Credit Secrets & Tips

Personal saving as a percentage of disposable personal income has dipped as low as 1 percent in recent year.  If you are like most Americans, one minor tremor is all it would take to shake your whole financial foundation.

In addition to long-term savings, financial experts agree that consumers should aim to have at least three or six months’ living expenses saved for emergencies.  If you are having trouble establishing a nest-egg, don’t despair.  The following are some simple ways to boost your saving:

1.  Pay yourself first

Saving is the cornerstone of financial security, so make it a priority.  After all, a lack of savings can turn a minor financial setback into major financial crisis.

2.  Make it automatic

Having money automatically deducted from your checking account into a savings account helps to ensure that you meet your savings goal.  Even better, if your employer has the capability to automatically deposit your pay check have some funds directed into a savings account.

3.  Turn a hobby into income

Many people have untapped talents,  Whether you enjoy photography, painting, knitting, or metalwork, consider possible ways to earn money by doing what you love best.  Baby-sitting and lawn work are also good ways to earn additional money.

4.  Downsize

Most people have garages, basements, and attics full of items they no longer want or need.  Holding a garage sales or advertising some of your things online ,such as selling on e-Bay, could result in a boost to your saving account.

5.  Use gifts wisely

If you receive unexpected funds, do not be tempted to spend them thoughtlessly. Instead, put all money received from tax refunds, inheritances and gifts into an interest-bearing savings account.

Finally, make a commitment to pay down debt.  Reducing your debt allows you the freedom to make smart future financial choices.

Bad credit can happen to good people. Don’t despair. There are many ways you can get your credit back in shape.

But you have to start working on it today — and keep working hard to show potential creditors that you’re serious about getting your credit back in order.

As you do so, your credit score will improve, resulting in better credit offers and a substantial savings in money.

Here are 6 simple easy and surefire ways to restore your credit: 

1.  Open new accounts and pay them off 

Being able to repay a variety of new accounts is a key step in rebuilding your credit. 
  
That means that devising a strategy to open and pay off as many different kinds of accounts as you can is better than adding more debt to an existing credit card.
 
2. Start small
     
Rebuilding your credit can be similar to starting over from scratch, and starting small may be the easiest option. 
  
Credit cards from department stores or your local credit union can be useful.
 
3. Consider asking for help
     
If you can’t qualify on your own, ask a friend or family member to cosign for a small loan or credit card. 
  
If you can stay current on a major credit card account or small auto loan, this will speed up the process of re-establishing good credit on your own.
 
4. Consider a secured credit card
     
They are guaranteed by a deposit that you make with the credit grantor. The cards offer the purchasing power of a major credit card. 
  
Just make sure the grantor reports payment histories to one of the three major credit bureaus so you’re building your positive payment history.
 
5. Use your new accounts in moderation
     
Make payments that are more than the minimum. You can keep a small balance so that your positive payment history will continue to show up on your credit report.
 
6.Keep your balances low
    
Avoid carrying a balance that is more than 30% of your credit limit (creditors may view it as excessive debt that you may not be able to stay current with.
 
Be patient. The payoff is worth it.  It takes some time for your new credit history to gain momentum.

You’re demonstrating that you are not depending on certain credit cards and loans for your financial survival.  With patience and timely repayments, you’ll likely be able to
build a new credit history that creditors will look upon favorably when making decisions about your ability to handle even more credit.

The holiday shopping season is in full swing. Whether you’re shopping online, by phone or at the mall, chances are you’ll use a credit card for some of your purchases.

Here’s some tips to keep in mind when you shop:
 
1. Keep track of all your spending
 
Incidental and impulse purchases add up. Remember credit cards are just like loans -you have to pay what you owe.

Owing more than you can repay can damage your credit rating. That can make it hard to finance a car, rent an apartment, get insurance, a job – even send flowers.
 
Pay your bill on time, and in full, if possible. If you don’t, you’ll have to pay finance charges on the unpaid balance – and it takes forever to get caught up if you just pay the minimum. 

2. Keep an eye on your credit card and account number
 
* Never lend your credit card to anyone.

You’re responsible for paying the bill. Any problems with the bill can damage your credit rating.

* Don’t sign a blank charge slip.

Draw a line through blank spaces on charge slips above the total so the amount cannot be changed.
 
* Never put your account number on the outside of an envelope or a postcard.
 
* Be cautious about disclosing your account number over the phone unless you know you are dealing with a reputable company.
 
* Carry only the cards you anticipate using to help prevent loss or theft.
 
* Report your lost or stolen credit card or ATM card to the card issuers as quickly as possible.

Many companies have toll-free numbers and 24-hour service to deal with such emergencies.

Follow up with a letter, including your account number, when you noticed the card was missing, and the date you first reported the loss.

3. Keep good records
 
Save your receipts. Compare them with your monthly bill. Promptly report problems to the company that issued the card. Usually, your statement will provide instructions for
disputing a charge. 

If you order by mail, phone or online, keep copies or printouts with details about the transaction, including any warranties, or return and refund policies if you’re not satisfied.

You should have the company’s name, address, phone number, the date of your order, a copy of the order form you sent to the company or a list of the items ordered and their stock codes, the order confirmation codes and the ad or catalog from which
you ordered. 

Holiday sale ads: they blanket the airwaves, jam your mailbox, and add another pound to your Sunday paper.

Soon you’ll be bombarded with ads for pre-holiday sales, preferred customer specials, early bird sales, midnight madness events, coupon savings days, and, don’t forget, post-holiday sales.

Sure you want a good deal, but just how do you decide if the deal is real?

The following some tips can help you get the most for your money:

* Shop around

A “sale” price isn’t always the “best” price. Some merchants may offer the sale price on the item you want for a limited time.

Other merchants may discount the item you want everyday. Also, when you’re comparison shopping, make sure you have: the item’s manufacturer, model number, stock number or other identifying information.

* Read sale ads carefully

Some may say “quantities limited,” “no rain checks,” or “not available at all stores.”

Before you step out the door, call ahead to make sure the merchant has the item you want in stock. If you’re shopping for a popular or hard-to-find item, ask the merchant if he’d be willing to hold the item until you can get to the store.

* Take time and travel costs into consideration

If an item is on sale, but it’s all the way across town, how much are you really saving once you factor in your time and the costs of transportation and parking?

* Look for price-matching policies

Some merchants will match, or even beat, their competitors’ prices. Read the merchant’s pricing policy carefully. It may not apply to all items.

* Go online

Check out Internet sites that compare prices for items offered online. Some sites also may compare prices offered at stores in your area.

If you decide to buy online, keep shipping costs and delivery time in mind.

* Carefully consider bargain offers that are based on purchases of additional merchandise

For example, “buy one, get one free” or “free gift with purchase.” If you don’t really want or need the item, it’s not a deal.

* Ask about sale adjustments

If you buy an item at regular price and it goes on sale the next week, can you get a credit or refund for the discounted amount?  What documentation will you need?

* Ask about refund and return policies for sale items

Merchants may have different refund and return policies for sale items, especially clearance merchandise.

You maybe carry at least 3 or more credit cards. Do you know what these digits in your credit card number mean?

Well, I can give you an idea. Although phone, gas and department stores have their own numbering systems, “ANSI Standard X4.13-1983″ is the system used by most national credit-card systems.

Here are what some of the numbers stand for:

The first digit identifies the type of card. For example,

- 3 is T&E cards
- 4 is Visa Card
- 5 is MasterCard
- 6 is Discover Card.

The structure of the card number varies by credit card system:

American Express – Digits three and four are type and currency, digits five through 11 are the account number, digits 12 through 14 are the card number within the account and digit 15 is a check digit.

Visa - Digits two through six are the bank number, digits seven through 12 or seven through 15 are the account number and digit 13 or 16 is a check digit.

MasterCard - Digits two and three, two through four, two through five or two through six are the bank number (depending on whether digit two is a 1, 2, 3 or other).

The digits after the bank number up through digit 15 are the account number, and digit 16 is a check digit.

 

 

Now, pull out one of your credit card, see if your can decode your credit card number.    

The best protections against card fraud, of course, are to know where your cards are at all times and to keep them secure.

The following suggestions can help you protect your credit card accounts:

1. Sign your card — as soon as you receive it! Always keep in a safe place a record of your card numbers, expiration dates, and the telephone numbers of each credit-card company for the emergency of reporting losses.

2. Never give your credit card number over the telephone unless you initiated the call.

3. Never put your account number on the outside of an envelope or on a postcard.

4. Draw a line through blank spaces on charge slips above the total so the amount cannot be changed.

5. Don’t leave your PIN and account number from a discarded receipt could make you vulnerable to credit card fraud.

6. Don’t throw out your credit card statement, receipts or carbons without first shredding them!

7. Rip up carbons from the charge slip and save your receipts to check against your monthly billing statements.

If there are any mistakes or differences, report them as soon as possible to the special address listed on the billing statement for “billing inquiries.” Under the Fair Credit Billing Act (FCBA), the card issuer must investigate billing errors if you report them within 60 days of the date your card issuer mailed you the statement.

Advertisements for easy terms loans are tempting. They can be good deals, but you must read the fine print very carefully before you sign up.

1.  “Zero Percent Financing” on auto loans

Often these loans are for 12, 24 or 36 months, not the 48 or 60 months many people choose to keep monthly payments down.

If you opt for a shorter loan term, be sure you can make the monthly payments. Also look for any hidden fees.

2.  “Zero Percent Interest” on a credit card

These offers usually are for limited purposes and time periods, such as no interest charges for three months on new purchases or on any balance you transfer from another credit card.

This may be a good option, but you’ve got to read all the documentation and do the math.

For example, if you don’t pay the balance by the due date, you will incur interest. Also find out if there’s a balance transfer fee or an annual fee.

These charges could be so high, in fact, that the zero-percent offer may cost more than a card with a higher interest rate but not the other fees.

3.  “Add the Closing Costs” to your mortgage

You’re not getting out of paying the closing costs they’re added to the loan balance, so your monthly payments will increase plus you’ll be paying interest on the closing costs.

And, if adding the closing costs to the loan balance results in a down payment on the loan of less than 20 percent of the home’s value, you will have to purchase private mortgage
insurance (PMI), which protects the lender if you stop making mortgage payments.

PMI can cost $80 to $120 per month for the typical mortgage loan.

PMI be cancelled when built-up equity equals at least 20 percent of either the purchase price or the original appraised value, whichever is less.

4.  “No Payments on Merchandise Until Next Year”

Even though you won’t make payments for several months, if interest is being charged from the date of purchase, as is often the case, you can end up paying much more for an item than you expected.

Also, if you don’t pay for the merchandise in full by the end of the specified period, you may be charged interest from the date of purchase.

For most people, financial health doesn’t depend on how much they earn, but how much they spend.  To find out where your money is going, start carrying a pocket-size spiral notepad with you all the time, and write down every purchase you make, including the amount. 

Even if it’s a soft drink form the convenience store, or a trip to drive-thru at a fast-food restaurant, record it in your notepad. After two weeks, review your notes and ask yourself if you really need all the things you buy.

Upon close inspection, most people are surprised to find out where their hard-earned money is going.  If this is true for your case don’t dismay – almost everybody wastes moeny to some degree.  It’s important to understand that every purchase we make – excluding such absolute necessities as food, rent, and gas for the case – is a choice.

Consider the following examples of how changing some small habits can affect your wallet’s health:

(1).  If you smoke one pack of cigarettes each day, then consider quitting smoke. it would save you nearly $1,500 each year.

(2). If you make it a habit to take long, hot shower, then take a shoter shower.  Water heating is the third largest enrgy expense in your home.

(3). If you drink 64 oz. of bottle water each day, then why cann’t you purify your own water.  It could save $60 each month.

(4). If you have magazine subscriptions delivered to you home, the visit the library or read magazines online.  Do you know the average American family spends more than $100 every year on magazine.

(5). If you buy a snack from a vending machine each day from work, then consider bringing your own snack from home.  It could save you an average of $30 per month.

(6). If you leave the air conditioner or heater on all day, then turn it down when you away from home.  For each 1 degree, you’ll save up to 5% on your heating/cooling cost.

(7).  If you drive even short distances, then walking or biking instead.  According to AAA, mortorist pay an average 68.9 cents per mile.

There are a wide variety of myths floating around about what you should and shouldn’t do to improve your credit reports and credit scores. This post provides you the truth about credit:  
 
1.  Your score will drop if you check your credit

Fortunately, this one is definitely not true. Checking your own report and score is counted as a “soft inquiry” and doesn’t harm your credit at all. Only “hard inquiries” from a lender
or creditor, made when you apply for credit, can bring your credit score down a few points.

Worried about damaging your credit while shopping around for a loan? Multiple inquiries for the same purpose within a short amount of time (a few weeks) are grouped together into a less damaging period of inquiry.

2.  Closing old accounts will improve your credit score

To close or not to close, that is the question. Many people advocate closing old and inactive accounts as a way for improving your credit.

In most cases, closing accounts will actually have the opposite effect. Canceling old credit accounts can lower your credit score by making your credit history appear shorter. Think twice before closing the oldest account on your credit report.

If you want to reduce your levels of available credit, ask for your credit limits to be lowered or close newer accounts instead.

3.  Once you pay off a negative record, it is removed from your credit report.

Negative records such as collection accounts, bankruptcies and late payments will remain on your credit report for 7-10 years.

Paying off the account before the end of the set term doesn’t remove it from your credit report, but will cause the account to be marked as paid.  It is still a good idea to pay your debts, it can improve your credit score, but the major improvement will come when the record expires.

4.  Being a co-signer doesn’t make you responsible for the account

When you open a joint account or co-sign on a loan, you are taking on legal responsibility for the account. Any activity on these shared accounts, good or bad, will show up on both people’s credit reports.

If you co-sign for a friend’s auto loan and they don’t make the payments, your credit profile will be hurt by their actions and visa versa. The only way to stop this double reporting is to refinance the loan or to have the creditor officially remove you from the account.

5.  Paying off a debt will add 50 points to your credit score.

Your credit score is calculated using a complex algorithm that takes into account hundreds of factors and values. It is very hard to predict how many points you can gain by changing one factor.

For a person with a high credit score, just one late payment can cause a significant drop. If a person has a low credit score, it may not cause a large drop at all.

There is no magic way to improve your credit score, just keep paying your bills on time, reducing your debts and removing negative inaccuracies from your credit report.  Good financial behavior and time are the two most important factors for your credit score.

Pre-approved cards are the result of one bank who now has you as a customer, and sells your name to another bank or a series of banks so they can offer you their credit cards.

Here’s how it usually works:

Many smaller banks want to be credit card issuers but, because of limited facilities for credit card processing, it is sometimes difficult for a smaller bank to cash in on the credit card boom.

What’s been developed is an interconnect system where large banks will process credit card applications and issue the credit cards for the little banks.

For example, let’s say that Mini Savings & Loan wants to get in on the Plastic Pursuit.

However, Mini does not have the facility or the staff to process credit card applications and issue credit cards. What Mini has to do is contract the service with Maxim Bank.

Since Maxi has several banks that they provide this service to, Mini Savings & Loan is just a welcome addition to their roster of client banks for whom they process and issue credit cards.

When you apply for a credit card at Mini Savings & Loan, your application is actually forwarded to Maxim Bank who runs a credit check and, granting you have good credit, issues you your choice of VISA or MasterCard with Mini Savings & Loan’s name on it.

However, since Maxim is the issuing bank and it has your credit on their file, they can very well send you an application for their own credit card. They can also sell your name to their other client-banks who can offer you their credit cards on a pre-approved
basis.

Another source that sells your name is the credit bureau. Because they can program their computers to search for names of existing credit card holders with clean and healthy files, they can provide issuing banks with a premium mailing list of people to whom the banks can send pre-approved credit card applications.