by BlondieWrites on May 18, 2010
Choosing and Creating Good Accounts to Boost Your Credit
Credit can be a fickle thing and complicated to those who are unsure of how credit works. Credit is a billion dollar a year industry and while most of that represents debt that families and individuals are struggling to get out from under, it also represents the possibilities that credit can offer. When handled appropriately and with smart decision making, credit can be a great thing that offers opportunities and advancement to you. Most people thing of credit as how you are able to get a house, a vehicle or other loans for items of value, but credit is also used to judge character about a person when they are applying for a rental, a job or other life advancement.
Take the time to choose and create the right accounts to reflect good credit and then maintain those accounts to boost your credit rating and score for the ultimate level of possibility in the future. So, how do you know which are good accounts to have and which are ones to avoid?
There are many different types of accounts that can be obtained and many of them are offered with enticingly low interest rates or high limits. The first step in determining accounts that are worth your time are to read the fine print and see whether the low interest rate will balloon after a couple of months or whether the high limit will create a level of temptation you may not be able to avoid. Also, only work with banks or other companies you know and trust, try to avoid ones that are new, unstable or unknown. Besides being a smart choice for investing your time and money in, larger, more well-known lending companies are better to have on your credit report because they lend more weight when others are considering lending to you.
Good accounts should be smaller ones you can pay off in full before the due date and should be for things you need or reflect a starter account status. Starter accounts are those that are small or through trustworthy companies with slightly lower standards than other companies. They are often jewelry store accounts, store credit accounts, cell phone company agreements and other small accounts. These accounts are perfect for first time borrowers or for those recovering from bankruptcy that essentially have to start over with their credit building. Once you have been given the chance with a small account, it’s up to you to be responsible with it and pay your payments on time and in full each month in order to keep them in good standing and avoid going into debt or financial hardship.
The longer a good account is in good standing on your credit, the higher it can push your credit rating and score. Large lenders, like real estate and car loans, like to see that you have a few good, solid accounts that you have had for years and never been late or defaulted on. This shows that you can not only make smart financial decisions, but that you can also maintain loans and budgeting over an extended period of time, which will help them feel they are making a smart choice by investing in you.
Regardless, of the starter or small accounts you decide to go with, take the time to do some research and learn about how small and starter accounts can help you define your credit status and create good credit over time and through commitment. It’s important to take the time to invest in your own future by learning about the financial world and how loans and credit work. They may seem intimidating and like something you can not understand, but with a little work and possibly a little help you can learn the tools and habits you need for a successful financial future. Aren’t you and your family’s future worth it?
by BlondieWrites on August 26, 2009
There is a relationship between credit rating and credit repair. If your credit rating is 600 or below, credit repair is needed so you will always be in good standing.
But what is a credit rating? This is an indicator that tells creditors if you are credit worthy. A simple way of doing this is to encode certain things about you in the computer and within seconds, they will see the results appear on their screen.
Credit rating ranges from 350 to 850 and as mentioned earlier, a score of 600 or below is bad because if you apply for a loan, you will be paying higher interest rates compared to someone who has a good rating of 700 or above and this is usually based on 5 factors.
First, the number of inquiries you have made in the past 2 years. Did you apply for a loan or a credit card? If you did and this was approved, then as long as you pay it on time, you will have a good credit rating.
Second, what types of credit you actually have? If you have funds, then that is good. If you don’t, well don’t expect to have a high credit rating.
Third, what is the length of your credit? People who have a line of credit for 5 years or more have a better credit rating compared to someone who just graduated from college.
Fourth, how much is your debt? It is okay to have debt once in a while as long as you are able to pay for it. If you don’t owe money to anyone, then good because this will be reflected on your high credit rating.
Lastly, what is your payment history? This is somehow connected with your length of credit because this will show if you have been able to make payments on time. If you missed a payment that could be bad but if you have not, then you should have a good credit rating.
All these five factors are equally important. So you can see if you have any problems, get a credit report from one of the three crediting agencies namely Equifax, Experian, and Trans Union.
You can get a copy from each one at the same time or do it at different times of the year. This report changes so you should obtain a copy annually.
One thing you might notice looking at the different reports is that they may not always reflect the same thing. When this happens, don’t be alarmed because each one uses a different set of protocols in coming up with those figures.
However, should something there be outdated or mistaken, this must be corrected. If you have the supporting documents, write a letter and send this to the credit agency.
If what the report says its true and you are in a lot of trouble, then steps have to be taken to initiate credit repair. You can do this by yourself or with the help of a counselor.
Regardless of who is involved, only one thing is certain and that paying off whatever outstanding debt you have is the only way to improve your score.
Don’t expect that your loan application will be approved if you credit rating is not very good. Do something about it because credit repair is your only option.
by BlondieWrites on January 1, 2009
With the current credit crunch, you may have over-utilized your credit cards. This can ultimately have a negative effect on your credit rating.
Here are five tips to improve your credit rating:
1. While credit reports can be obtained for free on an annual basis, you do have to pay a fee to view your credit scores at other times. Therefore, go to annualcreditreport.com which is the only site available for free credit reports. After you have printed out your credit reports, check to determine if there is any suspicious activity or anything on the report you do not recognize or wish to dispute.
2. In order to obtain your FICO score, you can check out myfico.com. Here you will receive the scores from all three credit agencies (Experian, Trans American, and Equifax). In addition, this site details the current interest rates for home mortgages and car loans based on your FICO score.
3. Pay down your credit card debt. High interest rate credit cards should be paid off first. Add additional money to the minimum payment to facilitate the reduction of the debt. Pay credit card bills on time.
4. During this economic crisis, you may find that using credit to pay for items you need is more than tempting. The problem is that if you max out your cards, this can not only cause financial difficulties but can lower your FICO score as well. The general rule is not to spend more than 30% of your total credit limit.
5. While consolidating credit cards may save money on interest payments, it does not bode well for the credit agencies. So if you have two or more credit cards, it is recommended that you avoid applying for additional credit. Both these actions can reduce your FICO score.
In these difficult times, some of you may have to make a mortgage payment, pay for expensive medication or utilize the credit card for an expense that, under normal conditions, you would pay with cash or check. Perhaps this is a one-time occurrence. If this is the case, try to pay off that specific charge immediately.
With the current bank lending freeze, it may be some time before you can secure a loan. Even if you could find a bank willing to give you a loan, your FICO score will have to be much higher than before.
Check your credit card reports and FICO scores and if you find low scores, it’s time to take action now so that if you need a loan in the near future, you will be in a better financial position to obtain one.
