July 30th, 2008
Lenders often encourage people to consolidate credit card debt by taking a second mortgage on their homes – thus spreading payments out over more years, generally at a much lower interest rate.
Sometimes the same company that issued your credit card will encourage you to switch to a home equity loan. They love it because this is a secured loan – unlike credit cards, which are unsecured. They also love spreading your payments out over a longer period of time, because then a larger percentage of each payment is interest (otherwise known as profit to the lender.)
The lender will point out that home equity loans are tax-deductible, so you’ll be saving money. Be careful with that one, as the rules have changed and you may have to prove that the home equity loan was used to make improvements on your home.
So… Should you do it?
The first question you must ask yourself is this: “Do I have the discipline not to turn right around and run up my credit card debt again?” If the answer is no, then no – you should not do it.
What will this new loan do to my credit score? That depends on question #1 – along with the amount of the new credit line you actually use.
For instance, if you have $50,000 equity in your home and are granted a second “revolving credit” line of $35,000, you have just acquired a higher amount of available credit – which is good for your FICO score.
However, if you use every bit of it, that’s not so good. FICO scoring is a bit of a mystery, but the overall consensus is that you should never use over 30% of available credit on any one account.
Can you eliminate those high credit card payments by using 30% of the credit available from your revolving home equity loan? Then it’s a good idea. From that point on, use your credit cards, but pay them off each month when the bills come in. And of course, never charge more in any one month than 30% of their available balances.
Get your credit report right here at CreditScoreQuick.com and read it carefully. Add up the balances you owe, and consider how large your home equity loan would be. If it all makes sense, then check with several Second Mortgage lenders to compare interest rates and programs before you make a decision.
CreditScoreQuick.com
Posted in debt consolidation, free credit score reports | 2 Comments »
July 29th, 2008
Q:
Hi Mike,
I noticed that there are different kinds of credit scores on the web. I was looking to get my actually FICO credit score. Not sure if it really matters, but do you guys provide a FICO score at your site? If you do could you pleas send me to the correct area.
Thanks,
Latisha Williams.
A:
Hello Latisha,
This is a great question. If you are in the market to buy something, getting your FICO score report is a good idea. The other credit score offers will not hurt anything either. Most of the Banks use the FICO credit score model to determine your creditworthiness. If you are looking for your FICO score you can go here.
Mike Clover
CreditScoreQuick.com
Posted in Uncategorized | Comments Off
July 29th, 2008
We’ve already discussed raising your credit score by paying down your debt – and we talked about ways to bring in more income.
The other “best practice” is to simply quit spending so much. You may think you’re already spending as little as possible – that there’s simply no place to make another cut. There’s a slim possibility that you’re right – but it’s very slim. Most of us spend on things we don’t really need.
Adopt a new habit – when considering any purchase that requires use of your credit card, set it aside for a day, or at least for a few hours. A good way to force yourself to do this is to hide your credit cards in a block of ice, so there’s no temptation to just grab the card and go.
Then take a conscious vacation from spending. Set a time frame of say, 30 days, during which you won’t buy anything but groceries and the absolute essentials – like toothpaste.
Now look for “leaks” in your expenses – ways that you spend money without giving it much thought. For instance:
• Lunch. If you work in an office and routinely go out for lunch, you’re wasting as much as $250 per month. Begin “brown-bagging” it and get the double benefit of eating healthier foods while saving money.
• Snacks – if you stop for a soft drink and candy bar or chips on the way home – stop it! They’re bad for your body and your finances both.
• Espresso – do you really need a $5 cup of coffee on your way to work?? If so, get a machine and make it at home before you leave.
• Services you don’t really need: Like 400 channels on your cable TV when you really only watch about 3 of them. See if you can get your plan changed – or just drop it entirely and begin using the library to borrow books or movies.
• More airtime on your cell phone plan than you actually use.
• Gasoline. This is such a huge expense now that eliminating a few trips will save you big money. If it’s possible, carpool or take public transport to work. If not, always bundle your errands to do before or after work so you don’t make a special trip out for them.
• Magazines you don’t read. Next time you get a renewal notice, take the money you would have sent for the magazine and send it to your credit card account instead.
If you try, you’ll find even more places where you can cut $1 here, $5 there, and even $100 somewhere else. Stop those financial leaks and you’ll be well on your way to a beautiful credit report.
CreditScoreQuick.com
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July 29th, 2008
Sounds simplistic, doesn’t it? Just pay down your debts, your credit score will raise, and all will be fine. But if you’re in debt, there’s probably a reason – such as spending in excess of your income.
If you want to build a good financial reputation – otherwise known as a good FICO score – you’ll have to make the effort to bring your spending in line with your income.
You have two simple choices, and they should be used in combination with each other:
• Earn more and use the extra to pay down debt – or stop going further in debt
• Spend less
Start with earning more. How many extra dollars per week or per month would it take for you to begin paying off credit cards? $10, $50, $100, or maybe $500?
Remember, even an extra $10 per month paid on a credit card account will make a difference over time. This is a simple example, because it doesn’t take into account that the money will be paid in a little at a time and will begin reducing the amount of interest you pay from the first “extra” payment onward. Your savings will actually be more than the following example.
But look at it this way: If you’re paying 18% interest, and you pay an extra $10 monthly for one year, that’s $120 less that you’ll pay interest on the next year – That’s $9.60 per month, or $115.20 per year that won’t slide out of your checking account into the hands of a credit card company.
So how can you earn that extra money? Here are a few suggestions:
• Take a part-time job in addition to your regular job. Here are a few that could easily bring in an extra $10 or $20 per week without taking up much time:
o Put up and take down signs for a real estate agent
o If you’re good with a camera, take property photos for that agent
o Walk dogs for a neighbor who works long hours
o Pet sit for people on vacation
o Clean offices at night or on the week-end
o Hire on to shop or do yard/garden work for an elderly neighbor
o Do on-line blogging for pay
o Do on-line surveys for cash
• Begin doing extra tasks at work – take on more responsibility – work a little harder and longer than anyone else – and then ask for a raise.
• Begin looking for a new job that pays more
• Go through the attic and start clearing your clutter – through eBay
• If you can write, sign up on a site like Helilum.com and enter the writing contests
• Put some Google Adwords links on your own web pages
• Teach a class about something you do very well
The most important thing is to immediately set aside all funds generated from these extra activities – and use them to pay down debt. It won’t help you if you increase your spending to match the additional income.
Author:Mike Clover
CreditScoreQuick.com is your resource for free credit score reports, fico scores, loans, credit cards, insurance , identity theft protection and credit repair advice.
Posted in free credit score reports | Comments Off
July 28th, 2008
Q:
Hi Mike,
I have some questions for you about my credit scores. I recently pulled my credit report and noticed I only had two credit scores. One of the credit bureaus said n/a. I currently don’t have any credit cards or any outstanding loans. Most of everything I had went to collections years ago. I am just curious why the other two credit bureaus have credit scores and Equifax does not. Thanks for your help
Susie Jules
A:
Hi Susie,
There are several reasons why you may not have a credit score with Equifax. Based on what you told me it appears that you don’t have any current credit revolving on your credit report. You are stilled getting scored with the other two credit bureaus because of old credit. Some of the creditors may have stopped reporting to Equifax due to no activity. If you want credit scores with all three credit agencies I would recommend opening some new credit cards. Once you have a bout 6 months of good payment history you should have credit scores with each credit bureau. To have better credit scores it would not hurt to have a mix of credit, like auto loans, mortgage loans, and credit cards. All of this is part of the credit scoring process.
Mike Clover
CreditScoreQuick.com
Posted in fico score | Comments Off
July 28th, 2008
Many people, especially those who routinely travel on business, use credit cards as an accounting tool. They’re a great way to have all the records of gas purchases, hotels, airline tickets, etc. in one place.
And if your employer is reimbursing you for travel, it’s easy to pay those bills in full each time they arrive, so the balances don’t build from one month to the next. That should show up as no debt at all, right? Wrong.
Companies report on the statement balances, so the only way to avoid having those charges figured into your credit score would be to pay them off each month before the statement was generated.
If you have a credit card with a moderately low limit, and your travel expenses each month bring you near the limit, you could be doing more damage to your credit score than you realize.
One way to avoid this is to ask your employer to furnish you with a card for those expenses he or she reimburses. Then the expenses won’t show up on your credit report at all.
But what if you pay your own expenses? You may be a sole proprietor traveling or entertaining for your own company. In that case, call your credit card company and ask to have your limit increased, so the debt to limit ratio is lowered. Sometimes you can go on line and fill out a quick form to have this arranged – provided you have a good payment history with the card issuer.
But be careful – they may pull a “hard credit report” before granting the increase. As you probably know, the number of inquiries on your account also plays a big role in determining your FICO score. So if you’re about to apply for a loan for a home or a car, you might not want to do this. Call customer service first and ask the procedure.
If you believe they’ll generate an inquiry on your credit, you can instead spread your purchases over several cards, keeping the ratios low on each of them.
Quick credit tip: If you’re going to need credit within the next few months, a quick way to raise your FICO score is to stop using this convenient bookkeeping method. Write a check, or use your debit card for these expenses and let your credit cards go unused for a while.
After you have your new loan, get busy on raising those limits so you can go back to the convenience of using the card.
Author:Mike Clover
CreditScoreQuick.com is your resource for free credit score reports, fico scores, loans, credit cards, insurance , identity theft protection and credit repair advice.
Posted in Uncategorized | Comments Off
July 28th, 2008
Piggybacking to raise your credit score is just one more good thing ruined by greed.
Until recently, you could help your kids, siblings, or a friend establish a good credit rating by allowing them to become an authorized user on your credit card. This is, of course, assuming that you carried a low balance and always paid on time, so your own credit was excellent. You were, in effect, sharing your good credit standing with someone you cared for.
The other person didn’t need to use the card at all, but its entire history would be included in their credit report, lending them financial credibility through a positive account.
This was a great tactic to use for kids just beginning their financial lives and without any credit history of their own to fall back on.
But, like so many other good things, someone saw a way to profit from it, and ruined it for everyone else.
Credit repair companies began brokering the rental of authorized user slots on credit cards – for a fee in the range of $600. Before long, the credit bureaus got wind of the practice, deemed it fraudulent, and decided to stop counting authorized user accounts in their reporting.
What can you do instead?
If you’d like to help your child establish credit and you have a few dollars to spare, you can help him or her get a secured credit card. In this instance you deposit a set amount into a savings account in their name, and they use that savings account as security for a credit limit in the same amount.
By carefully using just a fraction of that amount each month, and paying it back promptly, your child (or other loved one) will establish credit in his or her own name. Once they’ve established themselves, the card will be moved to an unsecured status and the security will be released – and can be returned to you with interest.
Note that this is not a pre-paid credit card, and that a pre-paid card offers no benefit. The issuers don’t report to the major credit bureaus, so you could pay on time forever without a boost to your credit score.
Another good option is an unsecured sub prime card. These come with extremely high interest rates, so again, should be used sparingly and paid in full each month.
The two most important things to remember are first, to keep your balances low in relation to the credit you’ve been given – 10% is best, but under 30% is imperative. Second, pay on time, every time.
Author:Mike CloverCreditScoreQuick.com is your resource for free credit score reports, fico scores, loans, credit cards, insurance , identity theft protection and credit repair advice.
Posted in authorized user accounts | Comments Off
July 27th, 2008
 Billy Bob and Sue got a divorce. The decree stated that Billy was responsible for certain joint credit card obligations. So Sue went on with her life not worrying about the credit card debt that was awarded to Billy Bob. Six months later Sue gets a call from the creditors wanting their money for the credit cards she forgot about. Sue told the credit card companies that those debts were awarded to her husband in a divorce decree. The creditor stated that they were not involved in the decree and she was still legally obligated to pay the joint accounts. Sue later found out that late payments appeared on her once spotless credit report.
If you are going through a divorce or contemplating on going through one-you might want to take the time to understand credit and the issues that can arrive as a result of a divorce. Most attorneys don’t explain what could happen if the other party does not pay a bill on a account attached to your social security number.
There are two types of credit accounts.
• Joint Accounts
• Individual
If you are getting ready to apply for credit whether it’s a credit card or a mortgage loan you will be asked to state whether the account is joint or individual.
Joint Credit Accounts Your income, financial assets, and credit history – and your spouse’s – are considerations for a joint account. No matter who handles the household bills, you and your spouse are responsible for seeing that debts are paid. A creditor who reports the credit history of a joint account to credit bureaus must report it in both names (if the account was opened after June 1, 1977).
Advantages/Disadvantages: An application combining the financial resources of two people may present a stronger case to a creditor who is granting a loan or credit card. But because two people applied together for the credit, each is responsible for the debt. This is true even if a divorce decree assigns separate debt obligations to each spouse. Former spouses who run up bills and don’t pay them can hurt their ex-partner’s credit histories on jointly-held accounts.
Individual Account: Your income, assets, and credit history are considered by the creditor. Whether you are married or single, you alone are responsible for paying off the debt. The account will appear on your credit report, and may appear on the credit report of any “authorized” user. However, if you live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin), you and your spouse may be responsible for debts incurred during the marriage, and the individual debts of one spouse may appear on the credit report of the other.
Advantages/Disadvantages: If you’re not employed outside the home, work part-time, or have a low-paying job, it may be difficult to demonstrate a strong financial picture without your spouse’s income. But if you open an account in your name and are responsible, no one can negatively affect your credit record.
With divorce being a common problem these days make sure you get joint accounts that your spouse is responsible for out of your name. If you don’t it could affect you down the road if they decide not to pay the bill.
Author:Mike Clover
CreditScoreQuick.com
Posted in credit, credit report, divorce | 3 Comments »
July 27th, 2008
 Being a lender I see bad credit management all the time. The amount of credit reports I pull; you would be amazed how many people don’t know how to manage their money. I have come to the conclusion that most Americans don’t know the value of a dollar. I am 35 and know for a fact that my generation has been spoiled to the point of no return. My generation is called the generation X.
The newer generations are even worse. They have never gone with out. Their parents just like mine always bought what their kids asked for. This is part of the problem. Our country is extremely rich and we have no idea what it is like to go with out. We have not had rough times since the “Great Depression.” If we want someone these days we just go out and charge it on our credit cards. You cannot turn on TV without someone enticing you with “no payment for 3 years.” Its kind of the “buy now pay later philosophy.”
I honestly think our kids and parents need to get back to the basics. Just because you have the money does not mean your kids need it. Buying your kids everything they want is a bad choice. All this teaches them is they can have just about anything they want.
The problem is once your kids get out on there own they will not know how to manage their money. This is because parents have bought their kids what ever they want most of there young lives.
Once your kids are gone off to college, they will have a rude awaking. Instead of saying no they will buy and get into debt to get what they want.
Most of this education starts at home by saying NO, you don’t need that Xbox. No you don’t need that etc……….
The next step is to have mandatory credit education classes in school and college. These classes should teach young people how to manage there credit, credit cards, money and overall credit report education. They also need to teach the affects of bad credit management and how it will affect your life for 7 years.
If this starts taking place I personally believe that there would be less bankruptcy, less credit card debt, because in the end its just stuff.
Author:Mike Clover
CreditScoreQuick.com
Posted in credit education, credit report | Comments Off
July 26th, 2008
When you want to buy a home or a car and your credit score causes would-be creditors to shake their heads and escort you to the door, it’s tempting to respond to those high-volume hucksters on TV who promise to repair your credit.
They all make the same claims:
• “Credit problems? No problem!”
• “We can erase your bad credit — 100% guaranteed.”
• “Create a new credit identity — legally.”
• “We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!”
The truth is, they can do none of that. They can’t erase bankruptcy, judgments, or overdue bills. The only thing they can do is help you get errors removed. Unless everything negative on your report is in error (such as when you’ve been a victim of identity theft), only time, a conscious effort, and a personal debt repayment plan will improve your credit report.
While there are free and low-cost services available to help you, you won’t see them advertising. The only reason a credit repair company spends the money to advertise is to get you as a customer – and to enrich their own bank accounts at your expense – sometimes by many thousands of dollars.
By using them, you’ll only make your financial situation worse by paying them to do something you can easily do yourself. But even worse than losing money is the fact that you could be subject to prosecution if you follow some bad advice. (See items 4 & 5 below.)
If you think you need help removing errors and do decide to respond to a credit repair offer, look for these tell-tale signs of a scam:
1. Companies that want you to pay for credit repair services before they provide any services. (This is a violation of the Credit Repair Organizations Act.)
2. Companies that do not tell you your legal rights and what you can do for yourself for free.
3. Companies that recommend that you not contact a credit reporting company directly.
4. Companies that suggest that you try to invent a “new” credit identity — and then, a new credit report — by applying for an Employer Identification Number to use instead of your Social Security number.
5. Companies that advise you to dispute all information in your credit report or take any action that seems illegal, like creating a new credit identity. If you follow illegal advice and commit fraud, you may be subject to prosecution.
You could be charged and prosecuted for mail or wire fraud if you use the mail or telephone to apply for credit and provide false information. It’s a federal crime to lie on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses.
If anything a credit repair company suggests doesn’t feel right to you – just don’t do it.
Mike Clover:
CreditScoreQuick.comYour Resource for free credit score reports, fico scores, loans, credit cards, insurance and identity theft protection and credit repair advice.
Posted in credit education, credit repair agency | Comments Off
Disclaimer: This information has been compiled and provided by CreditScoreQuick.com as an informational service to the public. While our goal is to provide information that will help consumers to manage their credit and debt, this information should not be considered legal advice. Such advice must be specific to the various circumstances of each person's situation, and the general information provided on these pages should not be used as a substitute for the advice of competent legal counsel.
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