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When was The Last Time you Reviewed your Credit Report?

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Did you know that you are entitled to receive a copy of your credit report from all three credit reporting bureaus – free of charge – once every 12 months? It’s true!

What are you Waiting for?

For many of us, our demanding lives and careers simply leave us no time to remember small obligations such as ordering our credit report. However, it is the small things that can wreak havoc on our lives if we don’t take care of them.

For example, it may be inconvenient to schedule our yearly physical with our physician, but we know that it is necessary to maintain good health. Well, checking your credit report is just as important for your financial health.

What you don’t Know can Hurt you!

An error or discrepancy on your credit report can cost you much, much more than you think. Consider this: an error on your credit report can lower your credit score, which may mean that the interest rate on your next car loan is higher, which may mean that your payments are higher, which means that you are losing money!

Also, identity or credit card theft can be wreaking havoc on your credit report without you even being aware of it. Many consumers are simply shocked to discover that a thief has used their good credit to take out bogus credit cards. And they’re even more shocked when they don’t discover this until they are turned down for an important loan or credit card.

Taking Matters into your Own Hands

Ordering a copy of your credit card each year enables you to keep on top of your credit report so that you can better manage your finances and financial health.

If you find an error or discrepancy on your credit report, it is important to immediately contact the credit reporting agency on which it appears so that they can begin investigating the mistake. You may also need to contact the creditor to remedy the error, as well.

In today’s tough, economic state, excellent credit is more important than ever, so always remember to check your credit report on an annual basis (some financial experts recommend checking as often as every three to four months) so that you can stay abreast of your financial information.

Credit Card Woes: When Making the Minimum Payment Becomes Difficult

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It comes as no surprise that millions of credit card holders are struggling to make ends meet. From mountains of debt to increasing credit card fees and interest rates, many consumers have found themselves in the unfortunate position of not being able to pay the minimum payments on their credit cards.

You’ve always paid your bills in the past; you managed your credit card debt; and you were always able to make the minimum payments – if not more –on your credit cards. Your job hours have been cut, your variable interest rate on your mortgage just changed, and you’re struggling to pay your everyday bills, let alone your credit cards. What do you do?

First and foremost, you can not afford to avoid paying your credit card bills. Although it is important to first pay your secured credit, such as your car payments and home loans, not paying your credit card bill should be your absolute last option.

The bottom line is that your credit score, if it is strong, can continue to provide you with options, while a poor credit score can close off doors and leave you with few options regarding your ability to obtain any type of credit. It is therefore of the utmost importance to do everything in your power to continue to pay your credit card bills each and every month.

Your Options

That is not to say, however, that you don’t have options regarding your credit card’s minimum payment. Your first order of business is to contact your credit card company and explain your financial hardships to them.

Given the current state of the economy, many credit card companies are willing to negotiate lower monthly payments. If you have been a good customer with a good credit history then it is likely that your credit card company will work with you. In addition, many credit card companies have financial hardship programs for which you may be eligible.

The absolute worst thing you can do is to either not make the minimum monthly payment or not make the payment at all. You cannot afford to pay outrageous late fees and you certainly cannot afford to destroy your credit.

Finally, you may want to seek the services of an accredited consumer counseling service in your area. A reputable credit counselor may be able to help you (a) lower your monthly payments; (b) lower your interest rate; and (c) pay off your debt.

Should I Help my Child Establish Credit?

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We all want to give our children the best start in life as possible, so it only makes sense that some parents want to help their children establish credit. While in general this is a good idea, as it enables your child to begin establishing a positive credit history while still in college, it may also prove to be detrimental to your relationship should your child default on his/her credit obligations.

The bottom line is that, because each child is different, and certainly every situation is different, you must look at all the factors before considering whether to help your child with their credit. For example, you may want to ask yourself the following questions:

• Do I feel like my child is responsible?
• Does my child have the means to pay off his/her debts that they incur (i.e., does your child have a steady source of income)?
• Has my child displayed responsible traits over the past couple years?
• How has my child handled money in the past?
• Have I taught my child about the importance of good credit?

If you answered “no” to any of these questions, you may want to reconsider handing over financial responsibilities to your child. If, however, you feel that your child is responsible enough to properly handle a credit card or other type of installment loan, then you may want to consider using your good credit to help your child establish his/her own credit.

You can accomplish this in one or two ways. First, you can put your child on your credit card as an authorized signer, or add your child to your credit card account as a co-applicant (provided, of course, he/she is at least 18 years old); both of which will help your child establish the credit necessary to begin building a positive credit history.

You may also want to act as a co-signer for a car loan. It is important to remember, however, that if your child defaults on the loan you, the parent, will be responsible for paying the debt or else your credit rating could be in jeopardy.

Both of the above mentioned options require a certain degree of faith and trust in your child, so always proceed with caution when putting your credit rating on the line.

Five Times You Should Avoid Using Your Credit Card

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There is a time to use credit cards and a time to know when NOT to use credit cards. The responsible use of credit cards can help build your credit history and improve your credit score so that you are eligible to receive great interest rates on everything from car loans to mortgages.

However, the improper or irresponsible use of credit cards can damage your credit score and hurt your chances to obtain everything from car loans to jobs.

Always avoid using your credit card to:

1. 1. Pay other Credit Cards - Using one credit card to pay another credit card is the quickest way to disaster. If you use credit cards to pay your other credit cards’ monthly payments you are simply digging yourself into a hole and delaying the inevitable. If you find yourself in the situation where you simply do not have the cash to pay your credit card payments each month it may be time to contact an accredited consumer credit counseling service.
2. 2. Purchase Items you cannot Realistically Afford to Pay off Each Month – The quickest way to get yourself in over your head is to purchase things that you know you are not able to pay off each month. We have been conditioned to be an instant gratification society, although this may be the reason why there are millions of Americans in credit card debt. Simply put: if you can’t afford a flat-screen television, do not buy it!
3. 3. Purchase Items you Wouldn’t Pay Cash for (to shop impulsively) - Many consumers are much more likely to purchase items with their credit card that they normally would not pay cash for. So, the next time you make a credit card purchase, take a moment to consider whether you would pay cash for this item. If not, put it back!
4. 4. Get Cash - Cash advances are, by far, the most expensive purchases you can make. Cash advances usually come with much higher interest rates than credit card purchases, so think twice before taking out a cash advance!
5. 5. Act Irresponsibly – Unless you are prepared to pay your credit card bill on time, each and every month, and to use it only in a responsible manner, then it is best to avoid using a credit card altogether.

Five Reasons to Have a Credit Card

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Contrary to popular belief, credit cards are not our enemy. In fact, they can be extremely beneficial to us in many ways. Of course, handling our credit responsibly is of the utmost importance, so it is vital that we become educated on how to responsibly use credit cards before we get in over our heads in credit card debt.

If you are prepared to handle your credit card debt in a responsible manner, then you should understand the many ways in which credit cards can help you and your credit.

You should have a credit card to:

1. Build your Credit Score - In order to have good credit, you must first have credit! A good credit score typically shows credit in different areas; namely, installment loans and credit cards. Creditors are unlikely to approve you for larger loans such as cars and homes if you have not proven your credit worthiness. And a credit card is the way to show this!
2. Build your Credit History – Just like building your credit score, a creditor simply can’t consider you a good credit risk if you don’t first establish a strong credit history. A great way to establish your credit history is to charge several purchases each month and pay off those purchases in full at every billing cycle.
3. Protect your Investments - Many credit card companies offer purchase protection, which can be extremely valuable if you use your credit card to make large purchases. Each credit card company has different policies regarding purchase protection, but most cover the cost of replacement in case of theft or damage.
4. Take Advantage of Reward Programs – Many of today’s credit cards come with perks in the form of reward programs. From free airfare and free hotel stays to cash-back programs and discounted vacations, reward programs offer fabulous rewards for simply using your credit card for purchases.
5. Protect yourself in Case of an Emergency - A credit card can quickly become your best friend if you find yourself in an emergency situation without cash. A credit card may allow you to replace a broken furnace; it may allow you to purchase last-minute airfare; or it may enable you to have your car repaired. Whatever the reason, a credit card may prove to be extremely useful for those moments in your life when you need financial help.

Newlyweds 101: Dealing with Existing Credit Card Debt

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We all know that marriage takes compromise, patience and lots of love. But what about money?

Amidst all of the wedding and honeymoon planning, it is important to take time to discuss finances with your fiancé. Unfortunately, talking about finances is often the first thing to get bumped when life is hectic and wedding plans are in full swing. However, it is not only unwise, but detrimental to your marriage, to begin your life together without first discussing your finances.

One of the most important subjects to cover is credit cards. You may want to ask yourself and your fiancé the following questions:

• - How many credit cards do you have?
• - Are there existing balances on the credit cards?
• - What is the monthly payment on your credit cards?
• - Have you ever defaulted on any credit cards?
• - Do you currently have any credit cards that are not in good standing?
• – What are your overall views on credit and credit cards?

If you begin to search for the answers to the abovementioned questions, managing your finances once married will be much less stressful.

It is vital that you and your fiancé essentially lay it all out on the table so that you can enter your marriage without any secrets or any surprises.

• - If you find that your views regarding credit cards and debt is much more stringent that your fiancé’s, you may consider managing the finances.
• - Now is also the time to pay off as much debt as you can, and to do what you need to do to get all of your credit cards in good standing.
• - You and your fiancé may find that ordering copies of your credit reports may also prove to be extremely useful when sorting through your debt. Having copies of your credit reports on hand will allow you to clearly make sense out of each other’s credit and will enable you to both get a clear idea of where you stand financially.
• - If credit card debt is a serious issue that you cannot readily solve, you and your fiancé may choose to seek the services of an accredited, consumer credit counseling agency.

Common Questions about your Credit Report

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We all know that we must stay on top of our credit to maintain a strong FICO score, but how many of us actually do just that?

Your ability to obtain a mortgage, purchase a car or secure a credit card all relies on your credit rating. It is therefore of the utmost importance that you order a copy of your credit report.

Luckily, under the nationwide Fair Credit Reporting Act (FCRA), which is protected by the Federal Trade Commission (FTC), you are entitled to a free copy of your credit report from all three of the consumer reporting agencies – Equifax, TransUnion and Experian – once a year.

Now that you are armed with this information, you can begin the process of reviewing your credit report.

Q: What type of information appears on my credit report?

A: Your credit report should contain your personal information, such as your name, your address and your source of income, as well as all sources of credit. It will also report any bankruptcies, arrests or cases in which you were sued.

Q: What is a typical credit report comprised of?

A: The four sections of a standard credit report include: your personal, or identifying, information; your credit history; public records; and inquiries.

Q: What are public records?

A: Public records include such things as bankruptcies and law suits.

Q: What are inquiries?

A: Every time you apply for credit of any kind, it is typically recorded as an inquiry. Excessive inquiries do not look very good in the eyes of a creditor; therefore, too many inquiries can lower your credit score.

Q: Do I need to look at my credit report through all three credit reporting agencies, or is the information the same?

A: Each credit reporting agency has their own set of information, as well as their own credit rating for you, so it is important to review your credit report through all three credit reporting agencies.

Q: Who uses the information on my credit report?

A: The three credit reporting agencies – Equifax, TransUnion and Experian – sell this information to creditors, insurers and even your employer. They then use this information to determine your eligibility for credit cards, insurance and employment, among many other things.

Q: What if I find a mistake on my credit report?

A: If you find a mistake or an inaccuracy, you must immediately contact the credit reporting agency and file a report. It is then the credit reporting agency’s duty to research the problem and correct it, if needed.

Five Easy Ways to Use Credit Cards to Improve your Credit Score

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When used correctly and responsibly, your credit cards can do wonders for your FICO score. And we all know that a good FICO score goes a long way towards obtaining other types of credit and loans.

It is therefore crucial that you understand the ins and outs of credit cards and the many ways in which they can affect your credit score.

You can damage your credit card score if you:

1. Don’t use your credit cards – You must use your credit cards – at least a few times a year – for them to be recognized as available credit on your FICO score. And your available credit makes up about 30 percent of your FICO score. It is therefore important that you exercise your credit cards regularly – even those credit cards that are put aside for emergency purposes.
2. Close out your credit cards - Many credit card holders believe that they are helping their credit score by closing out unused credit cards; however, the act of closing out unused credit card accounts lowers an individual’s credit score because it lowers his or her percentage of available credit. A simple solution is to cut up the credit cards you no longer use, but keep the accounts open.
3. Apply for credit too often – Every time you apply for a credit card it is recorded on your credit report. Therefore, if a number of credit inquiries from credit card companies appear on your credit report your credit score will likely be affected, particularly if you are routinely being denied credit. The solution: if you are experiencing trouble getting credit, order a copy of your credit report (which is free if you have been denied credit for any reason) and work to repair the problems which are standing in your way of obtaining credit.
4. Don’t make your credit card payments on time and in full - This may seem like a no-brainer, but many credit card holders don’t see an occasional late payment or partial payment as a big deal. The fact is, however, that even occasional missteps on your credit report can have a big impact on your ability to obtain credit and to obtain competitive interest rates.
5. Run up high balances on your credit cards – Once again, the amount of available credit makes up about 30 percent of your FICO score. Therefore, as you charge up your credit cards your available credit begins to dwindle, along with your credit score. The solution: make an effort to pay down credit card bills before applying for any type of consumer or business loan.