Credit

Managing Your Finances: Why Your Credit Rating Is So Important

In today’s digitized world, everything, including money, has been given the ability to be transported through electronic signals, going in and out of several computers, before finally landing, hopefully, in the right hands. In the last decade, the use of credit cards has been steadily on the rise. With people constantly now purchasing with credit cards, it is important to keep your finances under good management. It is easily just as important to keep track of your credit scores and make sure that they are in check.

A few years ago, many people would find constantly managing their finances quite a hassle. This would be due to the fact that to constantly keep an eye on your finances, one would also have to constantly make several trips to their respective banks. This makes it very hard for people whose daily schedules are constantly kept full by other appointments to make regular trips to their banks. This is why many people have turned to doing their banking online.

"Credit rating" handwritten with white chalk on a blackboardManaging finances

The convenience of online banking when managing finances makes even the most frequent online shoppers better at managing their finances. With the convenience that the service provides, the fact that it allows users to check their financial information as often as they want allows individuals to practice their skills in record keeping.Having 24/7 access to records can make it easier for you to keep track of your spending as well as spot errors on transaction records. It also enables you to secure a better credit score, allowing you to make more purchases using your credit cards.

You and your credit score

Your bank keeps careful track of your transaction records, so why shouldn’t you? Keeping track of one’s finances is crucial to maintaining a good credit score. When you use your credit card, you’re essentially borrowing money. Your credit score is determined based on five factors: your previous credit performance, the current level of your indebtedness, the length of time your credit card has been in use, the types of credit available to you, and your pursuit of new credit.

Your credit rating is most affected by how well you handle your debt by paying it off. To boost your credit rating, you should be able to pay off your debts quickly, maintain low levels of indebtedness, and refrain from applying for additional credit constantly.

Importance of your credit rating

When you apply for a utility, mortgage, or loan, the lender will check your credit rating. Depending on your rating, the lender will resolve what risk you pose to them. If you have a poor credit rating, lenders may not shun you entirely but lend you money at a higher rate instead. Therefore, if you are planning to use your credit for a major investment in the future, it’s important to achieve a good credit rating now.

Make you loan paymentson time and for the right amount through online banking to avoid getting in debt and into potential trouble. If you have an outstanding debt, keep it as low as you can and never ignore overdue bills. Pay attention to and improve your credit score to make sure you’re always in good financial health.


The Three Steps to Fixing Your Credit

There are a couple of things that you need to know about having less than perfect credit  The first is that there are more people out there whose credit profiles are not nearly as awesome as they’d like them to be—so there is no reason to feel embarrassed about your score or situation. The second is that credit scores change all the time. The credit you have now is not the credit you’ll have next month or next year. This means that you can fix your situation.

Step One: Finding Your Starting Place

The first thing that you need to do is get copies of your credit reports. You are entitled to at least one free credit report every year from each of the three major credit bureaus: Equifax, Experian and TransUnion.

It’s important to understand that accessing your credit reports does not necessarily mean learning your credit score.

Once you have your credit reports, you’ll want to make sure they are absolutely accurate. This means going over every detail and making sure that it is correct. If you see something that is even a little bit off, you need to dispute that detail with the reporting bureau. In addition to raising your credit score, it is important to get a clear and accurate idea of how much work you are going to need to do.

building-creditStep Two: Fixing Bad Credit

Most of the time, the key to fixing bad credit is getting back on track with your bills. Don’t worry about the payments you’ve missed in the past. You can’t do anything about those now. What matters is that you create a positive and steady payment plan for your future. It is also important that you work very hard to reduce your debt to income ratio. Your debt to income ratio is a big factor in your overall credit score. It is what lenders look at when you apply for loans or financing.

The best way to reduce your debt to income ratio is to increase the amount of money you send in to your creditors each month. By now you already know that you need to pay more than the minimum amount due if you ever want to get out of debt. Even $5 more toward that balance is a good thing. A better way to do it though, is to take your minimum amount due, add however much you are charged in interest every month and then tack at least $10 (though 10% is better).

If you have a lot of bills or if you’re worried that you won’t be able to afford to make even your monthly payments each month, don’t panic. Many creditors are willing to work with clients when it comes to things like interest rates and minimum amounts due. They’d rather reduce your interest rate than lose you as a customer. If this process intimidates you (or if you don’t have time to call and haggle with all of your creditors), a credit repair service can reduce the stress of the process. These companies negotiate with creditors on your behalf and help you set up budgets and payment plans that you can afford to keep.

Step Three: Building Good Credit

Don’t wait until you are out of debt to work on building good credit for yourself. You need to work on both simultaneously. Yes, paying down your debt and creating a positive repayment history will accomplish part of this goal. The other part, though, is proving that you can handle credit responsibly. The easiest way to do this is to open a secured line of credit with your bank.

If you are willing to work hard, you can fix your credit. It won’t happen overnight. It might take a few years—but it will happen.


Medical Cards: Should You Opt for Them?

Medical credit cards are often regarded as a godsend gift by cash strapped individuals, without medical insurance, hit by medical emergency. Scores of Americans have found themselves in a stressful situation during health related emergencies. The credit card companies have recognized this opportunity to step up their own business by offering medical cards which offer similar benefits as that of regular credit cards, only with the exception that these plastics are meant to help you deal with your medical expenses. More →


Your Credit Scores: How Much Do You Know About Them?

How often have you heard the term “credit score”? Perhaps— many a times. Yes, you know that it will be one of the key factors considered by lenders when you are looking for loans of any kind—be it cars, mortgage, home improvement or anything. However, are you exactly aware of the regulations behind them? Are you sure that you are not confused about any of the aspects of credit ratings? If no, then read on, to know further.

Provided below is a lowdown of a few nuances of the all-important credit scores—something aimed at helping you with better understanding of your credit or FICO scores.

These scale of the credit scores

The scores generally vary from 300 to 850. It can well be understood that 300 is a very bad and 850 is a very good score. A sufficiently good score for securing an auto loan is around 720. However in order to qualify for a mortgage, you should better 760. You do have the right to know, why a certain lender has rejected your loan application. Similarly you might also ask him why you have been offered lesser than the best rate. They should be totally transparent about the range of scores they have considered (many of the lenders use VantageScore that has a range of 501 – 990).

The Three Bureaus

The three credit bureaus only generate the credit reports. They do not judge your scores and give directions to the lenders whether or not to accept your loan application. They are simply in charge of laying down the history (how well or poorly have you been able to manage your finances like loan repayment or credit card bills etc). Equifax, Experian and TransUnion are the three major credit bureaus. It’s the companies such as VantageScores and FICO who mark you, thereby indicating lenders whether at all it is risky to deal with you or not.

Credit_CardFree Credit Watch

One of the biggest myths attached to credit scores is that you can find out about your scores for free from some websites. You can secure a rough estimate of your scores from these free sites (these scores include those marked by FICO and VantageScore as well as the PLUS scores by Experian) but only when you are willing to subscribe free (on a trial basis) to a credit monitoring service. And, the catch is—if you don’t unsubscribe within a period of 7 days or so, the site might charge you a certain amount of money.

The Credit Card Age

As against popular belief, your credit rating does not “age”, once you close an account. For instance if you close an account in a particular bank, the credit card of that bank will “be a year older” next year. John Ulzheimer, a noted credit expert says: “Not only does it still count in your score, but it continues to age.” (Sources: money.usnews.com)

The closed account stays in your credit report for only a good 10 years. However, if your scores are negative, they will be deleted after 7 years– since, negative rating can only be reported in the history for seven years.


What to Do If You Have Credit Issues?

Credit issues can impact just about every aspect of your life. Why? If you do not have a good credit score, it is harder to qualify for mortgage loans, auto loans and other types of financing. In addition, a bad credit score can result in higher insurance premiums, and you may not be able to secure certain types of employment.

Fortunately, there are effective ways to deal with credit issues. Since you didn’t get into this situation in one day, you can’t repair your credit overnight. Therefore, you should not expect a better credit score after only a few days or weeks. Even so, if you take the necessary steps to get your personal finances on track, your credit score will gradually improve and you’ll be a step closer to achieving A+ credit.

Credit_Card1. Check your credit report each year

Many consumers do not check their credit reports on an annual basis. Your credit report provides a detailed account of your credit history. It includes your most recent accounts, balances, older accounts, as well as your account statuses.

When you apply for new credit, creditors review your credit report to see if you qualify for financing. But unfortunately, your credit report may not be accurate. A creditor may report information in error, or someone may steal your personal information and open accounts in your name.

Checking your credit report regularly is the best way to identify mistakes early and each consumer is entitled to one free report from each of the bureaus every 12 months.

2. Seek professional help

If you notice errors on your credit report, you can notify the reporting creditor to clear up any mistakes. In many instances, this is all it takes to improve the accuracy of your report. But sometimes, repairing serious credit report errors requires professional help.

Credit repair agencies have experience fixing mistakes on consumer credit reports. They’ll investigate a claim and work with your creditors to remove any information that’s inaccurate. Negative information on your reports can drop your credit score by several points. However, once this information is deleted from your report, your credit score will improve.

3. Understand how credit works

If you do not understand how credit works, you may not make wise credit decisions. Several factors influence your credit score, such as your payment history, the amounts you owe, the length of your credit history, the types of credit, and new accounts.

Since your payment history and the amounts you owe make up 35% and 30% of your credit score, respectively, it is important that you pay creditors on time and maintain low balances.

This is much easier to say than do. However, if you only charge what you can afford to pay, and if you pay your balances in full each month, you can improve a low credit score.

4. Get rid of your credit cards

Canceling a credit card may reduce the length of your credit history, thus lowering your credit score. Rather than get rid of credit cards, destroy your cards and only use cash. The less you use a credit card for purchases, the less debt you’ll accumulate.

In addition, do not splurge when applying for a loan. Oftentimes, consumers overspend when buying a house or car. As a result, a larger percentage of their income goes toward paying off these debts. They end up living paycheck to paycheck; and if unable to make ends meet, they might rely on a credit card. This complicates a financial situation. Therefore, know your limitations and be reasonable.

5. Establish new payment terms with your creditors

Defaulting on a credit card or loan, and then ignoring your creditors will not make the debt go away. The credit card company or bank may send your account to collections or seek a judgment. Both moves can damage your credit score, and this negative activity can stay on your report for up to seven years.

To avoid any collection accounts or legal action, always communicate with your creditors. Explain your situation and ask the creditor for a new payment arrangement. Based on your economic situation, the creditor may lower your monthly payment to an affordable amount, or temporarily suspend payments until your finances improve.

Realizing that you have credit issues might keep you awake at night. However, credit problems are not permanent. There are ways to rise above a low credit score. However, you need to be proactive and make wise credit decisions.

 


Should You Cancel Old Credit Cards Or Reapply For New Ones?

Most people have at least one credit card. Even if you’re not using the card, and you’re not interested in swapping the balance to another lender, it still might be worth cancelling the card and switching to another one.

With credit card fraud on the rise, it doesn’t make sense to have a really old card lingering around unchecked. Moreover, your ancient credit card most likely won’t be benefiting from the latest zero percent interest deals on spending and balance transfers. Even if you have no intention of getting into debt, you can use the card for purchases for 18 months and save the equivalent cash in an ISA, so you’re actually making money as you spend!

In addition, many credit card companies are so keen to temp you back to their services, that they’ll often treat you as a new customer after a few months have passed. That means you’ll be entitled to all the offers that have since elapsed on your older credit card.

Credit_CardWhen To Hold On To A Card

If you travel frequently, or find yourself in any situation where you might require an emergency stash of credit, an older, empty credit card can be really beneficial, especially if you don’t have any savings to fall back on.

Weigh Up The Options

If you’ve got an old card lying around, and you’re in good standing with the credit card company, there’s a chance that your borrowing limit could be significantly larger than any new card you might apply for. The fact that you also won’t need to go through a credit check means that it’s often less hassle to keep an old card running if all you’re going to use it for is emergency purchases.

Will My Credit Rating Be Damaged?

There’s really no way of telling: Some lenders will look at your empty £7,000 limit credit card and think that it’s great you’ve got so much potential to get into debt but have stayed sensible. Others will view the massive unused balance as a ticking time bomb that you could fill up in a single day. Every situation is different.

It’s definitely worth checking out your credit report to see if everything is in order before you make a decision to switch cards. Credit Cleaner allows you to check your credit score and amend any admin errors. They offer advice for repairing and improving bad credit ratings, all for a low monthly fee. Hunt down a Credit Cleaner review to see if the service is right for you. Click here for more information.

How Do I Cancel An Old Card?

It’s best to make a direct phone call and have the account shut down. You’ll still be able to access your account for a short time, so make sure you completely stop using the card or payments might still go through. This is because the card company needs a small buffer period to make sure everything is in order and the balance has been settled. It’s also worth noting that simply chopping up a card won’t suddenly close your account down.

Keeping an old credit card hanging around can be a great piece of mind for emergency situations, but it pays to shop around and find the right deal. You may be missing out on some great offers!

Wendy Lin is an author and mother. Although she travels many months out of the year, she always tries to take her family with her as she prioritises her family above business.


Credit Card Debt Weighing You Down?

The world revolves on credit. More and more individuals are dependent on these plastic cards for their daily survival. The problem with this is that you lose financial accountability and sound judgment over a period of time. Without credit cards in the picture, your expenditures will always be limited on one thing – how much cash you have on hand. When you are forced to work with the amount of cash you have with you, you’ll think twice and even thrice before making a major splurge. However, plastic cards allow you to bypass that. You can basically get whatever you want and pay for it later. The first part is relatively easy; it’s the second part that reins in all of the problems.

5451685974_aa00a963e41. Get rid of your credit card.

The first step to eliminating your credit card debt is by making sure that you don’t have any more of it any time soon. This would mean cutting up your credit cards. Don’t fall into the trap of using your credit card to cover the difference between how much you earn and how much you spend each month, even if you do pay the credit card bills once they come. This will only result in a cycle of paying and borrowing, and you’ll never free yourself from the bounds of credit card debt.

2. Get all of your bills and find out what you’re up against.

Ignoring the problem does not solve the problem. Underestimating the problem, because you do not know the actual extent and gravity, is just as bad. To know what you are up against, you should get all of your bills and find out how much you really owe. If you have bills which are missing, call up your credit card company and request for these bills although your overdue amount is usually found in your monthly bills. By know exactly how deep in debt you are, you can plan your payments accordingly and in a manner that allows you to settle your debt within the soonest time possible.

3. Organize your credit card debt according to their interest rates.

If you have more than one credit card with an outstanding balance, then you need to start prioritizing. There are two things which you have to take note of when paying off your debt – the principal debt or how much you originally owe, and the interest or how much you’re being charged for holding a debt. The higher the interest is, the longer it would take for you to shrink the principal especially if you are just paying the minimum. However, if you aggressively work towards eliminating that debt, the smaller principal will mean that that the interest, which is based on the former, will also shrink significantly.

4. Cancel a credit card once you have paid it off.

Debt, just like other mistakes, comes with an invaluable lesson and that is to never have one again. So it would be remiss if you using a credit card once you’ve already gone through the painstaking process of paying it off. On the other hand, cancel the credit card once you’ve already paid it off to keep you from getting tempted. All of these tips will teach you how to get out of credit card debt fast.

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Phil Farell is a finance writer who loves to give useful tips to overcome bad debts. He also shares his insights on investing, financial management and lease financing.


How Important Is Your Rental History

How important is rental history when your trying to get that new apartment you just viewed? Apartment owners and landlords use a variety of different metrics to determine whether or not your rental application will be approved.  Nowadays, your actual credit score may come into play too. But in the end, your history is extremely important and will be used in the evaluation.

Why is your rental history examined with a fine toothed comb? Good rental history is a strong indication of your ability to balance your finances. It also may be an indication of how responsible you are in regards to paying your other bills like your credit cards and utility payments. If you have a positive history of paying your bills on time, and no negative items are currently part of your credit profile, chances are you will earn the lease.

Your Landlords Can Check Your Credit…

In fact its really easy for landlords to check your credit history via the big the credit bureaus. With a few clicks of a button, your entire profile will be immediately available. This can be both a positive and negative aspect.

Its always a great idea to pull your own credit report and see if you have any negative items that have been reported to one of the 3 credit bureaus. They include Experian, TransUnion, and Equifax. You can actually check each one free of charge yearly.

Being a First Time Renter…

If you’re a first time renter you might ask how you can be approved for a lease when you’re applying for the first time. There is not much to worry about here. No credit is always better than bad credit. Also, many apartment communities around the nation accept first time renters. And you can also go about getting a co-signer.

The co-signer will usually be a parent or a close family member. Although they will not be a tenant in the community in question, they will be held liable if rent is not paid on time by you.

Pay Your Rent…

Keeping good rental history can go a long way. Making sure you have paid your rent for the entirety of a lease will assist you in renting your next place and even buying a new home. When you apply for your next apartment home, you will feel great knowing that you will have a strong chance to be approved.

If for some reason your complete rental history is not reflected on your credit report, you might want to consider contacting the former landlord on the property. They might be willing to share your rental history with any future communities in which you may apply.

Keep in mind that if you have failed to pay your rent on time, or have any broken leases on your credit report, that you may be fighting an uphill battle. It doesn’t mean that you won’t be accepted. You just have your work cut out for you.

Remember that your good credit will go a long way. Be sure that you do your best to pay all of your bills on time. And if for some reason you have any bad marks, attempt to reconcile them the best you can.

Featured images:

By Henry H. Hernandez

Henry Hernandez is an entrepreneur and veteran from Texas. Henry works with Houston apartment locator http://www.houston1apartments.com/. Henry can be found on Google+.


Credit Rating Plan to Crack Down on Fraudulent Practices

Great Britain has a welfare budget problem and ministers have reported that they are planning to crack down on welfare cheats.

In a recent article a No 10 spokesman was quoted as saying, “Getting the welfare budget under control is a key part of our long-term plan for the economy.” One facet of the coming crackdown will be credit checks. While they don’t usually check credit references—officials typically depend on tip-offs—that is all about to change. Prime Minister David Cameron wants to use bailiffs to seize high-value assets which would be resold to recoup some of these burdensome welfare losses incurred because too many welfare cheats bend and break the rules.

The spokesman said, “We want to end the something-for-nothing culture and deliver for people who want to work hard and play by the rules.”

While credit reference checks are possibly one way to identify welfare recipients who own valuable possessions, the Department for Work and Pensions might well be off on the wrong track here. Credit worthiness is a valuable trait in its own right and is not something that is just handed out—as if it were a welfare check. Building a strong credit rating takes time, and typically steady employment, as well as a reputation for paying completely and on time. To find out more about credit reports click here; http://www.creditexpert.co.uk/credit-rating.aspx

While it’s possible that some of Britain’s poor have managed to game the system and attain expensive items on credit, this seems unlikely. One would suspect that someone on the dole with valuable items reflected on a credit report, probably recently came upon hard times, and therefore this plan seems more likely to add only further insult and injury to those poor souls already hit hard by bitter circumstance.pin-credit-application

There are many ways to identify and control welfare cheats, but the best is through investigation and then if warranted surveillance. Is the recipient living a lifestyle which doesn’t seem to correspond to the means provided by the state? This is easily discovered through random home visits, and conversation with neighbors. If the situation looks fishy then the chances are good that the subject has an employer who pays cash and never reports earnings to the government.  This is easily discovered through surveillance of the family during the morning and/or evening hours. Private detectives are experienced at this game and paying a private dick for a few hours work sounds like a pretty good investment in the long run when compared with paying for months and years of welfare.

One other way that welfare users beat the system is by operating a home-business. No, not cakes, cookies and lemonade stands, but illegal drugs, prostitution, and gambling. A sensible blend of investigation and surveillance will quickly identify those who are not only breaking the welfare bank, but also corrupting the youth, spreading disease, and making paupers of hapless gambling addicts—even further burdening the welfare system. Here again is a circumstance where a trained P.I. is invaluable for surveillance of what is happening at the home as well as to investigate the possibility of assets owned under an assumed name.


Four Naughty Credit Cards Spending Habits You Need To Fix

 photo naughty_zpse14c5ec6.jpg

It is common knowledge that Santa Claus is making a list and checking it twice,  that he’s gonna find out who’s naughty and nice.

But that’s just for kids.  Adults get into all sorts of mischief without the benefit of a jolly old elf to check in on them.

Perhaps the biggest mischief adults get into is credit card debt.  While this might not seem as exciting as putting a frog in a classmate’s desk, the repercussions are much more profound. “Many of our customers come to us because they are at their wit’s end with credit card debt, and they need to find a better card with lower interest or better cash-back rewards to bring their spending back into balance,” says Chris Mettler of the popular credit card comparison website CompareCards.com.

Naughty spending habits come in various forms.  Sometimes it is simply spending too much, other times it is spending on the wrong things

Here are some of the top naughty spending habits that you might want to break now.

Shopping to lift your mood.

 photo woman_shopping_zps6b77fcdc.jpg

This is a bad one.  In fact, it’s not just pulling out their credit cards (or “retail therapy”, as it is sometimes called) that people do to lift their moods.  Some people smoke whenever they get stressed or feel low.  Others drink, which can lead to even bigger problems.  Other eat (and overeat), and we all know where that leads.

While overeating, alcohol and smoking are all bad for your health, they are also horrible for your pocketbook.  Whether you try to lift your mood by shopping for shoes or dresses or power drills, or you seek comfort in pastries or drinks, the financial result is the same : more debt to bring down your mood.

Much better to lift your mood through music or exercise.  Yes, just go for a walk or a run to boost your mood.  Play some uplifting or energetic music.  Get pumped up rather than spiralling down in debt.

Spending more than you make.

 photo broke_man_zpsb01bfef1.jpg

This is the mathematician’s truism.  If you spend more than you make, you will be in debt.  Each time you spend more than you make, you get further in debt.  The only solution to this is to spend less on things you don’t need or make more money (which could be the subject for dozens more articles).  The easier option is to simply spend less. 

Draw up a budget.  Start with how much you make, and remove from that all the automated payments and expenses you don’t have a choice about.  What you are left with is discretionary spending, including emergency expenses, like when your car breaks down or you need to call a plumber.

Carrying a credit card balance.

Credit cards cost money…but only when you carry a balance.  When you don’t carry a balance, any credit card with a reward actually makes you money.  So what to do about the balance?  Pay it off in full every month.  Before deciding to take that weekend trip to Paris, first pay off the balance.  If you don’t, you’ll be skipping more than one weekend getaway in the years ahead.

Impulse buying.

How many times have you come home from the store with twice as many items as you had on your list?  That means your credit card is bearing twice as much weight as planned, and it is probably not necessities that you purchased.  Impulse spending adds up to huge amounts of debt that ultimately can drain your finances in a big way.

Furthermore, if that impulse spending was at a food store, chances are it was on high-sugar, high-fat, low-nutrition and high-calorie “foods”  that you really would rather have left behind once you feel their effects.

Always shop with a list and be determined to stick to it.  Break this rule under only one circumstance: when a consumable (such as food or cleaning products) is on a very good sale.  In such cases, if you absolutely know you regularly use the product, buy several of them while on special.  If you use the product regularly, it will save you money.  If you don’t, chances are it will simply cost you money.

The Bottom Line

People spend too much for many reasons, and for the most part the same spending habits repeat themselves.  If you can identify those habits, you can fix the problem.

Santa isn’t making a list for you, so hopefully this list will help.  If you can avoid these naughty credit card spending habits, your bank account will be better for it.  And in some cases, so will your health.

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  •  License: Image author owned
  •  License: Image author owned
  •  License: Image author owned

Justin Black is a freelance writer who covers personal finance, health and life planning issues.  He grew up on the Atlantic Seaboard, an average child in an average home and got an average education.  He has a wife and two children, who he hopes will make smart choices about their futures.


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