fico http://www.wisebread.com/taxonomy/term/8457/all en-US 5 Monthly Bills That Vary Based on Your Credit Behavior http://www.wisebread.com/5-monthly-bills-that-vary-based-on-your-credit-behavior <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-monthly-bills-that-vary-based-on-your-credit-behavior" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_screaming_papers_599701902.jpg" alt="Man&#039;s bills varying based on credit behavior" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Your credit score is one of the most important numbers in your financial life. Because it incorporates data about your past behavior with credit &mdash; how much credit and debt you have and how good you are at paying those bills off &mdash; it's deemed as a good predictor of how you'll behave with future bills.</p> <p>A <a href="http://www.wisebread.com/what-does-your-credit-score-mean-good-bad-or-excellent" target="_blank">low credit score</a> can hurt you in many ways: It makes it more difficult to qualify for mortgages, car loans, or credit cards. And when you do qualify for a loan or credit card, you'll be stuck with higher interest rates and the higher monthly payments that come with them. Poor credit behavior can also cost you money each month in the form of higher student loan and insurance payments. (See also: <a href="http://www.wisebread.com/15-surprising-ways-bad-credit-can-hurt-you?ref=seealso" target="_blank">15 Surprising Ways Bad Credit Can Hurt You</a>)</p> <p>Most lenders today still consider a credit score of 740 or higher to be a strong one. Anything at 640 or lower, though, is considered weak.</p> <p>Here's a look at five monthly bills that you'll pay more for if your credit score is low.</p> <h2>1. Mortgage payment</h2> <p>Your credit score has a big impact on your mortgage payment. If your score is high, odds are good that you'll qualify for a lower interest rate, which will, in turn, lower your monthly mortgage payment. If your score is low, the opposite will happen.</p> <p>Here's an example of the difference that a high or low interest rate can have on your monthly mortgage payment: If you take out a 30-year, fixed-rate mortgage loan of $200,000 at an interest rate of 3.80 percent, you'll have a monthly payment of about $931, not counting what you might pay for homeowners insurance and property taxes.</p> <p>If you take out that same loan with a higher interest rate of 4.80 percent &mdash; which you may have gotten due to a low credit score &mdash; your monthly payment, again not counting taxes and insurance, will be about $1,049. That's $118 more a month, or about $1,416 a year. (See also: <a href="http://www.wisebread.com/4-smart-ways-to-lower-your-monthly-mortgage-payment?ref=seealso" target="_blank">4 Smart Ways to Lower Your Monthly Mortgage Payment</a>)</p> <h2>2. Auto loans</h2> <p>You'll face the same situation when applying for an auto loan with a lower credit score. Auto lenders, like mortgage lenders, rely heavily on your credit score. If they see a low score, they'll protect themselves financially by charging you a higher interest rate. This higher rate will result in a higher monthly payment.</p> <p>The higher rates make sense if you look at your loan from your lender's point of view. A lower credit score means you have a history of making bad financial choices, whether that means paying bills late or missing them entirely. Lenders then levy a higher interest rate to make up for the danger of lending to riskier borrowers.</p> <h2>3. Credit cards</h2> <p>Interest rates on credit cards can be high &mdash; 20 percent or higher in some cases. But if your credit score is high, you'll increase your chances of qualifying for a lower rate on your cards. This is important: If you carry a balance on your cards each month, a lower interest rate will mean a lower required minimum monthly payment. It also means your debt will grow at a slower rate.</p> <p>How you use credit cards has a big impact on your credit score. If you always pay your cards on time, and if you don't run up too much debt on them, you will steadily boost your score. (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>4. Student loans</h2> <p>There are two types of student loans: federal and private. Your credit score won't affect your interest rate on federal loans. But lenders originating private student loans will look at your credit score. If your score is low, they'll charge you higher interest rates and fees. This will result in a higher monthly student loan payment.</p> <h2>5. Homeowners insurance</h2> <p>Insurance companies don't rely on your credit score to set your homeowners insurance rates. They do, however, use a similar metric known as an insurance score. This score includes information about your past payment history, your debts, and your number of open credit accounts, just like your credit score. It can also include information about any safety features &mdash; such as fire alarms and security systems &mdash; protecting your home and whether you've made a high number of insurance claims in the past.</p> <p>If your insurance score is high, you'll qualify for a lower insurance bill. If that score is low, you can expect to pay more for your homeowners insurance.</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-monthly-bills-that-vary-based-on-your-credit-behavior&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Monthly%2520Bills%2520That%2520Vary%2520Based%2520on%2520Your%2520Credit%2520Behavior.jpg&amp;description=5%20Monthly%20Bills%20That%20Vary%20Based%20on%20Your%20Credit%20Behavior"></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%20Monthly%20Bills%20That%20Vary%20Based%20on%20Your%20Credit%20Behavior.jpg" alt="5 Monthly Bills That Vary Based on Your Credit Behavior" 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-monthly-bills-that-vary-based-on-your-credit-behavior">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/what-to-do-if-youve-signed-up-for-a-terrible-loan-or-credit-card">What to Do if You&#039;ve Signed Up for a Terrible Loan or 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/why-you-need-to-know-the-difference-between-secured-and-unsecured-debts">Why You Need to Know the Difference Between Secured and Unsecured Debts</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/3-ways-student-loan-debt-can-affect-your-mortgage-application">3 Ways Student Loan Debt Can Affect Your Mortgage Application</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/8-valuable-rights-you-might-lose-when-you-refinance-student-loans">8 Valuable Rights You Might Lose When You Refinance Student Loans</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance auto loans bills credit score fico homeowners insurance interest rates mortgages payments student loans Tue, 01 Aug 2017 07:47:46 +0000 Dan Rafter 1990977 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-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/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/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-3 views-row-odd"> <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-4 views-row-even"> <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> <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-signs-youre-making-all-the-right-money-moves">6 Signs You&#039;re Making All the Right Money Moves</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 How to Read a Credit Report http://www.wisebread.com/how-to-read-a-credit-report <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-read-a-credit-report" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-503389404_0.jpg" alt="Man learning how to read a credit report" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Building and maintaining your credit history takes time and dedication. While there are many things you can do when shooting for that perfect 850 FICO score, checking your free credit report every year from AnnualCreditReport.com is among the best personal finance habits. Once you have a copy of your credit report, let's review step-by-step what to look for.</p> <h2>1. Check your personal information</h2> <p>First things first: Make sure that your credit report correctly shows your name, Social Security Number (SSN), phone number, and address. The three credit bureaus (Equifax, Experian, and TransUnion) keep track of all variations of names and SSNs reported as belonging to you.</p> <p>You can easily rectify a small error, such as a misspelling, absence of a hyphen in a last name, or transposition of a street number by contacting the credit bureau and providing supporting documentation. Keep an eye out for information that you don't recognize at all &mdash; this may be a sign of identity theft. (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>2. Verify it's really you</h2> <p>Even after checking that your full name and address are correct, you may recognize some accounts on your report that belong to somebody else in your household. In this case, you may be a victim of a mixed file &mdash; when the credit information of two individuals sharing the same name gets mixed up in a single report.</p> <p>This can be a potential issue in multigenerational homes with several family members sharing the exact name. For example, John Smith Jr. opens a store card but the credit bureaus list the account on the father's report (John Smith Sr.) instead of the son's. That would be a mixed file.</p> <h2>3. Watch out for errors in account ownership</h2> <p>Going back to the example of the father and son, the father may have decided to open the store card in his name, and then add his son as an authorized user, or vice versa. Make sure that reported accounts are only the ones for which <em>you</em> are the owner.</p> <h2>4. Look out for accounts incorrectly reported as late or delinquent</h2> <p>Unless you were more than 30 days past due, you shouldn't have a late or delinquent note on any debt. So, report this right away. (See also: <a href="http://www.wisebread.com/how-to-clear-old-debt-from-your-credit-report?ref=seealso" target="_blank">How to Clear Old Debt From Your Credit Report</a>)</p> <p>If you recently made a payment and your account is now current, keep in mind that there is often a lag when credit bureaus report such incidents. Follow up with the company owning your debt and verify that it has notified the credit bureaus. Keeping your accounts current is critical, because payment history makes up 35 percent of your FICO credit score.</p> <h2>5. Validate key account dates</h2> <p>The most important date to verify is the date that an account was opened, because the length of your credit history accounts for 15 percent of your FICO credit score. Other important dates to verify are date of last payment, and date of first delinquency.</p> <h2>6. Beware accounts listed twice</h2> <p>It can happen! Possible sources of this error are when you upgrade a credit card with the same company, or refinance a loan with the same financial institution. Another possibility is that somebody opened an account on your behalf without your consent.</p> <p>You also need to watch out for companies transferring the ownership of a delinquent account over to collections agencies. While you're still responsible for paying back what you owe, you're definitely not liable to receive a double (or triple!) whammy on your credit score for the same mistake.</p> <h2>7. Double check credit limits and balances</h2> <p>Double check that your account balances are within a range you recognize, and that your credit card limits are up to date. After all, 30 percent of your FICO score is based on your <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score" target="_blank">credit utilization ratio</a> &mdash; your total credit card balances divided by your total credit card limits. For example, an outstanding balance of $4,000 with total credit limit of $15,000 would put your credit utilization ratio at 26 percent. The more available credit you have, the lower your credit utilization ratio will be. Most experts recommend this ratio should not exceed 30 percent.</p> <h2>8. Keep an eye on public records</h2> <p>A bankruptcy isn't the only reason you might end up with a public record on your account. Unpaid driving violations, library fines, or other penalties from money owed to the government will come to haunt you on your credit report. Depending on many factors, public records can stay on your report for up to seven years, even after taking care of them. This means that the best time to take care of them is now. (See also: <a href="http://www.wisebread.com/4-credit-report-mistakes-that-could-be-costing-you-big?Ref=seealso" target="_blank">4 Credit Report Mistakes That Could Be Costing You Big</a>)</p> <h2>9. Corroborate that corrected information has been posted</h2> <p>Chances are at some point, you'll eventually have to report an error. When this happens, always follow up to check that the incorrect information has been replaced and corrected.</p> <h2>What to do if you find an error</h2> <p>If you find any errors in your credit report, refer to the instructions on your credit report to dispute inaccurate or missing data. Here is a <a href="http://files.consumerfinance.gov/f/documents/092016_cfpb__CreditReportingSampleLetter.pdf" target="_blank">useful template</a> from the Consumer Financial Protection Bureau to initiate disputes with the credit bureaus by mail or fax. Or, you can file a dispute online with <a href="https://www.equifax.com/personal/disputes" target="_blank">Equifax</a>, <a href="http://www.experian.com/disputes/main.html" target="_blank">Experian</a>, or <a href="https://www.transunion.com/credit-disputes/dispute-your-credit" target="_blank">TransUnion</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/how-to-read-a-credit-report">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/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/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-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-always-dispute-mistakes-on-your-credit-report">Should You Always Dispute Mistakes on Your Credit Report?</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/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-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 bureaus credit reports credit utilization ratio disputes Equifax errors Experian fico filing claims how to read Mistakes TransUnion Thu, 11 May 2017 08:00:09 +0000 Damian Davila 1942663 at http://www.wisebread.com 3 Ways Retirees Can Build Credit http://www.wisebread.com/3-ways-retirees-can-build-credit <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/3-ways-retirees-can-build-credit" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-471849363.jpg" alt="Learning ways retirees can build credit" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You might think that once you reach retirement, your credit score is just one of those things you get to stop worrying about. While it's true that most retirees won't be applying for mortgages, it's not true that you don't need to maintain a decent credit score. What if you want to apply for a car loan? What about credit cards? You certainly won't get the lowest interest rates and best rewards programs possible without a good credit score to back you up.</p> <p>A low credit score can also hurt you if you want to downsize to an apartment, or even move into a senior living facility. You might need a solid credit score to qualify.</p> <h2>Why it's hard for retirees to build credit</h2> <p>According to FICO, to have a credit score, you must have at least one credit account that is at least six months old. You must also have at least one account that has been updated by a creditor or lender during the last six months.</p> <p>If you aren't paying a mortgage, paying off an auto loan, or using credit cards, you might not meet any of these requirements. This might lead to you becoming what FICO calls an &quot;unscorable,&quot; a consumer who has no credit score at all.</p> <p>Fortunately, there are ways for retirees to continue building credit. They require the same good financial habits you've been practicing before retirement.</p> <h2>Use the credit cards you have</h2> <p>You might prefer paying for items in cash. Instead, make small purchases throughout the month with your credit card. If you pay off your entire card balance each month, you'll continue to boost your credit score. (See also: <a href="http://www.wisebread.com/how-to-use-credit-cards-to-improve-your-credit-score" target="_blank">How to Use Credit Cards to Improve Your Credit Score</a></p> <p>Make sure that you don't charge more than you can pay off by the due date. If you do, you'll be stuck paying interest.</p> <p>Never pay late. If you pay your credit card 30 days or more late, your card provider will report your payment as late to the national credit bureaus of TransUnion, Experian, and Equifax. This will cause your credit score to plummet. (See also: <a href="http://www.wisebread.com/5-simple-ways-to-never-make-a-late-credit-card-payment?ref=seealso" target="_blank">5 Simple Ways to Never Make a Late Credit Card Payment</a>)</p> <h2>Keep unused credit card accounts open</h2> <p>You might have a credit card that you never use, but don't close it. Having open credit card accounts helps your credit score, thanks to something called a <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>.</p> <p>This ratio measures your credit card balances against your total available credit limits, and it accounts for 30 percent of your score. Using too much of your available credit will cause your score to drop, while using a modest amount will help it rise. It's typically recommended that you not let debt tip this ratio beyond 30 percent. If you have a paid-off credit card that isn't getting much use, closing it will lower your overall available credit limit and your utilization ratio will then increase. (See also: <a href="http://www.wisebread.com/how-to-ditch-a-credit-card-without-dinging-your-credit-score?ref=seealso" target="_blank">How to Close a Credit Card Without Dinging Your Credit Score</a>)</p> <p>So, keep those unused cards tucked in your wallet. Having that extra credit that you're not using will provide a boost to your score.</p> <h2>Apply for a secured credit card</h2> <p>If you no longer have any credit cards, and you've become an unscorable, you can still build your credit. Your first step should be applying for a <a href="http://www.wisebread.com/the-5-best-secured-credit-cards?ref=internal" target="_blank">secured credit card</a>.</p> <p>You don't need a credit score to qualify for one of these cards. Their line of credit is based on the amount of money you deposit into an account with the financial institution issuing the card. (See also: <a href="http://www.wisebread.com/a-secured-credit-card-can-repair-your-credit-score-heres-how-to-pick-the-best?ref=seealso" target="_blank">How to Pick the Best Secured Credit Card</a>)</p> <p>If you deposit $1,000 into an account, you can then charge up to $1,000 on your secured credit card. Every time you use your secured card and pay off these charges on time, you'll get a boost to your credit score. Do this long enough, and you can build a score that's high enough to qualify for a traditional credit card.</p> <p>Again, take the same precautions you'd take with a traditional credit card. Pay your bill on time each month, and never charge more than you can afford to pay in full by your due date.</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/3-ways-retirees-can-build-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/building-a-credit-history">Building a Credit History</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-to-ditch-a-credit-card-without-dinging-your-credit-score">How to Close a Credit Card Without Dinging 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/why-your-credit-score-matters-in-retirement">Why Your Credit Score Matters in Retirement</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-7-debt-payoffs-that-boost-your-credit-score-the-most">The 7 Debt Payoffs That Boost Your Credit Score the Most</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-myths-about-credit-cards-that-wont-go-away">5 Myths About Credit Cards That Won&#039;t Go Away</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement building credit credit score credit utilization ratio debts fico retirees Wed, 26 Apr 2017 20:00:10 +0000 Dan Rafter 1934072 at http://www.wisebread.com How to Close a Credit Card Without Dinging Your Credit Score http://www.wisebread.com/how-to-ditch-a-credit-card-without-dinging-your-credit-score <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-ditch-a-credit-card-without-dinging-your-credit-score" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-654999932.jpg" alt="get rid of a credit card without damaging your credit score" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>It might seem like common sense to think that individuals would be rewarded (or at least not penalized) for closing a credit card. Doesn't it show good credit sense? Whether you want to close a credit card to remove the temptation of using credit you can't pay back, or you have other credit cards that offer better rewards and benefits, you may be surprised to find that closing an account may negatively affect your credit score. (See also:<a href="http://www.wisebread.com/the-5-things-with-the-biggest-impact-on-your-credit-score?ref=seealso" target="_blank"> The 5 Things With the Biggest Impact on Your Credit Score</a>)</p> <h2>Why a closed account dings your score</h2> <p>It's important to know why closing a card negatively affects your credit score. Here are the two main reasons.</p> <h3>Your account history is shortened</h3> <p>If you close an account that you have had for several years, then you are cutting your account history short. Closing a credit card that you have had for almost a decade will have a bigger impact on your score than closing a card you've had less than a year.</p> <h3>Your credit utilization rate changes</h3> <p>If you currently have $2,500 in credit card debt, but have three cards that give you a total $15,000 credit limit, your current <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score?ref=internal" target="_blank">credit utilization rate</a> is just over 16 percent. However, if you cancel one of the cards, and that card had a credit limit of $8,000, then you just decreased your overall credit line to $7,000. Your credit utilization ratio will now increase to over 35 percent. Having a credit utilization rate over 30 percent will negatively impact your credit score.</p> <h2>Ask for a card change instead of canceling</h2> <p>If you want to ditch a certain credit card due to high annual fees, you may be able to downgrade your card without canceling the account. Call the creditor and ask if you can change to a lower or zero fee card.</p> <p>Asking for a card change is also important for those who are <a href="http://www.wisebread.com/heres-what-the-successful-use-of-secured-credit-cards-looks-like?ref=internal" target="_blank">using a secured card</a> to boost their credit score. Some secured cards may automatically upgrade your account to an unsecured one, but not always. If your account is in good standing, the creditor should move your account to a better card. (See also: <a href="http://www.wisebread.com/the-5-best-secured-credit-cards?ref=seealso" target="_blank">Best Secured Credit Cards</a>)</p> <h2>Ask for credit limit increase on other cards</h2> <p>If you are still set on closing your credit card account, you can minimize the damage by asking for a credit limit increase from other cards you're keeping. This will prevent your credit utilization ratio from changing dramatically.</p> <h2>Close the newest cards first</h2> <p>Choose a newer card to cancel rather than an old one. This will prevent your score from dropping too much from a shortened overall account history. Don't close any accounts if you are planning to apply for loans soon. It will take your score a few months to recover. If a lender pulls your report shortly after you've closed your accounts, they'll see some account activity that may make them less likely to approve a loan, not to mention your sudden drop in score.</p> <p>Finally, be sure to monitor your credit score for a few months after you close your account to ensure everything went smoothly and no errors were reported. (See also:<a href="http://www.wisebread.com/5-ways-to-improve-your-credit-score-fast?ref=seealso" target="_blank"> 5 Ways to Improve Your Credit Score Fast</a>)</p> <h2>Why not just keep the card?</h2> <p>Credit card accounts in good standing will continue to positively impact your account for many years. Unless you're paying an annual fee for a card you're no longer using, it may be just as effective if you put it away in a safe place. This way you won't risk lowering your credit score.</p> <p>However, if you do decide to close some accounts, keep these things in mind so it has a minimal impact on your score.</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/how-to-ditch-a-credit-card-without-dinging-your-credit-score">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/fico-vs-fakes-are-you-getting-the-wrong-credit-score">FICO vs. Fakes: Are You Getting the Wrong Credit Score?</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/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/what-is-a-good-credit-score-range">What Is a Good Credit Score and Why Is It Important?</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-boost-your-credit-with-a-balance-transfer">How to Boost Your Credit With a Balance Transfer</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards closing credit cards credit bureaus credit score credit utilization ratio fico limit increase Wed, 29 Mar 2017 08:30:17 +0000 Ashley Eneriz 1917874 at http://www.wisebread.com 5 Financial Mistakes That Won't Hurt Your Credit Score http://www.wisebread.com/5-financial-mistakes-that-wont-hurt-your-credit-score <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-financial-mistakes-that-wont-hurt-your-credit-score" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-623515998.jpg" alt="Learning which financial mistakes won&#039;t hurt your credit score" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Certain financial mishaps can cost you dearly when it comes to your FICO credit score. Pay your credit card bill more than 30 days late, and your score can drop by 100 points. Declare bankruptcy or lose a home to foreclosure? Your score will fall by even more.</p> <p>In general, lenders today consider a FICO credit score of 740 or higher to be a very good score. They consider anything over 800 to be excellent. Keeping your score in these ranges requires that you pay your bills on time each month and keep your credit card debt low.</p> <p>But here's a secret about FICO scores: They don't measure all of your financial activity. It's possible to suffer a few financial setbacks, or make some money mistakes, without seeing your credit score take a dive.</p> <p>Here are five financial mishaps that, though they might cause problems in your daily life, won't hurt your credit score.</p> <h2>1. Paying your credit card bill just a little late</h2> <p>You should always <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>. And ideally, you should pay off your cards in full each month. But if you miss your deadline by two days or three weeks, it won't impact your credit score.</p> <p>Your credit card provider will only report a payment as late to the three national credit bureaus &mdash; Experian, Equifax, and TransUnion &mdash; if you are at least 30 days late on it. As long as you pay before that 30-day deadline passes, your credit score will remain intact. (See also: <a href="http://www.wisebread.com/how-late-payments-affect-your-credit?ref=seealso" target="_blank">How Late Payments Affect Your Credit</a>)</p> <p>Of course, this doesn't mean that you won't take a financial hit. Your credit card provider could raise your card's interest rate and levy a late fee &mdash; usually around $35 &mdash; against you.</p> <h2>2. Forgetting to pay your doctor's bill</h2> <p>Not all bills are equal in the eyes of your credit score. Pay your credit card or mortgage payment more than 30 days late, and you can expect your FICO score to plunge. Do the same with your doctor's or dentist's bill, and your credit score won't budge.</p> <p>That's because medical providers don't report late payments to the credit bureaus. So paying your dentist bill 40 days late won't hurt your credit score.</p> <p>Again, though, you need to be careful. Paying your medical bills late could have other financial consequences. Your medical provider might tack on additional fees to your bill if you don't pay on time. And if you put off paying that bill for too long, your medical provider might send a collections agency after you. This <em>will</em> be reported to the credit bureaus, and it will cause your credit score to fall.</p> <h2>3. Not paying your phone or utility bill on time</h2> <p>Your phone, electrical, gas, water, garbage, and cable bills are much like your medical ones: The providers of these services don't report to the credit bureaus. You can pay these bills late without suffering a hit to your credit score.</p> <p>Again, be careful. You don't want your utility company shutting off your service or sending your late bill into collections, something that will hurt your credit score.</p> <h2>4. Paying your apartment rent late (usually)</h2> <p>It used to be that apartment rent payments were never reported to the credit bureaus. Today, that is slowly beginning to change, with some services popping up that will report on-time, and late, rental payments to credit bureaus.</p> <p>But the majority of renters still don't see their monthly rent payments reported to the credit bureaus. That's bad news for renters who pay their rent on time each month; those on-time payments could boost their credit scores if they were reported. It's a better deal for those renters with a history of late payments, as these financial mistakes won't hurt their credit scores.</p> <h2>5. Losing a job</h2> <p>You might be surprised to learn that your annual income has no impact on your FICO credit score. Your credit score only tracks how well you pay your bills and manage your credit. It does not care whether you make a $1 million or $10,000 a year.</p> <p>If you lose your job and your income suddenly dips, your credit score won't budge.</p> <p>If your reduced income causes you to run up your credit card debt or start paying your bills late, though? That will hurt your credit score.</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-financial-mistakes-that-wont-hurt-your-credit-score">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-5"> <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/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-2 views-row-even"> <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-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-late-payments-affect-your-credit">How Late Payments Affect Your Credit</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/5-monthly-bills-that-vary-based-on-your-credit-behavior">5 Monthly Bills That Vary Based on Your Credit Behavior</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-need-to-know-the-difference-between-secured-and-unsecured-debts">Why You Need to Know the Difference Between Secured and Unsecured Debts</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance bills collections credit score fico financial mistakes late fees late payments utilities Thu, 23 Mar 2017 10:00:11 +0000 Dan Rafter 1911510 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-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/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-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-build-credit-without-using-credit-cards">How to Build Credit Without Using Credit Cards</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/the-5-best-credit-cards-with-annual-fees">Best Credit Cards With Annual Fees</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/5-smart-ways-to-meet-a-rewards-card-minimum-spending-requirement">5 Smart Ways to Meet a Rewards Card Minimum Spending Requirement</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 Why Your Credit Score Matters in Retirement http://www.wisebread.com/why-your-credit-score-matters-in-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/why-your-credit-score-matters-in-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/retired_couple_car_108348263.jpg" alt="Couple learning why credit score matters in retirement" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You've left the working world and are ready to enjoy your retirement years. So, you might be forgiven for thinking that your days of fretting over your FICO credit score are over.</p> <p>Guess what? They're not. Your three-digit credit score matters even in your retirement.</p> <p>Lenders of all kinds, not to mention credit card providers, rely on your FICO credit score to determine how well you've managed your credit in the past. Having a low score can hurt you financially, even after you've left the days of commuting to work behind you.</p> <h2>Why Scores Matter</h2> <p>Your FICO credit score &mdash; you have three, one each maintained by the credit bureaus of Experian, Equifax, and TransUnion &mdash; is a key number throughout your adult life. Lenders rely on these scores to determine if you can qualify for loans. And if your score is low, even if you do qualify, you'll pay higher interest rates.</p> <p>Generally, lenders consider a FICO credit score of 740 or higher to be an excellent one. Scores under 640 are generally considered weak by lenders, and will leave you with higher interest rates on the money you borrow.</p> <p>As you make your way through adulthood, lenders will check your scores as you apply for auto loans, mortgages, or credit cards.</p> <p>When you retire, the odds are high that you will no longer be applying for mortgage loans. However, this doesn't mean that credit scores will no longer play a key role in your financial life.</p> <h2>The Best Credit Cards</h2> <p>If you want to <a href="http://www.wisebread.com/5-best-credit-cards-for-people-with-excellent-credit?ref=internal" target="_blank">qualify for the best credit cards</a>, including ones with the <a href="http://www.wisebread.com/top-5-travel-reward-credit-cards?ref=internal" target="_blank">most generous rewards programs</a>, you'll need a high FICO score. Financial institutions only pass out their best credit cards to those customers who've proven that they have a history of paying their bills on time.</p> <p>Having a high credit score is how you'll prove to banks that you are financially responsible. And if you want to qualify for the best credit scores during your retirement, you'll take steps to make sure that your credit score is strong in your 60s, 70s, 80s, and beyond.</p> <h2>A New Car</h2> <p>Maybe you plan to buy that dream car after retirement. If you can't pay for it in cash, you'll need an auto loan. And if you want to qualify for an auto loan with the lowest possible interest rate, you'll need a strong FICO credit score.</p> <p>Auto lenders will check your credit score when you apply for financing. So make sure that your score doesn't take a dip after retirement.</p> <h2>Auto Insurance Rates</h2> <p>If you buy a new car, you'll need auto insurance, too. Guess what? Auto insurers rely on a variation of your credit score to help set their rates. Again, you'll want the highest possible credit score if you expect to qualify for the most affordable auto insurance.</p> <p>Auto insurers use something called a credit-based insurance score to set rates. If this score is strong &mdash; and your driving history is good &mdash; you'll usually qualify for lower insurance rates. Your credit-based insurance score doesn't factor in your job or income. But it will rise if you pay bills such as your credit card payments and mortgage on time every month. It will fall if you miss payments, make payments 30 days or more late, have too much debt, or have accounts that have been sent to collections.</p> <h2>Refinancing to a Lower Monthly Payment</h2> <p>The goal is to enter retirement without having a monthly mortgage payment. That doesn't always happen, though. And if you are still paying off a mortgage loan when you enter your after-work years, you might want to someday refinance that home loan to one with a lower interest rate. Lowering your rate will give you a lower monthly payment. That extra cash each month could be important once you're living on a fixed income.</p> <p>To qualify for a refinance, and for the lowest possible interest rate to make such a move financially worthwhile, you'll again need a high credit score. If your FICO credit score is 740 or higher, the odds are good that you'll qualify for an interest rate low enough to make refinancing a smart financial decision.</p> <p>The lesson here is obvious: You can't put worrying about credit scores behind you just because you've entered retirement. The best move is to continue taking the steps that help guarantee a strong credit score &mdash; paying your bills on time and keeping your credit card debt low &mdash; even after you've left the working world.</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/why-your-credit-score-matters-in-retirement">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/what-to-do-if-youve-signed-up-for-a-terrible-loan-or-credit-card">What to Do if You&#039;ve Signed Up for a Terrible Loan or 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/5-monthly-bills-that-vary-based-on-your-credit-behavior">5 Monthly Bills That Vary Based on Your Credit Behavior</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/make-these-5-money-moves-before-applying-for-a-mortgage">Make These 5 Money Moves Before Applying for a Mortgage</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/5-things-lenders-look-for-in-a-loan-application">5 Things Lenders Look For in a Loan Application</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/building-a-credit-history">Building a Credit History</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement car insurance credit history credit score fico insurance rates mortgages new car refinancing Mon, 30 Jan 2017 10:00:08 +0000 Dan Rafter 1870059 at http://www.wisebread.com FICO or FAKO: Are Free Credit Scores From Credit Cards the Real Thing? http://www.wisebread.com/fico-or-fako-are-free-credit-scores-from-credit-cards-the-real-thing <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/fico-or-fako-are-free-credit-scores-from-credit-cards-the-real-thing" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_reading_paperwork_471708004.jpg" alt="Woman learning if free credit scores are a real thing" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Building up and maintaining a good credit score is a great step toward achieving your financial goals. An <a href="http://www.wisebread.com/5-best-credit-cards-for-people-with-excellent-credit?ref=internal" target="_blank">excellent credit score</a> can open doors to better financing for your dream home or a more reliable set of wheels. When used properly, a credit card can help you start off, continue to improve, or even <a href="http://www.wisebread.com/how-to-use-credit-cards-to-improve-your-credit-score?ref=internal" target="_blank">build back your credit history</a>. Your on-time monthly credit card payments count as 35% of your FICO credit score, after all.</p> <p>The traditional way to find out your credit score involves contacting one or all of the credit bureaus and paying for their service to provide your score. Thanks to FICO's Open Access initiative in November 2013, however, credit card users may be able to access their scores free, every month on their statements. More than 50 lenders, including American Express, Bank of America, Chase, and Capital One, <a href="http://www.wisebread.com/the-5-best-credit-cards-that-offer-free-credit-scores?ref=internal" target="_blank">offer their customers free credit scores</a>.</p> <p>It's important to note, though, that the score you get on your statements may not reflect the actual score your mortgage lender or car dealership is looking at when considering you for a loan.</p> <h2>Case Study of a Free Credit Score</h2> <p>I have accumulated a few credit cards over the years, and some of those cards offer me a free credit score. I've looked at the credit scores indicated on my latest statements from each of these cards, and the scores vary by up to 59 points.</p> <p>So, what's going on? Which of these credit scores can I trust?</p> <p>The problem is that these credit cards are all using different factors and ways to calculate the score. Some of these factors include:</p> <ul> <li>The date my credit information was pulled;<br /> &nbsp;</li> <li>The credit reporting agency they use; and<br /> &nbsp;</li> <li>The type of credit score they are reporting.</li> </ul> <p>Given these different factors, you can clearly see that not all free credit scores are alike. It's important to know what credit data you're getting to correctly evaluate your financial health.</p> <h2>3 Criteria to Analyze Your Free Credit Score</h2> <p>Based on these findings, let's review key questions that you should ask yourself about your free credit score from an existing card, or one from a card that you're planning to open.</p> <h3>1. Is It a FICO Score?</h3> <p>Not all credit cards offer the same free credit scores. Capital One offers free TransUnion VantageScore 3.0 scores to all of its cardholders and, since March 2016, to non-customers through its CreditWise credit monitoring service. CreditWise is available as a smartphone app and allows you to sign up for a new account within the app. (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 for You</a>)</p> <p>Different credit cards use different algorithms to calculate scores. Generally, a FICO credit score provides you a closer look to what your lenders would actually get when pulling your credit score on their own. Credit scores other than a FICO are considered &quot;equivalency scores&quot; or &quot;educational scores,&quot; and are often referred to as &quot;FAKO&quot; scores. While a FAKO score may give you a general idea of where you stand with lenders, it may not be accurate enough to tell you whether or not you'll get approved for a loan.</p> <h3>2. If It's a FICO Score, Which One Is It?</h3> <p>FICO has been in the credit score business for over 25 years and it has developed more than 50 types of credit scores! Most credit card companies offering a free FICO score provide the <a href="http://myfico.7eer.net/c/27771/178841/2185?u=http%3A%2F%2Fwww.myfico.com%2Fcredit-education%2Ffico-score-8-and-multiple-versions-of-fico-scores%2F" target="_blank">FICO Score 8</a>. The key differentiating factors of a FICO Score 8 are that this score:</p> <ul> <li>Gives a bigger weight to cards that have a balance close to the cards' limit;<br /> &nbsp;</li> <li>Is more forgiving than other FICO score versions to one-time late payments of at least 30 days;<br /> &nbsp;</li> <li>Provides a bigger penalty for numerous late payments;<br /> &nbsp;</li> <li>Reduces &quot;tradeline renting&quot; benefit (a credit repair practice in which individuals with poor credit are added as an authorized user to a stronger credit account); and<br /> &nbsp;</li> <li>Ignores collection accounts with an original balance under $100.</li> </ul> <h3>3. What FICO Score Will Your Lender Use?</h3> <p>Depending on their industry and preferred credit reporting bureau, lenders can use different scores. Here are some <a href="http://myfico.7eer.net/c/27771/178841/2185?u=http%3A%2F%2Fwww.myfico.com%2Fcredit-education%2Fcredit-score-versions%2F" target="_blank">examples provided by FICO</a>:</p> <p>&nbsp;<img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/Screen%20Shot%202017-01-07%20at%202.47.52%20AM.png" width="605" height="277" alt="" /></p> <p>According to FICO, the FICO Score 8 provided for free by most credit card companies is most useful when applying for a credit card. For other purposes, your FICO Score 8 may not appropriately predict your likelihood of not paying as agreed in the future of a specific credit obligation.</p> <h2>The Bottom Line: Should You Sign Up for a Free Credit Score From Your Credit Card?</h2> <p>Yes, you should definitely sign up for that free credit score from your financial institution as long as it's a FICO score. The main reason is that the lowest price offering from FICO (9 FICO scores, including FICO Score 8, and Equifax credit report monitoring) is <a href="http://myfico.7eer.net/c/27771/218633/2185" target="_blank">$19.95 per month</a> or $219 per year. If your current card doesn't offer you a credit score or you're looking to take advantage of a balance transfer with a 0% promotional APR, here are Wise Bread's recommendations on <a href="http://www.wisebread.com/the-5-best-credit-cards-that-offer-free-credit-scores?ref=internal" target="_blank">best credit cards that offer credit scores</a>.</p> <p>Having access to your free FICO Score 8 will allow you to save money on credit monitoring fees until you get closer to the acceptable range that your lender is looking for. Once you're closer to your target score, find out from your lender what score they are using and consider signing up for the <a href="http://myfico.7eer.net/c/27771/93942/2185" target="_blank">myFICO score tracking service</a> that gives you access to that specific score (ask for score name and company that issues it). While this option may cost up to $29.95 per month for a couple of months, it will allow you to have a more accurate picture than your FICO Score 8 and prevent a hard pull from your lender. Remember that each hard pull on your credit history slightly brings down your credit score, so it's a good practice to minimize hard pulls.</p> <p>Of course, make sure to read the fine print on the service agreement with myFICO so you don't miss the deadline to prevent a charge for the next month.</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/fico-or-fako-are-free-credit-scores-from-credit-cards-the-real-thing">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/is-an-fha-home-loan-right-for-you">Is an FHA Home Loan Right 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/5-monthly-bills-that-vary-based-on-your-credit-behavior">5 Monthly Bills That Vary Based on Your Credit Behavior</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/the-5-best-credit-cards-that-offer-free-credit-scores">Best Credit Cards That Offer Free Credit Scores</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/5-things-lenders-look-for-in-a-loan-application">5 Things Lenders Look For in a Loan Application</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/3-terrible-things-foreclosure-does-to-your-credit">3 Terrible Things Foreclosure Does to Your Credit</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards auto loans credit monitoring credit scores fico free lenders mortgages myfico Thu, 19 Jan 2017 11:00:10 +0000 Damian Davila 1870052 at http://www.wisebread.com 7 Apps That Monitor Your Credit for You http://www.wisebread.com/7-apps-that-monitor-your-credit-for-you <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-apps-that-monitor-your-credit-for-you" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-512432890.jpg" alt="use these free apps to monitor your credit" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The <a href="http://www.fico.com/en/blogs/risk-compliance/us-credit-quality-continues-climb-will-level/">average FICO credit score</a> of U.S. consumers is 695, according to the latest data from the FICO company. If you think this number is encouraging, you'll also be glad to hear that 54.7% of Americans are able to score at least a 700!</p> <p>This data proves that it's very possible to improve your credit score. There's no excuse these days for not monitoring your credit. Credit score monitoring? There are apps for that! Let's review some of the best free and easy to use apps available for giving your credit score a boost.</p> <h2>1. Credit Karma</h2> <p>Claiming that you can sign up for a new account within two minutes, <a href="http://www.kqzyfj.com/click-2822544-10817209-1462225929000">Credit Karma</a>'s app offers free credit score tracking. Your score and list of reports are updated weekly. Credit Karma offers a credit report card, which breaks down every factor contributing to your credit score health, such as open credit utilization rate and average age of open credit lines, and helps you understand how your actions affect your credit score.</p> <p>Keep in mind that Credit Karma shows you a <a href="https://www.creditkarma.com/credit-scores">Vantage 3.0 credit score</a>, which isn't the same as a <a href="http://www.wisebread.com/fico-vs-fakes-are-you-getting-the-wrong-credit-score">FICO credit score</a>. The app allows you to track your credit score from TransUnion and Equifax (two of three main credit reporting bureaus, the third one is Experian). To learn more details about Credit Karma, take a look at <a href="http://www.wisebread.com/get-free-credit-score-monitoring-with-credit-karma">our review</a>.</p> <h2>2. Mint: Money Manager, Budget and Personal Finance</h2> <p>Besides being a <a href="http://www.wisebread.com/6-free-debt-management-tools">free debt management tool</a>, Mint offers a free credit monitoring app that provides an easy-to-understand summary of how you can improve your credit score. The credit score provided under any of these apps is the Equifax Credit Score, which is a proprietary credit model developed by Equifax.</p> <p>By connecting your bank accounts, credit cards, and investments accounts to your Mint account, you'll have a comprehensive picture of all of your finances, too.</p> <h2>3. Credit Sesame</h2> <p><a href="http://www.dpbolvw.net/click-2822544-12336153-1455123184000">Credit Sesame</a>'s app offers you a peek into your Experian National Equivalency Score (ENES). While the FICO credit score ranges from 300 to 850, the ENES ranges from 360 to 840.</p> <p>By using this alternate credit scoring model, Credit Sesame is able to perform a &quot;soft&quot; pull on your credit history and show you how much you owe, what your current interest rates are, and what your credit score is.</p> <p>Additionally, Credit Sesame offers you some refinancing options in partnership with Lending Club to pay off higher-interest debt. To help you understand whether or not this would be a good fit for you, Wise Bread took a <a href="http://www.wisebread.com/lower-interest-rates-with-credit-sesame-and-lending-club">closer look at Credit Sesame' services</a> and the steps of the loan process application process through Lending Club.</p> <h2>4. Credit.com</h2> <p>Credit.com is another option to access your Experian National Equivalency Score and Vantage 3.0 credit score at no cost. You'll receive a grade, ranging from A+ to F, for each one of the five factors affecting your credit score: payment history, debt usage, credit age, account mix, and number of inquiries.</p> <p>Through its visual aids and specific action items, this app allow you to spot credit blunders and understand how to fix them.</p> <h2>5. Experian</h2> <p>Since so many of these apps use the credit rating model from <a href="http://www.experian.com/consumer-products/credit-monitoring.html">Experian</a>, you may be wondering if you can just go straight to the source. Yes, you can! Through the app you'll monitor changes to your Experian credit profile and have the option to sign up for push notifications directly on your device whenever a change takes place. Your free Experian credit report is updated every 30 days.</p> <h2>6. TransUnion</h2> <p>The credit reporting bureau allows you to <a href="https://www.transunion.com/credit-monitoring">check your TransUnion credit report</a> from your smartphone. Similar to the FICO credit score, the <a href="http://www.tkqlhce.com/click-2822544-12771108-1480442728000">TransUnion</a> credit score ranges from 300 to 850. Still, remember that the FICO and TransUnion credit score aren't the same.</p> <h2>7. CreditWise</h2> <p>CreditWise offers free credit monitoring services from Capital One. You don't need to be a Capital One customer to sign up for a new account. If you're an existing user of the Capital One CreditTracker service, you can use your existing username and password that you use at the CapitalOne.com site. Every week, this app will provide your TransUnion credit score. A differentiating factor of CreditWise is its credit simulator, which allows you to simulate ways to improve your TransUnion credit score.</p> <h2>The Bottom Line: Know Your Score!</h2> <p>FICO maintains a total of 28 different FICO scores, which are widely used by issuers of home, auto, and credit card loans. Remember that each one of these apps offers a free snapshot of a credit score based on a separate model and that snapshot is only for educational purposes. If you want to get the actual FICO credit score, you'll have to pay <a href="http://www.myfico.com/products/credit-score-monitoring-products/">at least $19.95 per month</a>.</p> <p>While the advice provided by any of these services can be valuable to improve your credit score, your potential lender may be working with a very different score than the one gleaned from an app. If you're working toward meeting the requirements for a mortgage or auto loan, ask your lender what credit score she's using. That way, you'll choose the app that can provide a more accurate estimate.</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/7-apps-that-monitor-your-credit-for-you">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-4"> <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/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> <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/how-to-read-a-credit-report">How to Read a Credit Report</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/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-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/these-apps-turn-saving-money-into-a-game-are-they-worth-it">These Apps Turn Saving Money Into a Game — Are They Worth It?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Technology apps credit karma credit monitoring credit score Equifax Experian fico mint smartphones TransUnion Tue, 06 Dec 2016 12:00:17 +0000 Damian Davila 1848172 at http://www.wisebread.com What Is a Good Credit Score and Why Is It Important? http://www.wisebread.com/what-is-a-good-credit-score-range <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-is-a-good-credit-score-range" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock_000024983142_Large.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Credit scores can be confusing, especially with so many different models and algorithms available. Plus, it&rsquo;s easy to mess up your credit rating and end up with bad credit without even realizing you&rsquo;ve done anything. Here&rsquo;s what you need to know about credit scores and increasing your credit rating. (See also: <a href="http://www.wisebread.com/how-to-rebuild-your-credit-in-8-simple-steps?ref=seealso">How to Rebuild Your Credit in 8 Simple Steps</a>)</p> <h2>How Important is a Good Credit Score?</h2> <p>Credit scores don&rsquo;t usually get the attention they deserve and we don&rsquo;t realize how important they are until we go to get a loan and realize we&rsquo;ve somehow ruined it. Because credit scores are one of the only ways for lenders to assess a borrower&rsquo;s risk and can mean the difference between not just qualifying for the loan, but also paying hundreds to thousands more in interest, it&rsquo;s important that you diligently work on keeping a clean credit file.</p> <p>The most crucial role that credit ratings play in finances is in the interest rate. If you have a poor or bad credit rating, you are going to pay a much higher interest rate than someone with an excellent rating, if you are approved at all. When it comes to settling down and buying a house, your credit score can become one of the most important numbers in the process. A good credit rating can help in other situations including:</p> <p><strong>Employment</strong>. Not all employers require credit checks, but if you are in finance or a position requiring that you handle the company&rsquo;s money, bad credit can end up hurting your chances of landing a new job. The idea behind checking credit for certain positions is that if you can&rsquo;t manage your own finances, you may have difficulty managing other people&rsquo;s money as well.</p> <p><strong>Lower Insurance Rates</strong>. Bad credit can cost you in other areas besides higher interest rates on loans and credit cards. It can also affect your insurance rates and cost you hundreds more than if you had a better credit score.</p> <p><strong>Qualifying for Rentals</strong>. If you have poor credit, it isn&rsquo;t just difficult to qualify for home mortgages. You may also be denied rental opportunities simply because your credit file shows that you may be at risk of not paying your rent.</p> <p><strong>Utilities</strong>. Unfortunately, you may not be able to get your utilities hooked up in your name with bad credit. Although this doesn&rsquo;t happen all the time, credit problems can prevent you from getting necessary utilities turned on in your new home.</p> <p>See also: <a href="http://www.wisebread.com/15-surprising-ways-bad-credit-can-hurt-you?ref=seealso2">15 Surprising Ways Bad Credit Can Hurt You</a></p> <h2>What Is a Good Credit Score Range?</h2> <p>Although generally &ldquo;good&rdquo; is sufficient for most things like kicking ability in kickball or rating the flavor of an apple pie, in the world of credit scores, it&rsquo;s not exactly ideal. A good credit score is often considered within the range of 700 to 749, but the goal if you want the best credit cards and lowest interest rates, is to strive for an &ldquo;excellent&rdquo; credit rating, which is 750 and higher, according to FICO and VantageScore.</p> <h2>What Is a Bad Credit Score?</h2> <p>On the other end of the credit scoring model are bad credit scores, which can make it difficult to qualify for credit cards or loans. Bad credit ratings are typically 600 or below. This, however, doesn&rsquo;t mean you are doomed never to have a credit card. There are lenders and credit card issuers that provide financial products for those in the &ldquo;bad credit&rdquo; range. However, in addition to high APRs, you can expect to pay extra fees that you won&rsquo;t find on higher-credit products. (See also: <a href="http://www.wisebread.com/what-does-your-credit-score-mean-good-bad-or-excellent?ref=seealso">Good, Bad, or Excellent: What Does Your Credit Score Mean?</a>)</p> <p>In short, the credit score range from bad credit to excellent credit is usually:</p> <p>Bad Credit &ndash; 600 and lower</p> <p>Poor Credit &ndash; 600 to 649</p> <p>Fair or Average Credit &ndash; 650 to 699</p> <p>Good Credit &ndash; 700 to 749</p> <p>Excellent Credit &ndash; 750 and higher</p> <h2>Where to Get Free Credit Scores</h2> <p>Many financial companies provide services which allow you to check and monitor your score for a monthly or annual fee of approximately $29.95 per month, depending on the scoring model. There are also a number of agencies and credit card issuers which offer this service free to its customers and cardmembers. You can get your credit score free with some of the following companies:</p> <p><a href="http://www.anrdoezrs.net/click-2822544-12336148-1455123184000"><strong>Credit Sesame</strong></a>. Score pulled from the TransUnion database.</p> <p><a href="http://www.dpbolvw.net/click-2822544-10809829-1284618439000"><strong>Credit Karma</strong></a>. VantageScores from the three major credit bureaus.</p> <p>There are also <a href="http://www.wisebread.com/the-5-best-credit-cards-that-offer-free-credit-scores?ref=internal"><strong>credit cards that offer free credit scores</strong></a> to their card holders.</p> <h2>FICO and Vantage: Types of Credit Scores and Scoring Models</h2> <p>Another point of confusion when discussing credit scores is which score you are measuring. The score used by most lending institutions is the FICO score, which means if you want to see what your card issuer is seeing, this might be the score to keep your eye on. However, there are those that use other scoring systems, and you may check and monitor those scores with any of the following agencies as well:</p> <p><strong>FICO score</strong>: Provided by FICO and also allows you to track and monitor your score with all three credit bureaus. <a href="http://myfico.7eer.net/c/27771/93942/2185">MyFico.com</a> provides services for restoring your identity in the event it is stolen and detecting threats through identity theft monitoring as well.</p> <p><strong>VantageScore</strong>: This score is more often the free version offered by different financial services and is among the most popular scores as well. The VantageScore has some differences such as how it scores paid-off collections, alternative data like rent and utility payments, and how it rates how recently a credit account was used. This score was created by the credit bureaus, TransUnion, Equifax, and Experian.</p> <p>In addition to FICO and VantageScore, each credit bureau provides its own scoring model as well, which is one of the reasons they joined forces to create the Vantage scoring model in the first place. The scores for each bureau includes the following:</p> <p><strong>PLUS score</strong>: Experian&rsquo;s scoring model usually not used by any lenders. It ranges from 330 to 830.</p> <p><strong>TransRisk score</strong>: TransUnion&rsquo;s score based on its own credit reports. This score ranges from 100 to 900 and is used to predict risk.</p> <p><strong>Equifax score</strong>: The Equifax version ranges from 280 to 850 and like the PLUS score, isn&rsquo;t used by lenders but is designed for educational purposes only.</p> <p>The range of scores will vary depending on the scoring model, but as an example, may include FICO scores from 300-850, Experian scores from 330-830, Equifax and TransUnion from 300-850, and VantageScore 300-850. Although they are all different scoring models, they are close enough that no matter which one you prefer, you can get a general idea of what the lenders see when they check your creditworthiness. And, if you&rsquo;re working on increasing your score, you can monitor any of them and assume that if one increases, all of them will typically adjust in a similar manner. It&rsquo;s important to note that whether it&rsquo;s a loan, mortgage, or credit card, the FICO scoring model is the most widely used.</p> <h2>What Affects Your Credit Rating the Most?</h2> <p>Because credit scores are intended to gauge your risk and the ability to repay your loans and credit cards, it&rsquo;s important to make sure you pay on time and manage the accounts responsibly in order to maintain a positive credit rating. However, there are other factors involved in calculating your credit score, depending on the model you use. For example, FICO scores are calculated according to the following activities: (See also:<a href="http://www.wisebread.com/the-5-things-with-the-biggest-impact-on-your-credit-score?ref=seealso"> What Impacts Your Credit Score the Most?</a>)</p> <p>35% Payment History &ndash; the number of times you make late payments on your accounts.</p> <p>30% Amounts Owed &ndash; how much you owe. Could be an indication you are overextended.</p> <p>15% Length of Credit History &ndash; how old your accounts are and the last time you used certain accounts.</p> <p>10% Credit Mix in Use &ndash; whether you have a mix of different accounts like credit cards, retail, installment loans, and mortgage loans.</p> <p>10% New Credit &ndash; if you have a number of new accounts, it could indicate a higher risk.</p> <h2>How VantageScore is Calculated</h2> <p>In comparison, VantageScore 3.0 is calculated similarly with some minor differences, with more focus being placed on recent credit than payment history or credit utilization:</p> <p>30% Recent Credit &ndash; whether you have multiple new accounts.</p> <p>28% Payment History &ndash; late payments and payments made on time.</p> <p>23% Credit Utilization &ndash; how much credit you have versus what you owe.</p> <p>9% Credit Balances &ndash; how much you owe.</p> <p>9% Depth of Credit &ndash; your credit mix and length of your credit history.</p> <p>1% Amount of Available Credit &ndash; the total amount you have available among all credit accounts.</p> <p>Vantage Scores also include a letter grade which rates your likelihood of a charge off or paying your accounts on time. For example, 901 to 990 is considered an &ldquo;A&rdquo; grade, equal to 1 charge off for every 300 consumers who pay on time. The grades lower to &ldquo;F&rdquo;. which is 501 to 600 and equal to 1 charge off for every 1 consumer paying on time.</p> <h2>Increase Your Credit Score by Checking Your Credit Reports</h2> <p>One of the most shocking and frustrating things that can happen when you check your credit score is that you find it is lower than you expect. More shocking is if it happens to be due to an error on your credit report or a mistake that you didn&rsquo;t even know existed. This is just one of the many reasons it&rsquo;s important to regularly check your credit reports and address any errors or changes immediately. This is also one of the first places to start if you&rsquo;re going to begin your journey to improving your credit score. You can get your credit reports free in any of the following ways:</p> <ul> <li>One free per year from each bureau through annualcreditreport.com</li> <li>Denial of credit, insurance, or employment</li> <li>Unemployed and planning to look for a job within 60 days</li> <li>On welfare</li> <li>Inaccurate because of fraud or identity theft</li> </ul> <p>If you don&rsquo;t qualify for free credit reports, you&rsquo;re probably going to pay either a monthly or annual fee to access one, depending on the credit bureau. Because paying for credit reports from all three bureaus can become costly, it&rsquo;s best to set an alert or reminder to get your free reports online each year with annualcreditreport.com so you can check them all for any errors. You can then notify each bureau online of any errors or corrections that need to be made to your credit reports.</p> <h2>Ways to Increase Your Credit Score</h2> <p>Once you&rsquo;ve become aware of the importance of your credit score, you&rsquo;ll likely want to work on increasing it. While the most common ways to get your numbers up into the excellent credit score range involve making your payments on time, there are other ways to get the boost you&rsquo;re looking for if you want the best credit rating possible. Some of the easiest ways to increase your score include the following:</p> <ul> <li>Check credit reports for errors and submit corrections</li> <li>Catch up any late payments or missed payments</li> <li>Pay down balances so that you owe 30% or less of your total credit available</li> <li>Get a <a href="http://www.wisebread.com/what-are-secured-credit-cards?ref=internal">secured credit card</a> (if you have bad or no credit) to start a new, clean line</li> </ul> <p>See also:&nbsp;<a href="http://www.wisebread.com/how-to-use-credit-cards-to-improve-your-credit-score?ref=seealso2">How to Increase Your Credit Score with Credit Cards</a></p> <p>If you have a number of problems on your credit reports, it&rsquo;s best to work on the ones damaging your credit the most, according to the percentages of the scoring calculations. For example, in most cases catching up late payments and missed payments can make the biggest difference in your credit rating. Once payments are caught up you can work on decreasing your credit utilization.</p> <h2>Keep Your Excellent Credit Score</h2> <p>When you have increased your credit rating, you&rsquo;ll need to make sure you practice other tips for maintaining excellent credit. These tips for keeping a good credit score include paying every bill on time (set up reminders and alerts if needed), using credit only when you need to, limiting your new accounts, keeping old accounts open, and mixing up your types of credit with a combination of credit cards, loans, retail, and mortgage accounts. Also, make sure your credit mix includes revolving, installment, and open lines of credit.</p> <p>Improving or increasing your credit rating isn&rsquo;t an easy task, and it will take some time. However, as long as you know what you&rsquo;re working with, you&rsquo;ll be able to say you have a great credit score and qualify for the best rates available, in no time.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/christina-majaski">Christina Majaski</a> of <a href="http://www.wisebread.com/what-is-a-good-credit-score-range">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-4"> <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-to-avoid-getting-your-credit-card-canceled">How to Avoid Getting Your Credit Card Canceled</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/fico-vs-fakes-are-you-getting-the-wrong-credit-score">FICO vs. Fakes: Are You Getting the Wrong 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/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/6-credit-card-mistakes-that-could-be-ruining-your-credit">6 Credit Card Mistakes That Could Be Ruining Your Credit</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-ditch-a-credit-card-without-dinging-your-credit-score">How to Close a Credit Card Without Dinging Your Credit Score</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards credit rating credit score fico Fri, 20 May 2016 10:30:04 +0000 Christina Majaski 1711477 at http://www.wisebread.com 5 Unfounded Credit Card Fears http://www.wisebread.com/5-unfounded-credit-card-fears <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-unfounded-credit-card-fears" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/000014443696.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Credit cards get plenty of bad press. Scan the web and you'll find countless stories of consumers who've run up thousands of dollars of high-interest rate debt, fallen behind on their monthly payments, and destroyed their credit scores.</p> <p>But credit cards, if used responsibly, are important financial tools. They're safer than cash. They can actually <a href="http://www.wisebread.com/how-to-use-credit-cards-to-improve-your-credit-score?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=cc_article">help you build your credit score</a>. They often come with valuable rewards programs. And you won't have to worry about those high interest rates if you're disciplined enough to charge only what you can afford to pay back each month.</p> <p>Are unfounded fears keeping you from using credit cards? If so, it's time to stop. Here are five credit card fears that have been overblown, and the truths that debunk them.</p> <h2>1. Credit Cards Will Ruin My Credit Score</h2> <p>True, lenders rely on your FICO (and other) credit scores to determine if you qualify for loans. They also use these scores to set the interest rates attached to your loans. Credit scores are important. It's natural for consumers to worry that charging too much will send their scores plummeting. But the truth is, using credit cards responsibly will actually boost your credit score.</p> <h3>The Truth</h3> <p>Every time you pay your credit card bill on time, you are helping your credit score. According to <a href="http://myfico.7eer.net/c/27771/93942/2185">myFICO.com</a>, 35% of your credit score is made up of your payment history. Establish a history of paying your bills on time, and you'll be on your way to building a good credit score. Just be careful to not carry a large balance on your card each month. First, you'll pay too much in interest. Secondly, using too much of your available credit will <a href="http://www.wisebread.com/10-surprising-ways-to-negatively-affect-your-credit-score?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=cc_article">hurt your credit score</a>.</p> <h2>2. I'll Pay a Ton in Interest</h2> <p>It's true that if you misuse your credit card, you will pay plenty in interest. It's not unusual for credit cards to come with interest rates of 19% or higher. If you carry a large balance each month, your interest charges will skyrocket. But again, if you use your credit card wisely, you'll have nothing to fear from high interest rates. (See also: <a href="http://www.wisebread.com/the-best-low-interest-rate-credit-cards?utm_source=wisebread&amp;utm_medium=seealso&amp;utm_campaign=cc_article">Best Low Interest Rate Credit Cards</a>)</p> <h3>The Truth</h3> <p>Credit cards work best for people who pay off their balances in full each month. If you do this, your credit card's interest rate won't matter because you won't ever pay interest on your debt. You only pay interest when you don't pay off your balance in full with every statement. If you do find yourself carrying an ever-growing balance each month, though, it's time to stop using your card and focus on paying down that debt.</p> <h2>3. Someone Will Steal My Card and Run Up Tons of Debt</h2> <p>It's true that thieves can steal your credit cards. They might also steal your card's information and use it to make online purchases. But credit cards are actually safer than cash.</p> <h3>The Truth</h3> <p>Consumers, if they report their card stolen or lost in a timely fashion, aren't responsible for unauthorized charges on their credit cards. If someone steals your card and charges thousands of dollars, you can dispute the illegal purchases and your credit card company won't charge you for them. Under federal law, you won't be responsible for any fraudulent charges if you report your card stolen or lost before any charges are made on it. If you report your card stolen or lost within two business days and charges have already been made, you are only responsible for a maximum of $50 worth of those fraudulent purchases, though most credit card providers will waive even that.</p> <p>Compare that to cash: If someone steals $100 from your wallet, that money is likely gone forever.</p> <h2>4. Applying for Credit Cards Will Hurt My Credit Score</h2> <p>Your credit score will take a small hit when you apply for new credit. That's because whenever you apply for a new credit card, what is known as a hard inquiry is added to your three credit reports. A hard inquiry hurts your score because every time you take on a new line of credit, you are exposing yourself to the possibility of running up debt that you can't afford. But the reality is, the damage from applying for credit cards prudently, is minimal.</p> <h3>The Truth</h3> <p>If you apply for a single credit card, that hard inquiry will typically drop your FICO credit score by about five points. That's not much, and it won't take long for that small dip to disappear. Keep paying your bills on time and don't run up credit card debt, and that five-point loss will evaporate. But if you apply for, say, six credit cards at the same time? That can cause a bigger drop in your credit scores. So apply prudently: Don't fill out more than one credit card application at a time.</p> <h2>5. I'm Worried That I'll End Up in Jail if I Can't Pay</h2> <p>There is no such thing as debtor's prison in the United States. Even so, consumers might fear that if they can't pay their credit card bills, they'll end up in jail. This simply isn't true.</p> <h3>The Truth</h3> <p>The only way credit card debt can send you to jail is if you willingly commit fraud. Otherwise, no matter how much you owe, you won't spend time behind bars. No matter what creditors say, you can't be jailed for credit card debt. That doesn't mean, however, that you won't face consequences if you can't pay your credit card bills. For instance, your credit card company might be able to garnish your wages as a way to force you to pay up.</p> <p><em>Do you harbor any of these &mdash; or other &mdash; credit card fears?</em></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-unfounded-credit-card-fears">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/how-a-solid-credit-score-saves-you-money">How a Solid Credit Score Saves You Money</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/fico-vs-fakes-are-you-getting-the-wrong-credit-score">FICO vs. Fakes: Are You Getting the Wrong 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-smart-reasons-to-pay-your-credit-card-bill-before-its-due">6 Smart Reasons to Pay Your Credit Card Bill Before It&#039;s Due</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/what-happens-when-your-credit-card-debt-is-charged-off">What Happens When Your Credit Card Debt Is Charged Off?</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/building-a-credit-history">Building a Credit History</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards credit card theft credit score debt fico high interest rates jail myths Wed, 18 May 2016 09:30:25 +0000 Dan Rafter 1712216 at http://www.wisebread.com 5 Moves to Make If Your Loan Gets Denied http://www.wisebread.com/5-moves-to-make-if-your-loan-gets-denied <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-moves-to-make-if-your-loan-gets-denied" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/loan_application_rejected_000011809531.jpg" alt="Learning moves to make if your loan gets denied" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You needed an auto loan to finance that new convertible. Or maybe you applied for a mortgage loan to buy your dream home. Whatever type of loan you needed, the answer was the same: A big &quot;no&quot; from your lender.</p> <p>Lenders reject loan applications for a variety of reasons, but two stand out: Borrowers either have a low credit score, or they're already paying off too much debt each month.</p> <p>Fortunately, you can take simple steps to strengthen your finances and turn that loan rejection into an approval. Here are five moves to make after your loan gets rejected to qualify for that financing:</p> <h2>1. Order Your Credit Score</h2> <p>Your FICO credit scores are key when you're applying for a loan. You have three of them, one each generated by the national credit bureaus of TransUnion, Experian, and Equifax. These scores tell lenders how well you've managed your credit in the past. If you have a history of paying your bills late, running up credit card debt, and missing payments altogether, your FICO scores will be weak. Lenders consider a FICO score of 740 or higher to be a strong one. But if your score is too low &mdash; say, under 640 &mdash; you'll struggle to qualify for loans. And when you do qualify for a loan, you'll have to pay a higher interest rate.</p> <p>Before you re-apply for a loan after a rejection, order at least one of your FICO credit scores. Lenders are also required to provide you with a copy of your score if that&rsquo;s the reason you were denied the loan.</p> <h2>2. Order Your Credit Reports</h2> <p>You should also order all three of your credit reports, maintained by each of the credit bureaus. These reports list your personal information and detail your history of managing credit. They show how much you owe on credit cards and other loans, and any missed or late payments from the last seven years. They'll also list any negative judgments, such as bankruptcies or foreclosures that are up to seven or 10 years old, respectively. You can order each of your three credit reports once a year for free at AnnualCreditReport.com.</p> <p>Once you receive your reports, check them for mistakes. A single mistake on a credit report can send your credit score tumbling. If your report lists a missed car payment that you know you made on time, correct the error by contacting the offending credit bureau through email or by phone. Correcting an error can provide a quick boost to your credit score. Make sure, though, that you can provide documentation, such as a credit card statement or bank account record, proving that you actually did pay the &quot;missed&quot; payment on time.</p> <h2>3. Pay All Your Bills on Time</h2> <p>The best way to boost a weak credit score is to start a new history of paying all your bills on time. Your bill-payment history accounts for 35% of your credit score, according to <a href="http://myfico.7eer.net/c/27771/93942/2185">myFICO.com</a>. Paying your bills on time will cause your score to rise. But this takes patience. Depending on how weak your score is, it might take you several months, or even more than a year, to boost your score to a level acceptable to lenders.</p> <h2>4. Reduce Your Monthly Debt</h2> <p>Lenders often reject loans when borrowers' debt-to-income ratios are too high. In general, lenders want your total monthly debts &mdash; including the estimated amount you'll be paying each month for your new loan &mdash; to equal no more than 43% of your gross monthly income. If your debt-to-income ratio is higher than this, you'll greatly increase the odds of receiving a rejection on your loan application.</p> <p>The easiest way to improve a debt-to-income ratio that is too high is to pay off as much of your debts as possible. Usually, this means reducing credit card debt. Paying off the amount you owe on your cards will slowly but steadily cause your debt-to-income ratio to fall.</p> <h2>5. Keep Paid-Off Credit Cards Open</h2> <p>Say you pay off a credit card entirely and you no longer plan on using it. You should close that account, right? No. Never close unused credit cards. Cards with zero balances can actually help your credit score.</p> <p>That's because lenders look at something called your <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=article">credit-utilization ratio</a>. This ratio looks at how much of your available credit you are using. The lower this ratio, the better. Closing an unused credit card will instantly hurt this ratio.</p> <p>Say you have four credit cards, each with a credit limit of $4,000 for an available credit of $16,000. Say, too, that you have $5,000 worth of credit card debt. That comes out to a credit-utilization ratio of about 31%, $5,000 divided into $16,000. But say you close one of your four cards. That reduces your available credit to $12,000. Your debt-utilization ratio immediately jumps to about 42%, $5,000 divided into $12,000.</p> <p>It's okay to keep a paid-off credit card in your wallet. Just make sure that you don't run up another hefty balance on it.</p> <p><em>Have you ever had a loan app denied? What did you do after?</em></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-moves-to-make-if-your-loan-gets-denied">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/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-2 views-row-even"> <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-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-7-debt-payoffs-that-boost-your-credit-score-the-most">The 7 Debt Payoffs That Boost Your Credit Score the Most</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-botch-up-then-peddle-back-to-good-credit">How to Botch Up, Then Peddle Back to Good Credit</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-things-most-likely-to-give-you-lousy-credit">5 Things Most Likely to Give You Lousy Credit</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance applications bad credit building credit credit score debt denied fico line of credit loans rejection Tue, 17 May 2016 09:00:04 +0000 Dan Rafter 1709596 at http://www.wisebread.com Should You Cosign Your Teenager's Credit Card Application? http://www.wisebread.com/should-you-cosign-your-teenagers-credit-card-application <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/should-you-cosign-your-teenagers-credit-card-application" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/teenager_credit_card_000088123561.jpg" alt="Wondering if you should cosign your teenager&#039;s credit card application" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>It's not easy for teens to establish a credit history. It's not like most teens take out mortgage, auto, or personal loans that they can pay back on time to build a solid credit history.</p> <p>One way teens can establish a good credit history is to take out a credit card, charge items, and pay off their balances on time and in full every month. The challenge? Many banks won't approve teens for credit cards because these teens don't have any credit history.</p> <p>This is why your teen might ask you to cosign on a credit card application. With you as a cosigner, banks will be more likely to take a chance on issuing a credit card to your teen. They know that if your teen runs up too much debt and starts missing payments, you'll be there to help cover those missed payments.</p> <p>So, yes, cosigning a credit card application can help your teen establish a credit history. But before you take this step, be warned: cosigning <em>could </em>send your credit score tumbling.</p> <h2>How Cosigning Works</h2> <p>When you cosign, you are agreeing that you are equally responsible for your teen's credit card debts. This means that if your teen can't or won't make a payment, you'll be responsible for making it.</p> <p>And if neither you nor your teen makes a payment? Then <em>your </em>FICO credit score will fall. A missed payment by your teen will be reported to the three national credit bureaus, Equifax, Experian, and TransUnion. These bureaus will record the missed payment not only on your teen's credit reports, but on yours, too.</p> <p>If your teen is at least 30 days late on a payment, expect your credit score to take a hit &mdash; often falling by as many as 100 points. This missed payment will remain on your credit reports for seven years.</p> <p>This will happen even if your teen doesn't tell you about late or missed payments. You must trust that your teen will pay on time if you decide to cosign a credit card application.</p> <p>To help protect yourself, review the monthly statement of your cosigned credit card every month. Make sure that your teen is making the required payments and that your child isn't charging more than he or she can pay back each month.</p> <h2>What Are Some Potentially Better Options?</h2> <h3>Secured Credit Card</h3> <p>Most banks offer what are known as <a href="http://www.wisebread.com/what-are-secured-credit-cards">secured credit cards</a>.</p> <p>These cards operate much like traditional credit cards, but they have a credit limit based on a cash security deposit that consumers must first make with the bank issuing the card. A teen who makes a deposit of, say $500, will have a credit limit of $500. If the cardholder misses payments, the bank can use the security deposit funds to make the payments itself.</p> <p>The benefit of a secured credit card is that because banks have more protection, they are more willing to pass them out to consumers with little to no credit history. This is why many consumers <a href="http://www.wisebread.com/heres-what-the-successful-use-of-secured-credit-cards-looks-like">use secured cards to build a credit score</a>. Banks issuing these cards will report payments to the national credit bureaus. Enough on-time payments, and a teen can slowly but steadily build a solid credit history and score. Once their credit score rises high enough, teens who have been relying on secured credit cards can then apply for a traditional unsecured credit card. (See also: <a href="http://www.wisebread.com/the-5-best-secured-credit-cards?ref=seealso">Best Secured Credit Cards</a>)</p> <p>Your teen then might be able to build a credit history with a secured card without asking you to cosign on an application for a traditional credit card.</p> <h3>Authorized User</h3> <p>Adding your teen as an authorized user on your credit card is another easy way to help boost their credit score using a card you already have, in your name. This should be a card you're already in good standing with. If you're worried about overspending, you can also choose one with a low credit limit, or a card that allows you to set a limit on an authorized user's card. Know that when you add anyone as an authorized user, they will receive their own card in the mail &mdash; but you are still on the hook for making all payments. Even if your teen racks up a hefty bill while you weren't looking, the liability is yours. Delinquent payments will leave a ding on both your and your child's credit reports, so make sure your teen clearly understands this before they start spending.</p> <p>This can also be a great way to establish a sense of responsibility and financial discipline in your young adult child, with you watching over their shoulder as a sort of safety net. You can set certain rules for them, such as they can only use the card in emergencies or must pay you a certain amount each month toward the bill, which will help prepare them for using their own credit card in the near future. You should already be doing this, but having your teen on your credit card account makes it even more important to monitor all activity on the card. Even if your teen is responsible, the risk for identity theft goes up every time there is another card out there.</p> <p>Once your teen is responsible enough or has enough credit history to apply for a card of their own, you can simply remove their authorized user privileges and have them apply for their credit card.</p> <p><em>Have you ever cosigned a credit card?</em></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/should-you-cosign-your-teenagers-credit-card-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-5"> <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/fico-vs-fakes-are-you-getting-the-wrong-credit-score">FICO vs. Fakes: Are You Getting the Wrong Credit Score?</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/building-a-credit-history">Building a Credit History</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-is-a-good-credit-score-range">What Is a Good Credit Score and Why Is It Important?</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-ditch-a-credit-card-without-dinging-your-credit-score">How to Close a Credit Card Without Dinging 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/how-a-solid-credit-score-saves-you-money">How a Solid Credit Score Saves You Money</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards building credit history cosigning credit score fico kids teens Fri, 15 Apr 2016 09:00:13 +0000 Dan Rafter 1687113 at http://www.wisebread.com The 7 Debt Payoffs That Boost Your Credit Score the Most http://www.wisebread.com/the-7-debt-payoffs-that-boost-your-credit-score-the-most <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-7-debt-payoffs-that-boost-your-credit-score-the-most" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/happy_man_computer_000083101755.jpg" alt="Man finding debt payoffs that boost his credit score the most" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Your credit score can be a baffling thing. Your score goes up, it goes down, and it's not always clear what is responsible for the movement.</p> <p>If you have a FICO credit score that is too low, there are some ways to improve your score by tackling your debts head on. But it helps to have a plan, as not all debt payoffs will help you. In fact, credit bureaus like to see people who have some revolving debt but are still capable of paying their bills.</p> <p>So how can you give your credit score a boost? Here are the kinds of payoffs that will be helpful.</p> <h2>1. Anything That's on Time</h2> <p>Nothing helps your credit score more than your ability to make payments on time. If you can pay off your credit card balance in full each month, that helps. If you make your monthly mortgage payment every month without delay, that's <em>huge</em>. In fact, these types of payments are viewed more positively by credit bureaus than any other factor.</p> <h2>2. Debt With the Highest Interest Rates</h2> <p>Cards with the highest interest rates are the ones that place you at the most risk of racking up more debt, thus hurting your credit score. By <a href="http://www.wisebread.com/when-to-do-a-balance-transfer-to-pay-off-credit-card-debt">paying these cards off first</a>, you are reducing your debt risk and ultimately will see your score rise. (See also: <a href="http://www.wisebread.com/the-best-low-interest-rate-credit-cards?ref=seealso">Credit Cards with the Best APRs</a>)</p> <h2>3. Credit Cards With the Lowest Credit Limits<strong> </strong></h2> <p>Credit card bureaus will not only analyze your total debt, but the amount of debt relative to your total limit. If your debt is low relative to what you are allowed to borrow, that's good. But if you're close to maxing out a credit card with a low limit, pay that one off first. This way, if you choose to close the credit card, your debt load is reduced but your limit doesn't shrink as much.</p> <h2>4. Anything That Gets Your Credit Utilization Under 30%</h2> <p>Just because credit card companies let you borrow up to a certain amount doesn't mean you should always charge up to the limit. Even if you pay credit cards on time, your credit score can be negatively impacted if you have high revolving balance. Generally speaking, if you are using more than 30% of your available credit, that's a problem. So even if you can't get your balance down to zero, work to make sure you're borrowing less than <em>a</em> <em>third </em>of what you are allowed. You will continue to see improvement until your <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score">credit utilization</a> is down to 10% or less.</p> <h2>5. Your Student Loans (But Not Always)</h2> <p>Paying off your student loans is <em>usually </em>a good thing, because you're reducing your debt-to-income ratio. And because student debt is not dischargeable in bankruptcy, your wages could be garnished if you don't pay up. The fact that you have a long history of making your loan payments on time will continue to help your score, even after the debt is paid. But it's worth noting a debt payoff in this case <em>could </em>result in a change to your debt mix, thus impacting your score negatively. Student loans are considered installment loans, because you pay a fixed amount each month, while credit cards are a vehicle for revolving debt. Credit bureaus like to see both types in your file.</p> <h2>6. Small Balances on Numerous Credit Cards</h2> <p>You may think your credit score should be fine if you have only small debts. But if those small debts are on multiple credit cards, your score may be suffering. One of the things that FICO looks at when evaluating credit is how many credit cards have balances. So if you have debt on more than one card &mdash; even if it's a small amount &mdash; it's best to get those card balances down to zero.</p> <h2>7. Any Past-Due Bills</h2> <p>If you have debts that are very late, it's best to still pay back what you owe. This may not ultimately boost your credit score significantly right away, according to FICO, but new lenders will still want to see that you paid back what was owed. Prioritize the most recent past-due bills first.</p> <p><em>How do you prioritize debt repayment?</em></p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <p>&nbsp;</p> <div align="center"><a href="//www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fthe-7-debt-payoffs-that-boost-your-credit-score-the-most&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FThe%207%20Debt%20Payoffs%20That%20Boost%20Your%20Credit%20Score%20the%20Most.jpg&amp;description=The%207%20Debt%20Payoffs%20That%20Boost%20Your%20Credit%20Score%20the%20Most" data-pin-do="buttonPin" data-pin-config="above" data-pin-color="red" data-pin-height="28"><img src="//assets.pinterest.com/images/pidgets/pinit_fg_en_rect_red_28.png" alt="" /></a> </p> <!-- Please call pinit.js only once per page --><!-- Please call pinit.js only once per page --><script type="text/javascript" async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <div align="center">&nbsp;</div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/The%207%20Debt%20Payoffs%20That%20Boost%20Your%20Credit%20Score%20the%20Most.jpg" alt="The 7 Debt Payoffs That Boost Your Credit Score the Most" 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/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/the-7-debt-payoffs-that-boost-your-credit-score-the-most">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. 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