Credit B

What would happen if you needed a loan today…  would you be approved?  Your credit score is used by 90% of lenders to make a yes/no decision on a credit application.  The credit score calculation is based on five criteria; payment history, utilization, length of time of credit, inquiries, and variety of credit.

Payment history has the biggest impact on the score calculation with a 35% weighting.  Utilization (credit card balances) has the next biggest impact on the score calculation with a 30% weighting.

How Can I Increase My Credit Score?

There are several ways you can increase your credit score without using a credit repair company.  You can improve your score by taking small actions that have big results.

Make your payments on time, every time.  There is a 24 month historical record that both the credit score and the banker takes into consideration, so it’s important.

Do not carry a balance on your credit cards.  If you have to, there are specific balance thresholds that once met, credit score points will be awarded.  If you meet these target points on all of your credit cards your credit score will increase significantly.

Your credit score is calculated using the information found on your credit report.  Ensuring that the information on your credit report is correct will have a positive impact on the credit score calculation.  Some information is more important than other information.  Do you know what is and is not important?  I can help you with identifying what you need to pay attention to when looking at your credit report.

I have a recorded presentation that will provide more detail.  If you are interested, the link is provided below.  Personalized coaching is available, please contact me if you would like assistance.  Rex Bohachewski  Former Banker On Your Side.

Presentation link:  https://us02web.zoom.us/rec/share/rhgPaZW79bte0aMR52m-SAXmTsLkR9iFOxDNfISiVfzxtlLeR5QksPW58SIoG6lh.kcebKgqAXnXM-sOg?startTime=1712446513000

Passcode: PViU!4@E

The first “C” in the 5C’s of Credit is Character.  It is one of the principles measured and used to approve or decline a request for credit.  When you apply for credit the banker will ask you numerous questions, some of which are used to judge the strength of your Character and, along with using nine other principles, there is a decision as to either approve or decline the credit application.

What is Character?

Character is defined by the dictionary as “the aggregate of features and traits that form the individual nature of some person or thing.”  A banker defines Character as “Will you make the payments when money is tight?”  No matter how you define it, Character is being used as a measurement to make a decision on a loan or credit card application.

How is Character measured?

Your Character is being measured the moment you meet with the banker.  Were you on time for the meeting?  Did you smile when introducing yourself to the banker?  Do you have the documents that will be needed to approve your request for credit?  Are you dressed in appropriate attire?  And then the questions for the credit application begin.  How long have you lived at your current address?   How long have you lived at your previous address?  How long have you been at your current employment?  What is your position at work?  These actions and questions indirectly measure your Character.

While Character cannot be directly observed in and of itself during a credit interview, Bankers look at your behaviour during the credit application process to judge your Character.  Building a good rapport with the banker is good way to demonstrate your character in a short period of time.  Rapport is used to connect with people, and if they know, like, and trust you, then the “Does this person have good Character?” question is assumed to have an answer of “Yes”.

While it takes time to build good Character, built over countless decisions and actions that you have taken, when properly displayed, a banker will give the first “C” of the 5C’s of Credit a positive mark and you are well on your way to being approved for the credit that you have requested.  The Character “C” is a good foundation to build on to make the approve/decline decision.  While it is the first measurement used, Character is not the only thing that is looked at or measured.

What else is looked at?

There are nine other items that are looked at besides Character, which include the other 4C’s of the 5C’s of Credit (Capacity, Credit History, Capital, Collateral) and the 5H’s of Credit (Have you made your payments on time?, How much money do you owe?, How long have you had credit?, How much new credit do you have?, and How many types of credit do you have?).  Taken into consideration as a whole, these 10 criteria are what the banker uses to make their decision to say approved or declined.  You have opportunity to strengthen these areas once you know what the banker is looking at.  I will continue to discuss each criteria in more depth in future blog posts.

You have more control over the credit application process and credit approval than you realize.  When you know what is being looked at and what is being measured in the credit application and what is needed to get approved for credit, you are able strengthen these areas.  This can be done before you meet with the banker to apply for credit.  When you are able to give what the banker is looking for to them, it becomes easier to get approved for the credit you want at the interest rate you deserve.  I was a banker for 10 years and have studied credit for an additional 10 years, and know how to get approved for credit.  I can show you what you need to do given your specific individual credit circumstances.  If you would like to work with me, please get in touch.

       No one cares about your money more than you.  You are the one who works hard to earn it.  You should be interested in things that save you money.  Lowering your interest rates on the credit that you have is one way to say money.  The interest rates that the bank offers you are not set in stone.  You have control over the interest rates that you have.

If you want to lower your interest rates, you have to understand what the banker (lender) is looking for.  Then you can strengthen those areas and give the lender (banker) what they want to see.  It is a win-win for both of you.  They get to approve a new credit product which counts towards their sales goals and you get the money you were asking for and at the lowest possible interest rate given your current specific individual credit circumstances.

It will take some effort to improve your “approvability” as it just doesn’t happen overnight.  Knowing what you need to do though does make it easier.  It is worth the effort, I can assure you.  The money you save is after tax dollars, so it is more valuable than a raise at work, which is taxed.  Something to keep in mind is this:  which is easier to get and which is easier to work on – putting in time to get a raise or putting in some time to save some money on interest costs?

Depending on where you are starting from, what you need to do may be a little, or it may be a lot.  Either way, who doesn’t want to save money?  What would you do if you had extra money this month? Keep that in mind as you are making yourself a better credit approval by giving the banker or lender what they want to see.

To make yourself a better credit approval, you need to increase the strength of the 5C’s of Credit (Character, Capacity, Credit History, Capital, and Collateral) and the 5H’s of Credit (Have you made your payments on time?, How much money do you owe?, How long have you had credit?, How much new credit do you have?, and, How many types of credit do you have?).  This is what the banker looks at and uses to determine whether you are approved or not.  The stronger these areas are, the better the interest rates you will be offered.

Now that you know what the banker is looking at, how do you make each of these areas stronger and more appealing so that you be approved when you apply for credit.  In upcoming blog posts I will discuss ways to strengthen each of these areas and give methods that I have used to get my clients approved for the credit they were asking for.  Some methods will take longer to implement and it will take some time to see an effect; the key is to be patient and keep at it.  Others will be easily put into place and you will see an immediate effect.  For a compounding effect, use multiple strategies to get the best results possible.

What would you do with the extra money you would have if you paid less in interest costs?  When you have high interest rates, you are putting your money in the bank’s vault.  They are getting to decide what to do with your money instead of you.  Would you retire sooner if you could put that extra money towards your retirement savings account?  Would you pay off your mortgage sooner if you could put that extra money towards your mortgage as additional payments?  Would you take longer and better vacations because you could now afford it?  My point is that it is your money and if you can keep more of it, you get to decide what to do with it.  When you give it to the bank, they get to decide what to do with your money and not you.  It is your money, choose what you want to do with it.

You have more control over the credit application process and credit approval than you realize.  When you know what is being looked at and what is being measured in the credit application and what is needed to get approved for credit, you are able strengthen these areas.  This can be done before you meet with the banker to apply for credit.  When you are able to give what the banker is looking for to them, it becomes easier to get approved for the credit you want at the interest rate you deserve.  I was a banker for 10 years and have studied credit for an additional 10 years, and know how to get approved for credit.  I can show you what you need to do given your specific individual credit circumstances.  If you would like to work with me, please contact me.

Everyone makes mistakes.  You, me, even the banker you are asking for credit.  Everyone can recover from bad mistakes we have made.  When it comes to credit, people can most certainly recover from mistakes they have made in the past.  All it takes is to make good choices to recover from the bad choices that caused the mistake in the first place.  Put another way, learn from the mistakes of the past so you don’t make them again.  When you keep making good choices (making better and more responsible financial decisions), the mistakes of the past fade into memory and, given time, you no longer have bad credit but instead you have good credit again.

Four Ways to Improve Bad Credit

One way to recover from bad credit is to open a secured credit card and use it wisely.  The bank you currently deal with may or may not have a secured credit card option.  You may have to go online and find a bank or credit card company that offers a secured credit card that you are qualified for and can be approved for.  When you have a secured credit card, you will have to put up a security deposit.  An example would be you may need to provide $500 up front to get a $500 credit limit.  Ensure that the credit card issuer reports the payments you make to this card to the credit reporting agencies.  You are paying (security deposit) to rebuild a new credit history moving forward.  The payments that you make on time (and the late ones as well) need to be reported.  Don’t make late payments.  You are building a positive credit history moving forward and payments made on time allow for that.

Another way to recover from bad credit is to open a small installment loan.  This may be able to be done at your bank via a credit builder loan.  A security deposit will be needed for this type of loan.  Another option could be a retirement savings loan, where the bank not only has the loan but also the retirement savings account.  This is a win-win for the bank and you get to rebuild your credit.  If you consider using an online company, make sure that they report your (on-time) payments to each of the credit reporting agencies.  Similar to the secured credit card payments, you want the positive activities of on-time payments to be recognized and rewarded with credit score points.

A third way to recover from bad credit is to build your assets.  This is one of the 5C’s of Credit that bankers use when deciding to approve or decline a request for credit.  The “Capital” C is measured and the stronger it is, the better the credit application scores.  Your assets (Capital) can be in the form of a savings account with regular contributions, a savings bond, a retirement savings account with regular contributions, or other financial assets.  You do not need to have a million dollars set aside for this “C” to be effective, so don’t worry.  Having some is better than none.

A fourth way to recover from bad credit is to put the banker on your side.  They want to approve credit applications and you want credit, so let them approve your credit request.  When you have bad credit, the ease of approval for a credit application becomes more difficult.  You want to offset that difficulty by making the rest of the credit application process as easy for the banker as you can make it.  This means being prepared with the documentation that they need.  Have it with you when are at the first meeting.  Don’t have to come back and drop off the documents that you may be asked for.  Know that you have less than stellar credit and ask for a credit product that would qualify for.  Also, let the banker know about your need to rebuild your credit before you start the credit application.  By being up front about it and being prepared, it shows that you are not trying to hide anything.  When you are willing to establish a relationship with the banker and are open to accept their help and any financial products they may recommend, you are saying “I am here, and I will let you help me if you are willing to help me.”  This is a win-win relationship for the both of you.

You have more control over the credit application process and credit approval than you realize.  When you know what is being looked at and what is being measured in the credit application and what is needed to get approved for credit, you are able strengthen these areas.  This can be done before you meet with the banker to apply for credit.  When you are able to give what the banker is looking for to them, it becomes easier to get approved for the credit you want at the interest rate you deserve.

You call the bank and set up a meeting with your banker. You may or may not be told to bring your pay statement. The time comes and you sit down with your banker and they ask for more documents. You brought your pay statement and that was it. What about the other documents that you didn’t know about? A banker generally needs more documents than just a pay statement in order to approve a credit request. “Okay” you say. “What do I need to bring?”

Being a former banker, and having applied for credit myself personally, I can tell you what the banker will need to see. Not every banker will need every document I list here. I am providing the list so that you are the most prepared and will not need to provide anything else, which may potentially cause a delay in your credit application approval. Keep in mind each bank has their own policy as to what they need. It is better to be prepared and not need it than to not be prepared and need it, causing delays.

Three things you need to have when applying for credit

The first thing you will need is photo identification, so your driver’s licence. Your passport is acceptable as well as it is a photo ID as well. A secondary piece of ID will be needed which may vary from bank to bank. This piece of ID needs to have your signature on it, and can be issued by various institutions. Examples would be a credit card, health care card, or other identification issued by the government.

The second thing you will need is a copy of your pay statements. The three most recent ones will work as it shows consistency in earnings. An employment confirmation letter from your employer strengthens the earnings documentation requirement. This letter should be dated no more than two weeks old from the meeting with your banker. Lastly, providing a T4 (Canada) or W-2 (United States) shows your taxable income that the banks like to use and is a solid base that the banker can use for documenting your income. With these documents, the banker will not need anything else to confirm your employment income.

The third thing you will need is an understanding of your current credit circumstances. You must know where you are financially when applying for credit. In having your pay statements, you have an idea of your ability to pay (Capacity C), you also need to know what your credit worthiness is. Another way to put it is you need to know what your credit history looks like, and that is summarized nicely on your credit report. Having a copy of your credit report shows the banker that you are serious about credit because you are informed and are ready to talk about your current credit picture. The banker does not need your credit report, they will use their own. When you have your credit report with you it is showing that you have an idea of your credit history (Credit History C), and it will be noticed.

There are other documents that are “nice to have” documents, such as asset values confirmation, credit account statements, a net worth statement and others. These other documents will take time and effort to put together, but if done so, you will look like a professional borrower and not someone who is unprepared and crossing their fingers, hoping to get approved. When you are prepared, the banker takes notice and will work with you to get approved because you had put in the effort first to make it as easy as possible for them to approve you, so they will then put in the effort they may need to.

You have more control over the credit application process and credit approval than you realize. When you know what is being looked at and what is being measured in the credit application and what is needed to get approved for credit, you are able strengthen these areas. This can be done before you meet with the banker to apply for credit. When you are able to give what the banker is looking for to them, it becomes easier to get approved for the credit you want at the interest rate you deserve. I can show you what you need to do given your specific individual credit circumstances. If you would like to work with me, please contact me.

The interest rates on all of your credit facilities are there; you were given them when you accepted the credit that you applied for. Did you give much thought to the interest rates you were offered, or did you breathe a sigh of relief that you were approved? You should give it some thought. With the amount of credit that a person repays over their lifetime, any savings will add up. Thousands of dollars in savings if you have a mortgage. Even a small savings of one or two percent on everything will make a difference, I promise.

Using government website mortgage calculators, you can see the difference in a mortgage interest cost savings of one percent. A $300,000 mortgage over 30 years with an interest rate savings of 1% would save over $50,000. Credit card debt of $10,000 carried for 10 years with a 2% interest rate savings would save over $1,000. A $35,000 car loan for 7 years with a 3% interest rate savings would save over $4,800. A $20,000 line of credit utilized for 10 years with a 4% interest rate savings would save $8,000.

When you add up all of the interest cost savings in the preceding example the total amount of savings is a surprising $63,800. If that savings was instead invested in a retirement savings account, it would have been allowed to grow and you would be even closer to your retirement goals. Maybe you want to take a better vacation? This savings would allow you do that. You can’t put a price on a better piece of mind. Or alternatively, you could have other plans for the savings. The point is that it is your choice. You now know that you can have those interest cost savings and you can do with it as you please.

This savings would have cost you nothing but the knowledge of how to qualify for lower interest rates and perhaps some effort in keeping your credit report and score in order. I have heard the saying that knowledge is power. Knowing that you can save money with lower interest rates and then knowing how to get lower interest rates gives you more power. You have more choices when you have more money in your pocket.

My example will not be your current financial picture, it could better or it could be not as good. Your interest rate savings may be higher or lower. My goal is to get you to understand that you have control over the interest rates you are offered and the resulting savings that you receive are yours with relatively little effort. You choose what to do with it, instead of your hard-earned money going into the bank’s vault. I can show you what the banker is looking at when deciding to approve or decline a credit application. Want to know what the banker is thinking during a credit application? I can show you that as well. When you know what is being assessed, it is easy to give the banker what they want to see. You have more control over the credit approval process than you know.

What do bankers look at when they approve a credit request? Your credit history. Not only is it one of the 5C’s of Credit, your credit history is also determined by the 5H’s of Credit. They are what is used to calculate your credit score.

The 5H’s of Credit are what the credit score calculation looks at and measures to see how high your credit score is. If they are strong and your credit score is high, you will be approved and at a favorable interest rate. If the 5H’s of Credit are weak, you will be either declined outright, or if approved you will be given interest rates that are not favorable.

The first “H” is “How have you made your credit payments in the past?” It can be defined as your payment history. The second “H” is “How much money do you owe?” It can be defined as what if any are the balances you are carrying on your credit facilities. The third “H” is “How long have you had credit?” It can be defined as how old is your oldest credit account. The fourth “H” is “How much new credit do you have?” It can be defined as when was the last time you applied for credit. The fifth and final “H” is “How many types of credit do you have?” It can be defined as do you have a variety of credit types or, for example, do you only have credit cards?

Similar to the 5C’s of Credit, each of the 5H’s of Credit can be strengthened, and the stronger they are, the better the interest rates you will be offered. You have more control over the credit application process than you realize and you can start by strengthening each measurement that the banker looks at. Some may take time, while others may be done quickly. To strengthen others, it may take some work, or it may be easy to complete. Every person has a specific credit circumstance that they find themselves in, so what they need to do depends on where they are starting from.

The good news is that now that you know what the banker is looking at and that you can improve what they are looking at, you can begin today to use the control you have over the credit approval process by strengthening the 5H’s of Credit.

One way to strengthen the How is the Payment History “H” is to make your payments on time, every time. This is the biggest weighting in your credit score calculation at 35% of the total. The credit score calculation looks at the last 2 years worth of payments on each of your credit facilities so every payment makes a difference. The most recently made payments have the biggest impact, as does the most current missed payments, if any.

One way to strengthen the How Much is Owed “H” is to reduce any balances being carried on credit cards. The lower the balances you carry the better, as it shows that you do not need credit to cover day-to-day expenses and only use credit strategically. The lower the balances that are carried on credit cards, the more credit score points you will be awarded.

One way to strengthen the How Long is Credit History “H” is to keep your accounts open, even if you don’t use them. Do not close old accounts. Bankers may suggest that you close old unused accounts, so that they can approve more credit for you, but there is a cost. Closing old accounts shortens the age of your credit accounts. By removing any older accounts, you shorten the average age of your credit accounts. The older the average age of your accounts, the more credit score points you will receive.

One way to strengthen the How Much New Credit “H” is to not apply for new credit all of the time. Do not apply for the credit card that is being offered at the grocery store, or other store located in the mall. Do not complete every credit card application you get in the mail just because you received it. Every time you submit a credit application request, your credit report is looked at and an inquiry is placed on the report. Every inquiry costs you credit score points and every inquiry will cause a banker to ask more questions. The fewer the number of inquiries, the better.

One way to strengthen the How Many Types of Credit “H” is to have a variety of credit types. This is a combination of revolving credit (credit cards, line of credit etc.) and installment credit (car loan, retirement savings loan etc.) Having a mixture of different credit types shows that you can responsibly use different kinds of credit and you are rewarded with credit score points as a result. This counts for only 10% of your credit score calculation and is tied for the least amount of weight in the calculation.

You do have control over whether your credit application is approved or not. When you know the banker is looking at the 5H’s of Credit and you strengthen them before you make a request for credit, you are enabling the banker to say “You are approved!” Banks make money by lending out money, and the banker wants to approve your credit request. When you strengthen each of: 1) History of payments, 2) How much is owed, 3) How long is the credit history, 4) How much new credit, and 5) How many types of credit, you are making it easier for the banker to approve the application. Use the control that you have and strengthen the 5H’s of Credit.

What do bankers look at when they approve a credit request? Every question you are asked, every piece of information you are required to provide, every point on your credit score, and every payment recorded on your credit report is done for one thing and one thing only. That is to measure the strength of the 5C’s of Credit.

The 5C’s of Credit are what the banker looks at and measures to see how strong your credit application is. If they are strong, you will be approved and at a favourable interest rate. If the 5C’s of Credit are weak, you will be either declined outright, or if approved you will be given interest rates that are not favorable.

The first “C” is Character and it can be defined as “Will you make the payments, even in difficult times?” The second “C” is Capacity and it can be defined as “Do you have the ability (income) to make the payments?” The third “C” is Credit History and it can be defined as “How have you handled your credit responsibilities in the past?” The fourth “C” is Capital and it can be defined as “Do you have some savings set aside or do you spend everything that you make?” The fifth and last “C” is Collateral and it can be defined as “If you don’t make the payments, this will be seized by the creditor and applied towards the outstanding payments”

Each of the 5C’s can be strengthened. The stronger they are, the better the interest rates you will be offered. You have more control over the credit application process than you realize and you can start by strengthening each measurement that the banker looks at. Some may take time, while others may be done quickly. To strengthen others, it may take some work, or it may be easy to complete. Every person has a specific credit circumstance that they find themselves in, so what they need to do depends on where they are starting from.

The good news is now that you know what the banker is looking at and that you can improve what they are looking at, you can begin today to use the control you have over the credit approval process by strengthening the 5C’s of Credit.

One way to strengthen the Character “C” is to reside at one place for a length of time. Do not move every six months. Bankers like stability and when you change addresses on a regular basis, this does not demonstrate stability. You do not need to live at one address for 25 years to gain an improvement, but anything less than a year will not be to your advantage.

One way to strengthen the Capacity “C” is to increase your income. Bankers want to see that you can afford the payment that your current credit request will create. The lower the percentage of your income that goes towards the newly created payment, the better. The new credit responsibility cannot present a financial hardship and you must be able to easily afford making the required payments over the repayment schedule.

One way to strengthen the Credit History “C” is to make your current credit payments on time, every time. That means paying, at the least, the minimum payments on all credit cards and all loan payments. Payment History is the most important factor that is looked at when determining your credit score and keeping your payments current is the easiest way to maximize the strength of this measurement.

One way to strengthen the Capital “C” is to have a savings account, contributing to it regularly and having it grow. When a banker can see that you are increasing your assets and not spending everything that you are making, they are taking note that you are being financially responsible. That reflects well in the credit application. It does not need to be a large amount of money. What counts is a consistent pattern of contributions to your savings.

One way to strengthen the Collateral “C” is to have the other four “C’s” so strong that you don’t need to have collateral (security) taken on your credit request. While collateral does not get a credit request approved (it only makes it stronger), you can make the overall application so strong that it is not even needed. Note that some banks have a policy that security is to be taken, depending on the reason for the loan, no matter how strong the rest of 5C’s of Credit are. An example would be taking the vehicle as collateral when asking for a car loan.

You do have control over whether your credit application is approved or not. When you know the banker is looking at the 5C’s of Credit and you strengthen them before you make a request for credit, you are enabling the banker to say “You are approved!” Banks make money by lending out money, and the banker wants to approve your credit request. When you strengthen each of: 1) Character, 2) Capacity, 3) Credit History, 4) Capital, and 5) Collateral, you are making it easier for the banker to approve the application. Use the control that you have and strengthen the 5C’s of Credit.

I called my bank today. Three hours later I spoke to a live person at the other end of the 1-800 #. All I wanted was to set an appointment to open an account. The other day I waited an hour to get some paperwork completed that should have taken 5 minutes pre Covid 19. Times have changed. They have changed for you and they have changed for your banker. Right now, bankers are dealing with customers who are or soon will be defaulting on their credit payments due to COVID 19 related circumstances. Just like everyone else, bankers are human too and are doing their best in these trying times.

We all are struggling right now. I know you are too. Currently, I have personal challenges as well. Your banker will remember those who were easy to deal with during this crisis. Do you need to talk to your banker regarding something? Then make sure you are prepared. If you are applying for credit, make sure that you have the documentation that is required. I discuss what you need to bring to the meeting in my book How To Get A Loan: Get The Credit You Want At The Interest Rate You Deserve available on Amazon.

When you apply for credit at the bank, I recommend putting together a “Lenders Binder”. This binder will contain in a very specific order, all the documents that the banker will need for verification purposes before approving a loan. Normally you would either 1) bring some of these documents with you to the meeting, while bringing the others at a later date or 2) bring the documents with you to the second appointment when finalizing the application and signing any bank documents before the money is released. This of course takes time. Why not be prepared? Your banker will love you for it and will do everything he can to approve you. You will stand out and be remembered fondly, I promise you.
As the entire process of putting together your “Lenders Binder” is too in depth for a single blog post, I will summarize the steps. First get a 1 inch white binder, a box of page protectors (25 sheets), and a package of 5 binder tabs. These are available at your local business supply store or can be ordered on Amazon. You will then put the following documents in each section (tab). The first tab is to be labeled Character, the second tab Capacity, the third tab Credit History, the fourth tab Capital and the last tab Collateral.

Under the Character tab, put the following documents in order, each document in its own page protector: Cover letter, Reason for loan request, Contact information. Under the Capacity tab, put the following documents in order, each document in its own page protector: Copies of your last 3 pay statements, Employment verification letter, Current year Notice of Assessment and T4 (Canada) or W2 (United States). Under the Credit History tab, put the following documents in order, each document in its own page protector: Copy of current credit report, copies of current statements of all credit cards, loans, and other credit obligations. Under the Capital tab, put the following documents in order, each document in its own page protector: Personal net worth statement. Under the Collateral tab, place two empty page protectors of which you will put any documentation that the lender will give you regarding security being taken against your credit request.

Your banker will not have seen anything like this before, and will be surprised, and thankful. This binder will make the credit application process easier, and when you make someone’s task easier, they will want to help you. Yes, it will take time on your part, but you do want to get approved for the loan you are asking for, right? This will help – note I did not say guarantee approval, but help.

During this time of economic uncertainty, where you may have lost your job or your hours have been reduced due to Covid 19, are you worried about what to do with your loan and/or mortgage payments?  Are you asking yourself “What do I do now?” or “Which payments do I make and which ones can I skip this month?”

The best thing to do is to contact all of your creditors before any payments are missed.  Why?  Because your creditor or banker has more options that can help you while you are up to date with your payments.  This is known in the banking industry as still being “current”.  It may sound odd that I am saying to talk to your banker before missing a payment and letting them know that you are considering not paying them, but it easier for the creditor/banker to help you before the payment is missed.  You want to make it easy for them to help you and you can do that by talking to them early, before the payment is missed.

What happens if you don’t talk to your banker/creditor before you miss the payment?  You will be told “make the payment and then we can talk”.  Once the payment has been made, then you most likely will  hear “I cannot do anything, as you just had a late payment, sorry there is nothing I can do”.  This does not help either you or your banker, as they were unable to help you.  Help them to help you by talking to them about your options before a payment is missed.  This is where having a relationship with your banker helps, so that when you call them, they know who you are and not just as a client number.

You have four options depending upon the type of payment you are discussing and your relationship with the creditor/bank.  They are 1) make the payment, 2) make an interest only payment, 3) delay the payment, and 4) skip a payment.  Discuss with your banker/creditor what option is best for you given your individual situation.

Many people are calling right now.  You want to stand out in your banker’s mind for a good reason, as there will be many others who will be remembered for the wrong reason during this time.

“Is that the best you can do?”  Say those exact words in a confident calm manner, and it can do wonders.  Say it once you have been given the best option by your banker.  You may hear “Yes, it is.” Or you may get a better alternative, you never know until you ask.

Working with your creditor/banker now so that your situation is the best that it can be will be remembered when things are back to normal, whatever that may look like.  Your creditor/banker will be able to and want to help you when you need them in the future because you will have made  it easy to help you by taking action before your credit situation falls apart.