6 steps to boost your credit rating

Book Review
Title: "Your Credit Score: Your Money & What's at Stake"
Author: Liz Pulliam Weston
Publisher: FT Press, 2009; 224 pages; $22.69

It's no secret that credit scores are increasingly important. The recession has sent many a consumer's score down the drain, as people have lost homes, settled debts, declared bankruptcy, short-sold homes and even simply fallen behind on their mortgage payments in an effort to get their lender to restructure their home loan.

While consumer credit card debt is down, so are credit scores, on average, according to a recent study.

At the same time, the end of the subprime era has meant tighter credit requirements not just for home loans, but for all sorts of loans and credit. That's right: Credit is more important than ever, and scores are down.

Until now, most financially savvy folk have been hunkering down, getting bills paid off and attempting to stabilize their position vis-à-vis their homes, with much less concern about their credit score than about the long-term financial soundness of the decisions they are making. As we get things paid, though, many of us will shift our view to credit repair or optimization.

To that end, MSN Money's Liz Pulliam Weston has just released an updated edition of her bestselling manual, "Your Credit Score, Your Money & What's at Stake." Given that credit score algorithms and the rules and regulations that form the landscape underlying a consumer's ability to impact their score change fairly frequently, this is one of the many recent updated editions of personal finance books that is not only timely and welcome, it's truly necessary.

As such, I'm taking a detour from my usual rule of reviewing only very recently released books to review this 2009 publication, because I think it's exactly what so many of you, my readers, want and need right now.

Pulliam Weston starts out briefing readers on what it costs to have crappy credit, which might have been a mystery on the first publishing of this book in 2007, but was crystal clear by the time this version was published a little over a year ago.

She sketches out the differential interest costs to two hypothetical women (one with "good" credit, the other with a low credit score) considering their credit cards, auto loans and mortgages and tallies them up to a lifelong "penalty" of more than $300,000 to the woman with poor credit.

Next, Pulliam Weston provides readers with a primer on how credit scores work, an oft-covered, yet still-more-often misunderstood subject. She impresses upon readers that the score is an ever-changing snapshot that is used to predict all sorts of credit-related behavior; the ever-changing nature of the score is both a blessing (you can improve it!) and a burden (you must stay vigilant about it!), in Pulliam Weston's world.

She drills down into the five most important elements of your score, and shows readers how to find the scores that matter to lenders.

In addition to covering the traditional FICO score, Pulliam Weston also covers the alternative FICO Expansion score, which is used to assess the creditworthiness of consumers who have little or no traditional credit, and the relatively new VantageScore (which is published by the credit bureaus themselves, rather than by Fair, Isaac & Co., the FICO score publisher).

In what I'd call the "money" chapter of the book, Pulliam Weston presents a basic, but comprehensive and detailed, six-step program for improving your credit score, including credit score-maximizing approaches to actually eliminating debt and managing your use of credit cards on a monthly basis.

If you simply want to improve your credit, without any of the fluff, fast-forward to this chapter, but not through it. I'd encourage those looking to buy or refinance a home anytime in the next couple of years to start working this plan, stat.

Next, Pulliam Weston busts a bunch of credit score myths, most of which are no longer commonly held (in my opinion), but a few of which are -- a good chapter to quickly peruse to make sure you're not holding any false credit beliefs.

The next two chapters are worth their weight in post-recession gold. Pulliam Weston offers a very logical, useful process for working your way through a credit crisis, empowering readers to calmly reason themselves through very scary times by prioritizing their bills, the consequences of not paying them, and the action steps they need to take in very tough times, like when the money runs out.

And, for the aftermath, Pulliam Weston offers a chapter on credit score rehabilitation, post-crisis. If you're not planning to buy or refi, but have just survived financial you-know-where and high water, this one's for you. You'll learn about your rights, which debts not to touch with a 10-foot pole, which ones to play ball with and how to get your score in rebuild phase.

Pulliam Weston also offers fast fixes for those who need a quick little boost before making a large credit purchase (think: home); covers identity theft (which is more common than you might think) and how to unwind its credit score impact; and talks you through the impact of your credit score on your insurability and insurance rates, before providing some long-term guidelines for maintaining healthy credit over time.

Whether you're buying a home, refinancing or simply trying to build your credit back after a job loss or other financial trauma, "Your Credit Score" presents a concise, comprehensive, extremely user-friendly guide to get your score where you want -- and increasingly, will need -- it to be. I strongly recommend this book.

Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.

                                                   

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