Credit and Debit Card Ratings

Extra Credit – Credit Scores: Are There Rewards for Responsible Repayment?

True, it’s just a number, but maintaining a good credit score is key to getting the best rates for your mortgage and car loans

We all have numbers that, for better or worse, define us. Age is an obvious numerical marker, but so too are the ones that your doctor hectors you about – weight, cholesterol and blood pressure. In the realm of personal finance, the number that arguably matters as much as any other is your credit score. While the figure that is attached to you – be it 567, 680 or 750 – may not instinctually resonate, make no mistake that your credit score has big and very meaningful implications. Why? In the most basic terms, it’s because a good credit score (and higher is better) means that when you have to borrow money to buy a car or a boat or a house, a lender will not only be willing to fork over the money but they’ll do so at a better interest rate. In other words, a good credit score can significantly reduce the cost of borrowed money over the life of a loan.

The impact of your credit score goes well beyond getting a good interest rate on a loan. Although potential employers do not check the credit scores of job applicants, they may review a credit report, believing that a poor financial history could be an indication of irresponsibility, or may somehow impact job performance. But, back to the score issue, it gets worse. According to Kiplinger.com, some insurance companies charge customers with poor credit scores higher premiums because they are convinced that the way consumers manage their personal finances is a predictor of the number of claims they will file. Indeed, according to a 2004 Texas Department of Insurance study, more than half of insurance policyholders with high credit scores enjoy lower premiums.

All of this may seem terribly unfair. But the truth is that your credit score, also known as a FICO score, is simply a quick way for lenders to understand how risky it is to lend you money; or, more accurately, how likely it is they will get paid back. To come up with a score – which range between 300 and 850, with 680 the minimum to be considered credit worthy – the company that calculates it looks at 5 factors. Most important is your payment history, which is another way of saying whether you pay your bills in full and on time. Also highly important is how much money you owe; maxing out your credit card limits can indicate to lenders that you are in a precarious financial position and more likely to miss or make late payments. Also factoring in, though to a lesser extent, is the length of your credit history, how many new lines of credit you have requested recently as well as the mix of loans you have. The company that comes up with FICO scores, Fair Issac Corp., then throws all this information into a blender and comes up with a number.

 

Ignorance is Not Bliss

If you have read this far, the obvious question is this: do you know your credit score? Whether you do or don’t, you can be absolutely sure that any company considering lending you money sure does. And if you want to be a smart consumer, you should know it, too. Why? Knowing what potential lenders will see well before you actually ask them for a loan will not only give you a good idea of what sort of deal they will offer you, it will also give you a chance to change your score. In some cases, the score Fair Issac calculates for you is flat out wrong, the result of mistaken identity or erroneous information about your repayment of debts.

To find out whether that is the case, it’s best to contact one of the nation’s 3 credit reporting bureaus – Equifax, Experian and TransUnion – and request a copy of your credit report, which includes the granular information used to come up with your FICO score. Fortunately, the credit bureaus are required by law to provide a free copy of your credit report upon request each year (you can mark your calendar and request a report from a different bureau every four months). Be careful of lookalike websites that charge for free credit reports. Some websites will provide a credit report and/or score for free or for a small processing fee and then sign you up for a free seven-day membership. But the trick with these sites is that they automatically begin charging a monthly fee after that initial seven-day period unless you cancel it. To cancel the service, you have to call a designated number, and you may not be able to cancel online. In other words, it is a hassle to cancel.

To avoid that hassle, use this convenient link to request your (truly) free copy now. Unfortunately, getting your score is not free, but it’s probably worth the money to take a gander at the all-important number that lenders see. To do that, go to MyFico.com. While it is true that other credit scores are out there, the FICO score is the one used by the vast majority of lenders.

 

5 Tips for Raising Credit Scores and Lowering Your Interest Rates

People who have bad credit scores should take heart in the fact that they can be improved. Even if you’ve been tardy paying your credit card bills in the past but have since shaped up, time is on your side. All the negative information that led to the bad score in the first place will drop off your record in 7 to 10 years (assuming there is no additional negative information in that time). However, if you want to repair your credit a bit faster, here’s how to do it:

 

1. Make your payments on time. Timely payments are the single best way to improve a credit score.

2. Make amends. Get in touch with past creditors and agree to pay what you owe in full in exchange for them reporting your good deed to all the credit bureaus. Not only does this eliminate debt, it erases that black mark from your history. Be sure to get the creditor to put their promise in writing before you pay.

3. Don’t cut up your cards. It’s tempting to get out the scissors once you’ve paid off the balance of an account that has harmed your credit. Don’t do it. The lower the amount of debt you carry compared to your total allowable credit, the better off you are. For example, if you have $100,000 of credit available and you currently have a balance of $12,000 on your credit cards, department store cards, etc., you will have used 12% of your available credit. Shooting for 16% or less is a good goal.

4. Raise a stink. Dispute errors on your credit report. Find out which reporting agency is reporting the error and contact it. The credit-reporting agencies to contact are Experian, TransUnion and Equifax. Each maintains its own report. It is possible that an error is on one report but not another.

5. Take out a “credit builder” loan. One way to show lenders that you are low risk is to, well, show them by paying off another loan. Some credit unions offer a credit builder loan to their members. The money is actually placed in a savings account, which serves as collateral until the loan is repaid in full — then the payments and interest become yours.

 

You may also look into applying for a second credit card.  Where prepaid or debit cards do not build your credit score, a secured credit card can help you build your credit score.  We offer a selection of secured credit cards at BestPrepaidDebitCards.com.  Compare their offers, but pay close attention to the interest rate.  It is advised to try to go no higher than 18%, if possible.

 

Resources
Below are some resources that may be helpful while researching your credit report and score.  Remember that you can get a free copy of your credit report, but you must pay to receive your credit score, and MyFico.com offers the credit score most utilized by lenders.

 

Credit Bureau Phone Numbers:

Equifax: 800-685-1111800-685-1111

Experian: 888-397-3742888-397-3742

TransUnion: 800-888-4213800-888-4213

 

Contact Credit Bureaus Online:

Experian – http://www.experian.com

Equifax – http:www.equifax.com

TransUnion – http://www.transunion.com

 

 

    

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  • Extra Credit – Credit Scores: Are There Rewards for Responsible Repayment?

    Extra Credit – Credit Scores: Are There Rewards for Responsible Repayment?

    True, it’s just a number, but maintaining a good credit score is key to getting the best rates for your mortgage and car loans

    We all have numbers that, for better or worse, define us. Age is an obvious numerical marker, but so too are the ones that your doctor hectors you about – weight, cholesterol and blood pressure. In the realm of personal finance, the number that arguably matters as much as any other is your credit score. While the figure that is attached to you – be it 567, 680 or 750 – may not instinctually resonate, make no mistake that your credit score has big and very meaningful implications. Why? In the most basic terms, it’s because a good credit score (and higher is better) means that when you have to borrow money to buy a car or a boat or a house, a lender will not only be willing to fork over the money but they’ll do so at a better interest rate. In other words, a good credit score can significantly reduce the cost of borrowed money over the life of a loan.

    The impact of your credit score goes well beyond getting a good interest rate on a loan. Although potential employers do not check the credit scores of job applicants, they may review a credit report, believing that a poor financial history could be an indication of irresponsibility, or may somehow impact job performance. But, back to the score issue, it gets worse. According to Kiplinger.com, some insurance companies charge customers with poor credit scores higher premiums because they are convinced that the way consumers manage their personal finances is a predictor of the number of claims they will file. Indeed, according to a 2004 Texas Department of Insurance study, more than half of insurance policyholders with high credit scores enjoy lower premiums.

    All of this may seem terribly unfair. But the truth is that your credit score, also known as a FICO score, is simply a quick way for lenders to understand how risky it is to lend you money; or, more accurately, how likely it is they will get paid back. To come up with a score – which range between 300 and 850, with 680 the minimum to be considered credit worthy – the company that calculates it looks at 5 factors. Most important is your payment history, which is another way of saying whether you pay your bills in full and on time. Also highly important is how much money you owe; maxing out your credit card limits can indicate to lenders that you are in a precarious financial position and more likely to miss or make late payments. Also factoring in, though to a lesser extent, is the length of your credit history, how many new lines of credit you have requested recently as well as the mix of loans you have. The company that comes up with FICO scores, Fair Issac Corp., then throws all this information into a blender and comes up with a number.

     

    Ignorance is Not Bliss

    If you have read this far, the obvious question is this: do you know your credit score? Whether you do or don’t, you can be absolutely sure that any company considering lending you money sure does. And if you want to be a smart consumer, you should know it, too. Why? Knowing what potential lenders will see well before you actually ask them for a loan will not only give you a good idea of what sort of deal they will offer you, it will also give you a chance to change your score. In some cases, the score Fair Issac calculates for you is flat out wrong, the result of mistaken identity or erroneous information about your repayment of debts.

    To find out whether that is the case, it’s best to contact one of the nation’s 3 credit reporting bureaus – Equifax, Experian and TransUnion – and request a copy of your credit report, which includes the granular information used to come up with your FICO score. Fortunately, the credit bureaus are required by law to provide a free copy of your credit report upon request each year (you can mark your calendar and request a report from a different bureau every four months). Be careful of lookalike websites that charge for free credit reports. Some websites will provide a credit report and/or score for free or for a small processing fee and then sign you up for a free seven-day membership. But the trick with these sites is that they automatically begin charging a monthly fee after that initial seven-day period unless you cancel it. To cancel the service, you have to call a designated number, and you may not be able to cancel online. In other words, it is a hassle to cancel.

    To avoid that hassle, use this convenient link to request your (truly) free copy now. Unfortunately, getting your score is not free, but it’s probably worth the money to take a gander at the all-important number that lenders see. To do that, go to MyFico.com. While it is true that other credit scores are out there, the FICO score is the one used by the vast majority of lenders.

     

    5 Tips for Raising Credit Scores and Lowering Your Interest Rates

    People who have bad credit scores should take heart in the fact that they can be improved. Even if you’ve been tardy paying your credit card bills in the past but have since shaped up, time is on your side. All the negative information that led to the bad score in the first place will drop off your record in 7 to 10 years (assuming there is no additional negative information in that time). However, if you want to repair your credit a bit faster, here’s how to do it:

     

    1. Make your payments on time. Timely payments are the single best way to improve a credit score.

    2. Make amends. Get in touch with past creditors and agree to pay what you owe in full in exchange for them reporting your good deed to all the credit bureaus. Not only does this eliminate debt, it erases that black mark from your history. Be sure to get the creditor to put their promise in writing before you pay.

    3. Don’t cut up your cards. It’s tempting to get out the scissors once you’ve paid off the balance of an account that has harmed your credit. Don’t do it. The lower the amount of debt you carry compared to your total allowable credit, the better off you are. For example, if you have $100,000 of credit available and you currently have a balance of $12,000 on your credit cards, department store cards, etc., you will have used 12% of your available credit. Shooting for 16% or less is a good goal.

    4. Raise a stink. Dispute errors on your credit report. Find out which reporting agency is reporting the error and contact it. The credit-reporting agencies to contact are Experian, TransUnion and Equifax. Each maintains its own report. It is possible that an error is on one report but not another.

    5. Take out a “credit builder” loan. One way to show lenders that you are low risk is to, well, show them by paying off another loan. Some credit unions offer a credit builder loan to their members. The money is actually placed in a savings account, which serves as collateral until the loan is repaid in full — then the payments and interest become yours.

     

    You may also look into applying for a second credit card.  Where prepaid or debit cards do not build your credit score, a secured credit card can help you build your credit score.  We offer a selection of secured credit cards at BestPrepaidDebitCards.com.  Compare their offers, but pay close attention to the interest rate.  It is advised to try to go no higher than 18%, if possible.

     

    Resources
    Below are some resources that may be helpful while researching your credit report and score.  Remember that you can get a free copy of your credit report, but you must pay to receive your credit score, and MyFico.com offers the credit score most utilized by lenders.

     

    Credit Bureau Phone Numbers:

    Equifax: 800-685-1111800-685-1111

    Experian: 888-397-3742888-397-3742

    TransUnion:     800-888-4213800-888-4213

     

    Contact Credit Bureaus Online:

    Experian – http://www.experian.com

    Equifax – http:www.equifax.com

    TransUnion – http://www.transunion.com

     

     

        

  • Experian Reporting Rental Payments on Credit Reports

    Experian Reporting Rental Payments on Credit Reports

    In times past, the only time rental history would show up on a credit report was when a property management company would turn it over for collections.  But in December 2010, that all changed when Experian became the first credit bureau reporting rental payments on consumer credit reports.  Not only is this is great news for the millions of displaced homeowners looking to get back into the housing market, but it also gives consumers the ability to benefit from meeting their monthly obligations on time, instead of penalizing the ones that don’t.  This opens up a world of possibilities for millions of consumers seeking to improve their credit rating.

    It turns out, renters aren’t throwing their money away after all.  Making up a large percentage of the population, renters will now have access to the credit products they deserve by meeting their monthly obligations, not just the ones they take out loans for.  The change will have a positive affect for millions of renters including immigrants, students and displaced homeowners.

    Experian collects data electronically from a property management network, rewarding responsible renters and reducing the risks of skips, bad checks, evictions and property damage for landlords and property managers nationwide.

    It is unknown if TransUnion or Equifax will follow suit and begin offering rental payments on their reports, but a recent on eHow.com suggests having rental payments added to all three credit reports is as simple asking your landlord or property management company to report them.

    For more information on Rent Bureau by Experian, visit http://www.experian.com/rentbureau/rental-payment.html.

    For more from this author visit:  Tameka Riley’s Author Page

Credit and Debit Card Ratings