November 26th, 2008
Ten Ways to Make your Credit Look Better
Have you ever been told to “always look your best”? The same should be true for your credit. You should work to make sure that your credit always looks its best as well. Here are ten ways that you can approve the appearance of your credit.
1 – Pay down your debt.
This is one of the fastest ways to improve your credit by decreasing your credit available to credit used ratio, paying down the balances on the higher interest credit accounts first. If you are using more than 50% of your credit, then you are using too much and need to start paying some of it off for better results.
2 – Use secured cards to make an entrance into the world of credit.
Most banks and credit unions offer secured credit cards, which are excellent for helping you build credit even if you don’t have much to speak of just yet.
3 – Apply for a passbook loan.
These are month to month loans that use your savings account as a means of collateral, which is a great way to show lenders that you are capable of paying off the loan even if your credit is less than ideal. Some banks don’t report passbook loans to the credit bureaus so check with yours.
4 – Utilize retail store credit cards wisely.
These cards are relatively easy to get and can help to build your credit appeal. You can use these cards for purchases that you can pay off right away and build credit in the process.
5 – Keep old accounts open.
Closing an old account is something that you will regret, so even if you are not using the account, leave it open or it could have a negative effect on your credit.
6 – Properly utilize the 100-word Statement.
Under the Fair Credit Reporting Act, you are allowed to add 100 words to your credit bureau file, and this can be utilized to improve your credit image. Just keep in mind many lenders will just review the credit score and ignore any statement.
7 – Perform occasional checkups on your credit report.
By reviewing your credit report from time to time, you will be better able to keep track of changes to prevent negative things from showing up.
8 – Protect yourself from identity thieves.
Identity thieves can wreak havoc on your credit, so it is vital that you take steps to prevent your identity from being stolen if you want your credit to be appealing to lenders.
9 – Maintain good record keeping habits.
This is going to mean attending to your checkbook as often as possible, devising a bill paying system that works for you, and above all else, always paying your bills off on time, every time.
10 – Get professional help, if all else fails.
The two primary sources of help are your attorney, and a legitimate credit counseling company. If you cannot make your credit more attractive on your own, these two sources of help could be just what you need.
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November 13th, 2008
What is a Good Credit Score?
Most people know what a credit score is, but not really what it means or is all about. What qualifies as a good credit score? Some people consider a good credit score to be 720+, but this is classified as above average credit, or “very good credit”. Most people do not have a credit score that is this high, but with some time and some effort, you can achieve a higher credit score.
So what does a good credit score mean for you?
Good credit can get you lower percentage rates on your purchases and loans, and bonuses like miles and gifts. You can get department store credit cards, and you can get better loans. People with good credit can buy cars and homes with the financing that they need. If your credit score is not high enough, then you will either be denied outright for these types of financing and lending, or you will be forced to accept much higher interest rates, which really isn’t fair but is unfortunately up to the lender to decide.
When you have a good credit score, you can get approved for any type of financing that you need. Most credit scores reach as high as 850, and with a credit score this high, no one is going to have an issue lending to you. However, what is considered good credit is different to everyone, and some lenders are perfectly satisfied with lower credit scores as long as your credit report does not show anything really terrible. What some people may consider to be “so so” credit may actually be decent credit to a lender when it comes to getting a car loan or a home repair loan.
Generally speaking, a credit score below 600 is considered to be poor, and anything between 600 and 700 is continued good or fair. Having a good credit score is important, because it allows you to get the financing that you need, no matter what it is that you need it for. Because you never know when you are going to need money fast, having a good credit score is vital. If you suddenly have medical bills to contend with or an issue with your vehicle that needs to be repaired, then you need to be able to get a loan or a line of credit fast, which is much easier when you have a good credit score. Having a good credit score is a good way to make sure that you can get the lending you require whenever you require is, so start building a healthy credit report and score now, and take advantage of the results over time and you will surely be glad that you put effort into keeping your credit score high and your credit report in good standing with all three credit bureaus.
Credit Karma provides free credit scores along with national averages. Read more about what is a good credit score on Credit Karma.
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October 7th, 2008
Do You Really Need Credit Cards?
Given the state of the economy and the rising debt burdens of millions of Americans, many people are left wondering whether they really need credit cards. The answer to this question lies in how well you can manage your money and whether or not you are prone to overspending. Let’s take a look at some of the reasons why credit cards are essential for some, and deadly for others.
Pro Credit Card
Credit cards are a useful tool and when used correctly, they can benefit you in many different ways. While many people focus on the main benefit of being able to purchase something in an emergency or whenever they want, even if they don’t have the cash on hand, there actual main benefit is what a credit card can do for your credit score. When paid promptly, and not abused, a credit card can actually help you get a loan in the future, or help you qualify for better interest rates, because you will have built up a solid credit history that a bank can trust. This works best especially for those with poor credit and are looking to improve it.
The key to your credit cards to work for you and your finances is to minimize how often you use them, pay them on time and in full if at all possible, and limit how many you have. For example, if you have one or two good credit cards, you really don’t need five more. Store credit cards should be viewed the same way. By limiting how many you have and keeping those balances as low as possible, you’ll be doing your credit score a big favor.
Anti Credit Card
Not everyone should have a credit card, even if they can get approved for one. If you have difficulty managing your funds, or if you view credit cards as “free money,” then you will only be harming yourself in the long run. Credit cards should not be opened if you are not capable of making more than the minimum balance payments at least six months out of the year.
For those that have difficulty controlling their spending, credit cards are one of the quickest ways to bad debt. Limits creep up, payments get harder to make and before long, you’ve fallen behind. This can lead to serious damage to your credit report and score, and it may take years to undo.
Not having enough respect for credit is the main reason that some people just should rely on cash for any purchases they need. An emergency fund can be set up in a savings account to handle any future problems, but in this situation, avoiding credit cards may be the best solution. The one exception would be a secured credit card, which is a great option for people in this situation. You can only spend so much, the company will report to credit bureaus and you’ll be a lot less likely to overspend when it’s your money in the account. This is the only time that a credit card is appropriate for someone that has problems with spending.
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