Posts Tagged ‘credit’

A Catch 22 for Today’s Graduates Seeking Credit

Friday, May 8th, 2009

Most new graduates don’t have an established credit rating yet. This is a problem for those who are actually trustworthy individuals, but do not have the credit score to reflect that reality.

To add to the confusion, most debtors are not willing to take a chance on lending money without a good indication of creditworthiness. Although it may not seem fair, this makes perfect sense from the lender’s standpoint. After all, would you honestly take a chance on an unknown borrower when there are millions of other people applying for loans with clear credit standings and strong histories of repayment?

Fortunately, for these young people, there’s an practical method of building a credit history. It begins by applying for a secured credit card (one that reports to credit bureaus). Instead of basing credit limit on credit history, it bases it on a one-time deposit. This card can then be used for staple purchases, such as groceries and utilities, and as long as the individual repays this credit card back in full or at least stays on top of minimum payments, it will reflect positively on a credit history and will make it much easier to be approved for future loans!

The idea of building credit from scratch may seem discouraging to students and recent graduates. However, it must be done in order to have the best chance of growing their credit the right way. If a positive credit history is sought, then a little planning and time can certainly make it happen!

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Working Towards A Better Credit Score

Friday, May 1st, 2009

Raising your FICO credit score is important if you want to get a better rate on future loans, but the process will takes time and there are no quick fixes. In fact, quick fixes are usually detrimental to your score, because they usually backfire eventually. The best advice one could receive is to take your time, and learn the right approach to building credit.

To start improving your credit score, you must make sure you’re paying your bills on time and managing your available credit wisely. The most important item is definitely going to be your mortgage (make sure you pay it on time each and every month). Also note that installment loans (where you borrow a set amount to buy things like new furniture or appliances) are given more weight than credit cards.

A few additional rules to help you boost your score: 1) always keep your borrowing well below your credit limits, because your FICO score will suffer if you are maxed out on your credit cards, 2) never have more than two or three credit cards because a large number of credit cards will also lower your score, and 3) definitely don’t apply for several credit cards at one time; it makes lenders nervous and will lower your FICO score dramatically.

Many other factors will also affect your score, but this is pretty a good start! My advice: do your research and always be prepared — Good Luck!

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Using a Bad-Credit Personal Loan Correctly

Tuesday, March 17th, 2009

A bad-credit personal loan can be a powerful tool for accessing fast cash in an emergency!

It can allow you to pay off your credit cards with an even higher interest rate, or help pay for an unexpected financial situation. However, these kinds of can also put you at higher risk for default and mismanagement. In fact, experts recommend that individuals with bad credit take an active part in clearing up their credit first, before considering more high-cost debt.

The key to wisely managing a personal loan with bad credit is to crunch the numbers and determine how quickly you’ll be able to repay that debt. Many borrowers with bad credit only look at how much they can afford to pay back each month, and then borrow the maximum amount while planning to make only the minimum payments. What you really should do is plan to borrow the lowest amount possible for your situation, and then plan to make monthly payments that are a good deal higher than the minimum amount required. The sooner you can pay back a loan when you have bad credit, the better off you will be in the long run.

The first logical step in repairing your credit is to review your credit report and fix everything you can (if for no other reason than to expand your options in the future). Remember: the credit reporting agencies often make mistakes, so a careful review of your report may turn up something that you can easily fix. Tackling the other issues with your credit may take time and patience, but there is no quick fix for improving bad credit.

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Building Credit with a Secured Credit Card

Monday, February 23rd, 2009

This article is for those who want to establish good credit.

First of all, most people start establishing their credit by first obtaining a secured Visa or MasterCard. With these cards, you deposit a certain amount of money (ex. $100) to so called CD account and you then receive a credit card with $100 limit. The banks that offer these cards all report to the 3 credit bureaus (some report as a secured credit card account & some do not).

After a year, the bank then returns the deposited money and the account becomes unsecured, with the limit that you originally had. However, it is always a good idea to increase the limit before the year ends, so you will end up with higher limit card. There are a lot of good websites out there that offer both secured cards, regardless of your credit standings, employment or income. You can visit these sites and apply for a one, or maybe even sign up for a few cards to increase your credit score faster and higher.

Each credit account is considered as a trading reference: the more credit you have established, the more you’ll get from other creditors. Just remember to always make your payments on time and pay down little more than the minimum amount. Good luck!

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