Your First Credit Card

Everyone needs to start building credit at some point. Whether you’re in high school or college, starting out isn’t that difficult (as long as you’re at least 18 years old).

Getting approved for that first credit card can seem like an overwhelming task, but today lenders make it easier for your first time. If you have applied for a few credit cards and were turned down, don’t worry. Change your strategy and you’ll have plastic in your wallet in no time.

One of the more common mistakes that people tend to make when applying for credit cards is applying for the incorrect card that doesn’t really suit them. The major credit cards like Visa, Master Card, American Express and Discover are very difficult to come by for the first time card holder.

But finance cards are much easier to get. Finance cards are credit cards that are issued via a store or franchise and you can only use at that business. Some finance cards include Target and Best Buy.

The finance credit cards do not carry as much significance on your credit report as a major credit card will, but they are a good way to start out when establishing credit. It shows responsibility for a new card holder.  And if you still find it difficult to get a finance credit card you may want to consider a secured credit card.

Secured Cards

Secured credit cards are issued based upon a deposit you make in the amount of the credit limit. It may sound strange to some to pay $300 to get a credit limit for a $300 credit card, but a secured credit card can be a major impact on your credit report.

When applying for a secured credit card, keep two things in mind: that the card will still report your credit limit and, depending on the creditor, that the card will not show up as a secured credit card on your credit report.

Receiving a card that reports your credit limit is very important. This is because of the way credit scores are calculated. To score well, your debt ratio should be less than 30% on revolving accounts. If your secured credit card doesn’t report the credit limit, the credit report bureaus will use the total amount charged as the credit limit and this will look as though your debt ratio is 100%.

Additionally, it is extremely important to make sure your card is not reported as a secured credit card. If your credit card company reports your card as being a secured card, this will impact your credit score negatively.

Getting your first credit card can seem like a daunting task, but it isn’t. If you do your research and choose the best card for you and your lifestyle you will be approved before you know it.

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Have you recently been denied a loan, or a credit card? You may be in need of credit repair. Being turned down for credit is a hint that you probably have some negative entries on your credit report, which can happen in two circumstances.

You have either mismanaged your credit, which is now reflected in your credit report; or your credit file has some flawed information, hence negatively impacting your report. No matter which situation you find yourself, it is imperative that you embark on credit repair sooner than later.

To Do:

Here is an approach to assist with your credit repair.

• Start by requesting a copy of your credit report from any one of the 3 credit bureaus. Reports are free for your first request each year.
• Upon receiving your report, examine it closely. You must to study each account (also known as tradeline) and mark those which are incorrect damaging your credit value. Errors are more surprisingly common.
• After you have determined which tradelines are erroneous entries, you must contact the credit bureau and request deletions from your report.
• Even when you find some correct entries in your credit report, but the information is negative in nature, you can still try and have them removed. This goes a long way in ensuring positive credit repair. There is a time limit for which negative tradelines can remain on your credit report (usually between 7 and 10 years). If this time limit has passed, write to the credit bureaus and ask them to delete the negative items.
• Make certain all your correspondence with creditor and credit agencies is through registered mail. This way, you will have proof your requests was directed to them and also the date you initiated the process of your credit repair. Maintaining a record will help you such any deleted entry is re-included in your report in the future.

Side note: Some experts advice against sending certified or registered letters to the bureaus as this could potentially raise a red flag.

• The law allows 30 days for any action to take place. If the credit bureaus determine that the entries were wrong, they will delete the item from your report, hence helping bring the credit repair that you were after.

If the matter is not resolved to repair your credit, you should persist and challenge the negative items on your report.

What You Should Not Do:

Individuals with a low credit scores often try desperate means to repair their credit and hence end up hindering their credit even more. Here are some of the items you SHOULD NOT DO to repair your credit:

1. New Credit File or File Segregation: Many bogus credit repair companies entice people with false promises repairing bad credit by telling them they can create a new credit file. They promise a new credit identity. This is illegal and also known as file segregation.

2. The Ability to delete accurate information from credit report: Many credit repair companies claim to they can repair credit by getting accurate negative information deleted from their credit reports, thus improving their rating. Now, this is not guaranteed. You must first understand the process of getting information removed.

When you dispute the information on one of your tradelines, the credit bureau will contact that creditor listed on your report and ask them specific information about the tradeline. They contact them to verify the account. Sometimes, the creditor cannot verify the information for various reasons thereby allowing the credit bureau to remove the negative information. However, many times the creditor has kept good records and can verify the information. As you can see, it’s a gamble and nothing is guaranteed.

Thus, you should not trust anyone who tells you that they can repair bad credit by removing negative items from your credit report.

3. Advance Payments: Asking for advance payments for credit repair is illegal. They can only charge you for legitimate services that they have already provided. Do not be lured into any contract promising to repair your credit before any work has been done.

A credit score is a statistical appraisal of your creditworthiness. It’s a swift and uncomplicated means for banks to assess whether or not you can pay back loans.

There are several factors that go into calculating your credit score, including:

1. How you pay your bills

2. How extensive is your credit history

3. What’s your credit limit on credit cards and how much of it you use

4. What type of credit you have (is it is mixture of auto loans, credit cards and mortgages or all credit cards? 

5. How much credit and what types have you applied for recently

What is a good credit score? In general, a good credit score is somewhere between 650 to720. An excellent credit score is above 720. Those are the numbers you need to strive for to get the best interest rates.

How to Boost Your Credit Score

Your first step toward improving your credit score is paying your bills on time. Your bill payment history, particularly your recent history, accounts for a percentage of your credit score. So paying bills on time can be a big boost in improving your credit score.

Next, outline your credit cards with the highest balances and compare to the available credit on the card. Pay those first. For example, if you own a credit card with a  $1,000 balance and $2,000 available credit and another card with a $3,000 balance and $20,000 available credit, you’d want to pay down the card with the $1,000 balance first.

This is because your credit fico score is based upon how much credit you use as a fraction of the credit available to you.

Preferably, your credit balances should be no more than 40% of the credit available to you.

Finally, don’t close out credit card accounts. It’s advantageous to leave the accounts open and not utilize them than to close them out.  This shows responsibility to creditors on how you manage your credit wisely.  Based upon the credit bureaus statistical appraisal, it drives your credit score up!

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What is the best way to improve credit score? This article will not only answer that question, but offer tips on how to improve your credit score as fast as possible.

Side note: This article assumes that you already know your credit score. If not, you can purchase (unlike credit reports, credit scores don’t come free) it from either MyFico or Equifax. Why these two? Because they are the only ones that offer the true FICO score that is most widely used by lenders.

The biggest chunk of your credit score (65%) is based on two main factors:

1. Payment History (35%): This is the most important factor. Paying your bills on time raises your score. Late payments hurt your score often by significant margins.

2. Amount of debt (30%): This is the second most important factor in determining your credit score. Your debt to credit ratio plays a large part here; you want to keep it low.

Of the two factors above, the only one you have some control of is the No.2. Only time can take care of the No.1.

So, the first thing you need to do is to start paying your bills on time. Eventually, any late payments will sink into the background and decrease in importance. Also to note here is that new adverse information is most damaging to your score.

The fastest way to improve your credit score is by reducing your debt to credit ratio.  Your total debt should be between 10% and 30%. And yes, you do need to keep some debt in order to show regular and timely payments.

Your debt to credit ratio can be reduced by one of several methods:

1. Paying down your credit cards. This is not the easiest or fastest route as funds may not be readily available in the short term. For many, paying more than minimum amount due without using the credit card(s) might work, albeit slowly.
 
2. Requesting credit limit increases: This is a quicker option, but depending on your credit history, your creditors may decline to increase your limit. Not only that, but they will often run your credit, which will generate a hard inquiry (which causes points lose).

3. A commonly used method is to open a savings or cash deposit account (CD) for $500 to $1000 (the more the better if you can). You then borrow an equal amount against it. You can take the same money you borrowed from and open another account with another bank and repeat the process. There is no limit as to how many times you can do this, just make sure you can afford the payments.

4. A better way to improve credit score is to have new accounts added to your file. You want to be fairly sure that you will get approved, so go for pre-approved credit cards; you know, like the ones that come in junk mail. The downside is that the limits offered are often small and they usually come with other fees such as application fees, annual fees etc.

5. Now the best method. A very practical and easy method for raising your credit limit and reduce your debt to credit ratio is to get a merchandize card. Some merchandize cards can start you with a handsome limit ($2000 to $5000 and sometimes more) with no credit check or annual fees. As long as they report to the bureaus, these cards can help improve your credit score almost immediately. The challenge here is finding out which cards report to the bureaus, offer best rates, and are not scam.

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The Credit Secrets Bible is a course for people who have a bad credit problem, or have difficulty simply want to build good credit. Having studied numerous courses and read many books on the subject of credit repair, some of which turned out to be dards, I was naturally skeptical about this one.

The first question I asked myself was, what new lesson could I learn from this course that I did not learn from all the others courses, books and manuals?

But as soon as I started reading the very first pages, I was blown away. There was so much I did not know! There are many little details that impact your credit score that you probably do not know, at your credit peril.

Read the full review

The credit reporting system as it stands is inherently corrupt and flawed. It is also unfair and prone to errors. Abusive practices continue, despite the Fair and Accurate Credit Transaction Act (FACTA) that was meant to protect consumers.

The credit system was never created to help you, but to make money for the lenders. It is driven by one motive, profit.

Imagine this. Two individuals need drugs. One of them is sick and the other one is addict just looking for a “fix”. The former needs drugs to stay alive; the other uses them to ruin it (most of the time affecting many others).

Now, let’s say both have accumulated debts that they simply cannot pay. Both will equally get their credit files damaged. Is that unfair or what?

Did you know that it took intense pressure from congress and interest groups for Fair Isaac (the creators of the FICO credit scoring system) to disclose its credit scoring model? You were not supposed to know something that has such a heavy impact on the quality of your life.

Lenders and the bureaus don’t care about you. Lenders have one thing on their minds; to find as many excuses possible to charge you more for loans and credit cards. Meanwhile the bureaus make a great deal money selling the lenders information about you.

Some of the tactics lenders use so as to hit you with higher interests rates include “universal default” clauses and failing to report your true credit limit(s).

Universal default is simply means that a lender can increase your interest rates when you get late on another non-related item (even if you’re on time on all other payments!).

Now, by increasing your interests rates (sometimes doubling or tripling it), the creditor has just made it difficult for you to keep your payments up, or worse, made you likely to default or declare bankruptcy. How brilliant is that?

Some creditors fail to report your limit. Others report your balance as limit so as to keep your balance to limit ratio high, which brings down your score. In turn this keeps your credit rating at “sub-prime” level, which means high interest rates.

Another nasty practice that continues unabated, despite being against the law, is re-aging of derogatory accounts. This is mainly done by collectors, whereby they re-set the date of your last transaction to a later date.

Re-aging extends it beyond the seven year statute of limitations (after which it should cease to show on your report except in certain special circumstances).

Credit bureaus also allow debt collectors to place hard enquiries (the type dings your score) on your report. Cases have been reported where deleted accounts were re-inserted into credit reports, without the consumer’s knowledge (which is against the law).

What’s even worse is when paid-off accounts get reported as delinquent many years later, such that the consumer may have long forgotten the respective account.

What should you, the consumer, do? The answer is knowledge. An educated consumer is the bureaus’ and lenders worst nightmare. Armed with the right knowledge, you can use the law and lenders’ (including debt collectors) to your advantage.

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Discover how you can legally make creditors, credit bureaus and collectors clean up your credit file by turning the tables in your favor. Check out The Credit Secrets Bible now.

When fixing your credit report, certain mistakes could upset all your efforts or, worse, lower your credit score. Following is a list of some common and not-so-common credit repair mistakes you should avoid:

1. Disputing open, active accounts: Every account you dispute with credit bureaus, whether good or bad, often gets removed from your report until verified. Open accounts give you history; therefore by disputing these could lower your score. Not good. Not only that, you also potentially reduce your credit history, which also accounts for part of your score.

2. Making late payments while on your credit repair path will negate your efforts. If you know that you are not in position to start paying your bills on time, don’t start credit repair just yet. It will not be worth the effort. Late payments are devastating to your score.

3. Don’t close open accounts. One of the biggest myths out there is that closing accounts is good for your credit report. Not quite. What creditors look for is how well you can handle debt. As No.1 above, old open accounts help build your credit history and shows stability as well as ability to handle debt responsibly.
 
4. Avoid “pay nothing now” offers, often offered by auto repair and furniture shops. This type of credit lowers your score, as it indicates potential financial troubles. These types of credit often lower your score.

5. Avoid obtaining new credit accounts. New credit is considered less favorably than old. Too many new credit accounts indicate greater risk. Also, every credit enquiry dings your score. For people with bad credit and need to re-establish good credit, secured credit may be the way to go. Just make sure that the creditor will not run your credit before extending it to you, and that your payments will be reported.

6. Don’t consolidate. Contrary to what you may have heard, debt consolidation is not such a good thing. For one, if you consolidate all your credit card debts into one credit card, that credit card will likely have a high utilization rate (balance to limit ratio), which is not good. Secondly, if you use a consolidator, you will be required to close your open accounts, which will end your history as well as lower your score. Thirdly, most creditors frown upon it, as it indicates inability to manage credit.

7. 100 word statements are best avoided. There is a space on your credit report offered for you to explain your situation, or make comments. This can be a two-edged sword as it can bring to attention something that might otherwise have been missed, possibly to your disadvantage. Use this space only if feel you absolutely must (seek advice of a reputable credit counselor).

8. Disputing too many entries the same time: In a rush to clear bad entries from their report, many people rush and dispute one too many entries with credit bureaus. This generally raises a red flag. If you have lots of adverse entries, pick three to four to start. The latest entries are most damaging, so it is wise in most cases to start there.

9. Avoid canned dispute letters: Copying credit dispute letters off the internet is a dead give away that your dispute may not be legitimate, or that you’re using credit repair techniques. Use them as templates if you must, but write in your own words.

10. Patience, patience: Another mistake many people make is to follow one dispute with another too soon. Again the problem here is rushing. This resets time for the disputes to 45 days, up from 30. Obviously, you don’t want this. Allow at least 45-60 days between disputes.

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Fix your credit: tips and strategies banks, bureaus and collectors don’t want you to know. Check out Credit Secrets now.

Living with bad credit hurts. But not all is lost. You can fix your credit report, by following certain tips and tactics. To fix your credit, you need to raise your credit score and remove any negative items. Here are 8 credit repair steps to get you started:

1. Know what’s on your report: You must get a copy of your credit report right away. For credit repair purposes, avoid free credit reports. Why? Well, free reports increase dispute reinvestigation time from 30 days to 45 days. The less time the bureaus and creditors/collectors have the better.

2. Know your score: Though you can get free credit reports from all the major repotting agencies, at least once a year, you must pay for your credit score. And, you don’t want just any score. You want the true FICO score that most lenders use, that’s only offered by MyFico or Equifax.

3. Reduce your credit card balance(s): 30% of your credit score depends on this. Depending on who you ask, you should keep your balances below 30% or 50 % of each card’s limit. 30% appears to be the figure most experts agree on. This alone can give your score a much-need (and quick) boost. Avoid maxing out on your credit cards even if you pay off in full each month.

4. Begin to pay your bills on time. Though this takes a few months to take effect, it counts for 35% of your score, which is quite high. Also, any late payments will counter your credit fixing efforts as late payments are devastating to your score.

5.  Review your credit reports: Check for inaccurate information. Mistakes happen, more times than the bureaus would like us to believe. Check for errors in accounts such as names; dates accounts started or closed; types of accounts, and yes, even duplicates. Dispute any errors with the bureaus or furnishers (creditors/collectors) in writing.

6. Dispute old negative items: Though this no longer works as well as it used to – thanks to unscrupulous credit repair companies – it’s still worth a try. Bureaus have 30 days to verify accounts, and if you’re lucky creditors some might never verify. A long-short, but just might work. You could also try disputing old negative entries with the original creditor. With all the business mergers going on, records might not be all that straight.

7. You can also negotiate with creditors and collectors to delete negative items from your report. Typically, creditors will not do this, but collectors might especially if it’s part of a pay-off deal. Expect some collectors will be harder to deal with than others on this.

8. Don’t close old open accounts that have balances. Old accounts help build your credit history, which accounts for 10% of your score. 10% may not seem like much, but it could mean the difference between good and mediocre credit.

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Discover credit repair strategies and tricks that lenders and credit bureaus don’t want you to know. Check out: Credit Secrets now.

Unless you’re a Hollywood rags-to-riches story, have won the lottery or inherited a fortune, buying a nice car, home, or other big-ticket item is hard without a good credit score. Just what is a good credit score?

Though what is considered a good credit score may differ with each lender, certain ranges are considered favorable to most lenders.

Also, your rating (another term for score) will often differ with each credit reporting bureau. This is partly because creditors do not always report to all the bureaus and partly because two of the bureaus have their own scoring criteria.

Since all bureaus might give you a different credit score, one should err on the safer side and go with the score that most lenders use.

The credit score that most lenders us is the FICO score. Only two companies offer this score, the originator of this system Fair Isaac Corporation and Equifax credit bureau. The websites to obtain your FICO score from MyFico and Equifax respectively.

Now, let’s take look at the different credit score ranges in order to have a better understanding of what constitutes a good score (or poor one for that matter).

FICO scores range from 300 (the lowest) to 850 (considered perfect). The higher your score, the more you’re considered less of a debt risk, and therefore worthy of the friendliest terms (read low interests rates and fees).

As with almost everything else, most people fall within the median range when it comes to credit ratings. The smallest number falls on either poor or perfect. Let’s break it down farther:

720 and above: This is considered great credit, and qualifies you for the best loans and interest rates. Lenders will be fighting over you, which is a good thing.

700 – 719: This is considered excellent credit. You might be able to get very good loans and interest rates, but there’s still room for improvement.

660 – 699: Good credit. You might qualify for good rates, depending on the lender and the strength of rest of your report. Still, you will probably not get the best interest rates.

620 – 659: Considered weak or border-line credit. The rest of your file needs to be very strong to get reasonable rates. Your interest rates will be higher and terms a little more stringent.

Below 620: This is considered poor credit. You may still get loans, but they will cost you. Most lenders will only lend to you if you have a cosigner. Terms might be very stringent for you.

Bad credit problem? No matter how bad your situation, there is hope. This article offers simple but effective steps towards quick credit repair.

Now, how fast you can fix your credit is relative. No two situations are alike, and there is no one size fits all. Your individual financial situation as well as your personal determination and efforts will all come to play. And, to be honest, credit repair does not work for everyone.

First, you need to know what is on your credit report. Get your credit report from all the three major credit reporting bureaus.

While you are at it, avoid free reports and, where possible, also avoid obtaining them online. I have explained the reason for this in other posts and will not repeat it here. If you already have a recent all-three-bureau report from, say, a mortgage company, you can use that.

You should also get your credit score from either FICO or Equifax (Only Equifax offers the real FICO among credit bureaus).

Why FICO score? Simple: Because it is the score that most lenders use. You want to be on the same page with most lenders.

The quickest way to fix your credit and begin to enjoy lower interest rates as well as qualify for loans and credit cards is by raising your score. Once your score is raised to a reasonable degree, you will be able to obtain more credit which will help improve your credit even more. 

Now, let’s start with the obvious. Begin to pay your bills on time. This factor alone accounts for the biggest chunk of your score. When you are late on a payment, you loose, big time. Do everything you can to avoid this, if it means robbing Peter to pay Paul.

Next, read through your report. Check for mistakes. There is a chance (some surveys put as one in three) of having erroneous information on your report. Look for inaccuracies in dates, names, balances, credit types, and any missing accounts that you pay on time.

You should also be on the lookout for duplicate reporting (that is, the same account getting reported more than once).

Once you’ve established that indeed errors do exist, you have three options. One option is to write to the bureau(s) whose report is in error and explain your position. If you have documents to prove your point the better; enclose them.

The second option is to utilize a rapid rescorer. Rapid rescorers are agencies that work as median between creditors and credit bureaus. As you may have guessed, their work is to speed up the rescoring process. Reputable rapid rescorers do not work directly with consumers; ask your creditor or mortgage company for this option.

The third option is to alert the creditor(s) about the error(s). This is much quicker than contacting the bureaus on your own, as creditors can correct errors at the push of a button.

You can also raise your credit score fast simply by reducing your debt. But, do not close any open accounts. Just pay down you debt to about 30 per cent of your balance, and you will see an almost instant raise score.

Alternatively, you could ask your bank raise your limit. You could also transfer money between accounts, so that none is at or near maximum.

One strategy that credit repair companies use is to dispute entries on reports. Once an entry has been disputed, it is must be taken off until verified. This is a strategy you can utilize yourself and avoid paying someone a hefty fee to do it for you.

When disputing credit report information, take care not to dispute accounts in good standing, or accounts that are open. You need those accounts to keep your credit history, and it also helps your score.

To repeat, unless an open account is a real thorn on your side, don’t close it, even if you’ve had late payments on it.

How does disputing credit accounts work? Well, it works on the premise that old archived accounts just might not be verified, or the creditor might find it not worth verifying.

But, disputing credit accounts may or may not work. For one, credit bureaus are well aware of this tactic, and may dismiss your request for verification on grounds of being “frivolous”.

Secondly, some creditors are very diligent, even vindictive, and will verify accounts at a speed that might surprise you. Believe me; I once saw an account for a very small amount get verified, and it was more than five years old!

The dispute strategy is worth a try, all the same.

If your objective is to reduce – or get out of debt – you could start by paying off some of them. Some experts recommend paying off the account(s) with the highest interest rate(s). This might not necessarily be the best way to go. Why?

Well, the credit card with the highest interest rate could also be the one with the biggest balance, as was once my case. If you start by paying that one of, you might not have enough to cover the rest of your debt. Also, if problems arise somewhere in the middle all your hard work could come to naught.

Perhaps a better way is to pay off the account with the lowest balance. This has a double positive effect. One debt is out of the way, and you are more motivated from the “win”.

But perhaps the best way for quick credit repair, bar none, is negotiating with your creditors and/or debt collectors. Not only can a creditor or collector remove negative items from your credit report, they can also give you breaks on some fees.

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Discover rights that you can use to your advantage and begin to clean up your credit file. Plus tips and tricks creditors and credit bureaus don’t want you to know. Check out the Credit Secrets Bible today!