Archive for the ‘Credit Reports’ Category

Five Tips To Establish Credit!

Tuesday, October 5th, 2010

Post by Julie, RN CCRN Staff Writer

No Credit History?

Think about it.  You are just out of school, excited about your new job in a new city.  But first you need a place to live.  You find a perfect apartment, close to work.  You look forward to getting it fixed up, and get rid of all your college hand-me-down furniture.

New Grad! photo by CarbonNYC

The apartment manager calls you: “Sorry, we can’t rent to you!” “Why not?” you cry-I love that place and I can afford it!”  “Well, maybe so, but you don’t have a credit score when we pulled your sheet, corporate won’t let us rent to anyone without a decent score.”  Well no score isn’t a bad score, but that may not matter….

How does someone with no credit history establish credit in this economy-where banks and credit card companies are not willing to extend credit?

Young adults are at a definite disadvantage-why? No work history.  While credit cards are the cause of demise for many households, when used correctly are vital to a healthy credit report. And your ability to finance automobiles, obtain a home mortgage, rent an apartment, and function in a credit-oriented society require credit.

Most young people are faced with this  dilemma. You may be going away to school and leaving  Mom and Dad’s wallet, or just graduating from nursing school and entering the world of financial independence.

You need the security of having money available for those unexpected events that are sure to happen.  But how do you establish credit when you don’t have a work history?   Banks and credit card companies aren’t giving away credit like they were before the economy crashed and burned.

Five Tips on Establishing Credit:

1.     Obtain a small loan from a local bank. Items such as appliances, automobiles (used!), home repair, etc can be financed locally.. ..   Your local banks  frequently will extend small loans when larger banks won’t.

Why?

It’s the advantage of doing business with someone you know!   But you must make sure that your loan is reported to the 3 credit reporting agencies Equifax, Experian, and TransUnion.

It’s been my experience that many times small community banks do not report their loans to the credit agencies, no report, no credit score! So, request that your loan be reported.  When our daughter was attempting to establish credit after graduating from college, we advised her to take out a loan from our local community bank to purchase appliances.  We were unaware that this bank didn’t report their loans to the credit agencies.  So the loan from this bank did nothing for her in attempting to establish credit.

2.   ALWAYS pay your note on time!! I can not emphasize this enough! Never borrow more than you can afford to pay back each month and make sure you pay ON TIME! This is the most crucial aspect in establishing good credit.  Late payments remain on your credit report for years!

3.   Try to obtain a credit card with a low available credit limit, say $500.  That doesn’t mean that you should charge $500 on that card! Gas cards are an excellent place to start with low credit limits.  Some credit card companies are willing to open accounts with low limits initially and will increase your available credit depending on your payment history.  Establish a history of always paying on time and your available credit will increase.  Don’t charge more than you can pay off every month!  Do I need to repeat that??  Charge a tank of gas and then pay your balance in full when you receive your bill.  Don’t get into the habit of paying only the minimum balance!

4.   Make sure you have a good work history! Your length of years at your place of employment speaks volumes! Banks and credit card companies feel that if you have a stable work history then you tend to be more responsible.

5.   Consider a pre-paid credit card-This means a card that has your cash on deposit, that your charges are withdrawn.

Establishing Credit, Is Not Running up Debt!

Establishing good credit isn’t the same as running up debt.  It’s about being responsible in obtaining only what you can afford to pay back each month.  But make sure you use your card on occasion no matter how small the purchase.

Inactive credit cards have a negative effect on your credit report.  If it’s a bank loan, make sure you make your payments ON TIME every month!  If you go to a bank or credit card company trying to convince them why you deserve a mortgage, car loan, or high credit line  without having established a good credit history, you are going to be given the same look that a doc gives  a GN when you make patient treatment suggestions! (sorry Dr Dean….)

If you follow these simple guidelines, you can quickly establish a positive credit history that will benefit you greatly down the road.  The better your credit, the lower interest you pay, and that, my friends makes good cents….

Julie RN CCRN

Note from Dr Dean:

Julie is a new staff writer for The Millionaire Nurse Blog.  Check out her bio here!

She will post frequently here on money issues and nursing!  Please make her feel welcome!

Reader Questions:

Did you have any trouble getting credit when you first finished school?  Did you abuse the privilege?

What tips do you have for young people wanting to start out on a good financial footing?

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Posted in credit cards, Credit Reports, Personal Finance 101 | 17 Comments »

Your Credit Score: Remediation/Home Purchasing- Dissected!

Wednesday, September 29th, 2010

Understanding Credit Scoring &
Credit Repair

Guest Post By Ray Evans of Element Funding

Ray is a mortgage broker, who wants to help our readers improve their chances of qualifying to buy a home.

Credit Remediation

Credit remediation-what does that mean?  In medicine, it is somewhat like  surgery.  Fixing something that is broke.

Remediation means the correction of a fault or deficiency.  Today, instead of remediating your iron deficiency, we are talking about remediating your credit score.

It is a subject consumers often face with fear and trepidation, and for good reason. With the exception of recognizing that the best score wins, the average home shopper knows very little about the whole credit scoring process.

Sub-prime (poor risk) borrowers who are eager to move into A-Paper (good risk) territory often find themselves at a loss when trying to find ways to upgrade their credit history.

Why do you need to bother?

  • The better the score, the less your interest rate-which can save you thousands.
  • In today’s lending environment, a low score may keep you from even being considered-you can’t even get a foot in the door of your local bank or mortgage broker.

The good news is there are ways to improve less-than-perfect credit scores and obtain a loan for the home you really want.

photo by familymwr

Steps in Improving Your Credit Score

The first step in the process is making sure that you have a current copy of your credit report. Congress recently amended the Fair Credit Reporting Act so that consumers may now receive one free credit report annually. There are three major credit bureaus: Equifax, Experian, and Transunion. Since entries can vary across bureaus, you’ll want to request a free report from each of the three companies. (Go to www.annualcreditreport.com)

It’s also important to know just what a good credit score is. Most A-Paper (remember-that’s good)  scores generally begin around 680, although this number may differ slightly among lenders. Don’t despair if you come up shy, there is always room for improvement.

Increasing your score just 5 points can save a significant amount of money. For example, if your score is 698 and you increase it to 703, then you could save yourself thousands of dollars over time as a result of a slight improvement to your loan’s interest rate.

While credit repair is necessary for some, it’s not the only way to increase your credit score. Even if you have stellar credit, you can enhance your score through these steps:

  • Evenly distribute your credit card debt to change the ratio of debt to available credit. Let’s say you have a credit score of 665.  If you have debt on only one card, and four additional credit cards with zero balances, evenly distributing the debt of the first card could move you closer, and possibly into, that ideal bracket.
  • Keep your existing accounts open and active. The average consumer is usually anxious to close credit card accounts that have zero balances, but doing this can cause them to lose the benefits of a long-term credit history and increase their ratio of debt-to-available credit. The bottom line is don’t close those old accounts!
  • Keep credit inquiries to a minimum. Each inquiry into your credit history can impact your score anywhere from 2-50 points. When it comes to mortgage and auto loans, even though you’re only looking for one loan, multiple lenders may request your credit report. To compensate for this, the score counts multiple auto or mortgage inquiries in any 14-day period as just one inquiry, so try and stay within that time frame.

Remember, credit scores don’t change overnight. Improving them requires time and diligent effort on your part, so it’s a good idea to get the ball rolling at least three to six months prior to submitting your application for home financing.

Credit Repair

If credit repair is what you need, you can either begin the process yourself or seek out a repair service. If you decide to make your own improvements, visit as many websites as possible to get information regarding credit laws and consumer rights.

Diligently search through them and educate yourself to ensure that you don’t sustain any self-inflicted wounds. A good place to start would be the Federal Trade Commission’s website, which contains a wealth of helpful literature.

If you’re facing severe or complicated credit issues, then you’ll probably want to enlist the assistance of a professional credit repair company. Before you do, be sure to familiarize yourself with the FTC’s regulations on credit repair. With over 1100 credit repair companies to choose from, it’s important to be certain you are dealing with a reputable firm. Examine the FTC’s information on fraudulent practices to avoid falling prey to credit repair scams.

Addressing credit issues can be uncomfortable to say the least. But by taking these steps now, you’ll be that much closer to obtaining the home of your dreams.

Ray Evans

Mortgage Broker, Element Funding

Reader Questions:

Do you have credit score questions regarding a potential home purchase?

Have you had problems getting a mortgage approved?

Let us hear from you!

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Posted in Credit Reports, Personal Finance 101 | 4 Comments »

Credit Score:8 Tips To Improve It

Monday, April 12th, 2010

Credit Score

Do you worship at the “Sacred Church of FICO”?  Do you bow down to your credit score maker?

I hope not, but it certainly seems that way at times.  Google keywords says there were almost 2 million searches for “credit score” in March alone.

Dave Ramsey says, don’t worry about building your score-that the score only tells you how good you are at borrowing money….

But is it that simplistic?

Why you need a good credit score:

  • A new job-many companies pull a credit report when you apply
  • Buying a house-your report is used to approve/disapprove-but also affects the rate of your mortgage
  • Credit cards-the higher your score, the lower your rate-of course the inverse is true too!!! (I do agree with Dave that carrying a balance is stupid!)
  • Renting a home or apartment-most landlords pull a report now.
  • Lower insurance rates-homeowners and car insurance rates can be affected by a low score.

So the difference between having a good score and a bad one can mean  tens of thousands of dollars in interest payments over the life of a mortgage.  Also  whether or not you get that  job,  the apartment or home you have set your sights on.  And can make your monthly bills higher if you have to pay higher rates for your car or homeowners  insurance policy.

So  now  you understand why your credit score is important,  what can you do about it?

Improving your credit score:

  1. Pay your bills on time-yes all your bills, not just your loans.
  2. Keep your balances on cards below 50% of your limit.
  3. Your score will be higher if you have different types of loans, not just all credit cards.
  4. Avoid foreclosure
  5. Avoid bankruptcy
  6. Keep your number of cards to less than 5
  7. Avoid applying for too many loans-yes even loans you decide not to take count against you if you apply for too many.
  8. Have a tickler system at home-to be sure you do number 1-paying your bills on time.

Now you may say-avoiding bankruptcy and foreclosure are so obvious, why include them.  Many folks are underwater on their mortgage and struggling to get by.

It may be tempting to just walk away- and not deal with the problems.  However those decisions can stay with you for more than 7 years, before you can repair your damaged score.

Just a few more reasons to keep working your way through your debt problems (or better yet avoid them!!!!).

Now for more information about obtaining your credit score, check out this post from the past.

And for those of you who are ready to dispose of your  credit cards, I recommend cutting them up with bandage scissors-you nurses should have those in your scrub pocket- right….

Check out this video for a unique way  of destroying his card- in the microwave.  I don’t recommend this-those fumes are probably poisonous.

DON’T DO THIS AT HOME!!!!!

Let me know if you have any credit score comments or questions.  Are you worshipping at the FICO altar????

My free mini-course on personal finance, which you can get along with my free E-book “Emergency Money Resuscitation” can be found here. The mini-course has several posts on credit card management…

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Posted in credit cards, Credit Reports | 8 Comments »

Credit Reports and Consumer Credit Information, Free, Of Course

Friday, October 9th, 2009

The Wall Street Journal’s Cranky Consumer has written an article today about checking out three different free credit information sites.  The sites, Quizzle, Credit.com, and CreditKarma.com propose to give a comparable score to FICO and the other major credit agencies, Experian, Equifax and TransUnion.  You can obtain a free credit report from those sites 3 times a year by visiting www.annualcreditreport.com .

I have a full-time job, so I did not visit each of the above sites for a test drive.  Please read the professional journalist’s very well reported article linked above for that.

I did, however, visit www.quizzle.com.  The questions required to confirm my identity were not answered to their satisfaction-they were referring to a non-mortgage loan originated about four years ago.  But it was listed as my home mortgage loan,which was refinanced less than 2 years ago. Therefore I failed their identity tests…..

So if this is confusing sorry.  My point is I would have to call an 800 number to allow them to give me a credit report.  Maybe tomorrow after a full nights sleep.

Now, don’t let  roadblocks like these keep you from checking your credit information.  Going to one of the sites above and obtaining information is extremely important, both from an identity theft standpoint, as well as identifying errors.  You want to make sure no one has tried to obtain credit on your behalf.

A low credit score  can cost you thousands in extra interest, and fees -if you are able to obtain a new loan. You also will probably have to take out mortgage life insurance resulting in higher monthly payments.

But keep in mind, all of these reports give their own proprietary information.  The only way to get your FICO score is through FICO.  They now offer a free report as well, but is tied to a monthly service that will be charged to your credit card, unless you cancel it within the first thirty days.

Just keep in mind that FICO’s mathematical weighing of your credit information is not available, anywhere but at FICO.  Although all of the above sites will give you information that will be in the general range.

So where does all this go, for Millionaire Nurses

  • Check your report several times a year-for free
  • Don’t carry a balance on your cards
  • Make all your payments on time, so your score won’t be dinged
  • Keep your balances, if you have them on your credit cards-less than half of your credit limit.
  • Save monthly-so in time, you won’t care what your score is, you will be your own banker….

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Posted in credit cards, Credit Reports, personal finance | No Comments »