Category: Credit Score

Disastrous myths about your credit score

Disastrous myths about your credit score

Contrary to popular belief, paying bills on time is an overrated part of your financial reputation.

People are obsessed with getting and keeping an excellent credit score. We hear these statements regularly on our financial helpline:

A caller who can’t pay their monthly bills because their debt payments are so high says, “I can’t go to credit counseling because I heard it will damage my credit score.”

A caller who is not saving in their 401(k) and missing out on the company match says, “I don’t want to pay off my credit cards. I am keeping a balance to help my credit score.”

This makes no financial sense. People aren’t going to seek help getting out of debt — lowering the interest rate and possibly the balance owed — because it will hurt their credit score? How is this helpful? If people don’t get their debt under control, they may never retire. We’ll have a nation of people working into their 80’s with no savings but they can all come together and brag about their credit scores.

Let’s examine some of the biggest credit myths that can lead to disaster:

Assuming if you pay your bills on time, you don’t have to do anything else. Paying your bills on time accounts for about 35% of your credit score but there is another 65% which includes amount owed (30%), length of credit history (15%), new credit (10%) and type of credit (10%). Consider all of the other factors.

Also remember that there may be errors on your credit report so if you don’t check it, you’ll never know and your score will be affected. According to Deborah McNaughton, author of The Get Out of Debt Kit, 80% of credit reports have errors (as cited by Bankrate.com). Many of the erroneous reports had missing information that may boost a score, such as missing a revolving account in good standing, or miscellaneous incorrect information such as an incorrect birthday.

Check your credit report. Credit reports are unique to Social Security numbers, so if you are married, you may want to stagger your requests with your spouse every six months. You can also request your actual score for a onetime fee (which is less than $15 through most credit bureaus). Most credit monitoring services will provide your score for free when you sign up for their service.

Assuming when you divorce, your accounts automatically divorce with you. They don’t. If you have a joint account and one of the parties on the account is late, you are both late. With some types of loans, such as a mortgage or a car loan, the lender may not accept a letter asking you to be removed from the account after a divorce even if that property is going to your ex-spouse. They will need to qualify for the loan on their own before you will be removed from the account.

Take this into consideration because if they don’t refinance, and then have late payments, you may find yourself with some credit issues. When possible, close all joint accounts and refinance any debt separately. If it is not possible, maintain some type of control, whether it is an escrow account or at least access to information to make sure the accounts are paid in a timely manner. Don’t assume. Also see the last point about closing accounts.

Avoiding consumer credit counseling because it will hurt your credit score. For someone with serious debt, working with a not-for-profit credit counseling agency to develop a debt reduction plan and get out of debt permanently should take priority over credit scores. Credit counselors will work with your creditors to try and reduce your monthly payments, or settle your debt altogether. Debt settlement doesn’t affect scores as badly as you would think. In fact, many people don’t realize that late payments affect scores more than a debt settlement. Here is an example of how a debt settlement can affect credit scores, and how that compares to late payments.

A late payment hurts your score more than a debt settlement if your score is in the 680 range; it only significantly pulls it down if you are in the 780 range. Let’s be honest here, people ready for credit counseling probably don’t have the highest scores anyways, and the bottom line is credit scores are fluid — they can be rebuilt. According to Credit.com, a debt write off can stay on your credit report from seven to ten years, but as the information ages, so does its negative impact.

Making late payments aren’t that big a deal. According to FICO, a 30-day late payment can affect your score by as much as 110 points. Late payments can have a huge impact on your credit score causing it to drop like a stone. This is one disaster that is relatively easy to avoid. Simply set up all of your accounts with an automated minimum payment schedule from your checking account. This way you’ll never miss a payment. You can always pay additional amounts through online banking. Set yourself up for success with this one because it can be an easy one to miss and makes a significant impact.

Closing accounts to clean up your credit. Closing an account may be a good idea if you only opened the account to get a discount on merchandise or have too many credit cards which is causing confusion, but it won’t clean up your credit or help your score. In fact, it can hurt your score when the account you close has a long credit history — especially a good one. Your credit history accounts for 15% of your score, so in making decisions which cards to keep and which ones to close, keep in mind how long you’ve had the account open and close the most recent ones first.

Are credit scores important? Yes, but they are not the “be all and end all.” Now that we’ve dispelled some of the biggest myths, consider what the “be all and end all” is for you. What are your biggest financial challenges and concerns? Our latest research shows that less than 18% of employees feel they are on track for retirement.

Are you part of the 82% that isn’t? Do you have a personal net worth statement and is it going in the right direction? The point is when you focus on the important financial issues, you have a chance to meet your financial goals. Clean up your credit if you have to, and do your best to keep a good credit score, but let’s not go overboard and lose sight of everything for just one number.

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15-minute fixes to raise a credit score

15-minute fixes to raise a credit score

Setting up automatic bill payments can boost your number by as much as 50 points.

Improving your credit score can feel like a gargantuan task. But by spending just 15 minutes, you can give your credit score anywhere from a small bump to a major boost. Here are some tips from credit experts on quick — and sometimes easy — ways to raise your score.

1. Set up automatic bill payment or alerts.

“The one thing you need to do is pay bills on time — that has the biggest impact on your score,” says Carrie Coghill, director of consumer education for FreeScore.com. One way to do that is to set up automatic bill payment through your bank or credit union, at least for the typical minimum amounts of your bills, says Lita Epstein, author of “The Complete Idiot’s Guide to Improving Your Credit Score.” Or, if you’re not comfortable with automatic bill payment, Coghill recommends setting up regular email or text message alerts to remind you of bill due dates. On-time payments over a period of about six months can increase your score by as much as 50 points, says Epstein. “It shows you are getting responsible about your bills.”

2. Pay down revolving debt.

If your credit card debt is more than 35 percent of your credit limit, it’s probably dragging your score down, but paying balances down can provide a quick boost. Experts recommend setting up regular automatic payments to make a dent in your debt or making one big extra payment if you can sell something on Craigslist or eBay or if you get a windfall. “People sometimes get a sizeable tax refund. I recommend using that to pay off debt,” says Doug Borkowski, director of the nonprofit Iowa State University Financial Counseling Clinic. A good rule to follow is this: For every $1,000 of available credit, try to use less than $350, says Clifton O’Neal, a spokesman for TransUnion. “Say you have three cards, each with a $1,000 limit,” O’Neal says. “One has a $500 balance, one has a $350 balance and one has a $250 balance. Pay on all of them, but pay more on the first one to bring it down under 35 percent.”

3. Pay your credit card bill early.

If you use your card for everything from groceries to utilities to a pack of gum to get rewards — but pay in full each month — pay early. Because if you charge, say, $2,000 each month, but pay your bill after you get your statement, it looks as though you’re carrying a large balance when you’re not, Epstein says. “Check when the statement closing date is,” Epstein says. “Making the payment before the statement closing date — just five or six days early — can make a big difference over time. It will be reported to the credit bureaus as a $0 balance and will look like you’re holding less credit.”

4. Ask your credit card company to raise your limit.

If you carry a credit card balance but have been making payments on time and make enough money to support a higher credit limit, a quick phone call to your credit card company could raise your score. A higher credit limit will lower your credit utilization ratio (the amount of available credit you’re using), experts say. However, experts also say it’s important to be honest about whether that step would tempt you to rack up more debt. “It’s about knowing yourself, asking, ‘Am I going to be responsible using that credit card?'” Borkowski says. “Because what if your limit is $4,000 and it gets raised to $8,000 and all you end up with is more credit card debt? But, for those who can handle it, yes, call and try to get your limit raised so you’re at a one-third or less [credit utilization ratio].”

5. Go online to dispute an item on your credit report.

Some experts advise consumers to dispute a possible credit report error by registered mail, and to include evidence. But, let’s face it, many never get around to making copies, hunting down a stamp and heading to the post office. All three major credit bureaus offer the option of filing a dispute online — and it can be faster and easier, experts say. “The first thing to do is pull a copy of your credit report from all three bureaus. You can do it free once a year at AnnualCreditReport.com,” says O’Neal. “Look at each one and see if there’s anything you don’t recognize. If you have any questions about information on your reports, you can file a dispute online. You can track it online, too, so it’s a lot quicker.”

6. Just say no to too many inquiries.

When you’re buying those cool new sunglasses and the cashier asks if you’d like to get a 10 percent discount by signing up for a store credit card, just say no. “Whenever you take new credit, you get a ding on your credit score, so don’t apply for new credit cards all the time,” Epstein says. In fact, she recommends applying for new credit, at most, twice a year.

7. Get a late payment removed from your credit report.

In the “it-can’t-hurt-to-ask” category, it sometimes pays to call a creditor and ask to have a late payment removed from your credit report. “I always say, ‘just ask,'” says Borkowski, who recommends asking for the hardship department whenever you call a credit card company to make such a request. “A lot of times, general customer service might say they can’t help you, but the hardship department — or its equivalent — might,” Borkowski says. “They make a lot of money from the person who misses a payment every now and then but carries a big balance. They like to keep those customers.”

It is often repeated that, when it comes to credit scores, there are no quick fixes. However, if you follow these tips, you could see a big improvement in your credit score — with just a small investment of time.

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Six red flags for your credit report

Six red flags for your credit report

You know bankruptcy and missed payments, but they can be just as bad.

You pay your bills on time and never miss a payment. If you’re still having problems with credit, something on your credit report could scare lenders.

Everyone knows the gremlins that haunt the major credit reports: items such as bankruptcies, foreclosures and payments, late or even missed. Less dramatic items can also cause some anxiety among lenders inconsistent.

When you apply for a loan or a card account, lenders review your credit score and pull your credit report. Or they can take this report and pump through one of their own rating systems.

If they do not like what they see, you may be rejected. Or you can get approved with less favorable conditions. And it’s not just new applicants who have run the gauntlet. Credit card issuers to periodically review the records of existing customers, too.

Even more confusing is that different lenders zero elements of the credit report. So it’s quite possible that even for the same loan, no two lenders will see your credit history, in exactly the same light.

Think there might be something hateful about hiding your credit report? Here are six items that could scare lenders.

1. Multiplying Lines of Credit

Opening a new map is normal. Opening three in a short period of time could signal something bad happens in your financial life.

When it comes to card issuers of credit, “the window auditing has shrunk,” said Norm Magnuson, vice president of public affairs for the Consumer Data Industry Association, the trade association of companies credit. “It used to be months and months. Now, you will find firms that monthly monitoring of account or every two months.”

And the only thing that these issuers do not want to see is that you ask all in town to lend you money.

“It would raise some questions,” he said. “This could be an indicator of something going on. I do not think it’s in the best interest of all consumers to go and be a collector of credit lines.”

2. A short-sale housing

“We told people short sales will not hurt their credit,” says Maxine Sweet, vice president of public education for Experian credit bureau. “But there is no such thing as a” short sale “in terms of how the sale is reported to us.”

“The way the account is closed is that it’s settled for a lesser amount than what you agreed to pay originally,” she said. “Status is” settled “. And it is just as negative as a foreclosure. ”

A tip: negotiating for the lender does not report the difference between your mortgage and what you paid as a “balance due” on your credit report, says John Ulzheimer, formerly of FICO, now president of consumer education for SmartCredit.com. Your credit score will take a heavy blow, but this action will not soften the blow, he said.

Sweet’s advice is not to dismiss the notion of a short sale, just go on with your eyes open.

“This may be the right decision to leave the house,” she said. It can be “better than a foreclosure in the economy, moving from the house and move on with your life. Do not expect to walk away with no impact on your credit history. ”

3. Someone Else’s Debt

Here’s something you might not know: When you co-sign on the dotted line to help someone else get a loan or card, the entire debt is on your credit report.

While the fact that you co-signed is neither good nor bad, it means – to the extent that any potential lenders are concerned – you of the debt yourself. And will be included in your existing debt burden when you apply for a mortgage, credit card or any other form of credit, said Ulzheimer.

And if the person you co-signed stopped paying, paying late or missing payments, that bad behavior is likely to go on your credit report.

So when someone tells you that co-signature is painless, because you never have to part with a penny, you can tell them that this is not true. Co-signing means accepting not only to repay the obligation, if necessary, but also to allow the debt – and all non-payment – as against you the next time you apply for credit you same.

Co-signing for a friend or family member “plays well with the Thanksgiving table, but it does not play well in the underwriting office,” said Ulzheimer.

4. Minimum Payments

If creditors make money when you carry a balance, the lenders who view your credit report does not like to see you pay just the minimum.

“It suggests that you are experiencing financial stress,” says Nessa Feddes, vice president and senior advisor for the American Bankers Association. “You can be delinquent,” she said.

Pay the minimums from time to time does not necessarily signal a problem, she said. For example, minimum pay in January, after holiday spending. Minimum one month or pay you expect your annual premium to reach.

But always pay the minimum after months months signals that you can not pay the full balance, and your current and future lenders will see that as a red giant “stop” sign when it comes to grant additional credit.

5. A Lot of Inquiries

This is similar to hiring a large number of new loans. When tightened lending standards, many borrowers, subprime borrowers in particular, had trouble getting credit, said Sweet. This meant they had to be applied several times to try to get what they wanted.

And with the VantageScore at least, that “really influenced the impact of investigations – they are more important than they used to be,” she said.

With the FICO score, the impact of investigations has remained about the same, according to Ulzheimer. Every time you allow a potential lender to pull your credit report, your score can take a small hit. The exact impact varies with the consumer, the score and the number of inquiries.

And if you apply for a mortgage, auto or student, you can minimize the damage by all applications within two weeks. When you do this, the beam score of all similar investigations and treats them as such. Unfortunately, there is no grace period for applications like credit card.

6. Cash Advances

“Cash advances, in many cases, provide the despair,” says Ulzheimer. “Either you have lost your job or are underemployed. Nobody comes out cash advances against a credit card because they want the money sitting in a bank somewhere.”

Because the interest rate is usually higher than the cost of credit card “, you are usually borrow from Peter to pay Paul,” he said.

How it hurts: first, the cash advance is immediately added to the balance of your debt, which lowers your available credit and can lower your credit score, says Ulzheimer. And all potential lenders will see your score.

Second, card issuers more regularly re-evaluate the behavior of their customers. To do this, they often get the credit report, the FICO score and history of the customer’s account and put these three ingredients through their own rating systems, said Ulzheimer. Many scoring models penalize for cash advances, which are often considered risky, he said. From your account history is only available to the issuer, only your behavior score with this card is likely to be affected, he said.

However, if the issuer slices of your line of credit or cancel your account, which could affect your credit score. And that could affect your relationship with other lenders.

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How to build a credit score from scratch

How to build a credit score from scratch

These measures help young adults to prove they are accountable to the owners and lenders.

When it is time for a student to start building their credit profile? The answer is simple: when ready. You will know by how they budget their money, track expenses and manage their checking or savings and debit cards.

Building good credit is a function of managing your bills responsibly. No teenager or young adult should be in bulk with a credit card or given responsibility for a car loan until they have proven they can manage their cash flow. This means they must show that can deal with obligations without constantly ask the Bank of Dad for more money.

Your child may be ready to manage credit as a rookie, especially if you are willing to look over his shoulder. I prefer to send children to college with pre-paid housing, a checking account and debit card related that does not allow overdrafts. In this way, they have no large monthly bills and can get used to the convenience of plastic without much threat dinging their credit profile.

On the other hand, this approach does little to build good credit. Debit cards and checking accounts do not count for much in the context of the major credit bureaus. Therefore each student must take specific steps to start building a good credit profile. In the real world you want and need from a potential employer or the owner or the car dealer who sees your credit report to see that you are reliable.

Contrary to what many people believe, you do not start adult life with a higher credit score falls as you embezzlement debt. You start with a score around 600 (highest score is 850) and must build through a history of timely repayment of borrowed money.

My oldest daughter is entering her final year at university and for us it’s time to start working on their credit score. After an overview of Erik Larson, founder of NextAdvisor, a financial comparison site oriented, here’s how we approach it:

• Get a credit card. This is by far the quickest and most effective way to begin a credit profile. If I did not think my daughter was ready, I would find a prepaid card or warranty that the reports for the watchdogs of credit (it will say on the application, or just ask). Because she is ready, we’ll choose from credit cards are best suited for students.

• Use credit cards wisely. A credit card opens all sorts of ways to damage your score. Never miss a payment. Pay in full if you can. If you must carry a balance that will not hurt you unless your balance is relatively large. Never charge more than 30% of your credit limit and preferably keep it close to 10%. And do not apply for more than one card at a time or with any frequency.

• Get another form of credit. Having different types of debt helps your score. Thus, a car loan or personal loan or other installment credit can help. It can even help to have a second type, but different card, like a gas card or card store. In some cases, buy furniture or appliances can help conditions monthly. But you have to ask the finance company if they report to credit bureaus.

• Pay all bills on time. If you live off campus, to pay the cable bill or electricity bill or the monthly fee for a new office or on television is a must. It will not do much to build your score. But if you relax and get referred to a collection company is a major ding on your score.

• Do not close unused card account. It’s against-intuitive. Canceling a card can lower your score, because it leaves you with less credit overall, and instantly raises the percentage of the debt capacity you use. A long credit history is part of what makes for a high credit score. So keep those old accounts and ensure that they are in order.

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How to fight errors in your credit report

How to fight errors in your credit report

A well-designed dispute letter can help prevent rejection, the next time you apply for credit.

You’ve probably heard of “sticker shock”, but what about the shock of rejection of credit? This can happen when you apply for a new line of credit – a credit card airline miles new, or maybe even a mortgage – only to find yourself rejected for reasons you can not understand. Worse, when you get a good look at your credit report, you will find that you have entered do not even recognize, let alone agree with.

How do you fix something that was listed on your permanent record by one (or all) of these credit bureaus huge? Does this mean your credit is forever doomed? For starters, there is no need to panic, or anger. Unfortunately the errors on credit reports are not so rare. And even if it’s a pain in the neck, there are steps you can take to rectify the situation. This is the most important to be persistent, and document the process.

Know What You’re Up Against

Get a copy of your credit report from all three major agencies. You can do so online or by phone each of the major services: TransUnion, Equifax and Experian. Each credit report is divided into several sections, including a section covering personal information, requests for credit reports, accounts in good standing, elements of credit and potentially negative elements.

Analyze each of the three reports thoroughly and determine the accuracy of all information they contain. Much of what is on the report should be known to you as a loan you out, what you are looking for is errors. Make a list of all the elements that you feel doubtful or negative errors. (Also note the differences between the three credit reports). This will give you a start on solving problems and potentially improve your credit rating.

Documents and Disputes

If you find errors on your actual report, there are several steps that must be taken to resolve them. Under the Fair Credit Reporting Act (FCRA), the credit reporting agencies are responsible to correct inaccuracies and incomplete information on credit reports. This allows you the freedom (and responsibility) to contact the reporting agencies, which publish documents, to correct any inaccuracies you find.
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5 common credit card habits that cost you

5 common credit card habits that cost you

Most of us are guilty of some bad habits in our lives. There are too eat the fun stuff, and not exercising enough to burn, and tomorrow, salary expenses today. Of course, able to obtain and maintain a budget can be difficult to follow patterns, but avoiding these five common bad habits can add a bit of easy money to your bottom line.

1. By paying only the minimum balance. Paying just the minimum balance on your credit card each month to keep your creditors happy, but not to help you pay the interest costs more.

Corporate credit card to highlight the love Minimum Payment Due on your monthly bill – a trick they use to stretch your payments for years, costing you hundreds, even thousands of dollars in interest . For example, a $ 5,000 balance with a minimum monthly payment of 4 percent and an APR of 18 percent will take you a little over 11 years to repay, costs about $ 2,875 in total interest paid.

Do not believe? Discover what the credit card calculator to a good start today and see the real cost of paying only the minimum. The results are shocking, and you can rethink your habits minimum payment because it can cost you thousands.

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Three steps to a great credit score

Three steps to a great credit score

1. Don’t close credit card accounts to improve your credit score.

You might have a good reason to shutter your account — you don’t want to pay an annual fee, you’re concerned about identity fraud, or you want to reduce the temptation to overspend — but don’t do it for the sole purpose of raising your credit score.

One factor in your credit score is your utilization, which is the ratio of balances owed compared to the credit limits on revolving accounts such as credit cards. Utilization is calculated for each credit card you have and across all of your cards. The lower your utilization, the better for your credit score. Closing a credit card account that has a zero balance excludes that credit limit from the overall utilization calculation, which can make your utilization increase and in turn, lower your score.

For the same reason, it’s also a bad idea to ask for lower credit limits on your credit cards if your goal is to improve your score. Doing so can only push your utilization higher.

Tip: If you must close a credit card account but want to keep your score high, pay down balances on other accounts to mitigate the effect.

2. Paying in full doesn’t hide a high credit card balance from your credit score.

If you’re consistently charging near the credit limit on your credit card but pay the balance in full when each bill arrives, you might be hurting your credit score. That’s because your score considers the account balance shown on your credit report. Your credit report will reflect the account balance at the time the issuer supplied it to the credit reporting agency, which will typically be the balance as of your last statement date.

Tip: If you pay in full each month but need to bump your score higher for an upcoming credit check, charge less on your credit cards.

3. Light use of credit cards is best for your credit score.

Maxing out your credit cards can obviously have a negative impact on your score. Using the majority of your credit limit is not good, either. Light use of your cards is best. Using 10 percent of your credit limit will be better than using 30 percent, which in turn is better than 50 percent. A small balance is actually slightly better than a zero balance (though it doesn’t matter to the score if you actually carry a balance).

Tip: If you need to raise your credit score, look at your monthly billing statements to see how your balances compare to your credit limits. Consider increasing your payments, or if you pay in full, using your credit cards less often.

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What you should expect from credit report repair company

What you should expect from credit report repair company

When signing up with a credit report repair company, ask the consultant what is included in the service. There are 3 parts to achieving a great credit score:

1.Repair
2.Trade lines
3.Education

A great credit report repair company will not only help with the credit report repair, but also guide you on what type of trade lines to obtain and educate you on how to use and pay those trade lines to maximize your credit score. Education on how to use credit cards for utility purpose only is extremely important!

Discuss your future goals

A great credit report repair company should ask initially what your future goals are. This way you and the credit report repair consultant have an idea of how many points you are away from your goal.

Knowing mortgage and banking guidelines prior to credit report repair

Make sure your credit report repair consultant is familiar with mortgage and banking guidelines. Somebody that is looking to purchase a home in the future, is going to be much different than somebody that is applying for a business loan.

Is your credit report repair company working for you?

Make sure the credit report repair company you are using has your best interest in mind. The reason most people seek a credit report repair company is to obtain a higher credit score in order to save money on interest rates.

Stay away from credit cards with high fees

Do not apply for unsecured credit cards with high fees. A short term fix can create a long term problem. If you are referred to a credit report repair company from a mortgage broker, real estate agent or a builder, ask the credit report repair company if they are going to continue working on your credit after you purchase the home. Your credit score should be the primary focus. You need somebody that is focused on helping you obtain the highest credit score you can achieve.

Does your credit report repair company have an office location?

Ask your credit report repair consultant if you can meet them at their office location. Many credit report repair companies operate out of their home. You want to be able to drop by the office and speak with somebody if you have any questions and concerns. It is important for you to get to know your credit report repair consultant. There is no better way to establish a relationship than a face to face meeting.

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How to read your credit report

How to read your credit report

The x-ray of your credit health can be dense, so just look for these six items.

You have one shot of your credit reports. And now? As you’ve probably heard about now, you are entitled to free copies of your credit reports. Federal law gives you the right to request your credit reports from three, one from each of the three major credit reporting agencies each year.

You can get them at a time or throughout the year. Personal finance gurus often recommend taking a report every four months that you regularly monitor your records. Anyway, checking your credit reports is a smart move considering that the information in your credit report determines your credit score.

But once you get the report, what do you do with it? How about giving the treatment of six minutes? Then you definitely want to read the full report in detail, a quick check on a handful of indicators can give you an instant assessment of how good – or bad – your credit is right now.

Here are six markers that can provide an X-ray of your credit health.

Late payments

Delinquencies are “enormous influence” on the credit score, said Stephen Brobeck, executive director of the Consumer Federation of America. In fact, they represent 35 percent of your FICO score.

If you see the ratings invoices were paid 30, 60, 90 or 120 end, “it is very damaging” to your credit, he said.

The other factor is important here: the timeline. How was the end of the payment, and how long you make this mistake?

Following payment, the more it hurts your credit, says Evan Hendricks, author of “Credit scores and credit reports. How the system actually works, that you can do”

But the more time that has elapsed since you made a late payment, the less it will affect your credit, he said.

Limit high ratios of debt to credit

Credit scores typically look at your debt-ratio limit credit or “use” in two ways: They compare the balance on a revolving account to your credit available from that lender. For example, if you have a credit card with a balance of $ 1,000 and a $ 5,000 credit limit, this ratio would be 20 percent.

Scoring formulas also look at your debt-credit limit ratio is a second way: the calculation of the total of all your debts on the accounts revolving lines of credit against your total of these accounts.

So if you have four credit cards each with a credit line of $ 5,000 ($ 20,000 in credit), and you have a balance of $ 1,000 on two of them and nothing on the other two ($ 2,000 debt), this ratio would be 10 percent.

“In an ideal world, you want to have (ratios) of less than 10 percent,” said Hendricks. “But certainly you want to keep them under 40 percent. There is no magic.”

But if you use a balance of $ 2,000 to $ 3,000 with a card that has a $ 5,000 limit, “which will really hurt your score,” said Brobeck. “And what is worse, running up balances on several cards.”

Collection activity

In most cases, if you have an account that went to collections or have been written off as bad debt, you know about this, said Rhonda Bailey, credit counselor and manager of the review of credit report for Credit Counseling Non-profit Arkansas. But not always.

“There are a few cases, as an old utility bill after you have moved, (where) the collection agency and not find (the consumer) has forgotten about it,” she said. “I see that sometimes.”

If you find an article that is not yours, you can dispute and have removed from your report.

If the item is yours, you have decisions to make, says Bailey. Can you afford?

It’s a good idea to check the law of your state of limitations, which is the period of time creditors have to sue you over a debt. Your state attorney general’s office can give you that time, she said.

Separate this time, the question may remain on your credit report for seven years. Plus it was on your report, unless it affects your score.

Judgments, liens, bankruptcies

Hopefully you know if you have had major financial difficulties that involved judgments, liens or bankruptcies. However, if someone else uses – and looting – your financial identity, a notation on your credit report could be your first clue.

Same if a collector less-than-scrupulous you marked with another debt or taken action against you without proper notification.

When you get this report, the digitization of “public records” section, explains Michelle Doshi, the editor of publications for the Consumers’ Association Credit Union National. “If there are liens or bankruptcies, it is a good way to check. ”

Active accounts you have closed – Or never opened

You close a store card after moving. Or you finally had time to ask your daughter to close the card account you have co-signed for her when she was in college.

The next time you pull your credit report, if enough time has passed, we must show that these accounts are closed, said Doshi.

Looking back on your credit report “is a way to verify that you have closed and their dates are correct,” she said. If this should be a closed account on your credit report open lists, it’s a good time to contact the issuer and find out why.

Information drive

Another thing to watch is the accounts you do not remember opening the first place. The absence of a mix-up, which could be an “indication of identity theft,” says Doshi.

Your credit report will tell you who else has looked at my credit report. Called “investigations” into the credit-speak, they are of two types.

Applications are hard when you actually asked for new funding – has completed an application, signed documents, etc. – and asked a lender to verify your story. When you get a hard inquiry, your credit can take a slight decline. Hard inquires could affect your score for one year, but you will see on your report for two years.

Soft inquiries are what the credit bureaus put on your report when someone looks at your credit, but you did not request new loans. If you pull your own credit report, which is a soft inquiry. You’ll also see if a potential lender pulls your credit for marketing purposes. Applications software do not affect your score.

Applications are disks “such a small part of your credit score,” said Kelly Rogers, Chief Development Officer of the Consumer Credit Counseling Service a non-profit Orange County, California, and assistant professor at the University Chapman. “But that’s a great way to see if someone has used your information.”

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Raise your credit score at any age

Raise your credit score at any age

The best ways to build excellent credit are much different in your 20s than in your 50s.

Your age often affects how you balance your budget, saving for retirement and assess your investments. But it must also be a factor in managing your credit score.

The length of your credit history affects your FICO score highly, which lenders use to determine the ability of a borrower to repay a loan. While it is important to pay your bills on time and keep your balances low at all ages, there is more than most consumers can do to improve their scores so they can get better loan terms.

Here are nine steps to help you build excellent credit for your life.

Your 20s

1. Request a credit card

John Ulzheimer, president of consumer education for SmartCredit.com says that consumers generally get into the game of credit between the ages of 18 and 22, if the restrictions of the CARD Act makes it increasingly difficult for persons under 21 to get their first credit cards. Regulations aside, it is best to get a credit card as soon as possible because the debit cards will not increase your credit score.

Most beginners get their first credit card by getting a parent or guardian to co-sign the application or the application of a secured card, which requires customers to deposit money in advance that correspond to their lines of credit and minimize risk of failure. Either strategy can be effective as long as you understand that the real trick is to use these cards responsibly.

2. Do not apply for every credit card

“Construction Loan is not the same as building a large balance,” Ken Lin, CEO of Credit Karma.com said. Do not make the mistake many beginners make credit by opening a store card credit to all businesses visited during Christmas, for example.

Tom Quinn, expert in consumer credit for Credit.com, said that consumers should only apply for credit when they need it. A large number of credit inquiries over a short time can cause your score to go down, “he said. It can also make it much easier to run a pile of bills you can not pay.

Instead of a wallet full of credit cards, Lin proposes to add a new credit card once a year to your arsenal until you have collected three or four cards you can always pay on time.

He also suggests finding cards that are not annual fees, as any card you open at this stage should remain open for at least five years. These cards determine the length of your credit history, which represents 15% of your total credit score, so choose a card with a low to no annual fee, it is easy for beginners to keep soaring accounts opened in the long term.

3. Start watching your credit score

Beginners should be extremely diligent credit during these formative years. FICO score attempts to predict whether you’ll pay a loan on time and the first indications that you may not be particularly damaging.

“Consumers in their 20s should be aware that their credit ratings are more volatile and will react differently to payment delays and excessive credit card debt that consumers with credit files of increasing,” said Ulzheimer.

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