Here Are Great Ways to Raise Your Credit Score and Keeping It In Good Standing

Brought to you by: Breez DeGuzman

People considering a large purchase may be concerned about their credit score and how it might affect their eligibility for a loan. Don’t despair; there are ways to raise your credit score. Try following some of these ideas to bring your credit score up.

Many people don’t realize how important their credit score is, especially if they’re just starting out. Like your social security number, however, your credit score is intrinsically linked to your name for your entire adult life. If you want to borrow money of any amount the creditor will check your credit rating.

* Each year, order copies of your credit report and check it for errors. Knowing what is in your report will enable you to get any errors corrected which could increase your score dramatically. If you have extenuating circumstances concerning anything on your credit report, you have the ability to write a letter explaining your situation and have that included in your report. Depending upon the reason, this information could encourage acreditor to approve a loan request.

* Pay your bills on time. Each time you are late on payments your credit score is adversely affected, often within two months after the payment is missed. The reverse is also true; if you pay on time your score goes up; however, it can take six to twelve months for the good reports to be added.

* Avoid opening accounts you won’t use. No initial discount offered for opening an account is worth the potential black mark on your credit score.

* Transferring balances is risky business, so try to pay your credit cards off rather than transferring the balance to a lower rate card. The reason being, transfers may change the ratio of credit owed and open credit lines which hurts your credit score.

* If you do use credit cards, pay them off every month or use them sparingly. Your goal is to have as small a balance as possible when compared to available credit. Keeping the balance owed below 25% of the total available is good for your credit score.

* Choosing to close older accounts you no longer use could have a negative effect on your credit rating. Creditors want to see a long credit history, so you may want to leave older accounts open – at least until you’ve received the loan you’re seeking.

* Do everything you can to avoid having to file for bankruptcy. Even though you may have an immediate reprieve, in the long run it will be disastrous for your credit score.

* If one or more of your credit accounts is past due, bring them current as soon as you can.

Ultimately, if you know you’re going to have problems making payments at any point, it is better to call your creditor immediately and discuss your situation with them. They may be able to reduce your interest rate or postpone several payments. The important thing is to let your creditors know so you can work with them to keep your credit in good standing.

There are ways to raise your credit score if you’re going to be making a large purchase such as a house or a new vehicle. Remember to keep an eye on your credit report and correct any errors as soon as you find them to ensure your credit report is accurate and your good credit is maintained.

How to Build a Good Credit History While at College

Brought to you by: Breez DeGuzman

Many college students yearn to be considered as adults, despite the fact they’re barely out of high school. They often think having a credit card will give them the status they seek. Unfortunately, college students sometimes make bad financial decisions. Here’s how to build a good credit history while in college rather than ruining your credit.

Good credit is so important. Not only will it help you receive decent interest rates when you’re trying to buy a home – having a good credit rating can also affect whether or not you get hired for a job, since some employers are now looking at your credit history. It can also affect what type of deal you can get for a cell phone and how much you’ll pay for insurance.

Check your credit report even if you don’t think you don’t have a credit history. You can order a free credit report from each of the major credit bureaus once a year. The report is used to determine your credit score, which is what creditors look at when deciding to extend credit to you.

If you don’t think you have a credit history, it’s still a good idea to get the report to ensure there aren’t any errors. You could be a victim of identity theft or there could be an error where someone else’s information has been added to your report. It’s better to get the report now rather than wait and have your entire credit history ruined because of an error or identity theft. This will also give you an opportunity to get any errors corrected before they do too much damage.

Think about opening checking and savings accounts. Lenders see these types of accounts as signs of stability. They are also the only accounts you can have as a minor that can affect your credit history. You’ll have to wait until you’re at least 18 before you can apply for a credit card.

How is your credit score determined? It is determined by comparing how much of your available credit you use and whether or not you pay your bills on time. If you have a credit card with a $500 limit and you have it maxed out, your credit score may take a dip. Paying your bills late will also make the total score go down.

To ensure you pay your bills on time you can either set up automatic payments or mark them clearly on your calendar so you’re not late. One missed payment can affect your score and it won’t be taken off your report for seven years.

Try to keep the balance you owe on credit cards less than 30%. This will keep you from getting into credit card debt you can’t pay, and will help you maintain a good credit score. Paying off your balance each month is also a great way to build your credit history while at college.

Remember, credit cards are like a double-edge sword. With one edge you can build your credit history. With the other you can tear it down. Once you’ve learned how to build a good credit history while at college, don’t neglect it. You’ll want to get your credit report each year and ensure your credit history stays good.

Here are smart ways and tips to build your credit history and by following these ideas you’ll know the benefits to your first credit card to help your financial future instead of leaving big black marks on it.

Brought to you by: Breez DeGuzman

Statistics claim that two of every three college students have at least one credit card. Statistics also prove that many of those first-time credit card owners will end up in financial trouble because they haven’t learned to properly use them. There are smart ways to use your first credit card, though. Here are some tips:

Learning how to properly use credit cards can help build your credit history instead of leaving big black marks on it. The benefits of having good credit means:

* Qualifying for lower interest rates on car loans or mortgages
* Getting a reduced cost for insurance
* Getting a decent apartment because many landlords check your credit these days

A good first credit card is one that doesn’t charge an application fee, has no annual fee, has a decent interest rate (approximately 14-17% for college students), and reports to all three major credit bureaus. If it doesn’t report to credit bureaus it won’t help you build credit and you’d want to find another.

Apply for only one credit card at a time. When you’re just starting out, you really don’t need more than one. Wait several months to a year before applying for more. Two credit cards may help establish your credit history, but more than that could easily result in problems.

Study the information you receive about your new card. It will explain the interest and any fees. You’ll have one interest rate for purchases you make, one for transferring credit from another card, and still another for making cash withdrawals. You’ll also want to know about late fees or over-the-limit fees. Do your best to avoid these fees as they are too high.

What is your credit limit? On most cards college students get, the limit is $500. However, after you’ve had the card for a while and have made your payments on time, your limit may be raised. Try to avoid spending more than 30% of your credit limit.

When is your payment due? When does the statement period close? And what is the toll-free telephone number for the card? You’ll want to know this information in case there is a question or problem with your card.

Remember, your first credit card is a tool that can greatly influence your financial future. Misusing credit can haunt you for years to come. Cash advances have a high interest rate, so avoid them. Late payments mean a fee of $30 or more and may increase your interest. Missing a payment entirely will knock 100 points from your credit score. Going over your limit can also cause a large fee.

Pay your balance in full each month; never pay only the minimum payment. The minimum payment, usually 2% to 3% of your total balance, will take you years to pay off and will result in having to pay an exorbitant amount in interest. The best idea is to pay the balance off each month and if you can’t do that, then it would be better not to make the purchase.

If you have a steady source of income, have your payments taken from your account automatically. This will ensure you won’t have a late payment. Just don’t forget to deduct that amount from your account or it could cause other problems.

There are smart ways to use your first credit card. By following these ideas, you may learn to avoid the same financial problems that many college students find themselves in the middle of. Remember, credit cards are tool; use them wisely.

Brought to you by: Breez DeGuzman

If you’re holding plastic in your purse or wallet, you may think all plastic is alike. Although there are similarities between debit cards and credit cards, there are also some major differences. When considering which to use, debit card versus credit cards, you may want to think about a few things.

Credit cards are financial tools which allow you access to revolving credit through a lending institution. This money must be paid back, often with interest.

Debit cards are financial tools which allow you direct access to money you have deposited into your own bank account. You are limited by the funds available in your bank account.

Some financial experts feel debit cards are at a major disadvantage when compared with credit cards. Here are some of the disadvantages observed by financial experts:

* Access to your bank account: Debit cards use money you have deposited into an account. Therefore, if your card is misplaced or used by someone other than an authorized user, they could easily wipe out your account without your knowledge. Credit cards, however, offer you a layer of protection in that you are billed monthly. This may mean someone can spend a good bit and you may not know it until your account goes through its next billing cycle.

* Fraud protection: Debit cards have limited fraud protection compared with credit cards. This becomes a serious disadvantage if the debit card has been lost or stolen and it’s not reported right away. You can contact your bank to find out what protection is available and what your liabilities are in the case fraud has occurred. Credit cards have clearly spelled out the limit to your liability should your card be used by non-authorized individuals.

* Merchant disputes: You have fewer options regarding disputes with a merchant with a debit card than you do with a credit card. Because the money comes directly out of your account, the merchant has your money already. Also, the money involved in the dispute will be withheld until the dispute is ruled in your favor, which could cause other major problems with your account. Credit cards allow you a period of trial before payment is made. Most credit card companies allow you start a dispute and will withhold payment until the dispute is satisfactorily resolved.

* Track spending: Debit cards make it difficult to keep track of what you’re spending. You may forget to write down a transaction which can throw your entire account into an overdrawn tizzy. Credit cards also have the ability to bunch like charges together so you get a better idea of where your money goes.

* Credit history: When you use your debit card, it isn’t reported to the credit bureau and will thus not affect your credit history. This means your good habit of paying your telephone bill each month with your debit card will not help your credit score. Using credit cards, on the other hand, will help you build good credit.

There are advantages to using a debit card, as well, including not running up unsecured debt and not having to pay interest on what you spend. However, for most people these two advantages do not outweigh the many disadvantages when comparing debit cards with credit cards. Whether you choose to use either, or both, is a decision you and your family will want to make based on your knowledge of each.

Brought to you by: Breez DeGuzman

It’s one of the unfortunate aspects of being an adult – accumulating debt. If you are in debt, you probably didn’t start out as an adult with the goal of having as much debt as you currently have, and it most likely didn’t grow to the level it is overnight. If you want to get rid of the debt once and for all, you may want to use some of these ten tips for aggressive debt reduction.

1. Know what your total debt is so you know what you have to repay. Write down on a sheet of paper a list of all your creditors, the total amount owed, and what your minimum payments are for each. This list will give you a roadmap of how to get out of debt.

2. Do not incur additional credit card debt. If you have to, place your credit cards in a zip top bag filled with water and place it in the freezer so you don’t have easy access to it.

3. Create a realistic budget for expenses. List necessities such as mortgage, car payments, utilities, insurances, groceries, etc. as well as credit cards. Decide how best to spend your money to meet all of those financial needs. Stay within your budget.

4. Be sure to continue to make all regular monthly payments on each credit card. You do not want to fall behind on any of them because it will reflect poorly on your credit history.

5. Use extra income for debt repayment. Instead of spending that money, you may want to use all or part of it for debt reduction.

 6. Pay off the credit card with the highest interest rate first unless there is one card that has a balance over 50% of your credit limit. In this case, you’d want to pay down this credit card until it gets to a balance of less than 50% of the limit. Then you’ll work to pay off the card with the highest interest rate. When you have that card paid off, close the account and cut up the card. Next you’ll roll that payment onto the card with the next highest interest rate. Continue this pattern – paying off one card and then adding that payment to the next card – until all of your credit card balances are paid off and there is only one card left.

7. Use cash instead of credit cards. For the one card you keep, use it only for emergencies or major purchases such as a new dishwasher. Put it somewhere in your wallet that will help you avoid using it for daily purchases. Do not accept increases to your credit limit.

8. Reduce discretionary spending such as dining out, gourmet coffee, or other unnecessary items. A family of four generally spends $30 for a meal. Four meals over the course of a month would be an extra $120 you could use to pay on credit cards or put into a saving account.

9. Avoid borrowing money from another source to pay off debt, especially organizations that promise to consolidate debt. This means to combine debt could lead you to lose everything if you can’t keep up with your payments.

10. Look for ways to come up with extra money. This could be stopping some services, moving to a smaller home, selling items you no longer use, or getting a part-time job.

It is possible to spend your money wisely and get out of debt. Use these ten tips for aggressive debt reduction to encourage you to begin making changes in the way you spend and save.

Brought to you by: Breez DeGuzman

If you’ve ever had credit in your name, there’s a good chance that you get credit card offers in the mail regularly. Some charge interest rates so ridiculous that it’s amazing they’re still in business. Others offer deals that seem too good to be true, such as 0% balance transfers.

Zero interest deals do exist, though. In fact, they’re pretty common. Credit card companies offer such deals because they provide an incentive for those who already have credit card debt to get one of their cards. But should you take the bait? Here are some points to consider when making that decision.

Pros

Zero interest is almost certainly a better deal than you’re getting with another card. Even if it’s only for a limited time, it could save you quite a bit of money. As long as the non-promotional interest rate is the same as or less than your current card, you should come out ahead.

If you’re planning to pay off your debt, transferring your balance could allow you to do it more quickly. Instead of contending with compound interest until you finally get it all paid, you can put the entire amount of each payment toward the principal.

Having another credit card account reduces your outstanding debt to available credit ratio. This is good for your credit rating, and can help you get lower interest rates on mortgages and other types of loans.

Cons

For those who already have too much debt, getting another credit card could be a bad idea. That paid-off credit card might look like an open invitation to charge. If you accept that invitation, you could end up with much more debt than you had to start with.

Zero interest doesn’t necessarily mean free. Most cards charge a fee each time you transfer a balance. These fees are usually a fraction of the regular interest rate, but if you transfer a large balance it could add up to a lot of money.

Some cards that offer 0% balance transfers make up for it by charging high fees for other things. They may jack up your interest rate if a payment is late or returned by the bank, or they could charge high annual fees. Be sure to read the fine print, because they are required by law to disclose such things.

Transferring a balance to a zero interest credit card can save you lots of money. But if you just charge up the original card again, you’re worse off than you were to start with. Even if you don’t, fees could add up to more than you realize. Before you accept that balance transfer offer, make it a point to do some research.

Brought to you by: Breez DeGuzman

According to the American Banker’s Association, the average American family carries $8,000 in credit card debt. While a lot of companies claim they can magically make this debt disappear, there’s no substitute for formulating a realistic plan to get it paid off. High interest rates and late fees can complicate matters, so it’s important to make a plan and commit to it. There is no quick fix – paying down any debt takes time – but there are several viable options and techniques that can help.

* Prioritize

Make the payment of your credit card debt a priority. Without this basic first step, you will likely find it only too easy to keep running from the situation or accumulate more debt. Unless you address your debt head-on, it will continue to eat away at your family’s budget and even your relationships – according to PRLog, excessive credit card debt may be a leading cause of divorce.

* Create a family budget

This is not as daunting as it may seem. First, gather the family’s financial records: bank statements, utility bills, etc. Then, list your family’s total monthly income followed by its total monthly expenditures, such as a car payment and mortgage. This way, you will have concrete numbers to work with in regard to your credit card debt.

* Pay the debt with the highest interest rate first

Lay out all your credit card statements in order of highest to lowest interest rate, and focus on paying off the highest interest rate card first. On the highest rate card, pay as much over the minimum payment as you can each month. When that one is paid off, move to the next highest interest rate card.

* Work with the credit card company

Because they are unsecured creditors, credit card companies tend to be willing to negotiate the interest rate or other aspects of your credit agreement. When you explain that your intent is to get your debt paid, most creditors are willing to listen and work with you. When you call, have your household budget and latest credit card statement from that company handy.

* Think outside the box – do you really need to spend money on that?

What if you can’t find that extra $20 or $100 every month to dedicate to your debt payment? It never hurts to get creative. Go back to your budget and detail all expenditures – even those for which you don’t have a paper trail, such as a daily cup of coffee on your way to work or eating lunch out. Make your coffee at home and bring it to work in a travel mug, and save up to $3 a day – that’s $60 a month you could put toward paying off a credit card. And that’s just coffee.

Brown bag it for one week a month and save the $10 a day you were spending on lunch out. In one week, that’s another $50 saved. And that waiter or waitress who brings you your lunch might be working to pay off his or her credit card debt – waiting tables is a viable option for bringing in some extra cash with flexible hours.

Often, we just don’t realize where our money is going. Taking the time to sit down and evaluate just how much we have and where it’s being spent is not magical, but with commitment it can bring relief and eventual freedom from debt.