All posts in credit tips

Your 6 Favorite Credit and Banking Myths Busted

Creditors and financial institutions are always drawing up plans to increase their revenues. Most of the time, consumers like you fall prey to their hidden charges or confusing rules. This is why a lot of you doubt whether the creditors can actually resort to such mischievous loan origination tactics or not.

To help you make smart decisions, I have discussed five of the most popular misconceptions related to credit and the banking creditandbankingpractices observed in our country.

Myth 1: Credit card companies cannot increase the rate of interest on my cards.

Fact: Actually, they can. However, the CARD Act has been put into place to protect you from their most horrendous abuse, i.e., they can no longer hike the interest rate on your card’s existing balances without you being 60 days late in making the payments. Still, there are certain loopholes that you must be aware of like:

  • Rate of interest on credit card’s are variable and that they are always dependant on their prime rates. So, the interest charges on your balances will not increase any further unless the interest rates go up.
  • You could be slapped with higher interest rates, depending upon your creditworthiness and payment history. If you pose higher risk to the creditors’ money, then you’ll be charged with higher rates of interest on all your future transactions.
  • Your creditors can increase the interest rates on your cards for practically any reason after a 12-month period. However, the new, increased rate will only be applied to future purchases and not on the present balances. For that too, your credit card issuer, is bound to notify you at least 45 days ahead of any change in your cards’ rate of interest.

One of the most effective ways to resolve this of kind credit problem is to get your balances transferred or to payoff your dues through a personal loan, but make sure you are never made to pay as per the purchase annual percentage rate (APR).

Myth 2: Credit card payments are always used to pay off the highest interest incurring debt first.

Fact: This isn’t always true. Creditors use different rates to charge different kinds of transactions. The rate of interest on a purchase (is high) but then, it differs from the balance transfer that is basically low. Now, with the advent of the CARD Act everything such thing has changed. The payment made by you must be applied to the highest interest rate balance first. But, your payments should be greater in value than the minimum outstanding balances.

So, if you make minimum payments every month, then your money will be used to pay back the lowest interest rate balance first. The best tip would be to avoid having balances transferred and spend money from a single credit card. Frankly speaking, banks usually get to have your balances trapped when there are multiple kinds of balances incurred in a single credit card.

Myth 3: Every zero percent offer means the same.

Fact: No, all such credit card offers aren’t. A huge difference exist between a zero percent APR credit card and a zero percent purchase financing. Former is actually a balance transfer card wherein you’ll not be charged any interest on all your purchases for certain period known as the promotional period, whereas, the latter will defer interest from getting applied to your balances in some chosen departmental or retail stores.

In case of deferred interest credit cards, make sure you’ve paid off all the balances before the expiry of the promotional period because if you don’t pay off the balances within the said period, then you’ll be charged interest for the entire promotional period. Similarly, zero percent APR credit cards either have their interest reduced or stayed during promotional period. This is one of the most suitable ways to wipe out your overwhelming credit card balances and stay financially healthy.

However, as soon as it is over, the interest on their balances increases drastically. So, be careful with your use of these offers and always make it a point to pay off all the bills before the promotional period expires, as it might take you years to repay them all.

Myth 4: Closing credit card accounts will increase my credit score.

Fact: Actually, canceling old credit card accounts or any other debt is never a good idea to promote your credit score. People have the misconception that old debts look ominous to potential lenders. But, it is a lot better to pay off your bills on time and not missing a deadline than to keep a card with $5,000 available as credit lying idle in your closet.

So, basically its foolish to wipe out old credit card balances by having them cancelled. This is because old credit card accounts will elongate your credit history that plays an important role in improving your credit score. It would help creditors to evaluate whether you can manage your financial obligations responsibly or not. However, there are certain acceptable ways to have old debts removed from your credit report, if you’re hell bent on doing so.

Myth 5: Credit card issuers don’t provide any freebie to college students for signing up for their cards.

Fact: This is not always true. Though credit card companies are barred from doling out freebies like T-Shirts in front of schools, as per the CARD Act, yet that doesn’t stop them from signing-up students for the sake of bonuses. They can even promote their services/products on campus. Still, the practices isn’t good for students, as they are asked to spend with the lure of getting a free gift on every purchase they make. This is much worse than getting a T-Shirt for signing up.

Myth 6: I am protected from any kind of credit card or debit card fraud.

Fact: Not necessarily. In order to defend yourself against a credit fraud, you must report such an incident within 60 days of its occurrence. Or else, you’d lose a lot of your rights. In case of ATM/debit cards, banks can hold you responsible for not more than $500 in fraudulent transactions, provided you’ve notified them about the incident after two days of it from happening. On the other hand, credit card companies will not hold you liable for a fraud of not more than $50. There are some banks that waive off a fraud of $50 altogether.

If you are charged and held liable for credit frauds, then you’ll have to make the payments and in turn have your credit rating damaged. However, you can work to improve your credit score after negative trade lines like payment defaults, credit frauds or bankruptcy is reported against your accounts.

Whatever be the case, it is your responsibility to avoid any kind of liability. Always keep a record of your transactions and inform the concerned personnel of the bank or the creditor, the moment you detect any suspicious activity. Moreover, guard your confidential financial details and never share your Personal Identification Number (PIN) with anyone, or keep an easy, obvious one.

10 Common Credit Mistakes You’re Making

creditreportbannerLast week we mentioned how Your Credit Rating Might Be Ruined Even When You’re Not Doing Anything Wrong. This week we’ll be addressing The 10 Most Frequent Credit Rating Errors.

What’s a Credit Rating?”Your credit rating is a judgment about your fiscal well being, at a certain time. It suggests the threat you represent for lenders, in contrast to other consumers.

There are various approaches to work out FICO scores. The credit rating agencies Equifax and Trans Union use a scale from 300 to 900. High scores on this particular scale are great. The larger your rating, the low the danger of the lender. Lenders might also provide their very own methods for arriving at credit ratings. Additionally, lenders must choose the lowest score you’ll be able to have and still borrow cash from them. They may also apply your score to create the interest you may pay”.

Which are the 10 Most Frequent Credit Rating Errors?

1. Neglecting to review your own credit history for mistakes: Assess your credit report at least yearly. Errors on credit reports are somewhat more frequent than you could have visualized and you should stay along with the problem. Should you find any mistakes, contact the credit reporting agency when possible to fix the scenario.

2. Not using your complete legal name in monetary records: It Is possible that individuals with common names or similar sounding names could have their name imputed to a credit report that’s not theirs, as was the situation for Mr. Dave Johnson of Pembroke, Ontario. Use your complete legal title on credit programs, bank accounts as well as other files that become segment of your own credit history.

3. Paying your invoices late and neglecting to make at least the minimal monthly payment: time your lenders will finally report your account as past due, which can damage your credit If you do not pay at least the minimal amount due on score When there is a rationale why you will not be in a position to cover your invoice promptly, get in touch with your lender prior to your invoice is arrangement if due to work-out an feasible

4. Maxing out on your charge cards: If your charge cards are maxed out, prospective lenders may challenge your ability to refund. You might be billed an increased rate of interest to compensate for what exactly is viewed as a higher hazard in case you are qualified to get a loan.

5. Not alarming lenders if you have proceeded: Your statement may arrive late and as a result your payments could be late, possibly damaging your credit score.

6. Registering for too many new charge cards: Consumers who often open new credit cards are viewed as a greater danger than those who do not.

7. Closure older credit card accounts: Closure this can adversely impact your credit score and older credit card accounts shortens the duration of your credit history.

8. Do Not cosign for someone else’s loan: You could be liable for that man’s debt and harm your credit.

9. Do Not share your charge card or social insurance number with anyone: There are a lot of abound where individuals strive by telephone, e-mail or mail to get your charge card or social insurance scams number This is a fast-track to fiscal catastrophe and id theft.

10. Dismissing the warning signals of credit issues: If you’ve problem making the minimum payments on time and have maxed out all of your credit, you’ve severe debt issues.

Professional assistance is required by serious debt issues. Contact a reputable credit repair company or a debt management service to help get your credit moving upward again

Is Your Employer Pulling Your Credit Reports?

Employer1If you are in the marketplace for employment, maybe you are mindful that some companies run credit rating checks until they opt to employ an employee.

The theory behind this credit rating check is that individuals who have been in financial straits might be more prone to snitch or make other poor selections, and the fact that workers who are fiscally responsible may also be responsible at function. Whether this is really the situation (and a number of studies reveal that it usually is not), working credit checks on-job applicants is truly a pretty common pattern. Here’s things you should know about them.

There are credit reviews that were created particularly for prospective companies to make use of. They include a lot of the info that can be found in credit reports pulled by prospective lenders, except they cannot reveal your account figures, birth date, or mentions for your partner. Your own credit score is likewise not contained in these reviews.

The reports will include fundamental private info (like your house address), other names you have employed (like your maiden title), info on community records like insolvencies or liens, as well as your credit rating. These reviews also have fundamental employment tips and employment history.

Additionally, employment credit checks certainly are a soft pull on your own credit, significance they will not impact your FICO scores.

You Will Know When They Pull Your Report

An expected company cannot lawfully pull your credit history without your authorization.

So, you will undoubtedly understand whether a work credit check always could occur. You Will need to sign a release form to provide the company use of your info. Because these credit rating checks cost the company cash and, encouragingly, companies typically just run work credit checks around the most workable job candidates.

This is not authentic of most companies. Employment credit checks will be operate by some as a piece of first-round screenings. Nevertheless they still must get your permission. Yet, refusing a company use of your report might put you out of the working for employment.

In the event that you signed a launch for a jobs credit check always, but you are aware that there are errors in your report, understand that you might not have the capability to fix those mistakes prior to your report is pulled by the company. It can take weeks and sometimes even months to repair.

The Way You Can Pre-empt Issues

Here’s where being pro active can perform in your favor. First, before beginning your job hunt, it is great to pull your credit history to find malfunctions (and reach focus on correcting them) and recognize negative things. You Are entitled to your credit reports for free every year from the three major credit bureaus.

This way you may prepare yourself to pre empt any potential problems by being advance using the interviewer about your current credit score. This strategy might help paint you as a fair, upcoming man. Besides, it’s possible to actively describe credit issues a company might see, therefore you get the opportunity to communicate to your side of the storyline as opposed to being ignored out of hand.

When you sign a type that grants permission to a company to draw your credit history and you understand there are issues in your credit history, start. Speak to the interviewer about why you had foreclosure, or why you are buried in credit debt. In addition to this, be uncomplicated about how precisely you are earnestly working to repair those issues.

You do not require to communicate to your biography here. But providing a review that essentially says, “Look, I Have had some fiscal troubles. Here’s why. Here’s what I am performing to repair them,” might provide you with a much better opportunity at that occupation.

Have You Chosen the Right Credit Repair Service?

creditrepairimageThere are credit counseling firms and there are credit repair firms. The function is the exact same – offering legal and emotional help, even though the manner that they work are definitely distinct. These firms are available to help folks who have been in a serious financial scenario – occasionally because of old and present financial conditions as well as their particular spending habits.

While counselling firms only assist you in comprehension of your personal credit situation, this may be a good first step in getting your credit back on the right track; repair firms do everything they can do help you come out of the depressing scenario. Clearly, they bill for his or her services at the conclusion of the case – but that is worth every penny! There are a few things you should look for when you opt for a credit remedying company – go for an excellent/reputed one. Here would be the explanations for why you ought to choose a high quality service and only not the price tag it includes:

They follow the Federal Law: Any good company go because of it and will adhere to the Federal Law. It is going to ensure that lawfully nothing bad happens and that all of the proceeding are being done underneath regulations. They are going to go from the guidelines issued by Federal Trade Commission while presenting your case.
Recorded under US Trustee Program: They’ll be recorded under web site. It’s The web site which records just those firms with a clean past and have shown their value in the prior 10 years. It is possible to trust those recorded here without a hitch.

They bill nothing additional: Any reputable repair company is not going to charge you any more than is required to complete the job. What more – they’ll ask you for their fees just by the end of the case or even in the mid of the case – and never at the start.

They’ll say the positives and negatives: Any good repair company will say in the beginning regarding the results of the case in the beginning of the case – both the nice and also the poor. They too will advise you regarding to what degree your hand can burn just in case you don’t win. They too will let you know about the options and additionally what you may do if you’re unhappy with the professional services of the business.
All of the good credit fix company has a “A standard from BBB. If the firm you’re to hire comes in this evaluation or B evaluation, then for sure you’re going to get a great business.

Thus, go get a company and get services like prices for regular credit fix services, monthly credit monitoring, score tracking, investigation, text alarms not to mention the work towards boosting your credit rating. Using the business of an excellent credit fix business you will accomplish your target in virtually no time! So, search to find the best and leave the remainder!