Expert reveals credit score secrets

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PHOENIX -- Whether it's a house, a car or even opening up a bank account.  Millions of Americans are held hostage by a number they feel like they can't control.

"My credit score is low," Lydia said.  "It is bad for most people.  I can't get any loans."

"I have been turned down for important things, car loans, apartments," Amanda said.

"I have been turned down for some credit cards," Patty said.

Meet Patty, Lydia and Amanda: three valley women with three very different stories.  Yet all of them are in credit crisis.

"I always tell people go 780 or higher," says Al Bingham, the man behind this book called "The Road to 850.

"It's full of secrets to help you reach the perfect credit score.  It even gives you information credit agencies don't want you to know.

"My name is Patty Garcia and my credit score is 700."

While Patty's 700 may not sound bad, she still struggles.

"I have tried, actually, I have tried buying a car on my own," Patty said. "And I always get denied."

Thinking it would build her score, Patty opened more accounts.  But it turns out, she opened too many too fast.

Bingham's first tip is to close your most recent accounts.  Contrary to popular wisdom, closing them will not ding your score.

"Well, if you go back and close those, you can go back and retrace and build back your credit score by closing them," he explains.

Preferred cards to keep open are cards from banks and department stores because they show stability.

Holding onto those high value cards leads us to tip number two: know your lender and your borrower.

"The credit scoring system looks at three types of lenders," Al said.  "They look at banks, actual credit card companies, and finance companies."

Finance companies are known for offers like "same as cash" and "no interest for 90 days."
They are the companies furniture, appliance stores even car dealers often use.  But Bingham said don't fall for it.

"You get that account in your credit report," Al said.  "You are going to damage your credit rating."

Instead, use your bank or credit union.

"Hi my name is Lydia Ortega and my credit score is 554."

For Lydia, it's past due debts that are hitting her hardest. And while there is nothing Bingham can do to magically make those disappear,  there is hope.

Tip number three, Al Bingham says negotiate your debt down. "What we want to do in here is go back, start contacting these people and say what can we do to resolve this issue and you don't go in there, if it shows $300, say look, what if I give you 150 dollars."

As important as it is to get your debts paid off, It's equally important to get it removed from your report. Bingham says "If I pay it can you remove it, that is your leverage you haven't paid them.

If you don't do that, it will stay on your report for seven years. The best way to remove it according to Bingham. "I would go and show up in person because I will guarantee you I will work better if I see you in person. Face to face."\

Amanda Stevens shared that she has a credit score of 556 along with significant debts. Bingham says, "So the question I come back to is, maybe we have $15K or $16K in collections, and if we go to that how long would it take you to pay back those past due accounts? What would you say? Years.

That leads us to tip number four, know when to file bankruptcy.

If you can't pay off your debts within three years, bankruptcy is your best bet, according to Bingham, "Because if you get three to four years down the road and you can't get on top of these debts, you are never going to get on top of these debts."

Even though filing bankruptcy will hurt Amanda's score initially, Bingham says it will bounce back.
"So you take massive hit off the top, but then you are in the low 600s after six months, maybe a year. 
you have to take baby steps, yes. But you have got to start somewhere exactly.

While Patty, Lydia and Amanda have a lot of work to do, Bingham says when you know the secrets,  the road to 850 is a lot easier to follow.