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Archive for the ‘Credit Tips’ Category

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When discussing about credit and finances, we often hear the term credit score. A high credit score means quick approval, access to better rates, and more opportunities. But what really is a credit score? How do credit reporting agencies calculate a person’s credit score?

You and Your Credit Score

A credit score is a three digit number that is based upon an individual’s credit report. Credit scores range from a low 300 to 850 where 300 to 600 is considered to be a low score and 650 upwards is considered as a high score. Of course, a low score makes a person a “high-risk” borrower and most lenders are not willing to approve applications from people who have a poor credit rating.

There are lenders who grant approval for people with poor credit but these transactions usually require some form of security from the borrower such as a property or an amount of money deposited and held by the lender. These deals are also often accompanied by higher interest rates, lower credit limits, and higher penalty costs to make up for the risks.

What is FICO Score?
FICO stands for Fair Isaac Company, which is the company that came up with the formula used in calculating credit scores. Although other methods are used in the past, the FICO score is the one that is widely used today.

Your credit history is an important indicator on your credit worthiness. It will determine how easy you will be approved with a credit and the interest rate that you will be enjoying for the credit you are qualified for. Good credit history makes your life easy when you want to apply credit card or loan for any purpose. If you don’t have a credit history, you need to build one, but not many places are willing to give you credit if you have zero credit history, then how to even establish it?

There are a few things you can do to get the chances of building your first credit history:

1. Start with Bank Accounts

The first thing you should do is open a checking account and possibly a savings account as well at a local bank. Then, you should maintain these 2 accounts in good standing so that you show to the bank that you can manage your money. Although your bank account status is not part of your credit history, bank may use it as their reference to determine your credit risk when you apply your first credit.

2. Consider a Department Store Card

You probably have experience of being offer with department store card that will help you to save 10% on your purchases. Generally, it is not advisable to sign up with the card because its ongoing interest rate is very high although you enjoy the up-front discount.  Read more...

To improve your credit score can seem like an impossible task. The scoring model seems to factor in tons of information and makes it seem as if you have no control over your score.

This is incorrect. If you take a few steps you can positively influence your credit score.

1. Remove bad credit items on your report. You must dispute the credit bureaus directly with either a dispute letter or by hiring a service to dispute them on your behalf.

2. Pay off any verified bad credit item on your report. In exchange for your payment have the lender remove the item from your credit report.

3. On time bill payment. It is rumored that missing a payment can damage your score up to 50 points.

4. Open a new credit line. This is best if it is a revolving line of credit, for example an unsecured credit card.

This will also help you build a positive payment history by paying your monthly bill. However if you can not qualify for an unsecured credit card then open a secured card, but make sure it reports to all 3 bureaus.

In addition try to keep your monthly balance at 10% of your available credit. Doing this shows the bureaus that you do in fact use your credit and you use it responsibly.  Read more...

Your credit cards are often the one form of credit that you use that if you are not careful can get expensive in a hurry. But there are some steps you can take to keep them in check. Additionally there are some other things that you can do to help you save money with your bank and your suppliers. So here are 8 ways to help you keep your money in your pocket where it belongs.

1. The first thing you should do involves your bank account. Often linking your checking account to another account can save you money. But also linking a bank account to your credit cards can save you a great deal as well. If you fail to make the payment on time then the minimum payment due will automatically come out of your bank account. This will save you those late payment fees as well as a potential black mark on your credit.

2. Stay away from cash advances. A cash advance can cost up to fifty dollars per transaction with most banks depending on the amount of the advance. And many credit cards carry a higher interest rate for cash advances as well. Plus remember that when you make a payment on a credit card the amount you pay towards the balance is applied to the oldest charge owed not the charge with the highest interest rate.  Read more...

For poor credit individuals, qualifying for a car loan might feel like an almost impossible task. However, fear not – you do have the chance to get the wheels you need, regardless of your credit score. Here are 5 tips that you cannot afford to ignore:

1. Prepare to pay a higher down payment and interest rate

It may come as no surprise to you that obtaining car loans for those with poor credit means paying a higher down payment – and paying a higher interest rate – than would someone with good or excellent credit. Of course, some folks with poor credit feel that they have no chance for getting a car loan at all. Happily, that’s not true anymore. Regardless of your credit history, somewhere out there is a dealer (paired with a financing company) who will be willing to extend you an auto loan. Go into it knowing that your interest rate will be higher, but also go into it with the confidence that you can get the loan you are looking for.

2. Watch out for lenders who try to inflate their auto prices  Read more...