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Don’t Think Credit Is Critical To Your Everyday Life?? Better Think Again

Whether you think about it this way or not credit can have an incredible effect on your life and even on your employment. One good way to think of it is as a cloud that follows you everywhere you go. It can be a nice, fluffy, little cloud or a big, black cloud.couple going over bills

Learning where you stand

Your credit score, which is a little three-digit number, tells where you stand and how potential lenders will view you. If you don’t know your credit score one good place to get it is using’s Credit Report Card. This tool will even divide your credit score into sections and show you a grade for each of them. For example, when you access it you will be able to see how your payment history, your debt and the other factors affect your score.

Automobile loans

When you apply for an auto loan your credit score will dictate the interest rate you get. Most auto lenders won’t review your financial history or read your complete report. They will rely instead on your score and the data on your application. If your score is 750 or above you will get the best interest deal available, which can be 0%. What happens if you have a low credit score? You’ll still be able to get that loan but it will come at a very high interest rate. Where can you get the best auto loan interest rates? The answer is generally from credit unions and online lenders and not auto dealerships.

Cell phones

You’re probably not aware of this but cell phone companies generally check your credit before they give you a service plan. If you have bad credit you may be required to put down a larger down payment or pay extra for your contract. Some cell phone companies don’t require a credit check so if your credit is bad your best bet would be to hunt down one of them. Also be aware that some service contracts give the company the right to review your credit at any time.

Renting in apartment

Perspective landlords and rental agencies usually will review your credit report. What they look for are missed payments and other negative information on your report that shows you might not be a reliable tenant. People that have bad credit are often required to put down a much larger deposit or to get a co-signer. In a worst-case scenario your application might be turned down. Unfortunately, if you have been making your rent payments on time this won’t help your credit score because this is not reported to the credit bureaus. However, this may change. More and more property management companies and landlords will now report a positive rental history, which can help you build your credit. One good tip is to ask your landlord if it currently reports your rent payments. If not, you could suggest that it use a service such as RentTrack where you pay your rent online. Your payments would then be reported at least to the credit bureau Experian.

Checking and savings account

Banks and credit unions don’t check credit reports when you apply for a checking or savings account. However they will use ChexSystems to review your history of banking negatives such as bounced checks before giving you an account.

poor credit scoreCredit cards

Make no mistake about this. If you apply for a credit card, the issuing company will review your credit score to determine whether you qualify and the terms you will receive. There are credit card offers that actually have different interest rates for borrowers depending on their credit scores. As a general rule cards with low APR’s or that offer rewards require high credit scores. While you might know that credit card companies will check your credit score when you apply for a card you might not know that some of them review your credit scores even when you are an existing customer and may then adjust their rates accordingly.

Potential employers

More and more employers now routinely check the credit reports of prospective employees. However, they must get your permission in writing before they can do this. What employers generally look for are major negatives or discrepancies. In the event a prospective employer takes “adverse action” based on your credit report, it must first notify you and then give you a copy of your report.


When you submit an application for home or auto insurance, the company will use your credit information to determine your terms and rates. While the scores and reports that insurance companies use are a bit different than those used by creditors and lenders, your basic data and standing will be the same. The insurer must ask for permission to access your credit reports and may use that data to determine your “insurance risk score.” If you have a high score your rates will be better.

Utility accounts

You will probably need to give your permission but cable, electricity and other utilities companies will check your credit report. If you have a problem with your credit you will probably need to put down a bigger deposit, pay higher rates for your utilities or get a co-signer. If you live in a state that has community property laws such as California, Texas and Arizona, the utility companies might even check your spouse’s or partner’s credit history.


If you apply for a mortgage the lender will review all three of your credit reports and credit scores. Since a mortgage loan is typically much bigger then a student or auto loan, the review process is much more comprehensive. You’ll need to have a credit score above 700 to get a standard mortgage interest rate.

Child support

Agencies that enforce child support routinely check the child support payment and credit histories of delinquent parents. When they make an inquiry about your credit history this will not appear on your credit report and will not change your credit score. However, if you don’t pay child support this will be reported by the child-support enforcement agencies to the credit bureaus and can damage your credit score.

Student loans

If you or your parents apply for a private student loan the lender will check your credit report. However, the interest rates on federal student loans are set based on national rates so these loans do not require a credit check.

Omnipresent is the word

As you can see from what you’ve read in this article your credit is totally omnipresent or threaded throughout your entire financial life. If you have a good score of 750 or above, the world is your oyster. You should be able to rent an apartment, get a credit card, open a checking account or get a cell phone plan with no problem at all. Unfortunately, the opposite is true. If you have a poor score that big, dark cloud hanging over your head is going to make your life much more difficult.

Is The Idea Of Credit Repair True Or Just A Scam?

Man in ski maskWe heard a radio commercial just yesterday by a company that promised it could repair your bad credit. We have also seen promises such as:

“We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever“!”

“Create a new credit identity — legally.

“Credit problems? No problem!”

“We can erase your bad credit — 100% guaranteed.”

Is this really possible or are these just the false promises of scam artists?

First, let’s get one thing straight. No company can get your credit totally repaired if your credit reports are riddled with judgments, a bankruptcy, liens and items that have gone to collection. Once those types of items are on your credit reports they will stay there for seven years – all those promises to the contrary.

Know what can be done

There are some things that can be done to your credit reports to help repair your credit. But here’s the good news. You don’t have to pay a company to do this. These are things that you could do yourself and that are not all that complicated or time-consuming.

Do first things first

Maybe this goes without saying but we will say it anyway. There is nothing you can do in credit repair until you’ve seen your credit reports. The first thing you need to do is get the latest copies of your reports so you can see what it was you did that resulted in your current fix. You actually have three credit reports, as there are three credit-reporting bureaus. You can get them free on the site or from the three credit reporting bureaus –Experian, TransUnion and Equifax. In the future you may want to get each of your credit reports at four-month intervals so that you can continually monitor your credit. But for now you need all three of your reports because the credit bureaus typically don’t share information and it’s possible that there is different information in each of your reports. When you get all three, this will give you a total view of your credit situation and will enable you to repair your credit at all three of the credit-reporting bureaus instead of just one. You might also want to make a copy of your reports in the event you need to dispute some information on them. That way you could send a copy of your report to the appropriate credit bureau but would still have one for your records.

Correct any errors

As you review your credit reports look carefully for errors. These could be purchases you don’t remember having made, wrong amounts or merchants you don’t remember having done business with. If you find errors and believe they’re having an adverse affect on your credit score you need to dispute them with the appropriate credit bureau. You’ll need to tell it in writing the information you think is inaccurate. You will need to identify each thing in your report that you are disputing and the reasons why you are disputing it. And you’ll need to ask that it be corrected or removed. It’s good to enclose a copy of the credit report and circle the items that you’re disputing. Be sure to send your letter by certified mail return receipt requested.

When the credit reporting bureau receives your letter it must investigate the items you have questioned within 30 days. It must forward to the organization or business that provided the information all the relevant data that you sent it. When the business or organization receives that information from the credit bureau it must review it and then get back to the credit-reporting agency within 30 days. If it cannot verify the information or fails to respond within the 30 days, the credit-reporting bureau must remove it from your credit file. The credit bureau must give you the results of the investigation in writing and if it has corrected your credit file it must send you a new credit report free.

Tackle your past due accounts

If you have any past due accounts that are less than 180 days past due you can save them from being charged off. You will want to do this because a charged off account is one of the worst things that can happen to your credit score. To save that past-due account from being charged off you will need to contact your creditor to figure out what you will need to do to get current. In some cases, your creditor might be willing to waive some of the late penalties or even spread your past due balance over several payments. It’s important to let the lender know that you’re anxious to avoid a charge off but will need some help.

Pay charged-off accounts

If you find that you have accounts that have already been charged off you should pay them, too. You’re still responsible for them. The only good news is that as they get older they will not have as much an effect on your credit score. However, if you have a charged-off balance, it will make it difficult – and in some cases impossible – to get new credit or loans. When you pay a charged-off account in full it will show on your credit report as having a $0 balance and that the account was paid but the item will still stay in your credit files for seven years.. Alternately, you might be able to talk the creditor into settling for less than the original balance. Or you might talk the lender into deleting the status of the account as charged off if you agree to pay it.

What to do if an account has gone to collection

Many lenders will sell your unpaid account to a debt collection agency after six months. If this happens to you your approach should be about the same as for a charge-off. You’ll need to pay your balance in full or try to settle the debt for less than the original balance. Be aware that collection agencies cannot change what was on your credit report before they received your account. However, they can change any information they added to your account after they received it. Before you pay your balance in full you need to determine what information was added to your account and make sure the agency agrees to delete it.

Where to put money toward repairing your credit

Since it’s likely that you will only have a limited amount of money to put towards credit repair each month you’ll need to prioritize where you put it. You should first focus on any accounts that are close to becoming past due. Try to get as many of them current as you can. Next, go to work bringing down the balances on your credit cards. Third, work on any accounts that have already been charged off or have gone to a collection agency.

man jumping with a chart behind himGet new credit to help your credit score

Once you’ve done all you can to repair your credit, your next step should be to work on getting new credit. When you get new credit and make your payments on time this will help your credit score. You may not be able to get a major credit card so try applying for a retail store card. Retail merchants have the reputation for approving those applicants that have a bad or limited credit history. A second option would be to get a secured credit card. This is where you make a deposit to secure the card. Just make sure that the bank that issues the card reports how you use it to the credit reporting bureaus – to help you build a new and better credit history.

Advice About Low Interest Credit Cards That May Totally Shock You

Here’s a piece of advice you likely won’t read anywhere else except in this article – you may not want to get a low interest credit card. Despite what you may have been told or read getting a low-interest credit card is not necessarily your best option. This is not to say that you should rush to apply for a credit card with a high interest rate but there are reasons why this sometimes makes sense. Of course, if you pay off the balance on your credit card every month it probably doesn’t make any difference whether it has a high or low interest rate because you’re not paying any interest anyway. But there is a case to be made for passing on those low interest credit cards and here it is.Multiple credit cards in one hand

1. Low interest credit cards offer fewer benefits

A good rule of thumb is that credit cards with low interest rates generally offer fewer benefits than those with higher interest rates. As an example of this, airline rewards cards that have high interest rates not only come with frequent flyer miles but they often have other perks such as priority service, checked baggage fee waivers and even an airport lounge membership. Of course, you could always have one of these cards for its benefits but then charge most of your purchases to a low-interest credit card, which would give you the best of both possible worlds.

2. Low interest credit cards offer no rewards

If you choose a credit card that offers no rewards you will have a lower interest rate than other cards that offer miles, points or cash back. This means that if you generally carry a balance forward from month-to-month then a low interest card might make better sense. On the other hand if you hardly ever carry a balance, and rarely have to pay any interest charges, you might be better off with a higher interest rate credit card they would offer you a return on your spending.

3. You may not qualify for the lowest possible rate

A lot of credit cards have a range of interest rates and the one that you get will depend on your creditworthiness. When you see an offer with a very low interest rate this might actually apply only if you have excellent credit. If not, your rate won’t be that low. If you don’t know your credit score make sure that you get it before you apply for a new credit card. The three credit reporting bureaus – Experian, Equifax and TransUnion – will give you your credit score free though you may have to jump through some hoops to get it. There are also websites such as and CreditSesame where you can get your score free.

4. You’ll miss out on any sign-up bonuses

The credit card business is very competitive. Banks often offer new customers hundreds of dollars in miles or points just for signing up. However, when you choose a low-interest credit card you probably won’t get one of these generous offers. This is because if the bank knows you won’t be paying much interest every year, there’s no incentive for it to offer you a big sign up bonus because you will never be paying enough interest to offset the cost of the promotional offer.

5. You won’t get 0% interest

It doesn’t take a mathematical genius to realize that a card with 0% interest is better than even a very low interest credit card. Many of the higher interest credit cards offer interest free financing on both balance transfers and purchases. While there are cases where these cards might also offer a low interest rate, those that have the very lowest interest rates generally do not offer this type of promotional financing.

6. You could end up carrying a balance

If you were able to get a credit card with a very low interest rate this could encourage you to start carrying a balance. Of course, you’ll always save money if you pay your statement balance in full every month. But if you get a low-interest card and feel that it’s now okay to carry a balance forward, then the card probably isn’t worth it.

7. You could get hit with a penalty interest rate

If you fail to make a payment on time you could get hit with a high interest rate even if the card has a low interest rate. This is called a penalty interest rate and it can be as much as three times higher than your normal interest rate meaning that this could end up being incredibly costly. Fortunately, there are some credit cards that have no penalty interest rates such as Citi Simplicity and the Discover it Card. While these cards have competitive interest rates, they may not be the lowest you could find.

man jumping with chart behindWhat’s the difference between a good and bad credit score?

As mentioned previously if you do want a credit card with a very low interest rate you must have a very good credit score. But what is a good credit score? Lenders often look at credit scores as follows.

• Between 700 and 850 – Very good or excellent credit score
• Between 680 and 699 – Good credit score
• Between 620 and 679 – Average or OK score
• Between 580 and 619 – Low credit score
• Between 500 and 579 – Poor credit score
• Between 300 and 499 – Bad credit score

What this translates into is that if you have a credit score of 620 or higher you should be able to get whatever credit you apply for. However, to get the very lowest interest rate you would need to have a credit score above 700. And, of course, the higher the score the better. The overwhelming percentage of lenders use what’s called your FICO score. It’s available only on the site However, it would cost you $24.95 a month to get your FICO score monthly as well as your credit reports from the three credit- reporting bureaus. As mentioned previously, you can get your credit score free from a variety of sources and while it might not be your true FICO score it should be close enough that you would be able to see how creditworthy you are. It should also tell you whether or not you would be able to qualify for a very low interest credit card.

The net/net

If you’re in a financial position where you need to carry a balance forward from month-to-month then a low interest credit card might be your best bet, as it would save you the most money. Conversely, if you never or rarely carry a balance forward you might be better served getting a higher interest rate credit card that comes with perks such as cash back, airline miles or points. We know of people that will put a big ticket item on their credit cards to earn cash back but then turn around the next day and send a payment to the credit card issuer to cover the cost of the item to avoid having to pay any interest. If you could afford to do this then a higher interest rate might be a better deal than a credit card with a very low interest rate.

Best News Ever For People With Low (Or Zero) Credit Scores!

poor credit scoreDo  you know how lenders view credit scores? They view them in ranges as follows:

• Between 700 and 850 – Very good or excellent credit score. One
• Between 680 and 699 – Good credit score.
• Between 620 and 679 – Average or OK score.
• Between 580 and 619 – Low credit score.
• Between 500 and 579 – Poor credit score.
• Between 300 and 499 – Bad credit score.

What this means is if you have a credit score of 700 or above you should be able to get just about any credit you would want whether it’s a new credit card or auto loan. On the other hand, if your credit score is below, say, 500 good luck. You’ll have a problem getting a new credit card and if you are able to get one it will likely have a very high interest rate.

What if your credit score is zero?

A credit score of less than 350 probably means you’ve been a reckless spender but a zero doesn’t mean this. What it means is that potential creditors just don’t know what to do about you. In the past if you wanted to have any sort of a score you would need to have had a debt and paid if off. We know this might sound counterintuitive but the fact is that you need to have debt to have a good score. To have any score at all, you need to play by the rules, which includes having and paying off some sort of debt. If you have a credit score of zero you haven’t proven your ability to borrow money and pay off loans as quickly as possible.

It will soon be a whole new ballgame

There is the best news ever for people with low credit scores or a credit score of zero. A new plan is being rolled out that will make it easier for these people to get a Visa or MasterCard.

FICO, the company that invented credit scoring and whose scores are used by 90% of all lenders, has a pilot program designed to help millions of us get easier access to credit. This is because it will be based on their record of paying utility bills and not their history of making loan repayments. It is estimated that 53 million Americans don’t have a credit score and could be reached by this program. That’s about one fourth of the US adult population. Banks typically deny credit to anyone that doesn’t have a credit score or they charge them dramatically higher interest rates because they are viewed as being risky.

Immigrants and the young

As you might guess the majority of these consumers are very young people that don’t have an established credit history or immigrants that are new to the US. And many of the “unscorables” are members of a minority – especially Hispanic and black consumers

Two years in development

It took two years to develop this new program. It’s based on the idea that people that have a history of paying their utility bills on time would also pay credit card bills on time. The way it will work is that FICO along with LexisNexis and a credit bureau Equifax will use a person’s utility bills and public property records to create a payment history profile. This pooled data will then be used to determine what’s being called an “alternative” credit score that will be applied when a person with a zero credit score or a poor credit history applies for a Visa or MasterCard. While it is known that FICO will make the scores available to the 12 largest credit card issuers it is not known at this time, which banks will be participating.

Quick tips for improving your credit scorehow debt relief affects credit score

If you have a bad credit score this new program might help you get a new credit card. If you have a poor or bad credit score there are some things you could do fairly quickly to improve it.

Dig out that old card

The first is to start using that old card that’s just been sitting in a drawer. The older a credit history you have the better. If you had stopped using that old card your card issuer might choose to close your account or not update it to the credit reporting bureaus. The accounts will still be there but won’t have as much weight in the credit-scoring formula as your active accounts. You could improve your credit score by charging a recurring bill to that old card or by taking the family out for dinner and a movie occasionally. Of course you will need to pay off your balance in full every month.

Dispute negative items

Second, you should dispute old negative items in your credit reports. Let’s suppose you got into an argument with your utility company regarding a bill several years ago and as a result the account went into collection. This gets a bit sneaky but you could dispute a bill like this as “not mine.” If it’s an old and a small account and you dispute it, the collection agency might not take the time required to verify it when it’s investigated by the credit reporting bureau.

If you have significant errors in your credit reports you need to focus on them. The things that are really worth the time and effort to correct include late payments, collections, charge-offs or other negative items you believe aren’t yours. You should dispute it if you see credit limits that were reported as lower than they really are, as well as any accounts that were listed as “paid derogatory,” “settled,” “settled for less than owed” and any other items that isn’t listed as “paid as agreed.” You should also dispute negative items that are more than seven years old (or 10 in the case of bankruptcy) as they should have dropped of your reports automatically.

Improve your credit utilization

The second most important factor in your credit score is your credit utilization or debt-to-credit ratio. It accounts for 30% of your score and is something you can control – unlike your credit history. The way your credit utilization is calculated is by dividing your total credit limits into to the amount you’ve used up. Let’s say that you have total credit limits of $10,000 and total balances of $2000. This would yield a credit utilization score of 20%, which would be considered very good. On the other hand, if you had balances totaling $5000 of that available credit your debt-to-credit ratio would be 50% and would be having a very negative effect on your credit score. There are two ways you could improve your credit utilization. The first would be to pay down some of that debt. Again going back to our example of $10,000 in total credit limits with total balances of $5000 if you were to pay it down by $2000 your debt-to-credit ratio would drop to 30%, which would definitely have a positive effect on your credit score. If you are unable to do this you might be able to get your credit limits increased, which would have the same effect as if you had paid down some of your debts.

Finally, here’s a helpful video with more good tips for quickly improving your credit score.

Boost Your Credit History Without A Credit Card

credit historyEveryone needs to build a credit history. It is very important that you have yours as early as possible. This history is indicated in your credit report. It simply records your credit behaviour – how much you owe, how you pay them off and how responsible you are with all your credit accounts. If your record is good, you can get a high credit score. A high score will help you secure a lot of financial opportunities that are not available to those who have lower scores.

Some people actually think that this is a ridiculous requirement in our society. Why is there so much importance in building your credit reputation? After all the difficulties experienced during the Great Recession, is it really a wise idea to continue to care about credit? Wouldn’t it be better to just eliminate it from your life?

This is actually what some Millennials are doing. According to an article published on back in 2014, 63% of Millennials have decided not to own a credit card. This was based on a survey done by Bankrate. In comparison, only 35% of 30-year olds and above do not have credit cards. If you think that this will help you stay out of debt – it is not entirely accurate.

Sad to say, our society, or the financial industry in particular, feel differently about credit. They view the use of credit as an important indication of your financial success – especially in relation to your credit report. A six figure income with a bad credit report to match is not something to be proud of. You may actually be better off earning a simple salary but with a good credit history.

One of the easiest ways to build your history is to use a credit card. After all, you need some credit input in your report. However, this is where people are having a hard time coming into terms with. Credit cards may be a common payment method but a lot of consumers have been burned by the debt that they went through in the past. This is why most of them are having a hard time building their credit reputation. There is some hesitation in using it for fear of falling further into debt – since credit card use come with high interest rates.

5 ways you can build your credit report without a credit card

Fortunately, there are ways for you to build your credit history without succumbing to the dangers of high interest credit cards. It is the easiest, but if you are not comfortable with it, that are other options. Here are some of them.

Use existing companies that you pay each month.

We all make monthly payments outside of our credit cards. These include utility bills and subscriptions like cable or the Internet. The companies providing these services to you are not required to report your payment behaviour to the three major credit bureaus (Experian, TransUnion, Equifax). However, they can submit a report if they want to – and if you ask them to report on your behalf. Simply call them and ask them to submit a report just so you can have a record of good payment behaviour. If you are renting, you can even ask your landlord to submit too. Any consistent and recurring monthly payment may be submitted to help add to the data in your credit history. Take note that since this is not a requirement for them, they could deny your request.

Get a small loan from a credit union.

Credit unions, although they provide almost the same financial services and products as banks, are actually quite different. Credit unions revolve around their members. This is why a lot of them have membership restrictions. If you find a credit union that you can join, open an account with them and apply for a small personal loan. They offer lower interest rates compared to the traditional banks. This will help you put some credit data in your credit history so you can show that you are responsible with your payments. In case, you find it hard to get an approval for a loan, you might want to open a secured loan wherein you will use a savings account that you have with them as collateral. This will lower your credit risk and thus increase your chances of getting an approval.

Apply for an installment loan from a retailer.

Retailers of expensive items allow customers to take out an installment loan on purchases. This will require you to make timely payments for a specific period of time. This is important if you cannot even apply for a loan with a credit union. Not only will this be a record in your credit history, it could also help increase your credit score because having variety in your type of credits will affect 10% of your score. Sometimes, in an effort to get customers to pay, retailers offer these loans with little or even no interest rate for the first few payments.

Opt for peer to peer loans.

This is a relatively new way to borrow money. It is usually done online so you need to explore this via the Internet. The popular companies offering peer to peer loans are Prosper and Lending Club. These are simply platforms where investors from the community meet with borrowers. That means, the financing for the loan that you apply for will be coming from investors in the community. The risk is lower so the interest rate for peer to peer loans are smaller compared to traditional banks. The chance of you getting a loan approval is higher here. And since peer to peer lending companies are required to report to the credit bureaus, your credit behaviour will be recorded in your credit history.

Utilize your student loans.

If you have existing student loans, you can use this to help display how responsible you are with your credit accounts. According to, these loans can help you build a payment history. Make sure you practice proper payment behaviour as it will be recorded in your credit report accordingly. And in case you are planning to go to graduate school, you may want to use your federal student loans to help you get more data into your credit report.

All of these options should give you a chance to build your credit history. Just remember that it is not ownership of the loan that will give you a good credit reputation. It is how you behave in relation to that debt. If you stick to your payment schedule and you always pay the right amount, then you can be assured of a credit history that can reflect a high credit score.

Tips to practice proper credit management

The truth is, it is all about proper credit management. Even if you have a high amount of debt (which is really not recommended), as long as you can keep up with payments, you will have a good record in your credit history.

The thing about your credit report is it needs consistent good behaviour. Even if you start with a good report, one mistake can ruin that good record. It is something that you need to take care of for as long as you want to make financial transactions work in your favour.

To help you practice credit management, here are some tips that we can give you:

  • Only borrow what you can afford to pay. This does not mean you should look at your income to determine how much you can borrow. You need to also consider how much debt you currently have and the expenses that you need to pay for every month. If you have to base it on your income, make sure that it is on your disposable income. This is the income that is left after all your other expenses and payments have been paid off at the end of the month.
  • Practice the right payment behaviour. This is 35% of your credit score. If your credit history shows that you do not pay on time and you fail to meet the minimum payment requirement, you will be viewed as an irresponsible credit holder. That will make you a high credit risk because lenders will view you as someone who cannot be trusted with credit. You will either be denied of your loan application or given a higher interest rate.
  • Monitor your credit report. Sometimes, people end up with ruined credit reports after being a victim of identity theft. reported that in 2014, the top complaint from Americans (as compiled by the Federal Trade Commission) involves identity theft. The only way that you can detect this is by looking at your credit history every now and then. You need to look at the records to ensure that everything reflected there are all your financial transactions. If there is one entry that you are not familiar with, then you may want to check that out and have it removed.

Credit management will help you maintain a good credit history. But to practice proper credit management, you also have to practice the right financial management habits. This includes budgeting, saving and smart spending. Being cautious with your financial decisions will ultimately help you improve your current financial standing.

Here is a video from the Bank of America to help you build a better credit report.

Do You Really Need Any Of Those Store-branded Credit Cards?

man holding multiple credit cardsIf you get a store-branded credit card from a store such as Target or Sears you may get reward points and exclusives such as access to sales events and coupons. These perks can definitely help you keep more money in your pocket. But does it really make sense to sign up for one of these cards?

If your goal is to save money than the answer to this question is a definite “yes.” However, when it comes your credit standing the answer is a strong “maybe.”

What to expect with store-branded cards

In terms of saving money, credit cards from Lowe’s and Target both offer 5% off in-store and online purchases. Store-branded credit cards often come with other money-saving bonuses from the initial discount you get when you open the account to special deals and greater rewards when you reach a certain spending threshold. They may also include financing options for big-ticket items.

There are two types of credit cards. Store-branded cards can generally be used only at the associated store and maybe at a few other retailers that are part of the same corporate family. Then there are cards such as MasterCard, Visa, American Express and Discover that can be used practically anywhere. Of the two types the ones that can be used anywhere are more practical and may even come with more benefits than a store-only card.

If you’re trying to repair your credit

If you’ve had a problem with credit and are working to repair it then a store-branded card may be your best choice. The reason for this is that it’s usually fairly easy to get approved for one of them. Of course, once you get the card you need to use it responsibly or you’ll never get your credit fixed.

poor credit scoreYour credit score

Any time you apply for a new card, whether it’s a general-purpose card such as Visa or a store-branded card this will affect your credit score. This is because when you apply for a new credit account this turns into what’s called a “hard inquiry” into your credit history and this will cause your score to drop anywhere from 1 to 5 points. One or two of these hard inquiries won’t have much of an effect on your score but if you trigger several of them within a short period of time this will definitely affect your credit score and not in a good way.

If you do opt for a store-branded credit card to get a special discount or some other important perk don’t just turn around and close the account. Fifteen percent of your credit score is based on the length of your credit history or how long you have had credit. When you close an account that will interrupt your history and may shorten the average age or duration of your accounts. In addition, a full 30% of your score is based on how much money you owe versus the amount of credit you have available. Most experts say that you should use only 10% to 30% of the total credit you have available. When you close an account, there is less credit associated with you so the percentage of your credit in use – known as your utilization rate – rises. And this is one case where an increase is not a good thing. If you do get a store-branded credit card keep it open and then use it occasionally to make sure the store does not close it due to your inactivity. Plus, this can help boost your credit score.

If you’d like to know more about boosting your credit score, watch this short video courtesy of National Debt Relief …

Outrageous interest rates

One of the things you definitely don’t want to do with a store-branded credit card is carry much of a balance from month to month. These cards generally have shockingly high interest rates. These can range from 18% to as high as 25%. Many of them are linked to rewards programs designed to get you to spend. When you couple this with high interest rates on your outstanding balances this can be a slippery slide into financial problems. If you’re not careful, you could dig yourself into a hole that will be very hard to get out of.

The cards to get

If your goal is to get as much cash back as you can on credit card purchases then you would be best off choosing one of the general purpose cards instead of a store-branded card. The perks offered by store-branded cards generally work only with the specific store. This is even true of cards affiliated with the store that are not store branded. Your better choice would be one of the general-purpose rewards cards. As an example these, the Chase Freedom card currently offers a 0% APR for 15 months and the interest rate after this introductory period starts as low as 13.99%, depending of course on your credit score. The Freedom card also offers a 5% rebate up to $1500 worth of purchases on categories that rotate every three months. For example, Freedom cardholders could recently qualify for money back on purchases at more than 45 department stores as well as

When to use a general-purpose credit card

There is no question but that it’s always better to use cash than a credit card. If you see something you want to buy on impulse it’s just a lot harder if you have to pull money out of your wallet instead of using that little piece of plastic. Plus, it’s just flat impossible to get in trouble with debt when you pay cash for everything. But there are times when it does make good sense to use a credit card.

For example, in some cases if you buy an extended warranty plan with a credit card the issuer may add a year of coverage at no cost. Second, most credit cards will protect you against fraudulent charges and ID theft by limiting your liability to $50.
If you are traveling abroad, it’s just much easier to use a credit card then carrying a wad of traveler’s checks. There are a few places that favor cash above a credit card but in general the easiest way to pay is with a credit card. However, if you use a card for foreign travels make sure there’s no foreign transaction fee.

When you rent a car with a credit card it will save you money because it should allow you to opt out of the car rental company’s rental insurance. Another good place to use a credit card is for airfare. When you buy your ticket with a card and your bags or their contents are lost, stolen or damaged this will probably be covered. You may also be given money for clothing and toiletries while you’re waiting for your baggage to arrive. Buying your groceries with a credit card can also pay off because many of them offer bonus points for purchases that you make at the supermarket. As an example of this, the Blue Cash Preferred Card issued by American Express offers 6% back when you use it to buy groceries. And finally there are those online purchases. While there is still a bit of risk involved in using credit cards to buy stuff online many credit card companies offer liability protection so that you’re not responsible for any unauthorized transactions so long as you keep your account in good standing. However, it’s important to review your statements every month and if you find unauthorized usage report it immediately.

Why Repairing Your Credit Could Be Easier Than You Think

You’ve trashed your credit. Maybe it wasn’t even your fault. You could have had a medical emergency that cost you thousands of dollars. Maybe you were in an automobile accident and your car was totaled. Or it could be that you lost your job and didn’t have enough money to both pay your bills and keep a roof over your head. Of course, it could have been your fault. Did you charge wildly on a two-week dream vacation without considering how you’d repay the credit card company? Did you quit making payments on your cards because you just didn’t have enough money to make even the minimum payments?

The embarrassment of being declined

You know for certain you’re in trouble with your credit cards when you’re trying to checkout at your favorite store and your credit card is declined. That can be a horrible feeling. Fortunately, there are things you can do to repair your credit, which is not as difficult as you might think.

First, if you find that you’re in trouble with debt don’t apply for any more credit. Maybe that’s a sort of well duh, but if your credit is already poor the last thing you need to worry about is more credit. It’s likely that the application system will auto decline your application anyway. However, the more times you try to get new credit the more this will damage your credit report. This can bring down your score even further (more on this later).

Review your credit reports.

You have three reports because there is three credit reporting bureaus. They are Experian, Equifax and TransUnion and they are obligated by law to give you your credit report free once a year. You can also get your credit reports individually or simultaneously on the website But whichever you choose it’s important to get your reports and read them carefully to see what the lenders are seeing that’s damaging your credit. This could at least help you do better in the future.

If you would like information on how to read your credit reports watch this short video courtesy of National Debt Relief.

Pay down your accounts

A third way to help resuscitate your credit is to pay down your accounts. One of the biggest factors in your credit score is your debt to credit ratio. In fact, it accounts for 30% of your score. If you have a high debt to credit ratio it’s because you’ve used up a large percentage of the credit available to you. When you pay down one or more of your accounts this will improve your ratio, which ultimately will help your credit score

Dispute errors on your credit reports

Another reason to review your credit reports regularly is that one or more of them could contain errors. Your credit card company or a business could have reported something to the credit bureaus by mistake. If you do find an error it’s important that you dispute it. You could do this online but it’s much better to write the credit bureau a letter disputing the item you think is an error. Once the bureau receives your letter it will contact the company that provided the information and ask for it to verify it. If it is unable to do so or if it fails to respond within 30 days the credit bureau is supposed to remove the item from your credit report, which might be able to improve your credit score.

Open an account at a credit union

If you have a good job and need to prove yourself in terms of your credit you might want to join a local credit union. This is because credit unions tend to be a bit more liberal with credit. Or it might offer a secured credit card that would help you get started. If you use that secured card wisely, you might be able to eventually convert it into a normal credit card.

Did you know that it’s important to have different kinds of credit? Having a credit card or credit cards is only half the battle. If you have an installment loan, a line of credit, a mortgage, an installment loan or some other form of credit this can help your credit score considerably. This shows potential lenders that you are responsible with multiple kinds of credit. Of course, being responsible with all those different kinds of credit means making all of your payments on time every month going forward.

Get a secured card

As mentioned above, if you’re trying to rebuild your credit a good way to start is with a secured card. This is where you deposit some amount of and then use the card to charge against that balance. Once your balance reaches zero, you could deposit more money and continue to use the card. You need to be careful which type of secured card you choose, as there are two types. One is a prepaid debit card, the other a secured card. In both cases, you deposit money and then charge against the balance you’ve created. If you were to choose a prepaid debit card, you would load it with money just as with a prepaid cell phone.

However, with a secured card you deposit the money with the card issuer and then draw against it just as if it were a checking account. Of course, you can’t overdraw the account, as you could with a checking account because when your balance reaches zero the card can no longer be used. Prepaid cards are called cash centered transactions because you’re not using the bank’s money. In comparison, with a secured card you’ve actually deposited money with the card issuer (a bank) and are drawing against it.

What this means is that the biggest difference between these cards is that how your use a secured card will be reported to the credit bureaus but not how you use a prepaid card. This means if you’re trying to rebuild your credit it’s important to get a secured card. Naturally, you will want to use it sensibly which means adding money before your balance reaches zero and not trying to use the card when there is no money left in your account.

Understanding your credit score

If you are serious about repairing your credit it’s important to understand how your credit score is computed. As mentioned earlier in this article 30% of your credit score is based on your debt to credit ratio. Your credit usage or how you’ve used credit in the past accounts for 35% of your score. If you have misused your credit there’s nothing you can do about it because, well, history is history. Another important factor is length of credit history as it accounts for 15% of your score. This is basically how long you’ve had credit. The different types of credit you’ve had accounts for 10% of your score as we covered in the section about signing up with a credit union. The final 10% of your score is based on what are called hard credit inquiries or how many times you applied for credit. Your score is actually dinged two points every time you apply for credit. These stay in your credit report for two years though their significance diminishes at six months and then at one year.

Small Mistakes That Are Costing You A Good Credit History

credit history definitionIf you are confused about your credit score, then the best place to start is to understand your credit history.

Simply put, this is a record of all your credit transactions. Take note that it does not record all your financial transactions. It will only record credit that is under your name. So no matter how much money you have in your bank account, it will not matter in your credit report. All it will really care about are the debts that are piling up and being borrowed under your name.

Although this is not the end all and be all of your financial situation, whatever is on your credit history will have a huge impact on your personal finances. This is why it is very important that you take care of what is placed in this report. You need to make sure that there is adequate information and that it will show how you are responsible with your credit accounts.

Unfortunately, there are statistics that show how illiterate some people are when it comes to their credit report and everything connected to it. According to, the survey done by the American Bankers Association revealed how people are confused about their credit report and credit scores. They think that they are the same.

Well they are not. Your credit history and your credit report can be likened with each other but a credit score is an entirely different concept. Your credit report contains the history of your debts. Whatever is on your history will be the basis when computing for your credit score. This score will determine the financial opportunities and products that you can avail.

It is very important that you educate yourself about your credit report, because any confusion that you may have about it might jeopardize the credit score that will be derived out of it. There are many things that you need to know and let us start with the financial habits that could be ruining your credit history.

These little mistakes may be bringing your credit score down

When something ruins the history stated in your credit report, you can bet that it will affect your credit score. Although the bulk of the information you will get from the Internet involves credit card debt and how it can ruin your credit history, you should know that it goes beyond that. There are so many other causes of your credit downfall. So let us identify the entries that could be viewed as credit report problems. Knowledge of what they are could help you avoid committing these mistakes.

  • Late home rental payments. Although they are not required to submit reports to the major credit bureaus, they are not banned from it. If you are regularly late on your rent, your landlord might report you – that can taint your credit history.
  • Making car rental reservations. When you plan on renting a car, one of the requirements that will be asked of you is your debit or credit card. Either of the two will help guarantee that any damage that you will inflict on the car can be covered. However, you need to know that using any of the two have different effects on your credit history. If you use your debit card, the rental company will be prompted to conduct a credit inquiry on you. The same is not true if you use your credit card. An inquiry on your credit report will have an effect on your score so be careful about this. The best way to go about this is to reserve the vehicle using your credit card and then settle the bill with your debit card.
  • Unpaid medical bills. This is actually not a small mistake but given the frequency of this debt, it deserves to be mentioned. According to, 43 million Americans are currently burdened with delinquent medical bills. This data came from a report released by the Consumer Financial Protection Bureau (CFPB). It revealed that one out of five credit reports are tainted by outstanding balances on medical debt. This type of debt is something that you cannot avoid when you need it the most. But despite that, it can be just as destructive as an unpaid credit card debt. Do not ignore this debt and try to negotiate how you can pay it off.
  • Unreturned library materials. This may come in as a surprise. If you borrow a book or even a DVD from the library and you fail to return it, you will be charged with penalties. Some people know about this penalty but do not think twice about it because it is actually quite small – $0.25 a day. However, if your fine reaches $25, it will be fined further with $7.95. Most people, by the time it reaches this amount would have forgotten about it. But the library will make sure you will not because this is about the same time that they will forward your account to a collections agency. That could end up being a bad mark on your credit history. Think about it. If the lender sees that you cannot even pay a small amount, how do you think they will feel about lending you a bigger loan?
  • Delinquent tax payments. We all know how aggressive the IRS can be when it comes to collecting taxes. You can be sure that even if you run from your tax obligations, the IRS will track you and make you pay. Not to mention the record that they will place on your credit report. It can really take a downward spiral very fast.
  • Unfulfilled gym memberships. When it is time to cut back on expenses, one of the most common suggestions include gym memberships. If you fail to fulfill the terms of this contract, you will just be opening another way for your credit history to be tainted. Just pay off your obligations from this membership contract and cancel it. There are so many ways to stay fit without having to pay anything.
  • Ignored traffic tickets and violations. Whether it is a traffic violation or a parking ticket, these can be a cause for your credit report to receive bad marks too. While it will not be a devastating downfall, it will still reflect a great deal about your credit behavior.

How to rebuild your credit report

A lot of us have gone through financial hell in the past few years and we have our ruined credit reports to show for that. The good news is, this is one problem that you can recover from. Here are some tips that we can give you to help build, or rebuild a good credit history.

  • Choose the type of credit you will use. If your intention is to work on having a good credit history, then you need to use the right credit accounts. One of the accounts that you can use is an affordable secured credit card.
  • Understand the simple rules of good credit behavior. When you start using credit again, you need to implement the right credit behavior. This includes paying on time, paying no less than the minimum requirement, etc.
  • Be selective of how you use your credit. If it is not necessary, then do not buy it using your credit card. Also, make sure that you can afford to pay your dues and able to minimize the interest that you will pay on it.
  • Monitor your credit report every now and then. According to, your credit repair should begin with this. Make sure you get a copy of your credit report and check if there are errors on it. If there are, you need to dispute it. Sometimes, you exhibit the right credit behavior but after becoming a victim of identity theft, you end up with a botched credit history.

Here is a video from the Bank of America to help you with tips on how to build your credit from scratch.

5 Credit Score Myths That You Need To Stop Believing

It is true that what you don’t know about your credit score can hurt you. But it is also equally destructive if you had been believing the wrong things about credit scores all this time.

Some people are probably still confused about their credit report and the score that is derived from it. While the calculation is actually difficult to guess, those in charged of computing it are transparent about the factors that can affect it. All you really need to do is to make sure that these factors are taken cared of for you to have a great score.

The important thing that you need to know is that your credit rating is an important measurement of your credit behavior. By behavior, we mean your ability to manage your credit and pay it off responsibly. The more you lack in terms of credit management, the less appealing your score would be. That could affect your chances of getting a loan to buy a home, finance your business or secure financial aid for a higher education. If you wish to avoid any problems in case you need any of these loans, you need to pay attention to the condition of your credit score.

Here is a video that will briefly define what this credit rating really is.

5 myths about credit rating that you need to forget

After having defined what a credit score is, let us now discuss the popular misconceptions about this financial term. It is easy to be confused about this score. Some people are so baffled that they end up not trying to understand it at all. Well that could cost you in the long run because ignorance is never bliss – especially when it comes to your finances.

There are so many myths concerning your credit rating and here are 5 that you probably haven’t heard of before.

Myth 1: You only have to worry about 1 credit score.

Let us get one thing straight – there is more than one source of this credit rating and they are handled by different companies or agencies. Each of them have different formulas and you need to be aware of the varying credit score ranges. Sometimes, you think that you are in great shape but you are actually looking at the wrong range. For instance, a FICO score range is 300 to 850. The PLUS Score made available by Experian is only for consumers and has a range of 330 to 830. If you look at the latter and you got a 700, you would think that everything is well. But what if the lender used the FICO Score and the what you thought was sufficient was actually lower? You need to know what score the lender will be using so you can understand and probably negotiate a better loan term with them.

Myth 2: Credit elimination is the key to increase your credit score.
When the Great Recession happened, people suffered so much because of the debts that they owed. Some American consumers said to themselves that they would never put themselves in that position again. They worked hard to get rid of their debts and they thought everything will be okay. But while you may think that a life without any credit is great, the same cannot be said about your credit score. As defined earlier in this article, this is how you can measure your credit behavior. If you do not have any credit, how can you have a credit score? Paying for cash will not improve your credit rating. You need to use credit and then display good behavior in paying it back. The best way to improve your credit rating is to use your credit cards and pay it back in full each month. According to, you can understand how closing credit cards may seem like a good idea to improve your score. But that is not the case. You will actually cause the credit utilization in your credit report to rise. That can pull your credit score down.

Myth 3: Your assets will affect your credit score.

man with shovel and thinking about moneyThis is not true. The credit bureaus who are collecting your credit information will never look at your bank accounts. They do not care how much you earn and how many assets you have. All they care about is how you behave when it comes to your credit obligations. The only time that your bank account will have an effect is when your checks are starting to bounce. But if it is overflowing with funds and yet you are still missing out on your payments, your credit score will really suffer. Your savings will have an effect if you know how to use it in relation to your credit. For instance, if your funds are suddenly compromised, you do not have to delay debt payments if you have sufficient reserve funds.

Myth 4: Your educational background will affect your credit score.

Your college degree will not help your credit score if you do not know how to manage your debts. The ones computing your score will not care if you have a masteral or not. As mentioned, your assets will not be a part of your credit report. So the high income that you are earning because of your educational background will not matter if you cannot pay your dues. In fact, some college graduates have a low credit score because they are having a hard time paying off their student loans. If you can use your education to help you understand how to manage both your money and your debts, that can help improve your score – if you can implement it correctly.

Myth 5: A bad credit score can compromise employment opportunities.

In the past, this was a problem. But legislators realized that this is not a fair way of finding great talent. According to an article from, Senator Elizabeth Warren (Massachusetts) will work to end this practice of being biased to job applicants with a low credit score. She believes that this is unfair and through the Equal Employment for All Act, seeks to eradicate this practice. While there is no law prohibiting employers from looking at the credit report of applicants, it should not be the reason for a job applicant to be turned down for the job.

How to avoid ruining your credit report

According to the latest State of Credit published on, there is an improvement in the credit score of American consumers. Compared to 2013, the 2014 State of Credit revealed that there is an increase of 2 points in the average credit score in the nation. Now, the score is 666. This is great news but that does not mean you should be relaxed already. Taking care of your score takes constant effort.

Your credit score needs attention and you can expect that this will be necessary for the rest of your life. Here are a couple of tips that you can follow to make sure your credit rating will never be ruined.

  • Do not eliminate credit. As explained earlier, eliminating credit will not help your score. You need use credit every now and then so the credit bureaus can record that activity and your behavior in paying it off. Using your credit card and paying off the balance in full at the end of each month is the best way for you to do that.
  • Pay your dues on time. Late payment is a big factor in your credit score computation. You do not want them to bring your score down. Not only that, you will be saving money by avoiding the charges incurred by a late payment.
  • Always check your credit report. You may be responsible with your credit management but if you fail to check your credit report, you may not realize that you are already a victim of identity theft. Someone may already be using your name to borrow money and not pay it off. If you cannot report this immediately, you might end up with a bad credit score and a debt that you never benefited from, but you need to pay.

The 5 Most Important Things To Know About Your Credit Score

Credit Score highlighted in yellowThe most import thing you need to know about your credit score by far is … your credit score. That’s because it’s what rules your credit life. If you have a good credit score (more about this later), the gates of credit will open wide to welcome you and you’ll get the most favorable interest rates – whether it’s a credit card, a mortgage or a personal loan. But if you have a poor or bad credit score, ouch! You may have a tough time getting any credit and when you do it’s likely to come with an interest rate that could cause you to fall over in shock.

While you may know your credit score, did you know it’s only one of your many credit scores and that no single credit score is your “real” one? If you’re really on top of things you might know that if you have a high balance on one of your credit cards this will lower your credit score – even if you pay off the balances on your other cards every month. And you might even know that if you miss just one payment it can lower your credit score by 25, 50, 75 points or more.

All this is important but they’re not necessarily the most important things you should know about your credit score as they are:

1. Your credit report(s) is the key

Your credit report from Equifax, TransUnion or Experian is what’s used to calculate your credit score — whether the information is right or wrong. This is why it’s critical that you get and review your credit reports to make sure all the information in them is correct. You can get your reports free from each of the credit bureaus once a year or all at once on the website Since the credit bureaus don’t share information it’s very important that you get all three. Also, you can’t know which report will be used to compute your credit score so you need to make sure all three reports are accurate. Data breaches and identity theft have become a way of life these days. If you don’t review your credit reports regularly you may not know you’ve been victimized. It’s also possible that one (or more) of your reports contains errors. If you spot this or anything that looks like identity theft you need to contact the relevant credit bureau immediately and dispute the information.

2. Your credit score isn’t engraved in steel

Your credit score can change as information can be added or removed very quickly. And the changes can be either positive or negative. If you have a poor score this can a reason for hope that your score will change. On the other hand it also means you need to be alert.

It’s always possible that a mistake could damage your score or, worse yet your score could be trashed by identity theft. If either of these happen you need to know about it immediately so that you can take the appropriate action.

3. Your can rebuild your credit

Have you had serious problems with your credit in the past? Then the good news is that you can rebuild your credit. While this can be seriously frustrating there are almost always things you could do to move your credit in the right direction. For example, you could get a secured credit card with a small limit and use it carefully. Also, as negative information about how you’ve used credit becomes older it generally has less of an impact on your credit scores and will eventually disappear from your credit score calculation.

Man climbing range of credit scores

4. You can know if you have a good or bad credit score

As you read earlier in this article you don’t have just one credit score. Lenders can choose from among many different credit scores and each has its own credit score range. The reason this is important is because when you get your credit score you need to know the various ranges so you can understand how your number fits in. For example, your FICO score ranges from a low of 300 to a high of 850. You also have a VantageScore with the same credit scoring range. However, the VantageScore Scale (versions 1.0 and 2.0) ranges from 501 to 990 and your PLUS score goes from 330 to 830. But in any case, regardless of which scoring model your lender chooses, the simple fact is that the higher your score the better. As an example of this if your FICO score is 830, this puts you just 10 points away from the highest possible score and you would be considered “super prime.” On the other hand if your VantageScore Scale score is 840 that’s not as great because it leaves you 150 points shy of the maximum score. But given the fact that both your FICO score and VantageScore basically range from 301 to 850 is possible to see where you stand by category as follows.

• Excellent Credit: 750+
• Good Credit: 700-749
• Fair Credit: 650-699
• Poor Credit: 600-649
• Bad Credit: below 599

So the answer to the question what is a good credit score is any score above 700.

5. You can improve your credit score

Since a bad credit score will cost you thousands of dollars in interest, increase the cost of your auto insurance and maybe even keep you from renting a house or apartment it’s important to know what you can do to improve it.

a. Make sure your credit reports are accurate

As noted above, there could be erroneous information in one of your credit reports or even worse you could be the victim of identity theft. If you do find errors in one of your reports you need to dispute it immediately. Each of the three credit bureaus has a form on their website for this purpose but it’s much better to do it in writing. You should send your letter certified and return receipt requested so that you will have proof you disputed the information. When you file a dispute with a credit bureau it will contact the company that provided the information and ask that it be verified. If the company that provided the information doesn’t respond within 30 days or can’t verify it, the credit bureau must remove it from your credit report.

b. See where you stand

Once you’ve learned that your credit reports are accurate the next step is to get your credit score – assuming you don’t already have it. The only place you can get your true FICO score is on the website but it will cost you as you will be required to sign up for its monitoring service at $19.95 a month. But it’s not critical that you get your FICO score. You could get your score free at sites such as and And no, neither of these will be your true FICO score but they will be close enough for you to know where you stand.

c. Determine why you have a low score

All credit scoring models include a “reason code” or “score factors” that explain why you lost the most points in your credit score calculation. If you check these out you’ll know why you have a low score and can create a plan to improve it.

d. Create a plan and stay with it

Once you know why you have a low credit score you can make a plan to improve it. There are usually three reasons why you have a low credit score. The first is that you have a lot of credit card debt. The second is negative information in your report because you did not use your credit wisely and three is a mixture of these.

If your problem is that you have more credit card debt than you should, there is a quick and easy answer – providing you have enough money to pay down some of your debts. The second biggest component in your credit score is called credit utilization or your debt-to-credit ratio. If you can improve that ratio by reducing your credit card debt you should see an improvement in your credit score practically overnight. Unfortunately, if the problem is that you have negative information in your credit report it’s going to take time and changes in the way you handle credit to improve your score. If you have unpaid debts or debts that have gone to collection you’ll need to address them. You’ll also want to start adding new more positive information to your credit reports to make up for the damage you’ve done in the past. What this amounts to is making sure you keep your credit card balances low and always make your credit card payments on time.

To know more about all five components that make up your credit score and which ones you could work on, be sure to watch this short video courtesy of National Debt Relief.

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