There are countless articles online about how to fix bad credit. That is fine and dandy, but we need to try and prevent bad credit from the start. If you are a young person who is on the cusp of venturing out into the world or you are a parent who is trying to train your child to avoid the crippling debt that so many are faced with, I hope this article will help you to do what you need to. The best offense is a good defense.
The first line of defense against bad credit is a good budget. You may want to buy a nice patio set for your new home, but are you sure that you have the funds for such a purchase? You may only have a vague idea of how much of your funds are being deposited into you savings each month and how much you need to spend to maintain your life in the way you have decided to live it. You need to sit down and add up all of your standard monthly expenses, those that are guaranteed to reoccur. Once you have this total number, you need to add up your expenses that are a bit more fluid. If you got to the bar every other week and spend forty or fifty dollars on drinks then you should not just brush that expense off. That’s almost a hundred dollars a month on just leisure.
Next, you should consider stopping direct deposit in lieu of checks. This way, you need to deposit each check as you get it and you will have a weekly reminder of the total balance of your accounts. Making the conscious decision to put money in your account will solidify the idea that this is real money that needs to be handled carefully.
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Recession, credit crunch debt crises, subprime lending and the list go on with words that frequently made headlines during the last 4 years. Well, what it all boils down to is that lending money to an unsuitable candidate is bad for everyone, for the lending institution, the borrower and the economy in general. There may be those who miss the good times in 2005-2007 when money was abundant and banks were lending to anyone. The reality, however, is that this was never sustainable and should never have happened, and the strict lending criteria that we have today are a good thing. Getting and maintaining a clean credit score is not very difficult, and there are even some sneaky tricks you can use to get a great credit score.
How is the Credit Score Calculated?
There are five areas that determine your credit score. These are:
- Mix of credit
- Payment history
- Debt levels
- Age of credit
- Recent credit
Now, many people out there look at these five factors and feel comfortable that they are managing well on each of them, and therefore take it for granted that they have a good credit history. Never take your credit history for granted as mistakes are made all the time, and you may not be maximizing your credit score and therefore checking will help you track this.
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If you want to use lifetime balance transfer cards to pay down your debt you must take the time to compare offers. Just like anything, not all credit card offers are created equal and while there may be perks to some the decision has to come down to what will suit your bank account the best.
The idea of balance transfers is simple, save money in interest by moving your balance from a higher rate card to a lower rate one. That being said, you have to take into account not just the interest rate but the length of time you will be eligible for that rate.
This is where the idea of lifetime balance transfer credit cards comes into play. If you only have a small amount to transfer then you can use a zero interest balance transfer that is good for around six months.
Continue reading How to Compare Lifetime Balance Transfer Credit Cards
Nowadays, almost everyone has a credit card. What you need to remember is not to spend beyond your means so you don’t end up paying interest. But there are other dangers with having one and it is best you know how to avoid fraudulent credit card offers.
First, don’t be fooled when someone calls you and says you can get a credit card even if you have bad credit. Why? This is because credit card companies will never issue or offer you a credit card until you are once again in good standing.
Credit card companies do not ask you to pay something up front before they process your application. This is because this appears in your first credit card statement so if someone tells you to pay up, get away from them.
If you are offered a credit card by email, ignore it because credit card companies do not use this to get new clients.
You can get a credit card when you have attained good credit. If you are in the process of fixing it, you can apply for a secured credit card. This is different than what is usually offered to clients because you have to deposit an amount that is equivalent to your credit limit.
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Your credit score is based on a formulation used by the credit reporting agencies that creates a general average of your credit history and assigns a number to show whether you have excellent, good, fair or poor credit. While, your credit score is an average of your credit history, it is often the first thing creditors look at when deciding whether or not to give you a loan or credit account. While, you are unable to change the credit score directly, you can change and better your overall credit and credit report which will directly reflect on your credit score.
When looking for a way to improve your credit score there are many steps in the process and it will take a little bit of time for the improvements you make to reflect on your credit score. You can go through the process alone, or you can enlist the help of a credit counselor which can help with the process, paperwork and the law surrounding around what you are allowed to change and dispute and what you are not.
1. Request all of your current credit reports
Your credit report is available from each of the three major credit reporting agencies, including Experian, Equifax and TransUnion. All of these agencies have a web site where you are able to order your credit report that can be delivered in paper form or instantly electronically. Once you have your credit reports, print them out. This will take lots of paper, but it worth it to have them spread out in front of you for the best results when looking over them.
Continue reading Understanding Your Credit Report and Score
Credit clean up can be a difficult thing to do, but if you take the right steps toward cleaning up your credit you can be on your way to a brighter, more secure financial future. One of the best ways to work on building a strong financial future during your credit clean up process is to add or refine the starter or good accounts you currently have. Starter accounts are those smaller credit or loan accounts that people with no credit are usually able to get in order to start building credit. These are often in the form of jewelry, store accounts and tool accounts. They are smaller in limit and don’t require the high level of credit that other loans, like credit cards and home loans, do. These are good accounts not only for those just starting out in their credit journey, for also for those recovering from bankruptcy and other financial set backs.
If you already have some of these accounts, you need to take a hard look at them and make sure they are not in trouble. If they are, you need to do what it takes to get them current and the balance paid. While, some accounts on your credit report you will want to close as you pay them off, like high interest rate credit cards, starter accounts you should leave open. The open, active account with a current paid balance will reflect positively on your credit report and through your credit score. You do want to use them occasionally to keep them active and in good standing, but don’t go crazy or charge more than you can pay off in a month or two. These accounts generally have lower interest and small monthly payments, but don’t let the small payments entice you into getting in over your head. If it’s a jewelry account, buy your loved one some $100 earrings for a gift and pay it off within the next thirty days. This will show you can use the account responsibly and show future lenders you can handle a loan and the responsibility that goes with it.
Continue reading Credit Clean Up: Add Starter Accounts