Entries Tagged 'credit score' ↓
November 10th, 2008 — Debt, News, Personal Finance, carnivals, credit, credit cards, credit score, economy
Welcome to the November 10, 2008 edition of credit report stories!
Rich Credit Debt Loan is happy to host the latest edition of the Credit Report Stories carnival. We hope you enjoy the posts and find many worthwhile articles. Below are our editorial picks:
Credit Karma presents Balance Needed As Credit Card Rules Experience Change posted at Credit Karma.
MoneyNing presents Credit Card Spending Limit, Credit Scores and Conventional Mortgages posted at Money Ning, saying, “A credit card representative told me that my credit card limit alone will affect my credit score. Do you believe her?”
hank presents How Is What We Are Going Through Now Different From The Great Depression in the 1930’s? posted at My Investing Blog.
News
KCLau presents Financial Consideration for New Parents in Malaysia posted at KCLau’s Money Tips, saying, “Recently, there is an interesting post written by Xin Lu at Wisebread about the financial consideration of having a newborn baby. The article is more catered to the situation in the USA. Although it might differ in terms of currency, the other facts might similar and worth our study. This sparks the idea of writing this post to share with you the financial side of being a new parent in Malaysia.”
KCLau presents Case Study: Financial Goals of a Malaysian working in Singapore posted at KCLau’s Money Tips, saying, “Subscribe to my Newsletter to receive the Top Money Tips for Malaysians ebook. What you will get: * Top Money Tips e-book * Budgeting e-book (a week after signing up) * Insider’s tips not published here”
Andrea Smith presents How Can I Recover from Bankruptcy? | Consolidate4Free: Free Debt Consolidation Articles posted at Free Debt Consolidation: Qualified Financial Management.
Credit Cards
Mr Credit Card presents Rebuilding Your Credit? Don’t Use First Premier! posted at Ask Mr Credit Card.
Credit Shout presents How Does Your FICO Score Affect A Credit Card Approval? posted at CreditShout.
Credit Shout presents Chase Freedom Credit Card Review posted at CreditShout.
Raymond presents The Best Christmas Credit Cards For Holiday Shopping posted at Money Blue Book.
Raymond presents How To Generate Valid Credit Card Numbers posted at Money Blue Book.
Credit Score
Rich Leverage presents Resisting Panic: A Quick Guide to Surviving The Credit Crunch posted at Rich Credit Debt Loan.
Save Money presents Crazy Things that Kill Your Credit Score…Part 2 of 2 posted at How I Save Money.net.
Transunion
sherin presents Economic Recession and Preparing for a Recession posted at Investment Internals, saying, “A study on the preparation for recession time. Focused on Savings, Portfolio and Job security. An educational article for ordinary person to help self to build a self defense against problems from economic slowdown i.e. recession”
That concludes this edition of the Credit Report Stories carnival. Be sure to submit your relevant blog articles to the next edition of credit report stories using the carnival submission form. Past posts and future hosts can be found at the blog carnival index page. CRS is looking for blogs to host so if you’re interested be sure to include that in your submission.
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September 30th, 2008 — Debt, Goal, Money, Personal Finance, credit score
In the previous parts of this article we discussed how FICO score can impact your financial status as well as the initial steps that you can take to begin restoring your FICO score. We covered handling collections first since they do have a big impact on your overall score, but there are a few other ways that you can quickly see a big jump in your score.
After you have the collections on your account either settled or verified, double check to make sure that they were removed from your credit report. If a collections agency agreed in writing to remove the entry upon payment and did not, you can send copies of the letters and your cancelled check to the credit bureaus to have it removed by them.
Now that collections are out of the way, let’s move on to more ways to restore your FICO score. If you have abused your credit in the past, opening a new card can be difficult. Establishing a good payment history is one way to get a bounce of 30 or more points on your FICO score, but that can be tough if you can’t get any new credit.
Open up a secured credit card and use it once a month for a small purchase. (Here are some bad credit credit card recommendations.) Pay that off completely before the due date. After six months, you should start to see a change in your FICO score. Keep the balance on that card as low as possible to show that you are utilizing your available credit wisely. The lower your debt to limit ratio is, the better your FICO score will be.
Continuing on that theme and assuming that you still have accounts that are open, start paying those balances down each month and stop using the cards. You do not want to close the credit card accounts, since a closed account may actually reflect poorly on your rating. But, that doesn’t mean that you have to use them either. Keep paying on them each month, and try to shoot for paying more than the minimum balance requirement. This will help you chip away at a high balance and lower your debt to limit ratio nicely.
It can typically take anywhere from six months to two years to completely restore a FICO score, depending on your personal situation and just how badly in debt you are. However, with diligence and time, that score will change for the better. The key is making your payments on time, freeing up your balances and keeping an eye on any collection efforts.
It is also a good idea to read through the Fair Debt Collections Practice Act, especially if you are dealing with creditors. They do have rules that they have to follow, but it’s up to you to know your rights. This act will protect you from harassment, but only if you take action. Take the time to read through it, and don’t be afraid to tell a creditor that you will report them if they overstep their bounds.
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September 29th, 2008 — Goal, Money, Personal Finance, bad debt, credit score
In our last post, we covered how to begin the process of restoring your FICO score, as well as how changes can affect this score. Now that you are ready to begin, there are a few steps that you will need to take. Many of these steps require diligence on your part and a little hard work. However, they can result not only in a higher FICO score, but also lower interest rates on loans, and a higher chance of getting approved for loans in the future. It is definitely worth the effort, since higher FICO scores can actually help you save money over the long term. So, let’s get started.
Since collections have one of the biggest impacts on a FICO score, let’s start there. If you do have any current collections on your credit report, you will need to work to get those removed. Before you open your checkbook, there are a few options that you should consider. First, remember that collection agencies purchase bad debt from original lenders at a fraction of the cost. This means that any money they receive is pure profit.
This also means that are usually willing to work out a settlement with you. This may not always be the case, but it is definitely worth a try. The first step to take is to send out what is called a Pay for Delete letter, or PFD. This is basically telling the collection agency that you will pay the debt, but only if they agree, in writing, to delete the record from your credit report. Do not take any further action on the matter until they have agreed to this in writing. Send your PFD letter certified so that you have a record of when it was received.
If you do not believe that the debt from the collection agency is legitimate, you can send them what is called a Debt Verification letter. This is a request that will ask the collection agency to provide you with proof that you did indeed open the account and that you are responsible for it. The more detailed questions you ask in your debt verification letter, the higher your chances are of having them remove the debt since it will require a good deal of legwork on their part.
A DV letter will give the collection agency 30 days to respond to your inquiry. Again, you will need to send this letter certified so that you have proof of when the collections agency received it. They will have thirty days to respond from the date that they got your letter. If after that time period has elapsed, you have not heard back (you will need to wait around a total of 45 days from the day you mail your letter to allow time for the mail) you can contact the credit reporting bureaus to have them remove the entry from your report.
There are also a few other ways that you can restore your FICO score, which we will cover in final part of this post.
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September 25th, 2008 — Goal, Money, Personal Finance, credit score
While obsessing over a FICO score is not a good idea, this is a number that will have a lot of bearing in your life. This number determines whether or not you will be able to get a house, a new credit card, or in many cases, whether or not you will be able to rent an apartment. Lenders and businesses are relying on FICO scores more than ever, and it is have never been more important to make sure that your score is where it should be.
If you are just starting to build up your credit history, this is the perfect opportunity to watch your score and see how different variable affect it. Over time, with proper management, you have the ability to get your FICO score up over 800, but it will take some work. If you have already made some mistakes and your score is under 600, don’t despair. There are plenty of ways that you can restore your FICO score.
First, you need to know just how bad it is. You may even want to consider purchasing a subscription that will allow you to monitor your score over time. This helps you see what is happening with your credit and can provide you with advance notice if something is going wrong with your credit. We highly recommend monitoring your score, especially if you are getting ready to buy a house.
Once you have an idea of the number you are working with, it is easier to begin the process of restoring your FICO score. The average American has a score that is around 680, which is considered satisfactory. A score over 720 is considered good, and above 775 is considered excellent. However, scores under 620 are considered to be very bad and it can be difficult to get a loan.
The higher your score is, the less impact small good changes will have on it. For example, if you are already at 750 and keep making monthly payments, without opening any new cards, you probably won’t see much change. However, bad changes can have a very big impact on your score. For example, a collection can drop your score by as much as 20%, or a late payment may cause it to nosedive.
It is a lot easier to see more changes when you are working with a lower score, especially when you are rebuilding your credit. If it is in the low 500s, or even lower than that, making little changes can actually give your score a nice bounce. If you do decide to use a credit score monitoring service, these bounces are a great motivator to keep up the good work.
Now that you know what you are dealing with in terms of your credit score, it is time to work on putting together a plan that will help you restore it. Our next post will cover specific steps that you can take to get on the road towards a perfect score.
One resource you should be sure to check out is the blog at Credit Karma. At Credit Karma, not only can you get a free credit score and offers from partners with a pro-consumer vision, but also find extremely relevant information about your credit score or credit cards such as: Relationship Between Age and Credit Scores, How Often Does Your Credit Score Change?, or How A Credit Card Limit Is Determined.
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September 18th, 2008 — Debt, Personal Finance, bad debt, credit score
Whether you’ve lost your home or your job, or your money management skills over the years have left you severely in the hole, it is never to early to start turning things around. You can bounce back from financial trauma, but it will take some effort and dedication on your part. Here are some tips to get you back on the road to financial stability.
First, you’ll need to pull your credit report and see just how bad things are. This will help you get an idea of which creditors to handle first and will help you spot any potential errors. Remember, many creditors are willing to work out not only payment plans, but they may be willing to reduce your overall debt in exchange for a partial payment. It does not hurt to ask, and the worst thing they can tell you is no.
If your credit rating has already suffered, don’t despair. Assuming you have taken care of any collections and creditors, it is time to start rebuilding your credit. You can start by getting a secured credit card. This will require a small deposit of cash on your part, but this will go a long way towards building your credit history back up and repairing the damage that has been done. If you are facing creditors, make sure that you read the Fair Debt Collections Protection Act for consumers and know your rights.
The key is to learn from your mistakes. Once you have your secured card, remember that it is not free money. Instead of charging up to the full balance, use your card once a month for something inexpensive. Pay off the entire balance every single month, or at the very least, pay more than the minimum balance before the due date.
This will help establish a good payment history and this will factor in to how your lenders see you. Once you have been making payments on this card for six months, you should be able to apply for a “bad credit” or high risk credit card. Again, keep those balances low and use it only to show that you can be trusted to make your payments on time every month.
Next, you will need to start putting money aside. An emergency fund is essential and can help prevent another financial trauma from occurring. Aim towards putting three months of your salary away into your fund, or at least try to put a good sized portion in. Building up a savings account over time, even with small deposits, will pay off over the long term.
Now, it’s vital to take a look at why your initial financial trauma occurred. Was it due to circumstances beyond your control or are you to blame? By taking a hard look at the way you spend and how you view your money, you can help prevent any future financial traumas from occurring. After you are back on your feet, you can learn from these mistakes and start fresh.
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September 9th, 2008 — Debt, Personal Finance, bad debt, credit cards, credit score, good debt
Millions of Americans have found out this year that they are in dire financial straits and this came as a shock to most. Whether it’s a new variable rate on a mortgage, higher gas prices or just the higher cost of living, many of us are not as financially secure as we would like to be. So, what can we do to get back on track? Here are some hints to get you started.
1. Stop overspending.
This is a no-brainer, but many of us really don’t realize how much money we spend every month. Take a hard look at your budget and get serious about getting rid of non-essential spending. It may take a little time, but you can train yourself to follow a decent budget that doesn’t require scrimping.
This is the simplest way to get back into a secure place financially. Whether it’s from a second job, a raise or a new business venture, it is vital right now to have more than one stream of income. If necessary, think about leveraging some debt to open a new stream, such as with investment property since rentals are very hot right now.
3. Pay down those credit cards.
We’re not advocating consolidation loans, especially since they commonly require home equity and right now, that is not a wise decision. However, by paying a little extra each month, you can greatly reduce the overall amount that you owe on your cards. Whenever you have some extra cash, use it to get those balances back to a more manageable level.
4. Stop using credit cards as often.
Adopt the mindset of “If I can’t pay cash for it, I don’t need it,” with most of your purchases. Don’t close those accounts, you’ll need them to keep your credit rating intact, but you don’t need to use them as often. Granted, in emergencies, they are necessary, but you can greatly reduce your debt if you stop using them for frivolous items that you really don’t need.
5. Downsize if necessary.
If you have been living beyond your means, wringing your hands about it won’t do much good. If you are in a financial bind, the time to act is right now, before it gets worse. There is no shame in getting control of your spending and living within your means. It can be tough at first, but you will be able to get back on track towards saving money and having more financial freedom.
6. Strip away the non-necessities.
What is more important – cable or electricity? If you are in the midst of a serious financial situation and you can’t pay your bills, it is time to start doing away with everything that you don’t really need. It may be just until you get back on your feet, but by learning smart money management, you’ll be able to reorganize your priorities and start spending wisely.
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September 4th, 2008 — Goal, Money, Personal Finance, credit cards, credit score
In today’s world, it’s easy to define your self worth by your FICO score. Whether you are trying to buy a house, get more credit or just get back on the right track, a low FICO score can really impact your entire life. However, there are some easy steps that you can take to increase your score and open up the possibility of lower interest rates, more approvals and an easier time of getting a mortgage.
1. Get your credit report.
You won’t know what you’re working with until you get an actual copy of your credit report. You are allowed one free each year from the three major credit bureaus. You can get it online by visiting AnnualCreditReport.com Make sure you save and print your report, since you may only be able to access it online once.
2. Find any errors and dispute them.
You’ll need to go through your entire report and make sure that all of the information is correct. If not, you can file a dispute to either have it corrected, or removed from your report. You can send in a dispute letter or you can even do it online. Results take about 45 days. You may not be successful, but it does not hurt to file a dispute.
3. Limit your new requests for credit.
Whenever you apply for new credit, an inquiry is placed on your report. Get too many in a short period of time and it will affect your score adversely. Keep all credit requests to one every three months if possible.
4. Get rid of your collections.
If you have collections on your credit report, this will hurt your overall score. You need to get them removed if possible. If they are inaccurate, dispute them. If not, you will need to send what is called a PFD letter to the creditor. This is a pay for deletion letter. Basically, you’re telling them that you will pay the debt only if they agree to remove it from your credit file.
This is vital! If you simply pay the collection, it will remain on your report, pulling down your score. It may be marked as paid, but it is still a collection and will continue to hurt your score for several years to come.
5. Pay down your high balances.
How you use your available credit has a factor on your score. If you have maxed out all of your cards, this will result in a low FICO score. Pay down those balances to free up some credit.
6. Pay your bills on time every month.
Three months of paying your cards on time can result in a jump of thirty points or more in your FICO score. This can be significant! Try to keep as current as possible and you will see a change in your score.
Rebuilding your FICO score takes time, but with these techniques, you could see a jump of 100 points or more in a few months.
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August 25th, 2008 — Banking, Debt, Financial Security, Leverage, Money, Personal Finance, credit cards, credit score, retirement
Whether you are pushing thirty and trying to get your first home or your retirement is staring you in the face, there are times when you may feel as though you’ve run out of time financially. We don’t always make the best decisions when it comes to saving money and before long, we end up wondering where it all went wrong. If you’re trying to figure out how to catch up financially here are a few tips to get you started on the right track.
1. Fixing your credit.
First and foremost, your credit should be your main focus. This will make a big difference in whether or not you are able to get any kind of loan and it is always good to have as high of a score as possible. If you are below 600, there are plenty of things that you can do to improve that score. You’ll need to start by paying off any delinquent accounts. Then, open up a secured credit card or get a small loan and make regular payments. In six months, your score can jump as much as 80 points or more.
2. Putting money aside.
If you’re already in a financial bind, putting money away can seem impossible, but it’s not. There are a few ways that you can start saving money right now, even if it is only a little bit. Place it in a high interest bearing savings account to get the most out of your money and add to it as much as possible. Some nest egg is better than no egg at all, and every little bit does help.
3. Consider debt leverage.
In this situation, when you need to start getting more money in to secure your future, debt leverage may be the best choice. If you are not familiar with how this process works, you basically take out a loan and invest that money. Whether it is into stocks or even real estate property, the idea is to have it start earning money for you. This is a good kind of debt and one that can mean a big difference when it comes to retirement. If you don’t have a savings account, you’ll need to have an alternative source of income coming in that will last through your older years.
4. Realize that it is never too late.
Many people make the mistake of thinking that there isn’t any point in turning things around. It doesn’t matter how old you are, or how bad your situation may be. There is a way out and you can turn your financial life around. Never give up, find new ways to make more money and hang in there. By sticking it out, you will be able to start securing your financial future, one dollar at a time. It’s not the quickest way, but it will work, provided that you dedicate yourself to wise spending and investing.
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August 20th, 2008 — Debt, Income Streams, Money, Personal Finance, bad debt, credit cards, credit score
No matter how wealthy or poor you are, there are financial traps that are waiting to disrupt your lives. Many people end up finding out too late that they are in the depths of one and it is nearly impossible to get out. However, there are specific steps that you can take to ensure that you don’t fall into one of these financial traps. We’ll cover the three most common traps and the steps you can take to avoid them.
1. Maxing out far too many credit cards.
When you’re first starting out, you get one card and soon the offers come in for more. Before you know it, you’ve got five credit cards and you’re dealing with a lot of temptation. One of the worst financial traps that you can fall into is accepting all of these cards and then maxing every single one out. This can have a terrible effect on your credit rating.
How to Avoid This: You really only need one or two credit cards at most, perhaps one department store card and one gas card. Anything over that is superfluous. When you open these cards, the key is not to look at the available balance on the card, but the available balance in your checkbook. Control your spending and pay them off each month.
2. Spending more than you earn.
Many of us don’t actually realize that we’re doing this, but it is one of the number one problems facing Americans today. Through credit card purchases, homes, cars and other material goods, we end up far into debt before we even realize that anything went wrong.
How to Avoid This: Use the old rule of thumb when calculating what you need to buy. For example, for a house, you should multiply your current monthly salary by three. That will be your price range. For everything else, set a budget and stick to it. It’s not always easy, but you’ll feel a lot better when you have money to spare at the end of every month.
3. Relying on one source of income.
Too many Americans are living paycheck to paycheck and this spells big economic trouble. Whether it’s due to overspending or just a salary that is too low, this is a bad situation for anyone to be in. If you lose your job, everything else goes down hill very quickly.
How to Avoid This: Find ways to either increase your monthly income, by getting a raise or a better paying job, or start creating more than one stream of income. This is ideal and will provide you with the most financial freedom. Whether it is through a side business, your own company or investment returns, a secondary or tertiary stream of income will ensure that you are free from the shackles of your regular paycheck.
All three of these financial traps have a lot in common. They are all related to the amount of money you have coming in, versus the amount going out. Remember, the key to financial freedom is more than one form of income and never spending more than you make.
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July 22nd, 2008 — Personal Finance, credit score
Never before have Americans been so interested in their credit scores, and as such, numerous sites have cropped up offering to sell them. It can get pretty expensive if you want to keep checking your score with these sites and many people discover hidden monthly fees that rack up quickly. While you can get a free copy of each one of your free reports each year, your score is rarely free.
Enter CreditKarma.com, which plans to change all of that. This is a completely free service that allows you to check the status of all three of your credit scores daily. The site is sponsored by a group of people that wanted to open up access to credit scores and make them available for everyone. If you’re trying to apply for a mortgage or improve your score, a site like this is incredibly beneficial.
You will need to supply some personal information when you set up your account, such as your address and your SSN. Although the site does need this to check your scores the first time, they do not keep it on file after that. The data is completely secure and we have not found that we received any extra spam after setting up an account with the service.
Once you have your account set up, your scores come in every day automatically. There may be some difference from your credit report from CreditKarma and your regular credit bureau score, but the company claims that this is natural and due to the fact that instead of updating periodically like the bureaus do, they update the score every day.
In addition to all of these features, the site offers special deals that are matched to your preferences. While they do not share your credit score with any of these third parties, they are matched up for you by CreditKarma. The deals range from free trials to credit card offers and you’ll have an opportunity to rank the quality of the deals as a member of the CreditKarma community.
We really liked this feature and thought it added something special to the site as a whole. For those that are trying to improve their credit, one of the best ways is to find a credit card willing to offer you credit and then keep making those monthly payments. By getting a matched up offer, you’ll have a better chance of knowing which card companies to approach and this will cut down on the amount of inquiries that you have on your report.
Overall, if you’re trying to find a cheap way to monitor your credit rating, this is the only site that offers this service for free. We highly recommend their services, but it can get a little addicting logging in each day to see how you’re doing. For those that are trying to improve their scores, this is a great incentive to see how well you’re doing and what your efforts are amounting to. Since it’s free, you really have nothing to lose by giving it a spin.
Here is some of the basic reporting you can expect…
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