credit card

Why You Need to Keep Using Your Credit Card After It’s Paid Off

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If you want to improve your credit score or get rid of credit card debt then you have probably learned the things you definitely shouldn’t pay for with a credit card, like mortgage payments, tuition, and really any sum longer than three digits.

You have probably also learned that getting rid of your credit cards altogether can hurt your score because length of credit history provides valuable points.

So you have these credit cards and you want to pay them down to $0–but you don’t want to get rid of them. Should you just sit them on a shelf?

The answer is no. Keep using them.

An Inactive Account Can Damage Your Score

Don’t run up a huge balance–keep your debt to credit limit below 30%–but do use all of your credit cards monthly for two reasons: 1) if you didn’t use your card that month, some credit card companies will consider you inactive and not report your hard-won $0 balance, and 2) if you go long enough at a $0 balance without using the card many credit card companies will close your account. Both of these instances hurt your score.

Small Charges Represent Responsibility

Those who want to know your credit score want to know that you responsibly use credit. If your account is inactive or closed it indicates irresponsible use of credit or no credit at all. Instead, carry a small balance and pay it off monthly. This proves you won’t make unwise purchases and will always pay on time.

Small charges paid off each month indicate you are less of a risk to future lenders.

Charges You Should Make to Your Credit Card

When choosing what to charge to your credit card and what to pay for with a debit card or cash, look to your budget. It is important that you are able to pay off the balance and/or always keep it below 30% of your limit. For example, instead of budgeting $300 for your car payment, label that $300 item “credit card payment” and charge your car payment to your credit card, then pay it off immediately.

Many credit cards provide incentives for purchasing certain items like gas or groceries. My bank offers one cent in cash back points for every dollar spent, so after I spend $2,000 I get $20 which I can apply to my payment or convert into gift cards. Research your credit cards to see if you can utilize similar perks.If your card offers perks for a particular item and you can pay off that item each month, charge it to your credit card.



Warning

If you are unable to pay off the balance each month, don’t charge anything carrying an interest rate to your card. This would add that interest charge to your credit card’s and end up costing you a good deal more than if you keep your card active with small purchases.

Consistent, responsible use of your credit card improves your score. Paying off that huge balance is only half the battle toward 850.

Author
Jaren Nichols

Author profile
Jaren Nichols is Chief Operating Officer at ZipBooks, a Quickbooks alternative for Mac. Jaren was previously a Product Manager at Google and holds an MBA from Harvard Business School.


Credit card debt at a scary level – Things card companies won’t let you know

Credit card debt

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Recent reports suggest that American consumers have recently hit an indeed scary milestone. As per reports released by the Federal Reserve, they have the highest outstanding debt, mostly in the form of credit card debt as ever seen in the history of America. In the month of June, 2017, Americans owed $1.022 trillion in revolving debt and this figure even beats the record set in 2008 April when consumers owed a collective amount of $1.02 trillion in revolving credit. This record serves as a warning signal for Americans to focus on credit card debt. Even when you feel the debt is manageable; know that there could be a sudden emergency which can keep you away from real mess.

So, what are the few things that the credit card companies don’t let you know so that you fall deeper into the vicious cycle of debt? If you don’t want to deceive yourself and fall prey to few emergencies, you should know the different things that the credit card companies don’t want you to know. Here are few points that you should know.

#1: There’s no such government law which sets an APR

While your credit card can have a maximum interest rate which is mentioned in the place of ‘terms and conditions’, there isn’t any legal cap actually. There are various states which have usury laws which regulate the loan interest rates but they are only applicable to the banks within the state. This is why the biggest credit card companies are imbibed in North Dakota, Delaware, which are the 2 places where there aren’t any usury laws.

#2: Fixed interest rates aren’t always fixed

Even if you make timely payments, the fixed interest on the credit card can be increased any time when the company feels like doing it. The card issuers only require giving a 15 days notice about the change of rate. Hence you should always go through any correspondence from a credit card company if you want to avoid any harmful surprise.

#3: Being late on 1 card could raise the APR on all cards

If you could just end up in 1 late payment, you could incur a penalty rate on all your cards, even though you may have been timely while paying the balances on the other cards. So you should monitor all your accounts and remember the due dates of each of the cards so that you don’t make a single late payment. You will most likely be stuck with the high APR for few more months, but as per the CARD Act, issuers of credit card should reconsider the penalty of a cardholder post 6 months.

#4: Paying off your balance early hurts your credit, is a myth

This is one of the most famous myths and if you maintain a balance on your card, this wouldn’t even improve your credit score. In fact, if the balance is pretty high, this could actually hurt your score. Your first priority should be paying on time and then you should focus on interest payments, late payments and damage to credit.

Therefore, if you’re wondering about the different ways in which you can stay out of debt, first know about the things that the credit card company doesn’t want to let you know. Just make sure you take steps accordingly.

 


Your Flexible Friend: Why Having a Credit Card Can Actually Be a Good Thing

Credit cards, when used in the right way, can be a great way to manage your money. So if you’re not the best at money management, then it might be best to avoid them. But if you budget well then it could be the best thing to do as there are several benefits to having a credit card. It is obviously important to make sure that you can make your repayments each month, otherwise, it defeats the point of the getting the benefits from the credit card. So here are some of the benefits from credit cards, and why they might be right for you.

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Cashback

As long as you pay your credit card back in full each month, then getting the cashback benefits can be great. It can be quite an easy way to get some money back from your purchases. So in actual fact, you’ll be paying less than you would beforehand. So look out for the best credit card offers and see if they have a cashback rate too. Again, this only makes sense if you’re able to pay off the credit card in full, to see the most benefit.

Goods Protection

Did you know what under the section 75 of the Consumer Credit Act, that you actually have more protection when you buy something with a credit card? So if you order something that is faulty or never arrives, for example, you can get compensation from it. If a retailer refuses or has gone out of business, then you can apply for the compensation through the credit card company. So for larger purchases, especially for things bought online, using a credit card can be one of the best ways to go.

Boost Your Credit Score

If you want to build up a good credit score, then paying for using a credit card for your everyday purchases, and then making the repayments on time each month, are an easy way to do so. It shows that you are reliable and do actually make payments. Meaning that lenders are much more likely to want to lend to you. So if you want to get a mortgage someday, or get a loan for something like home improvements, for example, then it can be worth doing.

Theft Protection

If you lose your purse or have it stolen, and it is full of cash, it is basically impossible to recoup. But if you have your purse stolen, any fraudulent use of the cards won’t mean that you have to pay it off. You won’t be liable, as long as it wasn’t stolen due to negligence on your part. So if that did happen, you wouldn’t need to worry about having to pay off what someone else bought in your name.

Certain Transactions

If you travel with work or claim a lot of expenses, then those transactions might be best on a credit card, as the money doesn’t have to ever come out of your own pocket. Some stores only allow payment by credit cards, such as tickets and similar events. So a credit card is a must for those types of transactions.


Tricks to choose the best travel credit card – Opportunities galore

 

Credit card folded into paper airplane in atmosphere

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Credit cards are almost a ubiquitous part of the modern day society and people swipe them to pay for everything starting from groceries to card to gum sticks! America is a country that loves to use credit cards and probably that is the reason behind all those ads and bonuses which you have to sign up with. As there are plethora of options regarding credit cards, how would you know which one would be a good choice for traveling?

Travel credit cards offer wide array of opportunities to earn free points which you can redeem for hotels, airfares or cold hard cash. In the rat race to grab customers, credit card issuing companies are joining hands with different travel brands which entice consumers with loyalty points, bonuses, special rebates and so on. But how are you supposed to choose the best travel credit card? What are the tricks to watch out for?

1. Sign-up bonus should be huge enough

If the sign-up bonuses after you meet the card’s requirement for spending is huge, this gets your mileage account going and you get closer to a free flight. Don’t ever make the mistake of signing up with a card which doesn’t offer you high sign-up bonus. Are you wondering how bonuses work? Well, if you want to get a large bonus, you should either make a single purchase or meet a minimum expense limit within a certain time period. After that, depending on your credit card, you may earn 1-4X points per dollar that you spend.

2. Extra category spending bonus

Most credit cards offer a single point for each and every dollar that you spend but good travel credit cards will give you added points when you shop at some particular retailers. You can hereby add points much quickly. You should not want one dollar to be equivalent to one point and hence look forward to the ability to get 2-3 points each time you spend a dollar. Use those cards in your day-to-day spending and earn more than a dollar per mile.

3. The minimum spending amount should be low

It is sad enough to note that in order to grab bonuses which are offered by such cards, there is a required minimum spending amount. Although there are ways in which you can fake your spending, it is best when you’re able to snag the bonus using your regular expenses. You should typically sign up with those cards which have a minimum spending requirement of about $1000-3000 in a period of 3-6 months. Having a goal and starting with travel credit cards is good when you start small.

4. Cards with special perks and benefits

All the travel credit cards offer huge benefits and perks for the credit card holders. There are many credit card companies which will offer you special elite loyalty reward programs and other added perks. You should look out for cards with foreign transaction fees, free checked luggage, free nights, priority boarding and much more options. Remember that it is not just about achieving some miles; it is all about what else comes with the travel card that could make life easier and smart.

5. Foreign transaction fees

Majority of the credit cards usually charge a 3% fee when you use them abroad. Credit cards are great offers as you can grab a good exchange rate from them but if you pay a fee each time you use the card, then the result is not as good. The best card for averting foreign fees is the Capital One Venture Card. Though there is no yearly fee, yet there is no such reward structure as well.
Hence, if you’re eager to take a travel credit card, ensure taking into account the above mentioned factors so that you may choose the best card in the market. The better is the card you choose, the better will be the benefits that you reap.


Is Identity Theft Insurance a Scam?

People have become more and more aware about their personal data and information being breached and misused. Following these outrageous incidents about identity theft and bank accounts being stripped off that all of us hear from time to time, people have started to resort to any protection means available. It is all very common, and also quite a trouble when you’re coming face to face with identity theft these days. If you’ve faced this kind of a problem previously, or you know someone who has been a victim of identity theft, then you’re much likely to accept the proposals of identity theft insurance just to make sure that you don’t get caught up in a twisted web.

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                                                                         Image Credit – Pixabay

The increase in number of cyber crimes has made a lot of people run for cover. Those bespectacled hackers sitting comfortably in front of their computers and deviously stealing all of your money and stripping you of most of your valuables along with stealing your own identity have created an uproar, which led to insurance companies claiming to provide protection from these events. And just so you can sip coffee freely on your patio, you’ve decided to trust the companies providing this luxury as well. You’re not one to blame; nobody wants to deal with these kind of things, and worrying about identity theft is not your first priority during endless board meetings or shopping trips with the wife.

Just so you can get this excess stress out of your mind, trusting into the policy that is being offered to you by insurance companies to protect your identity and bank accounts is a common occurrence. And why wouldn’t you trust the policy? After all, you’ve always trusted this insurance company. But here’s the rub; there are people who have been tricked into identity theft insurance countless times. Not many have noticed this or taken into account that it might just be the fault of the insurance company itself and not theirs.

There have been instances where these insurance companies have conveniently tricked people into buying the policies—which, by the way, cost enough of your fortune anyway—and then presented the lousiest of results. Either the protection they initially offered didn’t meet its standards at all, or it incurred you more losses than you would have if you’d been hacked by a twenty-one-year old with a computer and a clever brain. It’s important to notice the obvious flaws in the plans that the insurance companies present. You might overlook them at first, but if you want to ensure that identity theft insurance isn’t draining your bank account itself, there are things to keep in mind.

What you should note is that if they’re making claims that seem more larger than life than a Star Wars movie plot, then you’re probably being played with. They’ll claim to provide you immense overall protection: something which they won’t fulfil when your credit card is stolen and is being used to shop for stilettos. What they should be doing instead, is to tell you exactly how much protection they can practically offer based on their resources, and how much significance this policy holds for you. Their claims should be based on facts, not on what their company hopes to achieve while providing you protection.

Don’t be mesmerized by how colourful their words are and how nicely they communicate with you over delicious tea and biscuits. They’re most probably making you believe that your identity will never be robbed even if their life depends on it, and when said attempt does happen, their hands will be tied, and you’ll be faxed a document whose tiny points you forgot to read before signing it. They’ll ask you to leave everything on them and rest assured during your next holiday trip to the Maldives, and by the time you return, your credit card will have the bill of a month-long trip when you only went for a weekend.

With your money, said insurance company will make immense profits while you’ll be left with nothing. It’s much better to pay attention to things yourself rather than giving away your trust to a company that is only going to trick you till the end. Awareness matters more than you’d think, and if you know what exactly you’re getting yourself into, you’ll be safer than others of your likes. Do your background researches before letting that smart-looking man walk into your home with a bunch of insurance documents to sign, which as he claims will ensure life-long protection from identity thefts.

While their proposal is being told to you, make sure to ask them questions that will give you the assurance that you’ll be given what is being offered. If they’re making fantastical claims, beware of those, and try to enquire about what they can actually do in case a hacker comes knocking at the door of your bank account or credit card. Ask if you’ll be paid what you’ve lost if identity theft does occur, despite the company claiming that it won’t. Make sure that your questions are being honestly answered instead of them dodging everything you want to know.

The usage of your credit card should be notified to you immediately as it is being done. Credit monitoring services are popular among these companies, but the claims they make are not always true. Make sure you’re keeping alert about any suspicious activities, because credit card scams are awfully common these days, which is unfortunate all on its own. In conclusion, all you can do is be more awake and alert than you’ve ever been when dealing with sensitive matters such as this.


Online Credit Card Processing FAQ

What takes places during an ordinary Internet credit card transaction? Here is the common credit card processing FAQ:

Internet credit card transaction will always take place in two major phases, a charge and a settlement.

First Phase

In the first phase, the charge is always made and money set for transaction is usually set aside form the holders account. The first transactionnormally takes place immediately the card is submitted which enables the merchant to secure the funds for transaction much faster.

Second Phase

In this phase, the amount is usually transferred from the cardholder to the merchant. This phase normally takes place later and it is often done in batches at the end of each business day.

Settlements are usually done in batches since most processors limit the number of settlements that can be done during a specific period of time. It is also done in batches since it is more economical and easier to prevent transaction before transfer of funds is done than crediting the cardholder account.

Electronic payment concept

Electronic payment concept

What means can a customer use to prove credit card information?

The credit cards transactions can be divided into two major types: card present transactions and e-commerce transactions. All these fees which are associated with the credit card transactions are always dependent on the transaction type. It is therefore necessary to note the importance between the two.

E-commerce transaction

Also referred to as mail order telephone order (MOTO) transaction refers to a transaction where the credit card is not available. These type of transactions are normally done online or through phone where the card details; the credit card number, billing information, expiration date are usually taken from the customer. However, this transaction method is always prone to theft and fraud and the fees associated with this transfer type are much higher than when your credit card is present.

Card Present Transaction

Credit present transaction refers to where the credit card being charged is physically present. This card is usually swiped through a terminal. This transaction type is referred to as POS transaction.

What is a Payment Gateway?

A gateway refers to a value added service that will always accept and process the credit cards from you in exchange of a fee. Payment gateways are known to provide extra services such as automatic settlement, reporting, transaction logging, fraud prevention and additional security.

What is a Payment Processor?

Payment processor refers to a service company that conductssettlements and charges for the credit card transactions. All the credit card transactions usually go through the payment processor.

What is a Merchant Account?

Merchant account refers to a bank account that has specifically been set up for a merchant. The main difference between the regular bank account and the merchant account is that merchant accounts usually provides support for one or more processors to be able to deposit funds which have been made by the credit card transactions.

What Steps do I need to follow to go through the payment processor?

All you need to do is make sure you have a merchant account what is compatible with the payment processor. Your merchant account bank will always inform you the type of processors that are supported. Most merchant accounts support TSYS processor.


The Cost of a New Addition to the Family

Most people growing up dream of meeting their one true love, marrying, starting a family and living happily ever after. For some it happens and in later life they can sit back and think about the wonderful life they have had together. Sounds easy don’t it? Well it is important from the outset to stress that it isn’t; indeed there are few better words than ‘stressful’ to describe the periods that everyone goes through in life, especially if they find themselves in financial difficulties with no obvious solution to their problems.

Money Management

Money cans certainly a source of discord between couples; two people growing up in different environments may have a completely different view of money, its value and management. On the one hand some children are taught the value of money from a very early age and recognize the importance of not spending money that they cannot afford. Some grow up with a less disciplined view of money. The complacency that prevailed prior to the recession created an environment where easy credit produced a level of spending that was unrealistic. It soon became evident to all when the Collateralized Debt Obligation Crisis struck and misery followed.

Anyone making a decision will draw on experience; at least they should. The economic environment in recent years has resulted in many people having debts and more restrictions in obtaining credit. For a couple just starting out on married life and expecting their first child it is important that they look at their personal financial situation. Suddenly household costs may be about to rise just as their income falls; if a two income family suddenly loses one of those incomes money will inevitably become tighter. If both partners have always been careful with their money they are more likely to automatically plan for the future.

Credit Card Problems

Ordinary couples coming from a working background may not have a great deal of money to start their married life. In the USA statistics suggest that there is still considerable credit card debt, some that appears to be out of control. That debt is expensive. At the end of every month a high rate of interest is applied to a balance. Those who can only afford to pay the minimum required by the credit card company each month will hardly scratch the surface in reducing their debt and their credit card can easily become a burden. As a matter of urgency young couples should address any credit card debt, especially if they are expecting an addition to the family.5474213121_2dce5e59b3

Few are likely to have an equity in real estate if they have bought in the last few years. The recession hit the market badly and many people found themselves in negative equity; owing more money than the current value of the house. It means that re-mortgaging is rarely an alternative for obtaining the finance to settle debt. A mortgage is a sensible way to build up assets; in the medium to long term real estate should appreciate in value and mortgage interest rates are very competitive. However there are other loans that can play a positive role in a financial strategy. Personal loans have interest applied but it is far less than credit card holders are paying to their card companies.

Online Lenders

Modern day online lenders will look favorably at applicants who can show he or she has a regular monthly income and the ability to repay the monthly instalments on time for the whole term of the loan. Such loans used to pay off credit card debt will remove stubborn balances and ultimately result in a better financial picture. It is a simple and quick way to borrow money. Online applications require some basic information and decisions will be made extremely quickly; the funds are likely to be transferred within a single working day after approval.

Every young couple should have a budget and follow it. If one of the two has been fairly complacent about money in the past the other should definitely make sure it is an argument with only one winner. With a new addition of the horizon there may be economies to make, every day things like socializing and eating out may have to go. What must also be achieved is a manageable debt situation and credit card debt is rarely manageable. Pay it off and have the determination and self-discipline never to build it up again; a personal loan at a competitive interest rate is an excellent way to do it.


How Credit Card Use Led to the Financial Crisis

The use of credit cards in the 21st century is a record high. According to this source, each individual has at least two credit cards at this time. It is also common for these cards to have credit limits that are way beyond the actual capacity to pay of the credit card holder.

This situation led from one disastrous event to another leading to national credit card crisis and eventually a global financial crisis. It would be worthwhile to trace how bad credit card use contributed to the financial crisis in the past decade.

Step 1: To increase business, credit card companies launch tempting offers to consumers. This includes easy credit card access, and a credit limit that is beyond the annual income of the average consumers.

Step 2: Consumer gets a credit card and makes his or her first purchase to get a feel of it.

Step 3: Consumer pays the credit card company. Everybody is happy.

Step 4: Consumer now uses the credit card for routine purchases including groceries, regular shopping, movies and dinner dates. At the end of the month, he or she pays the credit card company. Again, everybody is happy.

Step 5: Consumer stumbles upon a tempting gadget that is bit too expensive for his or her income level. But wait, “my credit limit can help me afford it”, he/she realizes.

Step 6: Consumer takes out his/her card and goes home with a new toy. Beaming a big smile and thinking that this can be repaid in a matter of time.

Image-1Step 7: Consumer passes by a fancy restaurant and realizes that his or her credit limit affords him or her to taste something fancy once in a while.

Step 8: Consumer discovers holiday destination and realizes that his or her credit limit affords him or her to take some day off and lounge in the luxury of a world class resort.

Step 9: Consumer gets a bill from the credit card company and realizes that his monthly pay check is not enough to pay the total bill. Scared of the big penalty and interest rates, he or she uses his or her paycheck to pay the amount billed. The credit card company is happy. The consumer says, “it’s good that I have a credit card to pay for my groceries and the rent until the next pay check.”

Step 10: Consumer uses the credit card to buy groceries, pay the rent, pay the mortgage, and everything.

Step 11: Consumer gets the bill and is able to pay only half of the total amount billed using all of his or her pay check.

Step 12: Consumer uses the credit card to survive.

Step 13: Consumer pays a fourth of the total amount billed.

Step 14: Consumer uses the credit card to get through life.

Step 15: Consumer pays only 1/10th of the total amount billed. By this time, the interest payments are even higher than the monthly income.

Step 16: Consumer uses what remained of his or her credit limit to get by.

Step 17: Credit card company calls. Frantic that all of its clients are unable to pay.

Step 18: The banks write-off a large amount of loans. Financial institutions are on the brink of bankruptcy. The consumer gets laid-off. They all turn to the government for help.

You know what happened next.


Getting a Business Loan for Your Small Business

Small businesses have been badly affected by the recent recession and are now being slowly shut out of getting a bank loan. They have lost several customers due to this and have also reduced the sales of their products. They have also had to lay off some of their employees due to their lack of ability to pay them.

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Before the recession took place, many small businesses could easily get business loans and had an excellent relationship with their banks. The recession however changed all of this when it dried up almost all the lines of credit for small businesses. This left small businesses with the only option of going in for alternative sources of funding. A small business has to go in for an alternative business loan in such cases.

Merchant Cash Advances

When you receive a merchant cash advance, you would need to purchase and sell your future credit card income. You do not need to make regular fixed payments in return for the merchant cash advance. The person giving the merchant cash advance only takes a percentage of the income that comes in the form of credit card sales to the company. Taking a merchant cash advance can however be expensive, even though the rate of interest is not fixed. They can still keep a small business afloat.

Peer to Peer Financing

In case of peer to peer financing, you decide how you would return the money. All you need to do is to enter the details of how much cash you want, how you intend to repay it and how much rate of interest you are ready to pay on the peer to peer financing company’s website. Then, prospective lenders will make a bid on your loan. You however need to have a good credit score in order to avail peer to peer financing.

Crowdfunding

When you are looking to finance your small business and do not have much of a choice, then you need to find your strength in numbers. You can get crowdfunding from some websites by asking people to pool in small investments to help you finance your small business. Before selecting a crowdfunding platform, make sure that you have gone through their fine print and conditions, so that you are on the safe side. When you take advantage of crowdfunding, you need not worry about giving up an equity stake in your business. Very few crowdfunding sites require that you give up your equity stake in your business in order to get money to finance your small business.

Micro loans

Micro loans are loans that are smaller in value than most loans. These loans are generally issued to small businesses that are based in developing countries. Examples of micro loans are loans given to either basket weavers, street vendors or those that raise poultry. If your industry is a small business too, you can get a micro loan. The interest rate charged on an average against this loan is usually 35 percent. Even if this sounds high, it is definitely lower than the rates of interest charged by the other lenders. Since the processing of micro loans is an intensive process, it requires that such high rates of interest be charged. Micro loans are a great option for businessmen or entrepreneurs, who have no credit histories or who have a low credit score. Since small businesses need equipment for running their business, they can buy it using a micro loan. These loans are typically in the range of $6,000 to $23,000. Today, there are also websites that offer micro loans to small business owners.

Venture Capitalists

Venture capitalists offer loans to small businesses that have reached a phase well beyond the start up phase. Companies that grow fast and that have an exit strategy can make millions of dollars and help their company grow, when they borrow money from a venture capitalist. Most venture capitalists tend to concentrate on financing businesses that are already well off. So, they can even offer you advice on whether or not your business would prosper.

Family and Friends

If you have a family member or friends, who have got some cash to spare, then you have yet another way to finance your small business. While borrowing from a bank would require you to have a high credit score, borrowing from friends and family do not require you to have a high credit score at all. However, you need to be as careful with them as you would be with a bank or a lender. If there is some misunderstanding regarding money or if you have not repaid them on time, then it can lead to a sour relationship. Make sure you prepare a written agreement with a promissory note that you would repay them their money in full. You can get many sample promissory notes on the internet, which you can use to prepare one. Make sure you add the terms and conditions of your repayment, how you plan to repay them, by when and why you need the money in the written agreement. You would also need to frequently communicate with them with regards to the repayment of your loan in order to avoid any misunderstandings and in order to prevent any arguments from taking place. Make sure you repay their money in full at the end of the loan period.

Angel Investors

They can be your angels in disguise, when you want some money to finance your small business and have been denied business loans by your bank. Google and Yahoo are examples of entrepreneurs, who have taken help from angel investors and today, both of them are companies worth billions of dollars each. When the company is in its early stages of growth, angel investors put in some money with the expectation of getting back at least twenty to thirty percent of their investment. When you take a loan from an angel investor, you can enjoy working with people in a friendly atmosphere and this will help you with your business.


5 Financial Sins that Can Lead to a Bad Credit Rating

You might have heard of the phrase ‘credit rating’ before, but you might not know exactly what it means. A credit rating is basically an evaluation of how well placed you are to pay back your loans. This may be used in conjunction with an appraisal of your credit report, which is basically a list of all the times you have applied for credit. When you apply for any kind of loan, both of these come into play, and it may be more difficult for you to be approved for a loan if you have a bad credit rating. To prevent this from happening, make sure you avoid the following.

http://www.dreamstime.com/stock-photos-good-credit-image265078131. Bad Planning

Bad financial planning and budgeting can eventually lead you down the path to a bad credit rating. If you have a mortgage or any kind of big personal loan, make sure you have a long term plan in place to pay it off and try to have a backup plan as well, just in case you fall into any other financial trouble along the way.

2. Credit Card Overuse

If you rely on your credit card a lot to get you to your next payday, beware! This might seem like the way to go now but, unless you are extremely disciplined with your financials, you may find yourself relying on your credit card more and more. If it gets to the point where you are unable to pay back your monthly statement on time, consider limiting your use of the card to desperate times.

3. Loaning Too Much

Many people make the mistake of attempting to pay off their current debts by loaning money from elsewhere, and this can very predictably lead to a snowball effect. This can earn you a bad credit rating, not only because the interest rates accrued from this method are extremely high, but also because this often means you cannot pay off your loans with the money you generate yourself.

4. MissingPayments

If you have missed payments on anything that is considered credit – including credit cards, personal loans or even something as simple as a phone bill, this can affect your credit rating. There is usually a fair amount of leeway given for late payments, but be aware that too many late or missing payments can drastically effect your credit rating.

5. Spending More than You Earn

This goes hand in hand with poor budgeting and overusing your lines of credit. If the amount of money leaving your accounts is greater than the amount entering, this will eventually lead to a bad credit rating. Budget well and you will not have this problem anymore!

If you already have a bad credit rating, do not fear! You are probably still able to get a loan if you need to, especially for important items like electronics and cars;you might want to look into obtaining a bad credit car loan, for example. There are specialists, such as Dreamloans, who can definitely help you on your way. As with everything finance related, make sure you do all the proper research before you commit to anything.


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