Getting A Raise, Part III

Posted by Glenn Leach filed in Build Your Wealth
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The previous article talked about a powerful and sure-fire technique for getting a raise. We talked about committing to spending time studying your industry and learning how to do your job better. But maybe you think the idea of studying your industry and coming up with ideas to improve your value won’t work because your job isn’t important enough.

You sweep the floors, stock the shelves, answer the phones, etc., and those jobs just aren’t important enough for you to spend any extra time learning about your industry. And you’re not going to be here long enough anyway.

Any Idiot Can Do What I Do – I’ll Wait Until I Get A Good Job!

Maybe you think that, someday after you get a good job, you can start doing something like this. But for now – it just isn’t worth it? Well, please consider the story of Johnny the Bagger by Barbara Glanz. I love this story and it illustrates so nicely the point I’m trying to make.

Glanz tells of a boy with Down Syndrome who worked at the most entry-level of jobs there is – a bag boy for a grocery store. Yet Johnny began doing something extraordinary on his own and he single-handedly grew the customer base for his boss by creating the kind of “extra value” we’re talking about.

Every night, Johnny would take little pieces of paper and write inspiring quotes on one side and he would write his name on the other. If he couldn’t find a good quote to use, he would make one up. When he arrived at work, he would have a stack of these quotes, and he would place one in each customer’s bag, smile, and thank them for coming in. Pretty soon, customers were lined up waiting in Johnny’s line while the other lines were practically empty, just so they could get one of Johnny’s quotes and his smile.

How Much Is A Kind Word And A Smile Worth?

Many customers admitted shopping at Johnny’s store just because he worked there – even though it might have been easier to shop somewhere else that day. Think of the lesson here. Johnny had absolutely the least potential for making things better for his company or creating “extra value” than anyone you can imagine. So if he could have this much of an impact by a little extra after-hours effort – how much more could YOU have at your job?

That’s the kind of thing we’re talking about. Taking some “extra time” to focus on ways you can improve what you do and how your company does business – and then doing it. Do you see what Johnny did to create this value? A little study (this coming from a kid who had Down Syndrome) and an idea to make things better in his industry – and then the necessary action.

How Much Is Johnny Worth To His Boss Now?

And all of the sudden, Johnny the Bagger is a hot commodity. Do you think maybe he’d be able to ask for a raise and get it? Do you think that his store’s competitors would be willing to pay him top dollar to recruit him away?

Note: Johnny only came up with one idea and put it to work. Your assignment is to try to come up with 10 ideas a day, 5 days a week – roughly 250 ideas a year. Think something will come out of that effort that will help you create extra value? You bet it will. Try it. Your short-term income will improve and your long-term prospects for success will be virtually guaranteed!

Getting a Raise, Part II

Posted by Glenn Leach filed in Build Your Wealth
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If you are serious about making more money at work, I can tell you exactly how to do it – without fail. This method is so fool-proof, it’s almost unfair how well it works. And not only will it earn you a raise or promotion in no time at all, it will set you on a course toward something called “success”.

What is this powerful technique? It is actually a two part technique, and it will require just over one hour a day of your time – 5 days a week. That’s about 5 hours a week. A not-insignificant commitment on your part, but the technique is so powerful that you’ll begin to see results almost immediately.

Every Day – Commit To This

Here’s part one: Every work day, commit to reading something related to your current industry for one hour – preferably before work, but after work is also acceptable. (Ahem – not DURING work!) Read books (Remember those 5 books your boss recommended? Start there!) or trade magazines that focus on your industry. One hour – 5 days a week.

With that kind of time commitment, you should easily be able to read at least one book a month on topics related to your job. Guess what? None of your co-workers are doing this (although teaming up with one or two co-workers in an informal book club is just fine if that will keep you motivated). This way you (or your book club group) will begin to set yourself apart from the just-here-to-collect-a-paycheck crowd.

Nobody Likes The “I Just Work Here” Crowd!

Right after each one hour reading session, part two is to take out a spiral notebook and turn to a blank page. Immediately write down 10 ideas that would make your industry better. Don’t worry about how practical or weird the ideas are – just write down what comes into your brain. Get this done as fast as possible. Don’t worry about repeats from previous days – just write down what comes to mind today.

As you continue to read (Hey, 12 books a year is more than most college students read before they graduate! So this effort is just as good as – even better than – taking some extra college courses. Of course, taking extra college courses ain’t a bad idea either), your brain will be getting more and more ideas from the material you’re reading and your spiral idea notebook will start filling up.

You’ll Just Be Better…

As you go through your work day, you’ll begin to find ways to apply these ideas to your job. It’ll just happen naturally. You won’t even have to force it. You’ll just be better at what you do. And remember our idea about “Create Value First and the Rewards Will Follow”? That’s what you’re doing.

One objection about doing this reading in your field that comes up is: “I don’t plan on doing this job forever. I’m going to be a (    ) once I (    ).” Doesn’t matter what you’re “going to be”. Right now, you are doing what you’re doing and you should become the best at it.

Habits of Success – A Beautiful Thing

If you do this, you’ll get a raise and earn more money now. If you move on to that “future” thing – Great! And won’t it be easier to get there with recommendations from past bosses saying “He/She was the best employee ever!” or “We hate to lose him/her, but he/she just outgrew us!” Plus you’ll be developing habits of success that will stay with you wherever you go.

Stay tuned to Part III, the concluding article, next time …

Getting a Raise, Part I

Posted by Glenn Leach filed in Build Your Wealth
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Hopefully, you took some time to answer those 3 questions in the article “Maybe You Just Need To Make More Money”. And I mean, REALLY answered them. Were you able to identify some strengths and weaknesses in your work habits from your boss’s (or customer’s) perspective? So now you’ve got some things you can work on to help you create more value. (And remember, you provide VALUE first and the reward will follow.)

But along with “doing” those things you’ve identified, there is one more step in the process of getting a raise – and getting it soon. Make an appointment with your boss. (Again, if you’re self-employed – this technique can be adapted to use with your clients too.)

At this meeting, admit that you have been giving some thought how you can be a better employee and how you can provide more value to the company. You don’t need to get real specific with your ideas unless you want to, but here’s the key to this meeting:

Ask your boss the following question (and then shut up and wait for an answer – even taking notes): “What would it take for me to get a raise in the next 3-6 months?”

If you’ve really done a good job answering those 3 previous questions, you probably already have a good idea what your boss will tell you. But by making your boss answer the question himself/herself, you are psychologically forcing a sort of commitment from him/her that once you do accomplish certain things – those things that create more value – you are entitled to the increased reward. This will make it very easy for you to go back later and remind the boss of the conversation, provide proof of the increased value you’ve provided, and get your raise.

You’ll Only Have Your Own Failure To Blame

And this conversation also raises the awareness of your boss towards you. Not many employees will try this type of thing at work, so it will be completely refreshing. You will suddenly be viewed as a valuable member of the team, someone who is trying to better the company and work up the chain of command. You will be taken more seriously and be given better assignments – to test you. Only your inability to achieve the results you’re after will keep you from your raise.

Begin coming in a little earlier each day, and leaving a little later. Those few extra minutes a day, combined with your increased focus on creating value, will pay off big time – sooner than you expect.

Is Your Boss Just A Tightwad?

But maybe your boss is a tightwad and doesn’t give raises? Doesn’t matter. Work at your job as if you will get a raise by creating extra value. If you work for the tightwad boss, but you increase your value, a competitor or some other employer will recognize it and try to recruit you away (at which point, your old boss could loosen the purse strings to keep you). If you’re self employed and suddenly your work has more value – raise your prices, because now you’re worth more. Again, create the extra VALUE first and the reward will always follow.

See you for Part II …

Maybe You Just Need To Make More Money?

Posted by Glenn Leach filed in Build Your Wealth
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We’ve spent a lot of time talking about cutting expenses and using your money more wisely. In my experience and study of “money problems”, the consistent theme I’ve discovered is that financial struggle is rarely caused by lack of adequate income. The fact is, people are usually in debt or have poor credit because they don’t manage the money they do make wisely. So that’s why financial advice articles focus so heavily on these areas.

But maybe you actually just need to make more money? “If my company would just pay me more… If I could just get more clients… If I could just hit the right Lotto numbers – just once…” I’ve got to stop you there. If these thoughts sound like a solution to your problem, we’ve got a long way to go here. But I’ll do my best to help you anyway…

But Somebody Has To Win The Lotto!

First of all, you ARE being paid what you are worth right now. You are NOT being underpaid by your boss. If you can accept this truth, this process of making more money will be much easier for you. For the amount of value you are providing your boss (and if you’re self-employed, your customers are your boss), you are receiving a certain monetary reward in return. If you want to make more money, you must figure out a way to provide more value.

And to make sure your thinking is laser-focused in the right direction, you must figure out a way to provide more value to your boss! If you can accomplish that, you will put yourself into position to begin earning more money. MUCH more money!

Start by asking yourself the following questions. Write down the answers. Be brutally honest with yourself. By clearly defining the problem, you can begin to solve it – and not before. The answers to these questions will help you define the problem. (Remember, if you’re self-employed, substitute “boss’ with “client”.)

The answers to these questions, especially when you focus on answering them from your boss’s perspective, will give you insight on what you need to do to start making more money at your present position.

Why Focus On Your Present Job?

But why focus on your present position at all? Why not just go find a better job? The answer is that by focusing on learning to provide more value, you will not only begin to earn more money at your present position, but you will also become a more sought after employee for other positions.

Work on providing VALUE first – the money will follow. If you work for a company that doesn’t recognize and reward you for being outstanding at what you do – you’ll be approached by other companies who WILL recognize and reward you (Yeah, it doesn’t hurt to network within your industry a little either – which is a great way to improve your ability and skills anyway).

If you become WORTH more in terms of the value you provide, you will earn more. This is not my opinion, it is just the way it is. So start there – it really is the answer to your income needs.

How To Get $500 In The Bank – FAST!

Posted by Glenn Leach filed in Mortgages and Real Estate
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In the last article, “Get $500 In The Bank Now”, I told you to write yourself a $100 check without cashing it (hanging it on the wall someplace you can see it everyday for motivation) to create a little cushion in your checking account to prevent bounced checks (and hefty bouncing fees). This is the first step towards getting $500 in the bank and keeping it there.

I also told you, in a kind of snotty way, that getting this $500 in the bank was the first step towards home ownership, and if you weren’t able to do this first step, then you should give up your dream of owning a home.

Well, that was down-right RUDE!

Yes, it was rude – but it was also true. It is easy to preach at you about things you should be doing, but it is quite another to offer practical solutions. And I’m a practical solution kind of guy. Step one was to create the cushion in your checking account. Step two and three are below.

Three steps ANYONE can do that will put $500 in the bank right away. So, again, if you can’t manage to get the $500 in the bank – even after I show you this anyone-can-do-it 3-step plan, well, just keep renting and miss out on the most proven wealth-building vehicle (home ownership) that there ever was and ever will be. (Oops! I got snotty again there!)

Step 2 to $500 in the Bank

Step 2 may seem silly to you, and right off you’ll think, “Oh, that will do me a lot of good – NOT!” but come on, just play along! How many other debt management, wealth-building, how to buy a home articles have you read that haven’t gotten you anywhere? I’m guessing, quite a few. But this step is so stinking easy to do, and it will get you STARTED, that you just need to do it. If you don’t have a pile of cash in the bank right now – then DO THIS!!!

Here’s what you do: Go through all your coat pockets, cups in the laundry room, dresser drawers, car ashtrays, couch cushions, etc., and gather up all your loose change. (Loose change? Are you serious? Hey, just do it – you’ll be shocked how much change you have. And it doesn’t even matter how much you have. 37 cents? $20? Doesn’t matter.)

“I’d like to open a savings account with this $2.54…”

Once you’ve gathered up your coins, head to your bank and get some of them free paper coin rollers. While you’re there, find out about how to open a savings account – any rules you need to know. Then head home and roll the coins up. You’ll use this as the opening deposit in your savings account. (Yes, most banks will let you open a new savings account for as little as $1.00.)

How does this help you? It gets you started. You’ve actually taken an action step. You’ve started to build real momentum. AND you’ve created a “landing pad” for the next wave of deposits you’ll be creating with Step 3.

Step 3 – Remember, ANYONE Can Do This

In Step 3, you’re gonna part with some junk. Find your old record albums, cassettes, video games, VHS movies, books, and get ready to sell them. You can use Ebay or Craigslist or try taking your books to a local used book store and see what you can get. Look for other items that may have some value – old coin collections, jewelry, tools, Boy Scout merit badges. Get these sold! (Come on, do you want a house or an apartment filled with junk?)

Don’t stop with just YOUR junk. Ask your relatives and friends if you can clean out their junk for them – if they know why you’re doing it, they’ll be happy to help you out and provide you with lots of cool stuff.

If you don’t know how to do Ebay, etc. yourself and don’t want to learn (Hey, did you miss that part about “anyone can do this”?) there are plenty of brick-and-mortar business who will sell your stuff on Ebay for you and take 30% of the profit – that’s better than nothing if you just can’t do it yourself for some reason.

Let Your House Seeds Grow

Your goal is a minimum of $500. Don’t stop until you get $500 in that new savings account. Once that $500 is in your savings account – DON’T TOUCH IT! That $500 is your house “seed” money. Plant it and it’ll grow into a home. Pull the seeds out of the ground before they grow, you got nothing but worthless dirt.

What did that take you – a day or two? A week? Did you enjoy doing it? Many people supplement their incomes nicely doing Ebay-like selling. Ebay.com has free tutorials that show you step by step how if you want to learn. This one skill could get you your house faster than you can imagine. Something to consider doing more of, but at least do it this one time – it’ll feel like progress! Do it!!!

Get $500 In The Bank Now!

Posted by Glenn Leach filed in Mortgages and Real Estate
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You’re trying to get in position to buy a home. You may have huge outstanding debts or serious credit blemishes on your record. Maybe collectors are calling you and you’re afraid to answer the phone, and it seems every time you get a paycheck your immediate bills already add up to MORE than your take home pay.

If this sounds like you, or maybe your situation isn’t nearly this severe but things are still tight, the first step to financial freedom and getting yourself ready to buy a home is to start with getting $500 in the bank. And I don’t just mean that you deposit your paycheck and then spend it. I mean $500 that sits there, doing absolutely nothing. Month after month, your bank balance NEVER goes below $500.

And here’s the harsh part of this lesson: If you can’t do this, you shouldn’t buy a house and you shouldn’t even think about it anymore.

But, I’m not telling you that you have to be able to do this right this minute. It’s okay to take a few months to get there if you need to. But start right now getting yourself to this position. Make it a priority. Think of it as your first test. If you can quickly and easily pass this test, you’ll be in good shape to buy your home very, very soon. If you struggle to pass this test, then realize you’ve got a long battle on your hands to get yourself ready to take on a mortgage.

Sadly, You’re Not Alone…

Why $500? Well, first of all you should realize that if you don’t have $500 in the bank, you are not alone. A recent survey revealed that over one-third of adults under the age of 35 did NOT have even $500 in the bank (Percentages improved slightly with older age brackets, but not much).

When you live this way, you know about the devastating effects of overdraft fees, late charges, and the helplessness you feel whenever an emergency strikes – car breaks down, appliance failure, medical emergency, etc. Any one of these things can wreak havoc on your budget for months before you can catch up again – that is IF another emergency doesn’t hit you again, and right away too.

We’ll look at ways to build this $500 cushion in upcoming articles, but to get you started, here’s your first assignment:

When you get your next paycheck, write yourself a check for $100.

Don’t cash the check, but do deduct it from your registry – you’ve now given yourself a $100 cushion in your checking account – enough to prevent bounced checks. Maybe instead of cashing it, you put it a frame and hang it someplace where you’ll see it often as a reminder of what you’re trying to accomplish? (If you use a debit card and rely on the ATM balance, you’ll need to mentally subtract this $100 each time you see your balance.)

Honey? The Show Starts At 6:45 – Don’t Be Late!

This technique is the same principle my wife uses to make sure I get someplace on time – she’ll tell me something really starts 15-30 minutes sooner than it does, creating a little time cushion, and that way I always seem to show up on time. So create a little checking account cushion and it’ll likely save you $100’s over the next year in banking fees, and it’ll get you that much closer to buying a home.

In the next article, we’ll continue to show you how to grow your cushion from $100 to $500 …

Can You Get Out Of Debt By Eating Better?

Posted by Glenn Leach filed in Get Out of Debt
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In other articles on this website, we’ve talked about the need to watch out for “Latte Factors” (A phrase coined by David Bach concerning the tendency of many people to “automatically” spend money everyday on something they don’t really need). The point Bach makes is that most financial troubles can be solved by making better spending decisions. In this article, we’ll look at another way to “automate” yourself to success.

One common “Latte Factor” that many people have has to do with their eating habits. These faulty habits are also one of the primary reasons why Americans have gotten so unhealthy in the last 30 years, sending obesity, heart disease, and diabetes rates soaring.

Are Your Friendships Slowly Killing You?

Tell me if this sounds familiar: You’re approaching the noon hour at work and your co-worker says, “Where do you want to eat today?”. After 10 minutes of back-n-forth, you finally decide where to go. Seeking novelty and mouth-entertainment, you end up spending $10-15 on yourself before heading back to the office (When did these restaurants start charging $2.49 for a glass of pop anyway?). Each day, your waistline gets fatter and your wallet gets slimmer, but you don’t want to be accused of being unsociable, do you?

For you Oprah watchers, you’ve no doubt seen her favorite health guru – Dr. Oz – bring out bowls of body parts to show what bad life style choices do to the body: The black lungs of a smoker, the over-sized belly-fat memento of an obese person, etc. One of Dr. Oz’s best-selling books is titled You: On A Diet and he details many of the body-destroying effects of poor eating habits. For solutions, I’ll save you 370 pages of reading by summarizing his main idea: Make your eating “automatic”.

Let’s Do Something Crazy For Dinner Tonight!

Dr. Oz’s big eating plan is to take two meals a day and eat the same thing every day. He suggests making Breakfast and Lunch automatic, and then you can go crazy with dinner. By making healthy choices for these two automatic meals, you’ll lose weight, you’ll have more energy, and you’ll save money.

Remember those old sitcoms where the wife always sent her husband to work with this black, metal lunchbox? That kind of behavior is seen as “weird” these days. But if you’re looking for a way to save more money, get out of debt, and afford your new house payment AND get healthy enough so you can enjoy the home for a long, long time, Dr. Oz’s plan is “right on the money”.

You’ve probably been told that in order to afford what you want, you’re gonna need to “tighten your belt”. Follow this plan, and you won’t need to “tighten” anything – you can just wear a smaller belt.

Imagine if both husband and wife did the same thing – would $600 in savings each month get your finances (and your fannies) in better shape? Don’t “eat yourself out of house and home”.

Credit Scoring In Plain English

Posted by Glenn Leach filed in Understand Your Credit
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Most people understand that there are 3 major credit bureaus who keep track of all your credit transactions, and that they give you a rating – known as a “credit score”. But very few people understand how this “score” is actually determined. It is a complicated mathematical scientific formula locked away in a secret vault somewhere, but you don’t want “complicated”, “mathematical”, or “scientific” mumbo jumbo to stuff in your head, so why don’t we make it simple for you?

Time For Plain English

Okay, here you go: In simple language, your credit score is based on four things:

1) How long have you had credit? (Depth of Credit factor)

2) How well have you managed your credit in the past? (Risk factor)

3) How well do you pay your current bills and accounts? (Current Habits factor)

And the one that most people don’t understand:

4) How likely are you going to be able to manage your credit in the future? (Safety Net factor)

Have You Had Past Problems With Credit?

Many people, especially those that have had credit difficulties in the past, try to avoid using credit – thinking that this will help their credit rating. Or they believe that they should concentrate on paying off old debts before attempting to get any new credit established. These approaches are wrong, because approx. two-thirds of your credit score is based on how well you manage your current accounts.

Some of the hardest resistance I ever receive from my mortgage applicants who have past credit challenges is when I advise them to open some new credit accounts. It just doesn’t seem like the right approach to them: “If I already have a bunch of bad credit accounts, how could it possibly benefit me to open more credit accounts?” The answer lies in #3 – Current Habits, and #4 – Safety Net.

More specifically, if you have unpaid bad accounts on your credit report, you are a “bad creditor”. If you work hard to pay off these bad accounts, they don’t become good accounts. They only become paid off bad accounts. And if all you have on your credit report is paid off bad accounts, you’re still a bad creditor and you’ll still have a lousy credit score.

You MUST Open Up Some Good Accounts

So if you want to improve your credit score, you MUST open up some good credit accounts and keep them good. Make the payments on time and keep the outstanding balances under 30% of the credit limit (If you have a $1,000 limit, NEVER charge more than $300 on the card and ALWAYS pay the bill in full each month). Two-thirds or your credit score is bases on how well you pay your current bills and your balances to limits ratio.

Can You Measure The Depth Of Something That Doesn’t Exist?

Then, once you get these accounts open, your “depth of credit” scoring factor will get you even more points the longer you have these accounts open. But “depth of credit” cannot help you until you actually get some good accounts open. You can’t measure the depth of something that doesn’t exist.

You can’t sit on the sideline and hope your credit score will improve by itself. You must actively pursue good credit. Yes, you want to take care of your past bad credit in order to reach the highest credit score levels, but your score won’t move up at all unless you add good credit accounts to your report.

Now, before you go out and start applying for all kinds of new credit accounts, let’s discuss the proper approach and get some perspective here . . .

Credit Report Errors? Or Deliberate Misreporting?

Posted by Glenn Leach filed in Understand Your Credit
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You just got a copy of your credit report and it is full of errors and accounts that aren’t yours. Your first reaction is to get mad at the credit reporting agency for being so stupid and ruining your life. But hold on a second there pardner…

Before you direct your anger at the wrong place, you need to understand that the credit reporting agencies rarely make errors. The report you have in your hand is from a credit reporting agency. They don’t make up stuff and put it on your credit report – they just report what is reported to them. If there is an error on your report, it didn’t come from the reporting agency.

But sadly, credit reports are often full of reporting errors! And the fact is that many of these reporting “errors” are done deliberately! That’s right – these “errors” are often put there ON PURPOSE! They’re rarely the result of the credit reporting agency making a “mistake” and “accidentally” reporting incorrect information on your report.

Why would someone purposely report incorrect information to the credit bureaus? There are a number of reasons why, and it often surprises people to learn that any creditor who is registered with the credit bureaus can report any information about you that they want. And as soon as they do, the credit reporting agencies will add this information to your report without question.

Any Creditor Can Report Anything They Want!

So why would a creditor report incorrect information about you to the credit bureaus? Well, in a word, MONEY! It’s profitable to report incorrect information, and where there is profit, there is somebody seeking it.

Common Examples of Deliberate Misreporting:

Your bankruptcy becomes final and your creditor is notified by your attorney that you have been released from your obligation to them. After awhile, your creditor “somehow forgets” about this and reports your old account as past due again. “Oops!”

• Your bankruptcy attorney gets busy and “forgets” to notify your creditors, and all that bad reporting stays on your report. “Oops!”
• During your divorce, certain accounts are assigned by the judge to be the sole responsibility of your ex-spouse. But when the creditor can’t collect from your “ex” they “accidentally” report this bad account to the bureaus under your name. “Oops!”
• You have a common name “Joe Smith” and there is a “Joe Smith” in your State who is bouncing checks. The collection agency can’t locate the check-bouncing “Joe Smith”, so they “accidentally” report every “Joe Smith” in the State as the check bouncer. “Oops!”
• You have a past due account with a creditor. After some time, you finally manage to pay them back what you owe them, and they agree to report your payment to the credit bureaus. But after you leave, this creditor figures that since it took you so long to pay up, that they don’t need to be in a hurry to report the new info to the bureaus. “Oops!”

Granted, some of these “mistakes” really are just careless errors on the creditors’ part. But many of these “mistakes” are deliberate attempts to hurt your chances of ever borrowing money again, or worse yet, are blatant attempts to collect from you again!

BUT THAT’S NOT FAIR! DOESN’T THE LAW PROTECT ME?

Yes, the law does protect you. If these creditors are caught doing these things against you deliberately, they could be fined and punished by the government. But this rarely happens, because you – the consumer – would have to push the issue (costs money for lawyers and to file complaints) and then you’d have to “prove” that they did this to you on purpose. Good luck “proving” that. A good, convincing “Oops!” and an apology, and the creditor is off the hook, and you’re out all those attorney fees.

The government sometimes goes after these predator-creditors themselves, but they usually only take action against overtly blatant consumer fraud, involving large dollar amounts, and they rarely take on those little “pukey” creditors who do an occasional “Oops!” with relatively small dollar amounts involved.

So, it’s really going to be up to you to proactively take charge of your credit report and get things corrected yourself. There’s lots of articles on this website to help you with your disputes.

Keep It In Your File Forever!

One thing to keep in mind whenever you’re dealing with credit reporting. Whenever you get an agreement with a creditor – maybe you’re settling an account, paying off an old debt, having someone remove an error for you – make sure you get the agreement in writing from the creditor, and KEEP THAT WRITTEN AGREEMENT IN YOUR PERMANENT FILE FOREVER! The chance of that “oops” showing up again are very high, especially if the “oops” was done by that creditor on purpose in the first place.

Using Bribes and Threats To Get a Good Credit Account

Posted by Glenn Leach filed in Understand Your Credit
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Yes, you read the title correctly. If you need to add a good credit account to your credit report (and the only way you can raise your credit score is if you have some good credit accounts), you can try using a bribe to get one. And , yes, this is legal to do!

The best place to start when trying to add a new credit account is your bank. Go in and talk to a new accounts manager. Yes, physically walk in to the bank and talk face-to-face with a person. If you have a copy of your credit report already, take that with you. Explain that you are trying to get your credit back on track and you would like some help.

They’ll Try to Push You Off

Ask if they will let you open a new credit card account with a small credit limit. Show them your credit report (so you won’t get the “You’ll need to fill out an application and wait a week to find out” run-around). They’ll try to push you off and not give you a decision, but try to get an answer on the spot. Not an iron-clad guarantee, just an “opinion – based on what you see” answer.

To improve your chances, pull out the bribe. No, I’m not talking about small bills in an unmarked envelope. Your “bribe” is your paystub. “If” the bank is willing to give you a new credit card, you would be willing to set up a direct deposit checking account with your paystub.

Do NOT Under-Estimate The Value Of Your Paystub!

Banks need deposits right now. In this economy, banks are failing because they are running out of money. Even if you only make a few thousand a month, that is a huge amount of money to them for a couple reasons.

• Reserve Requirements – Banks have to keep a certain amount of assets on hand at all times. They can count a certain percentage of their real estate holdings as part of their reserve requirements, but with the value of these holding eroding lately, they are scrambling to keep enough assets on hand. Your measly little paycheck just became far more valuable to them.
• Leverage – Banks are allowed to lend out more money than they actually have, based on their liquid asset base (they acquire extra money through the FED based on how much cash they have on hand). Your little $2,000 deposit could mean the bank can lend out an additional $10,000 or more – earning interest on all that extra loan volume. The bigger your paycheck, the more they can lend, the more profit they earn.

Offering to have your paycheck automatically deposited into your checking account every payday is huge to them – especially in this uncertain economy. Letting you have a little $300 limit credit card in exchange is something they really can afford to do.

The “Threat”

The “threat” in our above article title is the idea that if that bank won’t help you, you’ll have to go find another bank who will. You may have had an account at that bank for years, and the thought of losing you – even if you’re a lousy customer – is not something they want to think about. Don’t immediately close your account. Don’t get nasty. Don’t call the poor new accounts manager dirty names. Be nice. But let him/her know that you are serious about wanting to get your credit back on track and how disappointed you are that they won’t help you.

Can You Suggest Someplace That WILL Help Me?

Then ask for suggestions on where you should go try next. Which bank or credit union would they recommend who would value your direct deposit business in exchange for a little credit card? They might back-peddle on the spot and “see what they can do”. But if they can’t or won’t help you, go find some place that will.

This Bribe & Threat routine really does work. And when you do get your new account, don’t make them sorry they gave it to you. Use it wisely and pay off your bill in full each month. After a few months, you’ll be able to use this good account to help you get more good accounts.