Credit

Got No Credit? Want To Build Some?

Got No Credit? Want To Build Some?

Building up your credit can take time – but what if you have no credit to begin with? How do you build credit when you are just starting out?

If you are just beginning, you’ve probably run into the problem of being denied credit because you have no credit. How are you supposed to build credit if no one will give you a chance? It’s an age-old problem. The key is to start small, remain consistent and over time, you can develop a financial profile that will make it easy to obtain credit.

For those looking to establish credit, one of the easiest ways is to obtain a secured credit card. A secured card is one that you by depositing a certain amount of money. You are then allowed to use the card up to that amount. In other words, if you get this type of card and deposit $500, your credit limit on the card is $500. As you use the card, the card issuer will report to the credit bureaus, and your usage and payment history will help you establish a credit history.

Another option is to obtain a retail store credit card. These cards are relatively easy to get, but they do charge high interest rates. Using a store card wisely for about a year can go a long way toward setting you up with good credit.

When seeking to build credit, you may be tempted to run out and apply for several different credit cards. But be warned: you should definitely take your time when applying for new lines of credit. A flurry of new credit card applications is not looked on favorably by the credit reporting bureaus, or by lenders. Prove yourself first with the one card you have to establish and build your credit before you attempt to add other lines of credit.

You should keep an eye on your outstanding balances, and refrain from reaching the maximum limit on any credit card. Credit reporting agencies look at the ratio of total available debt versus the actual outstanding debt. If you have used a large portion of your available debt, it is a definite negative on your credit report.

One of the simplest things you can do to establish good credit is to pay your bills on time. Doing so will help improve your creditworthiness in the eyes of the credit bureaus, and will make you appear more trustworthy to lenders.


How To Get Out Of Debt – Fast!

How To Get Out Of Debt – Fast!

Are you hopelessly in debt? Have you maxed out your credit cards and feel like you have nowhere to turn to? Is your net worth now in the negative? Don’t despair. There is a way to change your current situation. You can still turn things around and make it better. Let me reveal to you 4 steps on how to get out of debt – fast!

First, plug the hole. If there is a leak in your tub no matter how much water you put in, it can never be full unless you plug the leak. In the same way, in order to get out of debt find out why you are in debt in the first place. Track down your expenses and determine where the bulk of your money has been going. Has it been going to shopping sprees, eat outs or expensive vacations? Figure out where you are putting your money and take control.

Second, cut back. You are in debt because of one simple reason: you are spending more than you earn. No matter how much you earn your expenses will always be in proportion to your income. The solution to this is to live beneath your worth. Do not overspend. Cut back on unnecessary expenses. If you have been going to an expensive gym then opt to go jogging instead. If you have been eating out 3x a week then cut back to once a week. If you enjoy going to movies every weekend chose to watch dvd’s at home. It is the little things that matter and these will make a big difference on your bottom line.

Third, cut down your credit cards. You do not need 3 or 4 credit cards. You only need one. So if you own 4 cards cut the other three in half and just leave one for emergency use. Credit cards are not evil. They are neutral. But in the hands of undisciplined people they can be dangerous. If you are not careful they can be the cause of your financial downfall. One disadvantage of using a credit card is that it makes spending much easier. Why? Because you don’t see money disappear. It’s a lot harder to hand over a thousand bucks than your credit card. That is why it is much harder to control yourself when you go shopping with your card. To minimize temptation always buy in cash.

Fourth, save at least 10 % of your income. When it comes to money it doesn’t matter how much you earn. What matters is how much you keep. So every month put away at least 10% of your salary. Never touch it. The only time when you can touch that money is when you are going to invest it. This will allow your money to grow and will provide you with the knowledge that you will never run out of money.

Amy C. is an interior decoration aficionado and online marketer.  She also likes testing and trying new home and office decorating themes.  In addition to being an interior decoration hobbyist, she enjoys designing calming solar fountains and glass art.  Amy invites you to browse her delightful collection of glass vases


The Coming Credit Card Debt Apocalypse

At the worst possible time for millions of Americans struggling to feed their families and maintain their residences amidst a still stifling post recessionary economy — much of the United States still besieged by ruined markets and bleak financial indicators — the multinational banking conglomerates effectively controlling credit card debt accounts within this country have embarked on a massive roll back of borrowing opportunities.  According to experienced analysts with knowledge of the consumer finance industry, the recent dramatic about turn of corporate emphasis will impact not only new applicants (whether hoping to get approved for their very first credit card or merely trying to land an additional line of credit) but also those existing borrowers in good standing who may see their balances abruptly cut without warning.

“The banking community enjoyed such incredible profits around the turn of the twenty first century, that — there’s no other way to really say it — they just started to get a little cocky,” explained financial correspondent and credit card debt relief blogger Harold Jamison.  “Across the board, we would see eligibility qualifications dip lower and lower as all sorts of borrowers were deluged with pre-approved card offers.  We’re talking about folks who wouldn’t have had a shot at being even considered for an unsecured line of credit back in the early 1990s, and, now, all of a sudden, the banks are just opening up the flood gates and saying that they basically trusted each and every consumer willing to sign their name to a lending contract?

“I think a lot of us knew there was bound to be trouble down the line,” Jamison continued.  “All you had to do was step back and think: ‘really, a twenty year old still in college without any credit history and no job is going to be able to treat ten grand worth of credit card debt seriously and responsibly?’  All the same, I don’t think anyone realized the problems would appear this quickly or be quite so severe.”  The gravity of the current lender circumstances is hardly in dispute, as loan balances continue to default in ever greater succession and the number of accounts charged off by the creditors for corporate tax benefits — an intrinsic safety net that formerly safeguarded lender balance sheets when appearing in reasonable numbers but, in such extreme bursts, can’t hope to stem the fiscal bleeding — has scaled historic heights of economic unease.

Although the lending community has yet to spiral toward the most pessimistic estimates, financial prognosticators generally believe the associated credit card providers could this year charge off as much as one hundred billion dollars (around ten percent of the entirety of all credit card debt owed by United States households), and commentators fret that we’re far from the eye of the storm.  “You look at the old debt relief methods that the average Joe Six Pack used to depend on when times were tight, and they’re just not there anymore.  Because of the credit freeze, consolidating everything onto one card is no longer a realistic possibility unless you have out of this world FICO scores, and, in terms of a credit card debt relief equity loan on the home mortgage, that industry isn’t even still in existence.  Unless they can somehow manage to convince the lenders to barter down an affordable debt settlement, you’re going to see a ton of men and women who just can’t avoid bankruptcy protection for their bills.  Things are going to get a whole lot more complicated just to erase the sins of the past.”


Benefits And Drawbacks Of New Credit Card Debt Laws

Although there hasn’t been nearly enough time for the effects of the Credit Card Accountability Responsibility and Disclosure Act — passed into law by the Congress of the United States of America in the late spring of 2009 (and implemented the beginning of last year) — to be properly assessed, commentators and pundits have nevertheless judged the legislation a qualified success.  However, as an unexpected consequence of the strengthened restrictions guiding interest rates and penalties levied upon unsecured lines of credit, borrowers have found their credit card debt account balances suddenly reduced without warning.  While we may all encourage the macro-economic rewards of restrained credit card debt usage by any means necessary, the constrained credit availability will inevitably seem far less desirable to consumers when their own financial opportunities are put in question.

Furthermore, consumers — beyond, of course, the men and women below the age of twenty one who have been uniformly denied access to credit card debt without the participation of a legal adult —  hoping to obtain new accounts have seen the qualifications for approval heightened across the board.  In response to the sanctions, the largest creditors have already begun to revise their lending policies in order to profitably issue new forms of credit card debt to applicants possessing a lower level of eligibility than the corporate underwriters deem absolutely safe (standards likely to be loosened once a sufficient amount of time has passed to evaluate the new risk pool).  The banks, for their part, have been actively promoting their retraction of resources as a pre-emptive form of debt relief, spinning the contextual parameters to suggest the industry’s interests lie in helping customers avoid bankruptcy above all else.

“Sure, now, they’re trying to curb household debts,” said Steve Trenton, vice president of consumer advocacy organization American Debt Relief.  “Now that the federal government’s gotten itself involved and the account holders can see just how much of a joke minimum payments really are.  All they’re doing, really, is just deflecting the frustrations and genuine rage that heads of household around the country have been feeling for a long time.  We’d all grown so accustomed to carrying these debt burdens on our backs, thinking it was normal to live this way, and, all of a sudden, the blinders have been ripped away.  It’s time the corporations behind credit card debt are held responsible for their actions, and, for the millions of people that have already fallen victim, the political establishment has to prop up the credit card debt relief effort.”

To that point, seasoned veterans of governmental affairs believe our elected officials have been substantially less effective in terms of enabling the debt relief ventures of ordinary Americans.  The legislation, currently under discussion on the floor of the House of Representatives,

intended to streamline the debt settlement negotiation process and prevent fraudulent enterprises from taking advantage of impoverished families might seem like a can’t miss prospect, but, keep in mind, the weight of the lending community’s more than ample resources has steadily pushed the need for reform (never a good idea when debt relief’s the issue at hand).  As Trenton suggests, the Credit CARD Act has indeed provided a much needed step forward, but, with such tenuous markets and shaky economic indicators, we need our leaders to pay more than the minimum amount of attention to what’s becoming a genuine credit card debt crisis.


Are you using the wrong credit card?

You may be thinking a credit card is a credit card, so there’s really no difference between two squares of the same plastic. This cannot be farther from the truth.

Credit cards, like anything else in life, have a certain quality to them and your current card may be completely wrong for your lifestyle and financial situation.

As our lives change, our needs change and this is certainly true with credit cards. The low-balance card we may have started out with after high school graduation is not the same type of reward-laden card we crave in adulthood.

Throw any notions of brand loyalty out the window. Staying with the same credit company forever can hinder you from pumping up your credit score.

With that said, keeping an old credit account open will show you have a long history of good credit and can improve your credit score. But before you settle for keeping the same card, consider the mistakes people make when keeping the wrong card.

If your balance is always carried over month after month but your card has a high interest rate, get rid of it. You’ll never pay down the balance with a high APR and it’s not difficult to open a new credit card and have your balance transferred over.

To easily compare credit card interest rates, visit Money Supermarket or other sites that show side-by-side comparisons. You can even compare fees and any rewards, so shop smart.

Although transferring your balance to a lower-rate card is the smart thing in this situation, it can be detrimental if you do it every year. Work on paying your balance down before the 0% introductory APR expires.

If you ran into past financial trouble, such as a bankruptcy and have worked on building up your credit with a prepaid credit card, reassess your credit score every year. Secured credit cards are a smart way to rebuild credit, but once your score starts going back up, they do little to help you.

Once you decide to leave the prepaid card behind, try to aim for a credit score in the 500 or 600 ranges before applying for a major credit card. This way you’ll be approved for good credit.

Another way to determine whether or not you have the wrong credit card is to take notice of annual fees. If you are paying an annual fee but have yet to take advantage of any rewards or perks, this is the wrong card for you.

The majority of credit cards do not offer annual fees, so if you’re not paying the annual fee to take advantage of rewards, get rid of it.

For anyone who is self-employed and uses credit for business-related expenses, a regular credit card is the wrong type to have. Opt for a special business card over a personal card. This makes things easier during tax time.

If you have a travel reward card but never plan on travelling, get a new card. Travel rewards can take years to build up so chances are, you find yourself in a very different place now than you were in when you first applied for the card.

Don’t bother with saving travel points if you won’t use them. Switch to a card that offers rewards you will enjoy, such as cash back.

No matter which type of credit card you choose, use it wisely and manage your debt responsibly.


A College Freshman’s Guide To Credit Card Debt

When surveyed about the reasons that they first take out a credit card, college students inevitably rank a concern for credit scores as their primary motivation, beating out even convenience and protection in case of emergencies.  To a degree, of course, this is utterly specious, and we would expect our most responsible and ambitious young Americans to underscore the importance of FICO and Vantage figures (highly complicated logarithms guarded zealously by the three credit reporting agencies and only vaguely understood even by seasoned consumer finance professionals) above their desires for late night pizza runs or shopping binges.

All the same, though, it is true that credit card debt payments are an excellent means of creating and then elevating the three digit scores, and, furthermore, the credit bureaus will admit that the length of time that unsecured lines of credit are held in good standing also plays a significant role in the numerical calculations.  Perhaps the rationalizations of teenagers and their parents — who, after all, should bear much of the blame, particularly after 2009 legislation newly prohibited credit card companies from issuing cards to minors without an adult over the age of twenty one co signing — rather disingenuously shies away from true motivations for the proliferation of borrowing privileges, but the usefulness of credit scores within modern society can’t be so easily dismissed.

However, that said, our country’s current credit card debt relief crisis didn’t come about because of faulty FICO ratings.  No, as a society, the people of the United States have become all too used to carrying around enormous debt burdens that would have been unthinkable even one generation ago, and, the earlier that consumers first start borrowing, it simply stands to reason that they’ll become that much more inured to the constant pressures of affording the bills on several cards whose balances only seem to go up thanks to the combined effects of minimum payments and compound interest.

If the young men and women attending our colleges and universities could truly maintain the rigorous discipline and enlightened perspective sufficient to only pump up the balances to levels they’ll be able to reliably satisfy in full every month, the benefits to credit scores could indeed provide untold advantages down the road, but, considering the nature of teenaged consumers first away from home, the risk may well outweigh the reward.

To be honest, economic analysts and financial counselors attempting to slow the tendencies of young Americans to blithely embrace the world of lifelong credit card debt have identified another culprit beyond naïve shopaholics and corporate profit margins.  Ever since the United States Congress enacted legislation designed to prevent former students from discharging their educational loans through Chapter Seven bankruptcy debt relief, kids have had little choice but to think about borrowing in a different light.

Although there were certainly fiscal practicalities spurring the changes to the code — the most vital obligation of the government must be to help the progression of our most capable minds and eager hearts, regardless of their social standing — one has to appreciate the societal repercussions.  Effectively forcing incoming freshmen from impoverished backgrounds or difficult familial situations to assume liability for tens of thousands of dollars for even a single year’s tuition (knowing all the while they’ll have to avoid bankruptcy and debt settlement as possible options should their careers falter) hardly encourages students to beware the evils of monetary obligations.


New Government Watchdog Group Monitors Credit Card Debt Companies

Although the legislation empowering the Consumer Financial Protection division of the federal government won’t formally take effect until the third week of July, the largest corporations issuing credit card debt accounts have already started making changes to their policies in anticipation of the coming industry wide upheaval.  Thus far, while waiting for their formal mandate to begin, the CFP has limited its moves to the preparation of introductory literature and consumer friendly information on how best to avoid bankruptcy and develop a personal credit card debt relief plan that would fit the individual household’s current status.  As well, they’ve already designed a internet portal to be used as a virtual bulletin board for group counseling about credit card debt relief, and, despite little media attention and no advertising this far in advance of the bureau’s technical opening, a small community of aggrieved borrowers has already started posting advise and suggestions.

Still, no matter how informative or congenial – a short welcome video hosted by film director and sitcom icon Ron Howard greets visitors to the consumerfinance.gov site – the public relations aspect may be, most Americans hope that the new department takes seriously its mission to hem in the commercial lending industry.  Far better, after all, to ward off credit card debt from the outset than be forced to invoke debt relief measures afterwards in attempts to minimize the damage.  Once again, bereft of a clearly defined mandate and somewhat thwarted by a bitterly divided political landscape, we are still waiting to see precisely what the CFP’s role shall be and how combative the putative consumer advocates shall behave when confronting the largest lenders.

Although survey after survey reports that Americans view credit card debt relief among their greatest concerns and every piece of economic data indicate that borrowers represent an overwhelming majority of the current electorate, the gigantic multi national corporations that control the lion’s share of credit card debt accounts wield enormous power and influence within the halls of our nation’s capitol.  In one positive sign for the debt relief advocates, the bureau wrote a missive directed toward the upper management of the significant credit card companies doing business within the United States that requested additional levels of discretion and leeway for the families of men and women serving in the military.  Although the verbiage of the letter was hardly antagonistic – and, perhaps, a good deal more conciliatory than would have been wished by many Americans overcome by revolving debt loads and treading water to avoid bankruptcy – the sentiment certainly seemed like a polite but firm warning of further restrictions placed upon lending practices.

One could ask, of course, why the bureaucratic brain trust currently organizing the infrastructure and articulating the mission statement which will guide future actions of the Consumer Financial Protection would so limit the focus.  The men and women of our armed forces spending time overseas may well deserve a certain latitude with regard to the waiver of late payment fees, and there should likely be some provisions in place to prevent the creditors from charging off past due loans or, especially, foreclosing on properties for seizure and auction.  In the same breath, though, what of the countless United States citizens who’ve fallen into similar disputes with defaulted loans but haven’t the military pedigree?  If the government is sincere about supporting debt settlement and credit card debt relief solutions for consumers who’ve lost their way, they should ban all manipulative and suspect lending techniques that could willfully deceive and defraud honest Americans.


The Economy and Personal Debt

The UK economy appears to have finally escaped the spectra of recession, but growth remains low.  The latest snapshot from the National Institute for GDP indicate a slowdown in month on month growth, which it said showed a “picture of continued weakness in the UK economy”.  Austerity cuts, increasing energy bills and higher fuel costs are all hitting the average UK homeowner hard.

According to Credit Action, a national financial education charity, average household debt in the UK is £8,144 (excluding mortgages).  Taking into account households with some form of unsecured loan, this figure increases to £15,661.

Credit Action figures also show that every day in the UK 1,392 people will be made redundant and 337 will be declared insolvent or bankrupt.

The Citizens Advice Bureau deals with, on average, 8,004 new debt problems every working day in England and Wales.  The organisation also states that average consumer borrowing, in various forms, has significantly increased, the average being £4,350 per UK adult, as at the end of March 2011.

Much of this unsecured debt is made up of credit cards or unsecured loans, which may be at extremely high interest rate levels.  For homeowners who find themselves in this position, it may be that much more favourable remortgage rates could be available; allowing them to raise finance to repay existing unsecured debts.

This option has the added advantage of enabling all debts to be consolidated into one monthly payment, makes for much clearer budgeting, will cut down on the clutter of credit card bills, unsecured loan repayment letters and the like and could also lower the amount of your monthly debt payment.  Perhaps you have taken a pay cut at work or are struggling to cope with the widely publicised rising cost of living in the UK.

You could therefore be looking to lower your debt outgoings for the time being and increase payments once your circumstances improve.  Remortgaging, in order to consolidate your debts will lock a variety of repayment rates into one fixed rate, which again gives much more clarity to you as a borrower.

It is important to speak to a remortgage professional before acting, because detailed calculations would have to be made.  It may be preferable to pay off the consolidated aspect of the loan sooner rather than over the entire mortgage term, something that can be achieved via a mortgage that allows overpayments.

If your personal finances are particularly poor, there may only be a limited number of remortgage rates available to choose from, however, there is no reason to despair, as there are some lenders who specialise in these types of mortgage.

Raising finance through remortgaging, for the purpose of consolidating existing unsecured loans, in the current difficult economic climate may therefore be a great option for the many homeowners who find themselves in the difficult position we have been discussing here.


Credit Card Defaults Hit New Low

Five out of six major credit card providers in the US have reported further reductions in credit card debt. Overall credit card debt stood at $785 billion at the end of March, according to the Federal Reserve.

Figures for April show only Bank of America with increasing debt balances with approximately 1 in 12 in arrears. Best performing institution was Capital One with a default rate of 3.5%.

This hardly reflects a strengthening of the consumer base since the financial meltdown of 2007/8. The explanation given by most analysts is that the reduction is due to the inability of customers with any payment problems in the past to get new cards.

Nevertheless, there are ways that consumers can widen their choice of card, so click here to browse those on offer.

Banks and other financial institutions have written off billions of dollars over the past few years and have changed their selection criteria for new customers so as to improve the quality of their portfolio. Good news for them and their shareholders, but not for consumers looking for access to credit.

Most financial institutions use credit scoring as the basis for determining whether to accept a new application. Although the actual scoring algorithms may differ, the base data used in calculating the final score comes from common sources.

Everyone has a credit history. This history contains details of all financial transactions in the past plus other data on what type of credit has been used whether it is a card, mortgage or loan. Every payment record is kept giving a profile of how a customer has performed on each financial product.

FICO scores are calculated on a combination of information held in the credit history. Around 35% of the score is based on the payment history, which shows how well financial commitments have been met in the past.

30% of the FICO score is based on the amount owed. That is, if a consumer has a high amount of borrowing versus their income the score will be lower that someone who has a low borrowing relative to income.

So two thirds of the score is based solely on what is owed and payment performance on those obligations. Therefore, keeping up payments and not incurring an overdue or late payment charge can make a huge difference to the FICO score.

Missed payments age so the longer ago they occurred the less important they become. Recent defaults score much more highly.

The remaining 35% of the FICO score is determined by the length of the credit history, types of credit used and any new or recent credit applied for. Therefore, someone with a long satisfactory record of managing payments will score better than someone with a relatively short credit history.

Fortunately, competition for new customers is still strong – especially for those with good FICO scores.

Different companies have different acceptance rates so it is important to check all available offers to see which best suits an individuals needs.

Comparison websites are a great way to both save time and get a summary of the best offers available.

Remember that lenders are selective so making sure that the credit history is in the best possible shape before applying should open doors to the best offers.


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