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What are the grave mistakes you need to avoid while building credit?

mistakes-to-avoid-while-building-credit

As a human being, we all make mistakes. But, some mistakes we can easily rectify. For example, forgetting about an essential commodity while shopping may take your extra time and can cost you a little more. But, if you somehow wrongly handle your credit, it may cost you thousands of dollars. If your credit score is bad, not only you’ll suffer a big monetary loss, but also you can’t be approved for a mortgage or other line of credit with best rates.

We all make mistakes, but if we want to improve our credibility, we must avoid some major credit mistakes for building a better financial future.

1. Missing your debt payment

Do you want to damage your credit score? You can do it easily by making a late payment or simply by not making payment at all. Since all of your future lenders can see your payment history traces through your credit score, you must be regular on your monthly debt payments and it must be done within due date. Making on-time payment is considered as an important factor to raise your credit score. Just one missed payment can ruin all the hard work and eventually drop your score to some extent.

So, what can be a possible solution? Things you can do is to initiate an automated payment structure if possible or transfer an approx bill amount per month (gross) in your checking account. You can also set up calendar reminders for your due dates and pay your outstanding bills on time each month. As a result, you’ll be able to know about your important payments dates and also that you have enough money to pay everything off.

2. Using maximum credit limit

Using your available credit to its maximum is not only harmful to your bank account, but the lenders also become curious about your spending behavior. It is because they believe consumers who spend their available credit to the maximum limit are much more likely to default on their payments.

You need to keep an eye on your credit utilization ratio (divide your credit balances by your credit limits) and take required step to control it. It is good to maintain your credit utilization ratio less than 3:10 if possible. You can make multiple payments in a month, or ask your credit card company to increase your credit limit, or just increase your cash usage – these methods can help you a lot to lower your credit utilization ratio.

3. Opting for too much new credit lines

Applying for too many credit lines have a bad effect on your credit score in different ways. Every time you send an application for a new credit line, the lender will pull your credit report, and it’ll be included in your report as one hard inquiry. One or two hard inquiries may have very little effect, but multiple inquiries can surely raise a red flag for your future creditors and lenders. On the other hand, the more you open new credit lines, the more you’ll access to your available credit. It will lure you to spend more money than saving.

So, you must control yourself and limit the applications. Hard inquiries will fall off from your account within 2 years, so you may wait for that time. However, you can also ask your creditors to increase your credit limit. If you’re satisfied with your current credit limit, don’t take out any new credit card.

4. Not using your cards at all

Creditors want responsible consumers who can use credit well and pay responsibly. However, it’s not possible for you to prove yourself responsible without using credit cards or any other line of credit. In addition, if you don’t use your credit cards, the creditors may close your account, and that’ll surely damage your score.

The best way you can use your credit cards is by making small purchases. Small credit card bills are easy to pay off, and it’ll also help you to retain your credit account. Also, it’ll help you to build up a good payment history for your future creditors.

5. Chasing rates

Transferring balances to a low-interest balance transfer card is a good option for borrowers to save money and pay down debt. However, as we discussed earlier, applying for new credit cards can include hard inquiries on your credit report. Various fees and charges may also add to increase your debt burden. Instead, do some market survey and stop too much balance transfers.

It’ll take several years to recover from your credit mistakes and rebuild a good credit report. However, by choosing the right path and avoiding above mentioned mistakes, you may keep your credit in a perfect and healthy condition.

By carol on August 18th, 2016

Things you need to focus on while closing old credit accounts

do's-and-don't's-of-closing-old-credit-accounts

It is always wise to maintain more than one credit card account. However, if you already have too many cards in your wallet, you might want to cut down any existing credit card that you’ve stopped using recently.

There are few reasons behind this decision that you must be aware of:

  1. It’ll help you to keep track on all the active credit cards. It’ll also clean your credit report.
  2. You’ll be qualified to get a loan as your revolving debt amount will be lowered.
  3. It’ll help you to avoid unnecessary payments. Without using the card at all, it’s a waste of money to pay yearly charges and fees.
  4. It’ll provide protection regarding any identity theft. Con artists may target your unused cards and you’ll end up paying a lot towards things you didn’t buy or use.

To help you understand what you should and should not do when closing old credit card accounts, here are a few tips to keep in mind.

Do’s…

1. Close unused high interest cards – If your card has a high interest rate or excessive fees, and your credit card company isn’t willing to reduce the rates or waive fees, you may surely close the account, especially if you aren’t using the card.

2. Pay balances on your active accounts – You can request your creditor to close new charges in your existing accounts. In the meantime, you can pay down the balance at every billing cycle. It is a good option for heavy credit card users to stop further spending as well as lowering their account balances.

3. Try to retain some accounts – You can do this to keep your credit score high. The more you actively and responsibly use your credit, the more chances you’ll have to get approved by your future creditors.

4. Don’t forget to check your credit reports – Check for updates and errors after you close accounts. Usually, creditors and credit bureaus will take 30 to 60 days for updating your records. The details may stay on your credit report for 7 or more years.

5. Dispose of canceled credit cards – It is crucial to dispose off the closed credit cards. You must cut the cards in half so that no one can misuse your credit card and reopen the closed account.

6. Pick one card for general use and make regular payments – You can select one low-interest card and use it for day to day spending. You can reserve your other cards for any emergency or specific cause. By paying off that single card on time every month, you won’t have to think of carrying a huge balance. On the other hand, urgent expenses can be handled with your higher-interest cards. However, don’t forget to pay them off on time.

Don’t’s…

1. Closing the oldest credit account – Your credit history is one of the 5 prime factors of your credit score. So, if you close your old credit card accounts, your credit history will become shorter and it may damage your credit score. Therefore, think before closing your credit accounts.

Try to have more than 7.5 years of open accounts to have a good score.

2. Just throwing off unused old cards – Don’t just throw away your unused cards; that’ll be foolish! The right way to close one of your unused credit accounts is to send a certified letter to the creditor. Normally, within 10 days you’ll receive the closing confirmation letter in your hand.

3. Canceling several credit accounts at a time – If you want to cancel more than one credit account, then try to keep a time gap between closing two accounts. If you don’t, it may increase negative suspicion from existing creditors.

4. Over-consolidate balances onto one card – You must keep your credit balances under 30% of your available credit limits if possible. If anyhow you cross the limit, it may hamper your credit score.

By carol on August 2nd, 2016

Are platinum and gold credit cards worth it?

platinum-and-gold-credit-cards

Having a couple of gold or platinum credit cards is a great thing, similar to cherish a long drive in an expensive sports car or buying a luxurious mansion. You can always use the cards for a simple or major purpose. You may even get several outstanding benefits along with the cards.

Many gold or platinum cards comes with these important benefits:

1. Domestic and International travel insurance

Most gold & platinum cards offer this standard facility. Depending on the level of bank service and card’s annual fee, the insurance cover may vary. It’s a very convenient way to get travel insurance automatically rather than getting it by yourself. Make sure you carefully read the fine prints/terms of your policy as it may exclude your family from the coverage. It may also include some special clause regarding accident cases.

2. Travel inconvenience coverage

Several gold or platinum cards have “Transport Accident Cover” and medical insurance. These benefits are very important add-ons that increase the coverage of your insurance.

3. Rewards programs

Most gold and platinum card companies offer separate versions of their same card. For example, the ‘American Express‘ offers the Blue sky, Gold, and Platinum credit cards. Each consecutive card has a different level of annual fee, but a higher reward point conversion.

4. High credit limit

If you ever require an urgent credit, whether it’s for short-term investment or an emergency purpose, be prepared to get up to $100,000 of credit at your fingertips. Use your gold or platinum credit cards to get that urgent currency and use it accordingly.

5. Hotel and flight tickets

Some credit card providers offer complimentary free domestic flight tickets or free staying in a hotel (night) each year. Other providers may prioritize your tickets at the time of booking, pick up the best possible hotel suites and transportation facility.

6. International buy and return protection

If you buy anything from outside your country, some credit cards may offer up to 90 days and more buy and/or refund security.

7. 24/7 support service

At any time of the day, any place, you can connect with your card customer care executive and request for desired services. You can get any information regarding your card and change the billing cycle. You can also visit your card provider’s website and get full support online.

8. Entertainment offers

You can get great discounts on booking tickets for movies, plays or any sports event. Card providers will often offer advance tickets or free tickets for a wide range of entertainment services and shows.

How to decide whether a Gold and Platinum credit card is suitable

Gold and platinum cards have numerous benefits – however, you’ll only achieve those true benefits if you use them wisely and as much as possible.

To get the full dollar value on your gold and platinum credit cards, you need to pay off your account balance fully to avoid the high-interest charges. You can also get the complete advantage in sectors like – travel (domestic and international), luxury purchases, and entertainment purpose. Go for a card that gives you enough advantages to make the relatively high annual fee worthy.

By carol on July 21st, 2016

The 5 biggest reasons to enhance your credit score

reasons-to-enhance-credit-score

Your credit report works as your financial report card and shows your financial responsibilities. It is a symbol of your creditability to pay off loans and other debts you have acquired. You may not like your current credit score, but let me remind you…it’s surely showing that you may need to improve it and how you’re gonna do it. It is a good idea to work hard to raise it properly.

Now, here are few top reasons for improving your credit score, let’s know why it’s so important:

1. Buying a new home or taking an apartment on rent

One of the most valid reasons for which you must build your credit score is to keep yourself in a positive position when hunting for a home. If you have a deep interest in real estate market and you want to invest in them, you will want to make sure that you can be approved for a mortgage with the lowest possible rate. The lower your score, the higher will be your interest rate.

If you believe buying a home is not an option for you, still you’ll need a good credit score even for renting an apartment. Landlords always want a good dependable tenant who has a good credit history in the past, and his credit score proves that.

2. Relationships

According to U.S. News & World Report, your bad credit score can rip your personal life apart when it comes to financial issues. Bad credit issues may always become a major problem when buying a property, taking out loans, or even at the time of divorce. Your low credit score may become the reason for your spouse’s disqualification since lenders surely consider both of your credit worthiness if you are co-signing a big loan.

3. Forming own business

Once you have decided to start your business, you may want to grow your credit score if you became aware of that your score isn’t optimal. To maintain your small-business financing you may need to show off that you can manage the finances of a new business pretty good. A good credit score can impress your lenders that you are very much confident and worthy to take any financial decisions and get desired results.

4. Getting a car loan

If you want to invest in a car, you’ll surely need a perfect credit score to help you out. When buying a vehicle, it is a common option for a buyer to opt for a loan to fund his finances. The lender doesn’t accept such borrowers who are not enough credit-worthy.

In addition, you’ll need to supply a more substantial down payment than if your credit score was good or excellent.

After buying the can, your auto insurance may also get higher. Having a good credit score will give you enough support to save as much as possible when financing your car and all the additional expenses came along with it.

5. Difficult to improve and remove the bad credit score

If you fell in a problem where your poor credit score is the main issue, it is very difficult to improve your score faster at that time. Typically credit score is getting down easily but hard to bring them up, so staying on top of them and maintaining responsible spending habits is critical.

Your credit score will be reflected in your credit history till the date you expire. So, make sure it should be error free and keep it high most of the time.

MyFico suggests you must check your credit score regularly through credit report and evaluate it to find any errors. Some negative items may remain on your credit report that’ll lower your score down. But they are actually mistakes done by you. If you take an initiative to remove those errors and negative, it’ll improve your credit score and help you to get success in your future financial ventures.

If you really desire to lower the debt amount you owe, you may set up payment reminders or automatic bill payments. By eliminating debt and staying current on your payments, you can improve your current credit score.

Your financial history is reflected in your credit score, and it is your duty to make it accurate and free from negative items.

By carol on July 5th, 2016

The 5 biggest financial factors that affect your credit

factors-that-affect-credit-score

A credit score is essential whenever you go for a big funding for a house, car, personal or any kind of financial emergency. Lenders will always consider your credit score to determine the risk of lending money to you for any purpose. Credit card companies, car dealers, and mortgage lenders are the three main types of creditors who will check your credit score before considering how much you are worthy to get the funding from them and at what rate of interest. Insurance providers, your landlords, and employers might also check your credit score to evaluate your financial status. So, let us know the biggest financial factors that’ll sure affect your credit score.

1. Your payment history – affect 35%

The most important thing about your credit score that lenders and other creditors check is whether you are capable of repaying the fund that is lent to you or not. This aspect of your credit score verifies the following factors:

  • Are you paying your bills on time every time or not? You need to pay for each and every account on your credit report. Paying your bills late will affect negatively on your credit score.
  • If you used to pay late every time, how much late were you? Is it 30 days, 60 days, 90 days, or more? The more you become late, the lower will be your credit score.
  • Has any of your credit accounts gone to collections? This is a significant alert for the potential creditors that you may not be able to pay the money at all.
  • Did you go for debt settlements, any charge-offs, foreclosures, bankruptcies, lawsuits, wage attachments, liens or judgments against you? These items can really be very painful for your credit report and from a lender’s perspective, you’ll not be considered as a trustworthy borrower.

2. Amounts you owe – affect 30%

Now we’ll check the second-most important thing of your credit score. Have you regularly check how much you owe to the creditors? Let us clarify a bit:

Did you calculate how much you’ve utilized of your total available credit? It is better if it gets low. But you need to have some credit balance in your account also, owing something is good for showing a credit account, it is better than owing nothing at all. Lenders like to see that you are using a credit account and borrowed money, and you have that responsibility to pay it back.

How many accounts you are maintaining and how much you owe to the lenders? Your credit accounts may be a mortgage, auto loans, credit cards and may be installment accounts. Having a mix of several types of credit accounts is good for building a good credit score. You need to manage them perfectly.

3. Length of your credit history – affects 15%

Another deciding factor of your credit score is how long since you are using credit. Do you know how old is your oldest credit account? And do you know the average age of your total credit accounts?

If you are maintaining a long and dispute free credit history, it is very helpful for your credit score. But a short history may also be working too if you continue your payments on time every month.

4. Your new credit lines – affects 10%

Your total new accounts can be considered by the FICO score. It’ll consider the number of new accounts you have applied for, and last time when you have opened an account.

According to the credit score assumptions, if you have recently opened several new accounts, your credit score might be in bigger problems. Normally, people used to open new credit accounts if they face cash flow issues or want to take lots of new line of credit.

If you have frequently opened many new credit accounts, this may give a signal to the lender that you are thinking off gathering credit in the coming days. That means you may not be able to carry out the entire monthly mortgage installments, or the loan payments you applied to the lender. So, the lender would use your credit score to set a parameter of a credit risk they might want to take on you.

5. Types of credit you use – affects 10%

As per the FICO formula, the types of credit you use can determine your credit score. You may have a mix of different types of credit, such as credit cards, store accounts, installment loans, and mortgages. It also looks at how many total accounts you have. It is a minor aspect of your score, so you don’t have to worry about it if you don’t have accounts in each of these categories.

Your credit score is the most important factor for being approved for several loans and new lines of credit. It also helpful to have the best interest rates available in the market. But for that reason, you don’t need to be obsessive to maintain your credit guidelines. Practically, managing the credit with due responsibility and wisdom, your score will rise.

By carol on June 23rd, 2016

Mistakes you shouldn’t do with airline credit card

avoid-mistakes-with-airline-credit-card

Today, most of the airline authority provided services, like access to the lounge, meals given in mid-air and, or may be an extra personal space require the passenger to pay a fee or to go for higher airfare. Fortunately, now the airlines are happily offering these benefits back to their most frequent passenger as well as consumers having their co-branded credit cards.

So, if you are getting bored of waiting for a long cue, paying up fees and/or being crammed into the back of a plane, avoid these six mistakes to get the cream out of an airline credit card:

1. Picking up wrong cards

Many airlines will offer the passengers multiple airlines credit cards. As a passenger or consumer, you might know that American Express provides three separate versions of credit cards that are called “Delta SkyMiles cards”. Apart from that they also offer three different business class credit card versions. The basic credit card comes with a $95 fee per annum, but it also offers comparatively low reward points and additional benefits rather than the high-cost credit cards. The key to choosing the right card is to weigh all of the benefits you are able to use against the cost of the annual fee.

2. Ignoring the huge interest charges

Like any other reward credit cards, airline cards will also bear high-interest charges than no-frills cards. It’s also unfortunate that if you earn any flyer miles from your airline card, that reward will not be as worthy as your interest charges on that card. So, by availing any those airline cards, you must pay a huge amount of money as interest if you carry a certain balance. That’s why it’s always the best idea to pay off your balance in full at the end of each month.

3. Not opting for the benefits

Most of the airline credit cards will provide a huge number of benefits to their users (travelers and passengers). But for getting these benefits, you must know how to use them. As an example, the “United MileagePlus Explorer Card” gives a free checked bag benefit to their card users along with one other person, if the user uses only that card to buy his tickets. Also, the “Delta SkyMiles Reserve card” from American Express provide complimentary access to the SkyClub lounges in any airport, but this facility is only reserved for the primary cardholders. The cardholder can include two more, by paying for $29 each additional member. The “American Airlines AAdvantage Executive World Elite MasterCard” provides free lounge entry to their primary and secondary card users along with two more members as well.

4. Not earning elite status

It is obvious that airline credit cards offer good benefits directly to their cardholders. But many of us don’t know that those credit card companies also provide indirect perks when you get elite status. As for example, the “Southwest Airlines Rapid Rewards Premier cards” from Chase deliver their card users 1,500 Tier-qualifying points for each $10,000 and above purchases, capped at 15,000 Tier-qualifying points per annum. These reward points can enable the card users to get the A-List or A-List Preferred status. By getting this elite status, a consumer can get V.I.P check-in, boarding, extra bonus points, and free wifi service in flight.

5. Not utilizing reward miles properly

Earning your reward miles is very hard, but spending those miles properly is often harder than you can imagine. Most of the airlines currently charge double miles for most flights, and travelers or passengers need to put extra effort for finding preferable seats at the lowest mileage levels, they are called “saver awards”. The best option to find the lowest priced awards for international flights is to check out for partner awards. Don’t give up on redeeming your reward miles, for getting an award flight at the lowest levels.

6. Not looking for annual fees

It is wise to apply for an airline credit card that’ll save on your baggage fees, in a single flight. But if you haven’t used that benefit recently, it is not worthy to pay the annual fee any longer. If you are getting a bill for an annual fee for an airline credit card that you aren’t utilizing as much, contact the card company. IN some special cases, you can get a similar credit card with a less expensive annual fee. The card company may offer you to waive off the annual fee or provide you bonus reward miles that can compensate the fee totally.

By carol on May 31st, 2016

Strategies to rebuild credit while getting out of debt

rebuild-credit-score

Sometimes the necessity of credit can break your best plans regarding finances. It can be totally annoying to stop making your prime purchases like – a new home, your own vintage car, etc just because of bad credit prevents the path of loans.

In these situations, you might be thinking there is any possible way to quickly raise your credit score while getting out of pre-existent debt. Unfortunately, there are no shortcut ways to repair credit score. If you have huge debt problems, paying the only minimum will make your credit suffer. So, you need to make some strategies which may streamline your efforts, raise your credits along with getting out of the debt.

Easy strategies for saving money and reducing debts

1. Increase your income

Increasing your working hours, take a part–time or a second job to earn more, rent out your house or room or garage. you may also ask your grown-up teenagers to find part–time jobs to start a new source of income, if possible.

2. Decrease your expenses

You need to spend less on luxuries like entertainment or recreation. Skip frequently eating out outdoors at the time of lunch or dinner. Try to stretch your money while buying at the grocery store. Don’t forget to file for taxes to receive assistance with premiums or government funds. Normally these benefits are based upon income levels.

3. Sell your assets

The financial crisis doesn’t come by knocking at your door. Do you have any extra vehicle that you often use for recreation? It may be a second-hand car, your bike or other possessions that you can sell out and make money for debt repayment. To overcome a financial crisis there’s nothing wrong to use your stuff to get over from it.

4. Consolidate your loans

If possible try refinancing your mortgage. Refinancing will definitely reduce the monthly mortgage installments. A consolidation loan might become handy to lower total monthly debt payments if you don’t gather any more debts until the consolidation loan is paid back in full.

5. Ask help from the creditors

You can make calls to your creditors and negotiate with them. If anyhow you can convince your creditors to lower the interest rates, it’ll be easier and quicker for you to pay debt off or go for a relief option during hard times.

6. Ask support from family or friends

You can ask financial help from your family or friends as a short time loan. If you borrow money from them, know well about the repayment option. If you can’t go for direct financial help, then you can opt for other resources like child care relief.

7. Go for settlement of a portion

Observe and examine the situation and contact your creditors. Convince them to accept your written proposal. The creditor may settle outstanding dues by accepting a reduced amount. But settling your debts may damage your credit score a bit rather than improving it.

8. Go for a debt repayment plan

Being a consumer if you have a surplus after doing your budget, and a strong will to pay off your debts in full through a credit counseling agency, a non-profit debt management program might support you.

9. Go for bankruptcy

According to your debts and your current financial situation, you may file for bankruptcy. This option might come useful when you have nothing to pay your debts off. This legal remedy for debt can be done through a trustee, who is licensed through the Bankruptcy and Insolvency Act.

10. Make proper strategy for making payments

Make a list of your debts from the lowest balance to the highest one. You can add up all the balances and distribute a certain amount for making each payment and distribute them. This way you can pay off the balances easily and faster. You need to pay off the lowest balances first as soon as possible.

11. Go for balance transfer

The best solution for your credit card debts is a balance transfer credit card. If you qualify for this card, you may transfer your current debts to another low-interest card, or you may also transfer the balances into a 0% interest card for a specific time period. By this way, the total big interest will be divided into multiple cards, and that’ll lower your overall monthly payments. The more money you save, the more easily and quickly you can repay your debts while building your credit score.

Now, you know how to kick out debts, now it is time for improving your credit scores :

1. Pay your bills timely

It is obvious that late payments are one of the most, prime negative reason that reflects on consumer’s credit reports and are often responsible for major drops in their scores. At the time of making monthly payments of loans and credit card dues, it’s important that consumers need to pay the minimum balance on time each month without fail.

Making continuous late payments or defaulting on loans will heavily damage your credit score that will be reflected in your credit report up to seven years.

2. Keep credit card balances low

If you have a due credit balance that is equal to 35% or more of your available credit limit, it will actually damage your score. It will happen even if you pay all your dues on time and always pay more than the minimum balance. If you have a $20,000 credit limit on a credit card, you may need to maintain your credit balances lower than $7000, and also need to make payments on time. More than the minimum balance.

3. Keep old unused credit accounts

Maintaining old credit accounts for a long time actually helps to build a good score. It will also establish a goodwill with each creditor. You may be rewarded for maintaining a good, long-term credit history with each creditor. The longer you maintain your old accounts in a good, positive manner, your credit history will also show a positive statement of your credits.

4. Apply for new credit when it’s really needed

Applying a too much new line of credit can hurt your credit score. Don’t get lured by the discounts offered by the retail stores. If you’re going to make a large purchase and want to get a retailer’s credit card, make sure you must read the fine print. Determine what your interest rate will be and what fees are associated with the card.

By carol on April 14th, 2016

How do medical bills affect your credit?

how-medical-bills-affect-credit-score

Medical bills can be stressful, and they can damage your credit. The damage can be drastic. Hospitals don’t normally report a medical bill dues to credit reporting agencies. Practically they hire a debt collector and send those unpaid debts to them. Ultimately the collection agency reports them about the status of their debts.

In fact, as per the Consumer Financial Protection Bureau, half of all collection accounts on credit reports are practically medical bills. Those credit accounts surely hurt the consumer’s credit. A single collection account can drop 50 to 100 points straight.

Many people don’t know how painfully a medical bill can be to their credit. They don’t realize some facts:

a. Even you pay your medical bill, it may be sent to collections. Many people have this misconception that after paying a part of the bill, their creditors won’t send the debt to a collection agency. That’s a false statement.

b. Medical bills can be sent to a collection agency way before the patient even gets his bill. By the time he gets it, the damage has been done.

c. Collection accounts are normally hurt your credit score even those are medical bill debt accounts or not.

d. The collection agency will not fix your credit even after you pay off the debt. In several cases, those collection accounts are reported for 7.5 years. For this long time, they will surely damage your creditworthiness a lot.

e. The size of your medical debt is not that important. The most important thing is the status of your debt. A small amount of medical debt can help a collection agency to harm your credit score.

It is difficult for you to review your credit reports annually or to check it on a regular basis. You can get a free credit report and score, regularly updated from Credit.com. As per the survey conducted by Credit.com revealed – 10% of the people who reviewed their credit reports found several collection account they didn’t pay off.

How to maintain a healthy credit score

1. Before those medical bills go for collections, if possible, be very careful and active about your medical bills. Even if you have a health insurance, don’t think every aspect will be taken care of. Review what type of benefits you are getting and carefully check them. You may contact the insurance company asap if it’s not being taken care of.

2. If a collection agency contacts you about a medical bill, ask them not to report it if you are paying it off. Think if you have all the details on the bill. Many collection agencies will listen to you and won’t report if you pay the bill quickly.

3. Updating your collection account “paid” will not boost your score, unless your lender will use the newer credit score versions. So, look for any errors and disputed items, try to remove them if possible. Some agencies will help you, others may ignore them.

4. If you feel that the agency is playing an unfair game with you – as you’re not getting a copy of the bill, you can try to solve the issue in two separate ways. First – you may file a complaint with the Consumer Financial Protection Bureau. Second – you may contact the original provider and ask him to pull it back from the collection agency. After that, you can pay it off directly. If the lender agrees, the account will not be reported normally.

5. If a collection agency contacted you and you truly believe you don’t have a medical bill that can be collected, you have the right under the Fair Debt Collection Practices Act to report against that collection agency. You may also ask the agency to validate the debt. You also have the right under the Fair Credit Reporting Act to send a report to the credit reporting agencies for disputing the account.

By carol on April 5th, 2016

The way Americans ruin their credit status immensely

ways-people-destroy-credit-score

People don’t want to damage their credit score willingly. A good credit score is always proven worthy at the time of getting new lines of credit. Particularly, most of the mortgage lenders consider credit scores to evaluate a borrower’s credibility. After verifying the financial status, the lender decides interest rates that he’ll offer to the borrower. So, the more your credit score become low, the more you’ll lose your chances of getting any kind of monetary help from others.

Whatever you do, try your best not to:

1. Skip payments – Your credit score will remain unharmed if you pay your credit card bills on the due date and in full. But, if you suddenly start skipping your payments, it’ll probably start creating a mess. After skipping the bills for 30 days, which is one complete payment cycle, you’ll be treated, delinquent. This information will get listed on your credit report for a certain period of time, and will remain there if you don’t pay off the amount entirely.

But it’s not all. After paying off the installments it’ll be still listed as “historical delinquency”. If anyhow you became delinquent for long 90 days, you’ll be in a grave trouble. Your case will be taken as major delinquency and it’ll be stabbed on your credit report for long seven years, even if you pay it off.

2. Utilizing your total available credit – Do you know how much credit is available to you? If yes, then use as minimum as possible from it. It’s not mandatory that you must use all the available credit you have in your wallet. Suppose you have $35,000 credit available to you cards. Then you must remember, in any circumstances don’t use $34,999. You must keep your credit utilization ratio as low as possible for you. Credit utilization ratio is very much influential when credit bureaus calculate your credit score.

It is also advised by the financial experts that an individual mustn’t use his/her available credit more than 30-50% of the limit. It would be great if you can keep the ratio below 10%. The persons having the highest credit scores in the country used their credit within 7% to 10%.

3. Closing credit card accounts – If somehow your credit score is getting low due to misuse of credit cards, you might want to close several cards irrespective of their credit limit. But, you should think about this twice. If you close your several credit cards and stop using remaining cards at all, you’ll eventually refrain yourself from scoring credit. As a result, you can’t avail any kind of loan or any other line of credit any further.

If your credit card company realizes that you’re no longer swiping your card, they might gradually lower your credit limit or even close your account. So, what you’re gonna do then? You may use your cards to pay for utilities which you anyhow need to pay. Do not gather more debts which you can’t afford to pay. Do not open several new credit cards or close several old cards at a time.

4. Using only one card – We all must prepare backup for every financial resource, even for credit cards. Using only a single credit card can be very harmful to your credit score. It’ll become worse if you have high or unstable credit utilization ratio.

5. Closing old accounts with high credit limits – Suppose you have one card with $20,000 credit limit and another one with $4000 credit limit. You also have $1,000 balance on the card with a 4,000 limit. So, if you need to close any one credit card account, which one would you prefer? If you close the $20,000 credit card, your available credit will be transferred to $4000 limit credit card. It is bad. As soon as you close and transfer the balance, your credit utilization ratio will go higher (25%). But if you close the $4000 credit limit bearing card, your credit utilization ratio will be 4% only.

6. Not paying due taxes – If you keep getting delinquent to your payments, especially in paying taxes, I’m afraid it would have a major blow to your credit score. The IRS can place charges or liens, which will be added to your credit report.

7. Home selling through a short sale – A short sale is nothing less than a mutual agreement where the lender accepts less money than the total outstanding loan balance owed by the property owner. Selling your home by the short sale will be considered as a settled credit and will be listed in your report for 7 years as a major delinquency.

8. Being a co-signer for others – Co-signing for others may seem okay to you, but often it may become the worst scenario ever. Bank or any other financial institute will ask for a co-signer when they find the applicant not enough creditworthy. Being a co-signer means you’ll be liable for paying off the loan equally as the borrower. As soon as you sign the documents, your credit report will show the liability. Later, if you apply for a new line of credit, your lender will consider that previous loan which you co-signed while calculating your debt-to-income ratio. By any chance, if the other person stops making further payments, the total loan will be your responsibility.

By carol on March 31st, 2016

How to celebrate a budget-minded Easter with everybody

celebrate-easter-within-budget

From our childhood memory, most of us may remember the Easter Sunday when we used to dress up with our new Easter dress. The girls used to wear the new bonnet, pretty frilly dresses, bright white leather shoes, and a hat made of flowers/feathers according to our culture and family tradition.

Today, we practically avoid dressing up like those days anymore. We’ve made some modifications and replaced some of the main material from our dress. Still, we may have found difficulties to cope up with the traditions of Easter. It becomes very hard and frustrating for us to arrange the perfect wardrobe each time within our budget. So, we need to look for few special offers, prices at retail stores and online shopping websites. Let’s find out how we can enjoy this Easter with others being a frugal-minded shopper.

#1 Religion, tradition, and gifts

Every Easter we happily enjoy Easter as per our family traditions and social religion. We buy gift items and give them to our loved ones, and that often become too expensive for us. Getting proper gifts for the kids, parents, and others may be confusing as it happens in Christmas. It’s only because we think costly gifts will please our loved ones. We first need to change that thinking. We must look into handmade, attractive but inexpensive goods gifting behavior and please our friends and family without damaging our budget too badly.

#2 Clothes for Easter Sunday and spring

Easter is a special time when you can give the gift that’ll express your tradition and can be used during the Easter holiday. You can buy clothes from online stores like Amazon.com, Target.com, and Walmart.com; they always offer great discounts on this kind of special occasions. You can find nice dresses under $20 to $30. You can also add a pair of new shoes and it’ll not cost you more than $50 in total. Buy good clothes and gift them as Easter gifts as well as for springtime dresses.

#3 Look for flowers

When our elders were young, they used to send lilies, roses, and tulips to their friends and family on Easter. These flowers are stunning and their perfume is mind blowing. These flowers can decorate any occasion, any place you want, especially the Easter. So, flowers and bonsai trees are the most authentic and cheapest decoration one could ever for Easter. You can also use them as beautiful gifts as well at Easter. Trust me, they can be treated as special gifts while keeping your wallet safe.

#4 Look for post-Easter offers

You can avail attractive offers by shopping post-Easter week. The next day after Easter, stores will reduce their prices by at least 50% when the day is over. You can save a good amount by buying Easter decorations, flower baskets, plastic Easter eggs and much more things for next year celebration.

#5 Now what’s for your taste buds!!

* Easter candies: By the term “Easter”, we can surely remember the traditional baskets fully loaded with flavored chocolate bunnies, jelly beans, cream filled Easter chocolate eggs, “peeps” and lots of other sweeteners for indulging your taste buds.

But eating too much of these things can harm your or your kid’s health. Too much intake of sugar and chocolate can weaken your bones and gum. Those huge baskets filled with candy and sweets can also have attractive little toys, puzzles, and reading books. We’re supposed to select gifts and hide them for some special person. You can hide those gift baskets and Easter eggs any place you want.

*Treats made at home: You can avoid buying cookies from outside and can bake tasty treats at your own home. You can easily get easy-to-use homemade treat mixes from retail stores. Cookies, cakes, chocolate chip covered pastries, strawberries covered with white chocolate, and try them at your home. It’ll save your wallet as well as give you a traditional feeling of Easter.

*Easter Eggs: This Easter you can save money by not buying costly Easter egg coloring pack. You can enjoy coloring your Easter eggs in the old fashioned way. All you have to do is to use natural food color and vinegar for coloring your Easter eggs. Don’t forget to put some water in it.

*Easter decorations: Another way you can save lots of bucks on Easter decorations by making all the crafts and posters all by yourself. You can make beautiful Easter centerpieces by using colorful jellybeans and peeps. You need to get a glass jar full of water also. After putting the jelly beans and peeps in the jar, fill it with water and add flowers for decoration. You can also use a large glass cylinder vase and decorate it with candles, jellybeans, and colorful stones also.

By carol on March 22nd, 2016