CreditRepairExpert.org https://www.creditrepairexpert.org My WordPress Blog Thu, 22 Jun 2017 00:22:57 +0000 en-US hourly 1 https://wordpress.org/?v=4.7.5 3 Credit Hacks Before Filling Out A Loan Application https://www.creditrepairexpert.org/3-credit-hacks-filling-loan-application/ https://www.creditrepairexpert.org/3-credit-hacks-filling-loan-application/#respond Thu, 22 Jun 2017 00:22:57 +0000 https://www.creditrepairexpert.org/?p=1657 These credit score tricks can help you boost your score to get the money you need at a rate you can afford Most people only think about their credit score when they need a loan. Your credit score and what’s on your credit report are big factors in whether you get approved for a loan […]

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These credit score tricks can help you boost your score to get the money you need at a rate you can afford

Most people only think about their credit score when they need a loan. Your credit score and what’s on your credit report are big factors in whether you get approved for a loan and the interest rate you pay.

Unfortunately, most of the things you can do to improve your credit score can take months or longer to start showing through in a higher FICO score.

The Fair Isaac Corporation (FICO) estimates that it can take up to three years to recover your credit score after just one 30-day late payment on a mortgage and up to ten years after filing bankruptcy.

Estimated Time for FICO Score to Fully Recover

Most likely, you can’t wait that long to get the money you need at a rate you can afford.

Fortunately, there are some credit score hacks that can help boost your score quickly and potentially get you a better rate on your next loan.

 

Understand why you have bad credit

First off, it helps to understand what affects your credit score and why it can take so long to improve it.

Your credit score is based largely on the information in your credit report, a history of your payments and debts for as long as you’ve had credit. Your payment history accounts for more than a third (35%) of your credit score. That means a history of late payments and defaults isn’t going away anytime soon and will keep your score low until you balance it with lots of on-time payments.

The total amount you owe and how much credit you have available is another big factor, as much as 30% of your credit score. This is one of the few factors you can affect.

Your score is also affected by length of credit history, new credit and credit report inquiries and even the types of credit you use.

Understanding these credit score factors means you can game the system to increase your FICO, in the short-run and for long-term improvement.

 

1) Dispute errors and negotiate credit marks off your report

You have the right to a copy of your credit report once a year from each of the three reporting bureaus. Check each report for errors and anything that might be hurting your credit score.

You can dispute any errors with the credit bureaus by writing a letter. The law requires that the bureaus investigate any negative errors and will remove them if the creditor does not respond within 30 days.

Equifax
P.O. Box 7404256
Atlanta, GA 30374-0256

Experian
Dispute Department
P.O. Box 9701
Allen, TX 75013

TransUnion
Consumer Solutions
P.O. Box 2000
Chester, PA 19022-2000

Just getting an error removed from your credit report can mean a big jump in your score in a few months’ time.

If you have any loans or credit in collection, you can negotiate with the company to pay the debt if they agree to remove the bad marks off your report. Creditors don’t have to negotiate but they’re usually much more interested in getting their money than with what is on your credit report.

 

2) Get your credit limit raised

This is a sneaky little credit hack but you have to be careful because it can also get you in trouble.

Your credit utilization ratio is the amount of debt you owe versus how much total credit your creditors have extended. If you owe $5,000 on a credit card with a $10,000 limit then your utilization is 50% ($5,000/$10,000).

That ratio is an important part of your credit score because it tells creditors how much you have available. Someone maxed out on their credit might be struggling to find new money and lenders will hesitate to extend more credit.

Asking creditors for a limit increase is a quick way to make yourself look more creditworthy.

Imagine that same $5,000 owed but now on a $15,000 limit, now a 30% credit utilization ratio. The same amount is owed but it looks like the person is spending well within their means.

This credit hack can help increase your score but don’t take it as a license to spend. Just because you have more credit available doesn’t mean you need to spend more.

 

3) Pay down revolving debt

Up to 10% of your credit score is determined by the types of credit you use.

  • Non-revolving credit includes loans like mortgages, auto loans and personal loans. Debt with a fixed payoff date and usually fixed payments.
  • Revolving credit includes credit card debt and other loans with payments that vary depending on how much you owe on debt that you can continue to borrow against.

While a lot of non-revolving credit will certainly hurt your score, revolving debt is even worse. Your credit score is a measure of how certain you are to pay off debt so a lot of revolving debt, with its varying payments and balance that can get out of hand quick, means more uncertainty in your finances.

Paying down your revolving debt, even if it means taking out a non-revolving personal loan, can help improve the types of credit you use and boost your credit score.

Even these three credit hacks won’t change your score overnight but they might be able to boost it enough over a few months to save you a few percent on a new loan. It might not seem like much but a rate 1% lower can easily save you hundreds in loan payments. Follow these credit score tricks and plan ahead a few months before your next loan for the money you need at rates you can afford.

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3 Credit Mistakes Everyone Makes https://www.creditrepairexpert.org/3-credit-mistakes-everyone-makes/ https://www.creditrepairexpert.org/3-credit-mistakes-everyone-makes/#respond Wed, 21 Jun 2017 22:58:20 +0000 https://www.creditrepairexpert.org/?p=1652 Avoid the most common credit mistakes to boost your credit score and get better rates Bad credit means more than just higher interest rates. Most people don’t fully understand how their credit report can affect their life. Those minor little credit mistakes can close doors and cause more problems than you might realize. For example, […]

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Avoid the most common credit mistakes to boost your credit score and get better rates

Bad credit means more than just higher interest rates. Most people don’t fully understand how their credit report can affect their life. Those minor little credit mistakes can close doors and cause more problems than you might realize.

For example, did you know that insurance companies are allowed to charge bad credit policyholders more? It’s called a credit-based insurance score.

Your credit can also affect whether you get approved to rent a home or the price you pay for your cell phone plan.

It makes protecting your credit so important but what about the credit mistakes you don’t even know you’re making? It’s not like good credit is taught in school and one mistake can mean being stuck with bad credit.

In fact, I found three financial blunders that nearly everyone makes.

 

1) Hooked on introductory rates without understanding payments after rates increase

Zero percent interest sounds pretty nice when you’re paying 18% on the rest of your credit cards, right?

The problem is that credit card companies know they’ve got you hooked once you open a new account. The cards with the highest rates and fees are usually the ones offering the juiciest incentives to attract new customers.

You spend the next six months racking up a hefty balance on your new card. Why not, 0% interest means you’re not paying anything extra on purchases. By the time six months passes, you’ve forgotten about how much the rate is going to increase and have no idea what payments will be on the debt. You also might not have the funding resources to pay off the debt as planned.

Even if you are able to keep up with the new (higher) monthly payments, the interest is keeping you from paying off the balance. Missing a payment could destroy your credit but even keeping a high balance will hurt your score and cost hundreds in interest.

There’s nothing wrong with taking advantage of introductory rates to transfer high-interest balances but pay your card balance off before your rate increases.

 

2) Making only minimum payments

Credit card companies aren’t going to tell you the danger of only making the minimum payment. I remember a time when they didn’t even have to include the word ‘minimum’, it’s now required to nudge people into paying balances faster.

Only requiring a small minimum payment is how the credit card companies make billions of dollars every year…billions out of cardholder pockets like yours.

Minimum payments are usually set between 1% to 3% of your balance. Making only the minimum payment means you’ll be paying off even smaller purchases for years and paying up to double the purchase price in interest.

Not only does paying the minimum cost thousands in interest but it also keeps your credit utilization ratio higher. This ratio is the amount of debt you owe relative to your total credit available and it’s a big factor in your credit score.

The higher your utilization ratio, the lower your credit score and the higher interest rate you’ll have to pay on any new loans.

List all your debt in order from highest rate to lowest. Try prioritizing debt payoff to cards with the highest interest rates first, paying extra each month to pay them off faster.

 

3) Thinking all debt is same

Not all debt is created equal, at least not in how it affects your credit score.

As much as 10% of your credit score is determined by the type of credit you have outstanding.

  • Non-revolving debt includes loans like mortgages and student loans. This debt usually has a fixed monthly payment and an interest rate. You borrow on it once and pay it off over a set period.
  • Revolving credit includes credit card debt and home equity lines of credit (HELOC). Payment on this debt increases as your balance grows and has no payoff date. Paying off some of the balance enables you to reborrow on the credit.

The problem with revolving credit, as it affects your credit score, is that it can get out of hand very quickly. You may not realize how high the payments will be when you’re borrowing and new creditors can’t be sure you won’t max out your previous credit lines after they’ve extended you a loan.

If you want to improve your credit score, focus on paying off revolving debt first. Non-revolving debt will still affect your credit score but not as badly as credit cards and other revolving debt.

These aren’t the only credit score mistakes that people make but they’re some of the most common and misunderstood. It can take years to improve your score so don’t ruin it with these financial blunders. Make sure you understand how much new credit will cost on a monthly basis and avoid high-interest debt on revolving credit.

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3 Good Reasons To Take More Risks https://www.creditrepairexpert.org/3-good-reasons-take-more-risks/ https://www.creditrepairexpert.org/3-good-reasons-take-more-risks/#respond Thu, 15 Jun 2017 04:22:12 +0000 https://www.creditrepairexpert.org/?p=1648 Many of us are conditioned to think that all risk is bad. We hear about putting our money where it can grow risk free. The reality, though, is that risk isn’t always a bad thing. Indeed, with risks often come greater rewards. If you really want to get ahead, you need to stop playing it […]

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Many of us are conditioned to think that all risk is bad. We hear about putting our money where it can grow risk free. The reality, though, is that risk isn’t always a bad thing. Indeed, with rTake Risksisks often come greater rewards. If you really want to get ahead, you need to stop playing it safe all the time. Here are 3 good reasons to take more risks:

Why Taking Risks is Good

You Can See Higher Returns

One of the biggest reasons to add a little risk to your portfolio is that you have the potential to see higher returns. If you keep all of your money in a risk free savings account, you will likely never see the yield necessary to build adequate wealth over time.

This doesn’t mean that you go for the riskiest investments out there. Successful investing is more about taking calculated risks than it is about trying to force higher returns from dubious assets. Carefully consider your situation, and your goals. Look at some of the investments that come with acceptable levels of risk. Index funds, certain dividend stocks, and other assets can provide you with a solid return without breaking the bank. You have greater risk, and you also have greater potential for wealth over time.

Entrepreneurship Requires Some Risk

We wouldn’t have entrepreneurs without risk. In order to succeed as an entrepreneur, you need to put yourself out there in some way. Whether you start your own business on the side, or whether you leave the traditional job entirely behind, it makes sense to take on some risk.

One of the risks that comes with entrepreneurship is failure. It can be scary to think that you might fail in your business venture. However, that risk of failure can push you to improve your business, and imagine creative ways to solve problems and get the results you want. And you might even fail. But if you learn from that failure, and make improvements, its usually worth it.

All of the great entrepreneurs and business leaders allowed a measure of risk into their lives. If you want to succeed with your dreams, and with your business, you need to be willing to take a calculated risk or two.

You Can Grow Personally When You Take Risks

Whether you are putting yourself out there and meeting new people, or whether you are looking to learn a new skill, there is an element of risk involved. Taking risks, getting out of your comfort zone a little bit, can help you grow as a person. You’ll learn new skills, and you’ll practice making things happen as move beyond what you are used to.

In reality, complacency has its own risks. If you aren’t taking risks and growing personally, you will find that some doors remain closed to you. You might not be seen as ready for a promotion, or you might not have the skills and knowledge to take your business to the next level. To some degree, healthy risk-taking pushes us to do better things.

Don’t Take Too Many Risks

Of course, there must be moderation in all things. If you are constantly playing it safe, it makes sense to take a few more risks. However, you don’t want to take huge risks that could be potentially devastating. You don’t want to play with your family’s well being, or risk complete meltdown. Its important to carefully consider which risks you take, and how far you are willing to go.

If you aren’t comfortable speculating on commodities, don’t push yourself to start getting into the futures game. You can temper your risk a bit by investing in a commodity ETF as a small part of your investment portfolio, or you can look into other asset classes that offer decent returns without quite so much risk. Before you take a risk on your business idea, consider shoring up your finances so that your family wont be in serious trouble should you fail.

There are ways to hedge against the risks you are taking, and its a good idea to consider these methods. Exposure to risk can be a good way to get ahead and see better returns. However, you don’t want to end up over-exposed.

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3 Ideas To Help Young Adults Improve Their Finances https://www.creditrepairexpert.org/3-ideas-to-help-young-adults-improve-their-finances/ https://www.creditrepairexpert.org/3-ideas-to-help-young-adults-improve-their-finances/#respond Wed, 14 Jun 2017 01:59:26 +0000 https://www.creditrepairexpert.org/?p=1643 Young adults today have a wide range of financial struggles. For the most part, they have too much debt, bad spending habits, not enough savings and poor investing skills. Throw in today’s record unemployment for young workers and the result isn’t pretty. Most people would agree that investing should be a part of your overall […]

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3 Ideas To Help Young Adults Improve Their FinancesYoung adults today have a wide range of financial struggles. For the most part, they have too much debt, bad spending habits, not enough savings and poor investing skills. Throw in today’s record unemployment for young workers and the result isn’t pretty. Most people would agree that investing should be a part of your overall financial picture. Furthermore, most people understand that starting early in your financial activities is crucial as it allows your money to compound over time and also helps you establish habits that will stay with you as you get older.

That said , let’s look at a few ideas to help you improve your finances.

Contributing to a 401(k) Plan

One of the easiest ways for young adults to establish regular investing habits is through a 401(k). Although this is limited to those who work for a company that offers such a plan, participating in a 401(k) plan is a great option for individuals who have access to one. I definitely recommend taking advantage of your 401(k) plan; especially to maximize company matching.
By automatically taking money out of your paycheck and contributing it towards your retirement investments, you’ll learn to live on less than you earn and also build a retirement saving at the same time.
What about those who don’t have access to a 401(k)? You will have to be more disciplined in your spending and saving and make sure you are stashing money away towards your long term goals, probably using an IRA or a Roth IRA.

Actively Saving Each Month

Whether you participate in a 401(k) or not, I strongly encourage you to make sure you are actively saving each month. Whether you put money into a savings account or a Roth IRA account, the most important part is that you are spending less than you make. There is no greater habit to master financially. If you need too, set up automatic withdrawals into your savings account each month.
It’s very easy to put off a month because of “special expenses”. What I’ve learned over the last few years is that there will always be special expenses, they just tend to look different each month. Maybe your dog had to go to the vet and your bill was $300, or your car broke down, or you needed to replace some sod; these are all unforeseen expenses yet they tend to be pretty regular. Instead of putting off saving each month because of these expenses, you must adjust your overall budget and plan for unforeseen expenses. If one doesn’t hit, then you’ll have even more money available to save.
As you build up a sufficient emergency fund, you should consider investing this money. While starting slow and sticking to the basics is recommended for your first “active” investing experiences — active compared to your 401(k) plan. This will help you learn much more about the stock market and how things work. This continuous education is a great asset.

Saving to Buy Things With Cash

Maybe you need to buy a car, or a new air conditioner for the house, or some landscaping, or a new computer. Either way, these are significant purchases and can be viewed as investments. The best way to invest in these assets (even though they are depreciating assets) is to pay for them in cash. Buy only what you can afford and if you can’t, wait until you have the money rather than borrowing.
Buying a car with cash rather than borrowing the money is almost heresy in today’s society, but I truly believe this would be a huge positive for people. Yes, this drastically changes what you can buy, but maybe you should be driving a clunker instead of that Lexus in your drive way.
What a fantastic habit to work on while you’re young.

Your Habits Will Pay Off Over Time

The habits you establish early in your life will stay with you. By getting a hold of your financial habits whether it’s a 401(k) plan, active investing or buying things with cash, you will set yourself up for greater freedom in your financial life. Sticking to these habits as you progress in your career and begin to make more money will result in a very nice result.
Take time to examine your life and habits. Where do you need work? Is investing a part of your financial picture? How long do you plan to wait until it is? Start today!

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10 Ways To Save Money In College https://www.creditrepairexpert.org/10-ways-save-money-college/ https://www.creditrepairexpert.org/10-ways-save-money-college/#respond Tue, 13 Jun 2017 04:55:55 +0000 https://www.creditrepairexpert.org/?p=1630 If college is supposed to be the time of your life, then why are you broke? We want you to have a good time and enjoy your college years without having to sell your body to science to cover the day-to-day expenses. So we’ve got a few tips and tricks to help you gather a […]

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If college is supposed to be the time of your life, then why are you broke? We want you to have a good time and enjoy your college years without having to sell your body to science to cover the day-to-day expenses. So we’ve got a few tips and tricks to help you gather a little green and avoid a lot of the stress of being penniless. Here are 10 ways to save money in school.

Design A Budget

Design A Budget

Budgets may be a foreign concept to many students, but creating one could mean the difference between fun and misery. To start, figure out how much money you have each month and how much you will be bringing in from work (if you happen to have a job in addition to your studies). Then break down that number into categories:  food, gas, entertainment, etc. (Don’t be in denial about how and where the money goes. You’ll avoid a ton of stress at the end of the month if you do. And, you’ll also know how to save a bit so you can blow it on a keg for your “Gossip Girl” season premiere party without having to live on cold pizza to make up for it.

Eat Cheaply

Eat Cheaply

The definition of eating on the cheap isn’t dining at McDonald’s. It means going to the grocery store and learning all about the wonderful world of generic foods. They are made with the same ingredients, but sell for a fraction of the cost. So head on over to your local grocery store and start stocking up on all your favorite foods for a reduced price of the brands you’ve been taught to love. You’ll even have enough money leftover to take the girl from Intro to World Religions class out on a few dates.

Bargain Shop

Find the time to be a smart shopper. College is filled with silly rituals like the 3pm ‘Coffee in the Quad’  or the Thursday night, ‘Glad it isn’t Wednesday’ party. You can miss an event or two and shop around for the necessities in your life. Chances are, whatever you need, you can get for less by doing a little comparison shopping. Luckily, with the Internet, you have many resources available to help you comparison shop. Sites like PriceGrabber do all the hard work for you so can still celebrate days that begin with ‘T.’

Avoid Credit Card Debt

Avoid Credit Card Debt

This isn’t so much about how to save money, but rather how not to spend money. If you are not responsible with money and aren’t in a position to pay off your monthly bill in full each month, then a credit card is not for you. Stick to cash until you adjust to your new budget. If you already have a credit card, remember that it is not free money. You need to pay that money to the credit card companies and they will charge you interest for each month you don’t. You don’t want to find yourself at 23, swimming in debt and moving back home to pay off that forgettable dinner you had at Steak & Shake three years ago.

Avoid Late and Overdraft Fees

Avoid Late and Overdraft Fees

Sometimes it’s not about what you spend, but what you don’t spend that means the most. Nothing adds up more than late fees and overdraft charges. These fees are easily avoidable so be smart, pay your bills on time and keep track of your bank account. You can even have your bank account automatically pay the bills on time and you can keep tabs on your checking account from your cell phone to help make this easier.

Spend Your Money on Moments

Spend Your Money on Moments

Don’t get caught on a whim to go to every concert that comes to town or be a co-dependent with your roommate’s obsession with Forever 21. Hold onto your money and use it when the moment is right such as when your buddies want to road trip to the Final Four or when your girlfriends want to celebrate their 21st on the Las Vegas Strip. Instead of having to string together the money to have a good time, you’ll end up enjoying the trip more because you already had the money for the occasion. Skip the small stuff and prepare for the big moments; there will be plenty of them along the way.

Don’t Live on Loans

Don’t Live on Loans

That extra three grand a semester looks super appealing now, but it could sting for a long.  When you’re 40, working through a second divorce, supporting your kids and STILL paying off a student loan for a giant flame you had stenciled onto the side of your 98 Chevy Lumina, you’ll regret it. You won’t have the Lumina, but you’ll still have the loans. Be smart, loan out what you need and leave the rest off your tab .

Sell Everything

Sell Everything

There’s no reason, in the age of eBay and Craigslist, to throw out anything you don’t want. Whether it is old clothes, books, or DVD’s, everything can sell. If you don’t think it’s worth the hassle to sell everything individually, then sell it in a lot. Either way, everything you throw out is lost income that could be used for next year’s Halloween party. Just because you are over your Juicy velour track suit doesn’t mean the rest of the world is.

Ditch The Car

Ditch The Car

Cars can be extremely expensive to maintain, especially when you’re in college. Not only do you need to worry about insurance, repairs and gas, but you may also need to pay for parking or the occasional parking ticket. Many students manage to ride their bike or take a bus, so follow suit. Learn to love the fresh air, reduce your carbon footprint and you won’t get stuck being driving everyone back-and-forth to the airport.

Enjoy Free Events

Enjoy Free Events

There are always free events happening at any given time on a college campus. Whether they are meetings about student causes or an extracurricular activity like intramural basketball, clubs and departments are constantly sponsoring things for you to do. The best part is that these often include free food. So take advantage of these free activities for the chance to get a decent meal, meet some new people and for the experience of learning or seeing something new.

Conclusion:

Following these tips will ensure that you not only have the time of your life, but that you will leave college without the thousands of dollars of debt. If you need more ways to save money, talk with your friends and roommates about ways to split costs or ask your professors who had to survive on a Ph.D. student’s stipend for years.

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12 Surprising Things That Can Hurt Your Credit Rating https://www.creditrepairexpert.org/12-surprising-things-hurt-credit-rating/ https://www.creditrepairexpert.org/12-surprising-things-hurt-credit-rating/#respond Fri, 09 Jun 2017 03:44:27 +0000 https://www.creditrepairexpert.org/?p=1623 For the vast majority of consumers, credit scores and how they’re calculated remain a complete mystery. Without a thorough understanding of credit scores work it would appear that your score is a results for credit card trickery. Whilst a few of us do manage to understand how credit scores are comprised, many others will simply […]

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Your Credit RatingFor the vast majority of consumers, credit scores and how they’re calculated remain a complete mystery. Without a thorough understanding of credit scores work it would appear that your score is a results for credit card trickery. Whilst a few of us do manage to understand how credit scores are comprised, many others will simply abandon any hope of gaining a true understanding of how their credit score is determined. Whilst this can largely be attributed to a lack of financial education another obstacle is how behaviors that would appear to be positive or irrelevant can actually damage your credit rating. Gaining a full understanding about these counter-intuitive threats can be the difference to achieving your financial dreams and financial ruin. Today, CreditRepairExpert.org will examine 12 strange things that, contrary to popular belief, can actually hurt your credit rating.

Closing Cards or Accounts

People who are saddled with consumer debt often find themselves scurrying for some way any way to reduce the damage done to their credit scores. At some point, it occurs to them that closing unused credit cards or accounts will help. After all, they assume, the problem is that they appear on paper to be debt risks. From this, they reason that closing a few cards limits their theoretical exposure to debt and therefore makes the debt they do owe look smaller compared to the mighty whole. Unfortunately, the credit bureaus (and creditors who examine your credit report) have almost the exact opposite view of the situation. When your credit score is calculated, it is not just your total outstanding debt that is considered but how much of your available credit you are using. Let’s say, for instance, that you owe $10,000 of a possible $50,000 that you could, in theory, spend. Closing accounts and lowering your available credit to $20,000 does not reassure creditors that you are less of a debt risk. Instead, they see that you were previously using only 1/5 of your available credit and are now using half! In other words, what appears to you to be a perfectly responsible behavior in light of your financial situation can, in fact, worsen your financial situation considerably beginning with your credit score.

Debt Settlement

Another solution frequently pitched to consumers as a debt cure is debt settlement, which refers to any arrangement where a creditor agrees to erase your debt for less than you owe. But while debt settlement is infinitely preferable to letting the debt go unresolved, it is not without consequence to your credit score. As Investopedia explains, a debt removed from your credit report via debt settlement is not scored identically to a debt you paid in full per the terms of your contract with that creditor. Rather, it is made clear that you had to settle for less than the full amount you owed, which acts as a sort of red flag to other creditors who might evaluate your creditworthiness in the future. Unfortunately, most of the debt settlement companies that advertise to indebted consumers fail to mention this in their promotions. Consequently, the consumers in question often assume that a repaid debt is a repaid debt and go about their lives unaware of the credit score damage that was done until they need to use their credit.

Payment Plans

For similar reasons, setting up a payment plan to repay an outstanding debt can also drop your credit score significantly. The reason is that, as explained above, a repaid debt is not a repaid debt in the eyes of credit bureaus and creditors. Although the debt is being paid off, creditors look at payment plans and see the costs involved. Setting up and administering debt payment plans involves more (sometimes substantially more) overhead, paperwork processing, and customer service than if you simply paid your bills on time. Prospective creditors, therefore, will see that you needed a payment plan to pay off your debts and forecast the risks this would pose if you required similar assistance from them. Consumers often object that this is unfair because ultimately, they are paying off their debt somehow, which is better than not paying it off. However, it is simply the way credit bureaus operate, and it’s better to know the truth than not know.

Inquiring About Old Debts

If you have an old debt or bill from your past, it may actually be better for your credit score if you never attempt to repay it. All states places what are known as statutes of limitations, which specify the number of years a creditor has to legally pursue you for unpaid debts. This number varies state by state and by whether the debt is an oral agreement, written contract, promissory note or open contract. Once the statute expires, the creditor may no longer pursue you for the debt. Although even inquiring about an old debt can restart the statute of limitations in some states, allowing creditors to sue you for the debt in question. Here, again, the results are counter-intuitive, because what appears to be a good-faith behaviour (attempting to make good on an old debt) can actually end up reducing your credit score substantially and for a substantial period of time.

Having Your Credit Limit Lowered

It’s becoming more and more common (especially since the start of the recession) for banks to reduce credit limits seemingly out of nowhere. But contrary to popular belief, a reduced credit limit is far more than a mere personal inconvenience. As we discussed earlier, a lower credit limit makes outstanding debt look worse because it now consumes a great share of that limit. In fact, Time reveals that this accounts for 30% of your score by itself. Beyond that, however, having your credit limit reduces is virtually always seen as a poor reflection on the consumer. Other creditors could wonder what you did to have some of your available credit revoked, even if the reasons are wholly unrelated to your behavior. Do not, as some consumers do, assume that the reduced limit is personally burdensome but positive for credit score purposes. It is both personally burdensome and a detriment to your credit score.

Paying Off a Collections Account

If you have been delinquent in paying off a debt for six months, the creditor reports this to credit bureaus as a charge-off. A charge-off is simply a book-keeping term that in no way means your debt is erased. You are still obligated to pay, and will usually begin hearing from collections agencies (to whom the original creditor sold your outstanding debt in order to wash their hands of it.) However, it’s important to know that what counts from a credit score standpoint is what the original creditor reports you owing at the time of charge-off, not what the collections agency subsequently reports you owing. In other words, if your balance is zero at the time a collections agency begins reporting (which is a common scenario) you actually will not improve your credit score at all by paying them anything. Previous Fair Issac spokesman Craig Watts concurs that if the trade line balance is showing zero, you’re not going to help your FICO score by paying off a collections account.

Balance Transfers

Like many debt repayment solutions, balance transfers can have their benefits outweighed by unexpected damage to your credit score. The potential risk arises out of the fact that credit inquiries (that is, when third parties pull your credit report for evaluation) account for 10% of your credit score. Given that each inquiry only dings your score by about 5 points, a single balance transfer is not likely to do serious harm. Be wary, though, of rapidly cycling through balance transfers the way that some credit card users have taken to doing in recent years. Five transfers, by FICOs measure, could reduce your score by 25 points all by itself.

Neglecting Old Debts

We advised earlier that attempting to repay old debts can harm your credit score. That is still true. However, it is also true that simply letting old debts fade into the sunset can harm your score. How can both be true? Basically, because FICOs credit scoring formulas group consumers into categories of shared characteristics, like whether you’ve ever gone bankrupt. Once the bankruptcy vanishes from your report (a good thing, all else equal), FICOs formulas could shift you over to a different category, where you rank lower than you ranked in the bankruptcy category. This is another reason that some consumers find their credit score has dropped by, in some cases, dozens of points for seemingly no reason. While it is not certain that the removal of old debts will transfer you to a different category (or to a different category that reduces your score) the possibility is there and you should be mindful of it.

Cancelling Older Cards

We’ve already discussed the negative impact that closing credit cards can have on your credit score if you are in debt. Unfortunately, the damage does not end there. If you closed an older credit card, your credit score will likely suffer even more. That’s because FICOs credit scoring formulas prefer older sources of credit. Unlike a credit card you got approved for last week, an older card in good standing serves as evidence that you have used that card responsibly for a lengthy period of time. US News concurs, explaining that by cancelling an old card, the length of your credit history on open accounts will grow shorter. Therefore, if you determine in the face of the information in this article that you still must close a credit card, strive to make it a newer card rather than an older one.

Library Fines

The New York Times reports a potential credit score threat that few people are aware of: library card fines. Believe it or not, late book rentals and other past-due library fees are sometimes reported to credit bureaus, after which they become entries on your credit report. While such infractions typically amount to a slap on the wrist for negligent people, consumers should be aware that the few points that they take off your score can really add up over time. It’s not likely that library fines will irreparably damage your score, but it is worth knowing in light of the fact that scores seem to change abruptly and without explanation.

Using Limitless Credit Cards

Some consumers have what are known as limitless cards, which, in practical terms, mean that the card issuer does not report the cards limit to credit bureaus. At first glance, this might seem like a good thing. If the credit bureaus don’t know your score, after all, your used credit to available credit ratio can’t be all that bad. Sadly, this is not how things play out in reality. What the credit bureaus typically do instead of use the highest balance you have ever had on your limitless card and set that as your limit. If you’ve been reading along, you should already see the problem. If you’ve only ever charged $500 on the account and owe $400, your used credit to available credit ratio will look awful as far as your credit score is concerned.

Unpaid Parking Tickets

Increasingly, consumers are finding that no unpaid obligation is safe from the credit score calculator. As CNN noted back in 2006, local governments are now passing off your unpaid parking tickets to collections agencies who, just like collections agencies working on behalf of your creditors, can report negative information like non-payment or late payment to the credit bureaus. Amazingly, CNN says, a report to credit bureaus by the collections agencies stating that you failed to pay overdue parking tickets could drop your credit rating by 100 [points] or more.

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Tips For Lending Money To Family And Friends https://www.creditrepairexpert.org/tips-lending-money-family-friends/ https://www.creditrepairexpert.org/tips-lending-money-family-friends/#respond Fri, 02 Jun 2017 04:37:49 +0000 https://www.creditrepairexpert.org/?p=1595 Mixing money and family typically is not an advisable financial move. All too often personal feelings get tangled up in a web of financial burdens and it can be a very unpleasant and potentially long-term bad situation. It can be made even more complicated when the ones you are closest to in your family are […]

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Mixing money and family typically is not an advisable financial move. All too often personal feelings get tangled up in a web of financial burdens and it can be a very unpleasant and potentially long-term bad situation. It can be made even more complicated when the ones you are closest to in your family are turning to you for help with their own debts, especially if you are just turning your own financial situation around.

Are You Obligated to Help?

You certainly don’t want to see your mom and dad suffering without heat, electricity, or food. When they come to you for help you probably don’t even thinkLending Money To Friends And Family twice about getting their bills paid off. But over time it seems the more you help, the more they expect. It may be your parents, your siblings, or other close relatives, but eventually the love you feel for family becomes jaded when you wonder, “What will they want next?”

It is a bad position to be in when on one hand you feel obligated to help, yet on the other hand you feel taken advantage of over and over again.

So what do you do?

Forget the Guilt

As an individual with your own financial obligations to meet, the matter of helping anyone else financially should be based on your financial abilities and not the obligation of blood relatives. It may sound harsh, but the logic here is that if their needs put your finances in jeopardy, everyone ends up in the same sinking ship. If you feel you have plenty to give, do it. But if your first concern is how you’ll get by while you help them out of trouble you need to seriously consider other options.

Do Your Math

Hopefully you are financially comfortable because you have been working on your budget and have been committed to saving. You should know where you stand and how much you can afford to help someone else. Look at your finances before giving anyone a definite answer so you can be ready with an specific amount. Leaving your financial assistance open-ended might be okay if you are independently wealthy but if you are working for a living, you need to ensure your obligations are met before you start handing out cash.

Consider Your Risks

If your brother is asking for a decent amount of money in the form of a loan, you really need to think about the consequences in the big picture.

  • Are you willing to never see that money again?
  • Are you prepared to deal with the fallout that will happen if he doesn’t pay you back?
  • Are you willing to get an agreement in writing and make it legal concerning the repayment terms?

You may think that your siblings or parents would never part ways over money matters but it happens to even the strongest families and you need to gauge your risks. You have to be comfortable taking your relationship from “just family” to “lender/borrower”. If you don’t treat your loan like a loan, you will never see any of the money returned.

Be Firm With ‘No’

If you decide you are not able or willing to lend out cash to family, be strong in your resolve to say no. Don’t delay in giving your answer. The longer you wait, the more difficult it will likely be. This may result in your giving in and handing over money you can’t afford to lose.

You can expect your relative to be upset with you. They see your financial success and wonder why you won’t help out. You’ve made good decisions while they have made bad, but they can’t see that. Stay strong in your resolve and do no waiver.

Offer Options

You may not be able to financially support those you love. When saying no, it may help to have some ideas or resources that can still be of use. Maybe you can offer to help go over their figures and help establish a reasonable payment plan. Perhaps you can accompany them to a debt counselor for emotional support. Know that your offer for help outside of money may be refused, but know you have done everything possible to be of assistance. Don’t let guilt trick you into changing your mind.

Prepare Your Agreement, Set Limits

If ultimately you decide to offer financial assistance or a loan, you should do it in a business-like manner by putting the terms and conditions in writing. To ensure you are repaid your loan, make your repayment expectations clear. If you can only offer so much cash, be upfront about how much and how you expect the money to be used. If the person receiving your help is not particularly keen on signing any agreements or they scoff at your requirements, it may be best to have them look elsewhere for financial assistance. It might be useful to discuss the matter with a lawyer as you will be creating a contract between you and the indebted family member. The contract should be written in compliance with laws — and also be actionable (meaning you can take them to court for lack of payment).

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7 Money Traps to Avoid https://www.creditrepairexpert.org/7-money-traps-avoid/ https://www.creditrepairexpert.org/7-money-traps-avoid/#respond Fri, 02 Jun 2017 04:10:32 +0000 https://www.creditrepairexpert.org/?p=1592 When it comes to money, it is important to make sure you are doing what you can to make sure your money is working for you. However, it seems as though there are plenty of pitfalls that can result in wasting money instead of getting the most out of it. Make sure you are avoiding […]

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When it comes to money, it is important to make sure you are doing what you can to make sure yoAvoid These Money Trapsur money is working for you. However, it seems as though there are plenty of pitfalls that can result in wasting money instead of getting the most out of it.

Make sure you are avoiding the following 7 money traps:

1. Discounting Your Time for Something Free

One of the things we often forget is that time is money. Don’t forget this. Yes, getting something for free is nice. But is it really worth it to spend two hours in line for a free $4 chicken sandwich? What if, instead of standing around in line waiting for something free, you worked on your web site, or completed a freelance article? There are a number of things that you could do in two hours that would help you toward your money goals better than saving $4 on lunch.

2. Purchasing on Impulse

Whether you pick something up at the checkout stand on a whim or come into the store for a great bargain on something you need (but end up leaving with several full price items you want), buying on impulse can be a real budget buster. Try to shop with a list and only get what you came in for.

3. Buying Something Because Its a Bargain

Just because its bargain doesn’t mean you need to buy it. If you aren’t going to use it regularly, or if you don’t need it, don’t get it just because it seems cheap. Buying stuff to buy stuff is still buying stuff. Don’t spend money because you’re getting a good deal. Your expenditure should have a purpose.

4. Carrying a Credit Card Balance

Watch out for credit card balances. Its easy to get in the habit of carrying a balance because the minimum payment is so low. You can make a big purchase and pay only a small percentage of the total each month. Unfortunately, if you pay only the minimum on your credit card you will end up paying quite a bit in interest and it will take forever to pay off. Instead, save up for big purchases. Then, even if you use a credit card, you can pay it off when the bill comes due and not accrue interest.

5. Buying Something for the Reward Points

Don’t purchase something just for credit card reward points. If you buy something because you can get credit card rewards, or put something you cant really afford on the credit card just for the points, you will soon find yourself trapped in the cycle of debt. The interest you pay on your balance will more than destroy any value you receive from reward points.

6. Raiding Your Retirement Fund

While you might have to do this if things are really bad, it is best to avoid cashing in the 401k (or any other retirement account) if you can. You will be hit with penalties if you ardent careful and your principal will no longer be working for you. Many people never actually replace the money they take out of a retirement fund, and that puts their financial future at risk.

7. Investing in Something that Offers High Returns for Low Risks

We all want to believe that we can make a lot of money without risk. However, it is important to remember that there are investment scams out there, and they often promise amazing returns at very little risk. Realize that in the world of investing big returns are only made by risking money. Watch out for investment opportunities that seem too good to be true.

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5 Things That Are Hurting Your Budget https://www.creditrepairexpert.org/5-things-hurting-budget/ https://www.creditrepairexpert.org/5-things-hurting-budget/#respond Fri, 02 Jun 2017 03:52:09 +0000 https://www.creditrepairexpert.org/?p=1587 Many people that create a budget have a difficult time sticking to it for one reason incidental expenses. Although incidental expenses are only a small fraction of your expenses, they can have a really big effect on your budget. These tiny expenses often go unaccounted for and can destroy your carefully crafted plans. Here are […]

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Many people that create a budget have a difficult time sticking to it for one reason incidental expenses. Although incidental expenses are only a small fraction of your expenses, they can have a really big effect on your budget. These tiny expenses often go unaccounted for and can destroy your carefully crafted plans. Here are a few small expenses that are killing your budget.Budgeting Tips

1. Entertainment Expenses

Too many people underestimate exactly how much money they spend on entertainment. These expenses can be so small that people fail to keep track of them. Small purchases like Redbox DVD rentals and on demand movie purchases are often overlooked. Spending $2 to $3 dollars here and there can really add up over the course of a month.

2. Impulse Purchases

Window shopping can be hazardous to your financial health. How many times do you go to the mall just to look and come home with a new shirt, pants or pair of shoes? Impulse purchases are budget busters because they are unplanned expenses. This means that you normally have to borrow money that was meant for another purpose to cover your impulse purchase.

Impulse purchases are great for retailers like Macy’s, Nordstrom, and Best Buy but they are terrible for consumers. You can easily spend $100 dollars or more each month buying items that you never planned on purchasing.

3. Too Strict a Budget

It may sound weird but having a budget that is too strict can make your budget impossible to adhere to. Too many people create a budget that applies every spare dollar to a bill or savings. If you feel like your budget is too constrictive eventually you will stop following it. Even while working to get out of debt allow yourself room to splurge from time to time. Splurging is not buying a new car or making a new debt for yourself. Splurging may be buying that new shirt you always wanted or a new video game. Just be sure not to charge them!

4. Labeling Wants As Needs

It’s important to place all of your expenses in their proper categories when budgeting.

  • Needs are expenses that are necessities such as food, clothing, and transportation.
  • Wants are luxuries that can be eliminated.

Individuals often budget around wants and not needs. A car can be classified as a definite need depending upon where you live and how far you travel to work. Buying a BMW 750Li however would be considered a luxury. This may be an extreme example but it demonstrates how easy it is to turn a need into a want.

5. Wrong Type of Friends

Having the right friends can make or break your budget. Are your friends spendthrifts who waste a lot of money with little to no thought about their financial future? Or do you have freeloading friends that consistently borrow money from you with only promises of being paid back? Both types of friends can be dangerous to your financial future. Most individuals pick up the habits of people that they hang around. The chances are good that if your friends are big spenders that you will eventually become one. Who wants to go out while everyone is having fun and not do the same? Freeloading friends can eat up your savings. You will find yourself busy financing their lifestyle that you may neglect to save for yours.

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Are You Financially Literate? https://www.creditrepairexpert.org/are-you-financially-literate/ https://www.creditrepairexpert.org/are-you-financially-literate/#respond Sat, 20 May 2017 07:11:23 +0000 https://www.creditrepairexpert.org/?p=1573 There is no doubt that unscrupulous lending practices were a leading cause of the recent recession. However, those practices would not have been able to happen as easily if consumers were better able to question these abusive practices. While the newly created Consumer Financial Protection Agency’s job is to monitor and warn consumers about these […]

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Financial LiteracyThere is no doubt that unscrupulous lending practices were a leading cause of the recent recession. However, those practices would not have been able to happen as easily if consumers were better able to question these abusive practices. While the newly created Consumer Financial Protection Agency’s job is to monitor and warn consumers about these practices, they only have limited reach and simply won’t be able to flag everything. That is why financial literacy may be the key in successfully fighting these practices. As Fed Chairman Ben Bernanke said, “Well-informed consumers…are one of the best lines of defense against the proliferation of financial products and services that are unsuitable, unnecessarily costly, or abusive.” The benefit of financially informed consumers is twofold because they will also increase overall market efficiency and innovation.

Financial literacy in America is extremely low, which is unsurprising considering that very few schools teach any personal finance. The Financial Literacy and Educational Commission found that a key reason for this lack of education was that the teachers felt like they did not have a firm grasp on the subject either. Without it being taught in schools, parents are now responsible for educating their children. However, parents aren’t any better educated than the teachers. A study by Charles Schwab found that while 70% of parents have taught their kids how to cook and do laundry, only 29% taught their children how credit cards and interest rates work. Without this education, it has left much of the population without an understanding of finances and how debt will affect them in the future.

While the government has passed a number of laws that aim to protect consumers, including the 2009 CARD Act that has forced credit cards to be more transparent with their terms, it won’t be enough if Americans still don’t have the basic understanding of what those terms are.

To help raise financial literacy, The Federal Reserve provides educational tools on their site (www.federalreserve.gov) to help teach people about mortgages, credit cards and general financial empowerment. It also provides loan calculators and up-to-date information on all the latest scams and how to avoid them.

Another resource is www.mymoney.gov, which is dedicated to teaching all Americans the basics of financial management. This site provides resources for people of all ages and at different stages of life. Topics covered on the site range from those targeted at youth and parents to those planning to buy a home and have a baby.

While these resources are helpful, how many people will actually seek out this information themselves? The fact that personal finance is not taught in schools is still a major issue and will continuously contribute to the lack of knowledge among future parents and teachers. And, with the Class of 2017 graduating as the most indebted ever, with an average of $22,900 in student debt, it is vital that they are educated about interest rates and budgeting so they can stay on top of their monthly payments and protect themselves from the mountains of “bad debt” that many of their parent’s experienced.

Teaching young adults financial literacy is the first step in guiding them towards a more stable financial life and helps them avoid some of the mistakes of their elders, including the mortgage crisis, and falling into debt. What do you wish you were taught before financially fending for yourself?

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