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Debt Consolidation While Building A Better Credit History

Debt Consolidation While Building A Better Credit History

Although it is possible to get approved for a mortgage loan with a high debt ratio, having a low credit card balance will present better financing options. Becoming debt-free is a highly sought after goal. Fewer debt payments or debt consolidation offer the opportunity to begin saving money. There are several effective strategies for eliminating credit card debt. However, before outlining a plan, consumers must be willing to alter their spending habits.

High Credit Card Balance Contributors

If used properly, credit cards serve a practical purpose. When an emergency arises, and you are short on cash, a credit card offers a quick solution. Sadly, many people use credit cards to finance frivolous purchases. This is common among young adults.

To avoid the credit card trap, consumers need to control their spending habits. Acquiring too much debt has several repercussions. Aside from high credit card payments, several lenders are hesitant to loan money to people with high credit card balances.

How does debt consolidation affect your credit score?

If you plan on financing an automobile or home, maintaining a good credit history is important. Bad credit will not necessarily affect loan approvals. However, if you have good credit, you can expect better financing rates and options.

Some consumers think that good credit entails simply paying minimum payments on time. While a good payment history does contribute to good credit, the amount of debt you have acquired also plays a role.

Lenders are more confident when a loan applicant’s credit card debt is about 25% of the limit. If your credit cards are at more than half the limit or nearly maxed out, this will result in a lower credit score.

Tips for Reducing Credit Card Debt

With self-control and effort, it is possible to dramatically reduce your credit card debt within a year. However, before a credit card reduction can take place, you must stop using the card.

The only way to reduce the balance is to pay more than the minimum payments. On average, minimum payments equal to the finance charges. Thus, attempt to pay triple the minimum payment.

Five Tips For Building A Good Credit Score

Five Tips For Building A Good Credit Score

Improving yourself is always a good thing. If you thrive hard to become a better public speaker, you can might yourself a promotion. Exercising and going to the gym can help you lose weight and have the figure you have always wanted. But the best thing of all is improving and building your credit score. This can help you save hundreds and thousands of dollars on your biggest purchases.

For some, it may be hard to keep up a good credit score but actually, improving credit is not that hard to achieve. You just need to be patient and learn a little bit about the credit scoring system and how it works.

A person who is patient and willing to improve their credit profile can do it easily. There are five things that they can follow in order to boost their credit scores.

1. Check your own credit report from time to time. It is necessary to regularly check your credit and take the steps to remove any inaccuracies in your credit report. Sometimes bad credit is caused by simple inaccuracies in the report. If you see something, contact your creditor immediately, and work to correct the error as soon as you can. Leaving an inaccuracy on your report counts against you.

2. Be on time with payments. Literally, it means that you have to pay all your bills on time. If you are always late with your payments, it will affect your credit report and score. Also, collections and bankruptcies have the most negative effect on your credit report. All reports including the late payments are noted and written in your credit report.

3. Learn how to manage your debt. You must maintain the balance of your credit report to 35% of your available credit limit. Make sure that you always watch your accounts and estimate if you can still handle the using more credit.

4. Avoid unnecessary inquiries. Every time you make an inquiry, it is written in your credit report. Even if you have no plan to open a credit account, your inquiry records will show how often someone has looked at your report and will cast doubt on your ability to pay. So as much as possible, do not make an inquiry into your credit report unless it is important.

5. Give yourself time. Time is considered one of the most significant aspects that can help improve your credit score. Time management is important to get yourself on the right track and show that you can handle your credit responsibly. You can also keep even the oldest account open in order to help make your credit use look longer.

Credit Score/FICO Report – 5 Steps To Improvement

Credit Score/FICO Report – 5 Steps To Improvement

Your credit score or FICO report can determine your eligibility for loans, what interest rate you pay for loans, and even whether you get a job to which you are applying. With every incentive to improve your score and nothing to lose, it should be a priority step in getting your financial life on track.

Here are 5 steps to improve your credit score.

Tip #1: Pull your FICO report for free:

The first step in fixing your credit is to get a handle on your current score. The Federal Trade Commission has an agreement with the Big Three credit reporting agencies to provide every U.S. citizen with a free credit report every 12 months. To get your free copy, go to the official Annual Credit Report Request Service website, and follow instructions for requesting your report.

Tip #2: Pay your bills on time:

A full 35% of your FICO score is determined by how timely you pay your bills. If you have missed any payments in the past few years, it will likely help your score significantly to go back and fix your past-due status with the creditors involved. By paying your overdue bill, your creditors will remove these glitches from your report from each reporting agency. Hint: go back and pull your report again later to make sure that all three of the agencies have actually removed the problem from your records as promised. Need help in finding blemishes on your credit report? Get a custom plan to help rebuild your credit.

Tip #3: Get the balance (of credit types) right:

10% of your FICO report reflects the specific diversity of types of debt you have and the credit lines you have available to you. Make sure you have the right balance of auto or home loan, department store cards, charge cards, and credit cards. This healthy mix shows potential creditors that you know how to handle different types of debt.

Tip #4: Reduce your debt:

Your debt-to-credit ratio is the ratio of the amount you owe versus the amount of credit extended to you. It determines a full 30% of your credit score. There are three ways to reduce your debt: 1. Make more money; 2. Put more of your current income toward paying off your debt; 3. Reduce the cost of your debt. One great way to reduce the cost of your debt is to transfer your current credit card balances to credit cards with lower interest rates. Doing this can save you $100s per month in debt payments if you have large credit card balances.

Tip #5: Open more lines of credit:

You can also improve your debt-to-credit ratio by actually increasing the amount of credit extended to you. The key here is to do so while avoiding actually using these new credit cards. To avoid using the cards extensively, make a purchase or two with them each month and then hide them so they are not readily accessible. Also: if you do open more lines of credit, do so over a period of a few months since having too much new credit can actually hurt your score.

There are many straightforward ways to improve your credit score. So, pull your free FICO report, assess your situation, and start taking steps toward a healthier financial life.

Credit Repair And Avoiding Court

Credit Repair And Avoiding Court

If you ever entered a courtroom, you know that the stress elevates, even if you are in the room for someone else. Courts are an automatic source for lifting stress. Moreover, avoiding court means we have to abide by laws and pay our debts. If you have taking out a home mortgage, car loan, personal loan, or any other type of credit loan in some instances when the loan requirements are not meet you can be subpoenaed to court.

There are several courts that handle cases that involved negligence, starting with small claims court and finally judgment courts. Any courtroom is stressful, and many of the courts will look at both cases objectionable. However, the party involved in negligence is often deemed untrustworthy.

If you want to avoid more stress than what you will endure on bad credit reports, it is important to make wise decisions before spending money you do not have.

Avoiding court judgments, liens, or lawsuits can be done by meeting payments on your monthly installments. If you find an area of your life when you see that it will be difficult to meet demands, you might want to look into some solutions available that can get you out of harm.

If you are paying mortgage you might want to opt-out by selling your home or else searching the marketplace for loans to help you refinance and get lower rates. When you owe money, your debts are sent to collection agencies.

Once you have a list of bad debts it leaves you open to the court. Creditors are people you owe and if they send your debts to collection agencies, you might be waddling in quicksand since someone else has control of your life. If you are delinquent on payments creditors, can garnish wages from your paychecks, take hold of all your tax refunds, and send you to court.

The only advantages you have when you have debts are the creditors cannot charge outrageous late fees or interest rates. The creditors cannot take a post-dated check from you and cash it until they notify you first. Creditors cannot cash a postdated check ahead of its date. Creditors cannot ask for postdated checks by frightening you with criminal suits. Creditors are not permitted to send postcards in an effort to ask for a payment, nor can creditors label, or place symbols outside of an envelope to press for payments.

There are many areas of legalities and illegal acts to look for if you are in debt and threatened with lawsuits, liens, repossessions, foreclosures, and judgments. Some of the most important areas of illegal acts made by collection agencies include false unlawful authorization forms or sending out a representative of the collection agency posing as an officer of the law.

Some creditors even harshly threaten debtors by using profanity or harassing family members by imitating government representatives.

Creditors have even tried cashing postdated checks and attempting to charge late fees for insufficient funds.

It is important that you learn your rights when your credit is in jeopardy. If you are taking to court and know your rights, you might see a way out of a bad situation. If you know your rights you might even find a way to avoid court by taking another route to stall payments.

Some collection agencies have even threatened debtors by phoning their home at late hours of the night, calling friends, family, and neighbors, and so on. If you suspect you are heading down a bad credit path, then it is important to document all communications between collection agencies, lenders, and other sources so that you are prepared when or if you hit the courtroom. If you see that you cannot avoid court then you want to take all the necessary steps to cover your self when you arrive on the door that is taking your control out of your hands. It is important to know that you can trust only you in most cases.

When your faith is in someone else’s control the worst possible situation can happen. In most cases, however, there are always solutions for avoiding court and you have the right to stand up and take back some of your control.

Credit Repair – Maintain the Correct Debt To Credit Ratio

Credit Repair – Maintain the Correct Debt To Credit Ratio

Many people believe that paying off their credit cards every month is a good idea. And if you are trying to stay out of debt, then I would have to agree with you. If you are trying to build credit and look good to your creditors, then paying off your credit cards every month is actually a bad idea. Let me explain by giving you examples of how to calculate the debt to credit ratio.

Creditors and lenders don’t make their money from annual fees on credit cards. They make their money on the interest that you pay each month. If you are paying off your balances each month, the creditors and lenders aren’t making any money. Creditors want to see someone that can maintain a balance each month and make payments on time. This goes a long way in showing your creditworthiness and actually is built into the algorithm that calculates your credit score.

Your debt to credit ratio is very simple to calculate. Suppose you have a credit card with a $10,000 limit. If your balance on this card is $2500 then your debt to credit ratio would be 25%. A good ratio to maintain to help raise your score would be between 30-35%. Your ratio is based on all your credit card limits and balances and combined. This actually gives you some flexibility. Read on if you need more help understanding the debt to credit ratio.

If you had a limit on one card of $5000 and a balance of $3250 then your debt to credit ratio would be around 75%. To fix this you could pay off a big portion of your balance or you could ask the creditor to raise your limit to $10,000. The latter costs you no money but alters your ratio to around 35%. With multiple cards, there are many combinations to achieve a good credit ratio by upping the limits on some cards and paying down others. I think you get the idea.

It may not be necessary to maintain this high ratio on your credit cards all the time. Use this technique to build your credit fast. If you will soon be in the market to get a home loan or auto loan, perhaps begin moving towards this ratio several months before shopping for a loan. Once you get a loan you can let this ratio go down to something more manageable.

This is just one little technique that can have huge ramifications on your credit score. I hope it helps. And remember to make all your payments on time. This can’t be stressed enough. Those 30 and 60 day late payments will kill your credit faster than you can repair it. Good luck!