Credit 911: Secrets and Strategies to Saving Your Financial Life

INTRODUCTION

Living on the Edge

It amazes me how easy it is to ruin perfectly good credit with one ill-advised decision. It happens every day, even to people who have paid everything on time for years, played by the rules, and avoided risky or dangerous money habits. One of the problems in our system is that your credit rating is tenuous and can change very quickly (on the downside); but it takes forever to repair a problem and to move your score back up.

Bad Credit Happens to Good People

I want to share a few examples with you to make the point about how we are all living on the edge when it comes to credit. First is the case of the typical hard-working American following the rules and maintaining an excellent credit rating:

Bad Advice Is Easy to Find

Dave was a 34-year-old teacher with a wife and three children. He and his family had been sacrificing and following a strict budget for years, saving to buy their first home. Along the way, Dave had built up an outstanding credit score of 797—good enough to be preapproved for a home loan. When he was ready to buy, Dave and his wife found the perfect house in a great community. Everything was falling into place, and 30 days before closing, it looked like their dream was finally within reach.

Then Dave walked into a Bank of America branch to make a simple deposit that would change his life. In years past, a bank teller would have just processed the transaction, handed Dave his deposit slip, and said, “Have a nice day.” But now ...