Credit Card Quick

How Savvy are you when it Comes to Handling your Credit Cards?

Choosing Credit Card

We’d all like to think we are credit card savvy, but with all the changes to the credit card sector over the last year, who can keep up? It seems like every day either the credit card companies or the government are changing the rules when it comes to credit cards usage, thereby leaving many of us in the dark about what’s right and wrong, and good and bad, about our credit cards.

Here are a few True or False statements to quiz yourself on your credit card savvy:

True or False: The more credit cards I have, the better my credit score will be.

False: Although more credit cards may mean a higher available credit and a lower debt-to-income ratio, many individuals with multiple credit cards may find themselves in trouble because of their availability to too much credit. In other words, some individuals may have the best luck using just one or two cards, while other individuals may be able to handle more credit cards. A good rule of thumb when it comes to credit cards is to never take out more than you can reasonably handle in any given month. And don’t worry about your credit score, as a flawless payment history on one credit card will always be better than a spotty payment history on multiple cards.

True or False: My credit score will remain strong as long as I pay my credit card bills on time.

False: Although a large portion of your credit score is determined by your payment history, the credit reporting bureaus also look at several other factors, including your credit history and your debt-to-income ratio. In other words, just because you pay your bills on time each month doesn’t mean you will have the highest credit score on the block. Instead, focus your efforts not only on your payments, but the amount of debt you have.

True or False: I am always better off taking advantage of a balance transfer offer.

False: Don’t assume that just because a credit card company offers you a balance transfer offer with a low, zero-percent introductory offer, it doesn’t mean it is the best financial choice for you. You must also pay close attention to other factors, including: the default interest rate once the promotional rate has ended, the balance transfer fee, and the card’s general terms and conditions.

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.

Your Credit Score: Broken Down

Credit Score

We all know that our credit score is of great importance, as it determines our ability get a loan or any other type of credit, but not many of us really understand the many factors that go into determining the all-mighty credit score.

Understanding the components that determine our credit score will ultimately enable us to better manage our credit, so it pays to take the time to really understand what our credit score is really trying to tell us:

• Payment History – Our payment history makes up about 35 percent of our credit report.  Our payment history is the largest component of our credit score, as it ultimately allows a lender to see if you have repaid loans in the past in a responsible manner. With this in mind, it is important to understand that any late payments made on loans, credit cards, and even utility payments, can have a negative effect on your credit score. In addition, your credit score will detail how late you were – 30, 60, 90 days or beyond.  In addition, if you have any accounts that have gone to collections for failure to repay, you can expect your credit score to take a serious hit. Other important factors that make up your payment history include: charge offs, debt settlements, bankruptcies, foreclosures, wage attachments, and liens.
• Debt Amount – Your current debt is the second most important component of your credit score, as it makes up about 30 percent of your credit score. The credit reporting agency will look at a few factors when determining this component of your credit score, including: total available credit used; amount owed on specific accounts (mortgage, car loans, installment loans, credit cards); and how much of original installment loan balances have you paid down. The general rule of thumb is to keep your credit card balances to less than 30 percent of your total available credit. Because of the importance of this component of your credit card score, many individuals will aim to pay down their debt before taking out a large loan.
• Credit History – How long have you have been using credit is the third most important component of your credit score, as it makes up about 15 percent of your total credit score. Some of the things considered include the age of the oldest account and the average age of all accounts.
• New Credit – Another 10 percent of your credit score is determined by how many new accounts you have. This includes newly opened accounts and recent applications for new accounts.
• Types of Credit – Another 10 percent of your credit score is determined by the types of credit you possess. Diversified credit is often helpful when determining this component of your credit score.

Smart Steps to Build a Positive Credit History

Credit Score

The last year or so has done a lot of damage to many Americans’ credit scores. With lending standards tighter than ever, it is now of extreme importance that we all work towards a strong credit score because our ability to obtain any type of credit depends on it.

Our credit score is determined, in part, by our credit history; in particular, if we have one, and if that credit history is positive. There are many ways to build a strong credit history; here’s how:

• Pay everyday bills on time and in full each and every month – Not only do loans and credit cards affect your credit score, but everyday bills do, as well. From your electric and gas bills to your phone and water bills, your payment history on your monthly utility bills can make a big difference in your credit score.
• Open a checking and/or savings account and take care of it – An active bank account is another great way to build a strong credit history. Take care of your bank account; don’t overdraw it and keep a steady balance in it, if possible. Your ability to manage a bank account is essential for developing a strong credit history.
• Obtain a credit card and never, ever miss a payment – A credit card is a great, first step in establishing a positive credit history. If you can’t snag a standard credit card, consider a secured credit card. Although secured credit cards must be secured with a cash deposit, regular payments still positively reflect your credit history.
• Choose credit over cash – When possible, choose to pay your purchases with a credit card. The more activity on your credit card the more history you can establish. Make certain, however, to keep close track of your monthly purchases and to pay off your credit card in full each month.  Remember: we must use credit to build credit, so establish a healthy respect for your credit cards and you will soon find that your credit score is making positive gains.

Start Small: Steps you can take to Today to Rebuild your Credit for Tomorrow

Credit Repair

The past year has been tough for many people, and that goes for their credit scores, too.

If you experienced the loss of a job or other financial mess over the past year and you are now eagerly looking forward to a brighter 2010 then you must begin to assess your credit score and work towards building it back up.

In order to repair your dinged-up credit score, you must begin at the beginning again. Unfortunately, creditors simply are not willing to extend credit anymore to those with poor credit scores. So, what does that mean for you?

That means that you must begin taking small – but very necessary – steps to repair your credit so that you can once again enjoy a strong credit score and all of the advantages that go along with it.

• Start with a secured credit card. Make a point to charge purchases on that card each and every month and pay them off in full each month.  A secured credit, although backed by your cash deposit, is a great way to begin proving your credit worthiness to creditors. Check out the terms and conditions of several secured credit cards, as annual fees and charges for these types of cards can vary greatly.
• Once you have developed a consistent payment history with your secured credit card, consider taking out a small retail credit card. Continue to pay on this card, each and every month, so that you can further build up your credit score.
• Once you have shown a strong payment history of at least 12 months, you can often begin applying for unsecured credit cards. However, if you are denied a credit card after this time period, don’t automatically start applying for more cards in hopes that you may get approved for one; too many credit inquiries will only further hurt your already low credit score.
• If your poor credit history is a result of irresponsible spending, consider heading to a credit consumer counseling service. These non-profit organizations are there to help you make better decisions and to start helping you to build a responsible approach towards credit cards.

The Top Three Reasons why Secured Credit Card may be Right for you

Choosing Credit Card

A secured credit, once upon a time, was the kiss of death for consumers. It was also quite unnecessary in most cases, as consumer credit was flowing like water.

However, given the state of the economy and the state of many consumers’ credit scores, secured credit cards are making a comeback, and for plenty of good reasons.

If you are new to the credit card game, or if you’re looking for an easy way to begin rebuilding your bruised credit history then you may want to consider a secured credit card.

A secured credit card account requires that the account user open a savings account, of sorts, where the creditor will hold the funds that will act as collateral on the card. This money is the creditor’s insurance policy, although if you loyally pay your bills on time the money will remain there, unused.

Why Secured Credits are Useful in Today’s Economy:

• They provide you with a credit card – Credit cards are convenient and practical, and are often the desired payment method for things such as airline travel and online purchases. A secured credit card acts in the same fashion as a traditional credit card, thereby enabling consumers to charge their purchases – not to exceed their credit limit, of course – and repay them each month.
• They provide you with a payment history – One of the best ways to begin building or rebuilding your credit is to simply begin establishing a payment history. In that sense, a secured credit card works just like a traditional credit card, thereby enabling consumers to begin boosting their credit score.
• They provide you with an interest-bearing savings account – Once you have developed a proven track record of timely payments, many secured credit card companies can begin paying you interest on your secured funds. For many consumers on a budget, this is a great way to build their credit and keep money tucked away in a savings account at the same time.