Posts tagged: credit_history

What is the Fair Credit Report Act?

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The Fair Credit Report Act is a law that protects and prohibits the distribution and use of your credit information. It protects you from the possibility of your credit history and other credit information getting into the wrong hands. It also prevents the wrong people from changing or manipulating your credit information.

There are several factors that allow your credit information to stay safe, but there are a few people who have access to it when it is necessary. Most of the time it is used to evaluate whether or not you are worthy of getting a loan or a contract similar to that. Here are a few examples:

1. Companies where you have credit can access your credit report so that they can monitor your credit. This way, they know whether or not you are capable of paying back what you owe on credit and how well you can make your payments on time. However, no one is allowed to give out your credit information in these situations except you.

2. Insurance companies are allowed to check your credit report for generally the same purpose. They need to know if you will be able to pay your insurance bills on time. By checking your credit report they can see your payment history and evaluate whether or not you can make the correct payments punctually.

3. Anyone who is allowing you to get credit from them. Whether you get credit by applying for a credit card or for a loan, those who will be your lenders are allowed access to your credit information. The very factor of your credit score and the details on your credit report determine whether or not you get credit in the first place. This allows credit lenders to find out how faithfully you will pay them back.

4. Your employer has the opportunity to look at your credit information, but in this case, it is only your consent that can grant them access to it. The previously mentioned cases may check your credit score whether you want them to or not, but possible employers, when considering you for a position, must have your permission before they see any of your credit information.

The Fair Credit Report Act also protects you from identity theft. Your credit information entails a lot of information about you, including important details like your social security number, date of birth, phone number, etc. Because it protects these details so intensely from getting into the wrong hands, it protects you from other dangers like identity theft.

The Fair Credit Report Act also gives you the right to take action on part of your credit information and request information about it. If you have a problem with your credit report, you have the right to dispute the mistake that you feel was made. If you want to know what your credit score is, you have the opportunity to request a free credit report once a year.

Will Canceling Old Credit Cards Hurt My Credit Score?

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So you have had a couple of credit cards for several years, and you have finally paid them all back down to a reasonable amount. You are thinking maybe you should close them out so that you never have the chance to spend on them again. But what are the consequences? Will it really help or will it hurt your credit score? One of the biggest misconceptions about closing out credit card accounts is that you should close your oldest ones first. Not true! Closing the accounts that you have had for the longest amount of time will not improve your credit score. In fact, it will most likely make your credit score go down.

Why will my credit score suffer just because I close my old accounts?

Having credit cards for a long time, whether or not they are active, actually help your credit score because it shows that you have long and healthy credit history. If you close those credit card accounts, it will lower your debt-to-available-credit ratio, making it appear that you have a shorter credit history than you actually do. So shortening your credit history makes it look like you have less experience buying things on credit cards, which puts you at a higher risk of being undependable with your payments. If it appears that you may not make your payments in full or on time, your credit score will not be as high as it should be.

Won’t closing my old credit card accounts erase all the late payments I made?

Maybe you had late payments on a few of those old credit cards, and you think that if you close them out they will be forgotten. This is false. Negative records, such as late payments, can remain on your credit report for up to ten years, whether or not you have paid off and/or closed out those accounts. So whether you have had negative reports on those credit card accounts or not, it is best to keep those accounts open, and allow time to erase any mistakes you made on those credit card payments.

Should I keep my accounts open even if I’ve paid them off?

Yes! Even if you do not plan to use those accounts anymore, it is best to keep them open to prove that you have a long credit history. The longer you have your credit cards and the older the accounts get, the more benefit they are to you. If you feel that there is too much of a temptation to spend the credit that is on those accounts after they are paid off, perhaps you should consider closing out the newer and more recently opened accounts. If all you have are new credit cards, even if they do have low interest rates, your credit score will not be as high because it will look like you have not used credit cards for very long, and have less experience using them and paying the bills on them.

How Many Credit Cards is Too Many?

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Is there such a thing as too many credit cards?

There can be. Honestly, it goes both ways. Most people would agree, though, that they are at a higher risk of getting into debt that they cannot escape if they own way more credit cards than they can control. Having so much credit can be too tempting, and many people have given in to that temptation, spending more than they can pay back and ending up with a bad credit card and debt up to their earlobes.

This is why it is often difficult to keep, or build up to, a good credit score. Creditors look at how many credit cards you have and almost automatically see a potential threat that you will not be able to pay off your debt. This automatically decreases your score, and it also may make it difficult to receive other forms of credit, like a loan, or another credit card.

So how do you escape the automatic assumption that just because you have a lot of credit cards, you cannot pay your debt?

Well, there are some cases in which people do not have a bad credit score, even when they have several credit cards. What did these people have that those with even a few cards did not? A good credit history. That and regular payments helps your credit score either stay in the high numbers, or increase to where you want it to be.

So how do I know how many credit cards I can have?

How many credit cards you can handle is up to you. If you have a large number of credit cards in your wallet and are confused as to why you are having difficulty paying your bills on time, you may want to cut down a bit. Your spending habits and our monthly income are what determine how many credit cards you can have without letting your debt get out of control, and how well you control your debt is what will determine your credit score.

How do I build up a good credit history?

If you are just starting to get familiar with credit, you should probably start out with a low number of credit cards, if not one. Buying too many credit cards at once will make you appear as a potential over-spender, and even worse, someone who will not be able to pay their bills. To start out low and use your credit card wisely, like paying your bills on time and paying your cards off frequently, will eventually prove that you can handle credit cards carefully and result in a very good credit history, allowing for you to build up to an excellent credit score.

How can I show creditors that I’m dependable with my credit cards?

Always pay in full and on time. The thing that will hurt your credit score the most is having frequent occurrences where you make your payments late. Paying your bills on time every time will show that whether you have one or fifty credit cards, you can pay back the money that you borrowed on those cards.

Guaranteed Secured Credit Cards

In the financial world the name of the game is return on investment. I read (okay, I only started reading) a book written by one of Warren Buffet’s two mentors. His name was Benjamin Graham and you could sum up his whole investing philosophy by saying this: “Find investments that offer safety of principle and a reasonable rate of return.”

With this in mind, the credit card companies are very careful about who they issue credit to. They don’t make billions in profits every by throwing their money around willy-nilly to anybody who just walks in and says sign me up. The reality is most people wouldn’t offer “safety of principle and a reasonable rate of return.”

Two of the biggest indicators the credit card companies use when evaluating you are 1) your credit score, 2) your credit history. This is how they judge whether you’re going to pay them back their money or not.

If you have a low credit score or not enough history, you’re not going to get approved for a standard, unsecured credit card. That means a secured credit card is the way for you to go.

To make the start of you credit-building journey as easy as possible, you should be looking for guaranteed secured credit cards. What do I mean by that? I mean you should only apply to credit card companies that offer guaranteed approval. After all, you’re putting down a big security deposit, which means their principle is complete safe and they’re going to make a reasonable rate of return off you. There’s no reason not to approve you.

Is it possible to Get Guaranteed Approval on Non-Secured Credit Cards?

The short answer is no. If you think about everything we just talked about as far as risk and reward for the credit card companies, you realize it would be corporate suicide for them to hand out a credit card to anybody and everybody that wanted one. A lot of those applicants aren’t credit worthy, and they wouldn’t repay their balances. We can’t have that can we?

If you want an unsecured credit card there’s only one way to get it. You’ll have to have some credit history and at least a decent credit score. They may start you small, but if you can get approved for even a small limit it will help you prove yourself to the credit bureaus and soon you’ll be to get as much credit as you want or need. Depending on your discipline and habits, this might be a blessing or a curse. Until your credit is back on track you’ll find that this type of financing – guaranteed loans for bad credit no fees – is really your only option.

Secured Student Credit Cards

One of the best things that any college student can do is get a credit card. There are a lot of options out there where you can go get credit cards. Some of you might have some difficult history in your past when it comes to credit. That is fine because there are still avenues for you to take a look at. One of the best ways to improve your current credit is to go get a secured student credit card.

Next you want to see what type of interest rates you can get. Usually if you have had a bad past with credit, your interest rate is going to be anywhere from 15% and up to 25%. There could be an initial lower interest rate, but make sure you read all of the terms and conditions of the contract. Be aware that there can be changes very quickly in your contract with the interest rate. It can take them only a 15 day notice before they make a change in the APR and bump it up.

Prepaid Student Credit Cards

When you get a secured credit card, you need to decide what type of credit limit you are looking to get. It usually isn’t more than a couple thousand dollars as a possibility, but more than likely a few hundred dollars. Usually the deposit will be about the same as the credit limit, but it could be less or more depending on the credit card company. It might be 50% of the credit limit or it could be up to 150%. You should search around to find a secured credit card that will allow for a smaller deposit.

With these cards, you can build a lot of credit during your younger years. You need to make some improvements to your credit and getting a secured credit card can be a great way to get you back into good graces with credit bureaus. Also with the deposit you might find yourself taking more notice and responsibility for your credit then what maybe you have done before in the past. This could also be a good option if you simply have no credit history at all. Find a lot of options before you make a decision so that you are not caught with a lot of fees and high interest rates.

Another choice you can look at is getting a family member to cosign on a line of credit to get your foot in the door, if a prepaid student credit card appears to much for you to handle. If that doesn’t work out then look to work through a debit card with a checking account and start building a good recognizable history that way.

Canadian Student Credit Cards

Student credit cards in Canada are different from what you might find in America if you are a student going north of the border. There are some common traits that you will have to have whether you are in Canada or America. It is important that you establish good credit. The best thing you can do is build your credit. If you have none then there are some things that you can do to improve your situation.

First of all you can open a saving account and a checking account before you apply for student credit cards. These are great ways to get the ball rolling. This isn’t going to solve everything, but it will help start off on a good note. You can start paying your bills in college such as rent and utilities on this fund. This will allow for credit bureaus to see that you are good on paying your bills. Then it is good if you can get a store credit card from a clothing outlet that will allow you to build more value with credit bureaus. This is all in vain if you don’t pay your bills on time. That is the biggest thing you can do.

For Canadian students to get a credit card it will probably require an annual fee of some kind. The limits are usually around $750 and the interest rates are similar to those of American credit cards. They are usually around 15% or so. This is a good way for you to build a credit history during school. This can help you to eventually lower your interest rates and then be able to raise your credit limits higher. If you are struggling to get a card then you might have to get a cosigner. This is fine and can be a good way to make sure that you are taking care of that card because someone else is responsible with you. I would also ask advice from this person as to how to properly spend wisely with a credit card.

If you are having issues getting a credit card and you can’t get a cosigner then it would probably be good to go after a secured line of credit. This can be a good option for students that are struggling to get a credit history establish and are easier to come by. You will probably have to make an initial deposit equal to the amount of money you want to have as a credit limit. Whatever type of card you are able to get, build a first initial impression with the credit bureaus and your creditor so that they are able to offer your better rates in the future.

Discover Card Student Credit Cards

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Discover Card might be viewed by some as the little brother of the major credit card providers. Visa is everywhere you want to be (at least that’s what they used to say), MasterCard is for everything that’s not priceless, and Discover…well, I’m not even sure. They’re trying though. I have to give them that.

As Discover tries to build its brand and compete with the heavy hitters of the credit world, it looks to tap into a potentially huge and lucrative market – college students. Tens of millions of kids go to college every year. We’re talking about tomorrow’s earners, and consequently tomorrow’s big spenders.

They’re watching mom and dad sink deeper into credit card debt every year, and as the saying goes, the apple generally heads down the same path as the tree and racks up a bunch of debt on the way. Or something like that.

Anyway, Discover knows that if they can get you on board while you’re in school you’re likely to stick with them for a long time. My parents have had a Discover card for over 20 years. I think they might have the first one.

In order to impress you Discover has put together a ‘Credit 101′ course on their website designed to educate and persuade you – to open a Discover Card Student Credit Card. They put great questions on there such as: What is a credit card? and What is a credit report? and How can you build your credit history?

The quiz is multiple choice, but they’re not actually trying to insult your intelligence. I guess the thought process is if they can educate you and keep you on their website you’ll probably fill out an application. Of course they’re hoping you’ll get approved, run up a balance, and make minimum payments for the rest of your life.

But you are way too smart for that. If you open one of these cards you’re going to use it to build credit score and credit history while making your monthly payments on time and never paying interest. Good for you.

  • Here are a few of the benefits of the card:
  • Six months introductory APR of 0%.
  • They won’t make you pay an annual fee.
  • You can get 1% to 5% cash back, depending on the type of purchase you’re making.

Along with those they give you the standards for most student credit cards – online account management, email bill reminders, etc. It looks like Discover will take good care of you if you pick up their student credit card.

Instant Approval On Student Credit Cards

Instant! This is a beautiful word that so many American’s love to hear. I know I love to hear it and I am sure that you do too. We like instant food, instant love, instant movies, instant money, and instant approval. This is really a loaded term as far as credit cards go. Many cards will give you instant approval as a method of showing their willingness to work quickly and help you in turn use that card quickly.

They know that many people get a credit card on impulse to buy products and not necessarily to improve your credit score. They want you to apply for credit cards with the notion that this isn’t going to take long and you are not going to have to go through a lot of hurdles to get there. Understand that there are still some things you will have to deal with.

One of the best things that you can do is don’t look for instant approval. Take your time to understand your APR, annual fees if you have any, grace periods, and any other noticeable items in the Terms and Conditions. There can be changes in the terms where the APR is 0% for a certain period, but that could increase in a heartbeat, so you want to know when that is going to happen. It might be more important for you to find out how easy it is to get a line of credit and not how fast you can get a line of credit, because that may be where your real problems are.

Easy Approval Student Credit Cards

The real question is how easy is it for you to get a credit card. Now if you don’t have a credit history, that is fine because companies know that you have to start somewhere and they would love to get your business initially so that you come back to them down the road as your income increases and especially for loans and business accounts. So they want to appeal to you to start off with. You can find cards that don’t have annual fees and that is good. Most rates are going to be 15% to 20% and that is pretty standard.

I suggest that you are safe with these cards because if you miss a payment then you can be murdered. Some interest rates can double up near 30%. This can be scary for any student just trying to make it by and I am sure that you don’t want your parents on your back about another issue, along with a creditor and a credit bureau which isn’t as forgiving.

Realize that you are going to have to give your social security number and they are going to do a credit check. This is in accordance with the Patriot Act and also they are going to do it obviously to know what your past is like with credit. This could help with getting a better rate if you have established a credit limit, but realize that it is going to take a several months to a year of good credit habits to impress a credit bureau.

Secured Credit Cards for Business

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This is an account from a business owner that I spoke to that gave me some tips on how he was able to get a secure credit card for his business so he could rebuild his credit. He was concerned because he had heard how important credit was for starting a business, but he wanted to create financial independence. This is his experience with secured credit cards for business:

I was going to buy media for my internet marketing business, but I was nervous because I had several occurrences where I had destroyed my credit. Some of these reasons were my fault and others were circumstances that I couldn’t control. I had gone through a bad divorce that had taken a toll on my credit.

So now I knew what I had to accomplish with my business, but I was scared of where to go to find a card that would accept me. I had some funds to help me get my business going, but I realized that I was going to need to leverage on a grander scale. It was going to require more leveraging and being able to exercise what little credit I had.

I realized that this was going to take some good credit history to replace previous mistakes. I knew that there was going to be forgiveness, but I had to prove myself to credit bureaus. I realized that a prepaid credit was a decent option. I searched around and found a company that offered secured credit cards for business. This company seemed legitimate and wasn’t requiring me to pay an arm and a leg with fees and phone minutes to sign up.

I was even more pleased as they asked me for my credit report to find out how my credit history was. This was assuring to me because it showed that they were serious about what they offered and I found out they would report often to credit bureaus about my new established history.

This became a dream come true because I could leave a larger deposit and receive a larger credit limit. I started using the line of credit often and made payments on time. Some times I would make more than one payment a month. It didn’t take long for my credit to be flipped around. Now my credit is well over 700 after being in the pits and I am able to get unsecured credit cards in a matter of months. I am going to try to build my credit more so I can get larger limits. I used to be scared about credit cards after I had bad experiences. Now I have been able to turn it around into my favor and use it to better my life.

Secured credit cards for business can be so beneficial for people with struggling credit. I like to think of it as almost paper trading, or maybe trading on a contract that is only 5 dollars. It is a conservative way to exercise your ability to use credit correctly. After a while you will learn how to use it wisely and be able to adjust it to become one of your strengths and not your weakness.

Credit Cards for Students in the UK

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Students in the UK need to establish credit history as much as students in the US. Far be it from credit card companies in the UK to pass up on this lucrative market. Here is a quick review of three cards you could pick up while you’re away at university.

Barclaycard Student Credit Card

Barclaycard is a well known credit provider in the UK. Their student credit card offers some decent benefits, but before you apply they want you to fit a few qualifications:

  • Credit history without major blemishes (as in bankruptcy or multiple missed payments on credit lines).
  • You can’t be a current Barclaycard credit card holder.
  • You have to have a permanent address in the UK.
  • You have to be at least 18 years old, and you you have to be heading into college.

If you meet those requirements, you should apply and you’ll be entitled to some good benefits. They offer 20% discounts with certain retailers, 2 for 1 leisure vouchers (not sure what that is), and prize draws for cardholders.

Their interest rates are reasonable – coming in around 14.9%.

Graduate Barclaycard Credit Card

They’re looking for you to have all the same requirements as the normal student credit card, but they also want you to have at least 10,000 pounds annual income.

If you qualify, here are a few benefits:

  • There’s no annual fee.
  • They offer fraud protection.
  • Purchase Delivery Protection which ensures your mail order or online purchases against loss or damage until they get to you.
  • Online account management.
  • Text notification of payment due dates (if you want them).

This isn’t a bad card for the graduating student to pick up as you leave college and enter the workforce.

Natwest Student Credit Card

A prominent UK credit provider gives students a great offer for what may be their first credit card. Here’s a brief summary of the benefits:

  • Great discounts with online retailers.
  • A grace period that may last as long as 56 days.
  • Daily cash advance limit of up to 300 pounds.
  • No annual fee.
  • Use your card worldwide when you travel.

The final benefit I see is they offer a maximum credit limit of 500 pounds. This will keep you from getting yourself in trouble while you’re working toward your degree.

Which reminds me, I have a few recommendations for any student getting a credit card. The most important one is to understand what a credit card is, and what it isn’t. A credit card isn’t free money. They’re going to make you pay them back, and if you’re late or if you even carry a balance your best case scenario is paying high interest rates, you’re worst case scenario is paying high interest rates and high fees. Sounds good right?

It doesn’t have to go that way though. You can use the cards wisely and your credit card will be your best friend. Enjoy those rewards!

Apply for Secured Credit Cards

A couple of years ago my little brother crashed his car and needed to buy a new one. He wasn’t looking to get anything too expensive or brand new, but he didn’t have the cash for a car. He was going to have to get a loan. Only one problem, right? He didn’t have the credit history to get approved for the loan, no matter how small it was. He had to have my parents co-sign the loan with him. Both he and my brother in law should have looked to apply for secured credit cards as a way of building their credit history.

My brother in law went through the same thing. The weird thing was he actually makes decent money and had a nice chunk of cash in the bank. He went to apply for a loan, and they wouldn’t approve him for anything. The only option they gave him was to put some of his cash in an account and they’d let him borrow enough money for the new car. I’m thinking – why would I give you the cash so I can borrow some money? Why not just pay cash for the car?

Both of these guys were in the same situation, they didn’t have enough credit history to get approved for the loans they needed. How do you get that history? You need to open lines of credit.

It’s like the old saying about getting a job – you can’t get a job without experience, but you can’t get experience without a job. The solution to the problem in the professional world is to get yourself an internship. You work for free for a while to get yourself some experience. The employer doesn’t have to risk much because you’re not getting paid, but it’s worth it for you because you’re getting the experience people are going to look for when you interview in the future.

In the world of credit cards, the internships you get are called secured credit cards. Since you don’t have the experience (credit history) that makes them feel safe giving you a credit card, you have to minimize their risk.

The solution here is that you apply for a secured credit card. Basically you’re putting down some money – giving it to the credit card provider as collateral just in case you decide not to make your payments. They know they can use your deposit to cover unpaid balances (but you won’t leave those balances unpaid, will you?), and while you’re making payments they’re sending good reports about you to the credit bureaus.

Of course, while you’re doing your credit card internship, make sure you apply for low interest secured credit cards. There’s no reason to pay a bunch of interest while you’re establishing yourself as an experienced credit user. Eventually you’ll have enough ‘on the job experience’ so credit card companies will give you the credit cards you want. Just make sure you use them wisely…

Credit Cards For People With Bad Credit And Student Loans

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Well there are many former students out there that have finished college and are trying to establish a career, but they have years of bills to pay. This is a big hassle because potentially you can have bad credit, especially if you have missed payments on your student loans. Obviously there are a lot of things that go into what your credit score is and a student loan can have an impact on that. If you miss a payment then you are going to get hit on your score. It will take a good six months of on time payments to bring your credit up or to even be considered. So don’t miss any more payments if you have.

Student loans usually have lower interest rates then credit cards, so I would probably stick to using that loan for expenditures before going after a credit card to use. On average interest rates for student loans are around 5%, but a credit card can have an interest rate around 15% and if you have bad credit or little credit history then it could be up to or over 20%. This can be silly for you to take on if you don’t know how to use it correctly. So first before getting a credit card, consider your spending habits and how you can improve it.

Students With Bad Credit And Loans, Looking For Cards And Checking Accounts

If you do decide to get a credit card then the first thing that you should probably do is set up a checking account and a savings account. Look at some store credit cards as options to get your credit going, just don’t spend like a 13 year old girl before her first day of school. Use it sparingly and pay off all debt quickly. The next step would be to get a secured credit card that will require a deposit and probably an annual fee (not always). There will be high interest rates, but the same rules apply for this as with the store credit cards. Use this simply as an experiment to improve your credit. You would be amazed how many people go nuts and think this is actually their money. I deal with this everyday and it boggles my mind.

This will take a few months and continue to pay off your student loan. If you have to, look at using the student loan to pay off any credit card debt as a last option. This can be intelligent if you are in a bind because the rates for the credit card will be higher and you want to always pay off higher interest rates first. In the end if you are a student with bad credit and student loans, finding credit cards and checking accounts can be very beneficial if you decide to use your dollar bills wisely.

Capital One Student Credit Cards

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Capital One is a great provider for a lot of people with struggling credit. I suggest that you take a strong look at them if you are a student and you have had some bad credit in the past or just simply don’t have any credit history. Everyone starts from scratch. If you are in high school or college it is best if you can get some good history going before you buy the home and get the nice car or for future investments where credit is important like real estate or security systems.

Capital One has some solid rates for first time credit holders. Their range can be anywhere from the high teens to the low twenties in APR. This credit percentage can very. Understand that it isn’t fixed and even if it was, it would be probably for a few months and then the rates would alter. It also might be news to you that the interest is high, but you just have to be diligent with your payments. There are no annual fees,which is a nice plus. Some card companies can nail students with a lot of fees. This is a safe option that you won’t have to face a lot of hidden charges with.

For those that are trying to improve a lackluster credit then you will probably have lower interest rates by 5% then a new credit customer. Although if you are late on a fee, then expect your interest rates to double. They put bad credit customers on a short leash. If you are late you will also pay a fee anywhere between $20-$40. You will have to pay an annual fee, usually around $19. The credit limits for both of these types of cards will be between $300 to $3000. You probably have a better chance to get a higher limit if you have previous history, even if it is bad.

Capital One Student Credit Cards For Canada

These tend to be guaranteed credit cards, but they do have some hurdles that you are going to have to jump. It is interesting to see how Canada runs their credit cards compared to America for students and people with a challenged credit history. There is an annual fee of around $60 and a security fee for the account. This security fee is basically similar to many secured credit cards in America.

The interest rates are the same as a secured credit card too, around 20%. You won’t be able to get as high of a credit limit as an American student, the highest they offer is only $750 Canadian. Even with the currency rates that is still an advantage to the American student. Never the less, this is a great opportunity for a Canadian college or high school student to build a strong history or rebuild a shaky past.