Monday, April 12, 2010

How Does the Credit Scoring System Really Work

Image representing Experian as depicted in Cru...Image via CrunchBase

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Raise your credit score to 740

As lenders continue to tighten credit requirements, getting a good interest rate -- or a loan at all -- requires that you understand how the scoring system works.

In our post-crisis economy, good credit isn't just nice to have -- it's essential if you want to level the playing field with lenders.

Credit scores are three-digit numbers lenders use to gauge your creditworthiness, and until the financial crisis hit, a 720 FICO credit score was enough to get the best loan terms. Even people with lower scores could get decent deals, and at the peak of the lending boom it seemed that no score was so low that it merited a rejection.

How to fix credit report errors
These days, lenders typically demand 740 scores for the best mortgage rates. Lower scores mean higher rates or perhaps no loans at all. Fannie Mae, the giant mortgage-buying agency, recently lifted its minimum score requirement from 580 to 620.

People with top scores are still getting credit card and balance transfer offers. If their issuers raise their rates or lower their limits, they can move their business elsewhere. People with weaker scores, by contrast, are finding their access to credit slowly strangled. Issuers can push them around, and credit seekers have little recourse.

* See which states have the best credit

Less-than-stellar credit can hurt in other ways. After all, credit information is used by:

* Insurance companies to evaluate applicants and set premiums.
* Landlords to decide who gets apartments.
* Employers concerned about higher risk of theft from those with troubled finances.

Clearly, cultivating good credit scores is an essential 21st-century skill.

The good news is that it's possible to boost your numbers if you have a handle on your finances and you know how credit scores work. After all, the median credit score is 720 on the 300-to-850 FICO scale, meaning half the adult U.S. population has a higher score and half has a lower score. Forty percent have scores over 750, and 13% have scores above 800, according to Fair Isaac, the company that created FICO scoring.

Plenty of folks are handling their credit well enough to earn good scores. You can, too. But first you need to recognize that:

* You can't raise your scores if your finances are still in free fall. If you're unable to pay your bills, you certainly can't fix your credit. Real credit score repair will have to wait until your financial crisis has been solved and you have enough money to cover your expenses, plus some extra to begin paying down your debts.
* You can't raise your scores if you don't use credit. Credit scores try to predict how well you're likely to use credit in the future by how well you've used it in the past. So while living a cash-only lifestyle may do wonders for your wallet, it won't boost your scores -- in fact, without continuing use of some type of credit, eventually your credit reports won't even generate credit scores.
* You don't have to pay credit card interest to achieve great scores. "Using credit" is not the same as "carrying a balance on your credit cards." Carrying a balance is expensive, bad for your finances and completely unnecessary. Many of us who have achieved 800-plus scores pay off our balances religiously, and we know you can build and keep great credit scores without ever paying a dime of credit card interest.
* You can't expect overnight results. You're likely to see improvement in your scores within 30 days if you pay down significant chunks of your credit card debt. But otherwise, credit repair takes time, and how much time depends on the many details of your credit reports. If you have serious black marks, such as bankruptcies or foreclosures, you can see significant improvement in your scores as time passes but you may have to wait until those negatives drop off your credit reports before you can join the 700-Plus Club.

Now that you understand the basics, you can use the following techniques to get your scores over 740.
You have to nail the basics
Patrol your credit reports. Your credit scores are based entirely on the information in your credit reports on file at the big three credit bureaus: Equifax, Experian and TransUnion. If the information is wrong, your credit scores could suffer. You can get your reports once a year for free from the government-run; you can buy subsequent copies directly from the bureaus or from Dispute any serious errors, such as:

* Accounts that aren't yours.
* Reports of late payments when you paid on time.
* Bankruptcies older than 10 years or accounts that were wiped out in bankruptcy but are listed as still due.
* Other negative information that's older than seven years. (The seven-year clock typically starts 180 days after the account first went delinquent.)

Get a major credit card. Retail cards and gas cards can help you build your credit history initially, but to get your scores into 700-plus territory you'll want at least one big kahuna: Visa, MasterCard, Discover or American Express. If you can't qualify for a regular card, consider a secured version, for which you make a deposit with an issuing bank. You can find offers at,, and Index Credit Cards, among other sites. Just make sure the card reports to all three bureaus, and try to get a card that converts to a regular credit card after 12 to 18 months of on-time payments.

Arrange automatic payments for every card or loan. Credit scores are extraordinarily sensitive to whether you pay your bills on time, so don't let travel, a busy schedule or a simple brain cramp trash your scores. Most lenders will let you set up automatic payments that take an amount you specify -- the minimum payment, a set dollar amount or the full balance -- every month from your checking account.

Don't let disputes go to collections. Yes, your insurance should have covered that bill; no, you shouldn't have to pay for a broadband connection that doesn't work. But if you let a commonplace problem like these escalate, your account will be turned over to collections and become a big black mark on your credit reports. Pay under protest and get your revenge in small claims court. (Don't get sued yourself, though: Lawsuits and judgments are another major stain on your credit reports.)

First Tax Solution LLC is your answers to all your accounting needs. With our Professional Personalized Accounting Management Team we have the solutions for your tax needs.

Our Motto is Accounting and Tax Service When You Need It

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Saturday, April 10, 2010

Debt Reduction and Yes It Does Work

First 4 digits of a credit cardImage via Wikipedia

Debt-settlement companies promise that you can get out of your debts for pennies on the dollar. Typically, these outfits demand that you stop paying your creditors and instead send the money to them. After a few months, the debt-settlement company promises to open negotiations with your lenders and use the money you've sent to pay them.

The idea is that after a few months of not getting paid, your creditors will agree to a fraction of what they're owed.

Of course, your credit will be trashed at this point, you'll have paid fat fees to the debt-settlement company, and you may be facing lawsuits from your lenders. That's if you're lucky. If you're not, you'll risk all this, and the debt-settlement company will disappear with your money. If you need more details, read "Debt settlement: A costly escape."

Better alternatives include: Debt Reduction Tips.

* Credit counseling. Legitimate credit counselors have debt-management plans that reduce or eliminate the interest rates on your credit card debt.

* Bankruptcy. If you can't pay your debts, you may be better off getting a fresh start through bankruptcy. Your credit rating may recover more quickly, and you'll be able to keep the cash you would have otherwise sent to the debt-settlement company. Consult an experienced bankruptcy attorney who can evaluate your situation and discuss your options.

Debt-consolidation loans from private lenders

A big mistake
If you owe money to lots of creditors, you may be a sucker for pitches from debt consolidators, which promise to combine all your debts into one "affordable" loan.

Unfortunately, though, these loans often come with high interest rates and hidden fees. Instead of helping you pay your debt off faster, a debt-consolidation loan can stretch out your repayment schedule so you actually end up paying more.

Better alternatives include:

* A do-it-yourself plan. If your credit's good, you may be able to negotiate lower interest rates on your debt. (See "Get a better deal . . . with a threat" for techniques.) Then you can tackle your bills one at a time, starting with the highest-rate debt or the credit card that's closest to its limit, while paying the minimums on your other debt. Once this high-priority debt is paid off, make the same-size payment to the next-highest-priority debt. Continue until you're debt-free.

* A debt-consolidation loan from a credit union. Because they're member-owned, credit unions tend to offer more-reasonable interest rates than other lenders.

* Credit counseling. If you can't afford to make the minimum payments on the debt you have, a credit counselor's debt-management plan might be your best option.

* A home-equity loan. Consider this option only if you have plenty of equity in your home, you stop the behavior that got you into debt in the first place and you pay off the loan as quickly as possible. Otherwise, you'll just be draining one of your most important assets, and you'll wind up deeper in debt in short order.

This is my last option. I almost choose not to list it. Only use this if you can and are willing to make life changes in controlling your financial future.

First Tax Solution LLC Offers Debt Reduction Tips and Consultation and it does really work.

Our Professional Personalized Accounting Management Team will help you get our of debt and stay out of debt. We work with you hand and hand. We teach you how to pay your own bills with our proven system. AND YES IT WORKS.

Our Motto is Accounting and Tax Service When You Need It

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Friday, April 9, 2010

Don't Stop Advertising During a Recession

When money is tight we cut everything: including our advertising budget.

Believe me when I tell you that is the last thing you should do.

The key is to look at your marketing dollars as an investment not an expense. Use the customer knowledge that you have and implement smart marketing during these times of financial distress.

* First take look at where you have spent your marketing dollars in the past.
* Second do they or are they able to track your marketing results for you?
* Third think about who your customers are? What do they want? and how can you give them what they want? and how much are they willing to pay for your service?
* Be creative
* This is not the time to become a stressed out hermit
* This is the time to do more networking.
* Offer a special lunch to have the local Chamber have their weekly meetings at your restaurants.
* Partner with local business's that are not in direct competition with your business
* Write community letters in your local newspaper about that great things you are doing for your community.

The items listed above are free. But if you decide to spend money on marketing make sure the marketing company can track your results for you. And remember that it takes more than just a couple weeks to see if an add campaign is working. Another thing to know: it takes the average person to have your NAME SHOVED INTO THEIR FACE 7 OR 8 TIMES before they react to your add ; SO BE CONSISTENT. AND SPECIFIC AS WHAT YOUR ADD IS ABOUT.

First Tax Solution LLC we specialize in Accounting for Restaurants. Our CEO has owned and operated restaurants and She knows first hand the challenges associated with owning your own restaurant.

We also specialize in Start Up Business Accounting for any industry. With our Professional Personalized Accounting Management Team we will fill your every need.

Our Motto is Accounting and Tax Service When You Need It

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Tuesday, April 6, 2010

Starting Your First Business with little or no money!!

Clipart of bills and coinsImage via Wikipedia

For starters starting a small business with very little money is not going to be easy, but you can do it.

* Think business, A clear mindset. Open up Word or get a clean sheet of paper and write down in not more than 1 sentence the goal of your business. If you can not do this, then you need to refine your business goal into a clear statement. Here is an example: "The goal of my company is to sell wholesale disposable Eco friendly table ware to all fast food restaurants in Arizona.

* Act business, Advertisement. Most likely the goal of your business will be centered around selling a product or providing a service. Take advantage of free advertising sites such as craigslist and community bulletin websites. Many people use these websites and you need as much exposure as possible. Post more than one ad on more than one category using different wording.

* Run business. If they won't come to you, go to them! If you are selling a product or providing a service then communicate with who you might think is interested. Examples: If you are selling a product you know a restaurant can use, then make a list of restaurants and call asking if they would be interested. Give people a great reason of why they might need your service or product. An example would be: I will beat the price of your current saffron provider, guaranteed.

* Be business-y. Professional. You have to sound and look professional once you are out there. Hint hint, don't wear those ripped jeans or talk in slang (slang including words like "hey" "whazzup" "hows it going"). Try not to use umm's and you-know's either. The more professional you sound the more people take you and your business seriously.

* Work for your business. If you need to make money for your business, consider the internet! Writing articles such as this on ehow or blogging and adding adsense and other advertising add-ons can earn you money. You can buy a domain name and make a website. If you are not computer savvy there are websites that do the work for you. Yahoo eCommerce charges about 40 bucks a months.

* Do not purchase any inventory. When your customers orders the product then you order it directly from the manufacturer.

* You can easily make enough money a month online to cover the expenses of a website that caters to your costumers needs and most importantly, YOU! Good luck!

First Tax Solution LLC is the Number One Virtual Accounting firm for Small Business. We offer Start Up Business Accounting for any type of business on the planet.

Our motto is Accounting and Tax Service When You Need It
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Sunday, April 4, 2010

Tips to Tracking and Calculating your business Mileage

Documenting Mileage is a big Deal according to the IRS. If you do not have accurate and proper documentation the IRS will disallow the deduction.
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Quick Techniques to make sure you have everything you need for your Mileage deduction:

* Keep a mileage log. In each vehicle at all times. ( a calendar with boxes for each day is perfect) Say, Toni House CEO First Tax Solution LLC

* Write your beginning Odometer reading on the applicable day and where you are going and the ending Odometer when the day is finished

* Calculate your personal Mileage and business Mileage weekly, Write the total at the end of each week for personal and for business.

* Write in the appropriate box for the each time you fill up with gas, change the oil, rotate the tires.

* Keep a large envelope in the back flap of the calendar for all your receipts.

* Keep the calendar, a pen and the envelope in the glove box or console of your vehicle.

* This only takes 30 seconds to record and trust me when I say it is simple yet effective.

* Or you can choose many electronic devices that are on the market today. But, the calendar and envelope system really works.

Beginning on Jan. 1, 2010, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

* 50 cents per mile for business miles driven
* 16.5 cents per mile driven for medical or moving purposes
* 14 cents per mile driven in service of charitable organizations

The new rates for business, medical and moving purposes are slightly lower than last year’s. The mileage rates for 2010 reflect generally lower transportation costs compared to a year ago.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

Revenue Procedure 2009-54 contains additional details regarding the standard mileage rates.

For information regarding vehicle deductions for your business or an employee business expense Contact First Tax Solution LLC. We are the number 1 accounting firm for Small Businesses. We offer Virtual Accounting Solutions for your convenience. Contact First Tax Solution LLC, with our Professional Personalized Accounting Management Team we have the solution to meet your every Accounting and Tax needs.

Our Motto is Accounting and Tax Solutions When You Need It.

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