UK Credit Secrets - Free eBook
Borrow money you don't need to repay. Amazing but true.
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The Borrower's Bible
By Jon Murray
IMPORTANT NOTICE :
This guide is intended for information only.
At the time of writing it was believed that all information contained within this guide was accurate, as far as could be established. Because of frequent changes in banking and property dealing rules and legislation the publisher offers no guarantee that any information contained herein will remain to be accurate at any particular time.
The publisher accepts no liability whatsoever for any consequences of any transactions entered into by readers of the material within these pages.
Contents Page
SECTION ONE : Credit Secrets
1. Save £000s Off The Cost of Your Mortgage 5
2. The Secrets of Obtaining a First Class Credit Rating 7
3. How to Have CCJ'S Legally Removed 10
4. Raising Thousands in a Matter of Days 12
5. A Guaranteed Income of £100,000 In a Year 14
6. All the Credit Cards You Could Ever Want 16
7. Virtually Unlimited Finance from Your Credit Cards 17
CHAPTER ONE :
SAVE £000s OFF THE COST OF YOUR MORTGAGE
Most people end up paying far more for their mortgage than they really should. In the first place there seems to be a kind of universal rule that the mortgage term should last over 25 years - the idea of this is obviously to keep the monthly expenditure to a minimum. But have you ever considered how much you could save if you reduced the term to only 20 years?
The amount you save will depend on which type of mortgage you have. For instance, on an endowment mortgage where you only pay interest on the loan, the amount of interest paid is the same each month regardless of the term of the mortgage. However, the endowment policy, if taken over 20 years instead of 25 years can have a surprisingly small increase in monthly payment. The total amount put into the endowment policy can therefore end up being considerably smaller - the extra monthly amount totalling much less than the extra five years worth at the lower monthly rate.
Where the savings really start to accrue though is with the repayment mortgage. Because interest rates are always subject to variations, the example shown below uses 10% for the sake of simplicity. Naturally, with interest rates being lower than this the total amounts of expenditure and savings will be less. Again, for the sake of simplicity, Miras is not considered.
The repayments on a 10% (APR) £50,000 mortgage over 25 years would be £454 per month. At the end of 25 years you will have paid a total of £136,200. The total interest being £86,200.
Reduce the term of the mortgage from 25 to 20 years and your monthly instalments only increase to £482 (only £28 per month more). The total repaid over the 20 year period would then be £115,680. The total interest being £65,680 - a saving of £20,520 and the whole thing is settled five years earlier!
A further reduction to 15 years and the monthly instalment would be £537 with the total repaid being £96,660. Total interest paid now coming down to £46,660. The mortgage being settled 10 years earlier and costing £39,540 less than the 25 year mortgage.
There are many other ways of saving money on a mortgage. The most obvious one being to find one with the lowest possible rate of interest. Be careful here though for 'low-start' mortgages, some of which can cost a lot more in the long term.
The best plan when looking for a mortgage is to consult a truly independent financial adviser - one you can trust not to sell you the product which simply brings him the highest commission.
A typical example of the kind of savings Client First are able to find :
A man, on the advice of his Building Society, took out a life insurance policy costing £89.46 per month, for £74,500 worth of cover over 25 years.
Fifteen months later, he changed to a different Insurance Company and is now paying £51.13 per month. Savings over the period of the policy are a very substantial £11,499!
CHAPTER TWO :
THE SECRETS OF OBTAINING A FIRST CLASS CREDIT RATING.
Today it is virtually impossible to survive and prosper financially without a good credit rating. There have been times in the past when I have taken business risks that turned out very badly and I have lost a lot of money. Even worse than losing the money itself is the damage that serious business failure can do to your credit rating.
After having had over 20 major credit cards, bank loans and overdraft facilities, with an ability to raise in excess of £100,000 in credit, I was left with massive debts and a credit rating so poor that I couldn't even open an ordinary bank account!
The one sure thing I learned about borrowing vast quantities of money, at high interest rates, to finance business deals and ventures, is that access to credit is virtually essential for any real wealth creation.
It was unfortunate for me that I had to learn the hard way about the importance of maintaining an excellent credit rating. After having access to easy credit, I lost hundreds of thousands of pounds on property deals and other business ventures. Only after this experience did I realise how fortunate I had been to have been in the position to gain the kind of credit I was using in the first place.
I have now re-established my credit rating to a first-class level, and I intend never to create a situation again where my credit rating is put in jeopardy.
The method detailed below is the one I used to rebuild my credit rating back to a level where I will never need to worry about access to money for any purpose.
When you have no money at all and your assets are all frozen because of debt, and no bank or other lending institution will lend you a penny, you may think that creating a credit rating where you can eventually borrow almost unlimited sums would be virtually impossible.
In fact, with absolutely no cash at all, it is virtually impossible. Some amount of cash is essential. To get this plan up and operational within the couple of months that it takes to become productive an ideal sum of money would be in the region of £1,000.
After enjoying a fairly wealthy lifestyle and being used to the finer things in life, I ended up broke and almost bankrupt. I avoided bankruptcy by the skin of my teeth.
To get some money to start my credit building plan I took every one of my personal possessions which I thought I could sell. I attended car boot sales, at which I managed to raise just over £350. I put together another £300 by selling furniture and other personal effects through adverts in the local paper.
Keeping £150 as an emergency fund I took £500 to the nearest bank and opened the highest interest savings account that I could get. After a week I applied for a personal loan from the same bank and offered my £500 deposit as security. Because the sum I wished to borrow was already held by the bank, they were only too glad to loan me the £500.
So I then had £500 cash in hand and £500 in the bank. Naturally I had to make monthly repayments to the loan. These were kept to a minimum by taking the loan out for the maximum period allowed, which was 2 years. This left me with repayments of less than £1 a day.
I then took the £500 I had borrowed to another bank and opened another high interest savings account with it. Following the same procedure I opened savings accounts at six banks and used the final £500 to cover the repayments.
After a couple of months repayments had been made to each loan I took the £150 emergency fund I had set aside and added it to the capital I still had. I used this to repay the last loan I had taken out. This allowed me access to the savings I had with that bank. Then, after each subsequent month I paid off each of the loans in turn.
Having done this it was easy to go to the first bank and apply for a loan of £500 secured on my home. They were happy to lend me this money because I had shown them that I could borrow and repay a previous loan. So, in spite of my terrible credit history, after having lost a great deal of money in business ventures which went wrong, I had rebuilt my credit rating to a first-class level within six months.
If you have no previous bad debts there is no reason why you could not establish this level of credit rating within two months.
And once you have established a credit rating with a few banks you can apply for their credit cards. Initially you may have to settle for a fairly low account limit, but this can be increased rapidly by using the credit cards to borrow money up to the limit of each card every month, and then repaying the full sum at the end of the month.
Within a few months you can request and normally will be granted an increase in credit limit. I used this method with store-cards also and now have a £5,000 limit on most credit and store cards I use.
One thing to always keep in mind : once you have established an excellent credit rating, don't lose it. I became too careless with borrowed money in the early days because I had easy access to credit. Now that I have rebuilt my credit rating to a top notch level I will never let it be ruined again.
Always be very careful when borrowing money to invest in wealth generating programmes. Do your research...don't just jump in at the deep end...I did, and lost out, big time!
Keep your credit rating healthy by always ensuring that you are able to make any repayments that are due, and make these repayments on time. Even if you have to borrow from one source to make a payment to another, this can be worth your while as the maintenance of your credit rating is one of the most important things you will need to take care of on your journey to financial prosperity.
NB : Most of the larger banks and building societies now automatically check your credit rating and, if you have been blacklisted for any reason, such as default or CCJs, then they won't even lend you the same amount as you have deposited with them. This is a recent development which limits the widespread use of the above plan. However, some of the smaller building societies and some banks will still lend to you, regardless of your credit history, provided that you have the right security.
The supplement included at the end of this guide has a listing of institutions which specialise in lending to people with a poor credit history. So, even without the need to have funds lodged with them, as suggested above, there are always alternative sources to the main banks and building societies.
CHAPTER THREE :
HOW TO HAVE CCJ's LEGALLY REMOVED
People who have CCJ'S (County Court Judgements) for bad debts will always find it very difficult to borrow money from established lenders such as banks and building societies. As outlined in chapter one, it is possible to get around this by using the method of leaving money on deposit as security for any loan.
However, it is always in your best interest if you have CCJ'S on your credit record, to have them removed as soon as possible. Records of CCJ'S are kept by four main credit reference agencies for a period of six years from the date of their inception. After this time they should be removed automatically, and if they have not been, then you can simply write to the credit reference agencies and order that they be removed.
In order to find out what information the credit reference agencies have on you, you should write to them to enquire. Include your full name and address, any previous address(es) you have lived at in the past six years, and £1 to cover administration fee.
The four main credit reference agencies used by lenders to check on your credit history are :
CDMS, Dove Mill, Dean Church Lane, Bolton, Lancashire, BL3 4ET.
CNN, PO Box 40, Nottingham, NG7 2SS.
Equifax, Spectrum House, 1a North Avenue, Clydebank,
Glasgow, G81 2DR.
Infolink, Regency House, 38 Whitworth Street, Manchester, M60 1QH.
Once you have obtained the information you need from these agencies, you can decide what action you wish to take.
NB : In order for any record of CCJ'S to be legally removed, you must be able to prove that at least one of the conditions below applies :
1) The six year period has expired, and the record should be removed as being out of date.
2) The record should not have been lodged in the first place, as the CCJ does not exist, and the record is a mistake.
3) The debt to which the CCJ applies has been fully paid off. Here you can insist that the CCJ be removed because you have cleared all of your financial indebtedness.
To apply to have judgements overturned, you should obtain form N244 from your County Court (or Sheriff Court in Scotland).
During the period in which your application is being considered all records of judgements against you are removed from the records of credit reference agencies. Then several more weeks usually pass before the agencies can re-instate these details, so even if your application is unsuccessful you have a period of around 8 weeks where you have no CCJ'S on record.
In order that any judgements against you be set aside you must have a valid reason, such as not receiving the original summons, being unwell or out of the country at the time the summons was issued, or having discharged the debt within a period of 28 days from the original issue of the summons, in which case no record should have been registered.
CHAPTER FOUR :
RAISING THOUSANDS IN A MATTER OF DAYS.
Once you have established a credit rating as described in chapter one you are in a position to borrow thousands from the banks with which you have been dealing.
Go to each of the half dozen or so banks from which you deposited and borrowed £500 (or whatever sum you were able to use) and request a personal loan application.
Fill out the loan application for a sum of between £500 and, say, £2,000. Even if you apply to borrow only £500 from each of six banks, that still amounts to a total of £3,000.
Take the applications home, fill them out and take them, in person, to each of the banks all on the same day. By doing this, any check on your borrowing will only show up for any loans which you already have. The banks will not have details of the loan applications made to other banks on the same day.
Because the individual sums for which you are applying are relatively small, and because you have already established yourself as credit-worthy with each of the banks to which you are applying, you should find that the loans are approved within a matter of days. Sometimes you will get clearance on the same day you apply and can leave the bank with a cheque for the loan amount.
Often banks will deposit the money directly into your account with them. If this is the case you simply go to the cash desk and make a withdrawal for the full amount either later the same day or whenever it suits your convenience.
Using this method I borrowed £8,000 and deposited the full amount with another bank from which I had not originally borrowed. I deposited £5,000 in a savings account with that bank, and £3,000 in a current account.
By lodging the £5,000 as security I then was able to borrow a further £5,000 and repeat the process as detailed in chapter one. Ultimately borrowing £30,000 I then invested in a small run-down, one bedroom flat for £18,000. I paid £7,000 to have this flat completely renovated and sold it 6 months later for £32,000. Even after interest payments I still made a profit of over £5,000.
£5,000 in the space of 6 months is not a great deal of money, by any standard. However, when you consider that I had been virtually bankrupt less than a year earlier and started the whole venture with only £650 in total I think you will agree that it is not a bad return.
I mention the property deal here because that is what I did with the money I borrowed at that time. I have been involved in many property deals over the years, most of which have made considerably more than £5,000...often more than ten times that amount. This example is pertinent here because it shows what can be done with the smallest amount of starting capital.
Once you have used the method of borrowing detailed above, you will eventually develop a credit rating where you will be able to borrow between £10,000 and £20,000 within a day or two of applying.
If you keep building up the amount borrowed, and expand the number of banks you deal with to ten, then you only need to borrow £10,000 from each one in order to raise £100,000.
First of all you can borrow as little as the £500 originally discussed in chapter one. But expand the number of banks you use to ten. You then go to as many as all ten of these banks and request a 30-day loan of £1,000. Because of the credit rating you have established you should have no trouble at all in borrowing such small amounts from each bank.
When the 30-day borrowing period is over, repay the whole amount to each bank on the same day. After another month or two, go to all of these banks again and ask to borrow £2,000 for a sixty or ninety day period.
Again, repay the loans promptly at the end of the sixty or ninety-day period. After another two or three steps using this method, you will be able to borrow at least £10,000. Because you will now be recognised by the banks as someone who is a very good lending risk, you should be able to have a loan of £10,000 approved, at each bank, within a day or two.
So, once you have built your reputation for credit-worthiness, you can raise at least £100,000 within two days of applying.
CHAPTER FIVE :
A GUARANTEED INCOME OF £100,000 IN A YEAR.
It is something of a truism that success breeds success. Likewise with money. Money can be used to "breed" money. Provided you have access to the necessary capital in the first instance, and are careful about selecting the kind of opportunities which offer a high return for a minimal risk, you can earn a very worthwhile income...using other peoples' money!
One excellent method of amassing a large amount of capital and guaranteeing yourself a very high annual income is to form your own corporation.
The cash you generate from the sale of shares is much cheaper than borrowing...there is no interest to pay, it does not incur monthly repayments will pay your salary and is not subject to taxation.
Regardless of what the company does by way of trading, it is possible to issue shares at a nominal value of, for example, £1.00 each.
You can buy a limited company off the shelf and convert it to a public limited company. You then write into the company charter an authorisation for the issue of one million shares with no par value.
These shares are then divided into lots for distribution. You could keep 300,000 shares for yourself, allocate a further 400,000 for sale to the public at £1.00 each. Then set aside the remaining 300,000 for sale at a later date, when the value of the shares has risen, so that the sale price is much greater than the original £1.00 each.
Contact a stockbroker and offer to let them sell your shares at an agreed commission (normally around 20%). Impress upon the broker that yours is a new company which is set for rapid growth.
With the capital raised from the initial sale of shares invest in getting the company up and running. Once you are trading profitably your shares will start to appreciate in value. It is not uncommon for shares in a newly established company to show a three or four-fold growth within the first few months of trading.
The initial capital from the sale of 300,000 shares, less 20% brokers fee, will leave you with an operating capital of almost a quarter of a million pounds. With this kind of money it is a fairly straightforward process to employ sales and management professionals to run your company and financial experts to advise on the best commercial strategy.
With a three-fold increase in share value your 400,000 shares now have a nominal value of £1,200,000. The remaining 300,000 worth of shares can then be sold at £3.00 each or close to that amount. Supposing you can sell them for only £2.00 each, you still are able to raise a further £600,000 in operating capital.
Keeping your 400,000 shares as a nest-egg for your future, you award yourself a salary of £100,000 per annum as the company chairman. You don't even need to take on a managing director's responsibilities, and would be well advised to employ an experienced business professional to fill this post.
The most difficult phase of establishing your own corporation will be in converting your limited company to plc status. The formation or the buying off the shelf of a ready formed limited company is a straightforward process. However, in order to elevate your limited company to public status will require expert professional guidance.
It is quite possible though, that you could find a suitable business professional to perform the necessary work for an agreed shareholding in your new company.
CHAPTER SIX :
ALL THE CREDIT CARDS YOU COULD EVER WANT.
As discussed in chapters one and two it is possible to build up an excellent credit rating which will allow you to borrow large sums of money from banks.
Providing that you always make agreed payments in full and on time you can then move on to building up a large collection of credit cards. Start with a Visa and Mastercard from all the banks that you have borrowed from. Then apply for cards from any other banks which provide credit cards.
Quite often you will find banks advertising credit cards at a preferential interest rate. The advertising usually concentrates on the concept of using that particular bank's card to consolidate all your borrowings from other sources which have a higher rate of interest.
When you apply for a card advertised as being a handy way of paying off all your other cards and overdrafts the issuing bank will assume that you are going to use their card as an alternative to the cards you already have. Because of this they will be keen to issue their card with the minimum of fuss. However, once you have obtained their card you are under no obligation to cancel the cards you already have.
As mentioned in chapter two, apply for and obtain as many cards as you can get. Providing you have kept to your repayment agreements on all loans and cards there is no reason that you should be refused any new cards for which you apply.
I now only use three major credit cards and two store cards. This is because I have managed to accumulate working capital and tend to use current account overdrafts when needed. However, in the early days of needing fast cash for business investments I used over 20 credit cards.
CHAPTER SEVEN :
VIRTUALLY UNLIMITED FINANCE FROM YOUR CREDIT CARDS.
When I used my credit cards to raise finance for rapid growth business deals I was able to raise over £70,000 on cards alone. I could raise a further £30,000 or so on overdrafts and 'personal reserve' accounts with agreed borrowing limits.
There are many opportunities to make a lot of money in a short time when you have the capital to invest. Naturally, because of the high interest rates payable for cash borrowing on credit cards, the only reason you should borrow large sums of money using this method is to invest in opportunities which virtually guarantee a good profit in a short time.
Before I made the mistake of investing in business opportunities which I had not looked into in enough depth, and so consequently lost money on, I used credit cards to borrow several thousands at a time to finance some very profitable deals.
Some of these included the cash purchase of luxury cars, often after I had already located a buyer with ready money to buy from me immediately after I had taken possession. The best of these deals was when I bough a Mercedes 190E for £8,750 from a private owner in London and sold it for £11,000 to an eager buyer in Edinburgh who had already told me that was the price he would pay for this particular car. The purchase price was raised solely through my Visa and Mastercards.
I actually borrowed £9,000 and took a luxury overnight stay at the Hampshire hotel in Leicester Square as a perk of the "job". The best part, though, was driving the car from London to Edinburgh.
I knew that I was making a sound investment, because, even if the man who had agreed to buy the car from me had changed his mind, I had a car with a book price of around £12,000 for less than three quarters of that sum. The very worst I was likely to end up with was my money back!
Although I have made more money in property dealing than any other business venture, followed closely by selling information, I still buy and sell the occasional luxury car. Not because I need to, sometimes I only make a few hundred pounds. I do it, just occasionally, because I enjoy it...it certainly beats working for a living!
Please note, because of the high interest rates of credit cards it is often not a good idea to use the money borrowed on them to finance property deals. The trouble with property, although it is nearly always a good investment, is that it can take some time to turn it around.
Credit card borrowing should only be used when you are virtually certain that a property is going to be ready for sale in a very short time and that you are confident that it will sell quickly.
I bought a shop, over three years ago, which I still have not managed to sell. It has been on the market now for over two years and looks like it will be some time before I finally dispose of it. The initial sum of £25,000 for purchase and repairs was raised on credit cards. But, after paying out thousands in interest I finally paid off the credit cards with a long term bank loan. I was able to use the property itself as collateral, so getting the loan was not a problem. I mention it here simply to warn of the dangers.
When I first decided to buy the shop I was confident that I could have it ready for sale within three or four months. This I did. I then used it as a storage space for a further 9 months and then put it on the market. I know it will sell eventually, and I expect to get the asking price of £57,000, but my initial hope of a fast profit soon disappeared.
So, although there is great potential in using your credit cards as a means of raising cash quickly to finance lucrative deals in property or any other business transaction, please be warned: Tread carefully.
Providing that you take care to research the opportunity in which you intend to invest, and make certain that you have every last iota of information available, there is no reason for you to not make excellent profits. And once you have done a few deals in whatever area of business you choose, you should recoup the profits to build yourself a capital base. Working like this you will soon be able to finance your dealings with your own money.
Getting Credit With No Credit Checks!