Archive for Credit Tips
Facts surrounding Credit Limit Cuts & Credit Card Closures
Posted by: | Comments
Whether a credit card closure or credit line cut will affect your FICO score depends on what else is in your credit report. Here’s what Craig Watts, FICO public affairs director has to say:
Will it lower my score if my lender (and not me) closes my credit account?
No. It doesn’t matter to your FICO score who closed the account.
Will closing a credit card account shorten my credit history?
No. Credit bureaus keep records of closed accounts in consumer credit files for years (seven years for negative information, longer for positive information). So a closed account will continue to appear on your credit report where it is accessible for the calculation of FICO scores. Those scores do consider the age of both open and closed accounts when determining the length of your credit history.
Will closing a credit card account increase my credit utilization rate, thereby causing my score to drop?
Not necessarily. A large percentage of adults (roughly one-third, based on FICO’s studies) habitually uses less than 10 percent of their total revolving credit. Having a utilization ratio that low means, among other things, that closing a credit card account is less likely to change your overall utilization rate. The situation changes if you had only one credit card account to start with, or if you have multiple cards with high reported balances, and so on.
If I close a credit card account that still shows a balance, how will that affect my score?
The reported outstanding balance of your closed account will continue to influence your overall credit utilization rate, so paying off that balance should continue to be a priority. If you miss a payment and are reported 30 days late on that closed account, the delinquency will hurt your score. So to maintain a good score, you should treat that balance on the closed account with the same respect that you give your active credit accounts.
How to Avoid a Credit Card Charge-Off
Posted by: | Comments
The simplest way to avoid a credit card charge-off is to learn and understand the credit card system. Here are some tips:
Sending Credit Card Payments Through The Mail:
Some credit card companies actually require you to use their own preprinted envelopes, but even if they do not, it is a good idea to do so in the interest of more efficient processing of your payment. Make sure you have included the billing coupon and have written clearly the amount that you are paying. Include your check, also written legibly, and remember to write your credit card account number on the check.
When Ronald Reagan was running for President, he was asked what he was going to do to make the post office more efficient, to which he responded that he would start mailing postal workers their paychecks. Allow ample time when you send your check to the credit card company.
Change Your Credit Card Due Date To Something That Is Convenient For You:
Many people find that the greatest number of their bills, such as their mortgage or car payment, are due at the first of the month. If this places a burden on your ability to pay your credit card bill that may also be due at the first of the month, a simple way to avoid this problem is to just ask your credit card issuer to change the due date for your monthly payment. There is no harm in the asking, and many credit card issuers offer this ability to change the due date of your bill as an option. One important thing to remember, though, is that it may take a couple of billing cycles before this date change is fully implemented. It is important to make sure that your bill is paid promptly when due until your change of due date becomes effective. Otherwise, you could find yourself on the wrong side of a late fee.
Getting Rid of Student Loans
Posted by: | Comments
Getting Rid of Student Loans - The Cold Hard Facts
Did you know that taking out a Federal Student Loan is just as real as taking out an auto loan or a home loan? Because it’s backed by the Federal Government, they won’t let you declare bankruptcy to get rid of it, nor will they let you off the hook because you lost your job, or you didn’t get the education you expected either. In fact, getting rid of a student loan, short of paying it off, is pretty difficult.
Although your credit history was not taken into account when you received federal student loans, your credit history will be affected if you do not repay your federal student loans under the repayment plan you agreed to when you entered repayment.
Assuming you have some Federal Student Loans that you are having a hard time repaying, let’s look at what your options are for getting rid of student loans.
Can You Sue A Car Dealer For Excessive Hard Credit Inquiries?
Posted by: | Comments
I came across this question, “Can I sue a car dealer for excessive hard creditinquiries?” when reviewing search terms on my blog and thought this is a good topic for further discussion.
First Of All, What Is A Hard Inquiry?
There are two types of credit inquiries, hard and soft.
A hard inquiry is a credit inquiry pulled for the purpose of obtaining credit. These types of inquiries are usually pulled for things such as a home, auto or personal loan. Landlords and tenant screen services credit inquiries are also considered hard inquiries.
A soft inquiry is a credit inquiry requested for informational purposes. If you request your own credit through a site such as AnnualCreditReport.com, this is considered a soft inquiry and does not deduct points off your score. Additionally, creditors whom you currently do business with can pull a soft inquiry to do an account review and evaluate your current credit worthiness. Offers for “pre-approved credit are not counted as hard inquiries. Credit inquiries for insurance and employment also fall into this category, as they are not made for the purpose of granting you credit.
How Many Points Can Be Deducted For A Credit Inquiry?
- Each “hard” credit inquiry (meaning the consumer has applied for some form of credit, prompting the creditor to check the credit report or score) that is counted normally subtracts no more than five points from a person’s score.
Bad Credit Auto Loans
Posted by: | Comments
Are you afraid to go shopping for a car because of the embarrassment you may face at the very real possibility of being turned down due to bad credit?
If this is you, you’re not alone. More than ever before, millions are faced with bad credit right now.
What you need right now is a little “credit score infusion”. Your score needs to be high enough so you can qualify for that auto loan you so desperately need. Read More→
The Use Of Credit While You’re Unemployed
Posted by: | Comments
If you’ve currently found yourself unemployed, don’t get discouraged….you’re in good company. The unemployment figures in the US are higher than they’ve been in decades. Now that the unplanned and unwanted event has arrived, if you have a savings account, regardless of how much you’ve put into it, and you have some available credit lines, you’ll have two tools that will be a huge help to you to get through this time without damaging your credit. Let’s look at some steps that you’ll need to take.
Which Credit Inquiries Lower Your Credit Score?
Posted by: | Comments
Excessive inquiries to your credit can drastically reduce your credit score, although certain types of inquires don’t affect it at all. You need to know which types negatively affect your credit, so you can keep them to a minimum in order to ensure optimal credit scores on a consistent basis.
The Hard Inquiry
When you fill out a credit application you authorize a bank, credit card company or lender to view your credit history. This is known as a hard inquiry and is done with “permissible purpose”.
Collection agencies may also pull a hard inquiry. Hard inquiries can take points from your credit score. Many hard inquiries are also viewed negatively by creditors and can be used as a reason to deny you credit. Read More→
Spending On Credit - Getting Back To Basics
Posted by: | Comments
I don’t think there is one person right now that isn’t affected in some way by the current economic downturn we’re experiencing.
In some ways, I’m thinking that maybe what is happening right now is a good thing in some respects. Credit limits are being cut, and people can no longer "consolidate" their debt into home equity loans, because most of us don’t have any equity available. Don’t get me wrong…..these are not "good" things, but I do believe that all of us are having to re-think our spending habits, and THAT IS a good thing.
What is a PayDay Loan?
Posted by: | Comments
A payday loan is basically a paycheck advance, also referred to as a payday advance and it is one of the biggest financial mistakes you can make.
Ever borrowed from a “loan shark”?
The purpose of this type of loan is to cover a borrower’s expenses for a short term, until their next paycheck comes in. I like to refer to these types of loans as “mafia loans” or “loan sharks” because of the amount of interest that is charged.
Most loans range from $100 to $500 and the balance is due and payable in two weeks. Interest rates can range anywhere from 400%, and even as high as 900% APR.
Do you still get a credit score if you Pay-Off your balances IN FULL every month?
Posted by: | CommentsThere is conflicting information going around about whether or not you’ll still get a credit score if you pay off your credit card balances in full every month, and 
most of it is un-true. 
Yes, even if you pay-off your credit card balances in full every month, this practice will still contribute to generating a credit score for you. Some folks are under the wrong impression that they need to keep a balance on their account(s) in order to generate a score. This is completely false.
If you make charges on a credit card that you pay-off in full every single month, then in actuality, your credit report will NEVER show a zero balance. Why? Because the creditor updates your account with the credit bureau’s at the same time that your statement cuts off. So, every time your statement cuts off, you have a remaining balance, which is why it will never show zero and will always contribute to your credit score.
Now you may think that because you pay-off your account(s) in full each month, that you’ll always have a high score right? (This is assuming that all the other credit you have is paid-as-agreed.) This isn’t always the case and let me explain why.
Even if you pay off your balance in full, your credit score can actually drop…
Let’s say you have a high credit limit of $500 on the one particular credit card that you use and pay-off every month. This past month, you charged $400 on that card. That means you’ve used 80% ($400 divided by $500 = 80%) of that card’s available credit limit.
This affects your balance-to-limit ratio which, for the best credit scoring results, should be kept at, or under 30%, but no more than 50% maximum. If you go over these amounts, it’s going to drop your credit score during that period.
Not to fear…your score will go right back up again the following month as long as you keep your balance at 30% or under, so this will only affect you for a short period of time, but it’s definitely something you’ll want to keep in mind for the future!
