Category Archives: Credit Card

6 Quick and Easy Credit Fixes

6 Quick and Easy Credit FixesIt has never been easier to get a credit card, and most are widely accepted wherever people shop. However, it is just as easy to max out a card, and end up owing creditors a ton of money. Making slow or no payments can put a dent in your credit score. When that happens, you may run out of options for buying a new refrigerator when the old one finally gives out. If your credit history stands in the way of building a stellar financial reputation or making a major purchase, don’t worry. There are several steps you can take to raise your credit rating to an impressive level.

Review Your Credit History

Request a free copy of your credit report from each of the three major U.S. credit reporting agencies: Equifax, TransUnion, and Experian. Consumers are entitled to one free report per year, and it is important to request a copy and review it carefully for mistakes. Sometimes one or more of the reporting agencies include wrong information about your name, address, and credit accounts. Contact each organization that contains faulty information to make corrections. After a few weeks, request an updated copy of your report, which should be provided at no cost. Ensure that each organization made the corrections and no new problems have surfaced.

Work With Creditors

Contact all stores and companies to whom you owe money. Apologize for any missed or late payments, and explain that you plan to submit payments on time by the due date from now on. If you are unable to afford the entire payment each month, request a revised payment plan that allows you to make smaller payments on the balance. Many creditors willingly work with customers to get the outstanding balance paid in full.

Limit Credit Charges

Look over monthly credit card statements to see where you can cut costs. Avoid paying for nonessentials with credit, such as entertainment, clothing, and snacks. Instead, pay for those things with cash, which is often a deterrent in helping people avoid spontaneous spending. Charge only essential items, like a doctor’s visit or a broken appliance that you cannot otherwise afford and that you are reasonably sure you can pay off by the end of the month or within a short period of time.

Pay Off Credit Accounts

Start with your smallest credit balance, and work on paying it off as quickly as you can. You may be able to expedite payoff by adding extra to the payment beyond the minimum amount due each month. Use funds from overtime, tax returns, or windfalls to pay down the balance more rapidly. When it has been paid in full, apply that monthly payment that is no longer needed for the first account to a second credit balance, along with the regular payment due each month until it also is paid in full. By eliminating your credit balances, your credit score will clear up fast.

Pay Bills on Time

Review monthly expenses for an idea of when they come due. Make sure you pay each on time so that nothing is late. This is one of the main criteria that credit organizations assess when determining your credit score. If you must be late with the payment, call the creditor to make other arrangements, such as skipping a month or making a double payment the following month.

Live Within Your Means

Establish a monthly budget that allows you to balance income with expenses. This means that you will have a pretty good idea of what your monthly income will be and how to spend no more than what you earn. A savings account is important for short-term emergencies and long-term goals like college or a vacation. Sticking to your budget will make finances easier to manage and help to protect your credit rating.

The credit ranking score for the three main reporting agencies ranges between 300 and 900. Generally, a credit score of 750 is considered strong, while over 800 is excellent. Factors like credit type, recent credit, and debt-to-credit ratio play a role in determining a person’s credit rating. Maintaining a high credit score is important for access to credit when needed.

What’s The Fastest Way to Increase My Credit Score?

What's The Fastest Way to Increase My Credit Score?Credit scores – they’re basically report cards for adults. And for better or worse, your credit score dictates your creditworthiness. Banks, insurance companies, and private lenders will all use your credit score for determining whether or not you qualify for a loan. As you may already know, the higher your three-digit grade – which ranges from 300 to 850 – the better. Below, we’ll briefly talk about what qualifies as a good score, as well as teach you the fastest ways for bringing your credit score back to a respectable number.

What is a “Good” Credit Score?

At 751 or higher, you can expect to receive extremely competitive low-interest rates from lenders. Anything between 711 and 750, and you’re still looking at pretty low interest rates. A credit score of 651 to 710 qualifies you for moderate interest rates, while anything from 581 to 650 qualifies you for high interest rates.

Anything less than 580, and there’s a good chance that you’ll A) Be denied the loan, or B) You’ll receive the very highest interest rates legally allowed in the United States. If you can keep your credit score at a minimum of 711, then you’ll not only qualify for higher loans, but you’ll also pay far less in interest on them.

Dispute Errors

First and foremost, start by disputing errors through TransUnion, Experian, or Equifax. Mistakes happen, and if you can fix these foul-ups early, it’s definitely going to help you increase your credit score fast.

Negotiate

There’s no denying that when you got laid off last year, you may have had to stop paying your credit card bill. But there is a possibility that a creditor can “erase” any debt that went to collection. The catch? You will have to pay the balance in full on the spot. Make sure that your creditor agrees to this in writing before you make the payment. Otherwise, yes, you’ll be paying off your debt but it’s not necessarily going to increase your credit score.

Get a Credit Card

You’re probably thinking, “Wait a minute! Credit cards are what got me into this mess. Won’t getting another just makes thing worse?” It’s certainly possible, but it’s also the fastest way to increase your credit score. Just remember: don’t charge too much and always pay your bills on time. In other words, just be responsible.

Having trouble getting a traditional card due to a low credit score? Try a secured credit card instead. With a secured credit card, you pay upfront. So if you pay $200, and you now have a secured credit card with $200 on it. Think of it like a pre-paid debit card, except the main difference is that it has to potential to help (or hurt) your credit score. With these, the same advice applies: don’t max it out and make your monthly payments on time.

Increase Your Credit Limit

Be very careful with this one. It only works if you trust yourself to not overspend your new line of credit. Basically, just call your creditor and ask for an increase in your limit (i.e. making your credit card good for up to $5,000). The reason this tip works is because it lowers your debt-to-credit ratio (assuming that you don’t spend any more than you’ve normally been spending).

Conclusion

There’s no magic formula that’s going to increase your credit score overnight. The most important thing is that you stay persistent on these strategies and trust that they’ll work. While it’s impossible to say exactly when you’ll be back at a reasonable credit score, know that you can be back in the mid-600s within a year or two if you work hard, avoid taking on more debt, and follow the strategies above.

Credit Cards Are A Necessity, If You Are Responsible

Credit Cards Are A Necessity, If You Are Responsible63% of people 18-29 do not have even one credit card. The aftereffects of the recession, the increase in debit card use, and the media focus on credit card debt have all been cited as factors contributing to millennials aversion to credit cards. This situation is unfortunate because credit cards offer a host of benefits if you use them correctly.

How Credit Cards Work

Unlike debit cards that take money out of your bank account, a credit card is a separate line of credit. You use it to make purchases or obtain cash advances. You then pay off your balance or the credit card company charges you interest. The issuer requires at least a minimum payment to keep your account in good standing and then charges interest on the unpaid balance each month.

Opening a credit card is different for millennials than other generations. The CARD Act means that anyone under 21 must have independent income or a co-signer to get a card in his or her name now. Banks now offer secured credit cards. These cards allow you to deposit cash in an account and then that amount becomes your credit line. For example, a $1,000 deposit translates in to a credit line of $1,000. This option really helps if you are worried about overspending, but in reality acts very similarly to a debit card.

Why Credit Cards are Great

You build your credit score with a credit card. A debit card, by contrast, does not impact on your credit score. A strong credit score is critical to getting favorable terms for big ticket items such as car loans and mortgages. You save yourself high interest charges in the long-term if you take a disciplined approach to credit on smaller purchases like clothing and gas now.

Credit cards are convenient and offer benefits. If you are uncomfortable with carrying a large amount of cash, you can carry a credit card. You replace a lost credit card; however, you cannot replace lost cash. You can use credit cards to hold a hotel room or a rental car. Many credit card companies also offer perks such as frequent flier miles to persuade you to sign up for their card and most give 1-2% of each purchase in the form of rewards points that can be redeemed for cash, gift cards, or airline miles.

Pay Them Off On Time

Credit cards are a great tool to build a credit history if you pay them off on time. There are serious negative consequences to not paying off your credit cards on-time and in full.

  1. Late fees – Issuers charge a fee if you do not make at least the minimum payment.
  2. Interest charges – You need to pay off the balance to avoid interest charges. Per bankrate, the average APR is 13.02% on a fixed rate card or 15.82% on a variable rate card.
  3. Lower credit score – Issuers notify the credit reporting agencies if a borrower does not pay as agreed. This act reduces your credit score.
  4. Reduced employment prospects – Employers in most states can check your credit report. Some states such as California and Illinois restrict the practice. It is best to develop a strong background using credit to prevent harm to your career.

Overall, They Are a Plus

Credit cards can be a fantastic financial tool if you use them responsibly. You can earn a discount for every purchase you make, and the bonuses alone for signing up can make signing up for a credit card worth it. We earned over $2,500 in rewards in one year by signing up for and using credit cards responsibly, and if you know how to control your spending and pay off the balance each month, credit cards are certainly worth it!