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How Having Multiple Credit Cards Can Help Your Credit.. or Ruin It

How Having Multiple Credit Cards Can Help Your Credit.. or Ruin It

The cashiers at the store offer them, your mailbox is always full of them, and even your bank seems to be constantly promoting them. Credit card offers bombard us at every turn, and a lot of them have some pretty enticing rewards and promotions that may have you wondering, “what would happen to my credit if I did apply for these? How many credit cards is too many?” The answer may surprise you, because the quantity of credit cards does not affect your credit as much as how you manage them. You can do more damage with one single credit card than with a dozen cards if you don’t use it responsibly. Here’s why. Credit Score Calculations Your credit score is calculated based on a few different factors, and some are more important than others. These include: Payment history: 35% Amounts owed: 30% Length of credit history: 15% Credit mix: 10% New credit: 10% And here’s how having several credit cards can impact each factor contributing to your credit score. Late payments Your credit score is meant to tell lenders how financially responsible you are, so it makes sense that the largest factor is your payment history. If you have always made your payments on time, you will likely have a decent credit score, since more than one-third of your score depends on this. However, when you add several credit cards to the mix, it can be easy to lose track of payments, annual fees due for each one, and other balances you owe. Simply stated, the more payments you owe, the more likely you are to miss one,...
How Does Using or Being a Co-signer Affect Your Credit?

How Does Using or Being a Co-signer Affect Your Credit?

Being turned down for a loan can be discouraging, especially if you have little or no credit history to help you apply for another. To improve your ability to qualify for loans, you may consider asking a friend or family member to cosign on your loan. But does having a cosigner necessarily mean you’ll be improving your credit, and what will it do to your cosigner’s credit? What is a cosigner? A cosigner is an individual willing to assume responsibility for a loan because the primary borrower does not meet the qualifications of the loan on their own. A cosigner usually has better credit or a more stable income than the primary applicant, assuring the lender that the loan will be repaid one way or another. This means that the cosigner is required to make payments on the loan if the primary borrower does not, and it also means that the loan appears on their credit report, as does the payment history. Who can it help? A cosigner is especially helpful for a new borrower. As mentioned above, having little or no credit may make it difficult to be approved for a loan. Buying your first car or home may not be possible without a cosigner if you have little or poor credit. A cosigner may help you get a loan that can help you establish a positive payment history and build your credit. Having a new type of credit on your credit report can help both the primary borrower and the cosigner. A car loan or mortgage adds installment credit which can improve your credit score by adding...
Can Social Media Affect Your Credit Score?

Can Social Media Affect Your Credit Score?

The precise formula for determining your credit score is information privy to the credit reporting bureaus (Equifax, Experian, TransUnion), and can vary between the different companies. Traditionally, the information on your credit report that determines your credit score is a mix of your payment history, amount owed, age of accounts, new credit, and type of credit used. But could additional lifestyle information, like the information we share on social media, become an additional tool that predicts our ability to repay loans? The Consequences of Over-Sharing While data from your social media presence is not currently considered when calculating your credit score, FICO CEO Will Lansing told the Financial Times that, “If you look at how many times a person says ‘wasted’ in their profile, it has some value in predicting whether they’re going to repay their debt.” Most people have at least heard the rumors, if not heeded the warnings themselves, that potential employers look up job applicants on Facebook, Twitter, and other online platforms to get a sense of their character before making hiring decisions. While certain laws protect applicants against discrimination based on gender, ethnicity, religion, etc. the line becomes less clear when it comes to voluntarily-shared lifestyle choices that could display unprofessionalism, especially toward a certain career. For example, announcing you were arrested for a DUI might not look so good if you’re applying for a position as a driver. But do lenders really see and consider the information you post online when you apply for a loan? Maybe. The Online Impact When an applicant with little or no credit history applies for a loan or...
Should You Use a Balance Transfer Card to Pay Off Credit Card Debt?

Should You Use a Balance Transfer Card to Pay Off Credit Card Debt?

Whether intentional or not, using your credit card regularly can rack up debt in the blink of an eye. It’s easy to get in over your head with credit card bills and interest fees, but there are some options to help you pay down that debt quickly and avoid paying huge interest fees. One of these options is to use a balance transfer card. What is a Balance Transfer Card? Using a balance transfer card does NOT eliminate the debt. It is simply paying off an old credit card with a new credit card, but the new credit card offers you an interest-free period of time, usually 6-18 months, to save you money on interest payments. There is sometimes a balance transfer fee, usually around 3 percent of your balance, but you can often find special offers that have no balance transfers fees. When shopping for a balance transfer card, try to find ones that offer no balance transfer fees and 0% APR for as much time as possible, preferable at least 18 months. Keep in mind that a balance transfer card is another credit card, and opening a new account will result in a temporary ding on your credit. But if the new account has a higher limit than your current card, then your utilization ratio will improve. This actually improves your score and may make up for the small drop. Consider your Current Credit Situation Balance transfer cards are competitive, so make sure you’re in a good position to be approved before applying. You should have a decent credit score and no big red flags on your credit...
How to Use Your Tax Refund to Repair Your Credit

How to Use Your Tax Refund to Repair Your Credit

Finding out that you’ll be receiving a significant tax refund can be exhilarating, especially if you’re living paycheck-to-paycheck or finances are tight. Coming into a good amount of money can get your wheels turning about finally being able to take a vacation, buy a new car, or buy something you’ve always wanted. But if your credit score could use some TLC and spending responsibly hasn’t been your best attribute, consider using your tax refund to set yourself up for future financial success rather than contribute to the cycle of spending and debt. Here’s how. 1. Pay off debt Your very first priority should be to pay down your debt, especially on revolving credit like credit cards or lines of credit. You want to get your debt utilization ratio down to 30 percent at the most, so check your balances against your total available and do some quick math. If you’re using more than 30 percent of the credit available to you, this has a negative effect on your credit score. Figure out how much you need to pay off to get below 30 percent. Better yet, pay off the whole balance if possible to give yourself a fresh start on responsible spending. 2. Settle Outstanding debts If you have any accounts that have been sent to collections or are overdue, settle these immediately. Just be aware of the statute of limitations that may restart for a partial payment, allowing borrowers to sue you or collectors to continue contacting you. If possible, make an arrangement for payments or pay of any debts sent to collections in full to rid yourself of...
How to Protect Your Email Address From Identity Theft

How to Protect Your Email Address From Identity Theft

Much of the world’s business today is conducted online, and it’s likely that most of your daily life involves interacting on the internet in several ways. We’ve all been warned about the dangers of online hackers and identity theft. We’re told that our credit cards and financial information is at risk of cyber attack, but what about your email address? When you notice unusual behavior in your email account, is there really that much to worry about? Why would a hacker want access to your email address? You use your email address for communication and correspondence at the very least, and likely as a method of verification and identification for conducting business online. Consider the following communications and items that may be found in your email address, and what personal information could be contained therein: Rental application (likely with your social security number, addresses, full name, etc.) New password and password reminder requests Personal, family photos and messages (children are prime targets for identity theft) Work documents E-invites for social events Online purchase confirmations (usually with partial card info) Flight and travel information with location details and card info Starting to feel a little anxious? You should. Hackers often breach large institutions to steal mass amounts of email addresses to scour them for information to sell. Once they have it, it’s not hard to piece together vital data, act on your behalf to change info in order to get credit cards send to them (in your name), hold your info ransom, or take over all of your other accounts. When you think about it, how often do you give your...
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