FREE Equifax, Experian, TransUnion Credit Report

Because of recent laws passed by the Federal Trade Commission, all major credit reporting agencies in the United States, including Equifax, TransUnion, Experian (formerly TRW), are required to provide consumers (that's you!) with a totally free copy of their credit reports, if requested, up to once every 12 months. This means that you can acquire a 100% free credit report from any of these three major credit reporting companies once every year. It has never been easier or cheaper to stay on top of your credit report and score than today.

Everyone should check their credit report! It's FREE

There really is no good reason why you shouldn't check your credit report, at least once a year. Knowing what is in your credit report and your credit score can save you time and money when shopping for a loan or lease. Also, it is an excellent idea to frequently check your credit report for errors, out of date information, fraud, or identity theft. All of these wrongful entries can negatively effect your over all credit score, tarnishing your reputation and relationships with banks and lenders.

All three of the major credit reporting agencies can be contacted for a free annual credit report by going to their official website: http://www.AnnualCreditReport.com. They may also be contacted individually, online or by regular postal mail; however, be aware that when going to one of their individual websites ( www.experian.com, www.equifax.com, www.transunion.com ) they will require you to also sign up for an account and other services to receive your credit report. So your best bet is to not deal with them through their commercial sites, and instead use the www.annualcreditreport.com site.

How Do I Get a Free Online Credit Check?

How to get a Free Online Credit Check

Knowing your credit score can save you from the embarrassment of being declined for that loan, car lease, or mortgage, as well save you thousands of dollars. So how do you find out your credit score for free? Read on to find out!

What Exactly is a Credit Report?


A credit report consists of a detailed list of your credit history maintained by one of three main US credit reporting agencies: Equifax, Experian, and TransUnion. You can imagine it as a report card that holds information on all of your current and past financial activities. When you apply for a loan, the lender requests your credit report from one or all of these agencies and uses it to help determine whether or not to approve your loan. All of the factors in your credit report are used to calculate what is know as your "credit score" which is between 300 and 850, the higher it is the better.

Why Should I Check My Credit Score?


Checking you credit report might seem like a difficult and expensive task to carry out, and in the past it usually was, but with recent advances in modern technology, namely the internet, checking your credit score online is simple and FREE! The Federal Trade Commission requires all of the major national credit reporting companies to provide consumers (that's you!) with a totally free copy of their credit report if requested, up to once every 12 months.

Now that you know that facts about obtaining your free online credit check, here are a few of the reasons why you should take advantage of this opportunity:

1. Help Prevent Identity Theft and Fraud.


Identity theft occurs when a criminal uses your personal information, such as your credit card number or Social Security number, to carry out fraudulent activities. When you obtain your credit report you are able to check over your credit history and make sure that no one has negatively affected your credit score through identity theft. If you do happen to find any fraudulent activities or inaccurate information on your report, you can contact the credit report agency or credit card company involved, and have them correct this inaccurate information.

2. Avoid Embarrassing Credit Surprises.


Which way would you rather find out you have less than perfect credit; when the bank or car dealer tells you so in their office, possibly in front of your friends or family, or when you request a credit report in the privacy of your own home? Knowing your credit score is the best way to avoid being put into an uncomfortable or down right embarrassing situation. Not to mention it can save you bundles of time. Knowing your credit score, and what is on your credit report, will help you make more informed decisions in a vast array of financial situations.

3. Correct Inaccurate Information.


It has been reported that approximately 1 in 4 credit reports contain serious errors, many bad enough to impact the consumer's eligibility to obtain a loan. Credit reporting agencies have very sophisticated and precise credit reporting protocols, but nothing is 100% foolproof and mistakes do happen. Sometimes outdated information will remain on your credit report longer than it is supposed to, negativity impacting your overall credit score. Obtaining a free online credit check is a great way to make sure your information is correct and up to date, before applying for a loan or new credit card.

How Do I Get a Free Online Credit Check?

Bad Credit Consumers Could Still Access Cheap Borrowing

Despite an increasing number of professionals aged in their 30s or 40s reported to be forced to take out a sub-prime loan, borrowers could still be able to access a competitively priced secured loan in the future it has been suggested.

According to research conducted by GMAC-RFC, about three-quarters of those with a sub-prime mortgage are aged between 35 and 54, reports the Times.

This figure was attributed to those in the age group suffering a damaged credit report due to missing credit card repayments or failing to reorganize finances after an event such a divorce.

As a result, potential borrowers were reported to be unable to access a cheap home loan and thus have to look to a bad credit loan which attracts a higher rate of interest.

However, a financial expert has indicated that consistently making repayments while on a bad credit loan can help consumers repair their credit rating and get access to cheaper borrowing in the future.

James Cotton from London & Country Mortgages told the publication: "If you can make the payments for the length of the sub-prime deal, the chances are that you could have repaired your credit record sufficiently to take out a prime deal next time."

Meanwhile, Savills Private Finance spokesperson Melanie Bien suggested that those with "one or two blips, such as missed credit card payments" should still be able to get a competitively-priced secured loan.

Earlier this year, James Jones, consumer affairs manager for Experian, advised consumers who are considering applying for a bad credit loan should first obtain a copy of their credit report.

He claimed that such a document can help borrowers identify where a change in circumstances, such as redundancy or illness, has affected their ability to pay off debts - which in turn could determine what rate of interest loan lenders decide to charge.

Saving - Is The Magic of Wealth Building

Saving As A Wealth Tool

Saving, everyone wants to save but why don't people save more? There are many reasons to why people do not save more, yet there is a simple solution, and people need to find the ways that they can save in order to build their wealth or improve their finances.

Saving money should be on every working person's mind. I am sure that not everyone wants to work all their lives and the earlier they start to save the better. I say this because saving is a good thing for everyone and when you start early, you can take better advantage of the compounding interest or dividends you earn on the money you have in savings. This is passive income. However, putting money away needs to be made simple and automatic. David Bach teaches you just how to make saving money automatic in his book The Automatic Millionaire.

The saving vehicles that can make anyone rich are your job, your credit, your retirement account like 401ks, IRAs, SEOGs, your home, etc. These are wealth-building tools you can use to save money and to generate passive income. There are others but they do not fall under the saving category. For instance, investing, Real Estate, owning your own home, and your own business. All of these should be part of your savings plan or program. Two great books will teach you more about these and they are The Automatic Millionaire by David Bach and TheMillionaireZone.com by Jennifer Openshaw. Oh, use your LifeNet for your success.

Wealth Building & Cash Flow

Saving money is a magical wealth-building tool that many people have been overlooking for centuries. Why is the question? The answer to this question is complex. For some people, it may not be just one particular problem. It could be many like a low-wage job, an undisciplined shopper, lack of financial knowledge, and people living above their means. This list can go on and on; however, the main problem is "Cash Flow." As Adam Bourque stated in his article, "Cash flow is a concept that is not taught in high school or even in most colleges and yet it's essential to understanding wealth accumulation and asset growth." Cash flow needs to be taught in schools both high school and in colleges as a mandatory finance class. Robert Kiyoski teaches this in his books, seminars, and board games. Keep in mind that cash flow can be either negative or positive. If you have more income coming in than going out then you have a positive cash flow. However, to build your wealth you will need to have income producing products and services like Real Estate (own home), investments, owning your own business. I hope that it will be a low cost start fee opportunity if you decide to start your own business.

One of the quickest ways to start your own home based business is to start a direct selling business. Simply find a unique product or service that you love and use every month then share the product and your experience with others. I suggest you take Jennifer's millionaire zone survey to find out where you stand as a budding entrepreneur. Also, use her 30 get started plan. Go to www. Themillionairezone.com.

Another, concept to use is to switch to money saving products and service products that you usually purchase at the super market and buy them from a direct selling company as an independent associate. The money you can make with one of these opportunities is amazing. You save on the product your purchase for your own consumption and you can earn residual income all in one shot.

The Importance of the FICO Score

What is a FICO score and why is it so important? For those in the credit industry, knowing what a FICO score is can help a lot in maintaining a healthy lending business. That is because the FICO score is being used in order to assess a person's credit worthiness. Lending money to people is always a risky endeavor. Lenders always have the fear of never ever getting back the money that they have loaned. And because it is a business, lending institutions can only make a profit if borrowers actually make the payments on the money that they loaned. For them, it is very important to know about an individual's borrowing as well as debt payment behavior before they can ever decide on handing out the money in the form of a loan or other types of credit.

Creditworthiness of an individual is something that lending institutions really want to know before they ever want to decide of loaning any amount of money. And the best way to do that is by knowing the FICO score and what it represents in terms of an individual's credit behavior and pattern. And just what is a FICO score? It is simply a way of being able to measure an individual's creditworthiness without requiring the lending institutions access to an individual's income history or employment status and, in a way, being able to maintain a person's privacy in some way.

What is a FICO score and how did it come to be? It was originally developed by the Fair Isaac Company in order to help the credit industry assess individuals applying for credit. The FICO score is calculated taking into consideration certain factors that determine one's credit behavior. Such factors included in calculating for the FICO score include one's credit history, current credit owed, the length of the credit history, recent loans applied for as well as the various types of credit each individual has obtained. The FICO score is now widely used by major credit reporting agencies in providing lending institutions with a credit report on individuals applying for a loan, getting a mortgage or trying to get approved for a credit card. Credit card providers and banks also use the FICO score in order to determine credit limits and the setting of interest rates.

Before an individual's FICO score can be calculated, he or she must at least have one credit account open and active for a minimum of six months. This is the bare minimum of information that is needed for calculating an individual's FICO score, although it would still be a long way from being considered credit worthy. Most lenders prefer to see an individual having minimum of three or four credit accounts that have been maintained for at least 12 months. This is what banks look for in providing large lines of credit and mortgages to its clients.

What is a FICO score in terms of your credit worthiness? A FICO score is rated at scale from 300 to 850. The accepted median for the FICO score is around 720. FICO scores that are 725 and above are considered good scores while those found below 600 are considered bad. Making sure that one keeps his or her FICO score high would ensure that lenders would approve of credit or loans being applied for.

Credit Repair - Overcoming Fear

Overcoming Avoidance

There is nothing funny about credit repair fear. Well, maybe it would be humorous if the side effect were not so potentially devastating. Do you know anyone who can't seem to get themselves to the dentist? Years slip by. Eventually they make their appearance at the dentist office holding their head and moaning with the pain of a toothache. Millions of consumers have the same relationship with their credit reports.

Everything Counts

I wince at the sound of the dentist drill. I understand. But there are some things that need to be taken care of. If you wait until there is a serious problem before taking action you may discover that the price of inaction is well beyond your means. Your credit report affects everything in your life. A regular course of maintenance is in order. Did you know that over 70% of all credit reports contain errors? Did you know that even innocuous looking errors like account opening dates can have a major impact on your credit?

The Ripple Effect

In a recent blog entry I wrote, "You should not overlook the myriad items that are determined by your credit scores. Your automobile loan payment, like your mortgage payment, ripples through your lifestyle by limiting other purchase choices that you make. Credit cards, personal loans, debt consolidation loans, home equity loans; all count."

It all Adds Up

This ripple effect should not be underestimated. A positive swing of fifty points in your credit score can translate into thousands of extra dollars in your pocket each year. Every single dollar of savings is a dollar that is available for other things that you would like to do with your life. The right decisions about maintaining your credit report can easily send you on a Caribbean vacation, pay for your night classes, send your children to a better school, or maybe just get you that new big screen television that you want.

The First Easy Step

So, given the importance of your credit, it would make sense to find a way to steel your nerves for the job of a comprehensive review of all three of your credit reports. Let's take the first step. The Fair and Accurate Credit Transactions Act, in response to the frightening number of errors that continue to appear on consumer's credit reports forced all three credit bureaus to provide a free copy of your report each year. Take advantage of this law. Go to annualcreditreport.com and get all three reports. Once you have your reports you are on your way. Don't think too far ahead. There are a couple of handy tricks that will make the job easy, even for those with a paralyzing fear of paperwork.

Organization is the Key

The key to getting through the job of credit repair is organization. Don't bother trying to deal with all three reports at one time. Sit down with one report. Get a nice clean legal size pad and a pen. Don't jump ahead to the derogatory section. Start at the top and work your way down line by line. Check every thing. Account opening dates, high credit limits, duplicate accounts, current balances; all are important.

One Report at a Time

Each time you find something that is wrong make a note on your pad. Each report comes with dispute instructions. Follow the instructions and dispute every item that you noted. I suggest that you leave the other two reports for another day. There are no economies of scale to assaulting all three reports at one time. Each bureau needs to be attacked individually.

Less is More

Take your time and address each dispute as clearly as you can. It should be helpful to know that the credit bureaus do not want to hear the story of your life. They also do not want to hear any explanations. Just say what you need to say. Be neat. If you take your time the experience should be painless and you should get very satisfactory results.

It's Your Life

If you simply can't make your way though the job you should hire a good credit repair company to do the job for you. Credit repair should be very affordable and should never lock you in for any pre-determined period of time. Your credit is very important. You work hard for your money. Make sure that your credit report is working just as hard for you.

Copyright © 2007 James W. Kemish. All Content. All Rights Reserved.

Encourage Your Customers To Pay On Time - And How To Recover The Debt If They Don't

Whatever sort of business you run, it can be difficult to ensure that your customers pay their bills on time. After all, late payment of debt can cause crucial cashflow problems and non-payment of debt has the potential to effectively cripple your business. But how can you make sure that your customers pay their debts on time? And, if they continue to renege on their payments, how can you go about recovering the debt?

To begin with, it's important to set out clear terms and conditions for your customers to adhere to when they're making their payments. For instance, offering discounts on early payments - and making customers aware of the consequences of non-payment - will definitely encourage bills to be paid on time. On the other hand, charging customers a fee on late payments is sure to encourage your clients to by the agreed deadline. Legally, if your customer fails to pay their bills within 30 days of being invoiced, the amount of interest you'll be able to charge interest daily at the Bank of England base rate plus eight per cent.

Additionally, you'll also be able to claim debt recovery costs when adding interest onto any overdue payments. Your customer is legally entitled to pay you rates of £40 for debts of under £1000, £70 for debts ranging between £1001 and £10,000 and £100 for late payments exceeding £10,000. However, if you choose to claim debt recovery costs, it's vital to let your customers with unpaid bills know in writing than you plan to implement these extra charges.

While these efforts usually provide results in obtaining your payments on time, some customers repeatedly ignore reminders to settle their bills with your business. In this case, the best course to take is usually to employ a debt recovery agency to claim any overdue payments that are owed to you. Debt recovery agencies can offer a lot of advantages when it comes to collecting debts for you.

Firstly, debt recovery agencies have the time, expertise and specialist industry knowledge that are needed to effectively recover any debts that are outstanding to you - so you can concentrate on the everyday running of your business. Often, the agency will also be able to instruct solicitors on your behalf if the customer still doesn't make their payment. Handing over these responsibilities to an external debt recovery agent will leave you free to tend to the everyday running of your business.

Ultimately, if you decide to opt for a debt recovering agency in order to collect any payments owed to you, it's essential to check whether the agency is registered with the Credit Services Association by referring to the CSA's website http://www.csa-uk.com. Choosing a reputable debt recovery agency, like Capquest for example, will ensure that you won't be associated with any questionable practices and will guarantee the fast recovery of your debts.

Do You Know Your VantageScore?

For over fifty years your credit score has been calculated using the Fair Isaac and Co's system and so it is generally described as your FICO score. Now there is a new system known as VantageScore. This is just over one year old having been launched in March 2006. So why was a new system needed, and how does it differ from FICO? What are the advantages of VantageScore, and more importantly, what are its disadvantages? And finally, how can you find out your VantageScore?

It is a well known fact that the three credit bureaus, Experian, Trans Union and Equifax will report a different credit score for an individual based on the records that each company holds. VantageScore was created with the intention of providing greater consistency between the three bureaus so that these discrepancies would be removed.

The two systems differ both in the way that the credit score is calculated and in the way the result is presented. Both systems use the same five factors in their computation, but whilst FICO places most emphasis on payment history and amount owing, making up 65% of the score, these factors only count for 47% of the VantageScore. For the results FICO uses a figure between 500 and 850 with anything over 720 being regarded as prime. VantageScore ranges fro 501 to 990 with an additional classification of letters A-F for each group of one hundred. So A is 901-990 which is regarded as super prime, with C 701-800 being prime and at the other extreme. F 501-600 treated as high risk.

One criticism of FICO is that while a score of 720 and above gives a clear green light to a potential lender, there is no generally accepted grading of the lower figures. This problem is solved with the VantageScore by use of the letters A to F which enable you to tell at a glance into which category a borrower falls. However there are critics of this system too who point out that within each category there will be a wide variation. For instance a score of 698 is only three points short of prime, when 603 is just two points clear of high risk, yet both fall into category D.

The main reason why FICO credit scores vary between the three bureaus is the variation in the data that each receives. While the promoters of VantageScore say that their system will produce more consistent results, they admit that ultimately this depends on the quality of the data.

Your current FICO credit score can be obtained from each of the three credit bureaus, but to date only Experian will supply you with your VantageScore and it will cost you $5.95.

Teach Your Children About Credit and How To Manage It Responsibly

One of the most important things for a child to learn in order to become a successful adult when he grows up is not taught in school. This is a very serious omission that parents need to be aware of and that they, as parents, must address if they want their children to lead happy lives as adults.

The concept that I am talking about is credit and how to manage it wisely.

I cannot understand why this crucial topic is not covered in schools today but I believe that it is imperative for parents to teach their children how to handle credit.

How many people grow onto young adulthood and immediately obtain and then misuse credit cards? I would venture to say that a large amount of today's young adults have buried themselves in debt that will take years to overcome.

Credit card companies make it very easy for college students to obtain credit cards. But if you stop and think about it, most college students do not have the wherewithal to pay for the credit card debt that they can so frivolously incur.

Many young adults today do not even know how to balance their checkbooks. I used to constantly prod my son to keep his checkbook balanced, making a joke out of it by calling it "Big Boy Checking". But it's not a joke when a young adult keeps throwing money away for overdraft fees caused by an unbalanced checkbook.

The same goes for credit. Young adults who spend money by paying for purchases with credit they cannot afford are making the same sort of mistake. Credit is something that is too easy to get and too easy to abuse.

Telling your children to avoid credit entirely is not the answer either. Credit needs to be established at an early age to have for emergencies for instance. But obtaining credit for future needs is different from credit abuse.

Teach your children sound credit practices and you will be giving them a gift that will last for the rest of their lives.

Children Facing Foreclosure & Homelessness Beg Your Understanding

Kim & Joe M. of Orlando, FL, fell victim to the shrinking house market. Both worked in financial services, Kim an administrative assistant at Wells Fargo and Joe a loan officer with a bank.

For five years, they stayed busy and saved money.

In July 20005, Kim lost her job…downsized. Wells Fargo didn't need her any longer. Not as many mortgage applications. Kim's job search lasted three weeks before she found a replacement for 75% of what she had previously earned.

In September, Joe suffered an auto accident, putting him out of work for six months and without an income as the insurance companies battled it out.

Kayle, 6, and Kyle, 8, knew something was wrong. Mom and Dad were preoccupied. Money was tight.

Kim and Joe and their two children quickly fell victim to bad luck and a slumping housing market. They fell behind in their mortgage payments on the same house in which they had lived for eight years. No irresponsible overspending here. No new BMWs; no Rolexes; no expensive vacations; no extravegence at all.

Joe got hurt…he couldn't work. Kim lost her job…she couldn't recover lost wages. Kyle and Kayle watched on…helpless.

According to the American Banker's Association, most people have less than 3 month's worth of cash in reserve.

Despite eight years of perfect payment history, Kim and Joe's mortgage company refuses to work with them. They've received a Notice of Default.

The foreclosure of your home can lead to the bank seizing your property, your cars, your stocks, your kid's college savings! Even the IRS can get involved with wage garnishment or levying your bank account. Kyle and Kayle watch on…helpless.

The National Association of Mortgage Banker's (NAMB) records show that more mortgages go into foreclosure 3-5 years after issue than at any other time. Credit is trashed and families are scarred.

Children, the most innocent victims of unfortunate tragedy, watch on…helpless.

Kim & Joe's horror will haunt them for life. More than 40% of borrowers took an adjustable mortgage in the past five years . Many of them have children.

Those "teaser" rates of 5% or less are set to explode their mortgage payments by 25-33% or higher when they adjust. In 2006, over $300 Billion dollars worth of mortgages will adjust with $1 trillion more in 2007, according to Freddie Mac, the secondary mortgage lender.
Homeowners are upside down…they have no equity. Some mortgage lenders, who shouldn't be in the real estate business, appear to want to take homes from Kyle and Kayle.

They appear not to want to work out payment plans to help families victimized by bad luck and a slumping housing market.

Adding insult to tragic injury, Kyle & Kayle learned about "deficiency judgment". The bank sold their home…the home where Kyle was born…the sale didn't cover the amount Kim & Joe owed.

The proceeds of the sale did not cover the total owed the bank, including legal fees, administrative fees, fee this, fee that.

If the bank cannot recoup their deficiency from you, Kyle & Kayle, and if your state will not allow a deficiency judgment, the lender will write the deficiency off on their taxes.

However, kids, the pain doesn't stop there. Now the IRS may enter the picture. This "deficiency" amount not collected by the lender is considered money you owe.

They will add it to your annual income and expect you to pay taxes on the total amount. This is business, Kyle & Kayle. Nothing personal. You'll get over it, Kids.

If your parents cannot pay, the IRS can come after everything you own, including your mom's & dad's paychecks.

Kim & Joe sought professional help as suggested. Kim & Joe's lender chose not to help them save their home. Tragedy strikes not just once but repeatedly, oblivious to children.

It's business. Real people with real children (scarred for life) lose their homes, get hit with a deficiency judgment & meet the Gestapo (the IRS).

It's not just the irresponsible overspenders carelessly losing homes to foreclosure. Some are real people with real children.

Great Reasons For Home Loan Refinancing

Why would you want to refinance your home? The best explanation I can give you is to lower your interest rates. In this article I plan on showing you some other great reasons for home refinancing.

A refinance home loan is a new loan that is taken to pay off an existing loan. You can also apply for a lower interest rate or to take cash out of your homes equity. Right now interest rates are lower than ever because of fast paced and changing economy. So now would be the best time to try refinancing. Even a quarter of a percent on your interest rate over a year can make a huge difference in the amount of money you save.

The biggest questions home owners ask is why should I refinance my home?

1. Lower Interest Rate

In today's day and age home owners are always looking for new moneys to invest. Buy refinancing your mortgage at a lower interest rate you can save thousands of dollars a year that can be used to reinvest in other places.

2. Cash Out

Some home owners like to refinance their homes so they can take the equity out and use it for other projects whether it is a vacation, home repairs or retirement investments.

3. Home Improvements

In almost every case a personal loan will be more expensive to take. That's why so many people refinance their homes in order to keep the maintenance up in their home. Without this things can be very difficult. Home repairs can be very expensive and it can be stressful trying to find the money for the repairs that's why this is a win win situation.

4. Just Want A Change

Many people are not happy with their existing loan program. There could be a number of reasons why you're not happy with your existing situation so maybe a refinance would be all it takes to make you more satisfied.

There are several benefits to refinancing your home including better credit standings so that you can refinance and obtain a better loan. Or you can get a line of credit backed by your home loan. This allows you to have cash available to you anytime you need it. Or your lender can consolidate all your bills to make your monthly payments come way down.

Dale Mazurek

Life After Debt Settlement - Budget, Credit, and Debt Help

After successfully completing a debt settlement program, most consumers are looking forward to a brighter future of being debt-free. In order to do so, I have listed some healthy tips to manage a brighter financial future.

Steps to managing debt and staying debt free:

Control your spending and develop strategies to manage your debt.

1. Cut spending- Cook at home, use other means for transportation to save on gas, adjust the thermostat around the house to lower your electric bill, buy used goods on Ebay for instance.

2. Pay with cash

3. Track your expenses.

Paying your bills on time. When you pay your bills on time, you establish yourself as a responsible, creditworthy individual. Destroy all of our credit cards except one, (preferably the one with the lowest possible long-term interest rate). Leave the card at home and use it only for emergencies. It's important not use up the entire credit limit, which also may affect your credit negatively.

Get a copy of your credit report from one of three major credit bureaus: Equifax.com, Experian.com; TransUnion.com. Review your report carefully for accounts or addresses that don't belong to you, creditors who have made mistakes and companies who have looked at your report without your permission. Immediately, notify any mistakes to the credit bureau. That means requesting and reviewing a report from the other two bureaus to make sure the mistakes are corrected. Maintaining a good credit history is essential to securing future credit, loans and mortgages. Even if you think your credit history is problem-free, it's time you know for sure. Errors occur more often than you may think. Examining your credit report regularly allows you to verify the accuracy of the information being reported by your creditors. Services like DirectAlert® make it easy to stay on top managing your debt and your credit report information.

Set financial goals

To manage debt you need to know how much you have and develop strategy to control it. If your expenses exceed your income, take a step back. Your debt should be no more than 25% of your gross annual income.

Create a spreadsheet with your net salary and any assets, investments, money in your savings and checking accounts, and anything else that is of value. Start by working out how much income you have each month after tax and other deductions. All expected expenditures for the month should be listed another spreadsheet, including rent, food, entertainment, trips, and loan payments.

If there's nothing left or if you're spending more than you bring in, it's time to examine your expenditures and cut out some luxuries.

Improve Your Credit

Your credit score is a very important number. It will decide many things in your future, including whether or not you will qualify for auto loans, credit cards, and mortgages; what interest rate you will have to pay, and many other credit limits. But many people do not really know what affects their credit ratings, nor do they know how to improve their credit ratings. It is not just about paying your bills on time. There are many other factors the the credit reporting agencies consider when determining an individual's credit score.

Credit Score Composition

Punctuality of Payments (35%) - The single largest portion of the credit score is punctuality of past payments. Credit score is affected only by payments more than 30 days late.

Available Credit (30%) - Almost one third of a credit rating is calculated by the ratio of debt to available credit for revolving accounts, such as credit cards. This is the amount of credit that is available to be used.

Length of Credit History (15%) - This is portion of the credit rating is determine by how long your credit history goes back. When determining your credit rating, the age of your oldest account, and the average age of all your accounts are taken under consideration.

Types of Credit Accounts (10%) - All three credit reporting agencies like to see a mixture of different types of credit accounts, including installment, revolving, and consumer finance.

Recent Credit History (10%) - One tenth of the credit score is calculated by recent credit searches and recently obtained credit. This includes financial institutions running your credit with or without your consent, as well as if a new credit account was recently opened.

Tips to Improve Your Credit Rating

- Pay all bills on time. One late payment
could take your credit score down up to
100 points. Try to use automatic payment features if possible.

- Try to keep balances for accounts such
as credit cards under 60% of total available credit.

- Open non credit accounts, such as savings and checkings accounts.

- Don't close older unused credit accounts. This will lower both your level of available credit, as well as the average age of your accounts.

- If you can afford to, do not declare bankruptcy. Most people with accounts that are in delinquency or collections will suffer an ever greater deduction from their credit ratings if they file for bankruptcy.

14 Mistakes That Will Destroy Your Credit

I'm sure that you realize that establishing credit and wisely managing your credit becomes easier when you know how. If you plan to finance real estate, either as a homebuyer or an investor, avoiding these common credit mistakes will help you with your credit score and save you money in loan costs.

1. First of all, you should be aware of the fact that using expensive or undesirable types of credit costs too much and is negatively scored.

2. Also, accumulating too many lines of credit or too many credit cards causes credit report remarks like "too much consumer credit."

3. Only paying the minimum due keeps balances too high.

4. Being mixed out on any credit card or line of credit causes deep drops in scores.

5. Taking cash advances costs higher interest and extra fees.

6. Exceeding limit and having to pay over-limit fees is a negative with.

7. Paying a day or more late may cause unnecessary late fees and increases interest rates.

8. Charging more than you can afford causes debts with no easy way to pay it off.

9. Letting someone else use your credit raises your debt-to-income ratio and possibly adds "too many consumer accounts" on your credit report, which lowers your score.

10. Ignoring credit problems causes unnecessary negative impact.

11. Failure to report address changes to creditors causes misplaced bills and late payments.

12. Using partial name, different names, and initials instead of whole name causes mix-ups. Use your full legal name to protect you from confusion with similarly named borrowers.

13. Failure to report name changes to creditors also causes confusion.

14. Not checking credit report frequently is one of the most common mistakes consumers make.

Keep in mind that you can buy real estate with poor credit, but you will save thousands in loan costs if you maintain good credit. A bad credit report leaves homebuyers with sub-prime loans, which have higher point charges, prepayment penalties, and higher interest charges, which therefore cost more money.

Breaking Your Credit Score Down Into Its Components - Part 1

To best understand how the score is computed you need to understand that the FICO score is made up of 5 main factors that are all weighted differently. This means that some factors like payment delinquency is weighted more heavily than say, inquiries for new credit. While this makes common sense, by understanding how the computer scores different factors you will have a better shot at making the changes that will have the maximum impact to your score.

Factor 1: Payment History - 35% of Score

It is easy to understand why your payment history is weighted so heavily as it is this information that tells a prospective creditor what your history has been paying your other creditors. This information gives prospective lenders insight as to how you will likely treat their account based on your previous payment history.

When it comes to derogatory credit information (often referred to as "dings") the assignment of weight (how much your score will decline) is based on three factors:

• Recency

• Frequency

• Severity

Recency refers to how recent (from the time of credit report being pulled) the "ding" was reported. For example, if you had a 30-day late on a credit card only one month ago, this would score more heavily (more negatively) than a 30-day late that was reported last year. As far as regular payment "dings" (30, 60 & 90 day lates) the time scale is 24 months. This means that the more recent the "ding" to the date that the report was pulled, the more it hurts your score. The closer the "ding" to the 24 month (back) date, the less it will impact your score negatively. And when the standard 30, 60, or 90-day late becomes over 2yrs old it is NO LONGER PART OF THE SCORE! While you can still READ the information on the report (for up to 7 years) the "ding" is no longer being calculated as part of your score. This is important, because for most people, if you start doing the right things with your credit and pay your bills on time, you can go from bad credit to good credit, even great credit within 2 years.

Frequency refers to how often you have payment "dings". If you have one 30-day late in the last 24 months, this will hurt your score less than if you had 2 or more late payments in the last 24 months. So the fewer the late payments within a 2 year period, the better!

Severity refers to the type of derogatory information or "ding". A 30-day late is worse than past-due. A 60-day late is worse than a 30-day late and a 90-day late is worse than a 60-day late. Nothing is worse than a 90-day late because credit card companies have determined that most 90-day late accounts end up having to be "charged off" and end up in collections. In fact the true definition of the original FICO score was "What is the likelihood that a borrower will have a 90-day late in the next 24 months?" Try to avoid 90-day lates at all costs as this type of "ding" is weighted the most heavy and negatively affects your score more than the others. However, as with 30-day and 60-day lates, after the "ding" is over 24 months old, it is no longer part of the active score.

Factor 2: Balance of Available Credit - 30% of Score

The second largest factor affecting your credit score, next to your delinquent payment history is related to your balances relative to your credit limits. It is important that you understand how this works. Let's say you have a VISA card with a $10,000 limit. If your balance on that credit card is $6,000, although you are not maxed-out...you will suffer a "ding" to your credit. Fair Isaac will not release the details of exactly how much it hurts your score, but it is generally accepted that like the rest of credit scoring, it is based on a sliding scale.

The closer to maxed-out the worse the "ding" to your score. Again, although Fair Isaac has not released the details, many industry experts believe that the optimal ratio of balance to available credit is 30%. It is also generally assumed that the "ding" becomes more severe as you cross the 50% line and head towards the max. This ratio is applied per card not against your total credit limit across all cards. For example, if you had 4 credit cards each with $10,000 limits, the system will look at the balance ratio on each card and then assign a point value. The reason that this is important is that many people might have several credit cards that have no balance and that they rarely, if ever use. Then they have one or two cards that they use all the time. Let's say that out of the 4 cards I mentioned previously, Jane only carries a balance on one the cards and leaves the other three with no balance. If card one had a balance of 8,000, although that only represents 20% of her total available credit ($40,000) it actually represents an 80% ratio for that specific card, and that is how the system is looking at that. So Jane would be better off (from a credit score perspective) to spread $2,000 onto each card thereby reducing her ratio to only 20% per card. The reason is that there is NO positive points awarded for carrying no balance, only negative points for the 80% ratio on the one card that Jane uses.

So she was "dinged" for the one card she uses, but received no compensating positive points for the three cards that she carried no balance. An important distinction to make is that credit scoring decisions may be counter to financial decisions. For example, if Jane only used card #1 because it had a very low interest rate compared to her three other cards, this would be a good financial decision. However, as we have just learned this will cost her in FICO points. So you need to make your decision based on what your goal is. If you have excellent credit and have points to spare (i.e. 750) then you may choose to use Jane's strategy and save money on interest charges. If on the other hand you are trying to improve your credit while you apply for a loan or a new credit card, you would want to spread the money to all the cards to avoid the "ding" from the 80% ratio on card #1.

Build Credit for a Better Future

Building credit is building a better future for yourself. Nowadays, it takes
good credit scores to purchase just about anything, such as a home or car. If
your credit is bad, your life will seem like it's in a downward spiral. It takes
time to find a solution that will repair your credit.

The fist step in repairing your credit is to take a look at all your bills,
including the past-due ones. Make sure current bills are paid in full to avoid
more negative credit reporting.

Once you have taken care of your current bills, work toward paying off your late
bills. Some current bills, such as utilities or unsecured bills, can wait longer
than others. You might want to payoff your secured bills first. Secured bills
are those that require collateral. You risk losing more with unpaid secured
debts, so take care of those first.

Most utility companies will delay a bill if you don't have the funds, and you
may be able to get some help paying them. Social Services and some religious
organizations offer this type of support to low-income families. If you have a
loan with a bank, you might want to contact your lender to see if there are
options for reducing your monthly payments.

Some banks wait for financial burdens to occur before they offer a solution.
They may, for example, ask you to consider refinancing your home or car. Be
careful in this situation because some loans have high interest rates. Some
loans may have additional hidden charges, so read the fine print thoroughly.

When you're trying to repair your credit, it's important to find the best deal
out there for you. To start with, though, figure out what you can cut back on.
Reduce spending as much as possible. Delayed gratification may be your key to a
better future. This will also allow you to begin repairing your credit.

Credit repair is the process of rebuilding your credit history, thereby
reestablishing your life. You need to look at all angles to find a solution to
repair your credit. When you are searching for solutions, consider all aspects
of the resolution you choose. If there are additional charges, you risk getting
further in debt instead of building a better future and repairing your credit.

Debt counselors, debt consolidation, bankruptcy and various companies offer
credit repair solutions. These, however, should probably be the last resort if
you really want to get out of debt and repair credit.

If you think bankruptcy is the answer, realize you will need a few hundred
dollars upfront to even start the process. Lawyers are not cheap! On top of the
high prices you'll have to pay, you'll also go through court proceedings and
other headaches. The best solution is to find a way out of debt on your own.

If you're in debt over your head and have nothing left to loose, it might be the
time to ignore your debts completely. This sounds ludicrous, but it's sometimes
is the only solution to debt relief.

Before it gets this bad, however, you might ask your family or friends for a
loan that's enough to pay off your debts. You might have to pay them interest,
but friends and family will often charge less and give you a longer time frame
to repay your debt. This solution is often better than applying for a bank loan
to payoff your debts.

Most bank lenders welcome people who are struggling and take advantage of their
situation by offering high-interest rate loans. Your monthly installments are
often lower, but your price in the end is huge. Search all options before
deciding on a solution to repair your credit.