by Adam | Jan 12, 2016 | Credit Repair
If you know your credit rights, you’ll know that you have the right to dispute any incorrect or erroneous items on your credit report. The three major credit reporting companies are required by law to investigate all claims you make, at no cost to you; all you need to do is request they do so in writing. That’s where a credit dispute letter comes in. An Effective Credit Dispute Letter in 6 Easy Steps All three major credit bureaus now allow you to file credit disputes online, making the process of correcting your credit report simpler and quicker. However you may feel more comfortable stating your corrections in writing and in your own words, where you won’t have to agree to any confusing “terms of agreement” that could put limits on your ability to successfully file a claim. Additionally, writing a physical letter allows you to keep a copy for your records, which could prove valuable in the future. You don’t need to be a professional writer or have a law degree to write an effective credit dispute letter. As long as you write clearly and back up your claims, don’t worry about adding anything else. You can hand write the letter, but your writing should be legible; if you’re not confident in your hand writing, go with a typed letter. (Click Here for our Credit Dispute Letter Template) Step 1: Start with your info At the top of your letter, start with your basic info. Put the date, your name, and a current address. It may also be beneficial to include the last four digits of your social security number. Step 2: Write the...
by Adam | Jan 5, 2016 | Credit Repair
When you open a new account with a bank or financial institution, they will often ask if you’re interested in opening a “line of credit.” This is meant to be a form of overdraft protection – essentially a buffer in case of a financial emergency. Basically, if you were to use your debit card for a purchase exceeding your available funds, the balance would be transferred to your line of credit attached to your account, and you would be subject to the interest rates and payment schedule to which you agreed when you signed up. While this resource can be a great asset for some, it can easily be misused and end up dinging your credit score. Here are some things to keep in mind if you opt for opening a personal line of credit: Credit utilization rate An important component of your credit score is your “credit utilization rate.” This refers to the amount of credit you use compared to the amount of credit available to you. If you always have a high balance on your line of credit, this reflects poorly on your credit and can lower your score. The best line of credit scenario If you’re expecting a payment but needing to pay a bill, a line of credit would be a good option because the balance would be paid down. Use your line of credit only for purchases you can afford. Those whose income is commission-based, for example, may have a stable and significant annual income but that is variable month-to-month. Those individuals would benefit greatly from a line of credit. Activity matters If you...
by Adam | Dec 28, 2015 | Credit Repair
The holidays are over, presents have been unwrapped, the tree has come down, ornaments stowed neatly away, new toys put in their place, but unfortunately the leftover bills aren’t so easy to clean up. You can’t undo the purchases you’ve made, but you can control how long you stay in debt over them. If you ended up in debt to pay for Christmas this holiday season, then here are some great tips to help you pay off those bills quickly. Out With the Old Now that you have bright, new, shiny stuff in your closets, it’s time to clear out the old things. If you are patient and willing to put in a little time and effort you can make money selling your old things. Any items that are in good condition can be sold; the rest can be donated or thrown away. You can list items in your local classifieds or online classified ads. Facebook is also a good place to list things for friends and neighbors to see; some neighborhoods even have yard sale pages. While you’re at it, get your family involved too! Kids are generally more willing to part with old toys when they’ve just gotten new ones, and they most likely have clothes from last year that they’ve outgrown. New Budget If you racked up a large amount of debt then you are going to have to tighten your budget for a few months. For those that are already budgeting, you will need to squeeze those numbers even more. For those of you just starting, this is the perfect time to begin. Either way, you...
by Adam | Dec 21, 2015 | Credit Repair
Have you tried saving for something in the past and ended up spending the money on something else first? Creating a sinking fund may be just the answer you’re looking for! What is a Sinking Fund? A sinking fund is simply a savings account set aside for a specific purpose. It could be Christmas, a child’s birthday, car payment, or a vacation savings fund. You set aside a certain amount of money monthly to go to this account in order to pay for the item at a later date. Christmas is the best example. It happens every year, and yet to many it comes as a surprise and there is no money to buy gifts. By creating a sinking fund you can put away enough money to pay for everything you need next year. What Do I Do? Fist, decide what you are saving the money for; it could be something inexpensive that takes only a month or two to save, or it could be something that takes a year or more to save enough money to purchase. Once you know what your goal is and how much money you need to save in total, now divide that number by how many months you have until you need to pay this total amount. That will give you the amount you need to set aside monthly to meet your goal. Where Do I Put the Money? There are a few options available, you can make a new savings account just for this item, or, if you’re a Dave Ramsey fan, you can save actual cash in an envelope. If you...
by Adam | Dec 15, 2015 | Credit Repair
An error on your credit report can damage your score, which is why it is important to inspect your report thoroughly. If you do find a mistake follow these 4 steps to get the problem resolved. Step 1 – Analyze The Report When you receive your credit report look it over carefully to make sure it is accurate. If you find a mistake you may be tempted to file a claim immediately. Before you start this process, do a little research on your end to make sure it is, in fact, an error. For example, some credit cards may be stated as the parent company instead of the actual card name on your report. Step 2 – File the Claim Once you decide to file a claim you have two ways to do this: online or a physical letter. The credit bureaus prefer the online method, but your options available about the reason for your claim may be limited and not what you are looking for. The advantage of writing a credit dispute letter is that it gives you the ability to fully state and explain the error. You also can make a copy for your records. Step 3 – Wait This step can take a while and try your patience, but because of the Fair Credit Reporting Act you are guaranteed a response within 30 days. It’s no wonder it takes a while to complete this step, there is lot happening behind the scene. While you are waiting, the credit-reporting agency will review your claim and turn it into a 3- digit code that specifies which category the claim fits in. Next...
by Adam | Dec 8, 2015 | Credit Repair
Your credit score can mean the difference between getting approved for a loan or not. Your score also has an impact on things like your loan interest rate, terms of that loan, and even more. Although many different factors go into determining your overall credit score, there are five general categories that are used to calculate all the data. Here is a quick recap of what those categories are. Payment History – 35% This is the most heavily weighted category, comprising thirty five percent of your total score. Have you been paying your credit bills on time? If so, then you will have a much better rank in this category, which will boost your total score. Amount of Debt Owed – 30% This category factors in all the debt you currently own. This includes different types of debt accounts, the number of accounts you have open, and how close you are to the debt limit on each account. Having multiple debt accounts may not be detrimental to your score if they are managed wisely. Length of Credit History – 15% Older credit users are at a slight advantage in this category, but even new credit users can reach a high score if the other categories are in good standing. In this group your credit score is weighted based on how long your credit accounts have been in use, and the rate of usage on each one. Credit Mix – 10% Your credit score is also calculated, minimally, by the types of credit accounts you have open. These can include retail accounts, installment loans, credit cards, mortgage loans, and finance...
by Adam | Dec 3, 2015 | Credit Repair
College graduation is an exciting day, but statistics show that most college graduates are weighed down with student loan debt upon graduation. Not only can these loans can be tricky to pay off, but they also prevent graduates from investing and saving money for their future until the debt is gone. So how can you pay off student loan debt faster? Make Bigger Payments The fastest way to get rid of the student loan debt, if you are able to, is to pay more than your minimum payment amount each month. There are a few ways you can do this: either pay twice a month instead of once, or add extra money to your minimum monthly payment. Paying off your loan in this way will cut off years of payments and thousands of dollars in interest! Make a Budget and a Plan Unwritten goals are just dreams, as the saying goes. If you have a plan in place and a goal of when your debt will be paid off, then you are more likely to stick with it and maybe even be motivated to pay it off faster. This plan requires a basic budget as well so that you know where your money is going. By following your budget you will be sure your student loan payments aren’t being spent on say, groceries instead. Automatic Payments Along those same lines, you may want to set up a separate bank account just for this purpose. You can set up an auto payment so that portions of your earnings are deposited into the account regularly. This ensures that that money isn’t...
by Adam | Nov 26, 2015 | Credit Repair
Holidays are known to be stressful times with family gatherings, parties, events, high expectations, and extra expenses; and Christmas is no exception. Especially if you are trying to stay debt free this holiday season. Here are some great tips to get you through this year’s festivities debt free! Manage Expectations If you typically spend a lot at Christmas and need to cut way back this year, then you need to set the expectations before the big day. It’s ok to tell your kids and/or family that you are trying to spend less this Christmas. You can make a game out of it with your children by setting a low budget and getting creative with gift giving. You can also tell your extended family that you are trying something new this year and that their gifts may be a little different than in years past. The key is communication upfront so that no one is disappointed on Christmas Day. Give Zero to Low Cost Gifts Oftentimes a sincere handwritten note is much more meaningful than a store bought present. There are so many things you can make, bake, write, or create that don’t cost you anything. Spend time thinking about the individual and their needs, hobbies, and special qualities and it will be easy to come up with a more personal gift this year. Here are just a few examples of low cost gifts you could give: Bake cookies or bread Hand write letters Draw a picture Write a poem Craft something they would enjoy Use What You Have I bet you have plenty of gifts and gifting materials in...
by Adam | Nov 20, 2015 | Credit Repair
As 2015 draws to an end, you likely have had two thoughts cross your mind: you spent way too much on the holidays, and you need to set some New Year’s resolutions to keep your spending on track. With this in mind, take the bull by the horns and decide today to take control of your financial situation by making 2016 the “year of the budget.” As you work toward getting out of debt, repairing your credit, and managing your finances you will likely see improvements in other areas of your life as well. Here are some suggestions for setting financial resolutions for 2016. Stick to the SMART rule The key to accomplishing your goals is setting the right ones from the start. Following the SMART principle of goal setting will make sure you’re set up for success. SMART stands for: S – Specific M – Measurable A – Achievable R – Realistic T – Time-bound Setting the goal of “This year I will get out of debt” doesn’t include a plan or any concrete actions for success. Instead, an example of a SMART goal would be: “I will pay off my credit card by November making monthly payments of at least $50 on the 1st of each month.” This goal is specific – paying off the credit card debt; measurable – with a pre-determined amount to be paid; achievable, assuming that this amount was set after considering other financial responsibilities and factors; realistic because it’s just one credit card as opposed to an entire load of debt, and; time-bound, with the deadline being November. And if paying off...
by Adam | Nov 11, 2015 | Credit Repair
You’ve worked hard to achieve a good credit score and start your own business, so what happens to your credit when you apply for a business loan? How a Business Loan Application Works Obviously, you need a high credit score to secure the best rates and qualify for the loan, but can that business loan application actually lower your credit score? It depends on how the lender decides whether or not to approve the loan. Here are three Ways Your Lender Can Check Your Credit and decide to lend you money: No credit check Soft credit check Hard credit check No Credit Check Some institutions or lenders may not check your credit at all. They may base their decision on other qualifications such as: the length of time you have been in business, your business revenues, and the way you charge and receive payments. If your lender approves you without a credit check it will have no effect whatsoever on your personal credit score. Soft Credit Check Most lending institutions will at least pull a soft credit history report from the bureaus when considering your application. This gives them a good summary of your credit history and a way to judge if you are an ok risk to take. A soft credit check does not hurt your credit score and is not visible to third party lenders that may also check your credit. It will be visible on your personal reports though. Hard Credit Check Once you have been pre-approved, most lenders will then do a hard credit pull (requesting your full credit history reports) before finishing the loan...
by Adam | Nov 2, 2015 | Credit Repair
As a single mother, you have to wear all the hats and juggle multiple roles. This is challenging enough, but if you are suddenly saddled with debt, this can be overwhelming. A good credit score can help you buy a home, go back to school, or buy a car, etc, as well as provide and care for your family. Here are some steps that will help raise your credit score and avoid bankruptcy. 1. Learn the Lingo This may take some research time at first to understand how your credit score works and what all the reports are about, but it is crucial to understand your starting point. Once you understand what your credit score is and what it means, you can move on to actually fixing it. 2. Check Credit Reports Regularly By checking your credit report regularly you will catch mistakes before they get too bad to fix. Once you see a mistake you can take quick action to dispute and correct it before it makes a huge dent in your score. If you can afford to, it may be a good idea to use a credit monitoring service as that can free up some of your time and energy. It may take 3-6 months of hard work to see a shift in your score, but it is worth the effort. 3. Pay Your Bills On Time If you can stay on top of your payments this will put you in good standing with your credit issuer. You may be able to negotiate a smaller payment plan after they know your budget and you can commit to consistent payments. 4. Budget Creating,...
by Adam | Oct 27, 2015 | Credit Repair
Credit card debt can be crippling and hard to get out of. Plus, it can take many years to pay off depending on the amount you owe and how dedicated you are to paying it off quickly. Once you’ve finally paid off the debt, you need to make sure you don’t follow the same path again. Does that mean you should close your credit cards? The answer is that it depends. Take a look at these categories and see which one you fall under to figure out what is best for you and your financial health. Prone to Temptation Do you feel like items at the store are calling your name? Do you have an urge to spend money on things that you don’t need? If you just can’t pass up those new boots, or resist a sale on golf clubs, or you grab everything that looks good in a store, then you may have an appetite for spending. Keeping your credit cards open at this time may be more of a temptation than you can handle and might cause a relapse to your old habits and an accumulation of more debt. For now, it’s probably best to close your cards, start a budget, and examine your spending habits. In Control If you can live on a budget and stick to it, passing by “wants” every time you go to the store, then you’ve got great self-control! Pat yourself on the back. If you are in this category, then you are probably ok to leave your card open and use it responsibly. However, leaving your card open is only...
by Adam | Oct 20, 2015 | Credit Repair
Today it is incredibly hard to graduate from college without any student loans, due to higher tuition rates and less student savings. CNN Money reports that students have an average of four student loans each with an average balance of around $29,000. Graduation brings with it a new stage of life, but how will these loans affect your credit score and your ability to purchase things in the future? Many lenders who extend student loans don’t look into a person’s ability to pay the loan back. “Student loans are the only credit vehicle where a lender continues to extend credit year after year without knowing the person’s ability, or even willingness, to pay,” said Michele Raneri, vice president of analytics at Experian. Ultimately, how your student loans affect your credit score depends on your ability to make payments in a timely manner. However, there’s a little more to it than that – here’s the good and bad news about student loans and your credit. Good News Because your credit score is made up of different types of debt, a student loan can actually be beneficial to your credit score. This type of loan is usually treated as an installment loan by the credit bureaus, which is good news for you as it is weighted less heavily in your overall credit score. Also, since you may not have a long record of credit use when beginning school, a student loan is a great way to start your credit history. And because these loans have an impact on your future and school isn’t considered a luxury purchase, it is fairly easy to obtain...
by Adam | Oct 12, 2015 | Credit Repair
It’s so easy to swipe a credit card without thinking ahead about your payments, and before you know it, you may have some serious credit card debt piled up. Because of high interest rates and low monthly payment requirements, without a solid plan of attack it could take you more than 5 + years to get out of debt! However, if you follow these 3 tips, then you could get out of debt in just one to three years. Step 1 – Find or Get a Lower Interest Rate Many credit cards have high interest rates, which means that the majority of your monthly payment amount is paying that interest and not your principle balance. The fist thing you should do immediately is lower your credit card interest rate. You want more of your hard earned dollars going to the principle balance; this will save you many years of payments, not to mention thousands of dollars! There are a few ways you can lower the interest rate: If you are in good standing, you may be able to negotiate a lower interest rate with your card issuer. If they won’t budge, begin looking for a new credit card that offers 0% balance-transfer and a lower interest rate than your current card. Next, consolidate all your credit card debt to this new card in order to get rid of the highest interest rates. Step 2 – Set a Goal How many years do you think it would take to pay off that debt at your current minimum monthly payment? The answer might surprise you! You can tinker with a credit...
by Adam | Oct 5, 2015 | Credit Repair
Many parents are hesitant to let their high school student work, worried that it will interfere with their grades or extra curricular activities. In some cases this may be true, but for most students, working while in school will actually help them learn how to budget their time and money. They will learn successful habits that will set them up for success as adults. The Benefit of Work In lots of ways kids are expected to do more than children of the past. However, by limiting their work experience we are hindering their financial development. The earlier they can learn the skills of time and money management, the better. If we allow our children to make small, supervised mistakes now, they will undoubtedly be more responsible adults later. Finding the Right Job Before applying for a job, have your teen consider the following questions with you: What do I enjoy doing? How many hours a week can I work? What days and times am I available? How will I get to work? This will give you both a great starting place when looking at job openings. A school counselor may also be beneficial to speak with as they may they know of jobs that help fulfill your child’s school requirements and interests. How to Budget Time Successfully Here are some tips to make sure your teen can keep up in school and work. Plan ahead- Do weekly and monthly calendar planning as a family so your teen knows when to ask for time off or is aware of any conflicts. Keep in contact with school teachers and counselors so...
by Adam | Sep 28, 2015 | Credit Repair
Just think for a minute how much of your information is stored on-line, from retail stores, to doctors, to insurance. The more you think of it, personal information about you is all over the web! We are regularly hearing of more and more major companies experiencing security breaches that make millions of customers vulnerable. By using a credit monitoring service you are alerted of any possible threats to your credit, including identity theft, report errors, and your credit score evaluation to help you improve your credit score. Private Information On the Web USA Today pinpoints what information identity thieves can use to gain access your identity and money: User names, passwords, and PIN numbers Social Security numbers Phone and utility account numbers Bank and credit account numbers Employment and student identification numbers Driver’s license and passport numbers Professional license numbers Insurance identification numbers College or university financial-aid form information Protection From Identity Theft Identity theft is a raging fire that is spreading quickly, and the thieves are becoming better and better at it. The sad truth of the matter is that, according to the U.S. Federal Trade Commission, “it takes 12 months, on average, for a victim of identity theft to notice the crime.” By then it is unlikely you will get much resolved. A credit Monitoring service can alert you regularly (by text, phone call or email) so that you can take immediate action if there is even a chance that someone has tried to steal your identity! Reports From all Credit Bureaus A credit monitoring service will provide you with regular reports from Equifax, Experian and TransUnion. Having...
by Adam | Sep 22, 2015 | Credit Repair
Good credit can give you the freedom to make large purchases, take advantage of perks like airline miles, and more. Bad credit, on the other hand, can restrict your financial opportunities. If you want to have good financial credit, it is important to understand how certain things affect your financial opportunities. One thing to consider is your debt to income ratio (or DTI). Keep reading to learn more about the connection between your debt to income ratio and your credit. What Is A Debt To Income Ratio? Your debt to income ratio (DTI) is usually calculated by dividing your monthly debt payments by your monthly income. For example if you make $2500 each month and your debt payments are $700 each month, you would calculate your DTI by dividing 700 by 2500. $700 debt payments ÷ $2500 income = .28 which means your debt to income ratio is 28% When calculating your debt to income ratio, be sure to include car payments, student loan payments, credit card payments, and all other monthly debt payments. What Affect Does Your DTI Have On Your Credit? Your debt to income ratio is not used to calculate your credit score. However, lenders use it when they are trying to determine whether or not to approve you for a loan. It is also used to determine your interest rates on new loans. What Is The Right Debt To Income Ratio? In most situations, the lower your debt to income ratio is, the better your financial opportunities will be. As a rule of thumb, your DTI should not exceed 36%. If you are trying to...
by Adam | Sep 16, 2015 | Credit Repair
The big purchases of our lives – cars, homes, big screen TVs – are typically fraught with anticipation and angst. They have the potential to either wreck your finances, or set you on a good path for years to come. Next time you’re preparing to make a big purchase, consider these 4 tips before pulling the trigger. 1. Sleep on it How do you know the difference between a wise purchase and an “impulse buy?” One of the best ways to find out is to sleep on it. If you’ve reconsidered by morning, then it was probably an impulse buy and you’ve just saved yourself a big chunk of change. But if, after giving it some time, you still decide that this is an important purchase, then you can start considering how to save up for it. 2. Budget for it A big purchase can have a big impact on your monthly budget. You don’t want to deplete your savings too much or risk any overdraft fees. Here are a few options for budgeting for those bigger purchases: Give yourself several months to save up enough money for the purchase, and set aside a manageable amount of money each month Build a cash reservoir into your budget specifically for these types of purchases. That way, when you need to make a larger purchase, the money is already available. 3. Research to find the best deal A little research can save you dozens, if not hundreds, or dollars on bigger purchases. Sometimes a little patience (waiting for a better deal to come along) is the best strategy. Other times you can hunt...
