Simply making payments toward your debts isn’t enough to pay them down—you also have to also begin living within your means. In order to stop increasing your debt, you have to do two things. First, you need to figure out how much you need to live on per month. Then, your second step is to set up a system that keeps you from spending more than this amount. Try one of the following:
If you think you can pay your debt off in just a few months, or your current interest rates are less than 10%, this step probably isn’t worth your time and you can move on to the next. That’s because cards often charge balance transfer fees, which could be more than the interest you will save. Otherwise, use Bankrate.com to search for credit cards that offer the opportunity to transfer to a card with a lower or 0% interest rate. Comparison shop, looking at these factors:
A credit score is a number generated by a mathematical formula that is meant to predict the stability of your credit and, by default, your overall financial situation.
Credit scores are determined using a variety of factors. The three main factors are payment history, amounts owed, and the length of your credit history.
In order to maintain a good credit score, you must pay your bills on time (with a few exceptions) and you must properly manage the amount of debt you carry at all times. In fact, some financial planners and analysts consider your debt to income ratio just as important as your credit score. Simply put, your debt to income ratio is the amount of debt that you have as compared to your total income. This ratio is also a factor in deciding whether or not you are considered credit worthy.
In addition to managing your debt, those with higher credit scores are able to show a favorable lengthy credit history; proving that they are able to maintain positive accounts over a period of time.
Credit scores range anywhere from 300 to 850. The higher your score, the more likely it is that you will be approved for a loan or credit account. If you do have a low score and are approved for credit, it is likely that the interest rate on your loan payments will be much higher than someone who had a higher credit score. Therefore, having a good credit score can potentially save you thousands over the course of the loan. But, what exactly is a good credit score? Generally anything 750 or higher is considered excellent credit and you will likely have a variety of options and receive the best rates. However, that does not necessarily mean that you will not be approved for credit if your score is lower than a 750.
Just as financial companies use your credit score to determine your financial stability, insurance companies use insurance scores to determine how particularly “risky” you are to insure. Those insurance scores are determined by a number of factors one of which is your credit history. The practice of checking credit reports is common across the country, unless you live in Massachusetts, California, or Hawaii where it has been banned. Simply put higher credit scores typically mean lower insurance rates.
Most people know that a good credit score is imperative in order to be approved for a loan. But in addition to that, a good credit score can also help you save thousands over the course of your mortgage loan. The better your score, the lower your interest rates. On a substantial loan such as a mortgage, a difference of even 1% in your interest rates could lead to a savings of thousands or even tens of thousands over the life of a 15, 20, or 30-year loan.
Looking to fund a new business venture or maybe expand a current one? Well, in order for banks and investors to put capital in your business they first need to know how effectively you have managed your personal finances. This does not mean that you can’t start a business with fair or poor credit however, obtaining funding for that business will certainly be much easier with a favorable credit history.
The job market these days is extremely competitive. It’s not only important to have skills and experience, but in today’s market you may also need a good credit score to land the job of your dreams. Many employers, especially those in the financial services industry, now require a favorable credit history as a contingency for being hired.
Just as a mortgage loan, a good credit score can help you immensely when it’s time to buy your next set of wheels. Those with a lower credit score can be hit with an interest rate that is more than twice that of someone whose score is above 700.
At the end of the day, slashing money from your budget on items like insurance and loans will put more green in your pockets. Your ultimate financial goal should be to live within your means and saving money on your expenses helps to make that goal a reality. In addition, a favorable credit score can help make you more employable in an extremely competitive job market or can help you start your own business.
There are a number of places you can go online to obtain a credit score however; federal law provides each U.S. citizen with one free credit report per year. It is important to note that credit scores are not typically included with the free credit reports but your credit score can be purchased for as little as $1 on most credit sites. The top three places to obtain a free annual credit report are:
According to a survey released by Bankrate.com in 2015, three out of ten Americans have absolutely no savings. And although the economy has stabilized a bit since the recession of 2008, foreclosures and bankruptcies are still quite common. For those stressing out over money, it can be seriously stressful. While it is recommended that you have three months worth of your salary saved, saving even just a few hundred dollars can help alleviate some of the worry.
Whether you want to be a millionaire or simply want to stop living paycheck to paycheck, there are some surprisingly easy (and creative) ways to store away a little cash. Try out a few of these ideas today!
Search for a bank that makes the most sense for you. Seek out perks like no ATM fees, high interest on savings accounts, and no overdraft fees. Smaller local banks often offer better interest rates and perks.
Ask your company's human resources department to divide each of your paychecks between your savings and checking accounts. Set a specific percentage or amount to automatically deposit into your savings so you're less inclined to touch it.
Make like the Sherlock Holmes of your bank account and regularly scour for charges that don't look familiar. Staying on top of your current balance and past purchases allows you to spot errors as well as areas of spending that can be cut back. (Do you really need Starbucks every day?)
If you find yourself needing to use ATMs more frequently, plan each ATM visit carefully to avoid fees. When it's time to take out cash, make sure you have time to get to your cash without incurring additional fees.
Get enough sleep, wash your hands, and do whatever it takes to prevent the sniffles. A little TLC, healthy food, and regular exercise can help prevent expensive medical bills down the road.
For prescription medicines that are taken regularly, ask your doc for a three-month supply. Doing this is cheaper than purchasing month by month.
Face masks, body scrubs, and hair masks aren't limited to pricey spas. Make your own spa-like goodies with easy-to-make ingredients lists including bananas and coffee.
See if your company offers corporate perks and discounts such as gym memberships, ball games, cell-phone data plans, hotel fares, and concerts.
Many gyms and fitness studios offer at least one free class or gym session, while others offer cheap, introductory rates. Don't be afraid to try new places and new fitness trends!
During harsh winter months, layer up with extra blankets, drink a hot cup of cocoa, and get your snuggle on to stay warm instead of jacking up the heat. Something as simple as a hot water bottle in bed can mean forgoing high thermostat temps.
The math is easy on this one. Less energy used equals less money spent. If your fridge works perfectly fine, it may not be in your best interest to chuck it; but when you do decide to buy new appliances, it's worth the extra dough to purchase an Energy Star model.
When cold months arrive, taking a few easy steps to winterize your apartment or house can also reduce energy costs. Try plugging drafty doors with towels, winterizing windows with plastic or caulking, and beefing up insulation to keep a home warm and cut back on heating costs all winter long.
Canceling cable can save you hundreds if not thousands a year. Beyond the obvious health benefits of decreasing TV time - including increased sleep, prioritizing your social life, and promoting healthier weight- limiting dependence on cable TV can save a substantial amount of money. And there are alternatives including Hulu, Hulu Plus ($8 per month), and Netflix ($8 per month).
You've probably seen energy efficient light bulbs on the shelves of the hardware store. They can be more expensive than their traditional counterparts, but they pay off in the long run: LED bulbs and compact fluorescent light bulbs (CFLs) require less energy to run. Crazy as it may sound, replacing five bulbs with energy efficient light bulbs can save about $75 each year.
The idea is simple - At a potluck dinner, each invitee brings along a dish of food, which is then eaten by all. Lots of people equals lots of food. Delegating dishes among guests makes it easier for the host family by saving time, energy, and (of course) money. Bonus: You get to spend time with friends and family!
When it comes time for birthdays and holidays, use sites like Pinterest for homemade gift ideas such as DIY candles, clothing & accessories, face scrubs, baking mixes, and home goods.
A library card grants access to thousands of books for free, but that's not all. Use your library card to borrow movies, magazines, and newspapers. The library is also a great place to get some work done free of charge (a.k.a. a place where there are are no kids running around screaming).
Don't have a Netflix account yourself? Split the already low monthly cost with a roommate, family member, or friend. Same goes for magazine subscriptions.
Check the local newspaper, town website, or coffee shop boards for free or cheap events, from farmers' markets to concerts in the park, that are going on around your hood.
Take some time to actually put everything where it's supposed to go. Once you've organized your clothes so everything has a place, it's likely you'll find forgotten items hiding in your closet and rethink buying a whole new wardrobe. Not to mention that selling your unused items could represent a nice little kick start for your savings account.
Going for a walk? Leave your wallet when you head out so you won't be tempted to grab coffee or go on a mini shopping trip.
Having a rewards card can save money on everyday items such as shampoo or toilet paper. (If the emails from drug stores bother you, immediately unsubscribe.). To make things even easier, there are apps that consolidate cards so you don't have to carry them all around.
Try out generic brands of some of your most commonly purchased items. Oftentimes it's hard to notice a difference. Certain purchases, such as medications and organic food, are especially smart to buy generic because they're regulated by the FDA and the USDA, respectively.
Put your purchasing power to use and buy in bulk whenever it makes sense. Buy personal care items, such as deodorant and hand soap, in bulk (so long as you're confident you'll actually use it all). Buying bulk almost always saves money on the unit price.
Buy produce that's in season and look for recipes that feature seasonal produce. Frequent farmers' markets during the spring, summer, and fall for locally grown produce that's often less expensive than supermarket food shipped in from miles and miles away. And not just produce, this goes for everything including automobiles, electronics, and clothing. Know when to buy!
Recycle glass and aluminum empties to put a little extra change back in your pocket. In states with bottle bills, each bottle or can redeems five to 10 cents.
Brew that morning cup of Joe at home or take advantage of the office coffee maker to save up to $15 a week. Making coffee at home or at work is also an environmentally friendlier choice since you won't be dumping a paper cup with each purchase.
Save spare change and use it on a fun drink that you don't really need, e.g. a fancy pumpkin spice latte. You'll get to treat yourself without putting any strain on your wallet. Even better throw this change right into your savings account.
Packing lunch for work or school is generally the healthier choice; plus, it saves on food markups at sit-down restaurants and fast-food joints. Rather than a $10 to $15 lunch from the corner deli, a lunch from home can cost just a few dollars.
This one is as simple as strapping on a helmet or lacing up a pair of shoes. Not only will a bike or walk commute to the supermarket or to work provide health benefits, but it's also more cost-effective (no gasoline required!).
The average American commuter drops more than $1,000 on gas each year just driving to and from work. Carpooling with a co-worker not only cuts gas costs but also saves on maintenance, meaning you won't have to worry as much about buying a new car in the near future.
Properly inflated tires can increase fuel efficiency by more than three percent - which means less money spent on gas. Check tires frequently with a tire gauge to make sure they're adequately pumped up.
Much like anything, credit building is full of old wives' tales and myths that just don't make sense. Seemingly smart financial moves such as closing accounts or paying off loans early, may not be the credit boosters you think they are.
Unfortunately, there are no real quick fixed to credit repair despite what some commercials or ads might have you believe. Usually, those quick fixes result in "avoiding" credit laws and can lead to issues in the future. The key to increasing your credit score is a combination of good payment behavior, along with time, and a healthy mix of credit types.
To help you sort the fact from the fiction, we will help you tackle some of these myths...
Many people assume that if they decline credit card offers, there will have fewer credit inquiries on their credit reports. However, those inquiries are considered "soft" inquiries and don't affect your credit score. You can keep the offers coming if you'd like, but doing so won't help you build better credit or make it worse for that matter.
If you want to opt out of offers to reduce your junk mail, visit OptOutPrescreen.com to remove your name from the credit reporting agency lists for unsolicited credit and insurance offers. That will remove your name for five years. To keep your name off the list, mail in the permanent opt-out election form available on the website. Consumers can also opt in on the website if they've already opted out.
A "hard" inquiry is generated when creditors pull your report or score after you apply for a loan or line of credit. Your score falls because it shows you're interested in taking on more credit and therefore, more risk.
Some consumers believe if they pull their credit report every day to load up on "soft" inquiries, they will bump off the hard ones that weigh on their credit score. But there's no indication that this works and it's only a small part of your total score (about 10%).
Focus on legitimate strategies such as paying your bills on time and managing your credit accounts properly.
Closing accounts typically won't help your score and could possibly hurt it if you close an account that positively affected your score. The results can shorten your credit history and leave you with a smaller amount of available credit, both of which can harm your efforts to build better credit.
The length of credit history shows how seasoned of a borrower you are, so the more positive history that you have, the better. Having more available credit helps to keep your utilization rate low. The utilization rate is how much available credit a borrower uses.
Some consumers with credit problems believe opening many accounts will be proof that they can handle credit. Actually, it has the opposite effect. It's a sign of risk and your credit score can suffer as a result.
What lenders will see is a boatload of new, hard inquiries on your credit report. Those inquiries will deduct from your credit score, while lenders will worry that you're in dire financial straits and desperately need access to credit to pay your bills.
Nope. It will help, but don't expect a major boost right away. That's because the delinquency will stay on your report for a specified period of time, even if it has a zero balance.
Most derogatory information such as late payments, collection accounts, charged-off accounts, tax liens and judgments live on your credit report for seven years before dropping off. A Chapter 13 bankruptcy can linger on your report from seven to 10 years, while Chapter 7 bankruptcies remain on your credit report for 10 years.
That's a tricky situation because while it may be good for your personal finances to pay off a loan, it doesn't do much for your credit score.
While a closed, paid-off account does add to your score, but an open credit account in good standing boosts it more.
That's because an open account shows you're consistently handling credit wisely. A closed account only shows good payment behavior in the past and becomes less and less indicative of future habits.
Your credit score takes into account how much available credit you're using. Paying a credit card balance in full 10 days or one day ahead of the due date won't help your utilization ratio and thereby improve your score.
However, if you pay the balance in full before the statement closing date, which appears on your statement, then your report will post a zero balance for that account. That will help your utilization rate and your credit score.
To get started, you will have to pay one credit card bill earlier than usual and then consider your statement date as your due date. Also, you will need to check your balance online or over the phone to make sure you pay the correct amount.
If you're in the unenviable position of having to miss a payment, choose carefully. Missing a mortgage or auto loan payment will ding your credit more than skipping a credit card payment will.
Of course, missing a payment is a last resort. Pay the minimum payment to keep accounts current.
Believe it or not, you can have anything from a 30-day missed payment to a bankruptcy on your report and still have a really good score.
The most recent information on credit reports is weighted more heavily than older data. So, if you have a bankruptcy from five years ago, but have had good credit performance since, it's possible to have a 700 FICO score!
So how does it work?
Each individual is allow to seal their credit reports and use a personal identification number (PIN) that only they know and can use to temporarily "thaw" their credit so that only legitimate applications for credit can be processed. This added layer of security makes it more difficult for thieves to establish new credit in your name even if they are able to obtain other identification for you.
Freezing your credit files has no impact whatsoever on your existing lines of credit, such as credit cards. You can continue to use them as you regularly would even when your credit is frozen.
Credit freezes have been available for free to victims of identity theft for some time now, but just recently all three of the major credit bureaus adopted new rules allowing non-victims to have access to credit freezes as well for a small fee.
The only time that it may not be beneficial to freeze your credit is if your credit reports are accessed regularly for work or because you create new accounts with various financial institutions on a regular basis.
The cost to freeze your report ranges from $3-$10 per person per bureau to freeze a credit report; some states have higher fees. Also be sure that you freeze your credit with all 3 bureaus.
The cost to "thaw" your reports for one creditor - or for a specific period of time - range from being free to $10.
If you are interested in getting more information about how to submit a credit freeze? We can help! Contact us today at 410-833-3939 or at firstname.lastname@example.org.
Identity theft is a crime that is estimated to affect over 9 million Americans per year. Every individual must take steps to protect themselves from falling victim to this ever growing segment of crime.
Protect yourself from identity theft with these basic tips...
Keep Personal Documents in a Safe. Consider keeping a fireproof personal safe for your home. You can use your safe at home to protect items such as your social security card, birth certificate and passport. In addition, we recommend an off-site safety deposit box to store copies of documents and items that are difficult to replace in the event of an extreme disaster.
Any questions? Contact us today at 410-833-3939 or at email@example.com.
What’s holding you back from a perfect 850 credit score?
There are actually only a few main factors that are used to calculate your credit scores.
Based on these factors, the top reasons why your credit score isn’t higher is listed below, along with a few words of wisdom on how to raise your credit scores.
The Four Primary Reasons
1. Payment History
Your payment history accounts for 35% of your credit scores, and is the single most important factor used when calculating a credit score. Having red marks on your credit like late payments, collections, repossessions, etc…, lowers your credit score immensely.
Pay your bills on time and fix your past mistakes. You can hire a credit repair agency to work on improving your payment history by leveraging consumer protection laws that clean up your credit reports. The Fair Credit Reporting Act gives you every opportunity to get your credit back in order, use the law to your advantage.
2. Credit Utilization Rate Is Too High
Your utilization rate is the percentage of credit that you owe (your balance) as compared to your credit limit.
Example: Balance = $1000 / Credit Limit = $2,000 Utilization is ($2000/$1,000) 50%.
Lenders view a high utilization rate as a proven indicator of increased credit risk.
Pay down your credit card balances and decrease your utilization rate to 30% or less. This means that you should never spend more than 30% of your credit limit.
3. Your Credit History Is Too Short
Your average length of open credit accounts for approximately 15% of your credit score. This shows lenders your experience with credit and lenders prefer consumers with a long length of credit over ones with a short credit history.
Do not close old accounts, keep them active and open and they will increase your length of history. You should also limit opening new accounts because every new account decreases your average length of open credit. Be patient and your credit history will grow with time.
4. You have too many inquiries on your credit report.
Every time you apply for credit, a history of that application shows up on your credit report, this is known as an inquiry.
Inquiries are about 10% of your overall credit score and having too many of them drastically lowers your creditworthiness. Each inquiry can lower your score by about 10 to 20 points.
Apply for credit only when necessary and try to limit yourself to a maximum of one inquiry every 6 months.
If you have too many inquiries reporting to your credit reports, a credit repair agency like Rescore, LLC can challenge those inquiries and work on removing as many of them as possible.