Discover Debt Freedom!

Credit cards get a bad rap sometimes as the reason why people are so far in debt. However, credit can be a powerful tool to get you where you need to be financially, or just to help you live out your dreams. If you are looking for some ideas as to how to use your credit to get you where you need to go, look no further.

1. Credit Can Finance A Big Purchase

If you need to pay a medical bill, or you want to buy that new flat screen TV, you can use your credit card to do so. You might have to pay a little more in the long run, but if you can pay off the balance within 30 days, you can make that purchase for no extra cost. Put the money on your card, and pay for it when you get paid. How easy is that?

2. Use Your Card To Take A Vacation

Rack up those rewards points and take a vacation. It can pay for your rental car, airfare and other costs associated with traveling. It might not be fun to have to pay back the balance on your card, but it will be well worth it when you are relaxing on the beach for significantly less than it might otherwise cost.

3. Start A Business

You can use your own credit card, or get a business card, to start up your own business. Be your own boss and get out of the rat race for a bit. Work from home, or use the card to finance the cost of paying rent. Most business cards have flexible repayment plans so you can buy supplies and pay back when you can.

4. Build Your Credit

You won’t be able to get a car loan, home loan or start up that business without having a credit history. Your credit card is going to allow you to make payments on time which shows your credit worthiness. Use this good credit score wisely to help finance other areas of your life.

5. Replace Cash

Instead of having to remember your cash, or spend money going to an ATM, you can use your credit card to do all your shopping. This works even better when you are shopping online. Most Internet shops won’t accept cash no matter how much of it you have.

Credit cards have a variety of uses and can be a great tool to use if used correctly. Don’t rack up too much debt and you will see how far your credit card can take you. It could take you to Hawaii for the week, or it could take you out of the office and into an executive suite in no time.

If you have recently tried to rent an apartment, buy a car, applied for bad credit personal loans or for some type of credit account, or applied for a new job, chance are that someone has looked at your credit score.  Your credit score is a three-digit number that reflects your credit-worthiness to potential creditors.  This number determines the amount you can borrow and the interest you will owe on it.

Your FICO credit score, the score most often accessed by creditors, is a number based on a formula developed by the Fair Isaac Corporation that takes into account all your credit accounts and payment history.  FICO scores range from 300 to 850 and are determined by a number of factors, including your on-time payment percentage (35% of score), the amount owed to creditors (30% of score), the length of your credit history (15% of score), the types of credit used (10% of score), and number of recent inquiries on your credit report (10% of score).

There are a number of ways that your actions can cause a decrease in your credit score.  Neglecting to pay your bills or fines on time can result in the creditor reporting the delinquency to the credit reporting agencies.  Maxing out your credit cards is another way to lower your credit score.  Your score can also drop if it looks as if you are trying to obtain several new sources of credit because it may be a sign that you are in financial trouble.

The best interest rates on unsecured personal loans and credit cards are given to individuals with a credit score above 700.  To keep your credit score high, make sure to pay all your bills on time.  A low balance of less than 1/3 of your total credit limit should be kept on the card, if you cannot pay off your balance entirely each month. Opening multiple credit card accounts within a short time period can lower your credit score, so be selective about what credit card offers you respond to.

Staying on top of the information in your credit report is also very important.  You can get a free copy of your credit report from each of the three major credit agencies, Equifax, Experian, and TransUnion, once a year, and if you notice information that is inaccurate, you can submit a request for removal to the agencies online or by mail.  It is important to include what information you think is incorrect and why, and include any documents that support your argument with your request.  By law, the bureaus must investigate the complaint and give you a response in writing.

One in four adults have a credit report with a serious error.  The three biggest credit bureaus process large amounts of information daily and studies have found that 25 percent of the credit reports surveyed had errors that were serious enough to cause the denial of credit.  Usually, consumers do not find out about errors in their credit reports until after they’re denied credit.

To fix mistakes in your credit report, here’s what to do:

Prepare For Battle

Get into the proper frame of mind to battle this in the courts.  Everything you do should be done with the goal of impressing a judge and jury if the problem gets that far.  You never know what it will take to clear up your credit record. In some cases, a couple of phone calls will do, but some cases end up in a multi-year ordeals ending in federal court. Your credit report is your financial reputation, and there’s nothing wrong with going to court to clear up any issues.  Act as if your first effort to correct an inaccuracy is the first shot in a legal war, document everything as it happens, and always act businesslike.

Keep Detailed Records

Even if you don’t take this matter to court, you can use your  record-keeping as a weapon.  If you can show that you wrote your records as events occurred, they will be considered more trustworthy.  Keep track of everything in a phone log, a daybook, or a diary.  It doesn’t stop inaccurate credit reporting, but it’s allowed in court because it’s a record that’s taken at the time things are happening.

Be Businesslike

Resist any temptation to scream, yell, curse, or do things that would not look good in court.  You don’t want your opponent to testify that you were belligerent. Don’t refuse to give information, such as account or Social Security number, to someone who is trying to correct your credit record. Never threaten to file a lawsuit unless you intend to follow through.  You never know if your problem is going to become so intractable that you have to file a lawsuit, so everything you do has to look good to a judge and jury.

Mail Everything

Consumer protection laws require you to notify credit bureaus in writing of any inaccuracies they report.  Send the creditor a certified letter disputing the inaccuracies and send a copy to the credit bureau, with any pertinent documents to prove that it’s inaccurate. For telephone conversations, back up each conversation with a certified letter summarizing the call, then send it to the person you talked to and send a copy to the credit bureau.  Ask for the first and last name of the person you’re talking to, the name of the supervisor, and find out the name of the department.  If you file a lawsuit, your copious information will help you establish your case.

There are several credit card mistakes that individuals typically make without thinking that can lower their credit score by a significant amount.  The mistakes may seem minor at the time, but their effects may be felt for years after the action has occurred.  There are many factors that can affect your credit score negatively, but avoiding the most common mistakes made with credit cards can help you keep your credit in good standing and your credit score high.

Missed or Late Payments

Because a nominal fee is charged to accounts when a payment is late or missed, many people believe that the charge is the only consequence of their actions and is such a small amount that the penalty is negligible.  Unfortunately, the penalty charge is only the beginning, as the company will report late or missed payments to the credit reporting bureaus for inclusion on the account holder’s credit report.  This will reduce the person’s credit score and alert other creditors that the person may be a credit risk.

Revealing Credit Card Information

Many people make the mistake of revealing their credit card information to parties that intend to steal the information and use it for criminal activities.  Preventing the theft of this information is as simple as remaining diligent about keeping the information secure and refusing to reveal credit card information to parties that you are unsure about.  Any legitimate company will have various payment methods available for making payments, including talking to a live representative of the company, and will never request personal or credit card information by email or by calling the person on the telephone.  If you receive a request by email, either call the company using a phone number listed on a previous receipt or on the company’s website, not the email received, to verify the company’s need for information.

Carrying A Credit Card Balance

Carrying a credit card balance exposed the cardholder to a number of negative possibilities, including increasing the amount paid to the company in interest each month and increasing the risk that the person will go over their credit limit and trigger penalties.  Paying off the entire balance of the credit card when the bill is received will eliminate these risks as all of the money borrowed from the credit card company has been paid back.  Paying off the balance of the credit card each month will also raise your credit score as your ‘available credit used’ ratio decreases.

Many people do not understand how important a high credit score can be to your future happiness.  A credit score is one of the first things that many lenders look at when determining whether to extend credit to you.  Keeping your credit score high and ensuring that there are no negative information in your credit history will help you secure your financial future and handle any unexpected expenses that may come along
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Fast Credit Approval

Having a high credit score means that you have a good chance of being approved for additional credit in the future.  Whether you are interested in obtaining a new credit card, purchasing a new car, or getting a mortgage loan, a high credit score will increase your chances of being approved for the loan.

High Credit Limits

If your credit score is above 700 and the length of your credit history is significant, then many lenders will approve you for a higher credit limit than the average offer.  A person with a fair credit score may be approved for a credit line of $2,500, but a person with an excellent credit score could be approved for a credit line of $10,000 or more.  This gives them increased purchasing power for the things that they want and allows them to have enough credit in reserve for any financial emergencies that may arise.

Low Interest Charges

People that have a high credit score pay less in interest charges on their loans and credit cards than a person that has a poor credit score.  This is because a high credit score means that you will not be a credit risk for the company issuing the credit card or loan so they offer a lower interest rate to attract your business.  Having a lower interest rate on credit cards and loans can save hundreds of dollars in interest charges each year.

More Employment Opportunities

Many employment positions require the human resources department to review the credit scores of applicants to determine whether they would be trustworthy additions to the company.  It is believed that people who pay their bills and their loans on time are more responsible, are less likely to steal from the company, and will not abuse the trust of the customers that give them access to their financial information.

Many people enjoy the credit perks that are available to them due to having a good credit history and credit score.  One of the biggest perks of having an exceptional credit history are the low interest rates that many of the major lenders will offer to people whose credit rating is better than average.  Low interest rates have the ability to save the credit card holder a great deal of money over time.

How Are Interest Rates Determined?

The interest rates that a person is expected to pay for their credit is determined by the company that is issuing the credit card or lending agreement.  The company that is extending the credit generally looks at several items to determine eligibility for their credit products; the person’s credit history, the person’s credit score, the amount of income that the person earns annually, and the balance between how much credit the person has available and how much credit the person has used.  By taking all of these items into account, the credit card company can determine whether you are eligible for credit from their company and what the interest rates for that credit should be.

Different credit card companies can offer the same person different interest rates based on looking at the same information.  Some credit card companies will be attempting to attract new credit card customers, so they may be willing to offer you lower interest rates in order to entice you to sign up with them for their products.  Other companies offer reduced interest rates to the people that have used their products for a long period of time and have a positive payment history with the company.

How Can I Maintain My Credit?

There are several different things that a person should do to ensure that their credit history remains in good standing and they remain qualified for low interest rates.  In order to enjoy credit perks that come along with a good credit history, the person must maintain their credit history by making all of their payments for their bills and credit accounts on time all of the time.  A single missed or late payment on any of your credit card accounts can have the ability to raise the interest rates to the default rate, often more than 20%.

Another thing that people should do to ensure that they qualify for the lowest interest rates possible is to resist maxing out their credit cards.  Credit card companies and other creditors look at the amount of credit that a person has versus the amount of credit that the person has used to help them determine whether the person is using their credit responsibly.  If the person has maxed out their credit cards or are only paying the minimum payment for the cards, the credit card company may feel like the person may enjoy credit using too much and will not want to offer the person reduced interest rates or any additional credit at all.

Recent estimates have shown that there are around 50 million Americans that are not eligible for credit, a large percentage of whom will be ineligible due to them having a poor credit rating. And many of those will simply be unaware of the factors that can have a negative impact their credit score and will therefore be ill equipped to repair their credit score.

This is where credit repair companies step in but there is generally no need to pay a third party hundreds of dollars to do the work for you as long as you are prepared to put in a little time and effort. Furthermore, if you are in the position whereby you need to repair your credit rating, it’s unlikely that you’ll even be in a position to be able to pay a third party hundreds of dollars to do this.

So how do you go about repairing your credit file?

Before you can answer that question you need to take a look at how your credit score was adversely affected and this can be down to any of the following factors:

• Being bankrupt.
• Having no previous credit history or a short credit history.
• Being close to the credit limit allowed on your credit cards or overdraft.
• Falling behind on mortgage, loan or finance repayments or making late payments to credit card and utility companies.
• Not having enough different credit lines, for example, installment loans (fixed payments such as car finance) and revolving loans (unsecured borrowing such as credit cards).
• Applying for a multiple credit cards, loans or overdrafts in a short space of time.

Most of you reading this will be aware that defaulting on payments will have a negative impact on your credit rating but you may not be aware of factors such as not having a varied credit profile or carrying out too many applications. And this sounds like something of a catch 22 as your credit rating may be poor due to you not having enough different credit lines but you may not be able to change this as you will also be penalized for applying for even more credit!

But should you find yourself in this position then what should you do?

The first step to take is get the latest copies of your credit reports. There are three bureaus that lenders can report to (they can be found at the following sites www.equifax.com, www.experian.com, and www.transunion.com) and you need reports from all of them to gain a true picture of your credit history as not all lenders report to all three bureaus. Once you have these documents you will have to hand all of the information you will need to start repairing your credit.

You then need to work out if there are any mistakes on your report and if so you need to immediately flag this up with the relevant credit agency. Each report should come with information on how to dispute information held on your credit file. You then need to identify those accounts that are overdue, over the agreed credit limit or have been passed onto third parties for collection.

It’s at this point that you need to take action and the first thing that must be addressed is those accounts that are marked as having missed payments as payment history accounts for a large percentage of your credit score. You will need to get these accounts paid up to date as soon as possible so they do not get passed on to third parties. If you are not in a position to pay off any default charges then get in touch with your creditors to make arrangements for them to freeze the interest for a period whilst you pay off what you can. Credit companies will usually do this for a period of up to six months and then review your circumstances and this should at least give you some breathing space and stop the debt being passed on to debt collection agencies.

You also need to take action on those accounts that are at or over their credit limit as credit utilization (total debt against total credit) accounts for 30 per cent of your credit score. You then need to work on bringing these balances down and, again, if you are not in a position to do this you need to contact your lenders and set up a repayment arrangement to avoid the debt being passed on.

Once these issues have been resolved then you need to try to start building your credit profile once again but this does not mean sending out as many applications for credit as you possibly can as this will have the opposite effect.  In addition, if you have had to come to a repayment arrangement with your lenders then it is unlikely you will be accepted for more credit so you need to let the arrangement run it’s course before applying for more credit.

On the other hand, if you have successfully updated your payment history and reduced your debt levels then you can apply for new lines of credit to boost your profile. But instead of applying for more credit right away it may be a better idea to apply for a prepaid card, this way you can build your credit score without actually taking out credit and running the risk of getting into more debt. If you decide to do this then you must make sure that the prepaid card you apply for is recognized by at least one credit referencing agency. Other lines of credit include cell phone contracts or a debt consolidation loan may be a good idea as this may open up a new credit line and also reduce your monthly outgoings.

Once you have done this then you will be well on the way to repairing your credit rating and, as long as you are vigilant and responsible with your money you should soon see an improved credit score. And once you have your finances on track you can start to manage your money correctly and think about opening a savings account.

But it’s also worth noting that if your debts are overwhelming or you cannot come to an arrangement with your creditors then you should contact consumer credit counseling for free advice.

Article written by Les Roberts, credit journalist at Moneysupermarket.com.

It is easy to unwittingly damage your credit score, but it’s not simple to return to previous levels of creditworthiness.  Any careless act that damages your credit score will take time and effort to correct, so the best tactic is to perform actions that will increase your creditworthiness constantly and consistently to repair any damage that has occurred.  There are some simple steps that can be used to increase your creditworthiness over time.

Pay All Of Your Bills On Time

Paying all of your bills on time is the single greatest thing that you can do to increase your creditworthiness.  Many companies report late payments to the three major credit bureaus and each late payment reported on the accounts that you hold will decrease your credit score by a significant amount.  Too many late payments can easily drop a credit score from excellent to poor in a matter of months and it may take years to raise the credit score back to its previous numbers.  Making sure that all of your bills are paid on time will ensure that you will not damage your credit score with non-payments or late payments.

Keep Your Credit Usage Minimal

Once a credit card has gotten close to the limit, it will only take a minor disaster to push you over the limit of the account and damage your credit score.  In fact, many lenders frown upon using more than 30% of your available credit at any given time and your credit score calculation takes this into account.  The higher the percentage of credit used, the more it will damage your credit score.  For the best credit, you will need to keep your credit usage minimal and pay off your balances whenever you are able.

Use Different Forms Of Credit

A varied credit profile that has been kept in good standing is much more impressive to lenders than a great credit rating based on a single form of credit.  Diversity in your credit profile shows lenders that you are able to get credit for your needs and that you repay these obligations in the manner dictated by the agreement that was signed.  Having a credit card, a car loan, and a student loan that you are repaying or have repaid is better than having just the credit card listed on your credit report.

Many people that use a credit repair software program on a regular basis chose to buy credit repair software online because of the reasonable prices and simplicity of ordering the program.  It is important to save money when you buy credit repair software online, which is why many people look for credit repair software in several different locations.  These credit repair software programs are not difficult to find if you know where you should be looking and the money saved can be used to pay down any debts that the person may have.

Internet Retailers

There are many online retailers that sell different types of credit repair software programs and many of these will allow you to buy credit repair software online at a sensible price.  Some of these internet stores get their credit repair software programs from physical retail stores that are making space for new merchandise while other online retailers only carry programs from smaller designers that are trying to make a name for themselves in the credit repair software industry. 

When you buy credit repair software online from these stores, it allows you to compare the prices of a number of different credit repair software programs from the comfort of your own home and the programs that you have chosen are shipped directly to your house.  You may even choose to buy basic credit repair software from discount websites to get a practical program for an extremely low price.

It is important to be careful when you buy credit repair software online from an internet store because in recent years, many fraudulent companies that scam consumers have appeared online for the sole purpose of stealing a person’s credit card information.  Make sure that the company selling the credit repair software is a reputable one by reviewing consumer websites for any negative information about the company.  If the price to buy the credit repair software online seems too good to be true, then the price is probably to get you to disclose your credit card information to the crooks at the company.

Being able to increase your credit score is a very important part of today’s financial environment and many people are seeking to increase their credit score to improve their personal financial situation.  Making the choice to increase poor credit scores can save you a great deal of money and knowing which methods to use to increase poor credit scores will take time and research to determine.  To find a way to increase your credit score, there are several things that you should keep in mind. 

Can I Increase My Credit Score?

The ability to increase your credit score will depend on your personal financial situation and previous credit history.  Many people that need to increase their credit score have a high number of blemishes on their credit report.  Your credit report is used to determine your credit worthiness and your record of repaying money that you have borrowed from lenders.  If you have not added any negative information to your credit history for the last few years, a credit score increase will be much more likely

The best method to increase the poor credit score of one person may not be the best type of method to increase the credit score of another person.  The ideal way to increase your credit score will have the highest results with the least amount of difficulty in the shortest amount of time.  It is very important to read all of the terms and conditions associated with the method to make sure that you understand what you need to do to complete the process.

How Much Effort Is Needed?

The amount of effort needed to increase a poor credit score can vary from person to person.  Some people can accomplish the task by making a few phone calls and submitting paperwork while others may have to negotiate directly with creditors and make repayment arrangements for delinquent accounts before increasing their credit score.  Some people choose to purchase financial management software to help keep track of all of the financial steps that need to be taken on the path to a higher credit score.  There are a number of different methods you can use to increase your credit score and the method that is chosen should be the one that works the best for you and your financial situation.