Seven ways to start improving your credit score today
1. Check your credit report regularly. Correct any incorrect information you find on your credit report as quickly as possible. Incorrect information is an invalid reflection of you as a credit consumer.
2. Learn what your current credit score is as it appears on your credit report. You can get your credit score by contacting any credit reporting agency, such as Equifax, Experian or TransUnion. These credit reporting agencies allow you to quickly get your credit score, along with your credit report, for a small fee. Remember, each of these 3 credit reporting agencies will have slightly different scores.
3. Have as few open credit card accounts as possible. Don't open new accounts that you don't need. The more open accounts you have, the lower your score - even if your accounts have a zero balance. Why? If you have an open account, it is assumed you could charge on it at anytime. Therefore, even though you have a zero balance, the account is viewed as debt you could possibly incur at any moment.
4. Try to keep account balances on your credit cards as low as possible. The higher your debt to balance ratio, the lower your score will fall. High balances on your account may negatively affect your score because you have a greater chance of missing payments.
5. Make all of your payments on time. Past Due accounts will be listed on your credit report. Usually, you have 60 days before this happens. If you cannot pay your bills on time, call your creditors as soon as possible to explain the circumstances and work out a payment schedule you can meet. If you are having trouble paying due to circumstances such as serious illness or unemployment, submit (in writing) an explanation to the credit reporting agencies. This explanation will be added to your credit report. Remember, the sooner you deal with your payment problems, the more cooperative creditors will be.
6. Minimize the number of inquiries on your credit report. You can do this by not applying for multiple credit cards over a short period of time. Apply for new credit accounts only as needed. Each time an inquiry is made on your credit report, it is listed. You may lose as much as 5 points from your credit score for each inquiry.
7. If you have a bad credit history, consider opening new accounts and then paying them off on time. This establishes a positive credit history for you and shows that you now handle debt responsibly.
Instant credit cards
9.22.2008
Get out of Credit Card Debt
Buy now and pay later. It's become the American way. There's no doubt that a credit card can be a powerful and useful tool. However, as more and more Americans discover every year, too much of a good thing can lead to big trouble.
According to CardWeb.com, the average American family owes over $8,000 in credit card debt. Remember, this is an average. For every family that's way below this average, there's another family that's way above the average. Where you fall in relation to this average can help you determine exactly how serious a problem your credit card debt really is.
It's important to recognize that no matter what you do, you're not going to get out of credit card debt over night. It probably took you several years to accumulate the debt you have now, so it's understandably going to take you some time to get this debt under control. The good news is that as soon as you start, you'll begin to see both financial and psychological benefits.
Change your spending habits
The first step in gaining control over your credit card debt is understanding how you use your credit cards. Do you save them for unusual expenses like automobile repairs and medical bills? Or do you routinely find yourself reaching for your credit card to pay for a TV Guide, a bag of Cheese Doodles, and a bottle of shampoo?
If you use your credit cards to pay for simple, everyday items, your debt is sure to creep up. You should make a commitment to reserve your credit cards for significant and/or unexpected expenses.
Stop using all your cards
Once you've established smart usage guidelines for your credit cards, you need to apply those guidelines. In other words, stop using your credit cards. This may seem obvious, but it's the most important step you can take to reduce your credit card debt.
Do you have any cards that are maxed out? Cut them up into little pieces. After all, they're of no real use to you. They only represent temptation every time you get a few dollars paid down.
Each time you look at your credit card statement, you probably grumble over the fact that a huge portion of your minimum payment was applied to interest, reducing your actual balance by only a small amount. The way to combat this effect is to pay more than the minimum amount. Even if you can only pay $10 extra each month, this is an important step, because every extra dollar you pay is applied to your balance. You'll be surprised at how quickly your balance begins to drop.
Transfer balances to Lower-interest credit cards
One popular approach is to transfer your high-interest credit card debt to some lower-interest loan - either a home equity loan or a low-interest card. This can save you a lot in interest, but be careful. This strategy requires quite a bit of discipline.
If, for example, you use a home equity loan to pay off your credit cards, the only thing keeping you from running those credit cards back up is your own will power. If you're careless, you could find yourself in a worse position than you were before - maybe even with your home ownership in jeopardy.
According to CardWeb.com, the average American family owes over $8,000 in credit card debt. Remember, this is an average. For every family that's way below this average, there's another family that's way above the average. Where you fall in relation to this average can help you determine exactly how serious a problem your credit card debt really is.
It's important to recognize that no matter what you do, you're not going to get out of credit card debt over night. It probably took you several years to accumulate the debt you have now, so it's understandably going to take you some time to get this debt under control. The good news is that as soon as you start, you'll begin to see both financial and psychological benefits.
Change your spending habits
The first step in gaining control over your credit card debt is understanding how you use your credit cards. Do you save them for unusual expenses like automobile repairs and medical bills? Or do you routinely find yourself reaching for your credit card to pay for a TV Guide, a bag of Cheese Doodles, and a bottle of shampoo?
If you use your credit cards to pay for simple, everyday items, your debt is sure to creep up. You should make a commitment to reserve your credit cards for significant and/or unexpected expenses.
Stop using all your cards
Once you've established smart usage guidelines for your credit cards, you need to apply those guidelines. In other words, stop using your credit cards. This may seem obvious, but it's the most important step you can take to reduce your credit card debt.
Do you have any cards that are maxed out? Cut them up into little pieces. After all, they're of no real use to you. They only represent temptation every time you get a few dollars paid down.
Each time you look at your credit card statement, you probably grumble over the fact that a huge portion of your minimum payment was applied to interest, reducing your actual balance by only a small amount. The way to combat this effect is to pay more than the minimum amount. Even if you can only pay $10 extra each month, this is an important step, because every extra dollar you pay is applied to your balance. You'll be surprised at how quickly your balance begins to drop.
Transfer balances to Lower-interest credit cards
One popular approach is to transfer your high-interest credit card debt to some lower-interest loan - either a home equity loan or a low-interest card. This can save you a lot in interest, but be careful. This strategy requires quite a bit of discipline.
If, for example, you use a home equity loan to pay off your credit cards, the only thing keeping you from running those credit cards back up is your own will power. If you're careless, you could find yourself in a worse position than you were before - maybe even with your home ownership in jeopardy.
Use Your Cash Advances Wisely
Cash Advances Wisely
Your credit card is a powerful tool for the management of your financial life. It can help you to extend the value of the products and services you need by obtaining them before paying for them. It can reduce the need for cash or check in places far from home, and allow you to conduct personal and professional business by phone, mail or Internet over long distances.
Like all-powerful tools, though, it needs to be used carefully. And that's especially important when using the ultimate power of your credit card: it's ability to give you immediate cash in large amounts. The two most popular ways of obtaining cash from credit cards are through the ATM machine at your local bank, or by filling out and cashing a check-like document that is often attached to your monthly credit card statement. Last year the amount of cash borrowed from just one major credit card company totaled more than 104 billion dollars. That was an eight percent increase over the previous year, and it tells us that credit card users are increasingly seeing the easy use of plastic as a substitute for the discipline of using banks and credit unions for borrowing.
Credit card companies in turn are increasingly willing to loan cash. It can be a very valuable service for their customers. But credit card companies are also increasing the fees and interest charges for cash advance. Your monthly statement gives you some of the fine print on how those charges are billed, but in most cases it doesn't tell you what those charges are. If you don't know it's always a good idea to call the customer service number on your statement and ask. It's no different than shopping for the best terms on a loan among banks and credit unions before signing on the dotted line.
The Cost of Buying Cash
When you use your credit card to buy new shoes or the latest CDs those products are yours to keep. You can use them for years to come and pay for them over a few months if you wish. But when you use your credit card for cash advance to pay for daily necessities like groceries and gasoline y ou will pay much more for that privilege. And you will have to give it all back as quickly as you can.
If you borrow $500 from one of the major credit card companies in the United States at contemporary rates, for example, you will be charged 3% of that amount (or a minimum of $5 for smaller loans) as an upfront transaction fee. You're interest rate (APR) for the loan will be set at 19.9%. If you determine to pay off the loan in four months your costs in fees and interest for the purchase of $500 will be $35.88 or more than 7% of the loan amount. If you pay it off in 8 months the cost will be $53.24 or nearly 11% of the loan amount.
But that's not all. If you read the small print on your statement you will learn that in most cases payments you make to your credit card company will be applied first to lower interest charge purchases before they begin to erase your debt for higher interest borrowing of cash. For example: If your credit card balance of $1000 includes a $500 cash advance and you pay back only $200 per month it will be three months before your payments begin to cover the advance That's three more months that the credit card company can charge you 19.9% interest on your original purchase of cash.
Your credit card is a powerful tool for the management of your financial life. It can help you to extend the value of the products and services you need by obtaining them before paying for them. It can reduce the need for cash or check in places far from home, and allow you to conduct personal and professional business by phone, mail or Internet over long distances.
Like all-powerful tools, though, it needs to be used carefully. And that's especially important when using the ultimate power of your credit card: it's ability to give you immediate cash in large amounts. The two most popular ways of obtaining cash from credit cards are through the ATM machine at your local bank, or by filling out and cashing a check-like document that is often attached to your monthly credit card statement. Last year the amount of cash borrowed from just one major credit card company totaled more than 104 billion dollars. That was an eight percent increase over the previous year, and it tells us that credit card users are increasingly seeing the easy use of plastic as a substitute for the discipline of using banks and credit unions for borrowing.
Credit card companies in turn are increasingly willing to loan cash. It can be a very valuable service for their customers. But credit card companies are also increasing the fees and interest charges for cash advance. Your monthly statement gives you some of the fine print on how those charges are billed, but in most cases it doesn't tell you what those charges are. If you don't know it's always a good idea to call the customer service number on your statement and ask. It's no different than shopping for the best terms on a loan among banks and credit unions before signing on the dotted line.
The Cost of Buying Cash
When you use your credit card to buy new shoes or the latest CDs those products are yours to keep. You can use them for years to come and pay for them over a few months if you wish. But when you use your credit card for cash advance to pay for daily necessities like groceries and gasoline y ou will pay much more for that privilege. And you will have to give it all back as quickly as you can.
If you borrow $500 from one of the major credit card companies in the United States at contemporary rates, for example, you will be charged 3% of that amount (or a minimum of $5 for smaller loans) as an upfront transaction fee. You're interest rate (APR) for the loan will be set at 19.9%. If you determine to pay off the loan in four months your costs in fees and interest for the purchase of $500 will be $35.88 or more than 7% of the loan amount. If you pay it off in 8 months the cost will be $53.24 or nearly 11% of the loan amount.
But that's not all. If you read the small print on your statement you will learn that in most cases payments you make to your credit card company will be applied first to lower interest charge purchases before they begin to erase your debt for higher interest borrowing of cash. For example: If your credit card balance of $1000 includes a $500 cash advance and you pay back only $200 per month it will be three months before your payments begin to cover the advance That's three more months that the credit card company can charge you 19.9% interest on your original purchase of cash.
Guide to Balance Transfers
Balance Transfers
Are you tired of fighting high credit card fees? Why not lower your interest payments by transferring your balance to another card. Balance transfers are one the smartest and easiest ways to reduce credit card costs. Just be sure you understand the terms and conditions of the new card, so you can maximize your savings.
Before you run out and switch credit cards, consider whether you want to keep your current card. If you do, simply ask for a lower interest rate. Tell your credit card company you've found another card with a much lower rate and you'll have to transfer your balance if they can't cut you a deal. However, be prepared to do so if they refuse your request.
Why Use a Balance Transfer?
Balance transfers can provide card holders with a number of advantages. Transferring balances to a lower rate credit card can drastically reduce your interest rate and fees. Credit card companies charge varying interest rates on balance transfers and purchases. The most common rate is 0 percent for six through 12 months.
For example, the Chase Ultimate Rewards MasterCard and Citi Platinum Select MasterCard charge no interest for 12 months on balance transfers and purchases. The Discover Platinum Card and the Hess Visa from Chase drop the introductory rate after eight and six months, respectively.
Some cards link the introductory annual percentage rate (APR) to billing cycles. The GM Card and Fifth Third Bank Cash Rewards MasterCard, respectively, charge 0 percent APR for the first six and four cycles.
Transferring balances can also give you access to more perks. For example, you may be able to get a new card that has no annual fee, a longer payment grace period or cash back on purchases and other rewards. Some cards also offer car rental insurance, identity theft protection programs and money saving discounts.
Are you tired of fighting high credit card fees? Why not lower your interest payments by transferring your balance to another card. Balance transfers are one the smartest and easiest ways to reduce credit card costs. Just be sure you understand the terms and conditions of the new card, so you can maximize your savings.
Before you run out and switch credit cards, consider whether you want to keep your current card. If you do, simply ask for a lower interest rate. Tell your credit card company you've found another card with a much lower rate and you'll have to transfer your balance if they can't cut you a deal. However, be prepared to do so if they refuse your request.
Why Use a Balance Transfer?
Balance transfers can provide card holders with a number of advantages. Transferring balances to a lower rate credit card can drastically reduce your interest rate and fees. Credit card companies charge varying interest rates on balance transfers and purchases. The most common rate is 0 percent for six through 12 months.
For example, the Chase Ultimate Rewards MasterCard and Citi Platinum Select MasterCard charge no interest for 12 months on balance transfers and purchases. The Discover Platinum Card and the Hess Visa from Chase drop the introductory rate after eight and six months, respectively.
Some cards link the introductory annual percentage rate (APR) to billing cycles. The GM Card and Fifth Third Bank Cash Rewards MasterCard, respectively, charge 0 percent APR for the first six and four cycles.
Transferring balances can also give you access to more perks. For example, you may be able to get a new card that has no annual fee, a longer payment grace period or cash back on purchases and other rewards. Some cards also offer car rental insurance, identity theft protection programs and money saving discounts.
Getting Approved for a Credit Card
Getting approved
Getting approved for a credit card can be difficult without a positive credit history working in your favor. It's a Catch-22: To obtain a credit card, you need a good credit history. But to have a good credit history, you need to establish good credit!
This no-win cycle can keep people with a non-existent, limited or negative credit history from getting approved for a credit card. But it doesn't have to if you understand the type of credit cards available and how to build a good credit history.
When it comes to credit cards, the type of card you apply for will depend on your situation. If you're a student, you'll, naturally, sign up for a student card. But if you're a non-student with a non-existent or bad credit history, a card that is secured or obtained with a co-signer may be your best option.
Secured Credit Cards
With a secured card, you secure the card by depositing cash up front in a savings account or CD. The amount of funds you place on deposit will generally match your credit line. Your card issuer maintains a lien on the deposit account, which you stand to lose if you fail to make timely credit card payments.
While many people have heard of secured credit cards, unsecured or regular credit cards are more common. With an "unsecured" card, the issuing bank has no right to take specific assets of yours if you don't pay your bill. Instead, the bank would have to sue you or force you into bankruptcy to collect.
A secured MasterCard or Visa looks just like a regular one, and the law ensures that it has all the same consumer protections. However, a secured card typically carries a higher interest rate. But a secured card can be a good deal because it offers you the convenience of having a credit card while you work on establishing or rebuilding your credit.
Getting approved for a credit card can be difficult without a positive credit history working in your favor. It's a Catch-22: To obtain a credit card, you need a good credit history. But to have a good credit history, you need to establish good credit!
This no-win cycle can keep people with a non-existent, limited or negative credit history from getting approved for a credit card. But it doesn't have to if you understand the type of credit cards available and how to build a good credit history.
When it comes to credit cards, the type of card you apply for will depend on your situation. If you're a student, you'll, naturally, sign up for a student card. But if you're a non-student with a non-existent or bad credit history, a card that is secured or obtained with a co-signer may be your best option.
Secured Credit Cards
With a secured card, you secure the card by depositing cash up front in a savings account or CD. The amount of funds you place on deposit will generally match your credit line. Your card issuer maintains a lien on the deposit account, which you stand to lose if you fail to make timely credit card payments.
While many people have heard of secured credit cards, unsecured or regular credit cards are more common. With an "unsecured" card, the issuing bank has no right to take specific assets of yours if you don't pay your bill. Instead, the bank would have to sue you or force you into bankruptcy to collect.
A secured MasterCard or Visa looks just like a regular one, and the law ensures that it has all the same consumer protections. However, a secured card typically carries a higher interest rate. But a secured card can be a good deal because it offers you the convenience of having a credit card while you work on establishing or rebuilding your credit.
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