What kind of chapter was this? My goodness. It’s definitely not any kind of advice I have ever heard of before. The chapter title is “You are not in the business to pay your vendors.” It revolved around trying to keep your cash as long as you can and in this case that means paying your bills and vendors late whenever possible using stall tactics.

Basically, Cloutier is saying that you should forget about things like your credit rating and whether or not your vendor likes you. Paying your bills late is like an interest free financing with way he puts it. Of course, there are various examples he uses of applying this business tactic that has worked wonders for him and many others.

As well, he clarifies too that this doesn’t mean you should be intentionally trying to avoid vendors and your landlord, but what you are doing are giving excuses like how you need a few more days to get the money in order to pay the bills. You should also make a list of vendors based on rankings such as ones that really wouldn’t want to get rid of you and therefore you can stall longer.

As much as I hate this advice, I have no doubt it probably works a lot of times too. Now you know why as a provider you should have a clause where if people don’t pay up they will be subject to an interest fee penalty. I don’t see why you would want to wreck your reputation though and depending on which industry you work in it is just so much easier nowadays to cut something off that a business desperately needs if they don’t pay the bill. Example, if it’s an online business I doubt the web host will let you run for long without paying. What a crazy chapter.

Okay, this was an interesting term. Basically, on the news they were talking about credit scores again and how most people aren’t too knowledgeable about the topic. Now you know how in the news whenever they interview people there is a strip on the bottom of the screen to label the person below their name? Well in this particular case, the person they were labeling was called a “credit victim”.

Essentially the person had a bad mark on his credit report as a result of a bill that wasn’t paid on time. It was some kind of rent fee apparently where himself and another individual was suppose to split the bill except the other guy never paid his half. To make it worst, the bill was under his name only. As a result, he couldn’t get a loan from a bank.

It is important to differentiate the difference between a credit report and a credit score too like with the post I made before. I just thought it was kind of over dramatizing to label people as “credit victims”. You then see them interviewing others who have no idea how they could check their credit score until it is too late. Almost felt like a propaganda segment to advertise credit report products/services.

Although, there was one interesting tip that most people don’t think too much about and that is your total credit availability to usage ratio. For example, they made the point how let’s say you have $5000 on your credit card that you maxed out in the month. Being the financially responsible person that you are, you pay it off in full. You would think that would be good for your credit score, but the fact that you used up all your available credit is considered a bad sign and so you should consider using less than your maximum credit limit.

Speaking for myself, I usually don’t worry too much about that though. Funny thing is a couple of years ago I racked up my credit card to the limit for Christmas shopping which was in the thousands and since my limit wasn’t high enough I had to just pay off the balance right away to free up the credit availability. Think the bank saw this too and they just simply increased my limit by a couple of thousand.

Can you truly be a “credit victim” though? I personally never viewed credit as a necessity personally. It just makes life way more convenient with the way things are I’d say.

I was watching that web cast of Suze Orman just yesterday and boy did that open up some interesting moments such as that restaurant owner that is mad over the advice of not dining out for a month. But I’ll save that for another post as watching that web cast made me realize that a lot of people actually don’t know how to obtain their credit scores/credit reports. Figured it would be better to talk about that first since there was a discount offer too.

In a nutshell, a credit score is basically used as a way to determine your “credit worthiness” as it is based on how well you can mange your credit and finances. If you are the type of person that always pays your bills on time then you will have a higher score compared to someone who only pays the minimum or worst doesn’t pay their bills at all.

That way, the lender can determine whether or not you are responsible enough to give credit to. In some cases too, employers use this information to determine your suitability for a job. If you want a little more detail about what a report can show, I posted my own online credit report way back that you can see at my personal credit score and profile post.

Just for clarification too, there is a difference between a “Credit Report” and a “Credit Score”. The Credit report essentially has all of your personal details such as your contact information and job history. At the same time, if you have any type of existing credit (such as a credit card or mortgage) it will appear on your credit report. As well, any outstanding debt that you have.

A “Credit Score” is basically taking all that information from your credit report and putting a number to it in order to show the lender your “risk level” in giving you credit. A low score means you are a risky person to give credit to as you are not likely to pay them back whereas a high score shows the opposite. A score usually ranges from 300 to 900 in Canada and 300 to 850 in the US. (People in the US often refer to the score as a “FICO score”)

While getting your credit report online is easier and more convenient, I’m surprised that web cast didn’t mentioned anything about how you can get it for free. (Especially for a segment that focused on helping people to save money). I believe the only difference between Canadian and US residents is that Canadian residents can get as many free credit reports as they wish when it comes to requesting for the report to be sent by mail.

While the process itself should be similar, I will use the Canadian system as the example (Since I am from Canada too). You would first have to choose a credit bureau to contact and here in Canada the two largest ones are TransUnion and Equifax.

Let’s use Equifax as an example. To obtain a free credit report, you would need to fill out a form such as this located at http://www.equifax.com/ecm/canada/EFXCreditReportRequestForm.pdf .

As you can see, it requires some very basic information such as your contact information along with a copy of two pieces of ID. Afterwards, you simply mail it off to the address listed and you can expect to get a report in the mail by 5 to 10 days. It’s actually that simple and you will receive a lot of insight to your credit history. This is the free way to get your report for those that need to save every penny.

For US readers, you can visit the website at annualcreditreport.com and obtain your free credit report that way.

Now the more convenient way is to simply order it online nowadays. Usually the fees can range from $9 to $15 to obtain a basic report and about $25 to get your score with it(Keep in mind too that your credit score could be slightly different between the credit bureaus).

While there are normally higher priced packages available, the main difference is that they usually provide you with more services such as giving you monthly reports as well as advise on how to improve your score. But for a person like myself that just wants the score and report, the basics is good enough. Here are some links to various providers where you can get them online:

Canada:

Equifax – The price to obtain an Equifax credit report is $15.50. Although, the “Score Power” package might be better for $23.95 as you will get your credit score with it.

TransUnion – You can get the report online for about $14.95 and with the score it is $22.90

US:

Equifax – While you can get the credit report only for about $11, I think getting the $15.95 option to get your FICO score as well is the better way to go. They do also have an option to get a report from all the three large bureaus at once (Equifax, TransUnion and Experian) and a monthly report plan for about $12.95/month.

Experian Triple Advantage – The company offers a monthly packaged deal costing $14.95 a month that grabs the score from all three credit bureaus. While it says free on the page, it is a free 7 day trial and so if you don’t want to pay you would need to cancel it before the promotional date expires.

TransUnion – They operate a brand called “Truecredit” where the service costs $14.95 a month and reports your credit score from the top three credit bureaus.

MyFicoScore.com – This was the one that Suze Orman was clamoring about on the Oprah Web Cast. Apparently until about January the 22, 2009, by using this link at http://www.myfico.com/Products/FICOKit/Description.aspx?lpid=SUZEWEB3&promocode=50FICOKIT you can get the FICO report package that is normally $49.95 for $24.97. Apparently the discount will apply automatically at the end of the transaction. From what I see, you are most paying a premium fee for her branded kit.

So hopefully that gives everyone some good ways to get your credit history. There is pretty much a good option for everyone to go with depending on your budget and needs.

So I tuned in to the Oprah show today as I was reading how there was a segment about financial management. Her guest speaker was Suze Orman who I think is a regular on that show. For the most part, it looked like it revolved around debt and how everyone in the audience had some form of bad debt. There were some crazy scenarios such as an accountant who was in tens of thousands dollars in debt. How does that happen huh?

One thing though, in the show they mentioned that you can get a copy of Suze Orman’s book “2009 Acton Plan” for free at the Oprah site until January 15th at http://media.oprah.com/sterm/action_plan_english.pdf. Haven’t read it myself, but figured others would be interested in it.

Some interesting things from the show was to see other people’s strategies when it comes to how much they think you should have in the savings before you can spend it on wants. In Suze Orman’s case, she said everyone should have about 8 times the amount in their savings compared to what they intend to spend. When I think about it, I use the same concept except the figure is a little different. But basically, the mentality is $100 in savings doesn’t mean you can say afford to buy that $100 item.

One point I heard in the show was how her “Action Plan” book was apparently titled that way as in her view 2009 is the make it or break it year when it comes to finances for people based on what happened in 2008. I was just thinking about that and in my opinion everyday should be a make it or break it day.

What I mean by that is everyday you should be doing something anyways when it comes to improving your financial situation. Whether it is finding ways to save or make more money, it should just be a part of your routine as oppose to waiting for a disaster to happen before doing something. Her plan was the following too for people to follow which made me think:

1) Don’t Spend Money For A Day

-For myself, I don’t restrict myself to not spending as I don’t like to spend money in general if there isn’t a good reason to do so.

2) Don’t Use a Credit Card For A Day

-Again, I’m one of those people who encourage the use of a credit card as much as possible due to the way you can earn free points and money. I always found that it is a great way for you to review your expenses each month too. Of course, like the first point I don’t simply buy things without a good reason. But if I had to buy say food everyday for some reason, then I would not hesitate to use the card if the option was available.

3) Don’t Eat At Restaurants For A Month

-I usually don’t dine at restaurants too much unless it is for a gathering or special occasion. Just from doings things like shopping and life experience from working at various jobs before, you develop this sense of “the value of a dollar”. Like wanting the best deals at a retail store for various items, many times dining out at a restaurant simply for a meal seems like a rip-off money wise compared to what you can buy at the supermarket and learn to do yourself.

So what does this all mean to me? Basically, it’s about knowing that you control your own finances and while your methods may be different from others, everyone shares a similar attitude I’d say which is the important point.

What a crazy story this was. I was just watching this clip about how some credit card companies and banks in the US are apparently keeping an eye on the type of things people use their credit cards for as a potential warning sign of the person having financial difficultly.

For example, if the person used their credit card for a medical related bill they may do things such as increase one’s interest rate or how it could be a sign to drop one’s credit score. I personally don’t see how that can be truly relevant compared to whether or not a person pays their bills on time.

It’s almost like saying that if a person purchases a bunch of financial management books or making money videos with their credit card that it would be a good sign to increase their credit limit and score. Sounds kind of silly to me.