How to Establish Your Credit History

Establishing your credit history can be tricky. Lenders won’t give you any money if you don’t have a credit history – but how can you build a credit history if lenders won’t give you any money? It’s the classic chicken vs. egg problem – what should come first? Follow our guide to establishing your credit history and you’ll soon have lenders falling over themselves to lend to you!

In the US, your credit history is directly linked to your social security number. Your credit history will show potential lenders your history of having loans and how you pay them off, whether you pay things like your rent or bills on time, how many times you make late payments and whether or not you have ever defaulted on a loan or bill.

If You Don’t Have a Credit History

If you don’t have a credit history, you might find it difficult to get a loan, an apartment, a cell phone, a car, credit cards etc. Bad or negative marks in your credit file could stay there for up to seven years.

Fast Facts

  • You must have resided in the US for at least six months to be able to get a credit card
  • If an agency denies your request for credit they must provide you, if you ask, with a written explanation as to why. That doesn’t mean that they’ll tell you what to do in order to improve your credit score and get accepted for credit in the future – it will be up to you to go away with that information and work out what you need to do in order to improve your score
  • If you get offers of credit through the mail, that does not mean that you’ll automatically be accepted for the credit should you apply and actually, if you do apply and get rejected, it could have a negative effect on your credit score. If you do get offers through the mail, throw them in the bin – there are much more suitable cards for those who do not have an established credit history.
  • Applying for too many credit cards at once will have a negative impact on your credit score. If one provider has denied your credit application, chances are, most of the providers will deny it – plus, repeated applications made in a short period of time will appear on your credit score and will make potential lenders a little bit nervous as those repeated applications make you seem desperate for cash
  • Credit scoring has to be based upon your financial background. Sex, age, race and other similar factors are not allowed to influence your credit worthiness.

Establishing Your Credit

Establishing your credit isn’t as easy as you might think. Although you might expect lenders to be falling over themselves to give you money, nowadays, it is actually quite difficult to get credit, especially if you don’t yet have a credit file. To establish credit, follow these tips:

  • Open a bank account and a savings account. Don’t let bills come out of your account if you don’t have the money and make sure that you never go overdrawn. If you don’t even have a bank account, you literally have no credibility to lenders
  • Pay your own bills. If you’re living at home with your parents, get phone bills or electricity bills set up in your name, coming from your bank account, and pay them on time each and every month. Doing this establishes that you’re able to pay bills and it also helps to build up a credit history at your address even before you move out of your parent’s home. When you do get your own place, make sure all of the utilities are swapped over to your new address and ensure that all data regarding your previous address, current address and name is present and correct. Don’t try to apply for cards and credit as soon as you move – you’ll need to establish that you can pay your bills on time before you start applying for credit.
  • If you can avoid it, try not to move around too frequently. Generally, it’s much easier to get credit if you’ve only had one address in the last three years.
  • Open store cards. This is not usually recommended if you’re trying to maintain your credit, but if you’re trying to establish credit, it’s definitely a way to get started. Ask if the store card reports to credit bureaus before you apply – it’s pointless having a card if it isn’t going to improve your credit. When you make purchases on the card, pay them back before your statement is due – that way, you won’t have to pay extortionate interest rates. Once your history is established (around six months) and you have a real credit card, cancel all store cards.
  • Try a classic credit card. Some credit cards require you to pay the full balance off each month, meaning that they are fairly easy to get approved for. You might also want to try a secured credit card, where the credit is secured against an item of value, or against money that you have already paid to the bank. That way, if you don’t pay your bill on time, the bank will still be able to recoup the funds either from you so that they won’t be out of pocket.
  • Having a loan is an excellent way to build your credit history. Make sure that you have plenty of supporting information, such as a salary letter, employment letter, proof of address etc and you’ll find the approval process much easier. Building and improving credit is easy if you pay your loan back on time, but if not, you’ll find that your credit score plummets really quickly too.
  • Whenever you do manage to secure credit, make sure that you’re as sensible with it as you can be. Spend too much and you might find it difficult to pay off. Spend too little and it won’t really have any bearing on your credit score.

For more tips for building, establishing, maintaining and re-building your credit score, take a look at the rest of our posts.

5 Credit Resolutions to Make This Year

Make this year the year that you finally get your finances in order – and get your credit score in check, by following our 5 credit resolutions.

Get a Copy of Your Credit Report at Least Once a Year

If you think your credit score is poor, you need to order a copy of your report with some regularity so that you can monitor it. If you think your credit report is good, you still need to monitor it – just in case something is amiss that you’re not sure of. The first thing you should do this New Year’s is order a copy of your credit report. Order from one of the three major agencies, Equifax, Experian or Transunion, and be prepared to pay a fee. Although you are able to view the bare minimum of details online for free, you usually have to pay for a paper copy of your report. Once you have it, read through – then follow the tips below.

Analyze Your Report

Go through your report with a fine-tooth comb. Spend just an hour or two reading through everything, checking the facts, reading through the report line by line. Take note of things like your addresses, past addresses with credit agencies that you might no longer be dealing with, past accounts that may no longer be open and your name. Ensure that all of the data is correct and up to date and if you spot any discrepancies or any issues, speak to the credit agency or the individual company that made the error. Although it sounds silly, these small discrepancies can be what makes your credit score – or what breaks it. These days, it seems that creditors are looking for any excuse not to lend – so don’t give them the excuse! Make sure your credit report is bang up to date – and completely correct – to give yourself the best possible chance for being accepted for the credit products you want.

Stay Savvy

It sounds like an obvious tip, but if you don’t think you can afford a product, don’t buy it and don’t apply for it. Stay savvy with the way that you use money and spend money, and if you don’t think that you’re able to do that, set out a budget for yourself and stick to it. How much money do you earn? Write it down. How much are your bills? Don’t use a conservative estimate, either – overestimate instead. Once you’ve worked that out, sit down and figure out how much you have left once you’ve paid all of your bills. This is your disposable income. You should put some of that money into savings, and the rest will be used for food, cleaning items, clothes and leisure activities. What you can’t afford, don’t buy – but if you know that this isn’t realistic for you, do your borrowing in the most controlled manner possible. Use a low interest rate credit card and pay it off in full – or at least more than the minimum balance – at the end of each month. Don’t open store cards, either – they sound fantastic and they make it easy for you to buy all of your favorite things, but they’re really a very easy way to get into a lot of debt, and fast. If you do desperately want to buy something from a certain shop, buy it on your low interest credit card instead of on a store card. The idea is to pay as little as possible in the way of charges for the privilege of borrowing the money.

Set Up Direct Debits

Don’t trust that you’ll always pay your bills on time. Instead set up direct debits or automatic payments for every single account that you have, that needs to be paid each month with some regularity. Your gas and electric, water bill, broadband, cable TV, home phone, credit card, rent, mortgage – all of them should be paid monthly and automatically. Missing a payment and missing it frequently is absolutely the worst possible thing you can do to your credit score – even if you did pay it in full when you remembered to pay it. Be absolutely sure that your bills are being paid and you’ll never have to deal with a missed payment again. And remember – if you want to switch bank accounts, be sure to swap over all of your automatic payments at least a week or so before they’re due – just to make sure that they all go through in time.

Start an Emergency Fund

Many of us live paycheck to paycheck, simply because the money that we earn is the money that we need to live. But you can start an emergency fund, even on the smallest of paychecks. Without an emergency fund, the money you make each month could be wiped out with a faulty car, issues with your heating system or an unexpected medical bill. Take a look at the budgeting tip above, then work out how much you can set aside each week or month. Even if it’s only $5 or $10 a week, it’ll all make a difference. You can also use this system to set aside money for Christmas – after all, $10 per week equals $520 in a year – more than enough for Christmas presents for the whole family. If you can set aside even more, that’s brilliant – at the end of the year, if the fund hasn’t been used, you could then save half, then use the other half to take your family on holiday or for a special trip. That way, you get to enjoy the funds, rather than just saving and saving without seeing any rewards.

For more debt and credit advice, come back soon!

Fraud Scoring: What You Need to Know

We all know about credit scores, credit scoring and credit reports. Whenever you apply for a financial product, you’ll be credit scored to make sure that you can afford to pay the money back. But what you might not know is that you’ll also be fraud scored, too – whereby separate agencies look over your application and past financial dealings to determine whether or not you’re a fraud risk.

Fraud scoring works in a few different ways depending on the agency, but most agencies share a few consistent traits. One of the major things you need to know is that fraud checking and fraud scoring is less factual than credit scoring, and this means that the system is open to greater error.

Fraud scoring agencies will look at your most recent application as well as any other applications you might have made in the past. It’ll then look at inconsistencies between the two and will keep an eye out for errors, such as incorrect addresses or different names. Fraud checks won’t automatically deny your application, however, but they will throw up a “red flag” to potential lenders. Lenders can then choose to do some of their own checks, or they can ignore the information – but they are not allowed to deny your application based on the red flag alone.

Other agencies will simply have a file of people who are known to have committed fraud in the past – although sometimes, people can appear on this list if they live at an address known to have been connected with fraud in the past, even if they have not personally committed fraud.

You can learn more about the data that fraud agencies hold about you. Each financial institution will use different fraud agencies, so write to the institution that you’re looking to apply for a product with and ask them which fraud agency you use. You can then send a letter to the agency, asking them to provide you with details of the information that they hold on you. Some agencies will require a fee, others will provide this information for free. You’ll then receive the information, which is effectively a collection of past applications that you’ve made, and you’ll be able to see if there’s any conflicting information.

Unfortunately, if there is conflicting information, you can’t correct it through the fraud checking agency. Instead, you’ll have to write to the credit agency that you made the application to and ask them to correct their details. This is definitely a long-winded process, but if you’re applying for a large financial product like a mortgage, it’s definitely worth it.

Fraud Scoring Tips

Make a note of the answers that you give on application forms so that you can use the same information – including spelling, job description, address etc. Even capitalizing parts of your address differently could mean that the agency puts a red flag on your file, so make absolutely sure that the data you use for each and every application is exactly the same.

Come back soon for more credit report and fraud advice.

5 Credit Score Myths

Credit scores and credit reports are very, very confusing. When you’re trying to improve your credit and in the process of applying for financial products, you want to make sure that you’re positioning yourself in the best possible light, and that probably means that you’ll be looking for advice on how to improve your credit. Unfortunately, though, there’s a lot of false information out there, so we’re here to clear up some of the most common myths surrounding credit and credit scores to make the whole process a little bit simpler for you.

Credit Scores and Blacklists Don’t Exist

Although you can pay any of the credit reporting agencies for an average credit score, all the credit score will tell you is what that credit reporting agency thinks of your credit history. Each credit lender will use their own criteria and their own mathematical formula to score you. Therefore, your “score” will differ depending on their criteria and it will differ with every single lender – so you don’t have just one score. One lender might give you the product that you need, while another lender might not. Also, it’s worth noting that blacklists don’t exist. No matter how bad your credit, there isn’t any one list that exists with people on it that have bad credit. Your lender won’t search a credit blacklist to make sure that your name isn’t on it – it simply doesn’t exist.

Lenders Don’t Have to Give You Any Credit

Even if your credit score is flawless and your report excellent, lenders don’t have to give you any credit. Banks will turn down some high quality applicants so that they don’t have to spend lots of money on lots of unprofitable customers. Remember that lenders are not obligated to lend, and so regardless of your circumstance, you might not always get the credit that you’re looking for.

You Might Get Rejected For a Credit Card if You Pay it Off in Full

Although it’s one of the major pieces of advice that we always give to those looking to improve their credit score – apply for a credit card, use it and pay it off in full at the end of every month. But if you’re already doing that, and you apply for another credit card, credit agencies might be unwilling to lend to you – most lenders prefer customers that are always in debt and although this sounds terrible, these customers are the most profitable as they pay the most interest. One way to get accepted for another credit card is to do this – meet the minimum repayments (and more) but don’t pay the cards off in full.  Put the rest of the repayments to one side in a high-yield bank account. After about five months, you’ll have shown that you’re a profitable customer – and you can then apply for another credit card. You can then take those savings from the high-yield account to pay the first credit card off. The same might happen if you always use 0% credit cards or if you’re a savvy shopper who consistently shifts their debt to these cards, so it’s always worth keeping in mind that you can be a borrower that has a credit report that can be “too good” for some lenders.

Lenders Score You Based On What You Might Buy in the Future

Some lenders might score you in a completely different way to how you’d expect. Think of it this way. A credit card company wants new executive account customers. You come in and apply for a low-range credit card with high interest rates. Instead of scoring you and processing your application as though you are applying for the low-range credit card (which you are), they’ll score and process you as though you’re applying for a new executive account. That means that you might not get accepted for the low-rate credit card, even though you should have been accepted for it. Unfortunately, there’s not a lot you can do about this – although perhaps you could try applying for money from lenders that don’t offer more than one product.

Student Loans Don’t Count

Student loans might make up a huge quantity of your overall debt, but in general, they don’t count towards your credit report. They tend to be paid through your tax and so that means that you only pay them when you can afford to pay them – and in most cases, this means that your student debt does not show up on your credit report. Go ahead and choose the best course that you can and don’t worry that it’ll impact your credit score.

NB: this differs if you don’t pay your loan back when you’re supposed to or if you default on your loan. Pay back your loan on time and there shouldn’t be any problems.

Your Credit Report and Score: Explained (Part 1)

Numbers rule our lives – our social security numbers, PIN numbers, mobile phone numbers, account numbers, customer reference numbers and even the number on the scale. But the number that has arguably the most effect on your entire life, that dictates whether you can get a mortgage or credit card, how much interest you pay on credit accounts or your mortgage, whether you can get car finance and that dictates your financial future is your credit score. Unsurprisingly, many people don’t know exactly what their credit score means and many wrongly believe that a good score will automatically mean good credit and a poor score will automatically mean bad credit. Learn everything you need to know about your credit report and score below.

What is a Credit Score?

A credit score is simply a general indicator of how credit worthy you are: how likely you are to pay your bills on time. The trouble with credit scores is that they don’t indicate all of the good (or bad) financial choices that you might have been making – they are a sort of average, an average number that represents how financially responsible you are. Your credit score might differ between the three major credit agencies, and that’s because each agency will score you slightly differently and will rate your credit-worthiness in different ways, and scores across credit agencies can differ by up to 50 points. Data gathered about your financial habits past and present is used to determine your score, which is why a few missed bills three years ago – even though you’ve had a clean record since then – can have an impact on your score.

Credit Scores Explained

The FICO scale rates credit scores from 300 to 850. 300 is the lowest and 850 is the highest, known as the “perfect” score. FICO gives their information to the three major credit agencies, Experian, Equifax and TransUnion, and they then apply FICO’s maths to their information about you. The agencies then use that maths on their data, but each agency uses slightly different data and that’s where discrepancies in scores can come in.

300-580: this is the lowest credit range. If your score falls into this area, you might find it very hard to get credit, and if you are offered credit, it is likely to be of the high interest variety.

581-650: scores in this level mean that you’re likely to get accepted for credit, but it will be at high interest rates and you might have to apply to a specialist lender.

651-710: at this scoring level, you’ll definitely qualify for credit and it will be at a moderate interest rate. Scores at this level are definitely moving towards a good, reasonable score that’ll come in useful when it comes to applying for big ticket purchases like a mortgage or car.

711-750: at this scoring level, you’ll qualify for credit at competitive interest rates.

751-850: the highest possible scoring level, if your score falls in this range, you’ll have lenders falling over themselves to offer you money.

In layman’s terms, a person with a score of 550 will pay 3-4% more in interest than a person with a score of 750 or more. Although this doesn’t seem like a lot, over a $20,000 car loan – or a $100,000 mortgage, this can mean that you end up having to pay thousands of dollars more in interest.

How is My Score Calculated?

Your score is calculated by looking over all of your past financial data – although there is some information that doesn’t count towards your credit score. Things like debit card habits, employment, regular income, bounced checks, overdraft and overdraft fees, late rent (if your landlord has kept the issue out of court), savings and utility bills don’t count. However (!) if you go over your debit card limit, bounce checks because your bank account is empty of funds and if you don’t pay your utility bills on time, this will have a negative impact on your score.

Your score is calculated by looking at your payment history (35%), your total debt (30%), the duration of your accounts (15%), new credit (10%) and the type of credit (10%). Your payment history details whether you’ve paid your bills on time, total debt takes into account how much debt you have and how much of that debt you’ve paid off, the duration of your accounts indicates how long your accounts have been open and in general, the longer the better, new credit indicates new credit accounts you may have opened, with lots of new requests for credit lowering your score, and the type of credit you have takes into account the different account types you have – for example, a credit card from a bank will be deemed as more responsible than a card from a department store.

Why Do I Have a Credit Report and a Credit Score?

A credit score is the average, whereby the credit report gives the whole picture. Some lenders will look exclusively at credit scores, while other lenders – especially for high-ticket purchases – will take a look at your overall credit report to get a better idea of your general finances. For a mortgage, for example, if you have a lower or only a moderate credit score, lenders will choose to look over your credit report to see why your score might be low. For example, you might have made several late payments and chalked up a lot of debt five years ago. Since then, you’ve been trying to pay back the debt and you’ve made a small dent in it and you haven’t had any more missed payments. Your score will still be fairly low, but your finances are in better shape – and the lender will be able to see that. It could also go the other way – you could have had a perfect score and recently, your finances have gone downhill. That’s why there is a score and a report, so that lenders can take a closer look at your finances if they have to.

Come back in a few weeks to learn more about your credit report and score – and how long those pesky negative items stay on your report and how long they have an impact on your score.

8 Ways to Improve Your Credit Score Fast

Low credit score? Not getting accepted for credit? Learn how to improve your credit score fast with these eight simple tips.

First, find out your credit score. Contact one of the three credit scoring agencies and ask for your credit score. The credit score in itself isn’t an indicator of your credit – instead, it’s just a number that agencies use to decide whether you’re a good risk or not. Having a low score doesn’t mean that you won’t get credit, but it does mean that you’ll likely have to pay higher interest rates on your mortgage and loans. A low credit score could also make it difficult for you to get new credit. Once you’ve gotten your score, you can then start to take some of the steps below to improve it.

Get a Credit Card

Having a credit card does not make you a bad risk for credit. In fact, it makes you a good risk, as it shows that you can pay back money responsibly. If you already have credit cards and you’re unable to make the payments, shift the balances to one credit card (ensure that it’s a balance transfer card) and make regular payments every month to shift the debt. Once you’ve cleared the debt, close the account and get a new credit card. Spend up to $200 per month – some people use their credit cards for gas only, for example – and pay it back in full at the end of each month.

Pay off Debts

It’s an obvious one, but it needs to be here for a reason – lenders won’t give you any money if you’re already in debt and not paying it back. Lenders like to see a gap between the amount of credit that you’re using and the credit limit that you have. For example, if you have a credit card with a limit of $1000 and you’re at the limit, it shows that you might not be able to pay back new credit. But a credit card with a limit of $1000 and a balance of less than $300 shows that you can spend money and pay it back, improving your score.

Don’t Spend Big Bucks

Yes, it’s a good idea to have credit cards and to spend on them. But spend too much, even if you pay the balance off in full, shows that you’re a big spender and it can worry potential lenders. Spend less than 30% on each card and pay it back in full at the end of each month. That way, when your balances are reported to the credit agencies, it’ll clearly show that your balances have stayed below 30%.

Check Your Credit Limits and Your Report

Your credit report will show details of each credit account you have, as well as the limits on those accounts. Double check all limits on your credit report, as sometimes, when lenders update your limit and give you more credit, they fail to update the limit on your credit report – so it can look like you’re either going over your limit every month if you spend more money or like your balance is small. Also, some agencies don’t disclose credit limits, and typically, the bureaus will take your highest balance as the credit limit. If you regularly spend $2000 on a card each month, say, and your limit is $5000, but your agency does not disclose your limit, it’ll look like you’re maxing out your card. Limit your spending and if you have to spend more, spread your spending over a few different cards.

Spend on Old Cards

The older your credit history the better, and so if you keep one credit card open for a number of years, spending on it regularly, the better your credit score will be. Dust off those old cards in the back of your wallet and if the account isn’t closed, use them once in a while. Take your partner out for a dinner date, pay the card back in full at the end of each month and get your reward in the form of a better credit score.

Ask Nicely

If you have late payments on your account and you have an otherwise good relationship with the lender, write to them and ask very nicely whether they’ll be able to erase one or more of the late payments. This tends to work if you have a long and otherwise unblemished relationship with the company. If not, ask if they’d consider erasing any late payments after you’ve made a series of on-time payments, for example, after a year of on-time payments. Most companies will be willing to do this especially if you back yourself up with plenty of on-time payments.

Erase Old Negative Amounts

If negative accounts and amounts are still lingering on your credit record, it’s well worth contacting the bureau to add a notice of correction to the account. Tell them that the charge is not yours, and that you believe it to be unjust (if you’re telling the truth, of course) and they might just erase it. If not, get them to put a notice of correction next to the negative account explaining why it is there and why you believe it to be unjust.

Correct Any Errors on Your Account

Old addresses, an incorrect telephone number and a number of different occupations listed in your credit searches can all lower your score. Ensure that your details are clear and consistent across all of your reports with all of the relevant bureaus and get them corrected if not.

Finally, stop making credit applications. The more applications that you make that are rejected, the lower your score will be and the more likely it will be that your next application will be rejected too. If you’re rejected, leave it at least three months before applying again, especially if you want to apply for something big like a mortgage in the near future.

How to Make Yourself More Attractive to Lenders

Although it might sound a little bit strange, making yourself more attractive to lenders is incredibly important when it comes to getting approved for any type of credit, such as a mortgage or a credit card. Attractiveness is all about making your credit report, and your credit score, more attractive – despite any of the nasty details that may be lurking in your financial past, such as defaults, county court judgements or missed credit payments. Read on to find out exactly how to make yourself more attractive to lenders.

Stop Applying for Credit

Although there’s nothing wrong with applying for credit if you actually need it, if you get declined for a credit card and find yourself applying to half a dozen more over the following week, you could seriously inhibit your ability to get credit. Putting in multiple applications, and getting declined, will make potential lenders think that you are desperate – think about it, would you lend money to someone that desperate? No! Space out your credit applications and if you’re thinking of applying for something big, like a mortgage, do not apply for anything at all for at least six months before filing your mortgage application. And if a credit card company declines your application, they probably have a good reason for doing so. If you know that you’re unlikely to get accepted for credit, or if you think you may have a problem, apply for a credit card designed for people with poor or low credit.

It’s All About Profit

For the most part, getting credit is all about profit – how much of a profit you’d make for the lender. Profit comes from interest rates, which are applied when you don’t pay back all of your credit before your interest-free period ends, or in the case of credit cards, which is applied if you do not pay back the balance in full at the end of each month. Although this is the best way to manage your debt, if you’re unlikely to make any profit, the lender might not give you any money! Risk does play a part because lenders would be bankrupt if everyone paid their bills on time – but it is worth considering that you can have a credit report that is so good, lenders might not lend.

Check Your Reports

There are a number of credit report agencies and if there are details that are different or inaccurate across any of those reports, you could get rejected for something as small as a mobile phone contract. Check all of your reports meticulously and take note of all of your previous addresses and phone numbers. If there are any active contracts still on your files that you aren’t actually using, get them removed from your file. Check any incorrect mobile phone numbers and ensure that your job description is exactly the same across all reports because this might also lead to rejections. And if there is anything in any of your reports that you think shouldn’t be there, write to the credit report agency and get them to correct it. If they are unwilling to correct it, add a ‘notice of correction’ to the report to add your side of the story. This is a good thing to do if you’ve had a default or a county court judgement, as it allows potential lenders to get your side of the story. Never, ever, ever pay a credit repair agency to repair your credit report for you. You can do all of this work on your own!

Be Stable

Stability is really important when it comes to applying for credit. Lenders want to know that you’re likely to stick at the same address, so put down a home telephone number as well as a mobile telephone number if you can, and try not to move around too often from house to house. Ideally, stay at the same address for more than three years. Multiple addresses within three years can make you look flighty, so if you can – and we know this will be difficult if you’re a student – stay in the same place as much as you can.

Close Old Credit Accounts

If you have any open credit accounts, such as old credit cards that you no longer use, old store cards that you no longer use or even a mobile phone contract that is still open, despite you paying off the balance, you could be seen as a fraud risk. Take a look through your purse and instead of just cutting up your old credit cards, call the companies and get them to cancel your account. Shut all of your old accounts and get rid of the store cards – you don’t need them. If you can’t afford to buy your shopping whilst you’re in store, you can’t afford to buy it full stop – so when the assistant behind the counter asks you whether or not you’d like a store card, just say no!

They Might Not Score You in the Way That You’d Think

Banks could well score you based on whether or not you’d be a profitable mortgage customer in the future, rather than on whether or not you are suitable for a current account – even though you’re only applying for a current account and even if you have absolutely no intentions of applying for a mortgage. Think about how the lender might score you before applying as it could make a big difference in whether you get accepted for credit or not.

Above all, you have to make very sensible credit choices. If you need to get credit, you need to be sensible. Don’t be desperate, space out any applications and above all, do not apply for credit that you don’t need. Come back next week to take a look at more top tips for making yourself more attractive to potential lenders.

How to Maintain a Credit Score

Getting a good credit score is tricky enough, but maintaining it is arguably harder. Having a good credit score doesn’t mean that you’ll keep a good credit score, so it’s important that you take the steps to maintain it. A good credit score means that you’ll be more likely to get accepted for credit in the future when it comes to renting or buying a home and applying for loans, credit cards and store cards. An excellent credit score could also minimize the interest that you have to pay on credit, so it’s definitely worth building your score. Once you get there, follow the steps below to maintain your credit score and your credit rating.


Pay Your Bills

Paying your bills on time is imperative to maintaining a good credit score, and that goes for all of your bills, not just your credit cards and loans. Missing a payment, or making a late payment on any of your bills, such as insurance or your gas and electricity bills will show up on your credit report, lowering your score. Pay all of your bills on time to maintain your score. If you’re forgetful, set up automated payments so that you never miss a payment.


Pay Off Debt

A good credit score means that you’ll be eligible for higher levels of credit – but the more credit you take advantage of, the more debts you’ll have and your score will plummet. Pay off your debt, if you have it, and try not to get into too much debt. The credit might be available but it doesn’t mean that you have to have it! Loans and credit accounts account for 30% of your credit score, and the more loans and credit accounts you have, the lower your score will be.


Keep Credit Low

Having no credit can be as damaging to your credit report than having too much credit. You need to strike the right balance and show that you can have credit without having to spend too much and that you can pay it off. Generally, it’s a good idea to keep your credit spend to less than 30% of your credit allowance. That means, if you have a credit card with a $1000 balance, you should ideally keep your spend to less than $300. This shows that you can use credit without going over the top with it, and it also demonstrates that you use credit regularly – and this will help to maintain your score.


Be Wary of New Credit

Multiple credit applications could have a massive impact on your credit score, so be wary of applying for new credit too frequently. Credit inquiries equal around 10% of your overall score, and too many of them could drop your excellent credit score to a good credit score. Equally, having too many open credit accounts or opening too many credit accounts at the same time will lower your score, so open new credit sparingly and be wary of new credit offers.


Maintaining your credit score is very important, so follow the tips above to keep your score high.

There is Financial Life after Bankruptcy

You’ve been through a bankruptcy and have felt the shame, guilt, and utter stress that such a financial disaster incurs. You’re wondering when, if ever, will you be able to rebuild your credit and move along with a normal financial life. You are not alone. More than 2 million bankruptcies were filed, in progress, or discharged in 2012. There are many people, many couples, many families out there who have been have been through bankruptcy. Take heart—there is life after the dreaded B-word, and here are some tips for getting back to it.

Let Go of Your Guilt and Shame

It’s natural to initially feel devastated about having to file for bankruptcy. However, do not dwell in those negative feelings. Hanging on to shame and guilt can actually hinder you from moving forward in a positive way in many areas of your life. You did not commit a capital crime, after all, you filed for bankruptcy. Remember this, too, shall pass. There are far worse things that could have befallen you, so let go of the negative and move forward.

Establish and Adhere to Your Budget

Hopefully you’ve done this during your bankruptcy process, but if not, do this immediately. Yes, it may seem tedious and like something you mother told you to do when you were in high school or college. However, your budget ensures you know your monthly expenses, monthly income, and where all that money is going. Your budget is your monthly financial road map; your future financial success depends upon you sticking to it.

Live Within Your Means

This can be a difficult adjustment for some, while others have no problem living within their means, i.e., not spending more than the extra cash you have on hand each month (assuming you have extra). This means examining what you need vs. what you want, and learning to live without charging many expenses to credit cards (and hoping you’ll figure out how to pay it later). This equates to, oftentimes, having to wait and save in order to make those purchases you’ve been planning. And in our I-want-it-now society, it may seem like torture, but it’s really not. This is how your great-grandparents, your grandparents, and possibly your parents approached spending money on extras… and they survived it.

Pay Your Current Bills On-Time

It is imperative that you pay whatever monthly bills you currently have on-time every month. This is the easiest and fastest way to begin to rebuild your credit. This also establishes a healthy bill-paying pattern, which sets you on a good track for continuing this practice in the years to come. Having the money to pay these bills on-time also depends upon you establishing that budget and living within your means.

Small Loans Make a Big Difference

This may sound counter intuitive, but it’s true that taking out a modest  and manageable loan for something you have all or most of the money for—and then dutifully repaying that small loan via monthly payments—does assist in rebuilding your damaged credit. This is demonstrating the new financial You and your ability to responsibly pay off debt. The key is to already have all or most of the amount of this small loan on hand, so that you’re not truly borrowing without knowing how you’ll pay for it.

Cautiously Tread Back Into Credit Cards

The decision to eventually return to using credit cards—or not—is entirely up to you. The “financial experts” may tell you that you must, must, must foray back into credit cards, but this is questionable. The idea behind reestablishing a credit card is basically the same as the small loan idea. The problem with this is that credit card spending is easier and more apt to quickly get out of control. Only you can determine if this is a responsibility you again want to shoulder, if you will be a responsible user, or if you should forego credit cards all together.

Keep Things in Perspective

Bankruptcy is not, by a long shot, the worst thing that can ever happen to you, despite the propaganda to the contrary. The situation was an unfortunate financial misstep, which you have and are endeavoring to correct. Be proud that you took action to right the situation! Keep this event in perspective with the rest of your life events. Focus your energies on all the positives around you.

The burgeoning student loan debt level – Is there more wiggle room for the students?

The United States of America has been hit by several fiscal bubbles that have already wreaked havoc in the economy when they burst. After the real estate bubble and the tech bubble, there is enough speculation that the student loans might be the next to join this infamous group. According to the Los Angeles Times, the student loan delinquency rates had dropped to the danger zone after studies showed that the delinquency rates have risen to 16%, which showed an increase of almost 25% in the last 3 years. This debt burden does not only represent a lifelong problem for the student borrower but might also have a broader impact on the US economy.


The student loan balances continue to rise steeply. The average last year was around $27,254 that was up by 60% from the $18,255 that was borrowed in the year 2005. With the sluggish economy and the slower growth in the job rate will mean tougher options for the students to repay their loans. This failure to repay the holders of their student loans will restrict and mar their future chances of getting new lines of credit and when more and more people cannot borrow, the economy will suffer as a whole. Although there are many financial moves that the students can take in order to be able to repay their student loans, very few have the urge to adopt a debt free lifestyle.


The new push by CFPB to alleviate the soaring student loan debt


As more and more borrowers fall back on the private student loan payments, the consumer watchdog of the US, the Consumer Financial Protection Bureau is pushing the students to help them make timely payments on their student loans. The CFPB informed that it is trying to seek proposals to make debt repayments more manageable for the private student loan borrowers; especially those are cash-strapped. The CFPB is well informed of the fact that the private student loan borrowers face even bigger challenges than those who borrow federal loans that have flexible repayment options.


Presently, the repayment options for the private loan borrowers who go through financial hardships vary according to the lenders. The CFPB or the Consumer Financial Protection Bureau is exploring some other options like allowing the private student loan borrowers refinance their student loans with a new loan. This would allow them to leverage the lower market rates, which in turn could easily reduce their monthly payments on the student loans. Although the comments from the student loan lenders and the public are still waiting, after this, the bureau will announce the recommendations for altering the private loans.


The new campaign of the CFPB on relaxing the student loan payments comes less than 2 weeks after President Barack Obama expressed serious concern over the issue during the State Union address. Due to the skyrocketing prices, too many students are not being able to make ends meet with the meager amount of funds that they have. Presently, there are federal government backed loans that are also on default but the borrowers are trying their best to get back on track through the flexible repayment options.


Therefore, as the consumer watchdog of the US steps into the student loan debt industry, it seems that there is more wiggle room for the students. If you are someone who is drowning in private student loan debt mire, you can certainly get help of the steps that are being taken by the CFPB. Refinance your student loans in order to grab the lower rates on your new loan and help yourself get back on track.


Savannah Brien is a financial writer with profound knowledge on the current financial industry. She contributes her articles to different blogs, communities, and websites and loves to help people with knowledge. Some topics covered by her are the credit card debt crisis, the student loan debt disaster and the ways it affects the economy and so on.