Archive | April 2016

Improve Your Bad Credit History And Get Better Interest Rates, But How?

deWhy Credit History Is Important?

You are in need of an urgent loan and the bank is reviewing your application. Well, that’s procedure and every lender will do the same thing. But what they are also going to evaluate is how your past history has been, regarding the payment of loans. Have you paid your bills on time, how long have you been using credit, how many credit cards have you obtained in a specific period of time and what is the current amount of your credit? These are some common questions that your lender might ask you when you apply for a loan.

The lender will then use your credit background and the credit scores to help determine whether you are eligible for a loan or not. So having a good credit background is critical if you plan on applying for a loan in the future. You would need to work on your habits to ensure that your credit background remains good but if there are some flaws in your credit background, there’s no need to worry. Although they cannot be completely erased; but with time, your good credit scores will cancel out the negative aspects.

But what should you do to ensure that your credit history remains untainted?

Review Your Credit Reports

The credit reports can be changed once they have been made so just go through the whole document and look for any errors. There are chances that some information might have been missed. Rectify any errors by notifying the authorities.

Get Rid of Bad Credit Habits

Some of these habits affect your credit more than others, but it’s better that you avoid them all. Indulging in these activities is going to do nothing but lower your credit scores. So Beware!

Delinquent Payments even only for a few days will reflect badly on your credit history.

Missed Payments will lower the FICO Scores and it’ll take some time increasing the scores, so it’s better to set up payment reminders to keep you from missing any payment.

Using credit cards will ultimately increase your debt and if you are not able to pay it off on time, the scores on your credit history will become quite low. So avoid using credit cards. Instead use cash or debit cards for purchases. Cancelling them will only decrease the amount of available credit, so it’s better to just keep them safe at home.

Changing your money habits might be tough work but you’ll need to distinguish between the things that you really need and the things that you just want. Adding expenses into an already crammed budget will only increase your debt. So keep your unnecessary expenses to the minimum so that it doesn’t reflect negatively on your credit history.

Building good money habits will surely change your bad credit history and put you out of the financial depression that you were sinking in. So improve your credit history and get better quotes for your loans. Best of luck!

If You Have Bad Credit, You Need to Read This

dfMany consumers wonder is credit repair legal? YES, actually it’s your right as a consumer to make sure your credit report is accurate, so there is nothing illegal about it!

There is also a huge misconception that credit bureaus are some type of government entity, they are not. In fact your local bar is just as much of a government agency as a credit bureau. A credit bureau is a business pure and simple, they have one purpose, which is to make as much money as possible. They don’t want to help you- they just want to make money! Making sure you have a low score helps them make cash, how?

Credit bureaus are essentially a lead source for lenders. They get paid by lenders so they can run your credit files when you want credit. They also sell thousands of leads everyday to lenders all over the country.

You know those “pre-approved” credit card offers you get in the mail? Well those are directed to your mail box from information sold by the credit bureau to the credit card companies.

I’ll give you one guess what type of consumer commands the highest lead price?

No it’s not the ones with excellent credit, they already have a good credit card and probably have money! You guessed it, lenders earn the highest profit off consumers with bad credit! Why?

If you have between a 580-680 you are the most profitable client for a credit card company or lender because you can still qualify for a loan and usually your willing to pay high interest for the privilege.

You might think this sounds crazy, aren’t those with bad credit a higher risk? Well not really because these lenders take out insurance to cover their loss in the event you don’t pay. If you have over a 600 FICO score they can get insurance on your account. Then if you don’t pay they collect the insurance and sell the debt! When you take into consideration the high interest rates you will pay most likely the lender would never lose a cent on your account.

Lets compare the lenders income possibilities for the following clients:

Good credit: Paying Bills on time, low interest rates, no late fees, low risk but low profit as well!

Bad Credit: Paying late fees, paying higher interest rates, needing more credit, cash advance fees. Higher risk but way higher profits!

As you can see over the life of the customer the bad credit client will always be more profitable. So its sad but the credit bureaus actually have an incentive to keep your score low!

You have the legal right to challenge anything you might feel is not accurate on your credit report. There have been laws written regarding your credit: how it’s reported, how long it can be reported, the accuracy of the reporting, and so much more. These laws are written to PROTECT THE CONSUMER!!!

Here are the main groups of laws and a short description of some of what they do:

The Fact Act (FACTA) – This act entitles you to a free credit report every year. It also forces the credit bureaus to disclose the factors that are affecting your FICO scores.
The Fair Credit Reporting Act (FCRA)-This act forces the credit bureaus to maintain accurate information on all its clients.

The Fair Credit Billing Act (FCBA) – This act is for original creditors. It forces them to bill correctly, notify the consumer correctly, handle disputes properly, and report accurately.

The Fair Debt Collections Practices Act (FDCPA) – This act is for debt collection companies. This act spells out exactly what collectors can and cannot do when attempting to collect a debt.

So as you can see credit repair is totally legal. It’s your right to make sure you have an accurate credit report. Have you been denied for a loan? Are your interest rates too high? Well its only for one reason, your credit report! You owe it to yourself to make sure the information is accurate.

How to Improve Your Credit Score to Find Better Employment

sdIf you know your résumé and cover letters are stellar and you perform well in employment interviews, yet you keep falling short of your goal to be hired in your chosen profession, your credit score/credit report could be holding you back. That is because employers view your credit score as a measurement of how well you fulfill all the financial promises that you made to lenders. It is a known fact that employers want employees with integrity, character and enough social skills that they will fit in well with the employer’s existing team. That is in addition to plenty of industry experience. You could also be held back by the results of a criminal background check, but normally you would know if that were the case.

The average credit score in the US is 705. An excellent credit is any score above 739. If your goal is to secure employment in a profession that pays well, you should be aware that every employment application that you fill out normally authorizes employers to check your employment history, references, background and credit report. Positions with more responsibility and higher compensation automatically require a more extensive background check, credit check and criminal background check. If the final two or three candidates are otherwise equal, results from a background check, credit check or criminal records check often makes the hiring decisions easy for the employer.

Here are the best ways to improve your credit scores:

    • Always pay all your bills on time, or preferably early. This is the highest weighted factor in calculating your credit score.

 

    • Start an automated savings plan so that you pay yourself first every month and live on the remainder. This can be done by setting up automatic deductions from your paycheck to your 401K/IRA/403B etc. or using the automated bill pay service with your online banking to contribute to a savings or retirement account each month. People with the discipline to keep six months of living expenses in a savings account are normally able to maintain an excellent credit history and make better financial decisions.

 

    • Keep your credit utilization rate under 30% vs. your credit limits; if possible, a 10% credit utilization rate vs. your credit limits is ideal.

 

    • In many cases, especially if you have consumer debt with high interest rates, you can use the equity in your home for a debt-consolidation loan (pay off debt with a cash-out refinance/home-equity loan). In many cases, this will improve your credit scores dramatically, but you must have the discipline to keep those credit card balances at zero by paying off your consumer debt each month.

 

    • Do not close down the credit cards/credit lines that you paid off, even if you will not use them anymore. The more open credit you have and the lower your balances on same, the better your score will be. The older your open credit lines are the better it is for you (stability).

 

    • Maintain stability in your job, profession and address. Frequent changes in your profession, job or address often lead to financial difficulties/unemployment because without stability you are a less desirable candidate for credit or employment.

 

    • Work a part-time job evenings or weekends to pay down your debts faster. Pay down the debt with the highest interest rates first for maximum impact.

 

    • If you have had financial struggles and you have the debts to prove it, write and ask your creditors to agree to remove your late payment record in exchange for paying off your debt in full. Let them know that if they do not agree to this in writing, you will have to focus your repayment efforts on other creditors who are friendlier because you have such limited resources.

 

    • Analyze your credit records carefully from each of the three credit bureaus because there may be mistakes that are holding your score down. These mistakes could be as minor as old late payments that are still on your credit history even though they are over seven year old. Follow the directions to dispute credit reporting errors carefully. Each agency has their own policies and procedures. I recommend you use certified mail with a return receipt on all correspondence, so you have official proof of delivery. If one of your creditors fails to respond within a reasonable time, you will automatically win your dispute.

 

    • Avoid bankruptcy whenever possible, including reorganization of debts bankruptcy because both are a public admission that you are financially inept. Everyone knows Lawyers are expensive and frankly, you could put that money toward paying off your debt and get a second job to accelerate the process of paying off your debts. Regular consumer debt with late payments will drop off your credit history automatically after seven years. A bankruptcy remains on your credit report under public records for ten years and many employers prefer not to hire candidates who filed bankruptcy.

 

    • Do everything possible to earn a promotion or raise at work, which will help you pay off your debts faster. If you are overdue for one, present your boss with an irresistible written proposal to make your raise or promotion a reality.

 

    • Hire a CPR or Tax Accountant to maximize all your income tax deductions. Yes, they are worth it because they normally generate more savings than their fees and you will learn from them!

 

    • Hire a Certified Professional Résumé Writer if you think that you are underpaid or ready to advance and test out the job market in your spare time. Passive candidates are greatly preferred by employers and in many cases, they pay up for them.

 

    • Get married, find a great roommate or rent a room out in your home to a college student, artist or professional to reduce your monthly living expenses.

 

    • Whenever possible, use public transportation in lieu of owning a vehicle and paying for car insurance. The cost savings is staggering, especially if you have to pay to park regularly.

 

    • Advance your education or skill set whenever possible, that way you will be more in demand in the event of a layoff and you will advance/receive pay increases faster.

 

    • Ideally, it is beneficial to have two credit cards, a vehicle loan/bank loan and a mortgage because this shows that you are responsible enough to have three major types of credit.

 

    • Resist the urge to splurge! Train yourself to be a saver not a spender by repeating this mantra, “Use it up, wear it out, make it do or do without.”

 

    • Request a free copy of your annual credit report every year from each major credit bureau. Search for “Annual Credit Report” with Google for the only online source of free consumer credit reports from all three credit-reporting agencies per federal law.

 

    • If any of your creditors have not reported your timely payment history, write to them and request that they report your good payment history to at least one of the major credit bureaus.

 

    • Use the online bill pay feature of your checking account to set up automated monthly/bimonthly payments for all of your debts. This way you will not forget if you have a car accident, mishap, long vacation or are hospitalized. An ounce of prevention is worth a pound of cure.

 

    • Have some type of Hospitalization insurance in the event that you are hospitalized with an illness, injury or sickness. AFLAC has several consumer friendly insurance options including one that pays you an income while you are hospitalized.

 

    • Avoid divorce if humanly possible, a healthy percentage of couples actually end up loving each other again after a separation. If you must divorce, I recommend using Divorce Mediators instead of Divorce Attorneys because you will benefit from a more amicable process, a more beneficial divorce settlement and significant cost savings.

 

  • Avoid co-signing any car loans, student loans, personal/business loans or mortgage loans/home equity loans for friends or family.

How to Choose the Right Travel Credit Card

rtTravelling is one of the passions shared by most people on this planet. People travel for the purpose of business and to explore new destinations. Traveling provides people with an opportunity to explore new cultures, cuisines and experience new languages. Given that traveling is an integral part of the lives of most people these days, many credit card issuers offer cards that come with a variety of travel benefits.

If you are someone who travels on a frequent basis, you will benefit from applying for a travel credit card as it will provide you with access to exclusive offers, promotions and deals that will make traveling a more rewarding experience for you.

It is a fact that there are too many travel cards available these days and so it becomes a daunting task to choose the right credit card for traveling. Here are a few tips that will help you in making the right choice:

1. A good sign up bonus – most cards come with different types of sign up bonus and in the case of travel credit cards, the cardholders are offered with free air miles or a free air ticket when they use their card for the first time after receiving it. You should make sure that the card you opt for will offer you with a huge sign up bonus preferably in form of air miles so that you can redeem the same for your travel bookings.

2. More air miles for your money – earning air miles is one of the main reasons behind applying for a travel credit card and so the card that you opt for should apply you with more air miles for your credit card expenses. For example, every time you spend a dollar on the card, you should be able to earn at least 1 air mile. If the credit card cannot offer you with sufficient air miles for your expenses, it will not be very beneficial to you.

3. Airport lounge access – the travel credit card should also offer you with complimentary access to Airport Lounges so that you can travel with luxury and comfort. Since most of the top credit cards for traveling offer complimentary lounge access to the customers, it will not be very difficult for you to apply for such a card.

4. Travel Insurance – another feature that you should look for when applying for a new travel credit card is free travel insurance. If you are provided with travel insurance coverage, you can travel in peace as you will be assured that the insurance policy will provide you with the required support in case something bad happens when you are on a trip.

5. Low annual fee – even if the card offers you with a wide range of features, it will be futile to opt for the card if it comes with a high annual fee. The annual fee charged for the travel card should be low so that you will not end up spending a lot of money to avail the benefits offered with the card.

6. Wide acceptability – it goes without saying that the travel card has to be widely accepted so that you will not have any problem using it when you are on a vacation or a business trip. The acceptability of the card should not be limited to only a handful of merchants.

Introduction to CIBIL Score in Changing Landscape of Loan & Credit

weThe landscape of loan and credit in India has drastically changed in the recent times. In August 2000, the country’s first credit information company (CIC) came into existence. This organization is named as Credit Information Bureau (India) Limited though it is more popular by its acronym CIBIL. The entity steadfastly collects as well as safe keeps credit records of both individual and corporate borrowers. The range of information includes both borrowing and payment, relevant to credit cards and loans. CIBIL is licensed by the country’s supreme banking authority the Reserve Bank of India (RBI). Moreover, the accredited organization is governed by the Credit Information Companies Regulation Act, 2005.

To cut a long story short, CIBIL provides mutual benefit to both debtors and creditors in dealing with debt issues. In one hand, it helps creditors to run their business more efficiently while on the other, its effort proves helpful for borrowers to seek loans faster and at lucrative interest rates. CIBIL generates a three-digit credit score for every borrower. This score usually ranges from 300 to 900 and a score of 750 and above is considered good. A good credit score equips a borrower with more bargaining power with credit institutions while seeking loans or credit card facility. A credit rating or the score aptly reflects extensive credit history of borrower. Borrowers with sound repayment history are less likely to turn defaulter.

Thanks to the dedicated effort of this premier organization, securing loans and credit cards is much hassle-free these days. As such, it is an undeniable fact that a good CIBIL rating is actually an excellent asset for borrowers to impress credit institutions. There are lots of benefits that good credit score provides. Banks and other credit institutions process loan applications of applicants having higher CIBIL ratings faster. In contrast, the same submitted by folks with low credit rating are usually processed later. Moreover, loans are approved with much lower rates of interest to folks who have impressive credit history. A good credit history also helps a borrower to seek mortgages and housing loans almost instantly.

Thankfully, it is possible to improve one’s credit rating. However, the process is time-consuming and it is mandatory to stick to certain norms and regulations to achieve the objective. There are quite a few dedicated online portals that categorically provide information on the particular aspect. Now, at this stage one may wonder how CIBIL collects the information relevant to credit history of borrowers. The eminent organization has an array of strategic partners, which mostly include banks and credit institutions. These entities are dedicated to furnish necessary information to the CIC on a regular basis.

India is home to a population nothing less than 120 million. Out of this vast populace only a handful few are actually knowledgeable about the world of finance and loans. Thanks to the dedicated and concerted effort of CIBIL, credit awareness among Indians is fast raising. This is an excellent precursor to the nation’s impressive financial prospect ahead. People even from the marginal section of the society are conscious about maintaining good credit rating these days.

This entry was posted on April 3, 2016, in Finance and tagged , .