Credit Card Quick

How to Take Care of your Credit before the New Year

Credit Repair

It’s quickly coming to an end: 2010! So, where does your credit stand?

If you’re like most consumers, you simply don’t know. However, what you don’t know or don’t acknowledge can hurt you, so take the time to get your credit in check so you can start out the New Year with a clean slate.

Here’s how:

• Order free copies of your annual credit reports – Every consumer is entitled to one free copy of their credit report from all three credit reporting agencies, including TransUnion, Experian and Equifax each year, so don’t let this year end without claiming your free copy. It is a great time to review your credit card activity from 2010 so you can clear up any discrepancies before the New Year rolls in. This is especially important in the upcoming year, as many individuals are now heading back into the home market, vehicle market and credit market after a rough last couple of years. It only makes sense to take care of any credit report problems before you apply for credit. Now is the time to take care of your financial housekeeping!
• Take an inventory of your current credit cards – Now may be a good time to close those credit cards that simply aren’t working for you. Is it worth lowering your credit score to cancel credit cards? It is if the rates are simply too high or the terms and conditions are not in line with your spending and budget, it may very well be worth it. If you opened up one too many retail credit cards during the holiday season, take them out of your wallet and resist spending on them until you have paid down your current balance.
• Make a financial game plan – Gather all your credit card bills (especially those that resulted from your holiday shopping) and line them up in order, from the highest interest rate to the lowest. Then, develop a game plan to pay them off in a reasonable amount of time. It just doesn’t make sense to carry high credit card balances into the New Year and beyond, so make it your New Year’s resolution to pay them down and kiss those high balances good-bye.

Diversifying your Credit to Build your Credit Score

Credit Score

Many consumers wonder what they need to do to build a solid FICO score. We all know that paying our bills on time and keeping our debts to a minimum is always a good idea if we want a strong credit score, but there are other things we can do bump up our credit score so we can qualify for the lowest interest rates on everything from home loans to credit cards.

Here’s how:

The three credit reporting agencies (TransUnion, Equifax and Experian) assess your credit worthiness by looking at a number of factors, including credit history, payment history and your debt-to-income ratio. However, they also look at how you manage different types of credit. If you are missing certain types of credit, your credit score will likely be lower.

Examining Different Types of Credit

In short, there are a number of different types of credit accounts that the credit reporting agencies take into consideration when examining your credit: credit cards, retail accounts, installment loans, home loans and consumer finance accounts. If you lack a home loan or installment loan, for example, the credit reporting agency does not have information to draw from and will therefore reduce your credit score slightly to account for this lack of information.

In other words, simply paying your credit card bill on time each month will not make a huge difference to your credit score over the long run. Installment loans are a great tool for raising your credit score, as they are steady, monthly bills that must be paid. In other words, if you pay on a car loan for an extended period of time, the credit reporting agency then has adequate information that details you are a good credit risk for installment loans and will therefore raise your credit score to reflect this.

Consider Adding a Small Installment Loan

Now this certainly doesn’t mean that you should seek other types of credit simply to raise your credit score. All it means is that it may take time to build your credit score enough to obtain the best interest rates on a variety of loans. However, now may be a good time to take a small installment loan on a kitchen appliance, for example, and make the steady payments instead of paying cash for it. The history of your payments will most certainly have a positive effect on your credit score.

How to Always Win at the Credit Card Game

Introduction

The Credit Card Accountability, Responsibility and Disclosure Act (CARD) that was enacted into law in May 2009 has accomplished what so many consumers had been hoping for over the years: to make credit card companies become more transparent and to eliminate certain credit card practices that were less-than-fair.

However, in response to the CARD Act, and perhaps because many credit card companies cried foul because some of the changes in the legislation meant that they were losing money, creditors began finding ways around the legislation. Therefore, many consumers were left even more confused than before the CARD Act was even enacted.

If, after all of the changes enacted by credit card companies, both to adhere to the new CARD Act guidelines and to avoid losing a great deal of money, you are still quite confused, then it is up to you to engage in a number of activities that will, regardless of what legislation is passed, protect you and make you a winner at the credit card game.

• Always pay your bill on time – OK, so this sounds rather obvious, but the fact is that many consumers still fail to do this on a regular basis. The truth is that creditors cannot charge you any kind of fee if you pay your bill on time. They can’t change your credit card interest rate and they can’t charge you any late fee. The best rule of thumb is to set up automatic payments through your bank so that you can be assured your credit card bill is paid on time, each and every month. If you pay your bill in full each month, set a reminder on your desk calendar or smart phone.
• Don’t reach for the convenience checks – Creditors love to send out those tempting little advance checks, also known as convenience checks. But you must be strong and send them to the shredder, as they are riddled with all kinds of fees and higher interest rates, and they are not protected by the CARD legislation. In short, there should never be a time when using convenience checks are OK.
• Read any material that is sent to you – Because creditors must inform consumers of any changes to their credit card account, you may find yourself receiving more correspondence from your creditor. Avoid the urge to toss the letters into the garbage can and instead take the time to read them so you can always be aware of any changes to your account.

Drowning in Debt? Why it’s Vital to Act Now

Credit Card Debt

If you are having more and more difficulty paying your bills each month, it is time to act. In other words, don’t wait until the month comes when you can’t pay your bills, as you are simply delaying the inevitable. In other words, if things don’t change, you can’t expect to miraculously start covering your bills. Thus, if you act sooner than later, you will likely be able to save your credit score and get your debts under control.

Here’s what you need to do now to begin digging yourself out from underneath your debt:

• Strategize and develop a plan – Without a plan you can’t expect to begin undoing the damage. In short, you must sit down with your partner and make a budget. If you can recognize where your money is going each month, then you can begin making changes now. Your first order of business should be to collect at least three months of bills, credit card statements and bank statements. Then, take the time to review this paperwork so you can examine spending trends.
• Start cutting back – It may seem quite obvious, but now is the time to see if your bills are bigger than your income. If this is the case, you will need to determine which of these bills are essential and non-essential, and begin eliminating the non-essential bills. If your income still covers your bills, but you are still finding it difficult to pay bills each month, then your spending is the problem. In this instance, you will want to begin keeping a detailed journal of your spending so you can find ways to cut back on your monthly expenses.
• Find the money and put it to good use – Once you have a good idea of your monthly income versus your monthly bills and spending, you will be able to either recognize areas in which you can cut back to better begin paying down your debt. A few extra dollars may not seem like a big deal but, in the long run, it can make a serious dent in your debt. Take all extra money each month and put it towards your highest interest rate debt and work your way down.

How to Teach your Children the Importance of Smart Spending

Introduction

We lead by example – and that goes for teaching our children the importance of making smart financial decisions.

It’s quite amazing, actually: we seem to have been transformed from a country that first relied on cash only, to a country that lived on credit, and back to a country that may not have reverted back to that cash-only mentality, but instead has now achieved a good respect for credit and finances, in general.

With everything else we must teach as parents, it may seem like an afterthought to educate our children on the importance of finances but, in reality, this is a very important topic that should be openly discussed throughout every stage of your child’s life. Aside from teaching the obvious concept of checks and balances, there are a few important things to teach your children about credit cards:

• Show them the process of purchasing on credit cards – The next time you make a credit card purchase, explain the process to them. Use this opportunity to explain the benefits of credit cards and the responsibilities that come along with them. It may be more difficult for your children to understand the process when they don’t see money being exchanged, so it is quite important to let them know that, although you are not paying upfront with cash, you are responsible for paying back the bill when it arrives.
• Show them the credit card statement – Which brings me to the next task on your list of things to show your children. After you have explained the process of purchasing items with credit cards, show them the bill when it arrives and remind them of the purchase that you made together and how the charge appears on the credit card.
• Explain the concept of interest and fees – Show your children the process of paying your credit card bill and the ramifications of not being able to pay the bill in full when it arrives. Do the math with your child and show them that those $20 pair of sneakers may end up costing much, much more if you fail to pay the balance off when the bill arrives.

How to Take Care of your Credit Score

Credit Score

You take care of your home, your kids and your health, but where does your credit score play into this equation?

For many of us, our credit scores are often neglected, which may lead to big problems when it comes time to obtain a mortgage, a car loan or any other type of credit. Instead of neglecting your credit score, give it the attention that it deserves so that you can obtain the credit that you deserve in the future.

Here’s how:

• Pull a copy of your credit report from all three credit reporting agencies at least once a year and go over them carefully, as to catch any errors, discrepancies or fraudulent activity. If you visit annualcreditreport.com you can retrieve a copy of your credit reports, each year, for free.
• Stay diligent and pay all your bills on time, each and every month, regardless of how small or insignificant you may think they are. Sure, you pay your mortgage, car payment and credit card on time each month, but what about your gas card, your electric bill and your water bill? Most companies, including utility companies, report to the credit reporting agencies, so you could be sabotaging your credit simply by neglecting these often-forgotten bills.
• Don’t go a credit card-closing spree, even if you don’t use the cards anymore. Although many individuals think they are doing themselves a favor if they close unused credit card accounts, they may actually be doing more harm than good. This is because every time you close an account, you lower your “available credit,” which therefore raises your debt to income ratio, which – you guessed it – drops your credit score.
• Make sure you really want a particular credit card and will use it before applying for it. Too many inquiries for credit cards will also lower your credit score, and may set you up for too much debt. One of the credit card types you will definitely want to keep in check is the retail credit card. This is because many retail credit cards come with very high APRs and related fees.

Important Facts about Secured Credit Cards

Introduction

Many of us, in an effort to improve our damaged credit scores, may apply for secured credit cards. Secured credit cards are often a smart way to begin showing the credit reporting agencies that you are taking responsibility for your credit woes and attempting to repair them.

However, it is important to remember that all secured credit cards are not created equal, and that it is important to take the same precautions applying for a secured credit card as you would an unsecured credit card. Here are other important facts you should know about secured credit cards:

• Not all secured credit card companies will report your credit activity to the credit reporting agencies. Make sure, when applying for a secured credit card, that you choose one that will report your credit activity to the credit bureaus. Otherwise, don’t waste your time. You will often find this language in the credit card’s terms and conditions, but it is also important to call and verify this information with someone from the credit card company before accepting the credit card.
• Just like unsecured credit cards, it is very important to read the fine print on a secured credit card. Some secured credit cards come with super-high fees, such as activation fees, credit increase fees, monthly maintenance fees, balance inquiry fees and ATM fees, so take the time to look over the terms and conditions for a few secured credit cards to ensure that you are paying as few fees as possible.
• Don’t forget to look at the interest rates on secured credit cards. Once you have examined the fees associated with a few secured credit cards (and eliminated a few), you will want to pay close attention to the APR. Although you may receive zero-percent introductory rates, you will soon find that the credit card’s default rate once the promotional rate has ended is much, much more.
• Don’t expect to be approved for every secured credit card for which you apply. Some banks are quite particular, even when it comes to secured credit cards. For example, some banks won’t approve individuals who recently filed bankruptcy.

I was Denied Credit: What Are my Options Now?

Choosing Credit Card

You applied for a credit card, home loan or car loan when, unexpectedly, you receive notice that your application for credit was denied. You naturally assumed your credit score was strong, so this news comes as quite a shock.

The biggest question that comes to many individuals’ minds when they are rejected for credit is: Now what?

Well, the worst thing you can do at this time is nothing. Simply accepting that your credit score is not strong enough for credit won’t do anything to begin fixing what went wrong. So here’s what you need to do:

• Order a copy of your credit report. The good news is that you are entitled to a free copy of your credit report from
  the credit reporting bureau that was used by the creditor to determine your credit worthiness. However, it is important to order a copy of your credit report within 60 days of your credit denial in order to take advantage of this free offer.
• Verify all information on your credit report. In other words, it’s not just your credit history you should be checking. You should also make sure your name, your birth date, your social security number and your address are all correct. Other information you may find on your credit report details marriages and divorces, bankruptcies, lawsuits, and any and all types of credit you possess.
• All credit accounts, along with your payment history from at least the last two years, will appear on your credit score. Make sure the payment history is accurate, as well as the creditor to whom you are paying and the type of creditor it is.
• Make a detailed list of any and all information that is in question. Anything that appears incorrect, out-of-date, or difficult to understand should be included in your list. You will also want to keep a close eye out for any information and activity that appears fraudulent.
• Take the time to contact the credit reporting agency and submit a dispute. It is then up to the credit reporting bureau to research your dispute so you can have these errors corrected in an effort to raise your credit score.

What to Consider when Paying Off an Installment Loan with a Credit Card

Credit Card Debt

You have an installment loan, like a personal loan or a car loan, and you get an enticing credit card offer in the mail. Should you transfer your installment loan to a credit card with a low, promotional or fixed rate? This depends on a number of factors:

• Can you pay off the loan without prepayment penalties?

You will need to study the terms of your installment loan before transferring the balance over to a credit card, as you could end up paying a large, prepayment penalty, which could negate any benefits you may receive from a credit card. It is best to contact the lender to see what type of which you have. In particular, ask them for a payout amount. Once you have that amount, multiply the number of payments remaining on the loan by the loan payment each month to see if the payoff amount is lower than the total payments. If not, you can assume the lender will charge you for the total interest amount and it may not make sense financially to transfer the loan to a credit card.

• Do the benefits of the credit card make good financial sense?

You may be tempted to take advantage of a zero-percent balance transfer, must you must look further into the offer. Credit card companies draw customers in with tempting, zero-percent offers but, in reality, this rate is merely a promotional rate and will only last for a short period of time – usually 12 months or less. If you can pay off the loan during this promotional time, then you will likely make out on promotional rate; however, if you can’t, it is important to look at the card’s default rate, the rate that will come into play once the promotional rate has ended. In addition, pay close attention to balance transfer fees, which can be as much as five percent of the transferred balance.

In short, you must do the math when it comes to transferring an installment loan to a credit card.

The Last of the CARD Changes go into Effect

News

Although many of the regulations and changes of the CARD Act have already been in place since May, the very last of them are now in effect.

The most recent changes to current credit card legislation under the CARD Act include:

• The first late payment fee on your credit card cannot be more than $25; however, subsequent late payments in a six-month time frame can result in higher late payment fees of $35 for each offense.
• Your late payment fee cannot exceed your minimum payment. For example, if your minimum payment is $20 your credit card company cannot charge you a $25 late fee. The maximum late payment fee in this case could not exceed $20.
• You cannot be charged multiple fees for the same offense. For example, you cannot be charged a bounced check fee and a late payment fee if your check bounces.
• You can no longer be charged an inactivity fee for not using your credit card. Other fees, such as annual fees, can still be charged.
• Any increase of your APR must be explained to you. In other words, an increase in your credit card’s interest rate must accompany a reason behind the change.

Other changes that went into effect earlier this year include:

• Your credit card company cannot increase your card’s APR during the first year unless your rate is an introductory, or “teaser,” rate or if your APR is variable and it tied to an outside index. Your creditor may also raise your interest rate if you are 60 days delinquent on a payment or if you don’t comply with the terms of the credit card.
• Your creditor must provide you with a 45-day notice before making any significant changes to your credit card account. In addition, during this time you have a right to cancel the card before these changes take place and pay off your balance under your card’s original terms and rate.
• Your creditor must give you at least 21 days to make your credit card payment.