Bad Credit Loan Articles and Blog Posts

Submitted by Alice Bryant  on Fri, 03/27/2015 - 10:31
Using credit cards responsibly is a tried and true method of building up your credit score. Unfortunately, some cards are better for this than others, and if you have a low credit score, you may be getting stuck with some of the bum deals. Learn how to recognize bad credit offers and find the ones that will really help you build your credit.
Harvester Cards
Known as "harvester cards", some credit companies aim to "harvest" money from their customers by charging fees to use the cards. Most credit card companies earn their money when customers carry a balance from month to month. At that point, the user is paying an interest fee to the credit card company. If the user is late on a payment, he'll also incur a hefty late fee, which is another way that credit card companies make money.
A harvester card, however, earns money by charging customers an annual fee -- usually somewhere around $100 -- and a monthly fee on top of that. These charges occur even if the cardholder never even uses the card. When you sign up for the card, you immediately start out with owing the company this money. To make matters worse, harvester cards typically have a low credit limit, so the monthly fee seems disproportionate to the amount of money owed, effectively increasing the annual interest rate.
Spotting These Cards
Unfortunately, the companies that make harvester cards typically market them toward people with low credit scores. If you don't have good credit, and you've gotten a card offer in the mail, be very wary. Most credit card companies try to send offers to people who have good credit.
Read the fine print on the offer very carefully, and try to ignore the marketing claims. For example, the card offer might tout a low interest rate, but if it also comes with high fees, the deal isn't really that good. Pay special attention to any fees that the card charges, including annual and monthly fees. If that information isn't readily available, call and speak with a representative, or consider getting your credit card from another source.
Getting Rid of Them
If you've already made the mistake of signing up for a card that turned out to be a harvester card, there's still hope. You need to close the account. Closing the account means that you'll have to pay off the balance first, though, which can be challenging. The sooner you can close the card, though, the less you'll pay in the company's excessive fees.
If you don't have the chunk of money you need to pay the balance in full, consider trying to transfer the balance to a new credit card. You'll pay a small fee to the new company, but it's likely to be less than what you'll pay the harvester card.
Effects on Credit
Part of your credit score is based on your payment history and whether you make your payments on-time. In this respect, even a harvester credit card can improve your credit score if you're making sure to make your payments by the due date. 
However, the amount of debt you have in relation to available credit is also a factor in your credit score. In this respect, a harvester card could be bad for your credit. Since the cards typically have low credit limits and the annual fee and monthly charge are added immediately against the credit limit, it can have a negative effect on your debt to credit ratio. For example, if your credit limit is only $250 and you pay an annual fee of $100 and a monthly fee of $10, you're already using more than 40 percent of your available credit, and you haven't even made any purchases. Even responsible credit card use where you never carry a balance might mean that you're constantly close to your credit limit.
Better Options
There aren't as many options out there for people with bad credit, but they do still exist and it's smart to look for these other choices when you want to build up your credit. Start by going to the bank or credit card that holds your checking or savings account. Explain your situation to the representative and mention that you've been a loyal customer for a certain number of years. Ask if there are any credit cards available to people in your situation. You may find that a credit company is more likely to work with you if they already have a relationship with you.
Another good option is to look for secured credit card options. When you get a secured credit card, you put down a payment that's equal to your credit limit. For example, if you give the company $500, your credit limit will be $500. It's a little bit like loaning money to yourself, but the good thing about using a company for this is that they'll report your behavior to the credit unions and it will raise your score. Companies that offer secured credit cards are sometimes like harvester card companies, in that they may charge an annual or monthly fee, so you do need to be careful and do your due diligence. Once you start getting offers for unsecured credit cards, you'll know that your score has improved and you can get one of those cards and close the secured card. When you close the secured credit card, you'll get back the money you originally put into it.
Credit cards are often a double-edged sword. You need them to help build up your credit, but the high fees that some have can be a big hit to your pocketbook. If you need to improve your credit score, do careful research before you accept any type of credit card offer.
Submitted by Alice Bryant  on Tue, 03/24/2015 - 08:25
TransUnion, Equifax and Experian--the nation’s big credit reporting agencies (which keep records on more than 200 million people and influence their ability to obtain credit) have agreed to improve their approach to fixing errors and the way they treat medical debts on consumers’ reports. The New York State attorney general announced that his office had reached a settlement with all three agencies, affecting consumers all over the nation. 
This settlement was initially prompted by an investigation that stemmed back in 2012. The investigation began after some New York consumers were frustrated that they were having issues with correcting errors on their reports. Even though consumers are allowed to dispute any inaccurate information in their credit reports, the entire process has been criticized by consumer advocates for many years. The credit bureaus often outsource thousands of disputes daily to workers overseas who are generally told to translate the problem into a three-digit code that simply goes into a computer system; the code and any documentation given to the by the consumer are sent to the creditor. If the creditor verifies the information, no further investigation takes place. As a result, many people are unable to get their disputes resolved.
With the new agreement plan, those automatic rejections will no longer be an issue. Specially-trained employees will have to review all supporting documentation submitted by consumers involving mixed credit files — in which a consumers’ file is blended with another person’s report — fraud or identity theft.
Another win for consumers in this agreement is that the credit bureaus will have to wait 180 days to list any delinquent medical debts on credit reports. Given the complicated way in which medical bills are charged and paid, it is not uncommon for delays in payment to negatively impact credit reports, often without consumers even knowing about it. 
Last year, the Consumer Financial Protection Bureau released the results of its own study, based on five million anonymous credit records, which found that consumers may be severely and overly penalized for medical debts that go to collections. About half of unpaid collections on consumers’ reports are medical related. There are far too many people that are shocked to find out about medical billing problems only after having a bill sent to collections and being forced to deal with the already damaged credit. This is long overdue for the agencies to finally agree to remove medical debts that were reported and subsequently paid by insurers.
FICO has also recently stated that delinquent medical debts should not be an accurate predictor of a consumer’s financial behavior. Last year, they said the latest version of its credit score would no longer weigh medical debts as heavily as in the past.
The three companies will implement a 6-month waiting period before reporting medical debts on consumers’ credit reports, providing more time for consumers to resolve the issues that may actually just be a result of a delayed insurance payment or another dispute. The credit agencies will also remove medical debts from reports after the debts have been paid by insurance companies.
Furthermore, the credit reporting bureaus will take additional steps to make sure consumers are aware that their credit reports are available online for free at least once a year from each of the credit agencies, by going to the website. The agencies will now have to include links to that website on their home pages, as well as provide another free report to consumers who experience a change in their credit reports after initiating any disputes.
The settlement agreement requires all three of the agencies to introduce the changes, which the bureaus said would be put in place nationwide over the next three years. However, most changes will be carried out over the next 6-18 months, according to the Consumer Data Industry Association (the trade group that represents the credit bureaus).
This is big news for almost every consumer in the nation. The settlement is a huge victory that will benefit millions of consumers.
Submitted by Alice Bryant  on Fri, 03/13/2015 - 13:21
Sometimes saving money is as easy as canceling a magazine subscription. Here are just 20 household expenses that can be cut, slashed or even eliminated entirely by enterprising minds.
1. Coffee
According to a recent Workonomix survey, the typical consumer spends more than $20 a week on lattes and espressos. This adds up to almost $100 a month and $1,100 a year! Skipping the Starbucks can make a huge difference in personal finance and money management, so buy a coffee maker and say no to the green logo.
2. Cleaning Products
There are only two things needed to maintain a pristine household: baking soda and white vinegar. The former will remove dust, dirt and grime from just about every surface; the latter will de-rust and de-grease anything it contacts. When combined, they make a fizzy mixture that can clean everything from clogged drains to dirty dishwashers.
3. Cable Television
In the age of the Internet, cable services are largely obsolete. Entire seasons of television can be found on sites like Netflix and Hulu, and new, individual episodes of network programming can be downloaded from iTunes very shortly after they air. Streaming videos are often available on official network websites, too.
4. Hefty Insurance Packages
Different states have different laws regarding auto insurance, but generally speaking, the only required coverage is liability coverage. Things like "comprehensive collision coverage" and "uninsured motorist coverage" are extraneous add-ons that can be tossed aside.
5. Gym Memberships
This is another expense made unnecessary by the Internet. YouTube has an entire collection of fitness videos, zumba routines and how-to weightlifting guides, and they don't cost a dime to use. Forget about gym memberships and personal trainers when the same material is so freely available online.
6. Late Fees
Companies will often waive late fees for customers who fall behind in their bill paying. The one caveat is that accounts need to be in good standing for exceptions to be made; if payments are routinely or excessively delayed, companies have no reason to be generous.
7. Phone Services
Competition is fierce among phone service providers, so it's easy to get a good deal with the right preparation and research. Look for someone who price-matches their rivals or offers to buy out their competitor's contracts. Pay-as-you-go phones are another option; they don't usually have contracts at all.
8. Excessive Energy Bills
Lowering the thermostat by just a few degrees can mean big savings on the monthly bill. Most people can't even tell the difference between 70° and 72°. It's also possible to save money by investing in energy-saving appliances the next time you're in the market for a new refrigerator or washing machine.
9. Fast Food
Instead of a breakfast from McDonald's that costs $8, go to the grocery store and buy biscuits, bacon and cheese. The total might come out the same, but the portions will be bigger, the ingredients will be fresher and there will be enough to enjoy several meals instead of just one.
10. Movies
Ticket prices climb higher by the day, and popcorn has never been anything other than outrageous. But what if little Suzie just can't wait to see the new Disney movie? Consider going during the day when matinee prices are lower. There are usually special offers, coupons and discounts that can be found on the theater's website, too.
11. Lawn Services
There are do-it-yourself guides for everything from gardening to reseeding entire yards. Instead of paying third parties for landscaping, it's often cheaper to just roll up one's sleeves and exert the effort personally. As a bonus, the final result will be more rewarding, too!
12. Individual Portions
TV dinners aren't just nutritionally deficient; they're also an expense that really adds up. The same goes for single servings of meat, dairy, produce and dessert. Start shopping at a warehouse club and buying things in bulk or family sizes. Products that are unneeded at cooking time can be stored or frozen until later.
13. Automatic Charges
When looking to cut superfluous expenses, it's important to take stock of one's unused memberships and unwanted subscriptions. How many magazines are still being read? How many museums and aquariums are really being visited enough to warrant their fees? Cancel everything that isn't used on at least a weekly basis.
14. New Clothes
There are a variety of tricks that will make old wardrobes seem like new again. For example, soaking shirts in salt water before washing will help brighten their colors. Putting shoes in the freezer will remove odors and eliminate the need for a new, non-stinky pair.
15. Name Brands
Generic brands are often just as good as their more expensive counterparts, especially when it comes to things like cosmetic products and prescription medicines. They carry the same ingredients and have the same effects. One just has a fancier label.
16. Personal Grooming
Haircuts and eyebrow waxes are necessary evils for a professional, put-together appearance, but they don't have to be received in an expensive salon. Look into DIY guides for personal grooming tasks.
17. Unused Electronics
If that lamp always stays plugged in even though no one in the house ever turns it on, it's racking up a small but consistent "phantom" charge. Televisions, laptops and other electronic devices are the same way. Unplug things when they aren't in use to save on monthly electric bills.
18. Consumable Habits
There's no better time to quit smoking. Just a pack a day can cost anywhere from $1,000 to $4,000 a year depending on state tobacco prices. Drinking is also an expensive hobby, especially in bars, clubs and other late-night entertainment avenues where prices are notoriously inflated.
19. Childcare
Day cares can be a huge drain on one's pocketbook. Better alternatives are camps, community centers and after-school programs that will supervise children and teach them something new. Ask around the neighborhood to see what options are available for working parents.
20. Single-Use Items
Instead of buying a new pack of batteries every month for that finicky remote, invest in rechargeable batteries that only need to be purchased once. Instead of buying a flimsy razor because it's the cheapest option, buy a high-quality one that will last for years. These expenses are larger in the short term but better for budgets in the long run.
These are just 20 things that can severely cut into a household's income. For people who are serious about saving money and reducing their monthly expenses, this list can be used as a guideline for smarter, more affordable living.
Submitted by Alice Bryant  on Fri, 03/06/2015 - 15:08
Saving money is easier said than done. Putting money aside and creating healthy spending habits takes time, focus and dedication. Consumers around the world really have to psych themselves into saving for a rainy day, emergencies, and retirement. Anyone who wants to improve their financial literacy has to take the time to reflect on their behaviors and educate themselves on savings accounts and different investing strategies. In time, it is possible to secure a strong financial future. 
Track Spending for a Month 
First, consumers need to know how they spend money. This means tracking everything from fixed expenses like rent that do not change and weekly purchases like coffee, movies, and eating out. Understanding key behaviors helps people make smarter decisions about their money. For example, a person who eats out for every lunch can save hundreds of dollars by bringing sandwiches three days out of the week and making his or her own coffee in the morning. Shining a light on spending helps people see their habits so they can learn how to break them. 
Stay Away from Impulse Buys 
When shopping online or in stores, consumers should take their time with purchases. Instead of buying a new toaster or pair of jeans, one should walk away and see if they still think about the product a week later. If a consumer still wants the item and would even buy it if it was twice as expensive, then it is worth the purchase. Savvy spenders understand how to look for deals and wait on purchases. Instant gratification is temporary. Saving money has long-term benefits. 
Make the Most of Certificate of Deposit Accounts 
A certificate of deposit (CD) is an account that helps people make money just by saving. Consumers can place anything from $500 to $1,000 into the account and agree not to touch it for a year or more. Thus, people earn higher rates of interest. This is perfect for people who often save but dip into their savings accounts. If anyone touches the funds, there is a penalty to pay. Thus, consumers are encouraged to leave their money alone. To make the most of these savings, one should compare interest rates before choosing any one CD. 
Carry Cash on a Weekly Basis
The problem with debit cards is that people forget how much they are spending when they stop at a gas station and buy candy or go shopping. After making a budget, consumers should carry cash to keep mind of what they are spending. Newer bills are actually seen as more valuable, so people are less likely to fork them over on impulse buys. All fixed expenses can still be paid with cards. Using cash for miscellaneous purchases really helps people develop healthy spending habits. 
Automatic Savings Transfers
Many banks today allow people to automatically transfer money each week to their savings accounts. If $20-50 dollars a pay period is transferred to the savings account, consumers are more likely to leave it there. Over time, habits about savings are created. After all, one will know that every paycheck will have a portion going towards their savings. 
Avoid ATMs and Go into Banks 
Consumers often forget that they have to pay fees when they use ATM machines. Going into a bank when a person needs cash reminds him or her of where this money is coming from. Additionally, it could stop a person from making an impulse buy that could affect them saving money. This also ensures that people receive crisp bills that they are less likely to fork over for a pack of gum or snack before they get home. 
Look into Incentive Programs 
Some banks have special programs to help people save money. For example, if a person spends $12.10 at the grocery store, the bank will round this amount up to $13.00 and place the 90 cents into the savings account. Over time, this really does add up. Consumers need to get into the mindset that every cent really does count. Investing in savings incentive programs helps people get in the habit of putting money away for a rainy day. 
Make Financial Goals and Visualize Them 
Images and charts help people better visualize their goals. Thus, if someone wants to save $200 a month, it is important to track this progress. Smart consumers will use charts online where they can watch their savings come in. Some people like to put little charts and savings-related images on their desks or fridge to help with this process. When the goal is met, it is okay to treat one’s self. This is another way to positively reinforce smart savings. 
Piggy Banks Aren’t just for Kids 
Putting silver coins into a piggy bank after every purchase is a great way to save money. In a year, people can actually end up savings hundreds of dollars. Every coin adds up. People forget about loose change because it seems so small in comparison to a ten dollar bill or debit card balance. This is an easy way to put money away and forget about it. Every six months, it can be beneficial to count this money up and put it into a savings account. 
Stack Receipts
It helps to save receipts and separate them into fixed expenses and unfixed bills. The visual of these paper documents helps people spend less. The only way to psych one’s self up into saving is to identify behaviors and work on changing bad habits. A stack of receipts pinned to a corkboard or fridge helps with this process. 
Get a Reality Check with Big Purchases
When a purchase comes up, it is important to assess its importance. For example, take a $200 smartphone. A consumer who makes $10 an hour should think about whether it is worth half of a week’s pay for these items. Doing the math helps people put purchases into perspective. Additionally, consumers start thinking about their time, their income, and how to separate wants from needs. 
Prevention Is Important 
People who take care of themselves are more likely to avoid emergency bills. For example, consumers should take their car in for an oil change every 3,000 miles to avoid break-downs and other issues. Similarly, regular dental cleanings and doctor check-ups help people avoid expensive medical and dental bills. 
A survey by Bankrate said that fewer than 20% of consumers consider saving money a priority. People who take the time to change their spending and saving habits will get ahead and have money for retirement and major purchases like buying a car or home. All of this takes time, of course. Consumers have to psych themselves up so they see saving as a necessity. With time, people can break bad habits and really develop a strong nest egg. 
Submitted by Alice Bryant  on Thu, 02/26/2015 - 14:59
Even if your credit is just decent, it's not all that difficult to find a credit card. Besides those card offers that arrive in the mail from your bank, you can also go to the websites of major credit and financial companies to apply for cards there. That's to say nothing of the huge variety of credit cards offered by airlines, stores and hotel chains.
Of course, with so many options to choose from, you can bet that they're not all created equal. It can be difficult to find the card with the best terms, but with a little diligence, you can often narrow down your choices to just a few. Here are some of the signs that indicate a bad credit card.
No Rewards Program
These days, many credit cards offer rewards programs that give you special perks when you pay with the card. There are all kinds of them available. Many cards may qualify you for special discounts at certain stores, restaurants or hotels. Others may reward you in the form of a percentage of your money back on purchases. Some even help you save money on gas when you pay for it with your card, potentially tens or dozens of cents off of each gallon.
Then there are the credit cards that use a points-based rewards program. These are most often seen with cards issued by retailers. As you make purchases on the card, you accumulate points that can later be redeemed for products or services offered by that company.
If you play your hand right, these rewards programs can even be used to reduce your spending on everyday items, like groceries or household products. There are dozens of cards available that have these rewards programs, so don't settle for one that doesn't even give you an incentive to use it.
High Interest Rates
When you don't pay off your credit card balance each month, you're inevitably going to pay interest on what you owe. Unfortunately, if a card comes with a high annual percentage rate (APR), you could end up paying a ridiculous amount. In some cases, a high APR can keep someone from being able to fully pay off their balance in a timely manner, keeping them in long-term debt. Furthermore, once they do finally manage to pay off the balance, they've likely paid considerably more for the original purchase than it was worth.
For instance, assume for the moment that a card has $1,000 with a 20 percent APR and minimum payment of four percent. If you just pay the minimum, you'd need to pay around $40 per month. However, it will take you almost seven years at that rate. Because of the added interest, by the time the balance is paid off, you've paid over $500 more in interest alone, for which you received nothing.
Now assume that you have the same balance and minimum payment percentage on a card with a ten percent APR. The monthly payment will still be about the same, but instead of seven years, it'll take you less than five with minimum payments. Plus, you will have only spent an additional $200 or so as interest.
Although it's never recommended to carry a balance on your credit card, it's not always avoidable. Because of this, it's wise to steer clear of cards with an obscenely high APR, which only cost you more money. When you really need to use the card for something that will take months to pay off, you don't want to pay more than you have to.
Low Limits
Every card has a pre-defined limit that dictates how much you can charge to it. It's not often advisable to max out any credit card, but a high limit can be a blessing in an emergency. For instance, if your car breaks down and needs repairs your bank account can't handle, you likely won't be able to cover them with your low-limit card, either. In addition, having a card with a high limit can even boost your credit score. This is because a higher credit limit compared to your balance gets you a better rating. If you stumble across a card offer that only gives you a $500 or lower credit limit, you should keep looking.
Costly Penalties and Fees
Credit card issuers make most of their money by nickel-and-diming customers. They charge a fee for things like cash advances and withdrawals, ATM use, balance transfers, paying your bill online or over the phone, and possibly much more. For this reason, be sure to take a close look at the fine print or terms of use for any prospective credit card. If it looks like they'll levy you with fees left and right, especially if you intend to do the things they charge you for, find something else.
Varying Interest
Varying interest rates are a clever but devious tactic used by some credit card providers. It's the old bait and switch. They lure in customers by offering temptingly low interest rates, which is the first sign that something is amiss. If it seems too good to be true, it usually is. In reality, this great interest rate you think you're getting can be changed by the company whenever they choose, without notifying you. What's worse is that you can rest assured that it will change, and it'll hit you below the belt, right in your wallet.
Always choose a card that comes with a fixed interest rate, even if the APR is a little more. However, it's necessary to advise caution even with these. In certain cases, companies can and will change the interest rate even on a fixed-rate card. Again, be sure to read the fine print before committing.
Foreign Transaction Fees
If you travel outside the country at all, whether it's for pleasure or business, you'll want a credit card that doesn't work against you for this. Many cards levy special fees on credit transactions done overseas, which are often around three percent of what you charged to the card. When you're paying for your entire trip with your credit card, this seemingly low figure will quickly grow. If you need a credit card for use in a foreign country, look for one that works with the payment terminals there, and that has the lowest possible fee on these transactions.
Credit cards can be nice to have, but selecting one that saves you money instead of costing you takes some effort and research. Fortunately, by sticking to the tips above, you can better understand what to avoid and what to look for when choosing the right credit card for your needs.
Submitted by Alice Bryant  on Fri, 02/20/2015 - 16:37
Most people recognize the importance of maintaining good credit and aim to make the right decisions to maximize their credit scores. However, these same people almost always fail to maintain a good credit score because they have bad credit habits that guarantee failure from the start. Therefore, it is critical to recognize your bad habits so that you can make decisions to avoid the most common mistakes that can crash your credit score. Below are seven of the most common habits that you will need to break in order to maintain a good credit score.
1. Accepting Every Credit Card Offer
Most consumers get new credit card offers on an almost daily basis. However, it is not a good idea to accept a high number of credit cards because this can severely damage your credit score. Consumers who have dozens of outstanding credit cards demonstrate to prospective lenders that they doubt their own ability to make their future payments on time. For this reason, credit agencies tend to lower the credit scores of consumers who have a high number of outstanding credit cards.
It is generally recommended to hold no more than five credit cards. You can have a couple of store cards in your name, but avoid accepting every offer that you come across. Making a habit of this can save you great amounts of money on higher interest payments in the long-run.
2. Ignoring Small Payments
Even the smallest payment is just as important as your largest bills. Credit agencies can penalize you severely if you fail to make a small payment on time. Failing to pay small balances that you owe shows lenders that you likely to engage in unethical behaviors that could cost them money. Therefore, it is important for you to pay attention to small payments and make sure that you pay them on time.
Consider using one of the hundreds of smartphone apps that are available in today's world for consumers to manage their expenses. You can use these apps to give you routine alerts that remind you about small payments that you might otherwise neglect. Developing a system to help you remember to make your small payments can clean up your credit report and make you more attractive to lenders.
3. Ignoring Credit Card Payments
Some consumers get so fed up with paying for their credit cards that they start to ignore their monthly credit card bill. Unfortunately, this will only hurt you in the long-run. Your credit card might only charge a small late fee, but your account will go into collections after 60 days. When this happens, you will have to pay the penalty interest rate and could face a lawsuit if you continue to ignore this problem.
The most damaging effect associated with late credit card payments is their effect on your credit score. Even a single late credit card payment can bring down your credit score by dozens of points. Get in the habit of allocating enough money for your monthly credit card payment to prevent ruining your credit score for this reason.
4. Not Checking Your Credit Report
Federal laws require credit agencies to make free credit reports available to consumers. Credit reports can keep you informed about the status of your credit history and help address small disputes before they become big problems.
There is no reason why you should ignore your free annual credit reports. Simply get your free credit report every year to know where your credit rating stands.
5. Paying Bills at Random
You should devise a strategy to make your outstanding bill payments in the most advantageous way possible. Bills that have the highest interest rates should always come first. It is also important to pay down bills that have the potential to accumulate significant costs through miscellaneous fees or more expensive penalties.
You should carefully analyze your personal financial situation to determine which payments should be made first. Sit down with all of your bills and contracts to find which creditors are likely to charge you the most in interest and fees. You should then start to make your payments beginning with the most expensive loans. From there, work your way down to the less expensive bills as time goes on. Paying your bills down in a methodical way can save you great amounts of money and improve your credit score.
6. Borrowing Cash
Most credit cards offer the ability to borrow cash for making routine installment payments. However, many consumers do not realize that borrowed cash is treated differently than ordinary purchases. Most credit card companies charge a much higher interest rate for borrowed cash than with ordinary purchases. Cash balances also stay on your credit card for a longer period of time because ordinary purchases come off of your outstanding balance before cash purchases.
Borrowed cash can hurt your credit score because it demonstrates that you could be struggling to make your payments on time. Consider any alternative to get some extra cash on your hands before you borrow cash from your credit card company to make purchases.
7. Skipping Payments
Monthly installment payments are not optional choices for consumers who have signed a contract and agreed to make payments on time. Late payments almost always go on your credit report and can quickly bring down your score. Even during the hardest financial times, you should always make your payments on time. It might cause you short-term financial pain to not have some extra spending money for the next month, but late payments can cost you thousands of dollars in the long-run.
If you have no choice but to make a payment late, you should at least consider contacting your lender to see if you have any available options. Many lenders are willing to move a payment to the end of your loan's term if you have demonstrated an ability to make your payments on time. Lenders are also more likely to grant you a grace period on their own initiative if you contact them in advance about your potential inability to make a payment.
Executing Your Credit Strategy
The most important thing that you need to do is take action to eliminate the bad habits that are ruining your credit score. Consider working with other people in your life to help you stick with your commitment to make good credit decisions. You should also routinely refer back to these bad credit habits to ensure that you are not starting to stray from your intention to change your ways. By following the right credit habits in the years ahead, you can look forward to a good financial future that is free from worries and stress.
Submitted by Alice Bryant  on Fri, 02/13/2015 - 16:06
When you make a purchase, should you opt to do so with cash or with credit? The answer depends on what type of purchase that you are making and whether you can afford to do so upfront or need time to make the payments. Let's take a look at when it is best to pay for something with cash and when it is best to put the purchase on a credit card that can be paid off over time. 
Can You Afford to Pay the Bill at Purchase Time?
If you can afford to pay the bill at purchase time, you should pay for the item in cash. This allows you to gain more equity in a large-ticket item such as a car or enjoy more of the appreciation of your home's value after it is remodeled. When you go to the store to buy groceries or buy pizza online, you should opt to pay in cash whenever possible because you don't want a $5 slice of pizza or $50 in groceries costing you $100 after interest and other charges because it took six months to pay down the balance.
Can You Pay Your Bill Before the Closing Date on Your Credit Card Statement?
The one reason why you could benefit from making a payment with a credit card is if you can pay it off by the end of the current billing cycle. If you pay the bill by the time it comes due, you won't have to pay any interest. This can be helpful for folks who may need groceries or need to go to the dentist but don't get paid until next week or are expecting a large bonus in the future. In that scenario, you won't pay any more than you would with cash.
Do You Budget Your Money Appropriately?
If you have a hard time saving your money, it may be better to pay cash instead of using a credit card. This is because you will have an emotional attachment to your cash that you don't have when using a credit card. When your money is gone, you know it is gone because there is nothing left in your wallet. In addition, you actually have to hold it, count it and hand it to someone else. Therefore, you are fully immersed in the transaction. Hopefully, this will help you keep better track of your money and how much you can actually spend. Otherwise, you could rack up a large debt faster than you intended. 
Do You Get Perks or Rewards Points From Using a Particular Credit Card?
These days, you may get cash back, rewards points or some other perk for making a purchase with a credit card. If your credit card offers you five percent cash back on your next purchase, it may make sense to use the card and save the money as long as you can afford to pay the bill in a reasonable amount of time. 
For larger purchases, you may feel better about making that necessary purchase because you are getting points that can be redeemed for airline miles or other gifts that you actually want to spend money on. Knowing that the airfare for your next vacation is paid for can take the sting off of having to pay for a new roof or braces for the kids.
If you are getting your money interest-free for the next 12 to 18 months, you may also be better off using your credit card assuming that you can pay off the debt. This may allow you to get cash back or other perks without paying any interest on the transaction. The overall outcome could be that you actually make money on the deal. 
Can You Get a Better Return Keeping Cash in the Bank?
One consideration that is often overlooked in answering this question is whether or not you can put your cash to work for you elsewhere. Instead of paying $10,000 upfront for a new car, it may be better to keep that $10,000 in the stock market and simply pay $200 a month to finance the car. Over the length of the loan, the money in the market could double or triple while the car is guaranteed to lose value. In addition, it may be a good idea to consider what would happen if all of your cash was put toward a purchase that drained your savings account. Could you afford to pay for food or groceries without using a credit card if you did use your entire savings account to make a large purchase?
Is This a Necessary Purchase?
If you are making a large purchase, do you need to make it today? Could you save up for a few months and pay cash instead? For instance, if you were going to buy a new refrigerator for your house, you should ask yourself whether you will be happier with that new appliance. While there is nothing wrong with wanting the best in your home, you don't want to go into debt if your current product serves its purpose. However, if your refrigerator wasn't working properly, you may need to buy whatever you can afford right away. 
There is a lot to think about when you decide whether you want to pay cash or credit for your next purchase. If you can afford to pay cash, that is almost always the best way to go. However, if you have a 0 percent interest credit card or can pay it off by the end of the month, you may not put yourself in a financial hole by doing so. Ultimately, you have to know your financial situation and analyze the purchase itself to understand which is the best decision for you.
Submitted by Alice Bryant  on Fri, 02/06/2015 - 16:05
If someone finds himself in a situation where they have more bills than income, he or she needs to make sure that they are looking for some sort of credit counseling or repair. Credit repair should go far beyond paying off debt. You must come up with a plan of action that will dictate how you manage their finances in the future. Look over the steps below to see what you can do to make sure your bills and income line up properly.
Make A Budget
You need to make a budget. A surprising amount of people do not have a budget that they work from. You need to have all your expenses written down, and you need to make sure that you are accounting for all the money that comes in and goes out. 
It can be hard to see immediately how much money you have, how much money you need to pay the bills, and where to make cuts. Many people need to make cuts to their monthly budget before they make other changes that involve credit counseling or repair. People need to be sure that they get rid of anything in their budget that is not absolutely necessary. Most times, you will see that there is a lot you can cut to balance your budget every month. However, you may need to make extra cuts if you are going to get your budget into a comfortable area.
Contact Creditors
When people are thinking of getting credit card help, they need to contact their creditors first. When people contact their own creditors, they may be able to work out payment plans that make the most sense for them. Creditors may reduce payments, discharge part of the debt or make it easier for you to make payments by reducing interest rates. 
Make Changes
Since most people have a lot of credit card debt, you may need to consider consolidating your debt into a loan that will be much cheaper every month. In essence, you will get a loan from a lender that allows you to pay of all these debts. You will make one payment every month on a loan that has much lower interest rates than the rest of your debt. Also, you will be able to find that extra room in your budget that you need to be comfortable. If all else fails, you can work with a credit repair agency.
Making changes to the budget may require changes services, cancelling services or contacting companies to get out of contracts. When you have made all these adjustments to your budget, you will be able to start anew with their finances. The money you have saved will help you to pay off your debt, but it will also help you improve your credit score by taking minor items out of the picture.
Credit Repair
When you contact a credit repair agency, they are going to start on a program that is predicated on the credit agency doing most of the work. The credit agency is going to go over all the debt, and they are going to show you how you can pay off your debt. You may not know where to start, but the credit repair agency knows exactly what to do.
The Plan
The credit repair agency is going to come up with a plan that will help you pay off all your debts. These plans are often progressive so that you can pay off smaller debts first. When you get into the program, you will be able to use the money you have saved to pay more on other debts. Using a snowball effect to pay off debt is going to make it much easier for you to deal with their debt.
Also, the credit agency can contact all the creditors for you. They will provide you with services that help to discharge debt or to get payments reduced. The credit agency does all the work, but you benefit from that work. The credit agency may also help you find a loan that will help with consolidation.
True Repair
When you are in need of credit repair, the credit agency can submit all the corrections to each credit bureau. The credit bureau can take the advice of the credit agency, and they will work to make changes to a credit report. Many people have incorrect items on their credit report, and it is wise to get these items taken off. When you have taken all these steps in credit repair, you will see your credit score go up much higher than they ever thought possible.
Submitted by Alice Bryant  on Fri, 01/30/2015 - 16:34
It can seem like having “no credit” and “bad credit” are essentially the same thing because of the way credit card companies can frown on and shy away from both; however, they’re not the same thing. A score tells a credit company or other lending institution how much risk is involved with lending a certain amount of money to a borrower. 
Bad Things Happens
Sometimes, things happen. People with messy divorces can find themselves quickly in debt. People lose loved ones. People get injured and lose their jobs. At times, people are faced with either paying for rent or paying for food to fill their little ones’ stomachs. Life can get tough and credit scores can take a hit during tough times.
Having no credit and having bad credit can be devastating. It can prevent people from obtaining mortgage loans, student loans, credit cards, and auto loans, amongst other types of loans. While having bad credit and no credit won’t permanently put life on hold, it can become a huge obstacle when things need to be done urgently. It’s better to plan ahead and steadily build or rebuild credit so that there aren’t any surprises down the road. This is better than needing to find a place to live and not finding a possible solution due to credit issues. 
Negative Impacts
It can take time to repair bad credit and it can take time to build up credit—either route results in raising scores. However, bad credit can be worse than having no credit. For example, a foreclosure can negatively affect a person’s credit score such that the impact stays with them for seven years on their credit report. While a person without credit can apply for a secured credit card to raise their credit score, a person with a foreclosure on their credit report will take additional time to raise their score. 
“No Credit” Explained
“No credit” simply means there is nothing in a person’s credit history to indicate whether they’re a trustworthy person to lend to. A person with bad credit indicates to a company that a person is risky to lend to. The lower a person’s credit score, the higher the risk for the company to lend out this amount. The higher the risk involved in lending money, the higher the interest rate and other fees will be. A company simply does not know whether a person without credit is trustworthy to lend to and will usually err on the side of caution. They may not lend money to a person without credit in the event the person defaults on the amount lent. 
“Bad Credit” Explained
Bad credit simply refers to a score that has been negatively affected by various issues. These issues can be a default on a utility bill or other payment. Late payments can also negatively affect a person’s credit score. While these issues can lower scores, there are ways to raise a score as well. There are financial solutions for bad credit and no credit situations. For instance, getting a secured credit card is one way to raise a credit score. 
Secured Credit Cards: One Way to Increase a Credit Score
A secured credit card, like an unsecured credit card, has a specified limit on it; however, it is a reserved amount. This amount can be $250 or some other variable amount. With a secured credit card, the “borrower” provides this amount to be kept on the card. The card is then used for purchases and rather than paying off the debt, as would be done with an unsecured credit card, the card owner pays the amount charged to consistently keep the balance on the card at $250 or whichever amount the secured credit card company specifies. Each month, the secured credit card company reports to the credit bureau and a credit score can be raised in this manner. 
Other Ways to Increase a Credit Score
Other routes to raising a credit score are available too. Lowering debt is one way to increase a credit score. Also, it is wise to obtain a credit report to see which companies are owed money. At times, there may be mistakes on a credit report. Writing to these companies can result in removing these items from a credit report, which can raise a score. Paying off debt or making an arrangement to make payments on debt can help to bring an account into right standing. Making regular monthly payments can help to increase a credit score as well. 
Prudence is Key
A word to the wise: Applying for numerous loans can lower a credit score. While it is wise to obtain money needed for emergency situations, it is foolish to repeatedly apply for loans, which can consistently lower a score. Applying for a couple every few years won’t hurt a credit score; however, too many inquiries can. It’s best to do research on which cards are best to apply for. 
Short Term Loans
Having bad credit doesn’t have to stop people from obtaining short term loans either. In fact, there are lending institutions out there that will help those with bad credit to obtain a short term loan. A short term loan may also be referred to as a payday loan. These short term loans provide people with a way to obtain money for a short duration of time when emergency situations arise. They’re not only available for those with excellent credit scores. Some companies require a social security number while others simply request pay stubs for proof of employment. The application procedure takes a matter of minutes and there are brick and mortar places to apply in person, or people can use the internet as well. It is not uncommon for people to have money credited to their checking account the very next morning after applying the night before. 
Raising Credit Scores Provides Other Benefits
Building and rebuilding credit can take time; however, the sooner a person begins the process, the better. Raising a credit score doesn’t just result in being able to obtain loans. Raising a credit score can help to increase the amount of money in a person’s pocket. As a person raises their score, the amount of their monthly payments generally decreases. Generally, raising a credit score is directly proportionate to the amount saved on monthly payments in terms of percentage. Raising a credit score is not impossible; it just requires diligence. In the meantime, there are credit card and short term loan solutions available to help out when needed. 
Submitted by Alice Bryant  on Fri, 01/16/2015 - 16:06
Many people see the start of every New Year as a good time to reevaluate their financial status and goals. It is a time of clearing out old bills and financial records to prepare for taxes and setting up new files for the current year. This is also a good time to reflect on personal financial progress over the past year and evaluate what the coming year looks like financially.
When it comes to finances, the oft-used expression “Today is the first day of the rest of your life” is especially appropriate. Decisions made today and carried out over the coming months can have significant long-term implications, including into retirement and estate values.
To make the most of the financial future, it is important to understand the basic principle of the time value of money. One of the most important elements in gaining financial freedom is being in a position to have savings compound over time. Likewise, minimizing current taxes to allow even more savings to accumulate is important. Putting these principles to work is even more effective when combined with workable financial goals.
The following are 10 steps anyone can follow to evaluate their current financial status and use to make 2015 a year of financial success.
  • Evaluate sources of income. Many people talk about developing a budget. Starting with the income is important to gaining a perspective of what money will be coming in over the year by months. This is especially important if there is any seasonality to the income, such as bonuses and periods of high earning. This is also an excellent time to evaluate potential ways to increase income from different sources.
  • Understand all expenses. Once there is a detailed understanding of total income, it is possible to evaluate the impact of all the expenses that are a part of living each year. It is easy to look at total income and forget about both regular expenses and contingent expenses, such as major auto repairs, medical costs, and unexpected losses. Once those are totaled up, and a contingency and savings fund is added in, the net shows the real cash flow for the year. Assuming it is positive, that amount is what is available to increase total savings and net worth. If there is a gap based on realistic numbers, that will explain why there seems to be more month than money every pay cycle.
  • Maintain an emergency and contingencies fund. Unexpected expenses are simply a fact of life. They are the biggest busters of savings plans, both eliminating the ability to save and draining what is already set aside. An emergency fund of at least two months income is considered a prudent financial planning step.
  • Maximize savings and investments. Note the expectation of calculating expenses includes a specific allocation for savings. Simply planning on saving what is left over from paycheck to paycheck is often nothing more than a plan for failing to save. In fact, there should be a specific amount set aside each pay period, with additions coming from what is left over. As Americans age, more are getting concerned about retirement and are focusing on saving. Really building net worth includes both setting aside cash and developing a prudent investment plan.
  • Make retirement a priority. There are a number of ways to save for retirement that provide the potential for real tax savings. It should be a priority to fund IRAs and 401ks each year, and to work with a financial planner to ensure the best approaches to developing a long-term savings and investing strategy. This is where the concept of time value of money is most important, with early savings making a big difference in total funds available at retirement.
  • Apply the “Pay Me Now or Pay Me Later” concept. Most financial planners point to the single greatest secret of financial security as living beneath, rather than above, one’s income. On the other hand, the greatest mistake is living above one’s income. In the first case, a family can set money aside and have it earn its own income, working for a secure future. In the case of overspending, one is not only losing the potential to earn income, there is the added burden of paying interest. Many are surprised to learn that they can still be paying for the shoes they bought their grade-schooler when they start college if they put it on a high-interest credit card and only pay minimums each month. Avoiding that trap is essential to achieving long-term financial freedom.
  • Avoid interest expenses. While credit can be a useful and necessary financial tool for certain things, it is useful always remember what interest really is. When debt is incurred, interest works in the opposite direction from when it is earned on savings. In other words, it either works for or against the average person. Pay credit cards in time to avoid interest charges, pay mortgages and car notes on a bi-monthly basis, and take the opportunity to avoid any unnecessary loans, no matter how small the interest charges seem to be.
  • Manage credit cards and personal credit wisely. While this sounds much like avoiding interest, it implies even more discipline. Instead of having multiple credit card accounts and small loans, consolidate them into one or two with the lowest possible payment. This makes it easier to maintain credit ratings by not missing small payments. Also, it is easier to understand the total paid each month when it is in one or two larger amounts. Importantly, avoid the trap of getting further into debt with new accounts after consolidating existing amounts.
  • Buy a used vehicle. Other than home mortgages, the biggest lifetime expenditure for many families is for autos and trucks. Simply buying a good used car and paying cash, while saving the difference, can mean as much as an additional $100,000 to $200,000 in retirement savings.
  • Save any unanticipated income. Rather than spending an extra bonus, increases in salary or other additional income, consider setting a large part of it aside into the savings, investment, or emergency fund. If the amount is large enough, it can make a significant difference over the ten to twenty or more years it accumulates in a 401k or other investment. 
Finances don’t have to be a mystery, and can bring a lot of peace of mind when a few simple steps are followed to achieve even modest financial goals.


Last updated on Mar 29th 5:20 pm