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5 Money quirks that can make you financially ill

5 Money quirks that can make you financially ill

If we go through the definition, a quirk is nothing but unnatural gesture or behaving. You may believe it or not, our financial quirks practically harm our life. To be more precise, we are damaging our financial life with our own hands.

Many of us feel ourselves financially vulnerable, and often fear about money matters. We use various ways to make the things right. Sooner or later, these ways often become drastic financial habits.

Do you believe your financial habits need attention? Try to find answers of these below-given questions and evaluate yourself:

1. Are you getting affected by the money quirks negatively?
2. Does it take too much hard work to stop the quirk?
3. Do your loved ones also getting worried about you due to your money habits?
4. Is your money quirk hampering your work, relationship, or other things?

If all of the above-mentioned questions indicate towards the answer “YES”, then let’s put some light on those money quirks or bad financial habits:

1. Avoiding the issue

One of the most significant bad financial habits that can lead you into serious financial hardship is ignoring that issue at all cost. People somehow manage to block their minds and ignore account statements, balances, or credit score. As a result, they miss important financial changes, starting from monthly payment due date to false buying.

If you don’t track your money, it’ll lead you to many serious issues that can damage your finances, including your credit score. So, being ignorant about your financial health is not wise.

2. Stress spending

Another bad would be spending like freaks. More or less all of us have experienced a time when we spent like hell due to the heat of the moment. But, when we realized our mistake, it was too late. As a result, we are getting stressed and start spending more.

The concept is like – “Oh, I’ve already messed up, some more will have no effect on me.”

This is bad. We need to stop ourselves the moment we realize that we are spending limitless. Don’t go with the flow, or else you’ll kill your finances soon.

3. Spending due to anxiety

An anxiety disorder may cause abnormal spending behavior. Some people may feel temporary relaxation by personalized spending. It’ll make them feel like a person they actually like to be. As a result, people spend more to get out of their anxiety.

So, you must treat the core problem, your anxiety. If you don’t, you’ll ruin your credit over a series of unwanted things.

4. Ignoring your future

Being teenagers, we often ignore thinking about our future at the very beginning of our live. We earn, we spend like hell, save very little and forget everything.

But when we reach our 30s and plan for marriage and kids, we realize what a grave mistake we have done in our early life. We will require funds to meet emergency expenses but we don’t have that much saving.

Saving money is an integral part of our future planning along with marriage, kids and everything else that we could have in future. If we don’t save today, there will be nothing left to spend tomorrow.

5. Living under the shadow

No matter what we have done in the past, we must recover ourselves from their shadow. We can control our habits, and change the way we treat our finances all the time.

So, learn how to control your impulses, change your unnatural spending behavior and concentrate on saving.

Few important money-managing tips:

a. Try to place your bills in your wallets in as per the date. It’ll help you to find the bill that you need to pay immediately. You can also order them by denomination.

b. Always wrap the smallest bill around larger bills. This way you won’t forget any single bill, not even worth a dollar.

c. Don’t always try to buy goods in “twos.” If possible, pick only one while shopping. Some people have a weird tendency to like things in pairs. Somehow, they tend to gather things in even numbers rather than odd ones.

Make sure that you find the reason behind your insane money habits. Don’t ignore the matter and take it seriously.

Read more:

By carol on January 6th, 2017

How to manage your credit cards in 2017

Manage credit cards in 2017

It takes more than just on-time bill payment if you want to use your credit cards properly. You must also be on the safer side to protect yourself from fraud, use reward to get more benefits, and build a good credit score by using your card.

Here are few important tips that’ll help you to manage your credit cards in 2017:

1. You must pay off debts with high interest

You need to control your credit card balances in 2017.

The Federal Reserve has informed that short-term interest rates might take a leap by a 0.5% point or more in 2017. So, it’ll have an effect on your credit card bills.

According to a calculation made by the TransUnion –

If the Federal Reserve increases the rate by 0.25%, 82% of the variable-rate credit account holders may have to add $10 more in their monthly payments.

So, it’ll be wise to pay off those credit card debts that have high interest. You’ll never know how much the rate might increase when the time comes.

2. Use your cards carefully at gas pumps

You must be careful while using your cards at the gas stations. Most of them haven’t converted to chip-enabled terminals. All the gas stations must update their terminals by October 2017 or they’ll be liable to compensate any fraud committed at their terminals.

But for now, you need to follow these steps to protect yourself:

  • Use only those gas pumps that are near to the gas station store. Most of the times, the criminals use skimmers at those gas pumps that are away from the stores.
  • Try to pay your dues inside the store directly, rather than at the pump.
  • If you don’t have any choice but to use your card at the pump, make sure you use your credit cards only.

3. Use a reward credit card as per your need

Reward points are useful if you use them. If you don’t use your points much, having a reward card is probably not a good idea.

Credit account holders don’t use thousands of rewards points and reward miles each year.

According to a recent survey, 15% of the credit card holders don’t use travel rewards points to pay off a trip.

So, being a smart consumer, consider using a rewards credit card that’ll give you cash back benefits.

But remember, a rewards card usually comes with a relatively higher interest rate. So, it’s probably not suitable for you if you have too much debt.

4. Set up notifications in your phone

If you’ve issues to keep in mind about every possible transaction, or every credit card account, you can set up automatic fraud detection and notification system.

Just ask your card issuer to set up mobile notifications that can inform you about below-mentioned situations:

  • When you’re close enough to your credit limit.
  • If any unnatural financial transaction happening or from any unfamiliar locations.
  • Each time when your card is getting used.

5. Check your credit card statements and your credit report regularly

You must remain calm and patient to fight against fraud. Don’t forget to check your credit card statements and your credit score regularly. Your financial statement will show you every possible sign of fraud.

If you find any, ask your credit card company and credit reporting agencies to take required steps.

If you can see any unknown account on your credit report like a mortgage, credit card or other, call your creditors immediately.

You can fetch your credit report once a year from each 3 of the main credit bureaus. It is advisable that you collect your credit report once in every 4 months (one from each bureau). You can also grab it at AnnualCreditReport.com.

6. Try to keep your credit score intact

If your credit accounts always carry a big amount of balances regularly, that can negatively affect your credit score.

Your credit score will get the blow even if you are regular with your monthly bills.

Huge balances on your credit account increase your credit utilization ratio. The credit utilization is a prime factor of your FICO score (30%).

It’s better if you can keep your credit utilization lower than 30%.

7. Ask for a higher credit limit

If your credit score is getting lower, you can ask your credit card company to increase your credit limit. If your credit limit becomes higher, the difference between your credit card balance and available credit limit will also increase. Thus, your credit utilization ratio becomes low, which may increase your score.

A recent survey revealed that every 8 out of 10 credit card holders were approved for a credit limit raise. But the problem is only 28% of cardholders dare to ask for it.

8. You can freeze your credit account

Scammers and fraudsters may use your personal information to open new credit accounts. You can prevent this crime by checking your credit report regularly. But it’s only the way to grab those frauds that have been done already.

You can stop scammers to open new accounts by freezing the current credit account.

When you ask your credit card company to freeze your credit, you’ll order the major credit bureaus to prevent anyone to sneaking at your credit file.

9. Keep patience for the chip-based card

In 2017 fewer than half of all retail merchants have processed chip-based credit and debit cards. But still, some merchants are encouraging the magnetic stripe swipe or dip terminals. They still misguiding consumers by saying that the chip-enabled terminal is slow or difficult to use.

Do not entertain such misguidance. This is all in the name of fraud protection. Chip-based credit cards are much safer than other credit cards. It has a superior security system that’ll prevent the con artists to misuse your credit card details.

So, wait some time until you have your chip-based credit cards in your wallet.

Read more:

By carol on December 23rd, 2016

7 ways to improve credit score while having burden of debt on your back

how-can-you-grow-your-credit-score-while-being-in-debt
Your credit score can be hard to grow by 100 points while you’re in debt. A good or excellent credit score can be maintained through good financial habits.

You may apply for a low-interest loan to pay off your other high-interest loans or transfer credit card balances to a card having a zero-interest balance transfer fee. These options might provide you a safe passage to get away from debts; but, to take advantage of those options poor credit could be a hurdle for you.

If you’re searching for ways to get out of debt and also increase your credit score, consider the below-given options.

1. Check out credit card balances

The most important factor in your credit score is your credit utilization. Credit utilization denotes the percent of credit you are using from your available revolving credit limit. The lower that percentage, the better for your credit rating. The optimum percentage of a credit utilization ratio is 30 or lower.

So, if you want to boost your score, try to pay off your balances every month and use your available credit as low as possible.

You can also check if your credit card company will accept multiple payments in a month.

2. Avoid applying for several new credit cards

Don’t apply for several new credit cards. Try to avoid it as this approach could backfire and hurt your score very badly. If you really need to open a new credit account, maintain it wisely and make payments on time.

On the other hand, don’t close unused, old cards to raise your score. Keeping old credit card accounts are good due to their long credit history.

3. Set automated payment reminders

Making on-time payments is helpful for building a good payment history and to boost your score.

Few banks offer payment reminders through their online banking system, this facility provides you advance notifications through Emails or text messages about your coming payment dates. You could also enroll in an auto-debit payments facility provided by your credit card provider.

No matter what option you choose, the thing is you have to pay on time every month.

4. Pay off debt in collections

In some special cases, once you get a negative mark on your credit report, there’s no other way you can remove it easily.

A negative mark’s effect will be removed over time, but it may take 7 to 10 long years to be fully dissolved from your credit report.

However, the latest FICO Score and Vantage Score don’t retain some negative items like already paid collections accounts. So, if you can pay off balances on those accounts that are currently into collections, it would have a prompt positive effect on your score.

5. Use cash instead of credit cards

It is the best way to reduce your credit utilization ratio. You can start making any type of payments by cash instead of your credit cards. It’ll keep you from winding up in more debts in the coming days. Try to stick to your decision firmly until your debts get under control.

6. Try to maintain different credit types

Try to maintain different types of credit lines successfully. Regular payments on student loan, auto loan, mortgage payments and credit card bills will portray your credibility through a good credit score.

7. You need to budget your finances

Budgeting is especially good for repairing credit while having debt burden. Through budgeting, you can separate your funds for daily expenses, debt payments, and emergency expenses. By this way, managing your finances as well as credit repairing will be a lot easier.

The toughest part of improving your credit score while being in debts is keeping the patience. You will definitely achieve an appreciable effect, but it will take time to reflect in your score. There is no quick fix to grow your credit score sky high; it’ll take few years to grow.

Read more:
What are the grave mistakes you need to avoid while building credit?
What are those credit score killers that you must avoid?

By carol on December 7th, 2016

Do you want hassle-free travel? Follow these 8 credit safeguard tips

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Travelling is all about hanging loose, free from worries and spending some quality time with dear ones. To make it more hassle-free and smooth, people are taking help of technology for booking flights, hotels, etc.

GPS makes road journey more hassle free, new aged apps make booking more convenient, and most importantly credit and debit cards make traveling safer.

But, as every bright sight has a disadvantage, technology is not an exception. Sometimes, people forget this fact and commit blunders and scammers take full advantage of them.

Thus, many people experience a total mess in their travel and learn a lesson.

Read my article so that you can learn the lesson beforehand and enjoy a hassle free, flawless vacation alone or with family.

1. Carry fewer cards

Carrying a wallet full of credit cards is a big boo-boo. Carry only 2 or 3 that you need the most. Make sure you have a backup card in case the first one is lost, canceled or stolen.

But, keep the backup card in a safe place or in the hotel room to avoid hassles.

2. No debit card, please

You heard right! Using debit card is not safe during traveling; especially for purchasing items. Debit only at ATMs to get cash. It has been seen that the card details or the magnetic stripe information get stolen while swiping the debit card at the stores.

Also, make sure you change the PIN time to time for its safety.

You need to be careful while using ATMs as well.

3. Give prepaid card a chance

In my opinion, a prepaid card is perfect for traveling purpose. Because it provides zero liability in case it’s lost or stolen. However read the terms and conditions carefully.

4. Recheck the terms before moving out from home

Do you know that some card charge a fee for foreign transactions?

So, verify yours from the card issuer before moving out. If you’re out for a long trip abroad, it will help you save a significant amount of money.

Keep the card details in a safe place.

Keeping the record of the card along with the card is a blunder; so no!

Don’t keep the card and the details together in a same bag or wallet.

5. Say “no” to unsecured internet connection

Free internet connection at a public place is enticing but dangerous. Try to avoid logging in using a free Wi-Fi connection. In case you don’t have any option, connect to it very carefully.

Make sure the website you’re browsing is secured.

For example, go for HTTPS://www.website.com instead of HTTP://www.website.com.

Also, don’t log in to just check how much balance is left in the account. Use the internet only when you need it.

6. Check your credit card statement time to time

Once you know the internet you’re using is safe, check your credit card statement to make sure there is no suspicious activity.

If you get any mail regarding any suspicious activity on your card, then block your card and inform the card issuer as soon as possible.

So, checking your credit card statement is necessary.

7. Inform your card issuer about your traveling

Your card issuer knows where you live, but when they see charges coming from another place that isn’t your mentioned place, they might block or freeze the card suspecting identity theft.

So, to avoid this kind of confusion, provide details about your itinerary to your credit card company.

Inform them which place and which dates you’ll be on vacation.

Ask the issuer to provide you a contact number.

Thus, you’ll be able to communicate with them easily when required.

8. Report the loss or theft immediately

If you report the loss sooner, then your liability is limited to $50 only.

So, try to report the scam or theft to the issuer as soon as possible.

However, now most of the credit card companies offer “zero liability” card as well.

Some easy tips to remember while traveling

Below are some handy tips for you if you don’t have time to read the whole article:

  1. Don’t let your card go. Keep it in your eyesight. If you let a waiter swipe it, then make sure you get it back.
  2. Keep the card in a secure wallet or a money belt inside your jacket to avoid pick-pocketing.
  3. Keep some cash to avoid hassles after losing the card.
  4. Use only ATMs of your bank.
  5. Write down all important contact numbers in a paper in case you lose the wallet and the mobile together.
  6. Use an Email for travel purpose only. Make sure you don’t use your business or professional Email for travelling purpose.
  7. Educate your family members as well regarding the credit card safety tips while travelling, to enjoy a smooth vacation.

You may also like:

Mistakes you shouldn’t do with airline credit card
What are the benefits of a gas credit card?
10 Startling facts about credit card scams and how to avoid them

By carol on November 25th, 2016

How much credit card companies snooping around their consumers

what-credit-card-companies-know-about-consumers

In our financial world, credit card companies have an eagle eye view on any financial transaction we perform. We do most of our monetary deals (like shopping, buying movie tickets, paying utility bills, medical bills, etc.) through credit cards. So, if the credit card companies want to know about the interests of American consumers, there’s no doubt that they’ll need to check the credit card transaction histories.

That’s why many reputed credit card companies, such as American Express, Capital One, JP Chase Morgan, and Citibank are always looking for big consumer data sources.

So, let’s discuss what type of data they know about consumers:

1. Your signature

If you’ve any doubt against any transaction or charges, you can ask your card company to verify your signature and proceed. Credit card companies can send you the receipt copies.

2. Your location and preferences

Credit card companies may track the places where you often visit or your favorite hotels, where you’ve checked in. They are also aware of the top ATMs you use and how frequently you log into your mobile app. Credit card companies can follow your tracks and send coupons from local stores.

You must remember that with new tracking technology, scammers may also use this information for identity theft purpose.

3. Your marital issues

Most credit card companies check their customer information to find out traces of financial issues. Credit card companies may use that information and decide to lower your credit limit.

FTC (Federal Trade Commission) once filed a lawsuit against CompuCredit. The case was filed for lowering the credit limit for Visa Aspire consumers who used their cards for marital counseling or other related deals.

4. You’re a regular customer

Credit card companies love regular customers. They pay on time bills, use the credit card regularly, and avail offers provided by the credit card company. They tend to make a lot of transactions and build a good payment history on their cards.

5. Your designation or job profile

Your credit card usage may reveal your designation. If you are one of the top heads of a company and use your card for company’s business, the credit card company may list you up as their top priority customer and provide you premium advantages. Sometimes they may send you attractive business card offers for your whole staff.

6. Your abusive nature

If you’ve called the credit card company and for any reason used vile language or abusive statement, credit card companies may tag your account and make a note on your profile as a “verbally abusive” customer. From next time onward, the customer care executive will be on guard before receiving your call.

7. You’re a shopping freak

Credit card companies tie up with retail stores and create special offers for you based on your previous shopping.

If you were a regular shopper at Walmart but haven’t been back in a while, an online coupon or discount card may pop up from your Email or app.

8. Whether or not you’re risky

When you contact customer care service, the representatives can see your profile status. Some companies also show your profile with “green” (normal) or “red” (risky) indicator, depending on your card usage and payment history.

Based on that indication, the card company may revoke their services and cancel the card.

9. You’re about to cancel

Credit card companies will analyze your account information, and if you haven’t been using the cards for a long time, they might consider your account as dead or assume you’re going to close the account.

So, to retain you, they might provide you heavy discounts and offers.

Credit card companies gather information about us through considering our transaction patterns, usage quantity, usage type, usage frequency, card balance, payment history and other factors. So, as much we keep these factors straight, as consumers, our profiles will become valuable to them.

By carol on November 11th, 2016

Should you cancel a credit card that is paid off?

should-you-cancel-a-credit-card-that-is-paid-off

Having credit card is good. But suppose you have a credit card that you recently paid off, and it’s lying down inside of your wallet. It’s a very high-interest card with zero reward program, and you might be feeling relaxed after having no balance on it.

But now the question is, do you need to close totally?

There are some good and bad effects of keeping that ‘paid off credit card.’ So we must decide only after reviewing those pros and cons.

a. If you want to retain the credit card – You must consider:

1. Keeping that card may enhance the risk of minor identity theft. If you’re no longer actively using the card, the risk is quite low. But, if you use that card often, the risk might get severe later on.

Solution – You need to cut off the card asap. By doing this, you’ll be free from any risk of misplacing it. It will be better if you can burn it over an open fire.

2. If you choose to keep the card, there’s a chance that you’ll use it again. If somehow you use it too frequently, you may again fall into debt. It’s right that you’ve already overcome that situation once, but can you have the guts to do it again?

Solution – Remove that credit card details from online store websites. Some retailer websites may remember your card number and PIN, so make sure to clean up your account and remove cookies/auto-fill records from the web browser. As soon as possible, remove all the traces of that credit card from the web world.

b. If you want to close the credit card – You must consider

Closing a credit card account may affect your credit score negatively.

    • When you close this card, you’ll also cut off your total available credit. So, your credit utilization ratio will increase. It is because your credit usage remains intact, but your available credit limit reduces.

The negative impact will get away slowly, probably after a year. But, during that time, your low credit score can create problems for your other financial decisions, like:

  1. Your insurance rates can go higher
  2. You may have difficulties to get any new, good job
  3. Lenders can reject your mortgage application
  • A good credit score consists of credit mix (10%) and other related factors. So, if you have only this credit card, by closing it, you’ll hamper the balance of your credit mix.
  • If that credit card bears the longest credit history amongst all your credit lines, it would be wise to keep it live. Long credit history is another factor that affects your credit score, by approx. 15%.

Solution for the above situation – Before closing that card, you must verify:

  • Are you going to shift your job? If yes, don’t close that account right now.
  • Applying for a mortgage or a car loan in the near future? If yes, put a hold on closing that card.
  • If you’re going to close your one and only card, it’s better that you go for few more cards to maintain the credit mix.
  • You also need to reduce your credit usage, unless it’ll hurt your credit utilization ratio.

Keep the account going on until you fulfill all your financial plans. If you don’t have such plans right now, you can close that credit card account.

Read more:
Things you need to focus on while closing old credit accounts
What are those credit score killers that you must avoid?

By carol on October 24th, 2016

Learn credit lessons that your parents forgot to teach you

learn-credit-lessons-that-your-parents-forget-to-teach-you

Most of us learned our money habits from our parents or grandparents. Many of us became lucky and learned different credit-lessons from our parents that helped us to follow the path of financial success, but all of us aren’t so fortunate.

Along with what you have learned from them directly, you might have to adapt few other credit facts to make a strong bond with your money.

You might not agree, but our parents might haven’t taught us all about credit. There are few lessons we have to learn on our own.

Brush your knowledge and check out whether or not you know these lessons:

1. Credit reports aren’t always correct

The information on our credit report is provided by the credit bureaus. So, we usually assume that the information will always be complete and accurate. But it’s not always true.

According to FTC studies, nearly 25% of consumers find errors on their credit reports.

So, you must check your credit reports regularly. As per law, you can fetch your free credit reports once a year.

While going through your reports, you may find any credit entry that is reported twice in your report. If this happens, it will surely increase your debt-to-income ratio (DTI) and your creditworthiness will be hampered.

2. It’s great to have good credit

Having a good credit means you’ll be entitled to get the best offer when you’re going to apply for financing. Having a bad credit score is not only frustrating but also can be very expensive.

If you’re going to apply for a loan with a poor credit score, most of the lenders will offer you loans at comparatively high-interest rates. You may need to deposit a good amount at the time of opening new utility accounts. Even insurance companies also charge you with high insurance premiums.

It’s for sure that as a consumer, you can save a lump sum amount over the course of a lifetime if you have good credit.

3. Credit cards are good

If something bad happens with our finances, it’s very common that we put all the blame to the credit card companies. However, we must know that most of the time it’s our bad financial habits that make us the sufferer. Good financial habits come with positive feelings but bad financial habits always make our relationship bitter with our creditors.

Credit cards are most useful for developing a good credit score or for building a good credit history.

As long as you responsibly use your credit cards, your creditors will remain happy and your credit score will grow.

4. Paying interest can be painful

It’s normal that you need to pay off your monthly credit card bills. But things becomes worse when you also need to pay interest on your card.

In today’s world, most of the credit card companies charge variable interest on the credit card balances. If you decide to pay the minimum payment on your cards and carry your high balances forward, you’ll be in a deep trouble. It’s because the interest will be charged on the remaining balance and at the end, you might be paying more than what you actually owed to the creditors.

5. It is difficult to rise but easy to fall

So many times our parents have told us about paying our dues on time. They advised us to keep the debts low so that we could maintain good credit. But what they probably missed out that if we somehow forget a payment, it will become difficult for us.

Being delinquent will lower your credit score more than what you think. A missed payment can drop your score by as much as 100 points. To earn that 100 points back, you need to work very hard.

Read more:

The 5 biggest reasons to enhance your credit score

By carol on October 14th, 2016

What are those credit score killers that you must avoid?

Credit-score-killers-you-must-be-aware-of

Your credit score can range from 350 (poor) to 850 (excellent). It is not just a number showing on your credit report. The higher it becomes, it’ll be easier for you to become eligible for new credit lines. Not only that you’ll get the best rate and terms, but you’ll also become financially safe and sound. But beware of the negative items that can be listed on your credit report. They can damage your credit score more than anything else.

Here are some aspects that you may avoid to save your credit score:

1. Carrying huge account balances – Having a huge balance on your credit card can make your credit utilization ratio higher. The ratio is calculated by using the last month’s balance-in-hand, that is showing on your bill. Your score can be damaged even if you pay off the entire balance each month.

2. Closing your cards – Closing your credit cards can lower the available credit amount, which can hit your debt utilization ratio.

3. Paying your bills late – Your payment history is always in no. 1 priority that lenders consider. It also makes up nearly 35% of your FICO score. Paying your bills late on student loans, credit cards, home loan payments, utility bills and even medical bills may lower your credit score if it gets reported to the credit bureaus.

4. Getting defaulted – Declaring bankruptcy or going for foreclosure may easily cut off 100 points or even more from your credit score.

5. Having too many credit lines – If you’re continuously adding more credit lines, credit companies may consider it as a potential risk and you may also become overextended at some point.

6. Not having a credit card – Without having any credit history, any lender may typically consider you as unworthy. If you don’t have enough activity on your credit file, it will not generate any score either. So, without any credit score, the lenders won’t treat you as a worthy applicant for a loan.

7. Co-signing – A co-signer bears similar responsibility for the amount owed to the creditor, meaning any late payments or defaults will be listed on your credit report if you cosign a loan.

8. Collection activity – When the creditor gets tired of getting non-cooperative behavior from you, he might appoint a third-party collection agency. Either the real creditor or the collection agency may report your account (in collections) to a credit bureau. As a result, your account will be marked with a “collection” status. This can lower your credit score by a substantial amount.

9. Public recordings – Tax liens, judgments, and similar activities are considered like killers for your credit rating. Judgments remain for 10 years; in some states, it may remain listed for 20 years, even if you pay off the debt. Bankruptcies can remain in your credit report for long 10 years and unpaid tax liens never go away.

10. Debt settlements – If you pay off only a part of your unsecured debt (for example, credit card debt) through a settlement, it can be harmful to your credit score.

11. Foreclosures – If you don’t pay off your mortgage, the lender will eventually go for foreclosure and occupy your home. Another 7-year negative notification will lower your score. This also happens when you convey your home to the lender in a deed-in-lieu of foreclosure to avoid proceedings.

12. Repossession – When you don’t pay off your car loans, a “bounty hunter” will be coming after your vehicle without any notice. It’s a legal activity. The person can repossess your property and your credit score will definitely fall down.

Remember, your credit score is the key to your future financial success. Never ignore any single reason that can hurt your credit and make you a dead meat.

By carol on September 26th, 2016

What are the ways to build a good credit history being a new grad

How-new-grads-can-build-credit

Establishing a decent credit history is very important for us. Qualifying for auto loans, renting apartments, mortgage loans, and even employment depends on your credit history. So it’ll be a tough call for you in future if you complete the graduation without a decent credit history.

Ironically, the students have much tougher time in building their credit than their classmates who already carrying credit cards. Building credit after graduation become much tougher for newly grad students as credit card companies assume that your parents will no longer pay off your bills. Fortunately, the newly grads can consider few ways that can be helpful to build up their credit.

Here are those important ways to consider:

1. You must understand how credit works

You can open a couple of credit cards and opt out a small loan to improve your credit score, but you must make each payment on time.

It’s very surprising that how credit works for us. For example, having no credit cards will make your profile a risk to the credit scoring system. It is because without having any credit activity the scoring system can’t assess your creditworthiness. Without assessing your creditworthiness, the lenders will not approve your application.

You must remember, that a lender will also consider other aspects besides your credit score while determining your creditworthiness. These may include collections, bankruptcies, charge-offs, and even judgments against you. Even if your score is relatively less, if you have more positive items on your credit report, you may be considered ‘credit-worthy’ to your future creditors. So, try to add positive items on your credit report.
Know more: The 5 biggest financial factors that affect your credit

2. You must pay before due date each month

Making every single payment on time impacts on your credit score more than anything. Your payment history considers 35% of your credit score, more than any other factor.

To make sure you don’t forget

a. Set up automatic bill payments directly from your bank account. Put all of your major payments like power bills, mortgage or rent payments, cable and telephone bills, auto loan payments, etc. on auto-pay.

b. Communicate with your each creditor and set up auto-payments every month if possible. You can do this by logging into the company’s website, or you can call them directly.

Your credit card balance can vary each month due to the credit card bills. If your bank account balance is getting lower due to unpredictable payments each month, you can set up reminders on selective dates when you need to pay off credit card bills. This way you can backup your bank balance by filling it up with due dates.

3. Use credit cards wisely

Credit cards are seductive but also necessary.

You must take enough time to set up a balanced spending habit while using a credit card.

A few tips:

a. Don’t use the card just because you got it for free. You must limit the number of cards you have. Don’t opt for a card without knowing its perks and expenses.

b. Stay in the driver’s seat. Always research and shop before opting a credit card or loan. Don’t sign the agreement without comparing features, interest rates, and annual fees.

c. Good habits always give you freedom. If you pay off credit card bills fully every month, you can concentrate on other beneficial features like rewards and fees instead of focusing on rates.

4. Go for credit mix

You must use a mix of credit types for a healthy credit score.

There are two kinds of credit:

a. Open-end or revolving lines of credit: For example, credit cards, (on which you can make minimum monthly payment or pay full outstanding balance ), borrowing against a credit limit.

b. Closed-end or installment loans: Auto loans and mortgages are considered as installment loans. The main features of this kind of loans are fixed monthly payment made within a fixed date.

Your credit mix shows the lender how efficiently you’re handling different type of credit lines. Although it accounts for just 10% of your credit score, having a good credit mix along with a good payment history will build your FICO Score.

5. Understand how much credit you should use

The credit mix helps your score to grow, but the account balance amount also matters. It accounts for 30% of your credit score. To be on a safer side, opt for less than 30% of the amount you are allowed to borrow.

Use less than 30% of your credit limit on each credit card.

For example:

If your credit limit is $10000, borrow less than $3000.

Why so? It is because using only a small portion of your credit limit is a decent way to pump up your score.

6. Whittle your student loans

Don’t let your student loan stop you from building a good credit score. Your score will rise as your loan balances diminish. So, start paying off the student loan to reduce the principal amount. It’ll show that you’re using less of your available credit.

7. Begin with a small credit line

To establish your credit, here’s what you can do initially:

a. Go for a credit union card – Opt for a card from a credit union. It might get easier to have your first card from there rather than from a bank.

b. Use a secured card – Secured cards are initially best for learning how to use a credit card. You need to put a deposit, and that’ll be your credit limit. Though it’s your money, but you mustn’t use more than 30% of your limit. Your aim is to build credit, so use it wisely.

c. Check whether your payment behavior is reported – Some secured cards report your payment record to the big three credit reporting agencies (Experian, Equifax and TransUnion), but others do not. Opt for those secured cards that report it at least to these agencies.

d. Shop carefully – Secured cards can be costly, so don’t forget to research, compare and shop carefully before signing the deal.

e. Look for a card with a grace period – The grace period is a time frame during which you can pay off your dues without paying interest. So, don’t overlook the grace period while choosing a card.

Read more:

The 5 biggest reasons to enhance your credit score
What are the grave mistakes you need to avoid while building credit?

By carol on September 15th, 2016

What should you choose – A business credit card or a business loan?

business-credit-card-or-a-business-loan

The first universal credit card was introduced in 1950. Since then, Americans prefer the habit of buying items on credit and paying off afterward. Later the credit card companies added more benefits with the cards to attract new potential consumers.

In today’s world, credit cards are not only used for personal use, but people also use them for business purposes as well. It’s quite common that people use credit cards to buy business essentials such as furniture, inventory, and many other things while starting their new business.

Today we’ll discuss the pros and cons of opting a business credit card or taking out a business loan. Both the options are good, but it’s crucial for you to know which option is the best according to your situation.

A business credit card

First, let’s review the pros and cons of a business credit card:

Pros of a business credit card:
1. It is easier to take out a business credit card than a business loan.
2. It doesn’t need any collateral.
3. A business credit card is considered as a good line of credit and helpful for building high credit score if you can use it wisely.
4. Several reward programs along with a business card can be very beneficial.

A business credit card can help you to manage your business oriented costs temporarily if you experience a major downfall. Keeping such a card can be beneficial for your company as it’ll help you to build good credit, too. It’s also useful for foreign business transactions, as well.

Cons of a business credit card:
1. Interest rate on a business credit card can fluctuate at any point of time.
2. There are chances of credit card fraud or any other security issue at any point of time.
3. You may have to bear few fixed charges associated with keeping a business credit card.

As stated above, the interest rates on your business credit cards may increase over the time. So, if you don’t use these cards too often, it may become costly for you to hold such cards. Like other credit cards, the terms & conditions also may change on business cards.

In addition, there are some security issues with a business credit card. A business has numerous people associated with it. These may include (without making any exception) the manager, a salesperson, the customers, vendors, employees or even a maintenance person. Amongst these people, anybody can misuse the card without anyone’s concern. However, in the end, the company will be liable for the monetary loss incurred due to that credit card fraud or identity theft. So, it’s a bit risky to keep a business credit card within every person’s reach.

A business loan

Now let’s review the pros and cons of a business loan:

Pros of a business loan:
1. You can arrange a large sum of money for your business development and to meet other related costs.
2. Interest rates on a business loan may be tax deductible.
3. Interest rates on business loans are quite low and fixed.

Cons of a business loan:
1. A business loan requires collateral.
2. A business loan may take a longer time to get the approval than other loans.
3. Poor or bad credit may create issues to get the approval.

As stated above, a business loan comes with a low and fixed interest rate.

If you have a good credit score, you’ll easily get approval for a business loan.

Business loan interest rates also can be tax deductible.

The downside of a business loan is that it is usually provided for businesses that are already thriving. So, companies that are already making a profit and wish to grow further are more likely to get the approval easily. Furthermore, most of the banks may take months to review your application before making the final decision.

Deciding the perfect credit line for your business is a quite tough job. You need to consider the lifespan of your business, the purpose of getting the funds, and the type of financing you would prefer. However, if you’re already an owner of an established business and need capital, a business loan can be easily available to you. On the other hand, getting a business credit card is easy if you have good credit. So, your first step should be analyzing the pros and cons of these options and then you should decide.

By carol on August 30th, 2016