taking some decongestants, the majority of it subsided, but it never completely left.

I started talking with my family and found that my brother and father also reported having bouts of ringing in the ears and like mine it sometimes gets worse and then subsides again.

I started looking around for information on what really causes tinnitus. What I found is that tinnitus isn’t a disease, it’s a symptom. Something else is wrong which causes a person to hear ringing that isn’t really there. It turns out that the way sound is transmitted to the brain is through the neurotransmitter, Glutamate and it is believed that an excess of glutamate is what causes the brain to perceive sound when none is present.

This is how I came to find out about NAC which some doctors were prescribing to their patients who were experiencing tinnitus after exposure to extremely loud noises, and while people with damage from loud noises must have it administered quickly to repair the damage, I thought it wouldn’t hurt – especially since I believe that any damage I might have would have been caused by a virus. I found that NAC has many uses which I’ll talk about more in this article.

What is NAC (N-acetylcysteine)?

N-acetylecysteine is an a-amino acid that is found naturally in the body. It is used by our bodies to produce one of the most powerful antioxidants substances known to man, Glutathione. Glutathione is a simple molecule renowned for it’s ability to scavenge damaging free radicals which can lead to disease and premature aging. What’s more, our diets are rich in the other chemicals necessary for our bodies to make Glutathione – Glycine and Glutamic Acid, but our diets typically aren’t rich in sulfur containing foods – which contain cysteine.

Uses for NAC:

There have been a ton of studies on NAC and if you have some time I recommend you google it or check out Medline. Traditionally NAC has been used as an expectorant which helps break up mucus in the lungs so it’s easier to cough up to protect patients who are undergoing kidney tests as some of the dyes can be quite dangerous to our bodies, and most commonly to treat alcohol and acetaminophen (Tylenol) poisoning (see a more complete list at WebMD).

It’s been researched for it’s ability to help boost male fertility when used with selenium, to speed up recovery after physical exercise (see Medline article linked in the disclaimer section) and has been used to treat patients with hearing damage. It’s also been used to treat patients with Ataxia (a disorder that effects body movement), has been indicated to help treat psychological disorders like OCD, Schizophrenia and cocaine addiction. It’s been used to treat people with Cystic Fibrosis, to prevent certain types of cancer, to rid the body of heavy metals and other environmental toxins and has few serious side effects.

Side Effects of NAC (N-aceytlcysteine):

First the bad news! Keep in mind that NAC is a drug, and just as you wouldn’t take Tylenol or Vicodin every day you probably should be careful with NAC. Some research indicates that (at least in mice) NAC in high doses may cause pulmonary hypertension because it fools the body into thinking that it has a shortage of oxygen, while another study indicates that NAC is effective in preventing Hypoxic Pulmonary Hypertension… so I take it all with a grain of salt and err on the side of caution by taking it less than daily and in low doses.

What people don’t know is if this effect is cumulative over time, meaning that if low dose NAC may have the same effect if taken over many years. Something worth mentioning is that many people report taking 600-1200mg daily without issue and it has been used in many different countries for a long time. NAC is generally considered to be quite safe, however there is limited research out there to show without a doubt that it is. There also isn’t a lot of research on whether increasing glutathione is healthy in the longterm or if stopping NAC can cause problems as well. Since NAC cannot be patented, and cannot benefit drug companies, most studies conducted on it have been quite small – leaving many things unanswered.

Minor Side Effects of NAC (N-acetylcysteine)

Just like any other medication some people report runny noses, swelling of the mouth, drowsiness, clamminess, and chest tightness. WebMD also cautions people not to take it if they have an allergy to N-acetylcysteine.

My experience with NAC:

So far I’ve taken a little over 30 capsules of NAC over the last two months. I’ve noticed a significant improvement when I started to come down with the flu, and when I had to sit in a recently painted office for 3 days. I also have noticed a reduction in my tinnitus and feeling less sluggish the morning following having more than 1 alcoholic beverage. As far as side effects, I can’t really say that I’ve had any at all. I have had a few headaches, but it is not unusual for me because I tend to clench my teeth at night.

Alternative to NAC:

If you want to raise glutathione levels for the possible anti-aging or liver protective benefits but don’t want to mess around with NAC, many recommend Undenatured Whey Protein which is also rich in Cysteine. There are many brands but one in particular stood out, Immunocal. I haven’t done much research on it and being such, I can’t endorse it. If you google indentured whey protein the brand will pop up on a number of different blogs. Andrew Weil commented in one of his blog posts (Getting More Glutathione) that Immunocal has little research indicating effectiveness but that it was most likely safe to take. He also mentioned a bias because it was sold through a Multi-level Marketing company which he is personally opposed to.

Filed Under: 4 Hour Body, Body Hacks

Happiness VS Contentment

January 3, 2012 By Richard Leave a Comment

“The world is full of people looking for spectacular happiness while they snub contentment.” – Doug Larsen

Think about that quote for a moment and ask yourself if you are one of those people who overlook the opportunity to be content and instead throw it away for a chance to be spectacularly happy. First a confession: These last few months I have been down in the dumps, and while I’ve been moping around, I haven’t gotten too much done either. A quick google news search regarding happiness based headlines shows that I’m not alone in my harbored feelings of discontentment. A recent analysis of 4.6 billion tweets shows that happiness across the globe is trending downward. So why wasn’t I happy? I’m healthy, in the prime of my life – I have a beautiful wife and great friends!

What is Happiness?

I define happiness as that moment of elation after reaching a goal or accomplishing something. Few moments in our lives are actually spent being happy or in a state of unrestrained bliss. Happiness is based on qualifiers or on external things, such as getting a new job, having a baby, buying something, or receiving a title or accolade. IE “I’ll be happy when I get that promotion” or “I just need to lose a few pounds and then I’ll be happy.”

The Problem With Happiness:

Happiness is just a moment of elation, but not long term satisfaction. It’s human nature to desire to feel happy, however we ignore the lesser emotion of contentment. While peaks of elation are desirable and enjoyable, they can become addicting and distracting. It isn’t practical to believe that we can experience “spectacular happiness” all of the time. Therefore when we base our overall well-being and satisfaction on the pursuit of happiness we have to keep chasing after things that never really fill us with joy for more than a few moments or worse yet are unattainable or impractical. What’s more, the time it takes to gain the things that make us momentarily happy is much greater than the amount of time we get to enjoy the actual feeling of happiness. Buying a new car may take us years of effort to save and pay off, but actually driving it may make us happy for several months – until it eventually becomes routine.

Since happiness is based on wants and on external factors, it’s also completely out of our control. If we say that we will only be happy when we have a new job or find a new boyfriend or girlfriend, then we are waiting to feel satisfied until those qualifiers are met, and since we cannot always control when we find a new job or get a new boyfriend or girlfriend then we could be waiting forever.

Another thought, our society puts an emphasis on happiness and hardly ever talks about being content. We think of contentment as happiness, but happiness and contentment are really two separate emotions. I believe that this causes us to be confused and to feel lost when we fail to find lasting happiness, when we should have been creating lasting contentment.

What is Contentment?

Contentment is an internal feeling of satisfaction based on what one has already accomplished or owns. Contentment is knowing that what you have in life is enough and enjoying the satisfaction of having done what you have already accomplished or created. Since happiness is based on if/when certain things happen, once those things do happen, we tend to set additional qualifiers, such as I’ll be happy if I get that big promotion and then, I’ll be happy if I get a raise of x percent, or when I use my bigger salary to buy a nicer car – and then we say we’ll be happy when we pay off our car. It never ends. Contentment is lasting because it doesn’t come from external sources, but stems from within. Contentment is also much more attainable because it only takes a decision to have it and doesn’t require certain qualifiers to be met.

Happiness VS Contentment Which is Better?

The pursuit of happiness goes hand in hand with the human experience. People have always sought happiness and always will, and it is something worth pursuing, but it must be kept in balance. We cannot base our overall feelings of well-being on happiness as it is unpredictable and hard to find. We need to live our lives centered around contentment and being satisfied with the things we have and the things we have accomplished.

Solomon, who wrote Ecclesiastes said that he built houses and vineyards, acquired property that was rare even for a King to own – and made himself gardens and parks and had servants and singers and wives – yet he realized after many years of trying to find happiness in grander experiences that there was nothing better than to eat and drink and to see the good his hard work had produced, or to appreciate the things he had done and to take pleasure in the simple things like eating and drinking. He realized that eventually he would die, and that the things he worked so hard for would go to his heir, who may not be worthy of them – and so he said that all his hard work was vain, or “striving after the wind”.

So from here on out, I’m basing my well-being – my feelings of satisfaction, on the things I have done and the things I already have rather on than on creating new things. I will continue to pursue those moments of happiness but not base my overall feelings of happiness on achieving that spectacular moment of unrestrained bliss.

How To Find The Happiness / Contentment Balance:

If we find that we are dissatisfied with our present lot in life, we might take a few minutes to consider what we have done in our lives and what we do have and give those things priority in our overall feelings of satisfaction. When it comes down to what makes us happy, we should look at what we have given control over our happiness. What qualifiers have we set for our happiness? Are they practical? Are they really what we think they are?

As an example, the name of this website is I WILL ESCAPE, it’s a reference to my desire to be absolutely free. The realization creeps in on me from time to time that freedom is an illusion. No matter how free we become materially, we are never free of the law and of our obligations to society, our families, or our friends. We cannot and will not do whatever we please and we shouldn’t out of consideration to those around us – and as long as we are a part of societies, families, and friendships, we can never be truly free.

I have re-aligned my desire to be free with the appreciation of how free I already am. While I can’t just pick up and sail around the world or spend months backpacking through Europe, if I had the time and money to do either of these things, I likely wouldn’t because my wife would not want to and my family would miss me while I was gone, however, I am free from many things others are not.

After reflection on what the difference between happiness and contentment is, and evaluating what I base my happiness on, I’ve decided to realign my thinking process on what truly makes me feel satisfied and place an emphasis on contentment over happiness. Since coming to this conclusion I’ve felt more at ease and less stressed, but I realize that I may stray from feeling content from time to time and that it will be a struggle.

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Filed Under: Mind Hacks, Motivational

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