Seven Steps to Stellar Credit

July 27th, 2014 by admin

It’s a classic Catch-22: You’ve got to have credit to get credit. So where do you start?

With step one in our seven-step guide to building a strong credit record. Plus: Three rules for boosting your credit score. It’s a modern twist on the classic chicken-or-the-egg conundrum: You can’t get credit until you have a history of repaying credit. For millions of young people just starting out in their financial lives, getting approved for a credit card, auto loan, mortgage or other line of credit can pose a challenge. If you don’t have a record of making payments or managing credit, lenders don’t know whether you’re reliable. They’ll likely turn you down or charge you higher interest rates until you can prove your creditworthiness. (Learn more about credit scoring.) Better to establish and build a credit report for yourself now before you need to borrow money. This will take some time — in order to have a credit score, you must have had credit for at least six months with at least one of your accounts updated and reported within the past six months, according to Myvesta, an organization that educates consumers about credit. But it’s not enough just to establish a credit report. When you get credit, it’s important to follow these key steps to net the best possible score: Make your payments as soon as you get your bill. Avoid waiting until the last minute. If you push it to the due date, any little snag could cause you to be late — no Internet access, ran out of stamps or got lost in the mail. Making your payments on time is one of the main factors that determine your credit score. A single missed payment can drag down your score, and the incident can stay on your record for up to seven years. Late payments can also cost you extra in fees as well as trigger a higher interest rate. Also try to pay more than the minimum required on your loans and credit cards each month. You’ll pay them off sooner and save a bundle on interest. Don’t max out your credit cards. Lenders look at how much available credit you actually use.

Keep your credit card use to less than 30% of your credit limits, advises Liz Pulliam Weston, author of Your Credit Score: How to Fix, Improve and Protect the Three-Digit Number That Shapes Your Financial Future. So, if your card carries a $500 limit, try to keep your spending below $150 — even on a secured credit card. Not only will this strategy help you to get the best possible rates, it can help you avoid getting in over your head in debt, says Weston. Don’t carry a balance. One of the biggest myths about credit is that you need to carry a balance month to month in order to build a history. Not so. In fact, credit scores don’t even distinguish between those who carry a balance and those who don’t, according to Consumer Credit Counseling Services. Go ahead and use your credit card each month, but stick to smaller purchases you can afford to pay in full. You’ll save money on interest charges and you’ll be less likely to get into trouble down the road. When it comes to building your credit, a little discipline can go a long way. If you’re starting from scratch, these seven strategies can help get your credit history off the ground:

1. Open a savings and checking account. Although they aren’t considered ‘credit,’ these accounts may show up on your credit report. Lenders view savings and checking accounts as signs of stability. Over time, your withdrawals and deposits will show that you can handle money responsibly, and that you have reserved cash to cover payments. But be careful not to bounce any checks, which will scuff up your report.

2. Pay all your bills when you get them. Credit cards, student loans and other debt aren’t the only bills that can impact your credit report. Your cell phone, cable TV, utilities and Internet service may show up as well, so it’s important to stay on top of all your bills. Years of on-time payments may or may not get reported. But one wrong move and — bam! — it’s on your credit report. A great way to make sure you don’t miss any payments is to pay your bills electronically. Many banks now offer the service for free, and you can use helpful on-site calendars or financial software, such as Microsoft Money or Quicken to schedule some bill payments automatically each month. You could also go with a reminder service, such as or, that notify you via e-mail or cell phone when it’s time to write a check.

3. Make a secure start. One of the best ways to build a credit history from scratch is with a secured credit card. These cards allow you to make a deposit with a lender (such as your bank or credit union), and the amount usually becomes your credit limit. The issuer takes on zero risk because if you don’t pay on time, it can dip into your account to cover the bill. Most issuers require a deposit of $300 to $5,000. You build a history just as fast with a secured card as with a regular one, says Ryan Sjoblad, a spokesman for Fair Isaac, a credit-scoring company. After making payments on time for a year with a secured card, you should have an adequate history to switch to an unsecured card. You’ll want to shop around for the lowest fees and interest rates on secured cards. Avoid those that charge application or processing fees. And make sure the issuer reports to the three major credit bureaus — some smaller banks may not.

4. Get a credit card in college. This may seem like irresponsible advice for us to give. After all, the average college student graduates with four credit cards and carries a balance of nearly $2,200, according to a recent study by Nellie Mae, a student loan provider. But credit cards are pretty simple to come by in the ivy-covered halls. Lenders practically beg college students to take cards off their hands. If you can establish a reliable credit history while you’re still in school, you’ll be prepared for when you want to buy a car or a house after graduation. Try to limit yourself to one card. Learn more about getting your first credit card, and how to shop for the best deal.

5. Get store credit. Consider getting a card to finance purchases at your favorite retailer or gas station. Qualifying for these cards is generally easier. But be careful — too many of these cards can actually hurt your credit score, says Weston. One or two should suffice. Shop around for the best deal and read the terms carefully. Watch for annual fees and other charges, and make sure you know how long you have to pay the balance before interest kicks in.

6. Borrow someone else’s good credit. If you simply use your parents’ credit card, your credit history will remain a blank page, no matter how responsibly you manage your spending. Ask them to add you as an authorized or joint user, however, and your credit report may be updated with your parents’ history with that account over the years, says Weston. (Make sure the issuer reports authorized and joint users to the credit bureaus, though. Some only report such users if they are married to the original account holder.) Of course, you’ll want to make sure they really do have good credit because any of their mistakes would then become yours too. Getting someone to cosign a loan is another way to qualify. Make your payments on time and you can build a solid history. But, again, if you miss a payment, it’s not just your credit that will suffer — it’ll show up on your cosigner’s report as well.

7. Don’t open too many new accounts at once. When it comes to building your credit, patience is a virtue. It takes time to create a solid record of consistency in making payments to demonstrate your creditworthiness. Start off slowly with one or two accounts. Use them responsibly for at least six months to one year before applying for another, if you need it. Applying for too many accounts in a short period of time could be a red flag to lenders, according to Equifax, one of the main credit bureaus, especially if your credit history is less than three years old. Even if you don’t qualify or open an account, each application for credit can remain on your report for two years. Applying for too many of the same kinds of accounts can also drag down your score. Lenders like to see that your money management skills are well-rounded. A checking account, a secured credit card and a co-signed car loan, for example, show more versatility than a pocketful of Visas.

Seven smartest ways for students to get credit card with bad credit

February 25th, 2014 by admin

It’s not an unknown fact that the financial crisis and recession of the last couple of years have left most banks less eager to issue credit cards. Students, specifically, are now having a harder time getting new ones for themselves. Essentially, nowadays, banks want to take less risk with their cash. This means if you’re one of those people who used to have a fairly easy time getting a credit card, you may now struggle. However, this does not mean that you can’t get one.

Bad credit vs good credit

Getting a student credit card with bad credit is not impossible. The reality is most of us don’t really have bad credit. We just don’t have good credit. What you need to understand is that whether you get anew credit card or not, isn’t a simple calculation based on how much you earn. And no, there is no such thing as a credit blacklist. So if you are rejected by one bank, then that doesn’t mean you will be turned down for a student credit card by another. Chances are, you just don’t fit the usual profile they look for in an applicant.

Start small. This is something that most people fail to consider when applying for a new card or loan. Applying for a lower amount cannot just improve your chances of getting a new card, it also helps you get back on track to credit recovery. Ask for what you can only handle.

Get a job. If you already have one, don’t be afraid to look for a better paying post, or an additional part-time job, if you think you can handle it. It goes without saying that holding a job (part-time or full time), will help you earn the trust of the bank you’re applying for. It also helps improve your credit score by giving you the resources to pay your bills on time.

Pay your bills.You can greatly improve your credit rating by keeping with at least the minimum repayments of your bills. You can also boost your credit history by registering on the electoral roll, if you haven’t already done so.

Be picky. One of the biggest mistakes that credit card applicants commit is to apply at every bank they can. Too many applications easily scare creditors. This is especially true if your credit history is already bad. Take time to do your research and apply only for the one that suits your preferences (and payment power) most.

Go for minor credit cards. Or better yet, try a department store or a gas company or some other smaller credit card. Not only is it one of easiest ways to get a credit card with bad credit, getting one will also help future credit card applications with major companies. Keep in mind though, that some issuers of these kinds of cards don’t report to credit bureaus. So better do a background check to make sure that the ones you apply for do. Having an unreported card account (no matter how updated your payments are) won’t boost your credit one bit.

Ask for help. Asking a friend or a relative to co-sign for a card is like swinging a double-edged sword. It can either help you or harm you. Keep in mind, though, deals like these works both ways. In other words, just as their credit can hinder you from acquiring a new card; you can also get them in trouble if you mess up.

Consider getting a secured card. A secured card is like a bad credit credit card. It gives you the flexibility of using a credit card and can be a good way to let creditors know that you can handle the terms. Keep your payments updatedand your bank may soon begin extending your credit line beyond what you have put in.

Amy is an active blogger who is fond of sharing interesting finance related articles to encourage people to manage and protect their finances. She also covers topics on how to apply for a home loan with bad credit that can help people manage their finances. Know more about things to consider if you are applying for credit cards with bad credit.

Credit card for someone with bad credit?

i have applied almost everywhere. when i was younger my mother used my name over some credit cards and screwed it all up. Anyone got a good card for someone with bad credit?

Since the bad credit reporting was not yours, why not clean that up first and then start building your credit.

File disputes with the CRA’s and the creditors for those fraudulent accounts.

When your mother stole your identity, used it to gain credit and then defaulted, she left you in a very bad position. Not only are your reports in bad shape but you also run the risk of being sued for the defaulted debts.

You should make cleaning that up a priority over applying for credit – doing that, you won’t have to worry about having collectors hounding you or answering your door only to have a summons handed to you.

Seven tips to create a good credit score with your student credit card

April 29th, 2011 by admin

Everybody wants to build a good credit score.  This is important for students considering long term goals. The following tips will useful to build a good score on a student credit card.

Some people object issuing credit card to students due to the dangers in their use.  However, students should be exposed to personal finance management at least to a limited extent.  Keep in mind the following tips to make good use of your credit card:

Keep only one card for use. There is no need to take too many cards even though there are attractive offers around. Multiple credit cards lead to unnecessary shopping.  If you have more than one card, close by unused credit cards.  After all, why to pay additional fees? Stay within the limits sanctioned to you.  Pay the amounts due on time.  If you go over the credit card limits or do not pay back the dues, there will be late payment fees and interest on outstanding balances.  They all can make a permanent mark on your credit score.  Be smart enough while using credit card and be responsible in repayments. There is always a temptation to pay the minimum balance mentioned on the credit card statement.  This is just a nominal amount to keep the account going.  The principal amount and interest thereon will go on accumulating and will make the repayment very hard over a period of time.  Try to make full payment of the amount due. If not possible, try to pay as much as you can. Open a savings account to take care of emergencies.  Deposit at least some money regularly. It will earn interest and at the same time will be useful to pay off the overdue balances on credit card. Read by credit card application very carefully before signing and handing it over to the company.  It is usual for these companies to include some fine prints.  You should be mainly looking at the penalties for late payment and the rate of interest you will be charged on overdue payments. Develop the habit of checking and filing all the statements you receive.  Sometimes there may be a mistake by some creditors. Be smart to protect your identity.  Misuse of your personal information can lead to a serious damage your credit score even if you have not done anything wrong.

A lot of effort is required for building and maintaining a good credit score.  Following the above tips will help you to stay responsible as well as organized in your financial matters.

Chintamani Abhyankar, is a well known expert in the field of finance and taxation for last 25 years. He has written many books explaining inside secrets of the magic world of personal finance. His famous eBook Stop donating your money to IRS which is now running in its second edition, provides intricate knowledge and valuable tips on personal finance and income tax.

Is 710 a good credit score and what does it mean?

I dont know much about credit scores. If my credit score is 710 do I have good chanes of getting a loan or another credit card?

Again people, you all are only giving partial answers. The correct answer to this question is “it depends.” 710 is considered “good” on most credit reporting matrixes but not all. There are numerous models of score. Auto finance enhanced, mortgage, general, etc. On most bureaus the highest score is anywhere from 850 to 900. Anything above a 740 in most scoring matrixes is excellent.