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Monthly Archives: April 2017

Information of Credit Establishment

Upon making your monthly payments to the Credit Card Company or bank, your information is electronically transmitted to a credit-reporting agency. Trans Union, Equifax and Experian are the three major credit agencies. Once you have made your payments consistently your rating will rise accordingly. Once your rating has hit 650 or better, your mailbox will become flooded with attractive offers for credit cards and loans. People will want to give you the world because you can pay your bills in a timely manner.

You may be surprised but if you do not act financially responsible, it can prevent you from getting a job, renting an apartment or even opening a bank account. The fact of the matter is that your credit rating is very important in today’s society. Your ability to keep it up to date by monitoring it is crucial. Once a year you can pull a free credit report from each agency. Check the report for accuracy, should it be reporting errors contact them immediately to resolve the issue. Some people might think a simple phone call can fix everything. That couldn’t be farther from the truth, repairing damaged credit takes time and only you can do it. Once you file a claim, stick with it and make sure it gets resolved. Once a correction has been made you will receive notification or an amended report from the agency showing the change. Your credit report has much more at stake for you in the present and in the future, watch it closely.

Establish Great Credit

If you do not know what is in your credit file, check with your local credit bureaus. Most cities have two or three credit bureaus, which are listed under “Credit” or “Credit Reporting Agencies” in the Yellow Pages. For a small fee, they will tell you what information is in your file and may give you a copy of your credit report.

If you have had credit before under a different name or in a different location and it is not reported in your file, ask the credit bureau to include it. If you shared accounts with a former spouse, ask the credit bureau to list these accounts under your name as well. Although credit bureaus are not required to add new accounts to your file, many will do so for a small fee. Finally, if you presently share in the use of a credit account with your spouse, ask the creditor to report it under both names.

Creditors are not required to report any account history information to credit bureaus. If a creditor does report on an account, however, and if both spouses are permitted to use the account or are contractually liable for its repayment, under the Equal Credit Opportunity Act you can require the creditor to report the information under both names. When contacting your creditor or credit bureau, do so in writing and include relevant information, such as account numbers, to help speed the process. As with all important business communications, keep a copy of what you send.

If you do not have a credit history, you should begin to build one. If you have a steady income and have lived in the same area for at least a year, try applying for credit with a local business, such as a department store. Or you might borrow a small amount from your credit union or the bank where you have checking and savings accounts.

A local bank or department store may approve your credit application even if you do not meet the standards of larger creditors. Before you apply for credit, ask whether the creditor reports credit history information to credit bureaus serving your area. Most creditors do, but some do not. If possible, you should try to get credit that will be reported. This builds your credit history.

Save Money on Credit Cards

The first and most obvious way to save money is to pay the balance each month. However if this is not possible then there are ways to save money. Moving money from credit card to credit card to take advantage of interest free balance transfers and effectively borrowing money for free. Be sure to read the terms and conditions on each card before you transfer.

Pay your credit card bill on time and avoid late fees which can cost you up to $40 each time. Check the payment option and guidelines on your bill. The best method of avoiding late fees is to setup a direct debit for the minimum payment each month.

Keep a close eye on your fees and charges and manage them very closely. Check you balance statement every month. Avoid withdrawing cash from your credit card. These services will cost you from 2% upwards of the amount drawn.

Credit Balance Transfers

It is important to remember that a balance transfer does not mean that the debt has gone away. It just means you are not paying interest on it. You will still have to maintain payments.

This may seem obvious but many people do not get this straight in their mind.

The basic criteria for getting a balance transfer is when you regularly have an outstanding balance after making your monthly payments. This is the amount you should look to transfer to another card. This will mean that for the period of the offer you will pay no interest on the balance (provided you make the minimum payments).

You should be very wary of taking up a balance transfer, if your overall debt is increasing. A balance transfer is not a green light to spend more money. The money you save should be used to decrease your debt.

What should I look for in a balance transfer ?

You need to be aware of the following when looking for a balance transfer card

Good things

  • Length of offer period.
  • Offer Interest Rate.
  • The zero or low interest rate charged on the balance.
  • Possible transfers from loans and overdrafts.
  • On some cards you can transfer from existing loans and overdrafts and still get the offer.

Bad things

  • Cut-off period for the balance transfer offer.
  • Hidden Charges on transfers.
  • Some banks will charge a handling fee on the balance transfer.

How long the offer is valid for ?

There is usually a cut off point from the account opening when the offer is no longer valid. Be very aware of this otherwise you could end up transferring a balance to a higher rate !!

Unless there is also a 0% interest rate on new purchases then you should avoid making new purchases on a balance transfer card. This is because the banks will look to reduce the balance transfer debt quicker than the new debt. Provided your credit history is reasonable, there is nothing stopping you having several cards for different purposes. A good way is to have a card, which specialises in 0% on new purchases and another card for balance transfers.

When the balance transfer offer period finishes the debt will revert to the typical variable APR. The lenders hope at this point that the cardholder will retain the card and some of the debt, so they can then start charging interest and making some money! So take into consideration the low interest rate credit cards. However, there is nothing stopping the disciplined credit card holder from switching to another balance transfer deal and closing the account. The cycle then starts again. Always allow 6 weeks to 8 weeks before the end of the offer period to apply for a new card. This means you can get the balance transferred to the new card before the lender can start charging the higher rate. You have to be organised to do this, but if you are it does work. People who regularly switch balances are know as card tarts.