The Build Credit Blog

How to Get a Loan With a Poor Credit Rating

admin — Tue, 23 Sep 2008 17:26:08 +0000

Poor credit scores are normally the sign of poor fiscal management by an individual. Lenders and banks use your credit score to determine whether or not you are dependable enough to borrow money to. They know a poor credit score means that individual hasn’t always been the most trustworthy with their credit accounts. Perhaps someone with a poor credit score has too much credit already opened or has held them self in credit debt for a long period of time. Whatever the reason is, a person with poor credit might not be determined as creditworthy enough to take out a bank loan. And if you are a person with bad credit, you might already know this.

Great Credit Means Great Treatment

It isn’t always fair as those with the biggest loans and lowest rates will be those with higher credit scores. It is because banks and loan lenders feel they are taking a much lower risk by trusting their money with someone who has been on track with their credit payment history. While running around to major banks may dig you up something, in most cases, if a couple major banks don’t accept your application for a loan, chances are others banks will probably not.

You Have to Pay Down Debt to Increase Your Credit Rating

If this is the case, opportunities still exist that may allow you to borrow and get a loan. The first step a fiscal management professional will tell you is to immediately get yourself as credit debt free as possible. This will cause an increase in your credit score, however doing this isn’t always something people are capable of doing over a short period of time. For some, credit debt is something they might not get out of by the time they pass away.

Two Loan Options for Bad Credit Rating Holders

You might have an emergency that requires you to get a loan as soon as possible. If this is what you need, there are plenty of loan lenders set up that feed directly to those with bad and poor credit. These credit lenders will generally provide you with two different options when examining the choices of loans you can take out. These loan types include a secured bad credit loan, and an unsecured loan.

Secured Loans

A secured loan is considered a better choice, financially, for those with bad credit. When applying for a secured loan, you must give up something of equal value to the loan. You are basically giving the loan provider a piece of collateral in case you default or go bankrupt while on the loan. These types of loans feature interest rates similar to those given to people with excellent credit from larger loan lending agencies.

Why is this an excellent choice for those with poor credit? Almost any type of loan you take out is considered a form of credit. If you give $5000 as a form of collateral for a $5000 loan, or 2 – 2500 dollar loans, you’ve just opened a positive source of credit. This shows on your credit report, and as long as you keep making your payments on time, it will show, as well. This in turn will increase your credit score. That will enable you to get larger loans from more mainstream lenders with lower interest rates.

Unsecured Loans

The other option open to those with bad credit from bad credit loan lenders is an unsecured loan. An unsecured loan is a better option for those with no type of money or assets available to give the lender as collateral in case of defaulting on the loan. However, the fees and interest rates are stiff. With some interest rates reaching more that 30%, if you can’t afford to pay much more than the minimum monthly amounts due, paying off the principle on the loan could take many, many years.

Simply put, unless you are in some dire financial situation, taking out an unsecured bad credit loan can be an extremely poor financial decision.

Be Careful of the Fine Print, Don’t Let Lenders Take Advantage of Your Bad Credit

Getting a bad credit loan isn’t always as difficult as it seems. There are plenty of lenders willing to lend you money, however, make sure you read the fine print when they ask for your signature. Some of the interest rates can be outstanding, making taking out a bad credit loan not the smartest of choices you could make financially.

To get yourself a proper loan, you will want to see what you can do to increase your poor credit score before anything else. Look at your current accounts of credit and ask yourself what you can do to start paying off those credit cards and loans that are making your credit score so low. Cut back on nights outside and spend more days relaxing at home, making dinner yourself instead of ordering out, and slow down your shopping habits. Put this extra cash towards your credit accounts and start paying off your debts. This will look very good to your creditors and show you are becoming more responsible with your credit. This can cause an increase in your credit score, and in turn make you more accountable to take out loans with better interest rates. However, if you don’t have the money it will take to start paying those loans back, avoid opening any more credit accounts if at all possible.

How Long Do Negative Items Stick to your Credit Report?

admin — Tue, 29 Jul 2008 00:55:22 +0000

Negative information on your credit report can be reported for up to seven years, but sometimes longer if it is serious. The length of time noted in these bullet points means from the start time of your late payment or delinquency, not the last time you made a payment on the amount. Some collection agencies, though, will update their reports to keep your account active with the credit bureaus so they can lengthen the time a negative item stays on your report. You do have a right to challenge this and you should if it happens to you!

So what are some of the negative items that are put on your credit report?

Bankruptcy information can stay on your credit report for 10 years
Tax Liens can stay on your credit report for 7 years after they are paid
US Government insured or guaranteed student loans can be reported for 7 years after certain guarantor actions
An application for $50,000 or more worth of credit of life insurance can actually stay on your report forever.
Information about a lawsuit or judgment against you can stay on your report for 7 years.

The Dummy Guide for Understanding APR

admin — Mon, 28 Jul 2008 23:39:22 +0000

APR (Annual Percentage Rate) is a simple financial concept to grasp, however, calculating your APR is a much more difficult task. APR is the interest rate you are signed up to pay when dealing with credit and loans. Taking that interest rate you receive and dividing it by 365 (the number of days in a year) will give you a basic, yet not exact, amount that you will actually have to pay back in interest on any loan you take out.

For instance, if you take out a loan for $1,000 dollars at 10% APR and have to pay it back in one year with one payment, you are left with the equation of: ($1000 x 10% x 365 days (billing cycle of one year))/365 days) = $100 in interest. Add $1000 dollars to that and you will know the total loan cost will be $1100 dollars.

Of course this could never be accurate, especially if you are dealing with credit. Your credit account is constantly changing as you rack up purchases. If you pay off all debts before the end of a billing period, you don’t pay interest; however, if you can’t pay back the balance in full you can be stiffed with harsh APR interest. Following billing periods can increase the amount you own in interest if previous interest debts aren’t removed from the credit accounts.

APR rates are made difficult to calculate as different lenders process loan and credit applications differently. Some lenders process the applications manually using information an applicant has provided in order to determine an APR. In most instances, seeing as how we live in a world dependent on technology, it is determined by computer software. Different APR processing software programs can use the same information, but provide two different APR rates pending what is actually integrated into the loan interest.

What fees make up parts of the APR?

It is not always known what makes up the whole of APR, but it is safe to say that in some loan APR rates, the following fees are compromised within the Annual Percentage Rate itself. Discount points and origination points are common factors. Interest paid from the loan closing date until the end of the month, generally assumed to be an average of 15 days of interest to be paid, will be included. This number is known to be inconsistent, ranging from 1 – 30 days depending on what loan provider you use. Loan processing, underwriting, and preparation fees are there, as well as private mortgage insurance in the case that you are preparing a mortgage loan. Loan application and credit life insurance are two factors that may come into play, but perhaps not with every lender.

What is not (normally) included in the Annual Percentage Rate?

There are several fees that will not usually be calculated into fixing your APR rate. These are just some of the fees that shouldn’t make up your interest rate. If they do, you may want to examine other lenders that can provide you with a better rate on relevant data. Titles, abstract, escrow, notary, home-inspection, recording, and an appraisal fee should all be left separate from your APR calculations. Credit reports and transfer taxes should be detached from your APR, as well.

Be cautious of hidden APR rates and fees

When shopping around for credit and loan lenders, be aware that APR should be a deciding factor in choosing the lender. However, many loan and credit lenders try to trick new homeowners and those lacking in fiscal knowledge by making them deals to good to be true.

In every loan and credit document you examine, do not skip the fine print. The fine print may entail the true APR rate you will receive after the “low-introductory” interest rate. Be sure to know what will happen to your APR in case you can’t prepare a payment on time. Commonly, this is known to make your APR suffer with incredibly high rates, and that doesn’t even include the fees you will have to pay for missing a payment. Credit cards may allow cash advances, but these cash advances charge much higher interest than that of basic charges on your credit account. This is also apparent for checks from credit lenders, as well.

What should you ask a credit lender about APR before you sign for a new credit account (loan, credit card, etc.)?

Doing research on what will make the best loan account for you is an excellent way to gain wisdom and financial responsibility; asking a loan lender personally is a second step you can take in order to gain a better look at which loan might be better for you.

Ask the loan lender whether the loan interest (APR) rate it fixed or can vary. This could greatly affect how your payments will look month by month.

Another choice inquiry to make is to ask what charges aren’t inclusive with the APR. What are those charges, are they truly necessary, and how and when would you have to pay them?

An all important question that you need to ask yourself, as well as your lender, is can you afford this loan or line of credit? A loan with a high APR rate can be extended out over longer periods of time if you don’t feel you can make larger payments on shorter loan billing periods. While this is excellent for those that may not be able to pay higher charges, in the long run this will cost you more money. This is because you will be charged interest over a longer period of time and on higher amounts, too.

How to pick the best loan based on APR

The number one way to find the best loan for yourself is to get down and dirty with research into what makes any loan tick, and what affects your APR. The Internet is a bountiful mountain of information on APR, interest, loans, and credit. Find loans that suit your preferences, and then ask for expert advice by comparing loans with similar payment terms. Asking for the honest opinion of a loan lender on which loan will keep your losses at the lowest amount possible is essential to getting the absolute best loan rate with any APR that you can get.

The Difference between a Debit Card and a Credit Card

admin — Sun, 06 Jul 2008 21:55:43 +0000

With the introduction of plastic money resources, credit cards and debit cards, it has been easier to get through payment processes with a swipe of that magnetic strip or simply entering in the digits on our keyboard to make purchases online. The debit card and credit card work similarly enough, and despite the differences being very vast, many people still can’t seem to spot why a debit or credit card may be better to use than the other. Being an informed consumer is an important step in making the correct financial decisions, and knowing whether you should use debit or credit is one of the first decisions you should make.

Where are you getting your money?

The most obvious difference between debit and credit cards is the source of cash from which you are drafting money from while making purchases. A debit card uses your bank accounts as its drawing source. While withdrawing money from an ATM or fueling up your gas tank, the money taken or paid is drawn out of the savings or checking account connected with that card. When dealing with debit cards, the limit on the money you use is exactly how much you have in your bank account.

Credit varies greatly from the use of debit as you can use money that you don’t actually have possession of, yet. The credit card lender borrows money from a larger bank, and your credit card institution allows you to use that money, up until you reach your credit limit. Credit is not connected to any previously established funds in your bank account; therefore, a credit card may allow you to make purchases you perhaps couldn’t make otherwise.

Liability can be a Problem

There are liability issues when using debit cards versus using a credit card. Credit cards are federally governed to limit liability to $50 dollars and tied by law to investigate any fraud suspected by the credit card’s name holder. A debit card is not always this simple as there are no federal laws insuring low liability rates for debit card holders. Most debit issuers may advertise $0 liability, yet reading the small print shows that this is only to those that qualify. In actuality, most will give $50 liability to the owner if fraud is spotted within 2 days and up to $500 within 60 days of being spotted.

Bank it or Loan it?

So what type of card should you use – debit or credit? This all comes down to the way you handle your own money. Many are scared that the use of credit can lead to financial failure if used too early in life, so many rely on only what they can afford to purchase with debit. This is an excellent choice if you have the money readily available to support your life and can keep tabs on your checking and savings bank accounts. Those not keeping track of their accounts may provoke hefty overdraft charges that will build up for days until they are paid off. Overdraft charges can be a killer, and most banks will typically hit you with a $30-$40 each time you commit an overdraft.

Credit offers options for those that might not be able to pay for something in full at the time of purchase but will be able to pay off that debt by the time their billing period rolls around. Credit offers benefits to those able to pay their credit bills on time, as well. Your credit score is linked to your credit card usage (as well as many other factors), and this in turn can affect whether or not you will be able to purchase a car or buy a house. The governed liability is enough for some to rely only on credit due to increased personal theft security.

Debit cards also lack the ability to chargeback fraudulent or charges you might feel unfair or not necessary. Using a credit card allows charges you deem questionable to be left out of credit reports until your credit lender fully investigates the issue. In a rare case, the credit card companies are actually on your side when it comes to fraudulent charges.

Credit cards carry much more security, but the fact is they still might not be for everyone. Building up good fiscal responsibilities with debit is an option for those still afraid of credit giants. Either way, depending on your usage, both a debit card and credit card can incur 0% chance of risk or carry huge risks if used impractically.

How to Pay off Credit Card Debt in a Down Economy

admin — Wed, 02 Jul 2008 20:05:17 +0000

Credit card debt is one of the worst financial situations you can manage to get yourself in. If you are sitting there, looking at multiple credit card statements and only sending just enough money to your creditors to cover the minimum payments due, you are making one of the least efficient financial choices you could ever make. By the time you end up paying off those debts with minimum payments, you’ll have acquired so much in interest that you’ll pay double, or more, of what you actually racked up on those credit cards.

Failing to pay and continuing to dig yourself deeper into a hole of credit card debt, you’ll find your credit score gradually slip. This will affect nearly every aspect of your life. With a bad credit score you’ll have a more difficult time finding a better job. You won’t be able to purchase or lease that new hybrid-electric car you want because you can’t charge your credit card with the price of gas as it is. No bank will even come close to considering you for any type of loan, and if you somehow had the thought that you could buy a new house, kiss that dream goodbye.

As you may have noticed the price of everything is going up. Gas has skyrocketed, food prices are rising, and the dollar’s purchasing power is weaker. All of these factors make it a bad time to be in credit card debt. It’s getting harder than ever to get credit and loans, so if you’re in credit card debt it’s going to be extremely difficult once you rebound.

Do It Now! There is no better time to start reducing your credit card debt then right now. Every month you do not start paying them off is another month of high interest debt being accumulated on your account.

Freeze Your Credit Cards

Paying off that credit card debt doesn’t have to be that impossible task that you think it is. The fact of the matter is that it is simple. You just have to think simple and make your life a little simpler, as well. Take your credit cards that are acquiring debt and interest on that debt, and hide them. Put those credit cards where you can’t get at them until the credit card debt is gone. One interesting suggestion was given was since you can’t afford to put any more charges on it, freeze the credit card, literally. Put the credit cards in a seal-able bag with water, and toss them in that freezer. Viola! Your credit card accounts are frozen.

Crunch the Numbers - Planning and Preparation Help

This is where you will need to take some time to crunch some numbers. Take a look at your latest credit card statements. If you have multiple credit cards that are driving you into credit card debt, you will want to compare what is hitting you the hardest, and decide from there how you want to pay off the debt.

What card has the most amount of debt on it? What are the annual percentage rates on those credit cards in debt? If you are looking for the option that will keep you from losing the most amount of money while paying off debts, then calculate which will generate the most amount of interest from unpaid credit card debt by multiplying the debt amount by the APR of each separate credit card. The card that has the highest APR will generally be this card, and for the sake of saving you from paying larger amounts of interests, you should generally put down as much money as possible into this debt as you can. Even if you can only afford to pay 50 dollars more than the minimum payment on this credit card, depending on the size of the debt, you could cut the time it takes to pay off this credit card debt in half.

Once this first credit card is finished and debt free, cancel the credit card immediately. This will take the limit on this card off of your balance of available credit on your credit report. Doing this will effectively boost your credit score. Follow through with this plan until you are debt free off of all of your credit cards.

An alternate path, while not as financially perfect as the above plan of attack, may seem more rewarding and therefore give you a boost in confidence in thinking that you will eventually be credit card debt free. Instead of starting with credit cards with the highest amount of debt and interest, some choose to get the cards with the smallest amount of debt out of the way. Financially, it is a weak tactic, but emotionally, it may be less strenuous and draining to take this path. Once you get one card done, and faster than the debt on cards with the most amounts on them, you may feel like you can achieve getting debt free off larger credit card debts.

Paying off credit card debt is all about planning your budget, and for some, this can seem like an impossible task. Where are you supposed to get the extra money to pay down when you can barely pay the minimum monthly fee? An obvious, but not always accessible option for people in credit card debt is to get a second, part-time job. The extra money from your second job should be put towards your credit cards and your credit cards only. Finding other ways to put extra money towards your credit card payments is easier than this, and shouldn’t involve having to get a second job.

Steps to Take to Pay off Credit Card Debt

Sit down and analyze where you are spending your money. What can you cut back on, and what can you knock out completely. Reducing costs is just as important as increasing revenue in the credit equation. Every extra cent counts and can help you get out of credit card debt faster than you think. Let’s look at some things you can do to save up a few extra dollars to pay off your credit cards.

Take a bagged lunch to work instead of eating out.
Make a big, cheap dinner at home, and save leftovers for the next few days (This, or live off of Asian noodle cups)
Start clipping coupons and use them. The savings add up! A good website for this is The Grocery Game. You can save up to 50%, 60% or even 70% on grocery bills when take time to plan what you buy, and when you buy it (On Sale!). For large families, this can equal hundreds of dollars in savings per month.
Watch a movie in your collection instead of paying ten bucks a person to sit in a movie theater for 2 hours.
Shop at thrift and discount stores. It might be second hand, but has anyone ever asked you if someone else owned that jacket before you?

The most important thing to keep in mind when paying off credit card debt is that you need to stick to your plan. Don’t sidetrack yourself, don’t splurge (especially with your credit cards), but most of all, don’t get yourself down. Paying off your credit cards is completely possible no matter how long you may think that “it will take forever to pay off my credit card debt” time will be. Keep your payments above the minimum, and budget properly, and you will see your credit card debt vanish quicker than you realized it would take.

The Difference Between Personal and Business Credit Cards

admin — Sat, 28 Jun 2008 20:15:08 +0000

It’s safe to see that a majority of most consumers carry some sort of credit card, and it would be absurd to think that any entrepreneur wouldn’t have a credit card. The credit card is the best source of payment when we just don’t have that large amount of cash on our hands. Business owners and entrepreneurs can use credit cards to turn those otherwise fiscally impossible purchases into easily obtainable items and services until withholding payments until the end of their credit card billing period. For those able to manage their credit and financial responsibilities it is a powerful tool, but are you using the right tool?

As an everyday consumer, you should be using personal credit cards in order to purchase goods otherwise not buyable. Purchase your groceries, clothing, and other goods needed to live your life comfortably with personal credit cards in order to build up personal credit. A good personal credit score on your annual credit report can help you get better credit account terms, home loans, automobile loans, and even nail you a better job.

For the entrepreneurs reading this, you’ve probably put several things necessary to keep your business above rising waters on a credit card of some sort. What kind of credit card was it, though? Did you just put your office furniture expenses on the same personal credit card that bought your groceries last night? For those practicing this technique, you may want to look into applying for a credit card offered specifically for businesses, business owners, and those employed in your business.

Keeping Work Separate from your Personal Life

One of the main advantages of having two separate credit cards, one for business use and another for personal expenses, is to keep the types of purchases you make separate. Obviously, purchases made to benefit your business will go on your business credit card, and personal purchases will be left ordered on your personal credit card. This helps avoid confusion when it comes time to file your taxes.

You can spot tax deductable items more clearly on separated credit card invoices, better find where your bills need to be paid, and know which expenses came from where and what reason they were purchases.

Two Credit Scores are Better than One

If you are the business owner and are using both business and personal credit accounts to separate your purchases, you actually have the chance to build two separate credit scores. While business credit cards are initially linked to your personal credit reports under your name, if you have incorporated your business you can eventually break that line of credit off of you and put it under your business’s name, instead.

Why would you want two lines of credit scores – a personal credit score and a business credit score? Well, credit scores can help us later on in life. With our personal financing in mind, if we have managed to keep ourselves relatively dry from the credit debt pond we will have an excellent personal credit score. This buys us faster cars, bigger houses, allows better credit accounts to be opened, and makes life a whole lot easier. Much of this can be translated to the business side of credit scores.

A business credit score isn’t quite the same in the way it is taken track of (0 – 100 score instead of 300 – 850), yet it operates similarly. A business credit score takes purchases and the history of payments on those business credit accounts in mind when calculating its credit score. Those with business lines of excellent credit will find it much easier to borrow larger sums of money for expanding and developing their business further.

If you have a business credit card, but haven’t registered your business name with business bureaus and credit agencies, those responsible for calculating your business credit scores will not even get them. Instead, it will be tied to your personal credit score which may hurt your score as business credit cards don’t rake in the benefits for personal use that a personal credit card does.

Expand the Use of your Business Credit Card

A personal credit card is meant for you and you only. Using business credit cards opens opportunities for you to help out your employee’s work needs when you can’t go out and purchase the necessary equipment they need to do their job. Many business credit card lenders allow for separate business employee credit cards to be sent out under you and your business’s name. It adds convenience for several different types of businesses where stock may need to be bought quickly when you, Mr./Ms. Boss, aren’t always around. Do be sure you keep track of employee’s credit cards expenses. Your employees might forget that that is a business credit card you’ve given them, not a free personal credit account paid for by you.

Reap the Benefits. Lower Business Costs

Many personal credit cards give amazing benefits. Lowered gas prices, airline miles, cash back, and other generous awards are given to those that know how to use their personal credit cards to better benefit themselves. Shopping around for business credit cards can help you and your business reap the same benefits. Many business credit cards offer cash back if the credit account is fully paid by the next billing period. With high business expenses, this could be several thousands of dollars a month. Other cards may offer extended paying periods when slow times arrive. Many business credit cards also allow business owners to receive exclusive discounts at places where business is almost necessary to come in (postal services, copier services, technology and business computer outlets, etc.).

Both types of credit cards should be treated the same way. Don’t overextend how much you can afford on the card, shop around for the best rates before applying, and always pay as much as you can on your credit balance if you can’t pay all of it. The importance of credit is not only a factor in your personal life, but it can be what decides the life or death of any small business you wish to further develop.

How to Build Credit When You Have None

admin — Sun, 08 Jun 2008 01:26:38 +0000

If you have absolutely no credit or no credit history, you could find it pretty difficult to apply and be approved to receive a credit card. The most likely reason reason you don’t have credit is because you’ve just turn 18. At the age of 18 you are legally allowed to be a new owner of that shiny credit card you’ve always dreamed of.

Wielding a credit card at such a young age can be dangerous. Young people are usually unaware of the dangers of credit card debt, and the ease of being able to purchase nearly anything you want, instantly, without cash makes that danger much more clear. However, establishing credit at a young age is easier than doing it later in your life. On top of this, credit will help you further down the road by allowing you to take out loans, create better opportunities for you in the job market, let you purchase/lease a car, as well as eventually allowing you to purchase your very own house. Ah, the power of the credit card is a wonderful thing.

How to Get Your First Credit Card

If you just aren’t able to get a credit card, whether you haven’t reached the age of 18 yet or the credit providers don’t trust the fact that you have absolutely no credit history, there are several steps you can take in order to make yourself seem more dependable when it comes time to getting your first credit card.

First, you will want to create a savings and checking account at any bank. While having either of these accounts won’t be helping you build your credit, they do make you look more liable for yourself in the eye of creditors. Having a savings and checking account are also beneficial, as you can build interest on top of the cash you deposit in your savings account and instantly purchase items with money in your checking account without the need for cash in your pocket.

Credit Cards with a Co-Signer

An option that will allow you to build instant credit is to get someone, most likely a parent, with excellent credit to co-sign on a minute personal loan with you. As soon as you start making payments back on the loan, and making payments on time, you will be redeemed with credit from your co-signer.

This is one of the quickest ways to build credit as it’s like a very credit-worthy person is vouching for you. If you are able to apply for a small personal loan, yourself, and can pay installments back monthly, you’ll also find yourself on track to building good credit.

Applying for a Store Credit Card

Another route you can take is to apply for a store card. These cards are like credit cards, but they can only be used at that specific store. Some cards can actually be used anywhere, but you would have to read the conditions before you apply to make sure. While it isn’t the fastest way to build credit, it does give you some, and if you have just turned 18 you probably don’t have any. Prepaid credit cards are a similar choice, building small amounts of credit on pre-charged cards.

Student Credit Cards

One of the easiest credit cards to get at young ages, even with no credit history at all, are student credit cards. These types of cards are found all over big college campuses, usually set up at booths where students can sign a form and be “instantly approved.” While it is a good choice for those with no credit, these types of credit cards are dangerous.

Student credit cards have low credit limits that are easy to break with extremely high interest rates and penalties for those that don’t make payments. Student credit cards rely on the fact that mom and dad will take care of any of their children’s credit problems. Don’t put your parents in a difficult situation if they do not have established credit or are in bad financial shape.

Start Building Credit!

Once you’ve got enough credit built up that enables you to get a proper credit card, start using it! Stay away from the credit limit and pay off all the money charged to it before the payment deadline is due each month in order to keep building your credit and avoid credit debt.

How to Fix an Error on a Credit Report

admin — Sat, 07 Jun 2008 00:10:36 +0000

Gather together with 3 other adult friends and go out to dinner together. One question you may want to ask them, as well as yourself, is if they have checked their credit report for errors lately. In a recent survey, it was found that of all credit reports surveyed, nearly 25 percent of them reported some sort of error.

Many credit reports with errors go unnoticed to the person the credit report belongs to. While in some cases, mistakes may be small, others can cause huge dips in your credit score. These dips in your credit score can disable your chances to get jobs, acquire loans, as well as the ability to buy a new car or house.

Equifax, Experian and TransUnion – the three big shot credit bureaus in charge of processing your credit information – crunch a lot of data. To say it can get easily mixed up is an understatement. The most common reasons for errors on a credit report are due to credit users with identical names. Many times they are just filed on the incorrect report. This could cause you to see extra credit accounts on your report or a bankruptcy that you swear you never filed for. In one instance, one man that checked his credit report discovered he was listed as deceased!

If you believe your credit report has a problem, getting a reinvestigation on your credit report is absolutely free. The Fair Credit Reporting Act finds it necessary that credit bureaus correct any inaccuracies and errors to be corrected, however, due to the massive amount of information they go through on a daily basis, most of these credit bureaus won’t even notice any mistakes on their own.

Get active and contact them yourself to get the proper action done on your credit reports. To file something that you think is an error on your credit report, many credit bureaus now have online divisions that can help you deal with the problem however snail mail is still commonly used. To file by mail you will need to report several details to the agency in letter format.

Provide your full name, home address, your date of birth, as well as your social security number
The company you are holding the dispute against and the account number for the disputed item with them
List all the reasons for your argument with your credit report, as well as providing a list of what the information should be and why
Finish the letter by requesting for the proper corrections to be made

Make sure you’ve done your research before you apply for a reinvestigation on your credit report. The more copies of correct information and evidence of mistakes the credit bureau may have made the better. If in the end the credit bureau doesn’t accept your dispute, you can ask for your documents to be included in your credit file for future reference.

A credit report reinvestigation can’t delete negative facts – which can take up to 7 to 10 years to erase from your credit report - but if you feel there is honestly a mistake on your credit report, don’t fail to report it. It could be the difference between an excellent credit score or a poor credit score.

What is a Credit Score?

admin — Wed, 04 Jun 2008 02:37:54 +0000

A credit score, put simply, is a number that decides how creditworthy and dependable a person will be when it comes to paying their bills and paying back money an individual has borrowed. This score is a simple 3-digit number that can summarize up your whole credit report to creditors and lenders, basically grounding you down into a “lend to” or “do not lend to” category. It’s an important number, as it is one factor that lets you take out loans for computers, houses, cars, is a main benefactor in the type of insurance rates you get, and can basically say whether or not you are reliable enough to have more credit accounts opened.

Credit scores are defined by what is found on your credit report. It is usually the final result of what your credit report turns up. While most creditors and lenders will examine your credit report before considering whether you are applicable to borrow more, a credit score can be regarded as their first impression into how you are standing credit-wise.

The three digit numbering system used to display your credit score runs from 300 to 850, 850 being the highest credit score you can receive. The higher the credit score, the better. A higher credit score, one running from 700 to 850, shows lenders that your credit habits and behaviors have been much better than those with low scores.

A person with a low credit score may have a hard time opening new accounts of credit as they may have had troubles paying their credit back in the past. This can also make it harder to achieve low insurance rates, as insurers have figured those with lower credit scores are more likely to file claims against their insurance. Most Americans run scores between 600 and 700.

Origins of the Credit Score

This score is based on the FICO, Fair Isaac and Company, system. Fair Isaac and Company created this score in order to help banks, lenders, and other creditors determine just how trustworthy you are. As more bureaus opened to help report credit, such as Experian, Equifax and TransUnion, FICO worked with them to develop their own systems. All three of these major credit bureaus use the FICO system as a base but have tweaked it to make it their own. If you ask for a credit report and score from all 3 of them, you will notice that not all of your credit scores will be equal (however they should be similar, unless they do not carry the same credit information about you).

Determining Credit Score

When determining your credit score, these credit bureaus will examine several aspects of you to find your results. One of the number one factors that help calculates your credit score is how much of your available credit you are using. If one of your credit companies doesn’t report your credit limit, you will be listed as using all your available credit on that account, whether or not you actually are, causing a steep drop on your credit score. Other major factors determining what your credit score will be include how your previous payment behaviors have been, how much credit debt you have and how long you’ve been in credit debt. They also examine how many credit lenders have looked into your file (they generally disregard this when you are looking for an auto loan or mortgage within short periods of time), how much credit you have in comparison to how much you are using, as well as the type of credit you are signed up with.

If you would like to examine your credit score, there are several websites set up to do this. On top of ordering your credit score from the three major credit bureaus – Experian, Equifax and TransUnion – you can also find information on the process to get all three reports at once with FICO. Getting informed on your credit score is a great way to know how you are standing credit-wise, and can get you on the right path to a better credit score.

Do You Have Too Many Credit Cards?

admin — Wed, 04 Jun 2008 02:10:13 +0000

How Many Credit Cards Should You Have?

According to statistics from loan and credit agencies, the average American holds anywhere from 5 to 10 credit cards, plus several loan payments. On average, that comes out to 13 credit accounts. That number is a bit outstanding according to credit experts. With all these credit cards and loan usages coming into play, this leaves nearly 85% of all Americans in some sort of non-mortgage related debt. Of those people, nearly 32% are in credit and loan debts of more than $10,000. Yikes!

Most of this debt is coming from the ease of gaining new credit cards advertising new rates and higher credit balances than what we already have. Getting a credit card is just too easy nowadays. While there is not a perfect number of credit cards one person should keep in their wallet, it’s easy to see that one person holding 13 credit cards could be a bit excessive. It all starts out when we hit 18 years old.

Applying for too many Credit Cards in College

College-age students are bombarded with credit card offers through mail. Then they get hit with credit cards set up at booths on their college campuses. They sign their name at the bottom of a form, and in a week a brand new credit card that lets them instantly buy things they normally couldn’t whether or not they have the money to actually pay for the product. Creditors know that college students will probably be pulled out of any credit problems by their parents, so it’s easy money for them. On average, a college student will get into credit problems early on with 3 to 4 credit cards. Plus it is very enticing for naive college students to sign up for a credit card to get a free gift that usually accompanies an application.

The Enticing Store Credit Card

Then people go ahead and apply for store cards. Store cards offer great deals, giving you 20 percent or so off your first purchase with your store card and continuing benefits after that. After the first purchase, though, the card can be a hassle if it isn’t frequently used. If the store card isn’t immediately closed after being paid off, it’s only one more credit account that could be adding to your debt and dropping your credit score. Another fact of store cards is that they drop your credit score by approximately 20 points after being approved.

Again, there is no perfect amount of credit cards, but there is simple advice that any credit expert could give you. Don’t take more than you need. Get the credit cards that offer you the best benefits, lowest interest rates, and a limit high enough for your spending habits. Don’t spend more than you can pay back, though. If you need two cards to fuel that, whether for personal or business purposes, then so be it, but if you cannot pay them off, don’t try using credit cards to finance your life. Credit cards are great tools when used right, but they can be downright evil with threats of debt and late fees added to that when we cannot make payments.

Credit cards can ruin lives when not used properly (clearly many people abuse them), and this website will try to help people with this growing epidemic.