So you’re getting ready to show off some properties to your new clients. You map out where you’re going and pile into your trusty, but dated, automobile.
It’s about that time you realize the “old girl” isn’t what she used to be. Perhaps a new car would look a bit more professional, but you’re not ready for a new car loan. Maybe business credit is right for you.
With 56% of Americans having poor or bad credit, good credit can be hard to come by… But what is a good credit score exactly? Different lenders may have different definitions of what a “good” credit score is. One lender may approve clients with a 640 credit score or higher while another might approve clients at 720. The higher your credit score is, the more likely you are to get approved and the better your rate will be.
FICO score is the most commonly used credit scoring model. FICO scores ranges from 300-850 and can differ depending on what credit application you’re pulling for. If you are applying for a mortgage your score will be different than applying for a new car, and both of those scores will be different than a score applying for a credit card, and so on. Here is the considered scoring range for FICO scores:
While you may be able to get approved from some lenders with a 640, you’ll be missing out on premium rates which can mean you’ll be paying more money in the long run. Someone with a 780 may wind up paying close to $100,000 less on a mortgage compared to someone in the mid 600s. Good credit will also allow you to get better credit cards with lower interest rates as well. It’s no joke, people with bad credit will always wind up paying more. Read our blog on how bad credit will control your life for a better understanding of this.
Don’t just assume you have good credit. If you plan on applying for a loan in the not too distant future, you may want to figure out where your scores are at right now. Find out your scores and make sure there are no errors reporting on them. Fill out the form below and Better Qualified will give you a free credit consultation with a credit analyst.
Why do we have credit scores? What makes up your credit score? Did you know 56% of Americans have bad credit?
Credit scores were implemented to determine the creditworthiness of a borrower. The higher the credit score, the more likely the consumer will pay his or her bills on time. While the most important piece of your credit score can be paying on time, there are several other factors that play a role in determining your score as well.
When it comes to determining your credit score, the biggest piece of the puzzle is your payment history. What this means is you have to stay current on your accounts and pay on time. If your forgetting to make payments, set reminders for yourself or enroll in autopay. Just 1 missed payment can drop your credit score 100 points or more and take a long time to recover.
If you’re having trouble making payments, consider contacting the lender or switching to 0% balance transfer cards. 0% balance transfer cards will transfer your balance and allow you to make payments with no interest for a set period of time. You’ll be surprised how quickly you can pay off accounts when interest isn’t accruing.
Don’t max out! Maxing out your credit cards is not good for a number of reasons. Maxed out cards with ensure that you are paying the maximum amount of interest possible. When you get to this point, climbing out of debt can feel like climbing Mt Everest. Making minimum payments will only pay off the interest, leaving you in limbo. It’s also noteworthy to say that consumers with maxed out cards have an average credit score of 563.
On the flipside, not using your credit cards will also hurt your credit score. You want to use them, but not overuse them. Pay your accounts down to 20% of the credit limit or lower. Doing so will give you a quick boost in score. Always try to remain below 20% of your limit. Once you pass the 20% threshold your score will start to decline.
Another method to raise your credit score would be to ask the creditor for an increase in your credit line. Increasing your credit line will see the utilization ratio drop, bringing your closer to 20% or lower and increasing your credit score.
I see it all the time, clients call in wondering why their credit score had dropped. They just got a new credit card and closed their old one. Not a good idea. Old credit cards are not like old appliances. The older your card, the more impact it has on your score. Closing old accounts will almost always bring your score down.
If your old card has outrageous annual fees or super high interest rates, then you may want to think about closing them up. Before you do, call your credit card company and ask if they can waive the fee or reduce your interest rate. If they refuse to budge, then you may want to make the moves to close your account.
Consumers with the highest credit scores have them because they have a variety of credit. There are 2 types of credit: Installment loans set at a fixed rate which are your mortgages, auto loans and student loans to name a few, and revolving credit which are your credit cards.
It’s always a good idea to have a few different accounts open on your credit report, including a few different credit cards. Doing so will spread out your utilization and make it easier to maintain a good score.
New credit can happen any time you apply for a new loan or account. When your credit score is pulled an inquiry is created. Inquiries will shave off a few points from your score and affect your credit for about 1 year (although they can report for 2 years.) Inquiries have strength in numbers and can really bring your score down if you’re constantly pulling your credit throughout the year. So make sure to keep a watchful eye on your inquiries.
If you are struggling with bad credit and would like a free consultation with an expect, please fill out the form below and we’ll be happy to point your credit in the right direction (up!)
You’ve gotten a new credit card and are looking to get rid of the old one that’s been with you since the dawn of time. Sure, you’ve had some good times together. After all if it wasn’t for your trusty credit card you wouldn’t have been able to pay for all those dates to impress your now wife or purchase that rug that really ties your living room together. So the question is… should you really be parting ways with your credit card just because it’s showing its age?
The answer is…. it depends. First ask yourself why? Why are you planning on closing your credit card? You should think twice before closing any old credit cards just “because they are old.” Positive revolving credit is a huge factor when building your credit score. If you’re looking to make the split with a card make sure you have good reason. If you are still using the card consider keeping it alive and well. Length of credit history makes up 15% of your FICO score. In this case, your old credit card might be your best source of positive credit.
When closing an old account your credit utilization ratio will remain at zero, making it hard to help your score out. If this credit karma study has taught us anything, it’s that your utilization should remain somewhere between 1%-20%.
Another factor for determining your score is the number of accounts. Getting a new credit card doesn’t mean you should close an old one. Having only one revolving tradeline opened at a time places all of your utilization on the single card. Try to keep a few cards active and remain below 20% of the credit limit.
If you are applying (or planning to apply) for a loan you should wait until after your application process to close any credit card accounts. The drop in score you get from closing an account may affect your ability to get approved, especially if you are just above qualifying range.
Ideally you would want to close your credit cards when you are slammed with high interest rates, stuck with annual fees or trying to get out of debt. When an individual with bad credit is approved for a credit card, they are usually met with super-high interest rates. Maybe this was you a few years ago and now your credit is exceptional. Before swapping your card out for a new one, ask your credit card company if they can lower your interest rate. If not, then do away with them. Having good enough credit will get you approved for another card with better interest.
Annual fees are another pain. If your card has been collecting dust for months and you’re still paying the annual fee, consider closing it. There’s plenty of other cards out there that can collect dust with no annual fee (but in all seriousness, use your cards regularly as it will be beneficial to your score.)
According to NerdWallet, the average US household credit card debt stands at $15,706. That’s a pretty big amount of debt. One of the quickest ways to get out of debt is with the use of balance transfer cards. Balance transfer cards do exactly what their name entails. They allow you to transfer the balance from one credit card to another and make interest-free payments for a set time frame. You will be surprised how quickly you can pay off your debt when you aren’t paying the interest. If you feel trapped by your debt, check out our Get Out Of Credit Card Debt blog post Here.
You’ve made the decision, it’s time to let go and move on, but before you do make sure you prepare yourself for what’s coming!
As stated above, after closing accounts your credit score will most likely drop. Consider closing the newer accounts before the older ones as older accounts hold more weight when determining your score. Once the account is closed your payment information will remain on your report for years to come. Positive payment info can remain for up to 10 years on your report (This is a good thing.) Whereas negative payment info can last up to 7 years.
Most (but not all) credit card companies won’t close accounts until your balance is at zero. Find what your credit card company allows. It’s always better to pay the account off first before closing. If you don’t think you can pay the account off, consider 0% balance transfer cards as previously mentioned.
If your credit card gives out rewards, make sure you redeem them before you close the account. If the account is closed before redeeming your rewards, you’ll most likely miss out on everything you’ve “earned.”
You’ve read the risks, you’ve satisfied the balance and you’ve redeemed your rewards. The time has come to put your card to rest (R.I.P.)
Contact your credit card company and break the news to them. Some companies will let you cancel online while others will require you to talk over the phone to a representative. Visit your credit card company’s website and/or give them a call to let them know you wish to close your account. Double check with the representative to ensure there’s no residual interest about to hit your account that you may need to pay. Too many times have I seen a situation where someone thinks they closed their account only to have it remain open and go derogatory.
Get Verification! This should go without saying. After you confirm your account as closed ask the representative to send you a verification email. Be patient, sometimes it can take a month for the account to close. Once you get verification of the closed account, check your report. Check your report on your credit monitoring service or go to a free credit report site like credit karma or credit sesame. Get in contact with the credit card company if your credit report is still reporting the account as open. If you don’t have credit monitoring, take advantage of our 3 months free offer here.
Afraid your credit might not be where it needs to? Can’t read your credit report? We know credit is confusing. That’s why we give out free credit consultations. We’ll take a look at your report and point you in the right direction. Fill out the form below and find out what you can do to better your credit score.
Your credit score is the most important number in your life. It can determine whether or not you will be owning a new home, driving the car of your dreams, or even securing that new job you just had an interview for.
Having a good credit score can lead you to a long enjoyable lifestyle…. But having a bad score can feel like you’re trapped inside a terrible nightmare.
If it’s one thing I’ve learned working in this business, it’s that credit is confusing and always changing. Back in March, the Credit Reporting Agencies made an announcement regarding new ways to report medical debt and disputed accounts. This change will benefit most Americans, especially those plagued by medical debt.
In an industry that’s consistently changing, how can a consumer know how to obtain a positive credit score? The general public is uneducated when it comes to credit and most are even unaware of their own scores. Well, you’re in luck! I’m here to give you the basic steps to good credit:
The first rule for the steps to good credit is to secure different trade lines. The more types of credit you have, the better your score will be (assuming the accounts are in good standing.) Ten percent of your credit score is determined by the different types of credit used. That doesn’t mean go out and start applying for as many accounts as you can (that will hurt you.) What that means is the credit bureaus like to see variety. A consumer with a mortgage, a few credit cards, student loan, and auto loan on his/her report should have pretty good credit score (again, assuming all accounts are in a good standing.)
“I’ve had this card for years. It’s old, and I just got a new one should I close this out?” The answer is NO! Old credit cards aren’t like old TVs or computers. You shouldn’t close them just because they are old. In fact fifteen percent of your credit score is based upon credit history. Closing old accounts can instantly decrease your credit score. If you have an old account you no longer use, you’re better off waiting for them to become inactive rather than closing them out.
Not long ago I met a gentleman who told me he only opens up credit cards to boost his credit score. He never uses them, just opens them up and locks them away.
While this may improve the score a little, his score can be substantially increased if he actually used the cards. A recent study from Credit Karma shows an average score of 692 for consumers that hold their cards at a zero balance. The same study shows average scores of 753 for consumers who used 1-10% of their credit limit, and 715 for those who used 11-20%. Which brings me to our next “don’t”…
The bureaus want to see you using your cards, but they don’t want to see you overusing them. This is also a good strategy for your wallet, as the more in debt you go, the more interest you will pay.
It’s easy to start charging away on your credit card and not realize where your utilization lies. Stay on top of your balance. Make sure you budget yourself and keep track of where your account is at. In the same Credit Karma study mentioned above, the average credit score is 563 for consumers with maxed out cards.
Any type of loan will have you make monthly payments. Do your best to pay more than the minimum. While making minimum payments won’t necessarily hurt your credit score, you’ll get a score boost if you pay them off in a timely manner.
Making minimum payments will cause you to pay more interest, which is money you could be saving. If the minimum payment is all you can afford at the moment, then there’s not much else you can do. When you do come into some extra cash, put it towards your debt. The quicker your debt is paid off, the quicker you’ll have some extra dough.
The most important Don’t on the list! Making a late payment with drop your credit tremendously and will remain on your report for up to 7 years. All derogatory accounts start with just one late payment so make sure you pay everything on time.
In today’s fast paced world it’s easy to forget when payments are due. It’s always a good idea to setup payments through autopay. Just double check to ensure the payments go through. If you’re not doing autopay, set reminders for yourself to pay. One late payment is all it takes to destroy your credit score.
Always keep a watchful eye on your credit. Credit monitoring can alert you to any new accounts that will appear on your report. If you see something fraudulent, report it to the bureaus and the FTC immediately. It’s easier to get a recent mistake removed rather than a lingering old mistake.
1 in 4 consumers have errors on their credit reports. Most consumers aren’t even aware of what is on their report. Get a credit report and find out what is on it. If you need help reading the report, consult a credit expert like the ones at Better Qualified. They can tell you exactly what is on the report and provide you with the steps toward better credit. They also specialize in removing negative items from credit reports. Don’t just assume your credit is doing great. Make sure you know what is being reported!
If you follow the steps to good credit, your score will increase tremendously. If you need help getting your credit back on track, just ask! We’ll provide you with a free credit analysis, go over your report with you, and determine what actions need to be made to improve your credit. Just fill out the form below:
It’s a new year and that means everyone is off to an inspiring start on their new years resolutions. You may already have your plan in effect to lose weight, get fit, and aim for that new promotion, but what are you doing about the pile of debt you racked up over the holidays? It’s well worth noting that only 8% of the population will be successful in their new years resolutions (according to the trivia flip calendar on my desk.)
While you pay the minimum balance on your credit card accounts, that debt is going to continue accruing interest and take you years to pay off. Wouldn’t it be nice if you started to take control of it today before it controls you? (And if it already does, I can help.) Here are a few tips to live by to get your mountain of debt in order.
You would be surprised at the amount of people who have not a clue as to what is reporting on their credit report. Most people aren’t even sure how much debt they are actually in. They may say its one number when it’s actually much more. Your first step towards paying off your debt is to find out how much of it you have. You’re going to need to get a credit report. You can obtain one by visiting www.annualcreditreport.com. They will give you one free FICO credit report every calendar year. You may also go with free online sites like Credit Karma or Credit Sesame. However, the free online sites only pull from one bureau and their scores are not FICO. (For more on FICO vs FAKO, read our past blog here.)
Once you get your credit report make note of all of your debt. Write it down and add it up so that you know just exactly how much debt you are in. For some of you this may be devastating, but don’t worry, look at it more like a goal to obtain and keep you mind focused on the end result.
Now that you can see how much debt you are in and how many bills you have to pay, it’s time to make a budget. Study your past bills and bank statements and write down all your necessary living expenses. This includes: Rent or mortgage, utility and credit card bills, car payments, ect. Make sure you’re paying everything on your credit report on time so that your accounts don’t fall into the negative.
Be realistic with yourself and cut out any unneeded expenses. Goodbyes are never easy, you may have to start making some sacrifices. Cook meals at home and bring lunch to work instead or dining or ordering out. It may be a good time to cut Netflix, HBO, or any of those other premium channels out of your life (you’ve already watched everything good on there anyway.) Once you get rid of all your unused subscriptions and services, you may find yourself with much more money than expected. Those $8/month subscriptions really add up when you have a bunch of them.
Most of the population today takes whatever is given to them without asking any questions. I’ve found that you can actually go far and get more out of life by simply calling and asking for it. If you get denied, you’re in the same position you were in before. Some of your credit cards may be impossible to pay off simply because their rates are too damn high! If you can get a better rate on the card, then why pay more money if you don’t have to? Try calling up each of your credit card accounts and asking them to lower your rates. Just make sure you prep yourself and do your research. You may want to find out what the prime rates are for that card. If you’re unsure of how to ask, try doing what Sally from creditcards.com did here
As stated before, the interest rates may be too close to the minimum payment on your card. This will take forever to pay the account off if only making minimum payments. Most large credit card companies will offer 0% balance transfer cards, interest rates worst enemy. 0% balance transfer cards are the secret play in your playbook to get out of credit card debt. These cards will allow you to transfer your balance to a new card with 0% interest for a period of time. Making it perfect people who are trying to pay off debt! Your balance will drop surprisingly faster if you are not paying interest. Transfer your debt to a 0% balance transfer card and make it your goal to pay off the balance before the interest rate kicks in.
It is vital to note you should NOT CHARGE THE CARD as you will only make your debt situation worse. These cards should only be used to pay off the debt, not add to it. You will need to get approved for the card as they may only issue them to people with good credit. Shop around, and choose the right card for you.
So now you’re ready to start paying off your accounts, but which ones do I take care of first? The best method would be to flood your extra cash into the largest accounts with the highest interest rates, while making minimum payments on all others. This will ensure that you are paying less in the long run. The higher the interest rates, the more money you will have to spend paying off the account. Once you finish with your biggest baddest account, flood your extra cash into the next biggest baddest account until that one is paid off. Continue this process and you’ll be out of debt much sooner than you think.
Some people may suggest the opposite. Take care of the smaller accounts and work your way up to the big ones. While this is still not a bad idea, in the long run you will be paying more due to the accruing interest on the big accounts.
The whole point of this process is to pay off your debt. If you continue to use your cards while attempting to get out of debt you’re going to get nowhere. Do not close your credit card accounts as doing so will drop your credit score. Start paying for items in cash rather than credit. You’ll find cash is a much cheaper and safer means of currency.
This one should be a no-brainer. Applying for any new lines of credit such as new credit cards or loans will only hurt your process towards a debt free life. New lines of credit means new debt and a new bill for you. Hold off on applying for any new credit until your debt is gone.
If you start utilizing these methods, you’ll find getting out of debt isn’t as hard as you may have thought. It can be a timely process but the end result is very rewarding. Living a debt free life will take a heavy burden off your back and will result in a happier less stressed you! Once you are out of debt, remember to always pay your bills on time, and don’t rack up your credit cards as you once did before.
When it comes to improving your credit score, consumers are left in the dust. Most individuals have basic knowledge of what can destroy their credit. Few know the steps to increase their credit score. Here’s 5 tips that will help build your credit score to where you would like it to be.
Without positive trade lines of credit, you cannot have a good credit score. Your credit score is determined upon the following factors: payment history, amounts owed, length of credit history, new credit, and types of credit used. The more positive trade lines of credit you have, the better. Does that mean you should go out and apply for loads of credit? Not exactly.
The more credit you apply for, the more inquiries you will acquire on your credit report. The more inquiries on your credit report, the lower your score. Also, anytime you take on new debt, your scores will initially see a drop. It is not until a few months of on time payments that you will start to see them increase again.
Individuals with no or few trade lines of positive credit may not be able to get approved for new credit. If this is the case, you may want to seek out secured credit cards. Secured credit cards are credit cards that the consumer backs themselves. These cards report to all three credit bureaus and will generate positive credit after a few months of use. Secured credit cards are a great tool to help build your credit.
If you already have trade lines of credit, it is critical to make sure they are paid on time. This includes: student loans, credit cards, car payments, and mortgages, among others. (We’ll get more into this further in the article)
Everyone knows that one person who has immaculate credit. Maybe it’s a close family member or one of your best friends. They never miss a payment and are never denied. If it is alright with your friend or relative, it would be beneficial for you to become an authorized user on one of their accounts.
Becoming an authorized user will build your credit as it will show a positive trade line on your credit report. You can essentially “piggy back” your way to better credit with the help of a friend or relative’s account.
Becoming an authorized user on the account will not require you to get your own card or make any payments. Your name will just be attached to the account. Just make sure your have the OK from your friend/relative. However, if they miss a payment and the account becomes derogatory, it will negatively affect your credit as well.
Keeping your credit utilization down will allow your scores to go up. It is recommended to keep your credit utilization rates as low as possible (but not at zero). The closer you come to the high balance on your account, the more your scores will decline. If an individual with maxed out credit cards has no derogatory accounts, his score will negatively reflect that.
A recent study shows the highest credit scores belong to individuals with 1-10% credit utilization. It is also worth noticing that consumers with 0% credit have an average score lower than consumers with 31-40%. The idea is to use your credit cards, but pay them off and use them minimally. Also take into consideration that the more debt on your account, the more interest you will wind up paying over time.
Derogatory accounts are negatively reporting items on your credit report. These accounts devastate your credit score. Most derogatory accounts will start off as just one late payment. If not handled correctly, late payments can change to charge offs or collections.
It is essential to your credit to always pay on time! Set reminders or use autopay features to ensure that you are always current. Just one derogatory account will drop your credit score dramatically, making it difficult to build your credit score.
If your credit report is flooded with derogatory accounts or incorrect information, you need to contact Better Qualified. Even if satisfied or current, derogatory accounts can remain on your credit report for 7 to 10 years. Better Qualified will attack derogatory accounts and correct false information. It’s what we do! Give us a call at (888) 533-8138, or fill out the form to the right for a free credit analysis. Even after our dispting process, Better Qualified will continue to advise you towards building your credit score.
Educate yourself a little more and read our credit blog. Be sure to check out the don’ts of credit with the 7 Mistakes That Will Destroy Your Credit
With just a couple errors you can see your credit score plummet into the danger zone, where it can remain for YEARS if not taken care of. Once your score drops, you can be stuck in credit score limbo. The sad thing is, most consumers aren’t even aware of the damaging effects their decisions can have on their score…. until now!
Here are 7 key mistakes to avoid when it comes to your credit score:
This one seems obvious. Just 1 or 2 late payments can be devastating to your credit score. According to a recent Credit Karma Analysis, consumers with excellent scores (750 or higher) pay 99.9% on time. Consumers with fair scores (640 to 699) still pay 99% on time. With that being said, about a third of Americans have a debt that is in a collection.
With today’s fast pace world, it’s easy for a bill to slip your mind here and there. Be sure to set reminders on your phone or sign up for an autopay feature to make sure you’re always current with your payments.
Just last month I was at the car dealership looking for a new vehicle. I had barely even looked at any cars and already the dealer was asking for my social security number to pull my credit score. He told me the banks would “fight over each other” to give me the best rate for my new ride. While this might sound intriguing to most people, to me it sounds like my credit score is going to be run 30 times. Needless to say, I didn’t let them run my credit and kept shopping until I found the car I desired.
Consumers don’t realize their scores will drop around 3-5 points every time a hard inquiry hits your credit report. This includes applying for loans, obtaining new lines of credit, and checking credit scores. Let’s take my trip to the Chevy dealer for example, and let’s say they had 5 banks run my credit. Boom! Each of my scores could have just dropped 25 points!(and that’s if I only went to one dealership).
When you have a bunch of hard inquiries on your credit, it will bring your scores down and appear you are desperate for credit. This is something lenders and creditors do not like to see. On top of that, any new credit lines will initially decrease your score. Only after several months of on time payments will it bounce back and start generating positive credit.
Limit your inquiries. Don’t create a hard pull for your credit when you don’t need it! Most places like car dealerships want to run your credit as soon as you walk through the door just to get you approved. Shop around first and make sure you know what you want at the price you desire(This goes for homes too). Once you find something that fits your needs, then pull your score. Make sure they only pull it a couple times. Remember they want your business. Most places will still work with you when you refuse to let them shogun your credit. Try to have only 1 to 2 hard inquiries a year.
When it comes to credit cards, the longer your history, the better. Some consumers tend to treat their old credit cards like old furniture. “We’ve had it for years, it’s brought us lots of good times, but it’s old. We want that shiny new account!” Closing old credit cards just because of their age will instantly decrease your score. In fact, 15% of your credit score is calculated based upon the length of your credit history. The more accounts that get closed, the more credit utilization is dependent on your open accounts.
Instead of closing old credit cards, leave them be until they become inactive. It’s best to cancel newer credit cards rather than old ones. As said above, older credit cards carry more weight when it comes to calculating your credit score.
Your credit card activity is a big factor when it comes to being approved by lenders. Based upon activity on your report, lenders can tell how well a consumer uses credit. When your accounts are reporting as maxed out lenders tend to get a little weary.
The more money you charge on your card, the less likely it is you will be paying the debt. When a card becomes maxed out it can take an eternity to pay it off. You can find yourself be paying boatloads of dough just on interest. This is when most consumers find themselves missing payments. After a few missed payments and the account may get sold to a collection (which with be devastating to your credit).
Avoid maxing out your credit cards. Maxing out the card will have you swimming in debt and interest. Instead, try to keep the utilization rate between 1%-30% of the high credit limit on the card. If you pay on time and keep a balance in this zone, your credit scores will likely improve. This shows that you know how to correctly use a credit card and will reflect on your score. Always keep this in mind so you can avoid those impulse buys and save money. You can also pay more than once a month to show that you are determined to drop that balance. After you’ve had the account for some time (and with positive history), request a credit increase. This will make it easier for you to stay within that 1%-30% margin, and keep you away from that high credit limit.
Plain and simple, making minimum payments will show the credit bureaus you take too long to pay off debt. You’ll also be paying a mountain of interest. So although the payments are smaller, you’ll actually be spending more.
Simple, pay off more than minimum payments. Set monthly payments to double the minimum if you can afford it. When you find yourself with extra cash, throw it towards your payments. The sooner you pay the account off, the sooner you can cross off this expense and put more money into your wallet.
We’ve all seen it. Almost every major credit card has “rewards”. Charge x amount to the card and get a bunch of airline miles or points towards redeeming a certain “prize.” It’s so easy to take their bait when they’re waving a “free” vacation in front of your face. The truth is, whatever “benefit” you get from these cards will be offset by the amount of interest you will be paying.
Don’t take the bait unless you already have the money to pay it off immediately. You’re better off saving up and paying for a vacation, and it’ll probably cost less in the process.
The last and one of the most important factors. 1 in 4 consumers have errors on their credit reports! With identity theft being the number one crime in America, it is insane to not sign up for a credit monitoring service. (if you haven’t read last weeks blog on data breaches, you can do so here)
Perform routine checkups on your credit. Get free credit reports online to make sure there is no fraudulent activity occurring on your account. www.AnnualCreditReport.com supplies you with one free FICO credit report per year. Check your credit from consumer sites like www.CreditKarma.com and www.CreditSesame.com.
Be sure to take the next step and enroll in a credit monitoring program. Fill out the form below and have Better Qualified go over a credit report with you. We’ll enroll you into our own credit monitoring program with BQ911.com. Plans start as low as $9 a month. Get protected and take control of your credit before it’s too late!
It’s your day off, and you’re out picking up some groceries at WalMart. After the cashier is finished ringing you up, you pull out your AMEX and swipe to pay without thinking twice.
On the way home you stop by Target to pick up that rug that you’ve been eyeing up for the past few months. (You’ve been told it would really tie the room together.) This time you swipe your VISA bank card to pay.
What you’re not thinking about is how WalMart and Target have your personal information tucked away in their databases, potentially putting your personal information at risk in the event of a data breach.
You’ve seen the movies where a group of gangsters team up to knock off a jewelry store, only to escape in their getaway car just seconds before police can apprehend them. Data breaches are not much different. The gangsters are hackers, the diamonds are your personal information, and the getaway car is the internet. In a technology driven world, it is becoming easier every day for hackers and Identity thieves to get their hands on your personal information.
Last December we received a rude awakening when it was made public that Target had a massive data breach, potentially compromising more than 40 million customer’s credit and debit accounts. Since then, there have been major data breaches almost every month. Those data breaches include: Michaels Stores, The Home Depot, Sally Beauty Supply, eBay, AOL, P.F. Chang’s, and most recently JP Morgan Chase. In 2013 alone, there were more than 600 data breaches, costing the USA over $100 billion dollars.
By now you’re probably thinking “This seems hopeless, What can I do to protect myself?”. Nearly one fifth of Americans suffer from data breach attacks. All is not lost, there ARE ways to protect yourself!
For more information on data breaches, watch me on CBS here:
With the exit of Labor Day, summer has officially come to a close. For hordes of young Americans, this means one thing: back to school. Back to late night cramming, ramen dinners, and hopelessly worrying about how student loan debt will annihilate your credit score come post-graduation. But before you start to panic, let’s take a look at some of the facts about student loans and your credit score.
First, lets take a look at how FICO actually works. What exactly is your credit score? Where does it come from? Back in the 1950s Fair Issac and Company (FICO) introduced an algorithm to decide how risky it is to lend money to an individual. They based the algorithm on five categories: Payment History (35%), Amounts Owed (35%), Length of Credit History (15%), Types of Credit in Use (10%), and New Credit (10%).
The three major reporting credit bureaus (Equifax, Experian, and TransUnion), use FICO developed software along with you personal information to generate a credit score for you. The scores can range between 300 to 850, and are always changing based upon your credit history.
A common misconception about student loans is that they will automatically destroy your credit score. This is not true. In fact, approximately 7% of consumers with at least $50,000 of student loan debt have FICO scores in the 800s. That’s correct, the 800s! Remember, 35% of your FICO score is based off of payment history accounts (See above). As long as you are making on time payments, student loans can actually help generate a good (if not great) credit score.
For most people, it’s just a matter of “how to manage student loans correctly”. One would think paying them off ASAP would be best for your score (it’s not). Paying off student loans too quickly can actually have negative impact on your credit score. On the flip side, you don’t want to pay the minimum every month either, doing so will imply that you are taking too much time to pay off the debt. You want to find the sweet spot in between to make sure your debt will not hurt your credit.
It’s always good to minimize your student loans the best you can. You can do this by taking AP courses in high school to knock out the basic classes. Applying for scholarships, attending community college, and putting money away into a savings account can all help minimize your student loans before you apply.
ALWAYS ALWAYS ALWAYS pay on time! Just a single late payment can linger on your credit report and haunt you for YEARS. In the cell phone age we live in today, it is ideal to set reminders on your phone’s calendar or email. Make sure you don’t default on your loans. Defaulting can lead to garnishments, which will obliterate your credit report. Times can be tough and if your payments are taking too big of a toll on you, try reaching out to the lender to negotiate.
Finally, it’s always good to know what’s on your credit report before you apply for the loan and after you graduate. The bureaus make mistakes too and you need to make sure everything is reporting correctly. You can always obtain a free credit report online and ask the experts at Better Qualified to help give an overview of your credit report.
