credit history http://www.wisebread.com/taxonomy/term/12012/all en-US How to Bounce Back From a Bankruptcy http://www.wisebread.com/how-to-bounce-back-from-a-bankruptcy <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-bounce-back-from-a-bankruptcy" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_savings_protection.jpg" alt="Woman savings protection" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Whether you've filed Chapter 7 or 11, bankruptcy is not ideal &mdash; but it's also not the end of the world. You've made some monetary missteps along the way, sure, but if you learn from those mistakes, you'll emerge from the ashes of financial ruin stronger than ever. Heed this advice on how to bounce back from bankruptcy and start your life anew. (See also: <a href="http://www.wisebread.com/11-steps-to-take-when-bankruptcy-is-your-only-option?ref=seealso" target="_blank">11 Steps to Take When Bankruptcy Is Your Only Option</a>)</p> <h2>Adopt this mantra: &quot;This is not the end, but a new beginning&quot;</h2> <p>Bankruptcy is not only financially devastating, but there are psychological effects to losing nearly everything. You may experience feelings of loss, shame, and anger as a result of filing for bankruptcy, but it's important to remember that this is only a <em>temporary</em> situation. It's also helpful if you look at it as a <em>solution</em>. This solution may have been a last-ditch effort &mdash; and it probably cost you much of what you've worked for thus far &mdash; but it's a solution nonetheless.</p> <p>This is not the end. Rather, it's a new beginning, and you'll get your life back on track faster if you get yourself in that mindset.</p> <h2>Obtain your full credit report to ensure everything is clear</h2> <p>Once your bankruptcy paperwork is filed and the proverbial wheels are in motion, it's your duty to double-check that all the I's have been dotted and T's crossed so you can start rebuilding your life. One of those starting points is making sure your credit report accurately reflects your bankruptcy status.</p> <p>Personal finance and banking expert Alex Gerard, founder of CardsMix, suggests requesting the annual free copy of your credit report from <a href="http://www.annualcreditreport.com" target="_blank">AnnualCreditReport.com</a> and cross-referencing your information from all three major credit bureaus &mdash; Equifax, Experian, and TransUnion &mdash; to ensure that everything is up to date and reported exactly the same.</p> <p>&quot;Check that all the accounts that were included in a bankruptcy are noted as having zero balance and are not in default/derogatory status,&quot; he says. &quot;For every account that is not correct on your credit report, file a dispute with all three credit agencies.&quot;</p> <p>The discrepancy &mdash; if there is one &mdash; may take some time to resolve, but it's necessary to do your due diligence so a technical error doesn't continue damaging your credit.</p> <h2>Recognize and accept where you went wrong with your money</h2> <p>A big part of the transition from bankruptcy to getting back on your feet is recognizing where you went wrong and accepting responsibility for what was in your control. Think of this stage as a self-induced rehabilitation program. The hardest part is admitting you had a problem and pinpointing where you went wrong, so you don't make the same mistakes again. It's also wise, if your spending was out of control, to identify your spending triggers so you can avoid those in the future and increase your chance of success.</p> <h2>Make amends with your previous financial habits and vow to change</h2> <p>What's done is done &mdash; you can't change the past. You are, however, in complete control of the future. Make amends with what went wrong that led to your bankruptcy and put those issues to bed; no reason to beat yourself up over it now. Instead, focus on the future and commit to changing those habits that put you in this predicament.</p> <h2>Get a new credit card to start reversing your circumstances</h2> <p>Getting a new credit card after you've just filed for bankruptcy might seem counterintuitive to rebuilding your financial foundation, but, in fact, you've probably never needed a credit card more than right now.</p> <p>Usually, options are limited to <a href="http://www.wisebread.com/a-secured-credit-card-can-repair-your-credit-score-heres-how-to-pick-the-best?ref=internal" target="_blank">secured credit cards</a> which require a security deposit, but there is an overlooked option to get a retail store card since many store cards are, in fact, bankruptcy-friendly. Their high APRs, low credit limits, and for store-use only limitations allow them to approve those with lower credit scores.</p> <p>Use this card to pay for expenses that you can turn around and pay back in full every month. The habit of paying in full and on time will gradually start to rebuild your credit.</p> <p>Be wary, however; fresh plastic in your hand doesn't mean it's time for a spending spree. That may be how you got into trouble in the first place, and you don't want to fall back into old habits. If you don't think you can handle the pressure of having a credit card in your pocket all the time, leave it at home in a safe place and use it sparingly with the intention of paying off the full balance each month. If you can't afford to pay in full whatever you're charging, do not use it. (See also: <a href="http://www.wisebread.com/best-credit-cards-to-rebuild-credit-after-bankruptcy?ref=seealso" target="_blank">Best Credit Cards to Rebuild Credit After Bankruptcy</a>)</p> <h2>Consider a credit builder loan</h2> <p>A credit builder loan, sometimes also called a &quot;fresh start&quot; loan, can be another smart way to boost your credit score after a bankruptcy. These small loans, usually offered by credit unions and community banks, approve borrowers' applications even if they have no or poor credit and can be for as little as $100. Often, the lender will deposit the loan amount into a locked savings account that can only be accessed by the borrower when the loan is repaid in full &mdash; which, in turn, protects both parties. If you pay the loan as agreed, a good report is sent to the credit bureaus.</p> <h2>Live on less to save more</h2> <p>Now it's time for some truth telling: If you've filed for bankruptcy, you're broke, and your lifestyle should reflect that. I'm not suggesting you live in a box under a bridge, but you will need to reevaluate your expenses and find ways to reduce your overall cost of living so you can start rebuilding your savings, emergency and retirement funds, and whatever other financial resources you've recently depleted. Taking the time to restructure your budget while simultaneously cutting the fat from it is a positive step forward, but there are many other <a href="http://www.wisebread.com/10-simple-ways-to-start-living-on-less-today" target="_blank">ways to start living on less</a>.</p> <h2>Redefine your worth</h2> <p>As I said in the beginning of this article, bankruptcy isn't the end. Millions of people have bounced back from bankruptcy to great success, and so can you. Dedicate yourself to becoming a success story instead of a victim of your own undoing and the rebuilding process won't be as arduous as it may seem. This is your life, after all &mdash; your one and only, for that matter &mdash; and you owe it to yourself and your family (if you have one) to be financially stable while practicing good money habits so you can live a happy life. You're worth at least that much.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-to-bounce-back-from-a-bankruptcy&amp;media=%20http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520to%2520Bounce%2520Back%2520From%2520a%2520Bankruptcy.jpg&amp;description=How%20to%20Bounce%20Back%20From%20a%20Bankruptcy"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/How%20to%20Bounce%20Back%20From%20a%20Bankruptcy.jpg" alt="How to Bounce Back From a Bankruptcy" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/how-to-bounce-back-from-a-bankruptcy">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-signs-youre-making-all-the-right-money-moves">6 Signs You&#039;re Making All the Right Money Moves</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-things-you-should-know-about-debt-relief-lawyers">5 Things You Should Know About Debt Relief Lawyers</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-money-conversations-parents-should-have-with-their-adult-kids">7 Money Conversations Parents Should Have With Their Adult Kids</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-financial-resolutions-you-can-conquer-before-new-years">10 Financial Resolutions You Can Conquer Before New Year&#039;s</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/reach-your-money-goals-faster-with-a-simple-naming-trick">Reach Your Money Goals Faster With a Simple Naming Trick</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance bankruptcy budgeting chapter 11 chapter 7 credit builder loans credit history credit score rebuilding saving money Tue, 05 Dec 2017 10:00:06 +0000 Mikey Rox 2065223 at http://www.wisebread.com Credit Challenged? How Alternative Credit Data Can Help Those With Little or No Credit http://www.wisebread.com/credit-challenged-how-alternative-credit-data-can-help-those-with-little-or-no-credit <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/credit-challenged-how-alternative-credit-data-can-help-those-with-little-or-no-credit" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/young_woman_working_at_her_office.jpg" alt="Young Woman Working at her office" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you've got no credit file, or a very thin one, you know how hard it can be to get a credit card or loan. Without a credit record, you can't get a credit score, and lenders can't easily judge how much of a credit risk you are.</p> <p>Don't give up. Lenders are slowly beginning to consider other kinds of information when making credit decisions. That may help you get approved for credit, even without a traditional credit score. But it's important to also understand how this so-called alternative data is used, and the implications for your privacy.</p> <h2>What is alternative data?</h2> <p>Traditional credit data relies on information about how you've used credit or debt in the past. It is compiled by the three major credit bureaus: Equifax, Experian, and TransUnion. That data is then used by the major scoring companies, FICO and VantageScore, to build your credit scores. (See also: <a href="http://www.wisebread.com/how-to-read-a-credit-report?ref=seealso" target="_blank">How to Read a Credit Report</a>)</p> <p>Maybe you haven't had experience with credit, or you had a negative experience that doesn't tell the whole story of how you would behave now with a new loan. Alternative data providers look at how reliably you've paid rent, utility bills, or rent-to-own agreements. They dig up nonpayment information, too.</p> <p>For instance, LexisNexis Risk Solutions gathers publicly available documents that show your professional licenses, evidence of college attendance, ownership of assets such as a home or boat, felony convictions, and your address stability. &quot;Address stability is the concept that if you're living in the same address for a period of time, you're more stable than if you're bouncing around four times a year,&quot; says Ankush Tewari, senior director of credit risk assessment at LexisNexis Risk Solutions. &quot;Multiple client studies have shown that people who move frequently are riskier than people who have a stable address history.&quot;</p> <p>LexisNexis Risk Solutions says the data it collects all has some proven ability to predict creditworthiness. By adding this sort of data to regular credit bureau data, it can help score about 40 million consumers who don't have a regular credit score. The company has paired with FICO and credit bureau Equifax to create an alternative credit score called the FICO Score XD. It's only for people whose credit files are so thin they can't get a regular credit score, and it relies on payment data from a consumer's utility, phone, and other bills.</p> <p>According to FICO, the new score should allow lenders to score more than half of all previously unscorable applicants. It's found that more than a third of those people turn out to have a FICO Score XD of at least 620, the cutoff point many lenders use for even considering a credit application. That means more people should be getting approved for credit. The trouble is, the product is so new, FICO has not revealed how many lenders are using it.</p> <p>TransUnion has had a similar scoring model called CreditVision Link since 2015, which incorporates a trended look at traditional credit data (how you've performed over time) with non-credit-related data collected from consumers' banking accounts, payday lending histories, and property, deed, and tax records. TransUnion told The New York Times that about 100 companies &mdash; primarily auto lenders and online lenders, but also an increasing number of credit card issuers &mdash; are using or testing the score. They're usually able to approve about 20 percent more applicants than they could before.</p> <h2>How alternative data can help you</h2> <p>The driving force behind the use of alternative data is lenders' desire to reach new customers who are creditworthy but can't show it through traditional means. &quot;Lenders tell us, 'We don't need help declining more people. We need help growing our business but without increasing our credit risk,'&quot; says LexisNexis's Tewari.</p> <p>That should mean good news for consumers who have been responsible with their finances but who haven't had a chance to build credit or have stumbled along the way. Alternative data may help increase your chances of being approved for a loan or credit card. &quot;It allows consumers to show that, while they may not be in a position to get a mortgage or a car payment, or they have no desire to get a credit card, they are still taking care of everyday financial responsibilities,&quot; says Kim Cole, community engagement manager for Navicore Solutions, a nonprofit credit counseling agency in Manalapin, New Jersey.</p> <p>A new company called FS Card is using alternative data to offer a credit card called Build Card to people who would otherwise have been rejected for a credit card. Build Card's target market is consumers with credit scores of 620 or below, meaning their credit is considered subprime. In the past, the only kind of card these consumers probably would have been able to get is a secured card, which requires a deposit of several hundred dollars upfront.</p> <p>Build Card asks applicants to agree to let the company use alternative data to assess their risk. In addition to traditional credit data, Build Card looks at payday loan information to determine whether an applicant is creditworthy. &quot;We're looking for an inflection point that shows the consumer has changed and is able to take on regular credit,&quot; says Marla Blow, CEO of FS Card. Typically this means they've been able to close out a payday loan. &quot;We're looking at the top 15&ndash;20 percent of payday loan users,&quot; she says.</p> <p>If the applicant is approved, they'll be given a regular credit card &mdash; no security deposit required. Granted, there is a $53 upfront fee, APRs are 25&ndash;29 percent, and the initial credit limit is only $500. But it's a step up from a payday loan. And if you do well with the initial credit limit, you can eventually have it increased to $750.</p> <h2>Concerns about privacy and transparency</h2> <p>One of the biggest concerns with alternative data is that people don't know it's being collected and used. Not everyone wants their financial history and other information rounded up and made available to financial institutions. And, as with any organization that collects personal information, there is always the chance that a data breach could happen. It's one thing if information that was already publicly available is stolen, but it may be more worrisome if you've voluntarily shared payment information that then gets disclosed in a breach.</p> <p>Beyond privacy and security, there are concerns about transparency. If you don't know what information lenders might look at when they're making lending decisions, you can't shape your behavior appropriately. For instance, maybe if you knew that bank overdrafts not only cost you money, but could also cause a lender to frown on your credit card application someday, you would be even more careful about not overdrawing. That's why some consumer advocates say you should first be asked whether you want to opt in to the collection and use of this sort of data.</p> <p>Consumer groups also worry about the accessibility of information that's being collected. &quot;People need to have access to data collected about them,&quot; says Linda Sherry, director of national priorities at Consumer Action. &quot;They need to be able to verify that it's accurate and to put notes on it to say what's happened in their life to justify why these things are happening to them.&quot;</p> <p>You already have those rights when it comes to data on your traditional credit report. The Fair Credit Reporting Act (FCRA) gives you the right to access your credit reports and if you find an error, it says the credit bureau must investigate and so must the bank or credit card issuer who furnished the data. The FCRA also requires creditors and employers to notify you if they've rejected you based on information in your credit report. That way, you can check the information and dispute it if it's incorrect.</p> <p>LexisNexis says you also have those same rights with the alternative data it collects. If you are, say, turned down for a loan because you've got a lien or judgment, you should be notified of that and given the chance to dispute any inaccuracies in the reporting. &quot;Alternative data must be compliant with the FCRA, which requires consumers have access to data that's used in credit decisions,&quot; says Tewari, who adds that his company allows consumers unlimited free access to the data it has on file. You can request it at any time, and as many times as you like. &quot;They have the ability to review it and correct it if there's an error,&quot; he says.</p> <h2>What you can do</h2> <p>While data collectors and lenders are in the driver's seat when it comes to the use of alternative data, there are still some things you can do to build your credit.</p> <h3>1. Pay all of your bills on time</h3> <p>This is always important, but even more so in times when companies are collecting information about how you pay all kinds of bills. Keeping on top of payments could help you build credit that you'll need in the future. Avoid overdrafts on your checking account, too, as this is a costly behavior that could also mar your alternative credit profile.</p> <h3>2. Check your traditional credit report and dispute any errors</h3> <p>&quot;If someone has been denied by the big lenders, that's a wake-up call that they need to go into their credit report, figure out why they're being denied, clean up the credit report as much as they can, and get back on track with a good credit history,&quot; says Consumer Action's Sherry. &quot;That's the best way to show yourself as someone that lenders will trust.&quot;</p> <h3>3. Get a secured card</h3> <p>This is the traditional way to go, and it works. Save up $300, use it as a deposit on a secured credit card, get a $300 credit line, then only make a small purchase with it a few times a year. At the end of a year &mdash; maybe sooner &mdash; you should have built enough credit to get a regular credit card. (See also: <a href="http://www.wisebread.com/the-5-best-secured-credit-cards?ref=seealso" target="_blank">The Best Secured Credit Cards</a>)</p> <h3>4. Ask your lender to look at FICO Score XD</h3> <p>Since this scoring model is fairly new, you likely won't see any immediate results if you request a lender review it. Banks have to pay to get access to this scoring model. But eventually if lenders see enough demand from consumers, they will begin to adopt it. It certainly can't hurt to ask.</p> <h3>5. Consider providing your own alternative data</h3> <p>If you're applying for a loan, it may help to present letters of good standing from your landlord, utility providers, or other monthly services that you pay on time.</p> <h3>6. Don't worry &mdash; yet &mdash; about modifying your behavior to fit the FICO Score XD model</h3> <p>For instance, if you really need to change addresses for the second time in a year, don't hold back just because it might affect your alternative credit score. A whole host of factors goes into most lenders' credit decisions, so no one factor is given too much weight.</p> <h3>7. Monitor your alternative credit record</h3> <p>This is not as easy as monitoring your traditional credit record, but if you're interested you can find out who's collecting your financial details by consulting the Consumer Financial Protection Bureau's list of <a href="http://files.consumerfinance.gov/f/201604_cfpb_list-of-consumer-reporting-companies.pdf" target="_blank">42 consumer reporting companies</a>. You'll have to check with each company's website to find out how to get your free annual report.</p> <h3>8. Correct mistakes if they arise</h3> <p>If you get a note that you've been denied credit due to a piece of alternative data, ask who furnished the information, and make sure it's accurate. You have the same right to dispute errors in alternative data as you do with traditional information on your credit report.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fcredit-challenged-how-alternative-credit-data-can-help-those-with-little-or-no-credit&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FCredit%2520Challenged-%2520How%2520Alternative%2520Credit%2520Data%2520Can%2520Help%2520Those%2520With%2520Little%2520or%2520No%2520Credit%2520%25282%2529_0.jpg&amp;description=Credit%20Challenged%3F%20How%20Alternative%20Credit%20Data%20Can%20Help%20Those%20With%20Little%20or%20No%20Credit"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/Credit%20Challenged-%20How%20Alternative%20Credit%20Data%20Can%20Help%20Those%20With%20Little%20or%20No%20Credit%20%282%29_0.jpg" alt="Credit Challenged? How Alternative Credit Data Can Help Those With Little or No Credit" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/yasmin-ghahremani">Yasmin Ghahremani</a> of <a href="http://www.wisebread.com/credit-challenged-how-alternative-credit-data-can-help-those-with-little-or-no-credit">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-6"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-the-new-credit-card-formula-means-for-your-wallet">What the New Credit Card Formula Means for Your Wallet</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-surprising-things-lenders-check-besides-your-credit-score">4 Surprising Things Lenders Check Besides Your Credit Score</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-times-you-should-never-take-a-loan">6 Times You Should Never Take a Loan</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-three-interest-rates">The Three Interest Rates</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-bounce-back-from-a-bankruptcy">How to Bounce Back From a Bankruptcy</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Banking alternative credit data borrowing credit history credit score lending privacy Tue, 10 Oct 2017 09:00:06 +0000 Yasmin Ghahremani 2033790 at http://www.wisebread.com 7 Things Your Credit Report Does NOT Include http://www.wisebread.com/7-things-your-credit-report-does-not-include <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-things-your-credit-report-does-not-include" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-629305628_0.jpg" alt="these things don&#039;t show up in your credit reports" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Ordering your credit reports every year and studying them carefully is a smart way to get a window into your financial well-being. But while credit reports contain a wealth of information about your history with money, they don't tell you <em>everything </em>about your financial health.</p> <p>In fact, there is plenty of financial information you won't find in any of your credit reports.</p> <h2>1. Your credit score</h2> <p>Your credit score is a key financial number. It gives lenders a snapshot of how responsible you've been with your finances. If you have thousands of dollars of credit card debt and you routinely pay bills late, your credit score will be low. If you pay your bills on time and you are using a smaller percentage of your available credit, your score will be high.</p> <p>Unfortunately, your credit report does not contain your credit score. To obtain your score, you'll have to pay one of the three national credit bureaus for it. Your credit card provider might also list a credit score on your monthly statements. This score might not be your official FICO credit score &mdash; the one most lenders rely on when deciding whether to lend you money. It can still give you a general idea of where you stand, though, and is worth keeping track of. (See also: <a href="http://www.wisebread.com/fico-or-fako-are-free-credit-scores-from-credit-cards-the-real-thing?ref=seealso" target="_blank">FICO or FAKO: Are Free Credit Scores From Credit Cards the Real Thing?</a>)</p> <h2>2. Your payments to utility companies</h2> <p>You pay your gas and electric bills on time every month. You might think that this key indicator of your financial responsibility would be listed on your credit report. Unfortunately, it's not. Utilities don't report payments to the credit bureaus.</p> <p>This means that your on-time payments to utility providers don't help your credit score. Late payments aren't reported, either. But be careful: If you're far enough behind on your payments that a utility sends your account to collections, that will show up on your credit report. And that black mark will give lenders reason to hesitate when deciding whether you qualify for a loan. An account in collections can also send your credit score plummeting by 100 points or more. (See also: <a href="http://www.wisebread.com/account-in-collections-heres-how-to-fix-it" target="_blank">Account in Collections? Here's How to Fix It</a>)</p> <h2>3. Your rent payments</h2> <p>Paying your rent on time probably won't help your credit score, either. That's because most landlords still don't report rent payments to the credit bureaus, meaning that these payments don't show up on your credit report.</p> <p>There are services today, though, that landlords can use to report rent payments to the bureaus. Most landlords don't use these services yet, but the fact that they are available could be a sign that rent information will become more common on credit reports in the future.</p> <h2>4. Medical bills</h2> <p>The payments you make to doctors, dentists, and other medical professionals don't show up on your credit reports, either. Again, this is because doctors don't report payment information to the credit bureaus.</p> <p>Paying these bills late, though, could show up on your credit report if your medical providers send your account to a collections agency.</p> <h2>5. Your salary</h2> <p>You'd think the money you earn would be a key indicator of your financial health, and it is. But it's not an indicator of how likely you are to pay your bills on time and manage your credit. Because of this, it doesn't show up on your credit reports.</p> <h2>6. A job loss</h2> <p>Your credit reports do provide some basic employment information, with some listing your past and most recent employers. But if you've just lost your job, that information won't be included in your report. Your reports never mention whether you are still employed, and they don't list how long you've worked with any one company.</p> <h2>7. Your spouse's credit history</h2> <p>Your credit reports list financial information about you and you alone. If you're married, your spouse's history of paying bills and running up debt won't show up.</p> <p>However, if you and your spouse both have your names on a loan or credit card, that debt will show up on both of your credit reports. So will late payments you made on these accounts, even if paying the bills was your spouse's responsibility and not yours.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F7-things-your-credit-report-does-not-include&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F7%2520Things%2520Your%2520Credit%2520Report%2520Does%2520NOT%2520Include.jpg&amp;description=7%20Things%20Your%20Credit%20Report%20Does%20NOT%20Include"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/7%20Things%20Your%20Credit%20Report%20Does%20NOT%20Include.jpg" alt="7 Things Your Credit Report Does NOT Include" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/7-things-your-credit-report-does-not-include">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-9"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-often-your-credit-score-gets-calculated">Here&#039;s How Often Your Credit Score Gets Calculated</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-apps-that-monitor-your-credit-for-you">7 Apps That Monitor Your Credit for You</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-why-you-shouldnt-freak-out-if-you-miss-a-payment-due-date">Here&#039;s Why You Shouldn&#039;t Freak Out If You Miss a Payment Due Date</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/pay-these-6-bills-first-when-money-is-tight">Pay These 6 Bills First When Money Is Tight</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-protect-your-credit-after-the-equifax-breach">How to Protect Your Credit After the Equifax Breach</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance bills collections credit history credit reports credit score Equifax Experian income payments rent TransUnion utilities Fri, 22 Sep 2017 08:30:11 +0000 Dan Rafter 2024892 at http://www.wisebread.com How Your Bad Credit Can Impact Your Kids http://www.wisebread.com/how-your-bad-credit-can-impact-your-kids <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-your-bad-credit-can-impact-your-kids" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/working_at_home.jpg" alt="Working at home" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>This is not about laying the guilt on you as a parent (there's already plenty of that to go around). However, you need to know that bad credit not only impacts your financial situation, but can also have long-term effects on your kids. Here's what you need to know.</p> <h2>It could keep them from getting a student loan</h2> <p>Co-signing a student loan should not be the default decision in helping your child afford college. Co-signing can cause serious financial problems for you down the line if your child cannot afford to make the loan payments. However, if you do decide you want to help your child apply for a student loan by co-signing, a poor credit score could prevent you from doing so. Your negative credit history will come up in the loan application and can cause it to be denied.</p> <p>Being unable to get a student loan means that your child may have to choose from limited educational options. Is that the end of the world? No, of course not. But certain career tracks depend on specific educational programs, and limited college options can make that difficult.</p> <p>Federal student loans, however, are still an option for your child even if you have poor credit. The Perkins loan and the Stafford loan, for example, have fixed interest rates and don't depend on credit history to determine eligibility.</p> <h2>It could make it more difficult for them to establish a credit history</h2> <p>College is often the time when young adults start establishing their own, independent credit history. That seems like no problem, until you realize that &quot;independent credit history&quot; isn't so independent at first.</p> <p>In fact, many credit card companies require a co-signer on a card if the primary applicant is under 21 years of age. That means that if you want to co-sign on a card to help your child start building credit, your own bad credit can cause your child's application to be denied. Keeping your kid out of credit card debt is great, but well-managed use of a credit card is often a great way to start establishing credit history. It's tough to get credit for a bigger purchase when there's no credit history to check.</p> <p>A <a href="http://www.wisebread.com/5-best-secured-cards-with-no-annual-fee?ref=internal" target="_blank">secured credit card</a> may be a good alternative, but keep a careful eye on hidden fees and increasing interest rates. The key to using a secured credit card successfully is to pay it off in full each month; otherwise, the high interest rates will cost you and your child much more than it's worth to build that credit history.</p> <h2>It could teach them poor financial habits</h2> <p>If your bad credit is a result of poor financial habits, you may have passed those &mdash; and a bad attitude toward money in general &mdash; on to your kids. (See also: <a href="http://www.wisebread.com/4-bad-money-habits-youre-teaching-your-kids?ref=seealso" target="_blank">4 Bad Money Habits You're Teaching Your Kids</a>)</p> <p>If they haven't learned from you how to budget, how to save, and how to plan for the future, they probably don't know how to do it. And if you're not showing them how to handle financial stress in a healthy way, or communicate with each other about financial issues, chances are they won't learn how.</p> <p>The great news is that you can all learn together, starting now. A poor financial past does not have to mean a poor financial future. You can change your habits and your attitudes, and there's help available to do so. Start with financial counseling to figure out how you (and your kids) can build better financial habits for today and for the future.</p> <h2>It could prevent them from accessing opportunities</h2> <p>There are often special extracurricular activities, such as field trips, tutoring, music lessons, and more, which come with a hefty price tag. Many parents can't afford these expenses outright, but can use a credit card or other loan option to pay for the expense and then pay that debt off within a few months.</p> <p>Poor credit can keep you from being able to access this payment option for these extra expenses, which means your child may have to pass on them. If your child is focused on a future that involves art, music, or sports, those missed opportunities may really matter.</p> <p>However, it's worth noting that, in general, there are inexpensive options to build a stellar academic resume. Look into free extracurricular activities such as volunteering in local communities, trading lessons for service or help, or applying for scholarships for workshops and camps. (See also: <a href="http://www.wisebread.com/save-on-school-expenses-without-ruining-your-kids-childhood?ref=seealso" target="_blank">Save on School Expenses Without Ruining Your Kid's Childhood</a>)</p> <h2>It can negatively impact their home life</h2> <p>Poor credit can have a major impact on your ability to access housing, transportation, and work. It isn't fair to be judged solely by your credit score; unfortunately, it happens.</p> <p>Poor credit might prevent you from getting a lease, which can make your living conditions unstable and bring a lot of stress into your life. You might encounter the same issues being unable to get a car loan, which means you have to rely on public transportation, rides from friends, or an old, unreliable car for getting around.</p> <p>Of course, living and transportation issues can make getting to work difficult. If your job is unstable, your income is unstable. This instability leads to more financial issues and stress, all of which can directly impact your child's life at home. It's a vicious cycle.</p> <h2>What can you do?</h2> <p>Despite the negative consequences of bad credit, there are steps you can take right now to start improving things. It's not just for you; it's also for your kids. Here's a short list to get you started.</p> <h3>Get financial counseling</h3> <p>There are resources available, such as confidential, low-fee credit counseling from nonprofit organizations. A good place to find help is through the <a href="https://www.nfcc.org/" target="_blank">National Foundation for Credit Counseling</a> and the <a href="http://fcaa.org/" target="_blank">Financial Counseling Association of America</a>. You can also ask at your local credit union and religious or nonprofit organizations. Many of these places offer free or low-cost access to financial advisers, credit counseling, and debt management. (See also: <a href="http://www.wisebread.com/8-organizations-that-really-can-help-you-with-your-debt?ref=seealso" target="_blank">8 Organizations That REALLY Can Help You With Your Debt</a>)</p> <h3>Start taking steps now to deal with your bad credit</h3> <p>Don't put this off another moment longer. <a href="http://www.wisebread.com/credit-counseling-when-you-need-it-and-when-you-dont" target="_blank">Credit counseling</a>, <a href="http://www.wisebread.com/5-tricks-to-consolidating-your-debt-and-saving-money" target="_blank">debt consolidation</a>, <a href="http://www.wisebread.com/7-unnecessary-household-expenses-you-can-cut-today" target="_blank">lowering expenses</a>, and even <a href="http://www.wisebread.com/11-steps-to-take-when-bankruptcy-is-your-only-option" target="_blank">declaring bankruptcy</a> may be good options.</p> <p>Dealing with poor credit is not easy. However, you're not alone. Many people have <a href="http://www.wisebread.com/your-bad-credit-isnt-the-end-of-the-world" target="_blank">dealt with bad credit</a> and come through it stronger than ever, and you can, too. No matter how tough your financial past has been, you can build positivity for your kids by communicating, being proactive, and looking for ways forward, together.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-your-bad-credit-can-impact-your-kids&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520Your%2520Bad%2520Credit%2520Can%2520Impact%2520Your%2520Kids.jpg&amp;description=How%20Your%20Bad%20Credit%20Can%20Impact%20Your%20Kids"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/How%20Your%20Bad%20Credit%20Can%20Impact%20Your%20Kids.jpg" alt="How Your Bad Credit Can Impact Your Kids" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/annie-mueller">Annie Mueller</a> of <a href="http://www.wisebread.com/how-your-bad-credit-can-impact-your-kids">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-questions-to-answer-before-giving-your-kid-a-credit-card">4 Questions to Answer Before Giving Your Kid a Credit Card</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-smart-financial-gifts-to-give-your-kids-this-year">6 Smart Financial Gifts to Give Your Kids This Year</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/teach-your-kids-about-money-with-their-holiday-gift-lists">Teach Your Kids About Money With Their Holiday Gift Lists</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-use-the-holidays-to-teach-kids-about-money">How to Use the Holidays to Teach Kids About Money</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-family-money-matters-your-kids-dont-need-to-know">9 Family Money Matters Your Kids Don&#039;t Need to Know</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Family bad credit children co-signing credit history financial habits impact kids negative stress student loans Thu, 21 Sep 2017 08:00:06 +0000 Annie Mueller 2022638 at http://www.wisebread.com 9 Ways Expats Can Maintain Their Credit Scores http://www.wisebread.com/9-ways-expats-can-maintain-their-credit-scores <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/9-ways-expats-can-maintain-their-credit-scores" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/friends_vacation_travel_528477676.jpg" alt="Expats learning how to maintain their credit scores" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Moving abroad can feel like the ultimate fresh start. But one element of American life you should never jettison is your good credit. Your U.S. credit score may not mean much in a foreign land, but assuming that you are not relocating for the rest of your life, you'll need that credit score someday when you come back. Rather than letting your credit score fall out of good graces, here's how you can maintain it while living abroad:</p> <h2>1. Don't run away from debts or financial obligations</h2> <p>At the end of college, my boyfriend and I landed exciting jobs in Beijing. The only problem was that we had a yearlong lease on our college apartment with nine more months left on it. When we couldn't find a subletter, we ditched and hoped for the best.</p> <p>Bad idea. When the landlord stopped receiving rent checks, he threatened to report us to a collections agency and to the credit bureaus. We ended up negotiating a partial payment, and we learned a valuable lesson: You can't run away from what you owe.</p> <h2>2. Keep your credit cards open</h2> <p>You're off to live in the jungles of <em>Tropicanaland</em>, where the only currency accepted is the cowrie shell. So why would you need those plastic credit cards that have to be paid in U.S. dollars?</p> <p>Keep them &mdash; especially the ones you've held longest &mdash; because <a href="http://www.wisebread.com/why-the-age-of-your-credit-history-matters" target="_blank">the age of your credit accounts</a> is a factor in your credit rating. Imagine you had just one credit card. If you have had that card for 12 years, close it when moving abroad for three years, then come home and have to open a new account, your average account age just went from 12 to zero. That will hurt your credit score. If you keep it open while you're gone, you'll instead come home to an average account age of 15.</p> <p>Another way that keeping your credit cards open benefits your credit score: It improves your <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score" target="_blank">credit utilization ratio</a>, which calculates the percent of available credit that you're using. The higher this ratio, the more negatively it will impact your credit score. If your cards are paid off, and you leave them open, the amount of available credit you have increases &mdash; raising your credit score.</p> <h2>3. Find a way to use your credit cards periodically</h2> <p>The largest single factor for your credit score is whether you make payments on time. If you're not using your credit, you have no opportunity to demonstrate that you pay on time, which could hurt your score. Not only that, but a card issuer may close an account that sits dormant for years. There's no hard rule on when that might happen, but if you're going to be overseas for a very long time, it's a risk. (See also: <a href="http://www.wisebread.com/how-to-avoid-getting-your-credit-card-canceled?ref=seealso" target="_blank">How to Avoid Getting Your Credit Card Canceled</a>)</p> <p>To keep your payment track record going and to prevent an account from being considered inactive, find some regular expenses to set up on autopay. Maybe you still belong to a U.S. professional organization that you pay dues to, or want to support your favorite charity with an annual gift.</p> <p>In many, even most, countries, you could use your U.S. credit cards on local purchases. However, you might be paying foreign transaction fees or losing money due to the exchange rate. Also, if most of your income is earned abroad, it might be hard for you to pay for a lot of ongoing charges in U.S. dollars. Consult the card issuing bank and consider the exchange rate implications before deciding to use your credit cards abroad long term. (See also: <a href="http://www.wisebread.com/follow-these-5-credit-card-rules-when-traveling-abroad?ref=seealso" target="_blank">Follow These 5 Credit Card Rules When Traveling Abroad</a>)</p> <p>Of course, in order to pay for these charges, you'll probably also need to keep a U.S. checking account open and funded.</p> <h2>4. Establish online accounts</h2> <p>When I lived abroad, I had to rely on my mother to open my mail and make sure any charges got paid. This could get embarrassing, like the time my mom asked why I was spending hundreds at a place called &quot;Casino.&quot; I had to explain that this was really, truly the name of a French grocery store.</p> <p>Nowadays, if you are living in a location with unfettered internet access, you may be able to handle your business without stateside help. Before you go overseas, establish online access to your checking and credit accounts. This should allow you to not only pay your bills remotely, but also monitor your accounts for fees, fraud, and overdrafts &mdash; other potential causes of credit score damage. You can even choose to have your credit card bill paid out of your checking account automatically, if you're confident that the funds there will cover the bills.</p> <h2>5. Touch base with your banks and credit accounts before you move</h2> <p>It's always a good idea to inform banks and creditors when you're traveling, but even more so if you are moving away long term. They may have special hotlines for contacting them if you need help overseas. And knowing where you live could help your card issuer catch fraud more easily.</p> <h2>6. Maintain a U.S. address</h2> <p>Seasoned expats advise this for a number of credit-related reasons. Some banks, credit cards, and investment accounts might not be set up to do business with a foreign address. If for some reason you want to open a new account, you'll need a domestic address to do so.</p> <p>You can use a friend or relative's address or a mailbox service. Either way, make sure you are able to actually read any correspondence you get in a timely manner. That way, if a bank or credit account sends you a warning notice, you'll know right away and avoid credit-damaging mistakes. Fortunately, there are now services that will open and scan all mail for you, in case you don't have anyone you trust at home to do this.</p> <h2>7. Pay your taxes</h2> <p>If you don't pay money you owe to the U.S. Internal Revenue Service, you could end up with a tax lien sitting on your credit report for the next seven to 10 years &mdash; and good luck getting any credit in the U.S. while that is sitting there stinking things up.</p> <p>You may or may not owe taxes while you are living and working abroad, but you should still file a tax return every year. You can claim a credit for any taxes you pay to a foreign government, which may eliminate your tax burden to the IRS. However, you'll still owe for any taxable U.S. investment gains or income such as rent payments on a U.S. property you own. It's especially important to report foreign bank and investment accounts to the IRS. Some expats advise hiring an accountant who specializes in Americans living abroad to file your tax return.</p> <h2>8. Expect to spend time shoring up credit when you return</h2> <p>If your only use of credit during a decade overseas was credit cards, you may have saved your credit profile from oblivion, but it still won't be as great as it might have been if you'd stayed home. That's because about 10 percent of your credit score is based on having a healthy mix of credit types: not just &quot;revolving accounts&quot; like credit cards, but also installment loans such as a car loan or a mortgage.</p> <p>Get back on the credit horse when you get home, and after making a series of on-time installment loan payments, you should see your score improve.</p> <h2>9. Be vigilant against identity theft</h2> <p>Being far away might make it easier to miss the warning signs of identity theft, such as bills arriving at your home addressed to someone else. So monitor those online statements and check your credit report regularly. You might even consider paying for a credit monitoring service. (See also: <a href="http://www.wisebread.com/dont-panic-do-this-if-your-identity-gets-stolen?ref=seealso" target="_blank">Don't Panic: Do This If Your Identity Gets Stolen</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F9-ways-expats-can-maintain-their-credit-scores&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F9%2520Ways%2520Expats%2520Can%2520Maintain%2520Their%2520Credit%2520Scores.jpg&amp;description=9%20Ways%20Expats%20Can%20Maintain%20Their%20Credit%20Scores"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/9%20Ways%20Expats%20Can%20Maintain%20Their%20Credit%20Scores.jpg" alt="9 Ways Expats Can Maintain Their Credit Scores" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/carrie-kirby">Carrie Kirby</a> of <a href="http://www.wisebread.com/9-ways-expats-can-maintain-their-credit-scores">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/debunking-8-common-credit-score-myths">Debunking 8 Common Credit Score Myths</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-countries-where-you-can-retire-for-1000-a-month">5 Countries Where You Can Retire for $1,000 a Month</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/15-surprising-ways-bad-credit-can-hurt-you">15 Surprising Ways Bad Credit Can Hurt You</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-5-things-with-the-biggest-impact-on-your-credit-score">The 5 Things With the Biggest Impact on Your Credit Score</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-reasons-building-credit-in-college-helps-you-win-at-life">5 Reasons Building Credit in College Helps You Win at Life</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Travel abroad accounts americans credit age credit history credit scores debt expatriates expats identity theft IRS payment history taxes Mon, 18 Sep 2017 08:30:10 +0000 Carrie Kirby 2021975 at http://www.wisebread.com Debunking 8 Common Credit Score Myths http://www.wisebread.com/debunking-8-common-credit-score-myths <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/debunking-8-common-credit-score-myths" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_paying_with_credit_card_on_smart_phone.jpg" alt="Man paying with credit card on smartphone" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Credit: Like it or loathe it, most of us need it to survive. And the kind of credit we have access to is dependent on our credit scores. A mortgage, a car payment, credit cards, and even health care financing all impact and depend on our credit score.</p> <p>The problem is, there's a lot of misinformation out there, and if you believe it, you could be doing yourself a disservice. Here are the top myths about credit scores that we have debunked for you.</p> <h2>1. Closing a lot of credit accounts will improve your score</h2> <p>It seems logical, but it's completely incorrect. Credit scores are calculated in part by something called a debt-to-credit, or <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score?ref=internal" target="_blank">credit utilization</a>, ratio. The agencies calculating your score are looking at how much debt you have, and how much available credit you can tap into.</p> <p>So, if you have 10 credit cards with a combined credit availability of $100,000, and you've only used $15,000 of that available credit, your credit utilization ratio is 15 percent. This is considered good: You have 85 percent of your credit unused.</p> <p>Now, let's say you close seven accounts, because you just aren't using them. You still have $15,000 in debt, but now your overall available credit drops to $30,000. Your credit utilization ratio just skyrocketed to 50 percent, and that means your credit score takes a dive.</p> <p>Do not close credit card accounts like this. Simply put the cards you aren't using somewhere safe. And if you get the chance to increase your credit limit, do it. As long as you don't plan to max it out, it will help your credit score. (See also: <a href="http://www.wisebread.com/stop-dont-cut-up-your-credit-cards?ref=seealso" target="_blank">Stop! Don't Cut Up Your Credit Cards</a>)</p> <h2>2. The amount of money you make has an impact on your score</h2> <p>Your credit score lists credit accounts, not income from employers. So, whether you're a CEO making $3 million a year, or an entry-level worker earning $30,000 a year, income is not a factor in determining your credit score. In fact, a rich CEO might actually have a terrible credit score, despite the money, because of a bankruptcy or series of late payments in the past.</p> <p>The only way income can have an impact on your credit score is if you live a Champagne lifestyle on a beer budget. If you are maxing out your cards, making minimum payments, and missing payments altogether, you will see your score take a big hit.</p> <h2>3. Credit scores change just a few times a year</h2> <p>Credit scores are changing all the time. The information used to calculate your score comes from the financial institutions you do business with. If you miss a payment, that will be reflected pretty quickly. If you close several accounts, that information will impact your score a lot sooner than in three to six months.</p> <p>In fact, if you look at your credit score right now, you will see when the last updates were made. Sometimes, it will be a matter of hours, rather than days or weeks. For this reason alone, you should be checking your credit score on a regular basis. When something negative happens, you can jump on that issue quickly and get it resolved.</p> <h2>4. A bad credit score makes it impossible to get credit or loans</h2> <p>This is a myth that comes from years of advertising messaging about needing a good credit score to get financing. Actually, most people can get financing, whether their score is up in the 800s or down in the 400s.</p> <p>A credit score represents a level of risk to financial institutions, and this will dictate the terms of any loan or credit your receive. For example, someone with a credit score of 800 is considered very low risk to the financial institution. They know this person pays on time, has a lot of available credit, and has longevity with his or her accounts. This will result in a low interest rate, and more available credit.</p> <p>Someone with a 450 credit score, on the other hand, is considered a very high risk client. Loans and credit offers will be available, but they will have oppressive interest rates for very little credit.</p> <h2>5. Checking your credit report damages your score</h2> <p>This is rooted in truth. A &quot;hard inquiry&quot; on your credit will have an impact on your score, albeit a small and temporary one. This happens when you apply for a loan, credit card, or other form of financial assistance. The hard inquiry dings your credit a little because if you do it a lot, say applying for 10&ndash;12 new accounts every month, you could be setting yourself up for some financial ruin down the line.</p> <p>However, if you, yourself, are examining your credit report, that is considered a &quot;soft inquiry.&quot; It will not have any impact on your score, and you can do it daily, or even hourly, without any consequences. (See also: <a href="http://www.wisebread.com/how-credit-inquiries-affect-your-credit-score?Ref=seealso" target="_blank">How Credit Inquiries Affect Your Credit Score</a>)</p> <h2>6. If you don't have credit, you'll have a great credit report</h2> <p>Not in the U.S. In some countries, a lack of credit is considered a good thing. If you've never had a credit card or a car loan, you must be financially responsible. But in the U.S., you don't get a good credit score unless you have a good history with credit.</p> <p>The fact is, credit scores are built. Financial institutions want to know that you will borrow money and pay it back on time, with interest. If they can see you have done that well, and often, you are not a risk. If you have never had any kind of loan or credit card, you represent an unknown quantity. And unknown quantities do not sit well with people putting a stamp of approval on a credit line. (See also: <a href="http://www.wisebread.com/how-to-use-credit-cards-to-improve-your-credit-score?ref=seealso" target="_blank">How to Use Credit Cards to Improve Your Credit Score</a>)</p> <h2>7. Carrying a balance on your credit card helps your score</h2> <p>No, it doesn't. To be fair, it doesn't hurt it either. But if you are under the impression that keeping money on your card is helping your score, you are not doing yourself any favors. Ideally, you want to pay off the balances on your cards in full every month, to avoid paying interest on purchases. If you are only paying the minimum, you are basically throwing money into the trash. Most of that minimum payment is going to the credit card company; very little pays down the balance.</p> <p>Whenever possible, don't carry a balance. And if your balance is more than 30 percent of the card, consider transferring half to another card. When you are using more than a third of the credit on one card, you can actually hurt your score. Ideally, your balance will be below 30 percent of the available credit &mdash; the lower, the better. This is a good time to request a credit line increase. If you get your line increased a few thousand dollars, so that your balance drops below 30 percent, that can increase your score. (See also: <a href="http://www.wisebread.com/4-questions-to-ask-before-getting-a-credit-increase?ref=seealso" target="_blank">4 Questions to Ask Before Getting a Credit Increase</a>)</p> <h2>8. A bad credit score will stay with you for life</h2> <p>If you are currently looking at a poor score, it's not the end of the world. You won't be paying exorbitant interest rates forever. However, it does take time to rebuild it.</p> <p>The score will change, for the better, if you open new lines of credit and <a href="http://www.wisebread.com/5-simple-ways-to-never-make-a-late-credit-card-payment?ref=internal" target="_blank">pay your credit card bills on time</a>. Never miss a payment. Keep your balances low. Maintain a very low credit utilization ratio. Try not to apply for too many cards or accounts in one year. If you continue to be a model credit citizen, even after financial difficulty, your score will rise.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fdebunking-8-common-credit-score-myths&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FDebunking%25208%2520Common%2520Credit%2520Score%2520Myths.jpg&amp;description=Debunking%208%20Common%20Credit%20Score%20Myths"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/Debunking%208%20Common%20Credit%20Score%20Myths.jpg" alt="Debunking 8 Common Credit Score Myths" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/paul-michael">Paul Michael</a> of <a href="http://www.wisebread.com/debunking-8-common-credit-score-myths">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-a-surprise-credit-limit-increase-can-harm-you">How a Surprise Credit Limit Increase Can Harm You</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-reasons-building-credit-in-college-helps-you-win-at-life">5 Reasons Building Credit in College Helps You Win at Life</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-surprising-things-lenders-check-besides-your-credit-score">4 Surprising Things Lenders Check Besides Your Credit Score</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-you-shouldnt-panic-if-your-credit-score-drops">Why You Shouldn&#039;t Panic If Your Credit Score Drops</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-the-age-of-your-credit-history-matters">Why the Age of Your Credit History Matters</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance credit history credit score credit utilization ratio debt financing interest rates loans myths payment history Fri, 08 Sep 2017 09:00:06 +0000 Paul Michael 2017189 at http://www.wisebread.com 5 Reasons Building Credit in College Helps You Win at Life http://www.wisebread.com/5-reasons-building-credit-in-college-helps-you-win-at-life <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-reasons-building-credit-in-college-helps-you-win-at-life" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_credit_card_514475258.jpg" alt="Woman building credit in college" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>As a college student, your credit score probably isn't a priority. You're too busy worrying about exams, homework, and scraping together enough money for a pizza on Friday night. But building good credit when you're in college is important. It can make it easier to rent an apartment, apply for a good credit card, and buy a car once you graduate. (See also: <a href="http://www.wisebread.com/the-5-best-credit-cards-for-college-students?ref=seealso" target="_blank">The 5 Best Credit Cards for College Students</a>)</p> <p>Many college students graduate with no credit score at all. That's because they've never used a credit card or paid off an installment loan, such as for a car or mortgage. They haven't even started paying off their student loans yet.</p> <p>Graduating with no credit makes life after college more challenging. Here are five big reasons why you should start building good credit when you're still in school.</p> <h2>1. Renting an apartment</h2> <p>In a recent survey by national credit bureau TransUnion, 48 percent of apartment landlords said that the results of a credit check rank among the top three factors they consider when deciding to lease an apartment to a potential renter.</p> <p>If your credit is bad, or if you don't have any credit at all, you'll struggle to rent an apartment on your own. You might have to rely on a co-signer, usually a parent, to sign the lease with you. If you can't find a co-signer, and you haven't built any credit while in college, finding your dream apartment, or even just a starter apartment, can get difficult.</p> <h2>2. Buying a car</h2> <p>Unless you buy a car with cash, you'll probably have to apply for an auto loan to finance the purchase of a new vehicle. Auto lenders study your credit, too. If they find that you don't have any history behind you, they'll be far less likely to approve you for the loan you need to buy that new car.</p> <p>Again, you might have to rely on finding a co-signer. This can be even more difficult for an auto loan. Not only are co-signers on an auto loan responsible for any payments you don't make, the loan will also be counted as their debt. This can make it more difficult for your co-signer to apply for new loans of their own.</p> <p>Overall, it's much easier to walk into an auto dealership knowing that you already have a credit history of your own.</p> <h2>3. Applying for student loans</h2> <p>You'll want a good credit history if you'll need to apply for private loans to help finance the cost of graduate or professional school. It's easier to get federal PLUS loans for graduate and professional schools with a lower credit score. However, you are limited in how much you can borrow through these federal sources.</p> <p>If you must borrow more, you might have to rely on private loans. And private lenders will take a close look at your credit. If you don't have a credit history, qualifying for one of these loans will be more challenging.</p> <h2>4. Being approved for credit cards</h2> <p>There are plenty of credit cards out there with <a href="http://www.wisebread.com/the-best-low-interest-rate-credit-cards?ref=internal" target="_blank">low interest rates</a> and valuable rewards programs. They can give you <a href="http://www.wisebread.com/5-best-cash-back-credit-cards?ref=internal" target="_blank">cash back on purchases</a> or let you <a href="http://www.wisebread.com/top-5-travel-reward-credit-cards?ref=internal" target="_blank">earn travel rewards</a> when you use your card.</p> <p>Without a credit history, and the credit score that comes with one, you'll struggle to qualify for one of these good cards. You might instead have to settle for a basic card with a higher interest rate.</p> <h2>5. Getting car insurance</h2> <p>Not having a credit history can even make qualifying for car insurance more of a challenge. If you do want to drive, and you can no longer stay on your parents' auto insurance policy, you'll have to apply for car insurance on your own. And many insurance companies today look at their own version of a credit score when determining who qualifies for insurance and at what rates.</p> <p>The lower your credit-based insurance score, the less likely you'll qualify for auto insurance &mdash; and the more likely you'll have to pay a higher premium if you do qualify.</p> <h2>Building a credit history</h2> <p>The best way to build a credit history while in college is to apply for a student credit card. These cards often come with lower limits. Some might even be <a href="http://www.wisebread.com/what-are-secured-credit-cards?ref=internal" target="_blank">secured cards</a>, meaning that you have to make a deposit into a bank account associated with the card. This deposit makes up your credit limit. (See also: <a href="http://www.wisebread.com/how-to-use-credit-cards-to-improve-your-credit-score?ref=seealso" target="_blank">How to Use Credit Cards to Improve Your Credit Score</a>)</p> <p>Once you get a card, use it, but use it wisely. Only buy what you can afford to pay off in full each month. Then pay off your entire balance by every due date. As you generate a record of on-time credit card payments, you'll steadily build a credit history. At the same time, you'll start building a solid credit score, too.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F5-reasons-building-credit-in-college-helps-you-win-at-life&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Reasons%2520Building%2520Credit%2520in%2520College%2520Helps%2520You%2520Win%2520at%2520Life.jpg&amp;description=5%20Reasons%20Building%20Credit%20in%20College%20Helps%20You%20Win%20at%20Life"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/5%20Reasons%20Building%20Credit%20in%20College%20Helps%20You%20Win%20at%20Life.jpg" alt="5 Reasons Building Credit in College Helps You Win at Life" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/5-reasons-building-credit-in-college-helps-you-win-at-life">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/debunking-8-common-credit-score-myths">Debunking 8 Common Credit Score Myths</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-every-parent-should-know-about-the-new-college-financial-aid-rules">What Every Parent Should Know About the New College Financial Aid Rules</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-money-moves-every-new-college-student-should-make">7 Money Moves Every New College Student Should Make</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/15-surprising-ways-bad-credit-can-hurt-you">15 Surprising Ways Bad Credit Can Hurt You</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-you-shouldnt-panic-if-your-credit-score-drops">Why You Shouldn&#039;t Panic If Your Credit Score Drops</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Education & Training building credit co-signers college credit history credit score loans payment history renting students Mon, 28 Aug 2017 08:30:14 +0000 Dan Rafter 2010394 at http://www.wisebread.com Don't Carry a Balance? Here's Why You Still Need a Credit Card http://www.wisebread.com/dont-carry-a-balance-heres-why-you-still-need-a-credit-card <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/dont-carry-a-balance-heres-why-you-still-need-a-credit-card" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/i_have_been_shopping_for_all_the_best_deals.jpg" alt="I&#039;ve been shopping for all the best deals" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Anybody can go into debt, quickly. Giving into impulse buys is only a swipe away with plastic in your pocket. It's easy to lose track of how much you're spending, which can spiral out of control before you know it.</p> <p>For these reasons, maybe you avoid credit cards or feel they aren't worth the hassle. That's one way to stay out of trouble, of course, but even if you're committed to limiting your amount of personal debt and you refuse to carry a balance, there's a case to be made for using credit cards. Take a look.</p> <h2>1. You'll build or maintain a good credit score</h2> <p>If you're interested in building a credit history, owning and using a credit card is often necessary. The trick, of course, is managing the account responsibly.</p> <p>The way a credit card impacts your credit score and personal finances has everything to do with the way you handle the account. Just because one person you know had a bad experience with credit doesn't mean you'll have the same experience, especially if you stay on top of things.</p> <p>Paying off your balance every month or making timely minimum payments adds positive activity to your credit report. This is essential to establishing credit. And if you already have a credit history, periodically using a credit card keeps your account active and helps build an even stronger credit score. (See also: <a href="http://www.wisebread.com/how-to-use-credit-cards-to-improve-your-credit-score?ref=seealso" target="_blank">How to Use Credit Cards to Improve Your Credit Score</a>)</p> <h2>2. You can receive rewards based on usage</h2> <p>Another reason to use a credit card is the opportunity to earn rewards for every purchase &mdash; because who doesn't love a good freebie? Your rewards can come in the form of points, miles, or cash back redeemable for a check, statement credit, airline tickets, hotel stays, gift cards, or merchandise. The more you use the card, the more free or discounted stuff you can score.</p> <p>The downside is that reward credit cards tend to have slightly higher interest rates than non-reward cards. But if you're disciplined enough to pay off your balance in full every month, you don't have to feel guilty because there won't be any interest to worry about. (See also: <a href="http://www.wisebread.com/5-best-cash-back-credit-cards?ref=seealso" target="_blank">Best Cash Back Credit Cards</a>)</p> <h2>3. It'll help you survive an emergency</h2> <p>It doesn't matter how responsible you are with money: Most people go through a rough patch at some point in life. If you hit a financial low or deal with a string of unexpected expenses, a credit card can function as a short-term loan providing cash for urgent situations. You'll pay interest on these charges if you carry a balance, but this option is cheaper than a short-term cash advance loan, and you'll maintain your privacy since you won't have to borrow from friends or family. Just make sure to prioritize paying off this balance when your emergency is handled.</p> <h2>4. It's safer than cash</h2> <p>Using a credit card is also safer than cash, especially when traveling. If you lose or have your wallet stolen, you can't replace the cash inside. But if your credit cards are lost or stolen, your bank can issue a replacement card and remove fraudulent charges from your account.</p> <p>Since bank debit cards are linked to your bank account, credit cards are sometimes safer than these cards. If someone uses your debit card fraudulently, this person can drain your bank account, resulting in overdraft fees. Your bank will reimburse your money &mdash; not all is lost &mdash; but it can take up to 10 days to sort through the mess and get your money back. (See also: <a href="http://www.wisebread.com/4-reasons-credit-is-safer-than-debit?ref=seealso" target="_blank">4 Reasons Credit Is Safer Than Debit</a>)</p> <h2>5. It'll help you keep accurate expense records</h2> <p>Credit cards also are useful for keeping track of spending for business and tax purposes, especially if you're not the best at saving receipts. Since credit card statements include a record of your purchases, use your credit card for business-related purchases, and then refer to your statement when recording business expenses. For this to work, keep a close eye on how much you're spending throughout the month to avoid going overboard and getting into long-term debt.</p> <h2>6. It buys extra protection</h2> <p>A credit card isn't only practical during an emergency or when you're looking to earn reward points, it also buys extra protection when used for certain purchases. For example, some credit cards offer rental car coverage at no additional cost, which means you can decline a car rental company's optional coverage when booking your reservation.</p> <p>Some credit cards have an extended warranty policy on select purchases too, giving you an extra year of protection after a manufacturer's warranty expires. Other credit cards may include travel insurance protection which compensates card members for costs incurred due to trip cancellation, lost luggage, travel accidents, etc. (See also: <a href="http://www.wisebread.com/10-awesome-credit-card-perks-you-didnt-know-about?ref=seealso" target="_blank">14 Awesome Credit Card Perks You Didn't Know About</a>)</p> <p>Benefits vary by card, so contact your credit card company for information on member perks.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fdont-carry-a-balance-heres-why-you-still-need-a-credit-card&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FDont%2520Carry%2520a%2520Balance-%2520Heres%2520Why%2520You%2520Still%2520Need%2520a%2520Credit%2520Card.jpg&amp;description=Dont%20Carry%20a%20Balance%3F%20Heres%20Why%20You%20Still%20Need%20a%20Credit%20Card"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/Dont%20Carry%20a%20Balance-%20Heres%20Why%20You%20Still%20Need%20a%20Credit%20Card.jpg" alt="Don't Carry a Balance? Here's Why You Still Need a Credit Card" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/dont-carry-a-balance-heres-why-you-still-need-a-credit-card">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-6"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-times-your-credit-card-has-your-back">12 Times Your Credit Card Has Your Back</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-steps-to-picking-the-best-airline-credit-card-for-the-most-rewards-value">5 Steps to Picking the Best Airline Credit Card for the Most Rewards Value</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-myths-about-credit-cards-that-wont-go-away">5 Myths About Credit Cards That Won&#039;t Go Away</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/are-airline-or-travel-rewards-credit-cards-the-better-deal">Are Airline or Travel Rewards Credit Cards the Better Deal?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/11-credit-card-perks-that-make-life-easier-and-way-more-fun">11 Credit Card Perks That Make Life Easier and Way More Fun</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards benefits credit history credit score emergencies expenses miles perks records rewards Fri, 25 Aug 2017 08:00:06 +0000 Mikey Rox 2007682 at http://www.wisebread.com 5 Money Moves That Will Ruin Your Mortgage Application http://www.wisebread.com/5-money-moves-that-will-ruin-your-mortgage-application <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-money-moves-that-will-ruin-your-mortgage-application" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/housing_market_risk.jpg" alt="Housing market risk" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>When applying for a mortgage, you shouldn't do anything that will cause a bank to question your ability to repay the loan. You don't need perfect finances to get a mortgage, but it's in your best interest to have a basic understanding of loan requirements. The more you know, the less likely you are to make mistakes that can ruin your application. (See also: <a href="http://www.wisebread.com/make-these-5-money-moves-before-applying-for-a-mortgage?ref=seealso" target="_blank">Make These 5 Money Moves Before Applying for a Mortgage</a>)</p> <p>Here are a few missteps to avoid if you're thinking about buying a house.</p> <h2>1. Paying for everything with cash</h2> <p>Using cash for everyday purchases is one way to avoid debt. But just because cash is king in your world doesn't mean you should cast off credit cards.</p> <p>Unless you're fortunate enough to pay cash for a house, you'll need to apply for financing, which requires a credit history. And the only way to build credit is to use credit. Without any type of credit profile, a mortgage underwriter can't assess whether you're capable of responsibly managing a home loan.</p> <p>In the lending world, no credit can be just as damaging as bad credit. So before applying for a home loan, establish credit by getting a credit card or another type of loan. You don't have to drive yourself into debt with it, but you should demonstrate a pattern of timely payments and responsible borrowing. (See also: <a href="http://www.wisebread.com/how-to-use-credit-cards-to-improve-your-credit-score?ref=seealso" target="_blank">How to Use Credit Cards to Improve Your Credit Score</a>)</p> <h2>2. Carrying too much debt</h2> <p>While it's in your best interest to have a responsible credit profile, if you start spending money on stuff you don't need and get in over your head, you could hurt your chances of a mortgage approval. Maxing out credit cards can raise your <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score" target="_blank">credit utilization ratio</a> and lower your credit score. Credit utilization is the percentage of your credit card debt compared to your credit limit.</p> <p>If you go overboard and accumulate too much debt, there's also the risk of falling behind on payments. Late payments are another credit score killer that can destroy any chance of qualifying for a mortgage.</p> <p>To avoid problems with a mortgage approval, get into a habit of paying off credit card balances in full every month. If you carry a balance, keep it small &mdash; ideally below 30 percent of your credit line.</p> <p>If you've already been approved for a mortgage, don't make any major purchases before closing on the home purchase. This includes buying furniture or financing a new car. New debt increases your debt-to-income ratio, which can affect your approval.</p> <p>Since you won't know your actual mortgage costs until a few days before closing, hold off spending money on new furniture or appliances to ensure you have enough cash on hand.</p> <h2>3. Co-signing for someone else</h2> <p>Co-signing a loan for a friend or relative is a noble deed (one that I do not personally recommend), but it's imperative that you're fully aware of the consequences of this decision. Co-signers are not silent partners on loan documents. By signing your name, you become a joint debt holder; as such, a co-signed debt appears on your credit report and counts toward your debt-to-income ratio. This is because you're responsible for the loan if the primary signer stops paying. (And if this happens, you could be in big trouble financially!)</p> <p>Once you are ready to apply for a mortgage, your lender takes a co-signed debt into consideration when calculating your debt-to-income ratio. Unfortunately, with a co-signed debt on your credit file, a lender might say you owe too much to take on additional debt and deny your mortgage application.</p> <h2>4. Not saving enough cash</h2> <p>You need cash for a home purchase &mdash; a <em>lot </em>of cash. Nowadays, many mortgage programs require borrowers to bring cash to the table. This includes a down payment between 3.5 percent to 5 percent or higher, as well as funds for closing (between 2 percent and 5 percent of the sale price). It doesn't matter how much you earn: If you can't show enough assets, you can't get a mortgage. Build up this cushion first before diving into the homebuying process. (See also: <a href="http://www.wisebread.com/4-easy-ways-to-start-saving-for-a-down-payment-on-a-home?ref=seealso" target="_blank">4 Easy Ways to Start Saving for a Down Payment on a Home</a>)</p> <h2>5. Quitting your day job</h2> <p>Don't quit your day job if you're planning to buy in the near future &mdash; at least, not yet.</p> <p>Qualifying for a mortgage involves demonstrating long-term financial stability. This is why lenders require a borrower's most recent paycheck stubs and the previous year's tax returns. Self-employed people can purchase a home like anyone else, but they have to provide one to two years of profitable business tax returns, where their income either increases from year to year or remains roughly the same.</p> <p>It doesn't matter how much you're making today as a self-employed borrower. If a lender has reason to believe that your income isn't consistent or stable, you might not get a loan. So if you're thinking about buying, stick with your job until closing, and then become your own boss. (See also: <a href="http://www.wisebread.com/denied-a-mortgage-heres-how-to-fix-it-fast?ref=seeaslo" target="_blank">Denied a Mortgage? Here's How to Fix It Fast</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fthe-5-best-travel-adapters&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Money%2520Moves%2520That%2520Will%2520Ruin%2520Your%2520Mortgage%2520Application.jpg&amp;description=5%20Money%20Moves%20That%20Will%20Ruin%20Your%20Mortgage%20Application"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/5%20Money%20Moves%20That%20Will%20Ruin%20Your%20Mortgage%20Application.jpg" alt="5 Money Moves That Will Ruin Your Mortgage Application" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/5-money-moves-that-will-ruin-your-mortgage-application">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-benefits-of-carrying-a-mortgage-into-retirement">5 Benefits of Carrying a Mortgage Into Retirement</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-pay-your-mortgage-off-early">Should You Pay Your Mortgage Off Early?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-mortgage-details-you-should-know-before-you-sign">5 Mortgage Details You Should Know Before You Sign</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-surprising-things-lenders-check-besides-your-credit-score">4 Surprising Things Lenders Check Besides Your Credit Score</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-home-buying-habits-we-can-learn-from-millennials">4 Home-Buying Habits We Can Learn From Millennials</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing cash co-signing credit history credit utilization debt debt to income ratio home buying homeownership money mistakes mortgages quitting Wed, 16 Aug 2017 08:30:07 +0000 Mikey Rox 2003615 at http://www.wisebread.com 6 Signs You're Making All the Right Money Moves http://www.wisebread.com/6-signs-youre-making-all-the-right-money-moves <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-signs-youre-making-all-the-right-money-moves" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/young_boy_nerd_saves_money_in_his_piggy_bank.jpg" alt="Young Boy Nerd Saves Money in His Piggy Bank" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You've worked hard to build up your savings, pay off your credit card bills, and boost your credit score. But how do you know that this hard work is paying off?</p> <p>There are several ways to tell if you are making the right money moves that will help boost your financial security, secure the lowest interest rates on loans, and give you access to the best credit cards with the most generous rewards programs. Want validation that your money moves are the right ones? Look for these signs.</p> <h2>1. You've built an emergency fund</h2> <p>Emergencies constantly pop up: Your car's transmission might blow. Your home's furnace might conk out in the middle of winter. If you don't have adequate savings, you might have to turn to high-interest rate credit cards to pay for these emergencies. (See also: <a href="http://www.wisebread.com/8-ways-to-decide-if-its-a-fund-worthy-emergency?ref=seealso" target="_blank">8 Ways to Decide if It's a &quot;Fund-Worthy&quot; Emergency</a>)</p> <p>But you won't have to do this if you've built an emergency fund. A fund stocked with plenty of cash is one sure sign that you're making the right money moves.</p> <p>Financial experts recommend that you have at least six months' worth of daily living expenses saved in an emergency fund at all times. If you've met this goal, be proud: You're doing something right financially.</p> <h2>2. You're getting better credit card offers</h2> <p>It's rare for a week to go by without some bank or credit union stuffing your mailbox with an application for a new credit card. But take a closer look at these applications. Has the quality of your credit card offers gone up? If so, that's another sign that you're making smart money moves.</p> <p>If you're saddled with tons of debt, or if you've made late payments or skipped payments entirely, your mailbox will be filled with offers for credit cards that come with high interest rates and no rewards &mdash; if you receive any credit card offers at all.</p> <p>If, however, you've <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt" target="_blank">cut down your credit card debt</a> and pay your bills on time each month, banks will send you applications for credit cards that come with generous rewards programs, enticing sign-up offers, and low interest rates. So watch your mailbox: If banks are trying to lure you to their plastic, you can bet that you're becoming a savvy financial operator.</p> <h2>3. Lenders are happy to give you lower interest rates</h2> <p>Were you surprised when you were approved for an auto loan at the low interest rate your lender quoted? That's another sign that you are making sound financial decisions.</p> <p>Lenders check your credit reports and your FICO credit score before deciding what interest rate to assign to your mortgage, auto, student, and personal loans. If your credit score is high &mdash; 740 or more &mdash; you can expect to qualify for lower interest rates.</p> <p>Your credit score is based on several factors, including your history of paying bills on time and your debt levels. If you have these financials under control, your score will be higher.</p> <p>You can check your credit score &mdash; usually for a price of $15 by ordering it from one of the three national credit bureaus (TransUnion, Experian, and Equifax). Your credit card company might also provide your score for free each month. Just make sure it's your actual FICO score and not an alternative version. (See also: <a href="http://www.wisebread.com/fico-or-fako-are-free-credit-scores-from-credit-cards-the-real-thing?ref=seealso" target="_blank">FICO or FAKO: Are Free Credit Scores From Credit Cards the Real Thing?</a>)</p> <h2>4. Your credit card debt has disappeared</h2> <p>Credit card debt is the worst type of debt you can have: The high interest rates that come with it mean that your debt load grows steadily each month that you carry a balance. If you open your credit card bill and you <em>don't </em>have a balance, that's one of the most positive signs that you are becoming financially mature. (See also: <a href="http://www.wisebread.com/how-to-pay-less-interest-on-your-credit-card-debt?ref=seealso" target="_blank">How to Pay Less Interest on Your Credit Card Debt</a>)</p> <h2>5. The monthly bills don't make you sweat</h2> <p>When you rip open the cable, utility, or gas bill each month, do you immediately wonder if you have enough money in your checking account to pay them on time? If you do, that's a sign that you're living paycheck to paycheck.</p> <p>If, though, the monthly bills don't make you cringe, and you always have enough money in your account to cover them, know that you're doing something right with your finances.</p> <h2>6. Your checking account balance is growing each month</h2> <p>The goal is to make enough money so that you can pay your bills each month and have dollars leftover, money that you can invest or save. If you notice that you have more money in your checking account at the end of every month, be happy: That's another sign that you're making smart money decisions.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F6-signs-youre-making-all-the-right-money-moves&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F6%2520Signs%2520Youre%2520Making%2520All%2520the%2520Right%2520Money%2520Moves.jpg&amp;description=6%20Signs%20Youre%20Making%20All%20the%20Right%20Money%20Moves"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/6%20Signs%20Youre%20Making%20All%20the%20Right%20Money%20Moves.jpg" alt="6 Signs You're Making All the Right Money Moves" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/6-signs-youre-making-all-the-right-money-moves">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-start-a-family-before-reaching-these-5-money-goals">Don&#039;t Start a Family Before Reaching These 5 Money Goals</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/your-bad-credit-isnt-the-end-of-the-world">Your Bad Credit Isn&#039;t the End of the World</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-money-moves-to-make-before-moving-out-on-your-own">5 Money Moves to Make Before Moving Out on Your Own</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-bounce-back-from-a-bankruptcy">How to Bounce Back From a Bankruptcy</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-money-moves-every-new-college-student-should-make">7 Money Moves Every New College Student Should Make</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance bills credit history credit score debt emergency funds good signs money moves saving money Wed, 02 Aug 2017 09:00:07 +0000 Dan Rafter 1986886 at http://www.wisebread.com How to Boost Your Credit With a Balance Transfer http://www.wisebread.com/how-to-boost-your-credit-with-a-balance-transfer <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-boost-your-credit-with-a-balance-transfer" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_calculate_how_much_cost_orspending_have_with_credit_cards_0.jpg" alt="Woman calculate how much cost or spending have with credit cards" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Balance transfers can be a practical and effective way to tackle your credit card debt. Simply, you transfer your high-interest credit card debt to a card with a lower rate. This could be a card with a lower APR, or a card that offers a <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?ref=internal" target="_blank">0 percent promotional rate on balance transfers</a> for a limited time. (See also: <a href="http://www.wisebread.com/when-to-do-a-balance-transfer-to-pay-off-credit-card-debt?ref=seealso" target="_blank">When to Do a Balance Transfer for Credit Card Debt</a>)</p> <p>This can help your credit score, too. A few weeks ago, I was feeling pretty good about the balance transfer offer I used to move some high-interest credit card debt to a card with a great introductory rate. But, then I realized you have to be careful of your balance transfer strategy. In addition to boosting your credit score, there are a few pitfalls to be aware of.</p> <h2>Pitfall: Applying for a balance transfer generates a hard credit inquiry</h2> <p>If you are trying to boost your credit score, be careful when applying for any new credit cards &mdash; including for balance transfers. Each credit application generates a &quot;hard&quot; inquiry on your credit report, which is a negative factor in calculating your credit score. Applying for new credit is considered a risk because it can be a sign of financial distress, especially if you have multiple hard inquiries over a short period of time.</p> <h2>Boost: If used effectively, the balance transfer will eventually raise your score</h2> <p>The drop in score from a hard inquiry is temporary. Unless you are planning on applying for any big loans such as a mortgage, refinance, or car loan, the drop shouldn't affect you too much. Once you start paying off your balance, your <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score?ref=internal" target="_blank">credit utilization ratio</a> will drop. Your credit utilization ratio, which is all of your credit card balances divided by the total of your credit card limits, is a big factor in the &quot;amounts owed&quot; category of your FICO credit score, which accounts for 30 percent of your score. Most experts recommend your credit utilization ratio not exceed 30 percent, and keeping it even lower &mdash; under 10 percent &mdash; can help raise your score.</p> <h2>Pitfall: Using balance transfers to grow your debt</h2> <p>Balance transfers should be used to consolidate your debt &mdash; never to &quot;make room&quot; on other credit cards so you can keep on charging past limits. All this does is rack up more debt.</p> <p>This can quickly spiral out of control, too. If your debt grows too much, it can increase your credit utilization ratio, which lowers your credit rating. Eventually, taking on too much debt can reach the point where you can no longer make payments on time, and your credit score will take a huge hit. Lenders also consider your debt-to-income ratio when deciding whether to approve or deny you for financing. If your debt becomes too large relative to your income, you may not be able to get approved for any new loans or credit cards.</p> <h2>Boost: A balance transfer can help pay down your debt faster</h2> <p>If you transfer your high-interest credit card debt to a balance transfer card with a lower rate, more of your payment will go toward paying down the principal. Not only will this save you money from interest, but you'll get rid of your debt faster. Only do a balance transfer if you have a solid debt repayment plan to pay off the balance within the promotion period. (See also: <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?ref=seealso" target="_blank">Fastest Way to Pay Off $10K in Credit Card Debt</a>)</p> <h2>Pitfall: Maxing out the balance transfer card you are transferring to</h2> <p>If you get a great introductory interest rate for a balance transfer, you may conclude that you should transfer as much of your high-interest credit card debt as possible to the new card. The problem with this strategy is that you can hurt your credit score by having a high utilization of available credit, even if it is only on one credit account.</p> <p>Your credit utilization ratio is a major factor in calculating your credit score. Even if you have lots of credit available overall, pushing your balance transfer account near its credit limit can hurt your credit score. The credit utilization metric that contributes to your credit score not only considers <em>overall </em>credit balances compared to your overall credit limit, but also scores utilization of <em>individual </em>credit cards. If you are trying to maximize your credit score, keep your balance under 30 percent of your credit limit on all of your accounts, even after you complete a balance transfer.</p> <p>Even if the interest rate is great, leave some room on your balance transfer card to avoid getting a lower credit score due to credit utilization.</p> <h2>Boost: Use a personal loan rather than a credit card to refinance debt</h2> <p>Personal loans aren't counted toward your credit utilization ratio, since a personal loan is not a revolving credit account. However, like credit card debt, the amount you owe on installment loans does figure into the &quot;amounts owed&quot; category of your credit score, though it harms your score much less than a high credit utilization ratio does. In fact, having an installment loan can help boost your &quot;credit mix,&quot; which is a different scoring category that comprises 10 percent of your credit score.</p> <p>The downside is that you will typically pay higher interest for a personal loan than you would with a balance transfer introductory rate at or near 0 percent. Still, if your credit score is low, or you are trying to boost your credit score to secure the best interest rate you can get on a mortgage, you may want to consider using a personal loan instead of a balance transfer card to refinance your credit card debt. (See also: <a href="http://www.wisebread.com/5-times-personal-loans-may-be-better-than-credit-cards?ref=seealso" target="_blank">5 Times a Personal Loan May Be Better Than Credit Cards</a>)</p> <p>Check with your bank about a personal loan as an alternative to transferring credit card debt to another credit card if you are trying to improve your credit score.</p> <h2>How much will you really save?</h2> <p>In addition to pitfalls that can lower your credit score, you also need to watch out for pitfalls that can reduce how much money you can save through a balance transfer.</p> <p>When doing a balance transfer, you'll typically have to pay a fee between 3 and 5 percent of the transfer amount. The balance transfer fee is charged all at once at the time the transaction is processed, and is often added to your balance on the transfer account. Avoid being dazzled by a great interest rate that distracts you from noticing a higher fee compared with other balance transfer offers. (See also: <a href="http://www.wisebread.com/5-best-credit-cards-with-no-balance-transfer-fees?ref=seealso" target="_blank">Best Credit Cards With No Balance Transfer Fees</a>)</p> <p>The low introductory interest rate that is offered on balance transfers usually expires after 12 to 18 months and is replaced by an interest rate that can be much higher &mdash; over 20 percent in some cases. If you can pay off the balance transfer balance before the end of the introductory offer, you don't need to worry about the higher rate later on. But if you don't pay off the balance transfer during the introductory offer, you may end up paying higher interest rates than you had on your original credit card.</p> <p>Balance transfers can be a useful tool to lower your interest rate and help you pay down debt, if you avoid the pitfalls and choose a balance transfer card that makes sense for you.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-to-boost-your-credit-with-a-balance-transfer&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520to%2520Boost%2520Your%2520Credit%2520With%2520a%2520Balance%2520Transfer.jpg&amp;description=How%20to%20Boost%20Your%20Credit%20With%20a%20Balance%20Transfer"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/How%20to%20Boost%20Your%20Credit%20With%20a%20Balance%20Transfer.jpg" alt="How to Boost Your Credit With a Balance Transfer" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dr-penny-pincher">Dr Penny Pincher</a> of <a href="http://www.wisebread.com/how-to-boost-your-credit-with-a-balance-transfer">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/avoid-these-5-common-mistakes-while-rebuilding-your-credit">Avoid These 5 Common Mistakes While Rebuilding Your Credit</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score">This One Ratio Is the Key to a Good Credit Score</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-moves-to-make-before-cutting-up-your-credit-card">6 Moves to Make Before Cutting Up Your Credit Card</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-important-things-you-should-know-about-balance-transfer-cards">7 Important Things You Should Know About Balance Transfer Cards</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/debunking-8-common-credit-score-myths">Debunking 8 Common Credit Score Myths</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards 0% balance transfers credit history credit score credit utilization ratio debt fees introductory rates Tue, 27 Jun 2017 08:00:11 +0000 Dr Penny Pincher 1970388 at http://www.wisebread.com Here's How Often Your Credit Score Gets Calculated http://www.wisebread.com/heres-how-often-your-credit-score-gets-calculated <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/heres-how-often-your-credit-score-gets-calculated" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-629305628.jpg" alt="Woman learning how often her credit score gets calculated" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Achieving and <a href="http://www.wisebread.com/what-is-a-good-credit-score-range?ref=internal" target="_blank">maintaining an excellent credit score</a> may help you qualify for the best interest rates when you borrow money, potentially saving you thousands of dollars over the life of your loans. That's why it's especially important to check your credit when you begin to consider borrowing for a large purchase such as a home or car.</p> <p>It helps to first understand how your credit score is calculated, what you can do to change it, and how long those changes take to impact your score.</p> <h2>Factors determining credit scores</h2> <p>Credit scores derive from credit reports, which consist of information about your credit history and activity with various lenders and creditors. Credit reports are maintained by the major credit reporting agencies, Equifax, Experian, and TransUnion.</p> <p>FICO is the credit score provider most commonly used by lenders The <a href="http://www.wisebread.com/the-5-things-with-the-biggest-impact-on-your-credit-score?ref=internal" target="_blank">five factors that go into your FICO score</a>, broken down by how much they contribute to your score, are:</p> <ul> <li>Payment history (35 percent): How timely have you been with payments on credit card balances, student loans, mortgages, etc.?<br /> &nbsp;</li> <li>Amount you owe (30 percent): What are your credit balances and credit <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score?ref=internal" target="_blank">utilization ratio</a> (your current balances compared to your credit limits)?<br /> &nbsp;</li> <li>Credit history length (15 percent): How many months or years have you had credit and maintained relationships with creditors?<br /> &nbsp;</li> <li>New credit (10 percent): How many new credit cards, loans, and credit-related accounts do you have? Too much new credit could make you appear desperate to lenders.<br /> &nbsp;</li> <li>Types of accounts or credit mix (10 percent): how many different types of accounts do you have (mortgage debt, car loans, credit cards, etc.)? The more types you have, the better it is for your score.</li> </ul> <p>Making timely payments, judiciously using available credit, maintaining long-standing account relationships, avoiding new credit, and holding diverse types of credit may influence your credit score positively.</p> <h2>How frequently credit scores get calculated</h2> <p>If you're working to improve your credit score, you may wonder how frequently your score is calculated and adjusted. Theoretically, knowing this frequency could enable you to monitor your credit score's movement, up or down, in response to your actions.</p> <p>According to Experian's Director of Public Education Rod Griffin, credit scores aren't ever truly adjusted. Instead, each and every credit score that's calculated is unique. It's a snapshot reflecting your creditworthiness at a particular moment in time. Your score is based on your credit report when a score is requested and the proprietary formulas created by lenders or credit score providers, such as FICO and VantageScore. In addition, these providers each have different scoring models for different lending purposes. (See also: <a href="http://www.wisebread.com/fico-vs-fakes-are-you-getting-the-wrong-credit-score?ref=seealso" target="_blank">What Do All the Different Credit Scores Mean?</a>)</p> <p>For example, if you're getting ready to borrow money to purchase a new home, your mortgage lender may use a FICO score that's indicative of your credit risk for mortgage borrowing.</p> <p>A few days later, you might decide to apply for a credit card. The card issuer may use a bank card scoring model in calculating this credit score. The number may be different from the mortgage-based score because it's based on a different formula and possibly new information on your credit report.</p> <p>Generally, your credit report is updated whenever new information becomes available, for example, when creditors report payments at the end of their billing cycles.</p> <p>Despite varying formulas and purposes, your credit scores tend to be similar, Griffin says. That's because scores are based on your credit reports, and the information contained in these reports tends to be consistent among reporting agencies.</p> <h2>Credit steps to take before a mortgage or car loan application</h2> <p>Griffin says reviewing your credit reports should be part of your financial routine. He emphasizes the value of keeping reports positive, not simply trying to fix your numbers: &quot;Taking care of your credit reports means taking care of your credit scores.&quot;</p> <p>But if checking your credit reports hasn't been on your to-do list, start paying attention to your information as soon as you think about borrowing for a major purchase and at least three to six months before applying for a loan. This time frame may allow you time to dispute any errors and make moves that could enhance your creditworthiness.</p> <p>Here are steps to consider taking.</p> <h3>1. Review credit reports for accuracy</h3> <p>Access your credit reports from the three major credit reporting agencies through<a href="https://www.annualcreditreport.com/index.action" target="_blank"> AnnualCreditReport.com</a>. Federal law mandates that you can get one free credit report per year from each agency.</p> <p>Review reports to make sure the information is accurate and up-to-date. For example, check home addresses and employer names. Notice whether outdated information lingers.</p> <p>If something's not right, you can <a href="http://www.wisebread.com/should-you-always-dispute-mistakes-on-your-credit-report?ref=internal" target="_blank">dispute errors on your credit report</a>. Contact the credit reporting agency and information source (such as a former creditor) to describe errors and request corrections. The Federal Trade Commission (FTC) provides useful sample dispute letters for<a href="https://www.consumer.ftc.gov/articles/0384-sample-letter-disputing-errors-your-credit-report" target="_blank"> credit reporting agencies</a> and<a href="https://www.consumer.ftc.gov/articles/0485-sample-letter-disputing-errors-your-credit-report-information-providers" target="_blank"> information providers</a> that can help you get an idea of what to write.</p> <p>You may be able to use dispute resolution processes offered by credit reporting agencies. For example, <a href="http://www.experian.com/blogs/ask-experian/credit-education/faqs/how-to-dispute-credit-report-information/" target="_blank">Experian's online dispute process</a> allows consumers to file a dispute from its website.</p> <h3>2. Look at your scores</h3> <p>Consider requesting a credit score to determine where you stand when trying to use your number to your advantage. A one-time report and score could be helpful to understand your current status and offer a baseline for monitoring changes in the future.</p> <p>You can get scores using these methods:</p> <ul> <li>Purchase a credit score as an add-on when you access one of your free credit reports.<br /> &nbsp;</li> <li>Buy a one-time report and scores from <a href="http://myfico.7eer.net/c/27771/93942/2185" target="_blank">myFICO</a> or other sources.<br /> &nbsp;</li> <li>Get a <a href="http://www.wisebread.com/the-5-best-credit-cards-that-offer-free-credit-scores?ref=internal" target="_blank">credit card that offers a free credit score</a> to its cardholders or try free services like <a href="http://www.kqzyfj.com/click-2822544-10817209" target="_blank">Credit Karma</a> and <a href="http://www.jdoqocy.com/click-2822544-12336148" target="_blank">Credit Sesame</a>.<br /> &nbsp;</li> <li>Purchase credit monitoring services that include credit scores. You can get these from myFICO.com, Equifax, Experian, and TransUnion. (See also: <a href="http://www.wisebread.com/7-apps-that-monitor-your-credit-for-you?ref=seealso" target="_blank">7 Apps That Monitor Your Credit</a>)</li> </ul> <h3>3. Monitor your scores</h3> <p>As you prepare for a major financial event, such as getting a mortgage or refinancing an existing home loan, consider monitoring your credit reports and scores over time to keep on top of any changes that occur.</p> <p>Credit monitoring is available for a fee from credit reporting agencies and other sources, such as<a href="http://myfico.7eer.net/c/27771/93942/2185" target="_blank"> myFICO</a>. You might also consider tracking your credit scores through free sources. For example, you might just keep note of scores offered by your credit card company every month.</p> <p>This scrutiny can be helpful but alarming. Griffin tells borrowers not to panic if they see changes from month to month, as credit scores move up and down frequently. He says that generally you don't need to be concerned with volatility as long as the scores trend upward over a longer time frame. (See also: <a href="http://www.wisebread.com/why-you-shouldnt-panic-if-your-credit-score-drops" target="_blank">Why You Shouldn't Panic If Your Credit Score Drops</a>)</p> <h3>4. Take actions as appropriate</h3> <p>When you receive your credit score, generally you'll also get a list of factors indicating why your number is less than perfect. These risk factors indicate where to focus your attention. (See also: <a href="http://www.wisebread.com/7-ways-to-increase-your-credit-score-quickly" target="_blank">How to Increase Your Credit Score Quickly</a>)</p> <p>When personal finance educator Kate Horrell's credit score fell from the 800s to 660s just a few months before a mortgage refinance, she realized that the decline reflected two factors: She had taken on new credit using a 0% APR credit card; and she had increased her credit usage to manage about $100,000 in home renovations.</p> <p>Still, Horrell was surprised at the impact on her scores, considering her stellar history. She couldn't do anything about the new account but found ways to pay off the card balance quickly. When she applied for the mortgage refinance a few months later, her score had increased to the mid-to-high 700s, enabling her to snag a 3.125 percent rate.</p> <p>Griffin emphasizes that the risk factors named with your credit score don't always warrant action. In some cases, it's not worth it to address risk factors just to raise your score a few points.</p> <p>For example, my lack of both credit diversity and recent installment loans dings my score, which is still above 800 and considered &quot;exceptional.&quot; However, I don't plan on taking out a new loan just to try to boost my number.</p> <p>While you can't predict the precise impact of specific actions, you can learn what moves reflect positively on your credit report. As your credit report is updated (with new and hopefully, improved, information) your credit scores could trend upward, potentially enabling you to take advantage of your numbers for cost savings.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/julie-rains">Julie Rains</a> of <a href="http://www.wisebread.com/heres-how-often-your-credit-score-gets-calculated">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-apps-that-monitor-your-credit-for-you">7 Apps That Monitor Your Credit for You</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-things-your-credit-report-does-not-include">7 Things Your Credit Report Does NOT Include</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-the-new-credit-card-formula-means-for-your-wallet">What the New Credit Card Formula Means for Your Wallet</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-read-a-credit-report">How to Read a Credit Report</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/once-bitten-twice-shy-what-is-credit-security-worth-to-you">Once Bitten Twice Shy: What is Credit Security Worth to You?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance credit history credit score credit utilization ratios debt Equifax Experian fico TransUnion Tue, 16 May 2017 08:30:14 +0000 Julie Rains 1946266 at http://www.wisebread.com 5 Questions to Ask Before Signing Up for a New Credit Card http://www.wisebread.com/5-questions-to-ask-before-signing-up-for-a-new-credit-card <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-questions-to-ask-before-signing-up-for-a-new-credit-card" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-534306478.jpg" alt="questions to ask before signing up for a new credit card" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>There's no shortage of attractive offers for new credit cards. The credit card industry is extremely competitive, and you are likely to come across advertising for new cards on television, in print, online, and even on airplanes. But as compelling as these offers can be, you still need to think carefully before applying. (See also: <a href="http://www.wisebread.com/pre-approved-for-credit-card-offers-are-you-pre-qualified?ref=seealso" target="_blank">Pre-Approved for Credit Card Offers: What Does It Mean?</a>)</p> <p>Opening a new credit card account is an important financial decision, and you should consider these five things first.</p> <h2>1. Can you manage a new credit card account?</h2> <p>Before you even begin to consider which credit card to apply for, think about if you need a new credit card at all. If there's any chance that having a new credit card will entice you to overspend and incur debt, then it's best not to apply. (See also: <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?ref=seealso" target="_blank">The Fastest Way to Pay Off $10,000 in Credit Card Debt</a>)</p> <p>Keep in mind, too, that each new credit card you have will generate a new statement to review each month, and another bill to pay. If your new card is from a different issuer than your other cards, then you'll need to create a new online login and you might want to download a new mobile app. Having more cards than you can keep track of increases your chances of losing them or having one stolen.</p> <h2>2. Does this credit card meet your needs?</h2> <p>Just as there are dozens of different cars made for nearly any kind of use, there are hundreds of different credit cards designed to meet every conceivable need. If you tend to carry a balance on your credit cards, then you should be looking for a card with the lowest possible interest rate.</p> <p>You could also look for a card with an interest-free promotional financing offer, to help you pay off your debt sooner. (See also: <a href="http://www.wisebread.com/how-to-pay-less-interest-on-your-credit-card-debt?ref=seealso" target="_blank">How to Pay Less Interest on Your Credit Card Debt</a>)</p> <p>If you always avoid interest charges by paying your entire statement balance in full, then you should be earning rewards for your spending in the form of points, miles, or cash back. (See also: <a href="http://www.wisebread.com/cash-back-vs-travel-rewards-pick-the-right-credit-card-for-you?ref=seealso" target="_blank">Cash Back vs Travel Rewards: Pick the Right Credit Card for You</a>)</p> <h2>3. What interest rates and fees will you have to pay?</h2> <p>Before you apply for a credit card, you should understand all of the costs of the card. Fortunately, credit card issuers are required to prominently disclose the important rates and fees in a standardized table. Any time you see a credit card application, you can look for a link to the &quot;terms and conditions&quot; or &quot;rates and fees.&quot; There, you will find a list of fees including the annual fee, late fee, cash advance fee, balance transfer fee, and foreign transaction fees, if any. It will also show you the standard interest rate and any promotional rates for new purchases, balances transfers, and cash advances. (See also: <a href="http://www.wisebread.com/simple-guide-to-evaluating-a-credit-card-with-an-annual-fee?ref=seealso" target="_blank">Simple Guide to Evaluating a Credit Card With an Annual Fee</a>)</p> <h2>4. Do you qualify for approval?</h2> <p>There's no point in applying for a credit card if you won't be approved. First, you need to look up your credit score. Most credit card issuers now offer free access to your credit score online, and there are several websites that can also provide you with a free credit score.</p> <p>Next, you need to research the credit cards that you are applying for, and learn what kind of credit score is needed. For example, a credit card issuer's website may list each card according to the type of credit history needed, such as &quot;Average&quot; or &quot;Good.&quot; In addition, many credit card issuers will have special cards designated for people who are rebuilding their credit. Finally, you can assume that the most competitive premium rewards credit cards will only be offered to applicants with excellent credit. (See also: <a href="http://www.wisebread.com/how-to-use-credit-cards-to-improve-your-credit-score?ref=seealso" target="_blank">How to Use Credit Cards to Improve Your Credit Score</a>)</p> <h2>5. Is this the most competitive offer available?</h2> <p>It's easy to find credit card offers, but it can take some time to locate the most competitive offer for your needs. If you are looking for a card with the lowest interest rate, then you need to look at the terms and conditions of multiple cards to find the best offer. And if you are trying to earn rewards, then you need to estimate the value of the rewards you would receive from the card, based on your own personal spending habits. Finally, you also need to take into account the value of any cardholder benefits offered, and the cost of the annual fee and other fees. (See also: <a href="http://www.wisebread.com/5-best-sign-up-bonuses-for-airline-miles-credit-cards?ref=seealso" target="_blank">Credit Cards With the Best Sign Up Bonus Offers</a>)</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/jason-steele">Jason Steele</a> of <a href="http://www.wisebread.com/5-questions-to-ask-before-signing-up-for-a-new-credit-card">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/stop-making-these-5-costly-credit-card-mistakes">Stop Making These 5 Costly Credit Card Mistakes</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-your-unused-credit-cards-may-be-costing-you">How Your Unused Credit Cards May Be Costing You</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/building-a-credit-history">Building a Credit History</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score">This One Ratio Is the Key to a Good Credit Score</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-things-you-might-miss-in-your-credit-cards-fine-print">6 Things You Might Miss in Your Credit Card&#039;s Fine Print</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards applications competitive offers credit card offers credit history credit score interest rates terms and conditions Tue, 18 Apr 2017 08:30:11 +0000 Jason Steele 1926749 at http://www.wisebread.com 5 Steps to Getting Excellent Credit http://www.wisebread.com/5-steps-to-getting-excellent-credit <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-steps-to-getting-excellent-credit" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_happy_tablet_618935990.jpg" alt="Woman taking steps to get excellent credit" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Having an excellent credit score is not as elusive as it seems. You simply must trade in your bad financial habits, no matter how innocent they seem, for these five healthy habits. (See also: <a href="http://www.wisebread.com/5-best-credit-cards-for-people-with-excellent-credit?ref=seealso">5 Best Credit Cards for People With Excellent Credit</a>)</p> <h2>1. Always pay your bills on time</h2> <p>One late payment can send your credit score spiraling. Even if you <a href="http://www.wisebread.com/5-simple-ways-to-never-make-a-late-credit-card-payment?ref=internal">forget to pay a credit card</a> with a minuscule balance leftover, it will still negatively impact your credit score. About two years before my husband and I bought our first home, I forgot I had a Victoria's Secret credit card. The balance owed on the card was very little &mdash; less than $20. But since I forgot I owed money on it, I didn't pay the card for three months.</p> <p>Fast forward two years, and the ding from the unpaid Victoria's Secret card was keeping my credit score a few points away from being excellent. We ended up putting the home loan under just my husband's name to ensure we got the best rate. All that hassle for a forgotten credit card bill two years prior. (See also: <a href="http://www.wisebread.com/prioritize-these-5-bills-when-youre-short-on-cash?ref=seealso">Prioritize These Bills When You Are Short on Cash</a>)</p> <h2>2. Don't use all of your available credit</h2> <p>Those with excellent credit scores use less than 30 percent of their available credit. One factor considered when calculating your score is your <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score?ref=internal">credit utilization ratio</a>. Your credit utilization ratio compares your balance to your total credit limit. If this ratio is too high, your credit score begins to suffer. For example, $2,000 of debt on a card that has a $10,000 limit looks much better to creditors that $250 of debt on a card with a limit of $500. Even though the first example owes more money, the utilization is only 20 percent, whereas the latter example is at 50 percent.</p> <p>You can lower your credit utilization ratio in two easy ways. First, calculate how much credit card debt you need to pay off in order to get your utilization ratio under 30 percent, and start making payments to get there. Second, call your credit card company and ask for a limit increase, which will in turn lower your credit utilization ratio. Most creditors would be happy to raise your spending limit, especially if you are in good standing with them. Just be sure not to increase your spending, too. (See also: <a href="http://www.wisebread.com/4-questions-to-ask-before-getting-a-credit-increase?ref=seealso">4 Questions to Ask Before Getting a Credit Limit Increase</a>)</p> <h2>3. Hang on to old credit card accounts</h2> <p>Another factor considered in calculating your credit score is the age of your overall credit history. Being a card holder with one company for over a decade will look better on your account than having several new cards opened or closed within the span of several years.</p> <p>Building up a longer credit history takes time. Figure out which card or account is your oldest, and use the card periodically. For example, say you have an old card that doesn't offer you many benefits, so you rarely use it. Don't just close this old account. Instead, call them and ask if you can get an upgrade to a card that earns better rewards. This way, you can use the card periodically, earn better rewards, and still benefit from a longer account history. (See also: <a href="http://www.wisebread.com/how-to-ditch-a-credit-card-without-dinging-your-credit-score?ref=seealso">How to Close a Credit Card Without Dinging Your Credit Score</a>)</p> <h2>4. Monitor your score</h2> <p>If you are not already monitoring your score, then start today. You need to know where your credit score stands at least quarterly. This will help you catch any mistakes or fraud quickly. (See also: <a href="http://www.wisebread.com/the-5-best-credit-cards-that-offer-free-credit-scores?ref=seealso">Best Credit Cards That Offer Free Credit Scores</a>)</p> <p>Back in college, my husband never thought to check his credit score. Every time he would apply for a credit card, he would instantly be rejected. When he finally checked his credit history, he discovered the bureau mixed up his name with his father's. His history showed that he already had a bankruptcy and foreclosure at the ripe old age of 19.</p> <p>Along with knowing your score, you also want to prevent people from running your credit unnecessarily. Car dealerships are notorious for this. Instead, get preapproved for a loan from your local credit union and refuse the dealership's request to run your credit.</p> <h2>5. Live within your means</h2> <p>The only way to live a financially responsible life, which is reflected in your credit score, is to live within your means. Pay off <a href="http://www.wisebread.com/5-ways-to-pay-off-high-interest-credit-card-debt?ref=internal">outstanding credit card debts</a> and other high interest loans, and then commit to only charging what you can pay for in full. Build up a reliable emergency fund, contribute to a retirement plan, and invest. There are no tricks to getting excellent credit. It all comes down to being consistent with good financial habits. (See also: <a href="http://www.wisebread.com/7-habits-of-the-financially-successful?ref=seealso">7 Habits of the Financially Successful</a>)</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/ashley-eneriz">Ashley Eneriz</a> of <a href="http://www.wisebread.com/5-steps-to-getting-excellent-credit">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/your-bad-credit-isnt-the-end-of-the-world">Your Bad Credit Isn&#039;t the End of the World</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-signs-youre-making-all-the-right-money-moves">6 Signs You&#039;re Making All the Right Money Moves</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-often-your-credit-score-gets-calculated">Here&#039;s How Often Your Credit Score Gets Calculated</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-things-your-credit-report-does-not-include">7 Things Your Credit Report Does NOT Include</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/debunking-8-common-credit-score-myths">Debunking 8 Common Credit Score Myths</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance bill payments credit history credit reports credit score debt good habits high interest Thu, 06 Apr 2017 08:30:16 +0000 Ashley Eneriz 1922592 at http://www.wisebread.com 5 Myths About Credit Cards That Won't Go Away http://www.wisebread.com/5-myths-about-credit-cards-that-wont-go-away <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-myths-about-credit-cards-that-wont-go-away" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-637754848.jpg" alt="Woman learning myths about credit cards that won&#039;t go away" title="" class="imagecache imagecache-250w" width="250" height="142" /></a> </div> </div> </div> <p>The idea of evaluating a person's creditworthiness goes back as early as 1899, when Equifax (originally called Retail Credit Company) would keep a list of consumers and a series of factors to determine their likelihood to pay back debts. However, credit cards didn't make an appearance until the 1950s, and the FICO score as we know it today wasn't introduced until 1989.</p> <p>Due to these timing differences, many U.S. consumers hold on to damaging myths about credit cards. Let's dispel five of these widely held but false beliefs and find out what to do to continue improving your credit score.</p> <h2>Myth #1: Closing unused cards is good for credit</h2> <p>Remember when United Colors of Benetton used to be all the rage and you shopped there all the time? Fast forward a decade; you don't shop there anymore, and you're thinking about shutting down that store credit card. Not so fast! Closing that old credit card may do more harm than good to your credit score.</p> <p>Your length of credit history contributes 15 percent of your FICO score. If that credit card is your oldest card, then closing it would bring down the average age of your accounts and hurt your score. This is particularly true when there is a gap of several years between your oldest and second-to-oldest card. Another point to consider is that when you close a credit card, you're reducing your amount of available credit. This drops your <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score?ref=internal" target="_blank">credit utilization ratio</a>, which makes up 30 percent of your FICO score.</p> <p><strong>What to do:</strong> Keep those old credit cards open, especially when they are the oldest ones that you have. Just make sure that you're keeping on top of any applicable annual fees and they're not tempting you to spend beyond your means.</p> <h2>Myth #2: Holding a credit card balance is good for credit</h2> <p>The amount you owe lenders accounts for 30 percent of your FICO score. The smaller your credit utilization ratio (the amount of debt you hold compared to your total available credit), the better your score. This means if you can avoid carrying a balance, you should do so. However, responsible use of a credit card allows you to buy big ticket items, such as a kitchen appliance or laptop, that you can't pay off all at once. So, sometimes you will have to carry a credit card balance. When you do, credit lenders recommend that you keep your credit utilization ratio below 30 percent -- the lower, the better. Keeping a low credit utilization ratio demonstrates that you're more likely to be able repay your debts, positively affecting your credit score.</p> <p><strong>What to do:</strong> Pay back your credit card balance in full every month as much as possible. When you're not able to do so, then seek to maintain a debt-to-credit ratio below 30 percent across all your credit card debts. (See also: <a href="http://www.wisebread.com/how-to-use-credit-cards-to-improve-your-credit-score?ref=seealso" target="_blank">How to Use Credit Cards to Improve Your Credit Score</a>)</p> <h2>Myth #3: Paying the cellphone bill builds your score</h2> <p>Since some cellphone carriers may run a credit check to decide whether or not to approve you for financing, you may think that those cellphone carriers report your on-time payment history back to the credit bureaus. Payments to service companies, such as cellphone carriers, electricity providers, and natural gas providers, aren't reported back to the credit bureaus. (However, Experian does provide eligible renters the option to make their rent payments count toward their credit history.)</p> <p><strong>What to do:</strong> Don't sign up for a cellphone plan thinking you'll get a boost in your credit score. Do continue paying your cellphone bill (and all other bills!) regularly on-time. If your cellphone account were to be sent to collections, then the cellphone company would surely report that info to all credit bureaus.</p> <h2>Myth #4: Choosing a popular card will benefit you</h2> <p>A 2016 study of 20,206 credit card users by J.D. Power found that at least one in five credit card holders have a card which has fees or rewards not aligned with their actual purchase habits.</p> <p>In the hunt for bigger and better rewards, 20 percent of credit card holders end up with a card that doesn't match their needs and would be better served by a different rewards card, or even one without any without rewards at all and a lower interest rate. Here's an example from the study: One of the reasons that 44 percent of airline co-branded card holders appear to have the wrong card is that those individuals aren't spending at least the necessary $500 per month to gain enough rewards to cover the average annual fee of $75. (See also: <a href="http://www.wisebread.com/cash-back-vs-travel-rewards-pick-the-right-credit-card-for-you?ref=seealso" target="_blank">Cash Back vs Travel Rewards: Pick the Right Credit Card for You</a>)</p> <p><strong>What to do:</strong> You don't just want to follow the crowd when choosing a credit card. Stack up your current credit card against others and figure whether or not it's time to find a new card more suitable to your lifestyle. Check out our guides on <a href="http://www.wisebread.com/how-rewards-credit-cards-really-work?ref=internal" target="_blank">how cash back cards really work</a> and choosing the <a href="http://www.wisebread.com/choose-the-best-travel-rewards-credit-card-with-this-guide?ref=internal" target="_blank">best travel rewards credit card</a> to find the card that fits your lifestyle.</p> <h2>Myth #5: Believing there's only one credit score</h2> <p>That <a href="http://www.wisebread.com/the-5-best-credit-cards-that-offer-free-credit-scores?ref=internal" target="_blank">free credit score</a> on your credit card statement may not be the same one used by a lending officer reviewing your application for a mortgage or car loan. Did you know that there more than 50 different types of FICO scores? Lenders have several options to choose from depending on their industry and preferred credit reporting agency.</p> <p><strong>What to do:</strong> If you get a free credit score through your card, check with the card issuer whether or not that score is a FICO score and what type of FICO score it is. This will help you know whether or not you can do an apples-to-apples comparison with the one used by your lender. Also, inquire with your lender if they can give you a target range for your loan to be approved. (See also: <a href="http://www.wisebread.com/fico-or-fako-are-free-credit-scores-from-credit-cards-the-real-thing?ref=seealso" target="_blank">FICO or FAKO: Are Free Credit Scores From Credit Cards the Real Thing?</a>)</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/5-myths-about-credit-cards-that-wont-go-away">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-carry-a-balance-heres-why-you-still-need-a-credit-card">Don&#039;t Carry a Balance? Here&#039;s Why You Still Need a Credit Card</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/get-free-credit-score-monitoring-with-credit-karma">Get Your Free Credit Score from Credit Karma</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score">This One Ratio Is the Key to a Good Credit Score</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/comparing-miles-which-airline-loyalty-program-is-better">Which Airline Loyalty Program Has the Best Value for Their Miles?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-5-best-credit-cards-that-offer-free-credit-scores">Best Credit Cards That Offer Free Credit Scores</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards bills credit history credit scores credit utilization ratio debts fico miles myths rewards Tue, 21 Mar 2017 10:31:11 +0000 Damian Davila 1907103 at http://www.wisebread.com