credit scores

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.


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.


How Your Credit Score Is Determined

credit scoreLike income taxes and 401Ks, credit scores can be mysteriously difficult to understand. With the overwhelming majority of the population being affected by them, one would hope there would be a simple method for individuals and families to calculate their own scores. Of course, the same could be said for taxes and retirement plans, but we know how that story goes…

Although the specific calculations are convoluted, and typically hidden from the public, the commonly accepted and standardized scores used by lenders are made up of five primary factors listed below, in order of highest percentage of impact to lowest:

35%:  History of Payment

If there is one question lenders want answered, that question is: Will payments be made on time, and in full? Above all else, this single fact determines worthiness and reliability in lending. More than how much money is in an account, more than how much income a household makes in a year, this is the key: if a history of paying the proper amounts on time can be shown, the most important base has been covered.

Although an occasional late payment is a rather common accident amongst American families, credit scores don’t react nearly as badly to one late payment as it does consecutive or patterned late or non-payments. Do not panic if a single payment was accidentally missed; the scores looks for repetition.

30%:  Amounts Owed

This factor can be initially misleading, in that people tend to assume that the higher amount one owes, the lower their score must automatically drop. However, there is a critical difference to be made: the significant amount is the ratio of available credit that is being used. Simply put, the lower the percentage of available credit, the lower the score.

The reason creditors care more about percentages and ratios than raw amounts is that when an individual is using a large percentage of their available credit, they are considered financially over-extended, and carry a higher risk of not paying on time. Again, paying on time and in full is so important, that not only is payment history the strongest credit score factor, but the next strongest is simply trying to show lenders if people will pay on time in the future.

15%:  Length of Credit History

Another factor that is commonly misinterpreted, having a longer credit history does not necessarily translate to a higher score. If poor credit is shown over a long period of time, that will have a proportionately negative effect on a score as having good credit for the same length of time would yield a positive effect.

Yes, lenders are certainly more leery of rookie or inexperienced credit users, but a score is not automatically low just because an individual or family is new to credit. In fact, only a few months of reliable credit payments actually yield quite a high score, but to get a score to prime levels, it does require good behavior shown over a longer duration.

10%:  Types of Credit

With the wide variety of credit cards, loans, installments (monthly payments), mortgages, and other types of credit available, more is not always better. Results seem to show that the two most noteworthy conclusions to draw from this section are 1) lenders prefer users who have managed credit cards properly, to those who have not managed them at all (meaning using a card is probably worth your while), but 2) do not open a credit card or other form of credit unless you intend to use it.

Paying monthly installments, a mortgage if one is in use, and a responsible credit card is more than enough to boost this portion of the credit score.

10%:  New Credit

The myth that simply opening a line of credit will drop your credit has been exposed; this is simply not the case. However, a dangerous red flag to lenders is when a household opens up multiple forms of credit in a very short amount of time, particularly if that household is not already an established, trusted credit user. When getting started, avoid rapidly opening multiple accounts.

Written by Clif, a freelance writer for SereniCare Corporate Marketing, a Phoenix-area franchise opportunist. For further questions about credit scores, you can find more in-depth explanations at myfico.com. I hope this post was an enjoyable and worthwhile read for you.


How to Make Money through Credit Cards

How to Make Money through Credit Cards

Credit cards are rather helpful for those who are able to understand how to use them. It is even possible for credit card owners to earn money while spending money with their credit cards. While this may sound a bit daunting, it is possible to pocket extra cash while buying ones basic everyday needs.

Credit card companies have been known to send out multiple cards to families; offering to make their lives easier. True, credit cards can help with paying off bills and purchasing personal belongings. Some people keep a credit card just for emergencies. However, there have been cases of families going into debt because they could not keep up with their credit card payments.

Pick the Right Card

Cash Back credit cards reward the buyer with a percentage amount made from purchases in the form of cash, instead of rewarding high flyer miles or store credit points. The best way to make money with a cash back credit cards is by picking a card with the least amount of fees that offers the best possible reward rates.

Some banks and credit card companies suggest owning more than one cash back credit card per family. By doing so, it is possible to get more cash back with great discounts on commonly purchased items.

Always Use It

Sometimes the fine print doesn’t cover all of the items that can pay owners back, so wherever shopping is done the bill should always be paid with the card. Cash back credit cards will not only pay back the user for their basic purchases, they can also help centralize a balanced check book.

Be warned, for if one has a history of not being able to keep a budget, the credit card debt will build up. When earning cash back for shopping it is almost impossible to compete against building interest. More money will be lost than gained if credit cards cannot be paid off in a timely manner.

Know the Fine Print

Big spenders who use their cash back credit cards bundling up on their cash back rewards need to know when their rewards expire. Another important rule to know is if there is a cap for how much cash can be rewarded for shoppers. To maximize the amount of money earned from using credit cards the owners should only use cards that have no reward limit.

More than half of the cash back credit cards have a maximized cap for how much the users can earn. This can hurt some owners who have a trigger finger for spending. If the point is to make money with their credit cards, why bother owning card that puts a limit to how much can be used?

There are many ways to fall into debt using credit cards, but there are more ways to earn money while shopping with a credit card. Credit card owners should speak to banks and card companies and learn the policy of their cards so they can benefit from the best cash rewards possible. So get out there and start making money while paying off bills.

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The post is shared by George Martin. George is well aware of types of credit cards available in the market. He has great knowledge of low interest credit card that proffer best low interest, rewards and cash back guarantee.

 


Check Your Credit Rating – Poor Fico Credit Scores Cost

Check Your Credit Rating – Poor Fico Credit Scores Cost

There have been good signs that the economy has bounced back but this should not keep you from protecting a good name and reputation within the community. The creditors these days are implementing more strict policies that more and more Americans Canadians are being disqualified from getting loans and financial credit. This may well be from their banks , credit unions , credit cards or third party financial sources and institutions such as auto dealers and their car lot auto financing services and divisions.

What is Good Reasonable Fico Score:

All loan providers that include credit card issuers, banks, mortgage lenders and auto finance companies have revamped the FICO score in screening their loan applicants. Individuals with low scores are typically not allowed to loan or are given mark up rates that are very high. The then 620 FICO score that served as the baseline for enjoying credit, benefits, goods and employment has been raised to 740. That means the individuals with credit score lower than this baseline cannot engage with loans. There are even individuals who score high in their credit standing but still experienced reduced credit line and there are even individuals who failed to maintain their credit card accounts and equity lines.

Improve Your Fico Score It’s to Your Credit History Benefit:

People are aware of the vitality of FICO score in today’s dealing so more and more individuals are looking to improve their credit score. And these have greatly contributed to the rise of credit repair, credit rehabilitation or credit restoration services.

Credit Profiles Profiling:

Credit profiles in the US mostly contain erroneous entries or omissions that have gone against the credit standing of seventy eight percent of the individuals. People who are not able to fix these errors might go for credit service organization (CSO) to help them out.

Standard Rules Regulations in the Credit Credit Reporting Industries:

Various CSO’s have been focusing in repairing credit standings in the same manner as making out thieveries. Typically these organizations look into laws endorsed by the congress to argue negative, erroneous, obsolete and fraudulent details in the credit profile of their clients. The common acts used are the Fair and Accurate Credit Transactions Act, Fair Credit Reporting Act, the Fair Debt Collection Practices Act, and the Fair Credit Billing Act. Then disputes will be submitted to the consumer reporting agencies namely Equifax, Trans Union and Experian as well as to the state, federal, private and local regulatory authorities, creditors, collection agencies, and third-party record providers via electronic, verbal and written means. CSO’s are able to send the dispute letters via the various means (electronic, verbal and written) to the different credit reporting agencies, creditors, collectors and third-party record providers in a much extended period of time as compared to other credit repair clinics that can only do the submission in a monthly basis.

Why Business Utilize the Skills Processes of Credit Reporting Agencies:

Although it is possible for an ordinary person to engage with the same activities performed by CSOs to make things more economical, CSOs are equipped with more knowledge, skills and resources which give these organizations an edge. A decent and sound CSO should have a verifiable track record of their capability to contest and change any flawed or imprecise judgments, liens, foreclosures, bankruptcies, short-sales, student loans, inquiries, derogatory tradelines, personal identifiers and other fleeting data from their client’s credit profile. The typical time frame for credit repair result ranges from thirty days up to six months. However developments should be apparent by forty fifth to sixtieth day upon initiation of the repair process.

Are Credit Reports Reporting 100 % Accurate? Appealing Inaccurate Reports Reporting:

The process of restoring the credit standing of individual is lawful. However CSOs are not run by legal attorneys. That means the advice that can be derived from these organizations may not necessarily be according to law and in case you need to appear in court these organizations cannot represent you unless they hire a licensed law practitioner.

Thomas I. Canmore

It never can be easy to obtain auto financing if your credit report and FICO score are not 100 %
Many “good” and “responsible” people seem to have unfortunate issues in their credit past

Yet you may need a vehicle for your job

You need a car for your employment but have trouble obtaining auto financing in Edmonton or Fort mcMurray ?

If you have a job in Alberta Western Canada require reliable transportation fill out a confidential credit app at Canadian Custom Credit


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