Category: Credit

11/15/2018 0 Comments

2 Steps to a Good Credit Score

Everyone can have a great credit score (750+.) How long it takes depends on from where you start. It will take a person with a 450 score longer than a person with 620. And both longer compared to a 720 score. But it can be done. The journey of 1,000 miles begins with the first step. Here are 2 steps to having a great credit score.

Step One STOP putting BAD news on your credit report.
If you do nothing, your credit will clean itself up in 7 years. The Fair Credit Reporting Act (FCRA) requires that.

Once you commit to improving your credit score start paying your bills: On time; Every time; All the time. Just one late payment can be devastating to a credit score for a long time. So, no more late payments--pay your bills on time--every time.
Improve credit utilization ratios. You can do this by reducing debt and/or raising credit limits. Your credit utilization ratios significantly impact your credit score in both the Trended Data and various FICO credit scoring models; independent of your payment history.

Step One will “clean” your credit report of all negative references in a maximum 7-10 years depending on the negative tradeline type. But a clean report is only part of having a great credit score. You can take Step Two before you complete the first. And you should. Especially if you had a bankruptcy in the last decade.

Step Two Put some good news on your credit report. Gotta Do It!
Current positive tradelines on your credit report have a greater impact on improving your credit score than older negative ones. They will improve your score faster and easier than just doing Step One alone. Here are some ways to put positive tradelines on your credit report.

Lend yourself money. Then pay yourself back in a way that reports to the consumer reporting agencies. If you have either no score or a “bad” score you will find it hard to get credit. Financial services institutions are very reluctant to lend money to the “untried or unworthy.” So you must borrow from yourself with the assistance of a financial services instrument such as a (1)secured credit card or (2)self-collateralized installment loan from a credit union, bank, etc or (3)a Credit Builder account from Self Lender. The first two options require you to have money to get started. Self Lender Credit Builder account only requires you to make self-selected on-time payments. You’ll need no money upfront.
Responsibly open and use new types of credit accounts. If you want a great credit score you must proactively manage it. Having and properly using credit when necessary can improve your financial well being. Educate yourself about credit scoring. Know how to move your score on purpose when you need it. Doing so can save you money on interest rates and result in more favorable terms when you borrow.

Bonus Step Repeat Step One and Step Two as needed.

Credit Score improvement Chart

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1/16/2018 0 Comments

What Happens to Your Credit Card Debts when you Die?

Short Answer is that it dies with you IF.....

It is unsecured debt
- Unsecured debt is a loan that is not backed by an underlying asset. Unsecured debt includes credit card debt, medical bills, utility bills and other types of loans or credit that were extended without a collateral requirement.
You are not a joint account
- If you’re a joint cardholder, meaning you co-signed for the credit card, you’re liable for the debt. Now there’s a difference between a cosigner and an authorized user. If you are the latter, you do not have any legal responsibility for debt accrued on the card.
If you are not a co-signor
- If you cosigned the application for a joint account, you entered into a binding contract and continue to be equally responsible for the debt.
No fraudulent authorized by you use after death
There is no estate claim by the creditor

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12/5/2017 1 Comment

7 Ways to Reverse a Bad Credit Score

If you have bad credit be encouraged you can have good credit, if you want it.

Having a “prime” credit score can make a significant beneficial difference in your life. Non-prime credit scores will result in limited more expensive borrowing options, if available at all.

Borrowing from time to time is a reality and necessity of modern financial life. Short-term borrowing costs impact your long-term financial well-being. Your ability to minimize those costs is based on your financial capability. In this adversarial economic system, you can either "play the game" or "be played by the game."

Credit heals itself. If you do nothing on your credit for the next 7 years you will have a clean credit report by law. The only exception would be the 10 years required for a Chapter 7 bankruptcy to clear. But just waiting for the bad news to fall off your report isn’t good enough. You also need to engage the system for your benefit.

Actual Credit Score Improvement Graph

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11/24/2017 0 Comments

Is a Balance Transfer Right for You?

It is difficult to give generalized financial advice. Because everyone’s situation is different and the dollars are in the details. Having said that, here's a look at the benefits of a balance transfer.

A balance transfer is when you move the debt from one debt instrument to another. In most cases, a credit card is the receiving instrument.

Some pros to doing a balance transfer.

The balance that you transfer will payoff an account. The debt did not go away. It moved to a lower rent neighborhood.
- If the reason you are doing the balance transfer is to pay off higher interest debt then it may be a wise move.
- For example, if you transfer to a promotional offer, such as “no interest for 6 months on balance transfers,” it will allow you to pay off debt quicker. Provided you make the same payment you were making on the debt as before the transfer.

Another advantage of a balance transfer is that it allows you to merge payments. It may be easier to focus on one bill as opposed to splitting money between two or more.

Some things you should be aware of when making a balance transfer.

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11/21/2017 0 Comments

7 ways to improve your credit score on purpose.

Lower credit utilization ratios Reduce "proportion of balance to limit" on credit cards and home equity line of credits (HELOC) to 25% or less individually and in the aggregate.
There two ways to do this.
•Pay down the balance.
•Obtain a limit increase on your accounts. It will cost you an inquiry whether approved or not.
•A hybrid strategy is effective.
This method will have the quickest impact on your score
Do NOT close any accounts in good standing
Close all inactive accounts that have a derogatory record
Challenge any negative accounts with a DLA longer than 7 years at credit bureau
Negotiate collections off your credit report Paying collection could lower your credit score. If the DLA changes you also refresh the seven years the derogatory information will remain on your report.
Remember from a FICO credit score standpoint it is the fact that you went to collections that hurts you. The damage is virtually the same paid or not.
Start paying your bills •On time •Every time •All the time This one takes longer to impact your scores but it is necessary for MAX credit and a MoneySmartLife style going forward
Stop applying for credit No matter how tempting the multitude of easy credit offers with incentives you get, don't apply. The offers can be tempting and appear financially prudent with promise of further savings by just applying. But they can really mess you up.

Take me to the maxing credit score webinar

Take to the maxing credit score Blog Post

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Author

Mansa Musa is a homeownership counselor and homebuyer educator. He is currently the Principal at MoneySmartLife.org. He blogs and speaks on subjects of financial well-being and financial capability. Helping working class families live a sustainable MoneySmartLife through pragmatic solutions and behavior changes.

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2 Steps to a Good Credit Score

What Happens to Your Credit Card Debts when you Die?

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Is a Balance Transfer Right for You?

7 ways to improve your credit score on purpose.

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