What is Rapid Rescore?

If you read about the housing market a lot, or you’ve recently been house hunting, you might have heard of something called ‘rapid rescore.’  Essentially, this is a service that mortgage lenders provide to certain clients in order to immediately boost credit scores. The main goal of a Rapid Rescore being to make it easier to purchase a home.

In some instances, a Rapid Rescore can be a good thing, but it’s not a strategy for everyone. If you’re considering paying extra for this service (or just want to know more about it), here’s some detailed information to take into consideration prior to opting for this service.

Not A Clean Slate

If you have bad credit, buying into a Rapid Rescore service isn’t going to fix that bad credit. Here’s what it will do:

  • Update your credit immediately
  • Allow you to purchase a home with updated information

Here’s what a Rapid Rescore won’t do:

  • Fix any major credit problems
  • Help you gain credit approval if your credit is truly bad
  • Eliminate any bankruptcy notifications that might be listed on your credit report.

How It Works

  1. Corrected credit report information is updated (so, let’s say that you’ve recently paid off a credit card or two, and you opt for a Rapid Rescore. Instead of waiting months for that update to happen, the information is fixed immediately).

  2. The updated details are sent to the credit bureaus.

  3. The lender then asks for an updated score that reflects the new changes.

All of this happens within days, but it’s not a service that you can get on your own. This is a value added service that lenders provide to certain people.

Not For Everyone

A Rapid Rescore is a great tool if your credit report needs a small bump – 5-10 points max. But, it’s not a tool that will work (or even be offered) if you’ve missed payments or have bad credit. In order to fix those problems, you will have to fix your credit. Normally, it takes six months to one year to fix credit problems, so keep this in mind prior to shopping for a mortgage. If you see any problems on your credit report, we still recommend fixing those issues in writing.

Getting a higher credit score immediately can make a huge difference where interest is concerned, and for some people it might even mean getting a mortgage as compared to not getting approved at all.

Best Ways To Improve Your Credit Score

When you look at improving your credit score, you have to look at the big picture.  If you’ve had a bankruptcy, it can stay on your credit report for 10 years, even though your credit history typically only covers the past seven years.

While there are plenty of law firms and companies out there that claim to be able to repair your credit report in an instant, many of them are scams, and can actually hurt your credit.  Simply put, the best way to clean up your credit report is to work on it yourself.  There is no “magic” fix – it takes time and effort, but in the end, it’s worth it.

Here are a few simple steps to get you started, cut remember, this is not an easy, quick fix.  It’s more of a starting point to put yourself on the road to managing your credit successfully.

Step 1. Make All of Your Payments On Time & In Full

The best possible way to offset your bad credit, and the best and first step toward repairing your credit, is making all of your payments on time, every time, and to pay them in full every month. Not only will this first step keep you from falling into the vicious cycle of owing interest and penalties, it will also help you climb back out of debt.

Step 2. Reduce Your Debt

Look for ways to reduce your debt, whether it’s just paying things off slowly, enrolling in a debt counseling program, or joining a payment plan with creditors to whom you are the most in debt. Don’t allow your debt to continue climbing.  Instead, actively take steps to clear your debt, and you’ll be home free sooner than you think.

Step 3. Understand Your Limits

This is the third most important step to take throughout your financial life. If a credit card, or bill sounds too high for you, or out of your league, don’t do it!  Your two best friends here are your basic math skills and your instincts. If you foresee a problem in the future, there’s a good chance there will be. Only purchase things you can afford, –it sounds simple, but it’s harder than most people think.

Step 4. Periodically monitor your credit report

Negative information about late or missed payments can lower your overall credit score. Monitor your credit report for incorrect information and dispute it when necessary.

3 Things You May Not Know About Your Credit

How much do you know about your credit score?  If you’re like many people, you know you have a credit score, and you may even know what it is, but that’s about all you know!  Even worse, many people have no idea WHY your credit score is even important in the first place.

If you’re not sure why you need to pay attention to your credit report and your credit scores, then you definitely need to start working on it.  Because your credit score is more than just your financial history… in many instances, your credit score can actually change the course of your life!  The question is, is your credit score changing your life for the better or for the worse?

Here are three things you need to understand about your credit score:

  1. Bad credit is expensive!   Your credit score can cost you hundreds of thousands of dollars in extra fees when it’s less than excellent.  There’s an old saying, “Buy with cash, pay once; buy with credit, pay three times.”  Sadly, it’s the truth, as it refers to interest, or the cost of borrowing money.  Not to mention the many other potential costs to bad credit, most of which lead to hundreds and even thousands of dollars spent on higher premiums for your auto and home insurance!
  2. Background checks aren’t all that potential employers pull!  Your credit score can affect your ability to get a job.  That’s right: your estimated ability to repay borrowed money (i.e., debt) also can be used to assess your suitability certain kinds of careers.   Although legislation has been introduced to limit the access of prospective employers to your credit score, these are just limitations, not universal exclusions – and I promise you, many employers these days do check your credit score.
  3. Knowledge is power!  Your credit score is a big indicator of your financial health and, as much as you’d like to, ignoring a low score won’t make it go away.  Instead, it’s time to be proactive and start working to raise or restore your credit score. You just have to take the first step and then put your mind to it.

Remember, your credit score is somebody else’s business, and not just your own.  Your credit score is big business these days.  Not only is your score at the mercy of three different privately owned credit bureaus, whose entire business is rating you and your creditworthiness, but they actually make millions of dollars every year doing it!

These “big three” national credit bureaus, Experian, Equifax, and TransUnion, not only track your score, they CREATE your credit score. And this credit – or FICO – score that they assign you ranges anywhere from 300 on the low side to a perfect 850 on the high side.  Which side do you want to be on?

Time to Think About Your Christmas Shopping

It’s that time of year again!  Yep, you heard that right.  It’s time to think about Christmas shopping!  Where will you get the money this year?  Credit cards?  Personal loan?  Maybe a year end bonus?  Or will you use just plain old cash?

You know, retail stores aren’t the only ones who love holiday spending.  Credit card companies stand to make a small fortune every time customers whip out those credit cards… that’s why your mailbox is filling up with all those credit card offers, with balance transfers, low interest, and rewards galore!  And, while there are some really good deals right now, be sure to read the fine print for any new offer that you consider applying for this year.

Here are a few things you’ll want to pay attention to before you fill out that credit card application:

“Interest Free” Purchases:  Seems like every offer you see, whether it’s in the mail or in the store, promises “interest free until next year.”  And while it’s true that you won’t pay interest, you do need to make sure that you can pay off that “interest free” purchase before the expiration date.  Otherwise, retroactive interest charges may be added to your account at the end of the promotional period.  (And while you’re at it, better check what the interest rate actually is when that promotional period expires!)

Balance Transfer Fees:  Be sure to read the fine print any time that you consider a balance transfer – with fees as high as 3%, you could pay a pretty hefty fee if you transfer a large balance.  And again, make sure that you can pay the full amount off before the end of any balance transfer promotion!

Store or Catalog Credit Cards:  Right now, there are lots of promotions out there… discounts, coupons, interest free until next year, etc.  Once again, check your interest rate and have a plan to pay the account off quickly!   (Store and catalog cards are actually a good start if you’re looking to improve your credit score – many of them will work with you to get you the credit you need.)

Millions of Americans use credit cards as a way to finance their holiday spending, and then aren’t able to pay it off – make sure you’re not one of them.  Set a budget, have a plan and enjoy the upcoming holiday season!

Your First Credit Card

“It’s everywhere you want to be.”

“What’s in your wallet?”

Advertisers make sure we’re aware of the power of plastic long before we’re old enough to carry those credit cards, don’t they?   Even though choosing your credit cards based on ad campaigns is not the right way to do it, the advertisers do get one thing right:  Credit cards can be very powerful tools.  And for young adults trying to select that first credit card, making a careful, educated choice can save you a lot of money, as well as helping you to establish and build a good credit history.

When it comes time to buy a car, get a mortgage, or just rent your first apartment, the better your credit score, the better your chances are of getting that loan at an interest rate that’s far more affordable than if you had no credit history.   (Even more important, in this digital day and age, your credit score can even affect your employment opportunities.)

Potential lenders utilize your credit reports to determine how risky it is to give you a loan.  Will you pay the loan back?  Will your payments be late?  Or, will they all be on time, every time?  Essentially, the lender wants to know if you, the borrower, will be able to pay back the loan.  If your credit is bad, then you may have made some major or ongoing financial mistakes and you may be less likely to repay this loan.  On the other hand, if your credit is good or excellent, then you’ve likely established a history of paying back your debt, and the lender will most likely grant the loan.

Credit cards are effectively short-term loans that need to be paid back within a short grace period.  Getting your first credit card can be difficult, especially if you’ve not borrowed any money in the past, and don’t have much, if any, credit history.  But, how are you supposed to establish and build your credit score if no one will give you a credit card?

One of the best ways to establish credit is to apply for a secured credit card. These credit cards are secured by a deposit that you make when you sign up for the credit card. Typically, your credit limit will be the same as your initial deposit, but that’s where the similarity usually ends.  Just like an unsecured card, you’ll be able to use your secured credit card to make purchases, you’ll make monthly payments, and you’ll even have interest charges if you carry a balance on the card.  All in all, a secured credit card is a great way to build your credit if you’re just starting out.

Another effective way to build a credit history is to become an authorized user on someone else’s credit card.  Often, a parent or guardian will designate one or more of their young adult children as authorized users on a credit card.  This helps the child build credit without obligating them to pay the balance every month.  Just keep in mind that if the person whose account you are authorized to use does not handle the account properly, their mistakes could end up hurting rather than helping your credit.

Typically, establishing credit only takes a few months, then you’ll be ready to select for your first unsecured credit card.  But, before you sign up for the first ad you see, make sure that you do your research so that you choose the right card for your needs.  As yourself these questions:

How will you use the credit card?  Emergencies only?  Day to day purchases so that you can cash in on rewards?   Will you pay in full every month or will you carry a balance?

If you plan to carry a balance on the credit card, what’s the interest rate that you’ll pay on the balance each month?  The interest rate used by credit card companies is the annual percentage rate, or APR. There are cards with variable APRs, which are based on a certain index (such as the U.S. prime rate).  There are also nonvariable APRs, which are usually fixed-rate credit cards. As a beginner, you will usually want a low-rate, nonvariable APR credit card, because knowing your interest rate will give you a sense of how much money you will need each month to pay at least the minimum amount due. A low-rate, nonvariable APR card will therefore help when you create a monthly budget.

Will there be any penalties, fees, or other charges related to the credit card or it’s use?   Read the fine print – the most common fees include balance transfer fees, cash advance fees, fees for requesting a credit limit increase and online or mobile payment fees.  Most credit card companies impose penalties for not paying your bill on time or going over your credit limit.   Choosing the wrong credit card company can result in outrageous fees and penalties that could actually hurt your credit score in the long term.

What about rewards credit cards?  Many credit cards offer cash back for certain purchases, or 0 percent APR for the first six to 18 months, or other incentives.  The low interest cards are great if you’ll carry a balance, just as the cash back is excellent if you use that reward correctly, but make sure that the reward actually fits your spending pattern.  Knowing how to use these rewards can really save you a lot of money if you’re careful.  Just remember, that 1% cash back really isn’t  saving you money if you’re paying 24% interest on the balance you’re carrying every month… don’t fall into the credit card trap.  Use your cards sparingly and pay off the balance as quickly as possible.

Remember, you’re working to build good credit, and you don’t want to get off on the wrong foot!  Your payment history, the amount of credit you use, and the number of negative marks on your credit history all have a large impact on your overall credit score.   

Pay off your balance as soon as you can, limit the percentage of overall credit that you’re using, and avoid any negative marks on your credit history if at all possible. While credit cards are a convenient part of everyday life, they can also be very dangerous if not used responsibly.  Make sure you use your first credit card to establish positive financial habits that will serve you well for a lifetime.

Low Credit Score? These 5 Things That Will Cost More!

If you have a low credit score, you’ll pay more for certain expenses.  Whether it’s a car loan, a mortgage loan, car insurance or even the rent on an apartment, the lower your credit, the more you’ll pay.  Lenders and financial service providers rely on credit scores to define if a customer can actually pay his or her bills on time. Those who skip paying bills or delay  payments are considered a risk by nearly all lenders.

Most lenders consider a FICO credit score of 640 or below as poor credit, so if your credit score is below that, chances are you will pay more for personal loans, credit cards and other financial options. In many instances, you may even be denied credit, so keeping your credit score at or above 740 is important.

Here are five things that will cost you more:

1. Your Mortgage:  

While it’s nearly impossible to get a mortgage with bad credit, in the event that you are able to do so, your interest rate will be quite a bit higher than someone with a higher FICO score.  Over the course of a 30-year fixed-rate mortgage, that comes out to tens of thousands of dollars in interest over the full thirty years.

2. Credit Card:

Once again, that low credit score may keep you from getting that credit card, but if you do, expect to pay interest rates up to 35%.

3. Auto Loans:

Automotive finance companies will definitely charge a higher interest rate if you have a low FICO score!  Those ads you see on TV only apply to “well qualified” customers. The better the FICO score, the better the interest rate you’ll get.

4. Insurance:

Surprisingly, your credit score also affects interest rates on your home and your car!  Most insurers believe that both homeowners and drivers with excellent credit scores are likely to file fewer claims and get into fewer accidents, while those with lower credit scores statistically file more claims and this makes them riskier clients.

5. Apartment Rentals:

Most landlords check credit scores, and with a low credit score, you may have to put down a larger security deposit or pay a higher monthly rental rate.

 

Your best course of action?  Remember, your credit score is extremely important.  Never miss an opportunity to improve your score, make your payments on time, and keep your credit card balances below 33% of your total credit.  If you’re just starting to work on your score, it will take time, but don’t give up!  Keep working on your credit and you will see improvement.

Back to School

Now that summer vacations are nearing an end, and we’re all in the midst of late summer, with all it’s heat and humidity, it’s time to start thinking about that next big hurdle. Getting the kids ready to go back to school! Not only is it stressful, what with all the lists of things they have to have, but it’s also very expensive.

From new clothing, new shoes, and, of course, ALL of those school supplies, you can spend a small fortune before they ever set foot in the door of the school next month! (And this does not even include all those book fees, lab fees, classroom fees, and the cost of extracurricular activities! What’s a parent who is strapped for cash to do?

Here’s an idea! Why no do what our parents, and even their parents, did? Instead of trudging through the big box stores, the mall, and the outlet stores, why not order most of what the kids need online? With the right catalog shopping site, you can get almost everything they need AND you don’t have to shell out all that cash at a time when most of us are broke from summer vacation!

Catalog shopping… I know you remember it. Your Mom would get these great big catalogs in the mail, and you’d spend hours looking through the clothes, shoes, toys, and stuff, dreaming of all the things you wanted. Then, she’d place an order, either over the phone or by mailing in a form, and in a couple of weeks, the order would be delivered. Opening those boxes was almost as good as Christmas morning! Of course, now you can place your order online, and most places deliver within DAYS instead of weeks, but the excitement is still there and so is the value. These days, most catalog sites have competitive pricing, free shipping, and LOW interest rates… all the things you need when you’re trying to save money and get the kids back in school!

Think this might be your back to school solution?

Worried that your credit is not perfect? Many of our catalog shopping vendors will work with you to ensure that you’re able to buy what you need, and even better, you just might be able to improve your credit score in the long run!

Need a New Ride?

Summer’s here!  Who’s ready for a road trip?  A vacation?  A day trip?  How’s your ride these days?

Summer driving can be just as hard on your car as winter driving.  Between the hot temperatures, hot pavement, and the additional driving we tend to do in the summer months, you might find that you need to trade in your old ride on something a little more reliable.  But, before you even think about driving down to that car lot, you might want to consider how you’ll finance that new set of wheels.  In case you haven’t already figured it out, the car dealership isn’t always the best place to finance a new car or truck.  In fact, unless you have excellent credit, it could be the worst place you could go when you need a car loan!

Did you know that dealerships often get referral fees for steering customers to certain loan companies?   Those fees nearly always get passed on to the customer in one way or another.  And sometimes the interest rates that they offer you aren’t always the best interest rate available!   Not to mention the payments those higher interest rates can mean!  What should you do?

Before you go to the car lot, before you pick out that new (or even just new to you) vehicle, know your options!  Know what you can borrow, know what you can afford, and know what you’ll pay!

Just like you shop around for the best credit card offers, you can also shop around for the best car loans:

Going on Vacation?

Are you planning a vacation this year?  Going to the mountains?  The beach?   Driving?  Flying?  Staying in a vacation rental?  Hotel?  Camping?  How are you planning to pay for things while you’re on vacation?

While it is really tempting to pay for everything in cash when you go on vacation, in reality, it’s just not a good idea.  Not only do you run the risk of losing you money if you use actual cash, but you also risk a lot more.  What happens if your cash is lost or, even worse, stolen?  What happens if you run out of money?  What happens if you’re cheated?  Maybe you check in to your rental, pay your bill up front like they all want you to, then find out that you’ve been had?  What happens if the rental is not what you paid for?  What happens if you have to leave early?  The list can go on and on and on.

And truthfully, using your debit card is possibly even worse than paying with cash.  Why?  Because your debit card is connected directly to your bank account.  And there is no place on earth where your debit or credit card information is more likely to be stolen than in an area that caters to tourism.  It’s a prime location for dishonest retail and restaurant employees to lift your information, it’s a prime location for pickpockets and scammers, and YOU are more likely to misplace or even lose your card when you’re in a strange place.  Even though you have a certain amount of protection against fraud, it can take as much as ten days to sort it out if you are a victim of fraud!  What would you do for ten days without any money?  The answer?  It’s pretty obvious.

Use a credit card to pay for everything that you possibly can while you are on vacation!  Not only are you better protected against fraud, theft, or loss, but you can even take advantage of some awards cards and get money back for all your purchases!   Not sure which card to use?

Take a look at these offers –


 

Do Your Credit Cards Work for You?

Do your credit cards actually work for you or against you? I know that sounds strange, but when you think about credit as a whole, your credit score either helps you or hurts you. Likewise, the credit cards you carry can either help or hurt you, too.

For example, your credit might be pretty good, but if you don’t have enough credit available, it can damage your credit score. You see, your credit score is calculated based on a number of variables, one of those being how much credit you have available. And if you don’t have enough, it can hurt your score. So, while you might be limiting your credit card use, if you’re still over the recommended 30% utilization, then you probably don’t have enough credit.

But how do you know if you have enough credit? One of the best ways is to look at how much credit other people in your credit range have. And that’s pretty easy to do with all of the free credit tools available these days. Almost every one of the free sites offers a comparison of your credit versus others in your credit range, all you have to do is log in and look. Then, once you’ve figured out whether you have the right amount of credit, you’ll want to take a look at the actual credit cards you have in your wallet.

Do they offer a decent interest rate for your credit score? If it’s been awhile since you’ve taken a look at your interest rates, or if your credit score has improved since you last looked, you might want to take a good hard look because you could be paying more interest than you should.

Do you have any rewards credit cards? Are the rewards that you’re getting the right rewards for you? Would a cash back card be better or should you get a travel rewards card? It all depends on your lifestyle. What works best for someone else may not be the best choice for you.

Remember, your credit should fit your needs, and it should work for you, improving your overall financial picture. Your credit should not hold you back, keeping you from doing or having the things that you want or need to make your life the best that it can be. So, if you haven’t examined your credit cards lately, there’s no better time than the present!