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. 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. Knowledge is Power and Credit is King!

What is a Charge Off and How Do They Work? When you haven’t paid on an account for 6 months to a year, creditors will often mark the account as a “charge off”. This means that the creditor has determined they’ll likely be unable to collect on the debt so they are claiming it as a business loss. This is basically done for tax reasons. However, just because it’s marked as a loss doesn’t mean they will stop attempting to collect on the debt. In fact, they might even hire an outside company to handle the collection process. This is important to understand in case you’re contacted by a collection agency you don’t recognize. Either they purchased the debt from the original creditor and are attempting to collect on it, or they have been commissioned by the original creditor to collect the debt. Knowledge is Power and Credit is King!

8 Credit Card Tips That Will Last a Lifetime!!! Credit card tips can change with the wind — or as you enter different stages in life. If you’re young and trying to build credit, start with a low credit limit. If you travel a lot, consider an airline or hotel credit card. If you have a lot of debt, it’s a good time to put those cards on ice. Great credit? Look into what rewards you might qualify for. All this advice can, at times, get a little overwhelming. Fortunately, there are certain credit card habits that will always apply. Here are 10 basic credit card tips that will last your lifetime. 1. Try to Pay Your Statement Balance in Full Paying interest increases the cost of everything you purchase with your credit card, so you should try to avoid carrying a balance as often as possible. If you do have to carry a balance, try to keep it below at least 30% (ideally 10%) of your available credit limit. Doing so will help keep your credit score intact. You can come up with a payment plan to get rid of any existing credit card debt you have here. 2. Never Make a Late Payment Late payments can result in costly fees, damaged credit and sky-high penalty annual percentage rates. Fortunately, there are many tools that you can use to make on-time payments including e-mail and text alerts or automatic payments that you can initiate with your issuer. 3. Carefully Examine Every Statement Credit card users enjoy robust protections against fraudulent transactions, but you may have to report the activity to your issuer to take full advantage of them. Regularly reviewing your credit card statements can help you spot fraud as soon as it occurs. Calling your issuer immediately to dispute the charges and have the card replaced can help ensure you’re not on the hook for them. 4. It Never Hurts to Ask If you have ever made a late payment by accident, then you’ve probably incurred a late fee. But if you take the time to ask for the fee to be removed, many card issuers will do so. You can also try asking for annual fees and foreign transaction fees to be waived, for your interest rate to be lowered or for your credit limit to be raised. (Keep in mind, the last two may result in a hard inquiry on your credit report, which could ding your credit score.) 5. Read Your Terms and Conditions It’s important to thoroughly read the terms and conditions associated with any credit card you are using or are thinking of applying for. You’ll want to know, for instance, what fees will be imposed and when, if an APR change may go into effect and what your rewards programs entails. You should also check your privacy agreement and whether your card is subject to an arbitration clause. 6. Keep Track of Your Credit The most important way to ensure that your credit card spending habits are in line is to regularly check your credit. Some credit card issuers now offer free monthly FICO credit scores on your statement. You can also request free copies of your credit reports each year from CreditcheckTotal.com and view your credit scores for free each month on Credit.com. 7. Regularly Re-evaluate Your Credit Cards The only constant in the credit card industry is change, so it’s important to regularly take a look at the credit cards that are in your wallet. Then, examine the market to see if there are newer products available that will better meet your needs — which may have changed since the last time you comparison-shopped for cards. 8. Avoid Cash Withdrawals Nearly all credit cards impose cash advance fees and very high cash advance APRs, so you should avoid using your credit card for cash at all costs. Remember, it’s always better to use your ATM card when you need cash.

If You Plan To Apply for a Mortgage soon, DON'T Start Disputing Credit Accounts The Action: The consumer has a disagreement with a particular creditor and takes action by disputing with the creditor a charge, balance, payment or any aspect of the credit obligation. The creditor then places the account in the dispute status, changing the credit reporting to “in dispute.” Why It’s an Issue: Mortgage lenders use what’s called an automated underwriting system, (AUS) for short, which is an algorithm that reviews a borrower’s total on-paper financial picture. The automated underwriting system used by lenders literally ignores any accounts in dispute. As such, the results of the automated underwriting system are flawed, because while the account is on the credit report, the algorithm ignores it because the account is in dispute. In other words, because it doesn’t provide an accurate rating of the true credit picture, the borrower would have to call the creditor and remove the account from dispute status, then the lender reruns the automated underwriting to ensure the loan gets approved in the system. If the loan does not get approved at this time, changes to the loan structure might have to be made, such as switching loan programs (from conventional to FHA, for example), reducing the loan amount or increasing the credit score. Knowledge is Power and Credit is King! #NoMoreExcuses

These 6 Tips Will Help You Get The Most From A Credit Card Most people agree that using a credit card to pay for day-to-day purchases is a smart idea. After all, credit is safe, convenient, and rewarding. Plus, if you're responsible, you'll also be building a solid credit score with every swipe. But are you really making the most of your plastic experience? Here are seven credit card tips everyone should know: 1. Balance alerts can help you keep your spending in check. Keeping a watch on how much you're spending with your credit card is easier than ever before. Most issuers allow you to set up balance alerts so that you'll receive a text and/or an email whenever your total spending hits a certain threshold that you've set. Sign up for this service so that you'll get a notice when your credit utilization ratio is approaching the 30% mark — this way, you'll know to make a payment before you jeopardize your credit score. 2. Spending analysis tools make sticking to your budget a cinch. One of the most underrated online banking features offered by most credit card issuers these days is the spending analysis tool. This allows you to see a breakdown of how much you're spending with your card in different categories (restaurants, travel, general merchandise, etc.). You can usually choose to view this on a per-month basis or take a look at your spending patterns over time. Be sure to look around for this tool the next time you log into your card's online banking platform. It can provide some helpful insights into where you're doing a good job sticking to your budget, and where you might need to cut back. 3. Mid-cycle payments could improve your credit score. Every month, your credit card issuer sends a report about your account to the three major credit bureaus. Included on this report is your balance, which is used to calculate your credit utilization ratio. However, this data isn't necessarily sent over after you've made your monthly payment — it could be reported at any point in your billing cycle. If you tend to charge a lot to your card each month, getting into the habit of making a payment mid-cycle will keep your credit utilization ratio low. This, in turn, will help 30% of your credit score determined by amounts owed. Woman on Laptop at Cafe If you do your shopping on your computer, see if your credit card offers a rewards mall. 4. Shopping through rewards malls will earn you stellar rewards. If you're a big online shopper, you should definitely use your credit card's rewards mall every time you place an order. This is an easy and convenient way to earn tons of extra rewards on every dollar you spend. And don't assume that your particular issuer doesn't offer this benefit. Even if it's not widely advertised, look around a little the next time you visit your credit card's website. You'll probably find some type of rewards mall or portal that you never noticed before. 5. Moving your due date could help you avoid missing a payment. Missing a credit card payment is bad news for your FICO credit score, since 35% of it is determined by your history with making on-time bill payments. If your credit card billing due date comes at an inconvenient time during the month, consider switching it. You can usually do this online or by placing a call to your issuer. This one simple move could go far toward preserving your good credit. 6. Strategic swiping is the best way to maximize rewards earning Using just one high-rewards card for all your spending is a good way to rack up a lot of points. But getting a couple of cards that earn big in the merchant categories you spend the most in and then using them strategically is a great way to pump up the volume on the rewards you're accumulating. For example, if you spend a lot on gas, dining, and travel, getting both the Chase Freedom® - $200 Bonus and the Chase Sapphire Preferred® Card is a smart idea. You can use the Chase Freedom® - $200 Bonus at gas stations when they're featured as a 5% category (which historically happens 2 out of 4 quarters per year) and the Chase Sapphire Preferred® Card when you travel and dine out.

Major differences between FICO® Score 8 and FICO® Score 9 credit-scoring models Here are the highlights. 1. Paid collection accounts matter less. If you’ve paid off a collection account in full, it no longer counts against you with FICO® Score 9. With FICO® Score 8, paying off a collection account doesn’t necessarily help your scores. That’s can be an issue, because collections can stay on your credit reports for a long time. 2. Medical collections matter less. Until recently, there wasn’t a significant distinction between medical collections accounts and other types of collections accounts — at least in terms of their impact on your credit. But newer credit-scoring models, such as FICO® Score 9, deemphasize the impact of unpaid medical collections accounts. 3. Rental payments matter more. FICO® Score 9 cares if you pay rent on time, including rental payment history as a factor in your scores — provided your landlord reports it to at least one of the three consumer credit bureaus. This can be a boon to those who have just started building credit from scratch and don’t have much lender information on their credit reports. Knowledge is Power and Credit is King!

If You Plan To Apply for a Mortgage soon, DON'T Start Disputing Credit Accounts The Action: The consumer has a disagreement with a particular creditor and takes action by disputing with the creditor a charge, balance, payment or any aspect of the credit obligation. The creditor then places the account in the dispute status, changing the credit reporting to “in dispute.” Why It’s an Issue: Mortgage lenders use what’s called an automated underwriting system, (AUS) for short, which is an algorithm that reviews a borrower’s total on-paper financial picture. The automated underwriting system used by lenders literally ignores any accounts in dispute. As such, the results of the automated underwriting system are flawed, because while the account is on the credit report, the algorithm ignores it because the account is in dispute. In other words, because it doesn’t provide an accurate rating of the true credit picture, the borrower would have to call the creditor and remove the account from dispute status, then the lender reruns the automated underwriting to ensure the loan gets approved in the system. If the loan does not get approved at this time, changes to the loan structure might have to be made, such as switching loan programs (from conventional to FHA, for example), reducing the loan amount or increasing the credit score. Knowledge is Power and Credit is King! #NoMoreExcuses

1 Smart Way to Fix Your Bad Credit Once you have it, how should you use it? Basically, treat the card like you're spending your own cash (in a way, you are). Obviously, you want to make your payments on time every month (35% of your FICO score comes from your payment history), but you also should make an effort to keep your balance low. Of your FICO credit score, 30% comes from "amounts owed," which mainly refers to how much money you owe relative to your credit limits. Most experts agree that you should use less than 30% of that amount. For example, if you get a secured card with a limit of $500, try to keep the balance under $150. The lower the better, but make sure you use your card somewhat regularly in order to establish a good payment history. Over time, your secured credit card will help your credit score in nearly every way possible. "Types of credit used" comprises 15% of your score, and if you don't have a credit card, you're not doing too well in this category. Another 10% comes from "new credit," and as your secured card becomes established, the age of your credit will increase and this category will improve. A secured card can be an excellent step on the way to reestablishing your credit, while allowing you all of the freedoms that come with having a credit card.

How to Establish and Maintain Good Credit

Your credit history is a list of all the pieces of your financial life. It includes every credit card account you've opened and any other loans you've taken out. It also includes your debt repayment history. Many factors can affect your credit score, including whether you've paid on time or late, been foreclosed upon or filed for bankruptcy. If a court has ordered you to repay a loan or your debt has been deemed un collectible-these, too, affect your score. All of this information stays on your credit history. Lenders look at your credit history to assess your ability to pay back their money. If you are having money problems, you represent greater risk to a lender. The basic principle with credit is this: use credit wisely and spend within your means. Establishing Credit If you don't have credit (or much credit), the key is to start small. One credit card or small loan can get the ball rolling. But make sure your lender reports your on-time payments to one of the three credit bureaus- ExperianSM (experian.com), Equifax (equifax.com) or TransUnion® (transunion.com)-and preferably to all three. If your on-time payments don't get reported, you're accumulating debt but not building credit. Only credit accounts that report your borrowing and repayment activity will count toward your credit history. Here are some tips to help you establish a credit good history: When establishing credit, pay off your charges in full at the end of the month. When you get a card, always pay off the balance in full when the statement arrives. Paying off your balance in full shows the card company that you're fiscally responsible. You're using credit as it was intended: as a short-term loan. Pay on time. One of the most important steps in building and maintaining a solid credit history is to pay all of your bills on time each month. By paying on time, you're showing the lender or creditor that you've got enough cash flow to cover your expenses. If you pay late and the creditor reports your late payment to the credit bureaus, it may damage your credit history, and lower your credit score. Keep your total charges well within your credit limit. If you want to boost your credit history and credit score, you'll want to keep your total monthly charges well within your credit limit. Why? In calculating your credit score, you'll take a hit if your balance is above that limit because it signals to creditors that you may be having financial difficulties and thus are a riskier borrower. Regularly read your credit report. One way to building a positive credit history is to make sure you know what information is being reported. Errors and negative information can damage your credit history and your credit score, so you'll want to regularly check your credit report to see what's there. Understand what debit cards can do for you. While they look like credit cards, debit cards actually function more like a checkbook. They provide direct access to the cash in your bank account. So you can pay for items and services with a debit card instead of writing a check. What debit cards don't do is help you build your credit history. That's because you're not using credit to buy these items—you're using something that's treated like cash. Because you're using a cash substitute instead of credit, your debit card activity isn't reported to the credit bureaus and won't help you establish good credit. Consider getting a secured credit card. A secured credit card is tied to an account. You deposit a certain amount of money into the account and then you can charge up to that amount. If you default on your payment, the bank can tap into the account to get repaid. After six to 12 months of on-time payments, you may feel you're ready to graduate to a regular credit card or a store card. However, resist the urge to open too many store card accounts to take advantage of discounts. Every time you open one, it results in a credit report inquiry, which may affect your score. Ask for a credit line increase. After you've had your first credit card for a while (six months to a year), call the issuer and ask to increase your credit limit. The idea is to raise the credit limit on the card, not your debt load. If you're carrying a balance, raising your limit will help keep your debt-to-credit-limit ratio low. That's an important factor when calculating a credit score. Focus on what you want. Your credit history becomes critical when it's time to make those big purchases, like a home or a car. At that point, a one percent difference in the interest on a loan will either cost you or save you thousands of dollars over the life of the loan. By keeping your eye on the goal-establishing and maintaining a good credit history-you'll be able to borrow that money when you want it, at the most favorable terms and conditions being offered.

Ways You're Ruining Your Credit Score You know your credit score is important, but are you clued in on what you might inadvertently be doing to sabotage it? This three digit number acts like a grade for your financial life and is calculated based on the information in your credit reports, like your history of paying credit card bills and taking out loans. Lenders use it to determine your eligibility for mortgages, car loans and credit cards, plus how high of an interest rate you’ll pay. Your reports can even be pulled by prospective landlords or employers as they evaluate you for an apartment or job. A FICO score, which is used by the vast majority of lenders, ranges from 300 to 850. Anything above 780 is considered very good and anything below 600 is considered fair to bad. Here are some of the top credit score killers: 1. Paying bills late: Your history of making payments is one of the most important factors that goes into your credit score, whether it’s for a credit card, student loan or mortgage. It’s the first thing a lender wants to know, says Fair Isaac Co., which produces the FICO score, and composes about a third of your score. By slipping up and failing to pay your bills on time, your score gets dinged. It’s devastating for your credit score when you start missing payments entirely (say, you lost your job and can’t afford your mortgage) and they get sent to collections. A collection listed on your credit report will typically remain there for seven years, regardless of whether you pay it off later or not. (That’s right, an unpaid collection is no worse for your score than a paid collection.) With that said, generally the older a collection is the less it will hurt your score. If you get to the point where you’re forced into foreclosure or bankruptcy, that’s particularly catastrophic and can easily knock 100 points off your score. It doesn’t matter if you never exceed the limit and you’re religious about paying your bill in full every month. The fact remains: Amassing big balances on your credit card, relative to your allowance, is harmful to your score. With that said, there are a few tricks you can employ to spend as normal and take full advantage of credit card rewards, without putting your credit score in harms way. The balance that’s reported is typically the one on your monthly statement, so figure out when this hits your mailbox and pay well in advance. Call your credit card company to check. You can also try to boost your credit limit, either by requesting a higher limit on your existing card or signing up for another credit card. Your total credit limit rises with each additional credit line you’re extended. Just “don’t play chicken” with your bill, Your best bet might be to make credit card payments multiple times a month to ensure your balance is always low. Or if you make a big purchase, say a $1,500 flat-screen TV, go home and pay it off right away. You’re expected to pay your credit card bill every month, even if you’re challenging an item on your statement. Were you charged for a catering job you thought was subpar or hotel parking you thought was free? Shipped a defective product? By all means, fight for a refund with the merchant and call up your credit card company to tell them you’re disputing the charge (they’re supposed to designate that charge as pending.) But then pay your credit card bill.