Sunday, September 2, 2012

How to Dispute Your Low Credit Score

There can be a number of reasons why an individual can have a low credit score. Your low credit score may be due to your credit misbehavior and mismanagement or it may be because of errors that have been incorrectly entered into your credit report and many other reasons. Upon receiving the credit report, many people assume that it contains accurate information. If you suddenly experience a huge increase in your interest rates or you have been turned down for a loan, it is time for you to check your credit report.

When you discover that your record is flawed and you believe it is not your fault, you should properly dispute the errors. This way, your low credit score will be fixed and only correct information can be found on your report.

Errors that Need Immediate Action

If you find that your score is low even though you have been making timely payments, look for issues that might need correction. These items in your credit report include:

    Payment history - The people assigned to input your payment history may make mistakes and as such, there may be inaccuracies. If you have been paying on time consistently and you have not missed any repayment schedule but your report says otherwise, dispute it. Make sure, though, that you have account statements to back your claim.

    Your account - Several errors may be associated with your account. Sometimes, your accounts may appear to be duplicated. When this happens, you may be shown to the creditor or lender as someone who have more debt than you actually have. Consequently, your creditor can increase your interest rate, particularly when they find your debt to income ratio too high for their standards. Another error involves an account that is closed by your creditor. Such a situation is often viewed negatively by lenders. Make sure that you dispute all the wrong details concerning your account to increase your score.

How to Dispute Errors

You will need all the evidences that will strongly support your case. Gather your credit statements, your bank account report, receipts, and transaction numbers if you have purchased anything online. Make copies of the documents and keep the originals in a safe place. You can choose to highlight the items in the documents that prove your point so that identification will be much easier.

After collecting and organizing your proof, you should now write your dispute letter. In this letter, write down your full name, your address, and the current date. The content should clearly convey the error in your credit report and the action that you would like to be performed to remedy the situation. For instance, if your problem is a duplicate listing of one account, this should be stated openly. You can then ask to have the duplicate removed to eventually fix your low credit score.

Send your evidence along with your letter. Make sure that you specify the documents that you have inside the envelope. Address the letter to the credit bureau that reported the wrong information. If two credit bureaus have inaccurate information, you will have to deliver two separate mails to them.

Thursday, August 30, 2012

Top Tips For Safe Credit Card Usage

In this financial climate, owning a credit card has become a necessity for many of us. Although many people believe these cards are 'bad', they aren't really, they provide a vital purpose. However, many people use them incorrectly which means that the expenses quickly rack up large amounts of interest, and before you know it, spending could be out of control. Follow these credit card tips however, and you will find that borrowing can be incredibly cheap.

Firstly you should always shop around for the best deal out there. Basically you will be wanting to look for the amount of interest charged, whether there is any interest free period, and of course, whether there are any subscription fees for just owning the card. One thing that ties into this really is to not own too many cards. This is one of the top tips offered by people in financial turmoil, most of their problems have been down to not being able to keep up with the repayments on their cards.

Keep your 'limit' though (this will stop you using the card for anything but emergency purchases), and you will want to pay off the card in full every single month so that interest does not accumulate. There is no sense just paying off the 'minimum amount' as to be perfectly honest, you will never pay the credit card back at that rate!

Try to avoid paying late on your credit card, not only can this lead to high 'fines', but it will also lead to bad notches on your credit report. Keep doing this, and you are going to ruin your credit score for a long time to come.

Always make direct purchases as opposed to 'withdrawing cash' on your card. Cash Withdrawals (sometimes known as advances) are a considerably more expensive interest wise than a straight purpose, and quite often, the interest will start racking up on them immediately as opposed to the next month.

Finally, sure you have the money in place, but be honest, do you really need to spend it? You will want to weigh up the difference between what you 'want' and what you 'need'. If you follow just one of these credit card tips, it has to be this one! There are so many people out there who will spend money just because they have it. So when you are considering a purchase, particularly a large one, you will want to consider whether you actually need it there and then, or whether you are better off waiting, which of course will end up being cheaper in the long run. If you provide this same sort of attention to all purchases, you will find that you won't 'dive' into your credit card balance too much.

Sunday, August 26, 2012

Variable Rate Credit Cards - Good or Bad?

If you've been reading our blog, then you know that I am not a big fan of credit cards. Credit cards are very convenient and they are mandatory when doing certain things such as securing a rental car or for buying airline tickets. Shopping online is also another area where a credit card is a must. I would also take a moment to discourage anyone from using a debit card (linked to your checking account) to purchase items online, especially if you do not know the vendor. It's very difficult in some cases to get your money back and as you know, the money disappears right away from your bank account. OK, with that out of the way, let's talk about today's topic, the variable rate credit card.

Now why would we want a credit card whose rate goes up and down? Well, the idea behind this is that you would get hooked by a low teaser rate and then be presented with a prime + some number as the rate you would eventually pay. Now the only time that this would be a good idea is at times when the economy is depressed and interest rates are low. Hey, wait a second, isn't that now? Yes, it certainly is! With the prime rate now in the low single digits (currently 3.25%), it's a good time to have a credit card that is a variable rate a few points over the prime rate!

Credit card companies are getting money at a super low rate now from the Fed. If you have one of those 27.99% APR credit cards, and if you have good credit, now's the time to take action.

In the case where you already have a credit card with a balance, you can save a pile of money by calling your credit issuer's customer service line. Explain to them that you've been a good customer and that you want your interest rate lowered. Be firm, but polite. If you don't get the answer that you are looking for, keep going up the chain of command. These people are working in datacenters off a script and will do everything they can to let you know that they cannot help you. Some will repeatedly insist that nobody's available, but wear them down and keep at it. Sometimes you will have to hang up on a stubborn representative. Sometimes you will have to ask for the department that closes the account before they'll do something.

Either way, companies know that rates are low and they have absolutely no justification for charging you big interest fees. The best way to avoid these fees is to always pay off your balance each and every month. I advise all of my friends and family to avoid using credit cards at all except where no alternative is available. Keep in mind that easy credit is a lure to make you spend money that you don't have. Do not succumb to the temptation of an impulse buy. When shopping, take along a list of essentials and only carry cash. That will save you from the dreaded credit card trap.

Monday, August 20, 2012

Tips for Closing a Credit Card Account Without Hurting Your Credit Score

If you are in debt, you may have already considered closing a credit card account. While this can help you save money on fees, it has one potential drawback-it can seriously damage your credit score. The good news is that there are ways on how you can avoid this.

Knowing how to cancel your credit cards the right way can put off the risk of lowering your rating. Here are the steps that you can follow to evade undesirable repercussions on your report:

Take note of your current credit score.

Before you do anything, make sure that you know what your credit score is. You can get a copy of your credit report from any of the three credit bureaus. Every consumer is entitled to get a version of their report once a year for free.

Know your credit utilization ratio.

This is one of the factors that affect your credit score. Also known as debt to credit ratio, this should not go over 30% so your score will not decrease. To compute your credit utilization ratio, add all your available credits. Then calculate all your balances. Divide your whole balance by the total credits to get the percentage. For instance, let us assume that you have available credits worth $3,000 and your total balance is $1,000. After computation, your credit utilization ratio will be 33%.

Pay off all your debts.

If you can't, you can simply pay off the credit card that you are trying to cancel. After repaying your debt, closing a credit card account will be much easier. Don't forget to confirm that your credit card has indeed zero balance by calling your issuer's customer service hotline.

Cancel your card.

Once your account's balance is zero, you can contact your creditor again to start closing the card. You may be thrown a few retention offers to entice you to withdraw the cancellation.

Follow up on your request.

Even though you have already spoken with a customer representative, you should follow up on your application to close your account. You can send out a request in writing stating the same thing. You may also want to obtain a written statement authorizing the termination of your account. It is good practice to keep a copy of the records you have acquired.

Check your credit report.

You may have to wait a few weeks before the activity will appear on your credit report. Make sure that everything is accurately documented including a zero balance on the closed account and that you have paid the card in full. Compare your credit score at the moment with your rating before you close the account. Hopefully, there is only a subtle change or none at all.

Wednesday, August 15, 2012

What Are Cash Rebates?

Cash rebates are a favorite type of reward. Many consumers are easily enticed by the line "Spend more to earn more." Credit cards that offer cash back or cash rebates let you earn a percentage each time you purchase against your credit. Most cards give you points or miles which you need to convert first to use them. Cash back is different since they are in the form of spendable dollars. Discover® was the first company to implement this offer and soon enough, other credit card companies followed suit.

How to Earn Cash Rebates

The process is actually very simple. All you need to do is use your credit card on purchases. It is similar to carrying a discount card around except that you don't get the discount on the spot. Often, companies will give you your cash back at the end of the month. The complex part is finding out how much percentage you get on each purchase. Thankfully, creditors have made it easier for consumers to compute their cash rebates by grouping the purchases together.

For instance, the amount of percentage you get from conventional purchases such as groceries, medicine, and gas is all the same. All other purchases entitle you to smaller rebates. However, if you purchase from their partner merchants, you can get really huge rebates. If your creditor has an online shopping website, you might want to shop there using your credit card. This is because they can give you 10% to 20% or even more for each purchase you make.

How to Qualify

First of all, you need a credit card that allows you to earn cash rewards. The catch is that most creditors will only approve applicants that have excellent credit. Even those that have good credit can be turned down. Aside from your credit score, they may also take a look at your employment status or your current income. There is often an income requirement since most of the credit cards that offer cash rebates come with high annual percentage rates, interest rates, and other charges. You should also be aware that you have to pay all your bills in full to avoid paying the high monthly interest fees.

Cash Rebates Tips

It is noticeable that the card offers are slightly different from one another. You can find cards that give you rebates each time you purchase on a particular category. You can sign up for each category every quarter of the year to qualify for the rebate. Other financial organizations will give their consumers a flat rate, which they need to earn throughout the year.

If you wish to gain more rewards, you may need more than a single card. With more cards, it would be easier to rack up on your total percentage. Additionally, using two or more rebates credit cards gets your more discounts on not just one type of purchase. Each card has unique privileges when it comes to cash back rewards.

Instead of using debit or even hard cash to pay for your purchases, use your credit card with cash rebates to get huge savings in the long run. Be sure to pay your dues on time, though, to avoid penalty fees and getting into debt.

Monday, August 6, 2012

How to Use The Credit Card Wisely?

Plastic money is ruling the world today. In the recent times, holding a credit card is as common as holding the cell phone. None other than the credit card will help you in the best way to meet your financial obligations. If you use the card wisely, you will be the master of your life. Financial issues will never have command on your life. The current article tells the reader about how to use the card effectively and manage the budgeted life.

Everybody knows that cash flow is important in life. If the cash runs dry, getting financial assistance in these scenarios is pretty difficult because most of the people in the world today run budgeted life. Here comes the role of credit cards into the picture, they extend required financial help. Unlike bank loans and money lenders, these credit cards will never ask you any security against the finance that you take. The credit card institutions want you to be responsible in maintaining your finance by paying the bill amount promptly. It helps you to build good credit history which in turn paves a way for easy loan approval in future.

Use the credit card wisely

The problem with usage of the card rises only when your accumulated bill go high and you are unable to close it on time. You may need monetary help for many things life. Sometimes you need it to buy your basic needs and sometimes you need it to meet your travel expenses. Depending on the single card to meet all your expenses will exceed your credit limit and your inability to pay the bills on time will give you bad credit score.

Today's credit card market includes customized cards to meet your purpose. You have cash back cards which gives you cash back rewards for your daily purchases, travel cards will give you the free credit miles for your journey. You can even find business cards which gives you special discounts on your business expenses.

Sharing your monthly bill across different cards will keep you in your credit limits and gives you ample time to pay off your credit bills.If you are a travel freak, use the travel cards to meet the travel expense. Your daily purchases will earn cash back rewards for your regular purchases. If you different cards for different purpose, you will not only manage your finances but also earn rewards in form cash backs, free miles and discounts.

In spite of your effort, sometimes you may find your card bill on the sky. If you are looking out for an option to reduce your interest rate and clear off the debt in the short time, you can take the advantage of balance transfer cards. Using these cards you can transfer the amount form your high interest paying credit card and reduce your credit bill.

Thursday, July 26, 2012

Five Factors That Determine Your Credit Score

Credit scores are becoming increasingly important. While it was once only used for mortgages and car loans, it is now used by life insurance companies and even potential employers. In fact, 60% of employers perform credit checks on at least some of their job candidates. Maintaining a clean credit report and high credit score is increasingly important.

There are 5 factors that determine your credit score. Think of these factors in terms of what a person lending you money might want to know about your history with borrowing.

Payment history (35%) - Payment history refers to your ability to make payments on time. Your credit report shows bills that were 30, 60 and 90 days late. If you were 60 days late on a bill and then paid it, the fact that you paid late will still show on your credit report and affect your credit score. Making payments on time is the single most important thing you can do to increase your score and keep your report clean.

Outstanding debt (30%) - Outstanding debt is calculated as the percentage of available credit that is being used. For instance, if you have a $30,000 credit limit, and have $25,000 in debt, you may be viewed as overextended. Some experts recommend maintaining a debt balance of about 10% of your available credit, however the most important thing is to not overextend yourself. If you use your available credit wisely, your credit score will increase.

Length of credit history (15%) - The longer you have been using loans, the better for your score. Creditors want to know that you have been a good steward of your credit over time. This is also the reason to keep your oldest credit card. Remember that card you were issued in college (the one you signed up for to get a free pizza)? Unless the card has high fees, keep it active by using it once a month.

New credit (10%) - Opening several new credit accounts will hurt your credit score as this may indicate that you are suddenly a higher risk borrower. Try to open new credit accounts only when you need them. Instead, try to have the credit limits on your current accounts raised if you need additional wiggle room.

Types of credit (10%) - Having different types of credit accounts can help increase your credit score. Instead of having 3 credit cards and no other debt, creditors would rather see a mortgage payment, an installment personal loan and a credit card. This is most important when you don't have a long credit history. Over time, the importance of this factor goes down.

When you think about it, if you were loaning money to someone that you didn't know, aren't these the factors you would consider? A person's ability to make timely payments, responsible usage of credit, how long they have been using credit, if they are opening a lot of recent accounts, and their usage of various types of loans, would all be important to know. The most important thing to remember is to protect your credit history by paying attention to these 5 factors. It takes time and energy to protect and build a solid credit history. Plus, your future job may depend on it.

So what do you think? Have you ever been turned down for a job due to a blemish on your credit report? Has anyone ever told you of other factors that affect your credit score? Feel free to share by commenting.