Personal finance tips: The risks of medical credit cards, and more

Saving on back-to-school purchases

Back-to-school shopping isn't the "frenzied one-day spending spree" it used to be, said Kaitlyn Krasselt at USA Today. Families are expected to spend an average of $670 on school supplies, clothes, and electronics this year, but more parents "are shopping strategically online and picking up additional in-store items when necessary," spreading out their purchases over time. For the essentials, experts say the best way to save is to avoid brick-and-mortar stores altogether and wait for Labor Day sales. In the meantime, late July and early August can be a great time to cash in on deals for classroom supplies, while big-ticket items like laptops are likely to go on sale in August, "when 62 percent of all 2013 laptop deals occurred."

5 tips to manage your credit

1. Check your credit report 
   The first step on your journey to maintain or improve your credit is finding out your credit score and reviewing your credit report. The FICO score is the most frequently used type of credit score. It's a measure of risk that calculates the odds of you repaying lenders based on your financial history and the terms of the loan. To do this, it uses the information in your credit report. FICO scores can range from 300 to 850. The higher your credit score, the more likely you will be approved for loans and possibly lower interest rates. You can check your credit report once a year for free through the Equifax, Experian, and TransUnion at www.creditchecktotal.com. Once you view your report, look for any discrepancies or delinquencies and be sure to resolve them right away.
2. Understanding different credit score inquiries 
   There are two types of credit score inquiries: hard or soft, depending on who is pulling your credit. When a lender or business obtains a copy of your credit report in response to an application for credit, it results in a hard inquiry. Hard inquiries can take a few points off your credit score. Soft inquiries occur when a person or company (a prospective employer, for example) checks your credit report as part of a background check. Soft inquiries have no effect on your credit score. Checking your own credit counts as a soft inquiry. That means you can check your own score as many times as you like without any risk of hurting your score. It makes sense to check your credit report and score regularly, particularly if you’re concerned about identity theft or reporting errors.
3. Make payments on time 
   This one may seem obvious, but paying your bills on time is one of the simplest ways to earn and keep good credit. Potential lenders want to know if you typically pay your bills on time. This doesn't just include installment loans and credit cards, it also applies to things like your cell phone and utility bills. Consider utilizing bill pay or automatic payments to ensure your bills are paid on time.
4. Length of credit 
   Generally, your credit score will increase the longer you have credit established. However, length of credit history doesn't overshadow the rest of the report. Negative marks on a credit report can bring down your score. Length of credit history is determined by how long your accounts have been open, with consideration given to your oldest account and your newest account, and how often you use those accounts. You should consider length of established credit before transferring balances from an old account to a new account. While a credit card company may offer a 0% APR on balance transfers when opening a new account, you should consider if trading old debt for new debt is worth the impact to your credit. Ultimately, if you're able to pay off the balance of your credit card with the 0% promotion, it will benefit you it the long run.
5. Mix of credit accounts 
   Potential lenders want to know how you manage your debts. Having a mix of active credit accounts, such as credit cards, retail accounts, auto loans, and mortgages, allows potential lenders to see that you're able to manage debt responsibly. While having different types of credit accounts plays a role in your credit scores, you shouldn't open up credit accounts you don't intend to use.

10 Steps to Repair, Rebuild, and Protect Your Credit

Have you had one or more financial misfortunes over the past several years and now have a less than ideal credit score? If so, you’re certainly not alone. Credit scores have been one of the biggest victims of the financial crisis and the recession. Unfortunately, that number can determine not only whether you can get credit and what interest rates you’ll pay but they can also affect your insurance premiums and even your ability to get a job.

1) Fix any errors in your credit report. It’s bad enough if you’ve made your share of mistakes in the past so you certainly don’t want to be penalized for ones you didn’t make as well. About 70% of credit reports have them so there’s a good chance at least one of yours does too. You can get a free copy of each of your 3 credit reports every 12 months, at creditchecktotal.com . Once you get your report, you can then correct any errors you find that could be hurting your score.

2) Catch up on any missed payments. If you’re having trouble making payments, you can try to work out a payment plan with your creditors or consult a non-profit credit counseling agency to negotiate on your behalf.

3) Make sure your payments on any debt and other bills like rent and utilities are on time going forward. After all, payment history is the biggest factor in calculating your credit score. You might also be able to get letters of recommendation from these companies when you apply for credit. For those reasons, you may want to consider having your payments automatically deducted from your checking account. Just be sure not to overdraw the account. If you do miss a payment, contact the creditor as soon as possible and ask if they would be willing to remove the late payment from your account as a courtesy and gesture of good will.

4) Of course, you can’t build a positive credit history if you don’t have any credit.  The problem is that it takes credit to get credit. A good place to begin would be to see if your bank will allow you to open a secured credit card. These cards require you to deposit an amount of money usually equal to the credit limit into a special savings account that the bank can collect any missed payments from. This helps to minimize the bank’s risk so it’s relatively easy to get but there’s a chance you may still need a co-signer to qualify.

4 tips for getting your credit score in shape for summer

So here’s a quick four-step workout to get your credit score in shape for summer:

1. Check your credit score. You’ll need a baseline against which to judge your performance, so check your credit score (for free). Two-thirds of people haven’t checked their credit score in the past year, according to the National Foundation for Credit Counseling, which means this simple step alone puts you ahead of the game. You might even discover that your credit is already excellent and you’re perhaps currently overpaying on certain financial products. In such a case, you can get right to upgrading.

2. Review your credit report for errors. To say that credit reports are error-ridden would be an overstatement, but not by much, as roughly a quarter of people have a mistake on one of their files, according to the FTC. Finding a significant error and then successfully completing the dispute process is one of the easiest ways to get a quick credit score bump.

3. Pay down outstanding balances. Credit scores incorporate a metric called “credit utilization,” which is the ratio of your credit card balances to your credit limits. Lower is generally better with this ratio, so try to repay a chunk of a revolving balance, if applicable, or pay your bill a few days prior to your monthly statement being generated in order to reduce the balance reported to the credit bureaus.

4. Satisfy collection accounts. The newest credit-score models stop considering collections accounts once they have been paid. Either paying what you owe in full or negotiating a settlement with the collection company could therefore improve your score, and perhaps your odds of credit card approval.

The final step is to re-check your credit score in about a month. If it’s excellent, you’ll be able to apply for one of the best travel credit cards on the market and perhaps get an initial bonus worth $400 to $625 in travel expenses.

If your score is fair or bad, just make sure and perhaps your odds of credit card approval.

The final step is to re-check your credit score in about a month. If it’s excellent, you’ll be able to apply for one of the best travel credit cards on the market and perhaps get an initial bonus worth $400 to $625 in travel expenses.

If your score is fair or bad, just make sure that you have a card with no annual fee, and focus on the fundamentals of paying your bill on time every month (in full if possible) and using only a portion of your credit line.

6 Tips for Boosting Your Credit Score in 2016

Your credit score affects your financial life in many ways. Car insurance premiums and your interest rate on home and auto loans are determined, in part, by your credit report, and plenty of employers actually check it when deciding whether or not to hire a candidate for employment. With that in mind, it’s in your best interest to not only know your credit score, but to improve it.

Here are six tips for improving your credit score for a fresh financial start in 2016.

1. Pay Your Monthly Bills on Time
Paying monthly bills is a necessary chore that has a definite effect on your credit score. According to the FICO scoring model, your payments account for as much as 35 percent of your total score. Create reminders for due dates or establish a calendar for yourself to ensure you get everything paid on time.

2. Reduce Your Debts
Got credit card debt? Start paying it off now. Part of your credit score is based on the amount of available credit you have, known as your credit utilization ratio. So if you’re carrying high balances, you’ll want to lower them as soon as possible. Create a personal budget with a goal of reducing your spending so that it’s lower than your income. Then, use any monthly surplus for your credit card debts until they’re gone for good.

3. Limit Credit Inquiries
Looking for a new apartment? What about a mortgage? In either situation, try and group your applications together as much as possible. Applications for new lines of credit will generate a “hard pull“ on your credit, and having too many of them in a short period of time can lower your score. However, credit reporting agencies usually consider a group of applications within a short period of time as one pull, as long as they’re in the same category.

Similarly, limit yourself to opening up no more than one or two credit cards per year, which also generate hard pulls. Even if you get a ton of offers in the mail for stellar sign-up bonuses, they’re likely to be offset by the damage to your credit. FICO reports that new credit and credit inquiries account for 10 percent of your total score.

4. Don’t Cancel Old Cards
Have a card you don’t use anymore? Don’t close it. This can negatively affect your score as it lowers your amount of available credit. Instead, use it about once per month and don’t forget to pay the bills in full, and on time.

5. Request Credit Limit Increase
If you only have one card and you’re constantly approaching your spending limit, call the bank and ask for an increase in your credit line. This will raise the amount of available credit, which will eventually improve your score.

6. Take Care of Late Payments Before They Hit Your Score
If you do happen to miss a payment, contact the card issuer immediately. If you have good history built up, the company may agree to not report your late payment. Even if you can’t avoid a late-payment fee, be sure to get your account up to date as soon as possible so you can limit the damage.
Your credit score is yours to own. It reflects your financial history and helps lenders predict how you will manage your finances in the future. Due to the lingering effects of credit, you don’t want to waste any time to improve your credit.