Have You Checked Your Credit Score Lately?

Have you checked your credit score since the updates that took place this month?  

Remember, we reported back in April that beginning July 1st, big changes in the reporting standards would take place, and this could potentially affect your credit score!

Here is a summary of the changes:

  • First off, beginning July 1st, all civil judgement and public tax lien data that does not conform to the new reporting standards will be excluded by the three big credit bureaus.  In a nutshell, unless the data includes an individual’s name, address, and either a social security number or date of birth, it will be excluded from credit reports.  Further, this information must be physically verified every 90 days by making visits to courthouses.  Simply because of logistics and economics, the majority of civil judgments will likely be excluded after this date.  (If you have this type of information on your credit report, you may see a credit score increase of about 20 points.) Unfortunately, there is also a downside to this change.  Mortgage lenders may be forced to due more “due diligence,” and if so, prospective homeowners could face additional costs, red tape, and so forth when they are trying to get approved for financing.
  • Secondly, medical debts cannot be reported until 180 days after the date of delinquency.  This will protect you in the event that insurance payments are delayed due to verification issues, questions, etc.  And, once the bill is being paid or has been paid in full by insurance, any previously reported medical debt must be removed from credit reports.
  • And finally, authorized user data must include the full date of birth for any newly added user to all existing and new credit card accounts.

So, if you haven’t checked your score, now is the time to do so!

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Credit Utilization Too High?

Did you know if you’re using over 30% of your total available credit that it’s probably hurting your credit score?  That’s right.  Credit utilization, the simple measure of how much available credit that you have at any given time, should stay at or below 30% of your total available credit.  But, how is credit utilization calculated?

Simply put, your credit utilization is figured by adding up your total credit limits and dividing that by the total of all the balances on your credit cards.  So, if you have a $1,000.00 credit limit spread across one, two, or even three cards, and the total balance that you’re carrying is $500.00, then your credit utilization is 50% and the credit bureaus take that into account when your credit score is updated every month.  Even worse, some actually look at individual balances, so if you have even one credit card that is over that 30% utilization, it may be costing you points on your credit score.

What can you do to improve your credit utilization score?

Of course, ideally it’s best to pay off the balance on all your credit cards every month, but that’s not always financially feasible, so you may want to consider other ways to lower your credit utilization and/or increase your available credit.  The first way is fairly straightforward – just pay down the balances on your credit cards until you’re below the 30% utilization score.

Or you can increase your total available credit by getting another credit card and then using it sparingly.  Oftentimes, people accomplish this by applying for a balance transfer card with a special interest free introductory period that will allow them to transfer one or more balances to the card, and then pay it off before the introductory period expires.  This move can save hundreds of dollars in interest over the course of a year or more – just be sure to pay it off before the introductory period expires!

Another option, for those of us whose credit isn’t really high enough to qualify for the balance transfer cards is to sign up for a regular credit card, or even a catalog shopping card like a Fingerhut Account (Apply Now for Fingerhut Credit and Save on Thousands of Brand Name Products!) as this too will increase your available credit and Fingerhut typically works with those of us with less than perfect credit.

(Fortunately, your credit utilization score is only calculated on credit cards and revolving charge accounts – your mortgage and auto loan isn’t taken into consideration.)

Fingerhut Credit Application

Should I Get a Credit Card to Build Credit?

A friend of mine is thinking about buying a house, in fact he’s been thinking about buying a house for a couple of years now.  However, the last time he applied for a mortgage, he didn’t have enough credit, so his mortgage broker suggested he get a credit card or two to help build his credit score.  Unfortunately, my friend didn’t know much about credit scores, credit cards, and such, so he went out and applied for multiple cards… and was rejected multiple times.

And that actually hurt his credit far more than he realized… his credit score plummeted almost twenty points.  All because he applied for multiple credit cards that were actually “out of his credit league.”   Had he been smart, he would have checked his credit score first, and then only applied for credit cards that he was likely to qualify for instead of the top tier cards that require excellent credit for approval.

What about you?  Do you know enough about your credit score and credit cards to make smart choices when applying for credit cards?  And, once you get approved for a credit card, do you know all the ins and outs?  Have you read all the fine print?  Do you understand it?  If not, you might want to spend a little time learning a little more about credit cards and the benefits and the negative connotations that go with them.  That way, you won’t be like my friend and have to learn the hard way.

Remember, using your credit cards responsibly can help you reach those big financial goals, like your first home, that new car, or even something as simple as this year’s vacation.

How do Credit Cards Work?

A credit card is really nothing more than a simple plastic card, equipped with a security chip, that is linked to a line of credit with a financial institution.  Whenever you swipe your credit card to pay a bill, make a purchase (online or in person), or get a cash advance from an ATM, you’re actually borrowing money from the financial institution.  While you don’t have to repay the full amount right away, if you don’t pay within a certain amount of time (usually 25-30 days from the date of purchase), you’ll have to pay interest on the unpaid balance.  If the purchase is large enough, and if you take a long time to pay off the balance, the interest charged against the initial purchase can be significant as it will accrue against the amount that remains unpaid every month until you’ve paid it in full.

What are the Benefits of Using a Credit Card?

One of the biggest benefits of having a credit card is so that you can handle large or unexpected expenses, such as car repairs, home repairs, and other emergencies that crop up when you don’t have the cash to pay all at once.  With a credit card, you can manage the expense by paying over time.  (Just be sure that you pay it off as soon as you can.)

Some credit cards also offer rewards, such as cash back, travel rewards, and other perks, just for using the card to make purchases.  Again, be sure to pay the balance off as soon as you can because the monthly interest charges can easily outweigh any rewards you may earn.  Some credit cards also offer “purchase protection,” where items that you have purchased may be refunded if it’s defective or damaged.  And of course, nearly every credit card offers protection against fraudulent use.  (If yours doesn’t, you need to get another credit card!)

But, for a certain group of people, the biggest benefit of a credit card is the opportunity to build (or rebuild) a good credit history.  Using your credit card to make purchases, paying your credit card bill on time every month, and keeping your total credit usage at or under 30% will demonstrate responsible credit usage, and this will be reflected on your credit report.  Available credit and payment history are the two most significant factors in calculating credit scores, and lenders consider a solid payment history when you apply for new credit or a loan, so that a healthy history of on-time payments can help you get approved with lower interest rates than if you have had one or more missed payments.

What are the Risks of Using a Credit Card?

Probably the single biggest risk of using credit cards is how easy it is to get in over your head, spending money you don’t have, and strapping you with monthly payments that you can’t afford (often for years).  For every month that you can’ pay your balance in full, the interest accumulates and increases that debt.  The best way to avoid getting in over your head is to only use your credit cards when you can pay the balance in full, or when you have an unexpected expense (such as car trouble) and need to pay for the expense over time.  Just be sure to have a repayment plan and stick to it!

There are other risks with credit cards, as well.  Paying late, missing payments, carrying a balance over 30% of the total available credit, opening and closing too many accounts can all have a negative effect on your credit score, so use your credit cards responsibly.

What Credit Cards Should I Apply For?

Before you apply for a credit card, check your credit report and your FICO score to see what kind of credit card you’re most likely to be approved for when you apply.  Remember every time you apply for a credit card, the credit card issuer reviews your credit report.  This causes a “hard inquiry,” which can negatively affect your credit score, especially if you apply for too many credit cards all at once.

(Prequalification on the other hand would be a soft inquiry, since it is not firm approval, and provides an estimation of what you could qualify for. Not all prequalifications will lead to approval, since other factors such as income would be additional factors for the approval process.)

Single Parent? You’ll Want to Read This!

Being a parent costs a lot of money… being a single parent?  That requires some truly careful budgeting!  Did you know it costs nearly $175,000 for a single parent to raise one child from birth through the age of seventeen?  Between the cost of housing, child care, groceries, and transportation, there isn’t much left for extras, is there?  And then, when birthdays, graduations, and the holidays roll around, you’re scrambling to afford even the most meager gifts when you’d like nothing more than to give them the moon and the stars.

Fingerhut Credit ApplicationSo, as a single parent, how do you afford the extras… you know, those few little luxuries that make life worthwhile?  That flat screen television, that gaming system, or even that special, brand name pair of tennis shoes that all the other kids are wearing this year?

Relax.  With Fingerhut, you can.  Fingerhut is the perfect solution to your single parent household budget.  Not only do they have hundreds of thousands of name brand, competitively priced items on their site, but you can actually see the monthly payment before you buy, so you’ll know exactly how much you will need to pay AND you’ll know if you can fit that amount into your budget.

Even better, Fingerhut works with single parents, those with less than perfect credit, and even those of us with little or no credit so that you can get what you need, when you need it, and pay for it over time.  Plus, Fingerhut regularly reports your responsible credit use to the three major credit bureaus, so over time, you might even see your credit score increase!

So go ahead, what are you waiting for?

Apply for a Fingerhut Credit Account (issued by WebBank). Get low monthly payments with no annual fees or overlimit fees. Shop from thousands of trusted brands. Apply Today!

(Oh, and did I mention that Christmas is only about six months away?  Better start planning for that now, too!)

Planning for Christmas Yet?

Are you planning for Christmas yet?

I know, that’s a scary thought, but are you planning for this year’s Christmas gift buying yet?  Especially if you don’t have the cash to buy all those gifts at once, you should either be saving like crazy now OR you should be working on your credit score so that when the holidays roll around again, you’ll have the credit that you need to do this year’s Christmas shopping.

Now, of course there are a couple of different ways that you could be saving for this year’s gift giving extravaganza.  The first and probably, the easiest way to save is to simply have a certain amount taken out of your pay check each week and put into either a savings account or onto a prepaid debit card that you don’t use until it’s time for Christmas shopping.  (I know, emergencies do arise, but if you don’t use the card, come October you’ll have a tidy little sum to shop with.

As far as prepaid cards go, there are a lot of options out there, but I like the Account Now Prepaid Gold Visa.  It’s easy to sign up for, easy to put money on, and the online interface is pretty neat.  And, once you start putting a certain amount on your prepaid card each week, it just gets easier and easier to keep going!

Apply now for your AccountNow® Gold Visa® Prepaid Card

 

Fingerhut Credit ApplicationThe other way that you can start planning this year’s Christmas season is to start working on your available credit now so that when the time comes, you have the credit you need to buy the gifts that you want.  One of the best ways to get a fresh start on your credit and get the credit that you need for Christmas shopping is to apply for a Fingerhut Credit account.

Unlike a lot of online shopping sites, Fingerhut is known for extending credit to those with less than stellar credit scores, and unlike other catalog shopping sites, Fingerhut has hundreds of thousands of name brand merchandise, priced competitively, and they tell you up front what the monthly payment will be, so there’s no guesswork nor any surprises to wreck your budget.

And, if you open your Fingerhut Credit Account now, you’ll be ready for Christmas shopping when it rolls around later!

Get the credit you deserve and save $50 on your first order of $200 or more with a new Fingerhut Credit Account. Use promo code NC361. Limited Time Only. Offer Ends Soon.

Could Bad Credit Wreck Your Lovelife?

Although most people don’t really think much about a potential partner’s credit score when they’ve just met someone, once the relationship begins to develop into something more long term, having credit scores that are polar opposites can cause problems when finances and households are combined.


In fact, about 40% of the population indicate they might just cool things off in a hurry if a partner has a bad credit score… sadly, unless you’ve had a serious financial setback such as losing your job, getting a divorce, or having a catastrophic illness, having a poor credit history is often viewed as an indicator of your overall level of financial maturity.  Not paying your bills on time (or at all), running up the balances on credit cards, and even letting Mom & Dad pay for your car insurance or your cellphone are all indicators of irresponsible use of your money, and sadly, may appear to be a sign of how you’ll handle combined assets in a long term relationship.  (Likewise, if you’re the one with good credit, and the person that you’re seriously involved with has a poor credit score, wouldn’t you be concerned if finances were to be combined in the future?)

So, what do you do?  Even though you don’t want to know (or share) your financial details on the first date, it is a good idea to talk about your finances early on, before you start planning the wedding!  And if your credit is bad (or your partner’s credit is bad)?  The first thing that you need to do is to sit down and talk about it, openly and honestly.  Then, make a plan together to improve your (or his/her) credit score – and stick to it.

Study your credit reports, fix any errors, and start working on those areas where you’ll see the most improvement:  Payment History and Available Credit!

Not only can a poor credit score affect your relationship, but a poor credit score can also lower your partner’s/spouse’s credit score, and make it more difficult to buy a home or car, and seriously limit your job prospects.

Bad Credit? You Can Still Get That Car Loan!

Need to replace your car but worried that you won’t qualify for a loan?  Maybe your credit is less than perfect or you’re buying your first car and don’t have much of a credit history?  You can improve your chances for approval before you go car shopping just by doing a little extra planning!

First and foremost, have your down payment saved up well in advance.  The more that you can save, the better off you’ll be.  Not only will a potential lender look more favorably at a sizable down payment, but you’ll have a lower payment AND you’ll save money on interest.

Secondly, pull your credit reports and scores from all three credit bureaus ahead of time so that, regardless of which one your lender pulls, you’ll have already seen it and you’ll know what’s out there.  (If your credit score needs work and you have time to do so, work on it before you buy that car!)

And finally, shop around BEFORE you go to the dealership.  Check with your bank, savings & loan, or credit union first, then, check online for potential lenders.  There are so many really good options out there that you can’t afford not to compare offers, even if your credit is not perfect.  Don’t just automatically use the financing offered by the dealer unless it is better than what you can get on your own – remember, their lenders are working for them and not necessarily for you, so it pays to know your options before you ever set foot on that dealers’ lot.

So You Want to Buy a House

So you want to buy a house… you’ve decided that you can afford a mortgage, insurance, and the inevitable repair bills?  And it’s better to be building equity of your own than paying someone else’s mortgage, insurance, and repair bills like you do when you pay rent, right?

But, do you really know what it takes to buy your first house?  Have you really investigated anything other than looking at your “dream home” on the real estate websites?  If you’re like most first time home buyers, the answer to that question is a resounding “NO.”


The truth is, there’s a lot more to buying a house than just looking at homes, then going to the bank and getting the loan.  A. Lot. More.  In fact, getting your first house may very well be the hardest thing that you will ever do financially… you’ll find yourself digging for bits and pieces of your credit history, check stubs, tax returns, and so much more, just to get approved for the loan.  And you’ll need a lot more money than just the down payment that the bank asks for up front.  Trust me, it can be a long drawn out process, and you’re never really, really sure that it’s all going to go through until the moment when you finally sign all of the paperwork and they hand you the keys to your new home.  (And that, too, will happen eventually!)

So, what can you do up front, before you actually find the home, make the offer, and then go to the bank?  Well, first and foremost, if you’re thinking about buying a home, you need to start with your credit score. If your credit score is below 600, you’re going to have a hard time finding a mortgage lender who is willing to work with you, and if you do, you’ll likely pay a higher interest rate than if you start out with a credit score in the mid 600’s.

Don’t know your credit score?  Well, that’s the absolute first place to start anytime that you want any kind of credit, be it a mortgage loan, an auto loan, or even just a credit card.

Of course, there are lots of places where you can get your credit score for free these days, and most of them are really good, but sometimes to get your full credit report as often as you’ll want to while you’re in the process of buying a house, it’s better to pay for credit monitoring for a few months.  That way, you can keep a really good eye on your score, and if your score isn’t where it needs to be, you can check it frequently while you work on cleaning up your credit to get ready to buy the house of your dreams.


 

Bad Credit Characteristics

Ever wondered exactly how some people end up with terrible credit?  What are the common characteristics of those at the very bottom of the credit scoring scale?  Are there things that you can do to avoid ending up with bad credit?

Generally speaking, people with poor credit (defined as a 300-600 score) tend to:

  • Make late payments
  • Pay only the minimum amount
  • Carry high percentage balances on multiple cards
  • Apply for multiple lines of credit within a short period of time

See yourself in any of these characteristics?  If so, then you need to make a concerted effort to start making your credit cards, car payments, house payments, etc., on time, work toward paying down the balance on credit cards, and stop applying for new credit cards.

It’s also a good idea to regularly review your credit reports for accuracy, as your credit score can be lowered considerably by inaccurate information.

 

Five Ways to Improve Your Credit Score

Overcoming obstacles to improving your credit score is never as easy as it sounds, and honestly, there are no magic buttons that you can push that will cause your score to skyrocket over the course of a few days, weeks, or even months, but there are steps that you can take that will start you on the path to good credit sooner rather than later.


Here are our top five suggestions for getting started on the path to a better credit score:

  1. Pay your bills on time, every time. Your payment history makes up about 30% of your credit score, so even one late payment can seriously damage your credit score. And remember, it’s not just your credit cards that need to be paid on time. It’s also your mortgage, your car payment, your utility bills, your doctor bills, everything. So sit down every month, every week, or every time you get paid and pay your bills first. Then you can have that new outfit, or that extra night out, or whatever you’ve been craving… just make sure the bills are paid first.
  2. Pay attention to your credit card balances. Sure, it’s easy to tell yourself that you can put that vacation, or that new living room furniture, or even that new television on a credit card, but if that puts you over the 30% usage limit on the card (or on all your cards), then you could see your credit score suffer simply because you’re using too much of your “available credit.” So, do yourself a favor and use your credit responsibly. And in the event that you do have to use more than 30% of your available credit? Pay it down below that level as quickly as you can. Available credit is another 30% of your credit score. Use it wisely.
  3. Pay off any small balances on credit cards. For example, let’s say you have a couple of store credit cards with balances under $100.00, along with a couple of major credit cards, also with balances. Pay off the small store credit card balances first and then use those cards sparingly. Why? Because one of the items that is considered in credit score calculations is just how many of those small balances that you carry. So, the sooner you pay those off, the better it looks when your credit score is updated.
  4. Don’t try to get good debts removed from your credit report. By “good debts,” we mean those paid in full car loans, zero balance credit cards (don’t close the accounts), or even a paid in full mortgage. This illustrates that you have a good history of paying your bills on time, especially when it’s a long term commitment like a home or car loan, and looks attractive to the next lender that you may approach to buy that next car or that new home.
  5. Be careful of the number of credit inquiries you initiate. Although it’s not a huge part of your credit score, every time there is a “hard inquiry” on your credit report, it can and does affect your score for up to two years after the inquiry. So, if you’re shopping for credit cards, or a new car, or even a home, try to keep the number of credit inquiries at a minimum (and within a short time span, if possible). The easiest way to keep your credit inquiries to a minimum? Know your credit score and only apply for those credit cards and loans that fall within your credit scoring range. For example, don’t apply for a credit card that requires your credit score to be excellent if you know that your score is only fair. Instead, apply for a credit card that is specifically for fair credit – you’re more likely to be approved and you’ll only end up with the one credit inquiry.

Remember, when it comes to good credit, it’s a marathon, not a sprint, and time is the best cure that there is for a poor credit score.