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Credit Repair Advice – How to Improve Your Credit Score

admin — Wed, 07 Apr 2010 01:40:45 +0000

Our credit scores determine much about how we live our lives. We buy practically everything on credit. When applying for a loan, our good credit scores help us receive reasonable interest rates. In fact, from landlords, to insurance companies, to utilities, everyone looks at our credit scores, as they are a reflection of our financial health. A healthy credit score may determine what various agencies will charge for their services. Today, even employers check personal credit scores before offering a job.

Knowing more about our credit scores and the factors affecting them may help us build a positive credit history. But first, let’s look at how they are maintained by the various credit reporting agencies.

Three major credit bureaus – Equifax, Experian, and TransUnion – calculate credit scores. Though they use the same methods and formula to calculate scores, they sometimes come up with a different rating for various reasons. One agency may have more updated information about an individual. A creditor may have shared information with one agency only, but not with the others. Creditors, while checking on our scores, take the average of the three scores from these three agencies.

Credit scores range between 300 and 850. A score of 680 and above is excellent for obtaining mortgage financing at low interest rates. A credit score of 621 to 679 is an average score and you would have to pay a slightly higher rate of interest. A credit score of below 600 makes us potentially unreliable and harder to obtain credit. When a credit score falls below 600, credit repair steps should be taken immediately.

The following are factors affecting credit scores and basic steps to take to maintain an accurate credit score rating with the credit bureaus:

1. Routinely check payment history and the current credit debt held.

2. Credit history length is a determining score factor. Naturally, the longer a ‘good’ credit history, the better.

3. Do not close old or paid off accounts. These show the credit history length and contribute to higher credit scores.

4. Pay off debts to improve credit scores.

5. On-time payments. Delayed payments appear on credit reports and adversely affect it.

6. An individual’s race, sex, age, level of education, or marital status has no bearing on a credit score, nor does the fact that an application for credit was previously turned down.

Taking care to maintain a high credit rating enables us to receive credit and loans at good rates. Our credit score is a reflection of how we manage our finances and a determining factor for many aspects of our lives. Knowing early on how to have a healthy credit history is the best way to avoid bad credit and limited loan options in the future.

By: Sherry Frewerd

Secured Credit Cards Help with Bad Credit

admin — Mon, 22 Mar 2010 21:06:48 +0000

If you’re reading this article right now, there’s a good chance you have bad credit. Does bad credit make you a bad person? Absolutely not. As the years go on this earth, the debt continues to go on as well. In fact, over thirty to forty percent of all Americans have some sort of debt that doesn’t include their mortgage. So, the question is, “What do you do when you have awful credit and no where to turn?” The answer is quite simple, apply for a secured credit card.

A secured credit card is a great way to re-establish your credit. Instead of applying for a bad credit credit card and have a low success rate of being approved, you should turn your head to a secured credit card where your chances of getting approved are almost one hundred percent. With such a high approval rate, this is why many people turn to a secured credit card when they are looking to re-establish their credit.

If you’re not familiar on how a secured credit card works, I’ll guide you through the process. Keep in mind that this type of card is very different than a regular credit card. When you apply for a secured credit card, chances are they you’ll be approved. This is because you’ll have to supply the credit card companies with a deposit The reason you’ll have to supply the companies with a deposit is because if you don’t pay off your bills, they will have something to fall back on.

Depending on what credit card you apply for, most credit cards only make you supply them with anywhere from three hundred to five hundred dollars to start. Usually, whatever you supply the credit card company with, this is going to be your credit limit. So, if you try to spend more than what you deposited, you’re going to find that you’re going to get denied for the purchase.

When you’re looking to apply for a secured credit card, make sure that the card you’re looking at reports to all of the three major credit bureaus. Most of the time, the credit cards will. If not, this will defeat the purpose of applying for a card to establish your credit all over again. Yes, a secured card will help build your credit because you’re technically still “borrowing” money from the company to prove that you can pay it off. Like I mentioned above though, if you can’t pay it off, the company will take away from your deposit. You’ll want to avoid this though because like in the past with your credit, you’ll want to avoid it because it will affect your credit.

If you’re looking to re-establish your credit and you have had no luck applying for credit cards, make sure you tend to avoid the bad credit credit cards and go the secured credit card route. If you learn your lesson from your credit past, you should make a change in your spending and you’ll be able to get the better cards and have better credit in no time.

By: Tom Tessin

Poor Credit Credit Cards

admin — Sun, 07 Mar 2010 15:08:32 +0000

People who have bad credit have many more credit card options today than they did just a few years ago. Maybe this is contributed to the theory of supply and demand or maybe the credit card companies just realized how much more money they can make by charging high interest rates to people with bad credit. I personally think it may be a little of both.

But no matter what the reason why, there are many credit card companies willing to grant credit to people with bad credit these days. This is good news to those with tarnished credit records. But people with bad credit should evaluate what actions got their credit into bad shape in the first place before applying for more credit. For many people their bad credit is due to uncontrollable circumstances like the loss of a job or medical reasons. But for other people, their bad credit is due to irresponsible financial decisions. If you have bad credit and it was caused by the second reason, it is imperative that you change your credit habits. Otherwise you will never improve your credit score and will always end up paying high interest rates and fees.
Higher interest rates are obviously the price you have to pay in order to obtain a credit card if you have bad credit.

Fortunately, if you are responsible with your bad credit credit card and make your monthly payments on time, over time you can improve your credit score and eventually get a lower interest rate. Make sure that the bad credit credit card you are applying for frequently reports to the major credit bureaus. This will insure that your credit score will improve as quickly as possible by having your positive payment activity reported.

There are credit card websites that have researched the best bad credit credit card deals available and have listed them in an easy to read format. Visit http://www.amex-visa-mastercard.com to look at the details. Many of the bad credit credit cards listed on this site do monthly credit bureau reporting.

We have all run into hard times and made mistakes with our credit activity. Thankfully there are bad credit credit card offers available that will still give you the freedom of having a credit card along with giving you the chance to rebuild your credit.

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By: Beth Pardue

Bad Credit Credit Cards Can Help Rebuild Your Credit

admin — Fri, 05 Mar 2010 16:03:12 +0000

If you have a low credit score, you’re not alone. Millions of Americans have run into problems with debt. The good news is that there are certain steps you can take to rebuild your score. And you can even use a credit card to do so. Bad credit credit cards are designed to help you move forward and put your financial history where it should be: in the past.

Apply for One

Your first step toward a better financial future is to look online for a credit card designed for people with bad credit. Many credit card websites include a special category for this. You can compare various options side by side. You’ll notice that many are issued under well-known names such as Mastercard.

As you search online, you may find that this type of card includes a number of fees. You can expect to pay a fee for signing up, and you may be charged an annual fee as well as a monthly fee. All of these charges can seem overwhelming. While they are more than what regular cards charge, they are designed to give people in your position another chance at credit. A low score can make it difficult to take out a loan or get any kind of monetary help. This card, if used properly, will help you move back up the financial ladder.

Use it Wisely

How do these cards help you rebuild your credit? First, most of them report to three or four major credit bureaus every month. This means that if you make a purchase and pay it off, the company will show the bureaus that you are able to manage your finances. Over time, this will help improve your credit score. In a few months, or in some cases, longer, your rating may be high enough to apply for a different card with lower fees. Continue to use the new one wisely, and you’ll see your score climb higher and higher.

Things to Remember

Bad credit credit cards can help repair your finances. They will not, however, do all of the work for you. You must use them properly in order to see positive results. In other words, you’ll need to start taking charge of your spending habits. Try making a budget to see how much income you have and how you spend it. Doing so will help you keep track of your money. Pay your bills on time each month, including your credit card balance.

Consider your new card to be a chance to reestablish your credit. Take the time to read through the terms and conditions attached to it. Understand the fees involved, and pay them promptly. When you make a purchase, check your account and pay off the balance right away. These measures will help your credit rating climb quickly.

Small steps are the key to a brighter future. Over time, other companies will notice that you have established a better credit rating. Eventually, you’ll be able to get more cards, take out a loan, or set up a home mortgage. So start with a bad credit credit card, and get your financial life on track, one purchase at a time.

By: Stephanie Andrews

Building Credit With Credit Cards

admin — Wed, 03 Mar 2010 21:02:36 +0000

When people find themselves with bad credit the most common refrain they hear from friends, family and idiots on TV is “… first thing: cut up those credit cards!” That couldn’t be more wrong. Credit repair, like life, is often counterintuitive, and the role of credit cards in rehabilitating your credit scores couldn’t be more so. Let me walk you through a worst case scenario.

For our scenario lets assume you have horrible credit scores, sub- 500, with lots of write-offs and old, bad debt. The last thing you want to do is cancel any existing credit lines for two reasons. First, if you close them they will continue to report as a debt each month but they will not show any available credit and you need as much available credit showing as possible. Even a store credit with $289 owed with a $300 ceiling is better than $289 owed on a closed account. The second reason we don’t want to close any credit lines that are still viable is that with credit this bad you won’t be able to open any new accounts for a while so you’re best off working with what you have. Paying down that $289 debt to $149 will make a tremendous impact on your credit scores, probably pushing you above the “drop-dead” 500 credit score.

In a real worst case scenario you don’t even have one account active and clean enough to work with, thats when credit cards become a necessity if you want to rehab your credit within your lifetime. There are cards that will approve anyone with a valid social security number but the costs are high. A typical “worst case” card will offer guaranteed approval but your credit line will only be $300 and the fees to get the card will be upwards of $240, which is applied directly to the card. Thus you get a legitimate credit card that will report your good payment monthly to all three major credit bureaus but you will start out with a fat balance right away. The key is to now pay that down right away so that you are showing an available balance greater than half the maximum credit line of the card, in this case less than $149 owed on a card with a $300 limit. This may seem like a very predatory lending practise and it is, however you are not signing up for credit you are “buying” a credit booster. Simply paying this credit card balance off with on time payments will greatly improve credit scores within 3-6 months.

After you’ve had the “worst case scenario” card for 6 months, assuming you haven’t been late or defaulted on any new debts, you will no longer be a “worst case scenario”. You can now apply for a better card that will actually start with some credit. You usually need a job and one line of credit in good standing for 6 months to get a “step-up” card, that is where the “worst case scenario” card comes in. If you can transfer the balance from your first card to the new one that’s great but you don’t want to cancel the first one even if it seems silly to pay monthly and annual fees to keep a card you will never use. You will keep all of these cards until you have truly reestablished your good credit. This new card should have reasonable fees but you will still be paying $60 to $100 in set up fees and you will have an interest rate at the very high end. It doesn’t matter the interest rates because you aren’t supposed to use this card anyway, just let it bouy your credit.

After you’ve had both cards reporting good payment for about a year with low balances you will see an amazing improvement in your credit scores. The reason is because the formula the credit bureaus use to determine who deserves credit is based on who already has credit. The more unused credit you have the more credit lenders want to give you. At this point you should start replacing predatory cards with high annual fees with good cards with zero annual fees.

Building credit through “bad credit credit cards” is not the only way to improve your credit but it is one of the most important steps if you are really in a deep hole.

By: Mitchell Torek