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What Do Credit Scores Mean and Why Are They Important?

August 21, 2018

What is a credit score?
A credit score is a three-digit set of numbers ranging between 300 and 850 derived from information in your credit report. The higher the number is, the better the score. Lenders such as banks, credit card companies and finance companies use this information to determine loan eligibility, interest rates and credit limits.

Credit scoring is not limited to lending institutions. Other organizations, including mobile phone companies, utility companies, insurance companies, landlords and government agencies use credit scores to determine leasing eligibility, hiring or deposit amounts when providing services.

Exceptional credit score range between 800 and 850. Very good credit ranges between 740 and 799. Good credit is 670 to 739 and fair from 580 to 669. Any score below 580 is considered very poor credit.

What is a credit report?
A credit report is a compilation of credit history and how you handle your financial obligations. The information is collected by the three major credit bureaus – Experian, Equifax and TransUnion – and compiled into one report.

It details all credit accounts, the amount of accumulated debt and how you pay your bills. It also tells your address and place of occupation, as well as whether you’ve filed bankruptcy, had a lawsuit filed against you, home foreclosed, tax liens or vehicle repossessed.

Credit reports also include a list of businesses that have recently checked your credit, pulled your credit or made inquiries into your credit.

Why are credit scores and credit reports important?
Many institutions use credit to make decisions about an individual. Credit means the difference between not only qualifying for certain loans but also paying hundreds to thousands in interest. Poor or bad credit yields much higher interest rates than someone with high credit.

Insurance companies use credit to determine payments. Lending institutions use this information to determine whether or not you’ll be approved for credit cards, loans, financing and mortgages. Landlords use credit to decide whether to rent to you. And some employers check credit before making hiring decisions. That small, three-digit number that makes up a credit report is a huge determining factor in our lives.

7 Simple Strategies to Build and Rebuild Credit

August 21, 2018

Sadly, there is no quick fix to establishing and building positive credit. Because healthy credit practices aren’t normally discussed in homes or taught in public schools, many Americans don’t understand how credit works and struggle to establish and maintain positive credit scores and credit history.

Poor credit scores can cause hugely inflated interest rates when purchasing cars and homes, denials on personal and business loans and even determine eligibility in leasing and renting homes. Positive credit, however, offers a myriad of unimaginable financial freedoms.

So whether you are burdened by negative items on your credit report or just starting out and attempting to build positive credit from scratch, here is a breakdown of seven simple steps to establish and reestablish positive credit.

Review Your Credit Reports and Credit Scores
Three major credit reporting agencies– Equifax, Experian and TransUnion– issue credit reports, and federal law requires them to issue one free copy of your credit report annually upon request. Also, many banks, credit unions, reputable websites and card issuers give them to customers for free.

Examine every line of your credit report to ensure everything is correct and accurate. If there is an error, the credit reporting agency must correct it at no charge, which could in turn result in positive credit.

Additionally, look for negative items on your credit report older than seven years. By law, negative items must be removed from your credit report after seven years or after 10 years with some liens and bankruptcies.

Monitor Your Credit Closely
No one has the time to watch their credit score 24/7. But identity theft, financial fraud

and credit-report errors can be murder on your credit score. So it would be wise to regularly check your credit. Many services, such as WalletHub, offer free 24/7 credit monitoring and will alert you of any changes to your TransUnion credit report.

If you notice any inaccuracies, fix the problem immediately. The longer it takes to address the issue, the worse it will become.

Protect Your Existing Accounts
Do not close out existing credit card accounts. Older, active accounts can boost credit scores. But be sure to not max them out.

If the cards are burdensome, however, simply stop using those cards until they are completely paid off. During months when you may have become financially strapped, pay the required minimum and pay it on time.

If you have cards that require usage, charge small, inexpensive items then pay the bill in full the following month. Some credit card companies will close your account after long periods of inactivity. If you make a credit card payment that is less than 30 days late and you do not have a history of late payments, your credit will not be damaged.

After Positive Credit Has Been Established, Apply For New Credit

Most times, poor credit is a result of credit cards. But just like bad credit card habits can impair credit scores, using credit cards wisely can boost your score. So after credit has been repaired a bit, consider getting one or two new unsecured secured cards with no annual fee. If you are turned down for an unsecured card, consider a secured card. With this card, there is an upfront deposit used as collateral. Then, it works like any other credit card.

Before applying, make sure that the card reports monthly to the credit bureaus. Otherwise, it will not help improve your credit score. Also, look for a secured card that would eventually convert to an unsecured card after a specific period of good payment history.

Be Cautious When Applying For Lines Of Credit
Simply having a credit card, making payments on time and paying off the full balance monthly will help build credit. Card companies report account information to the major credit bureaus each month.

When selecting a credit card, however, choose wisely. Each credit card application causes a “hard inquiry” into your credit history. So apply only once. Repeated inquiries, especially denials, lead to temporary damage to the credit score.

So try to apply only once for a card that has no annual fee. If you don’t get approved, pay a deposit for a no-annual-fee secured credit card and each month, pay off the full balance of what was spent in the previous month.

Practice Good Credit Habits
Human beings are creatures of habit. From eating to exercising, buying to spending, we all have a tendency to follow many of the same patterns in our daily lives. Establishing and keeping positive credit is no different.

So make payments on time. A large portion of your credit score is based on on-time payments. A great way to do this is setting up automatic monthly payments from a bank account scheduled just after payday. Also, pay off the full credit card balance each month. If the balance is not paid in full, interest will accrue.

Be Consistent
Consistency is the key to building and maintaining positive credit. So only spend and borrow within your means, and keep all accounts open and in good standing. Simply having an open line of credit that is in good standing helps to build upon positive credit.

Also, remember to budget and save. It takes less than an hour each month to plan how monies will be spent and saved. And make sure to set aside room for an emergency fund. This will give you a financial safety net in the event of unexpected expenses or loss of employment. Your goal should be to save two months of pay per year and increase your savings until you have put away a year’s worth of pay.

Building and rebuilding credit is a slow process but it is well worth it. The rewards are better rates and thousands of dollars in interest savings. But it won’t happen overnight. It can take 60 to 90 days or longer before seeing significant improvements in your credit score.

Depending on the severity of credit scores, it can take years to achieve first-rate credit. However, the sooner you devise a plan to better your credit situation, the better. So be patient; be diligent, and you’ll

7 Simple Ways of Making Several Steams of Income

August 21, 2018

In today’s tough economy, it’s virtually impossible to strike it rich on a regular nine-to-five job, working five days a week for the next 30 years. Food, housing and utility costs increase by the week. Meanwhile, paychecks seem to stay the same.

While many Americans struggle to make ends meet, live paycheck to paycheck and essentially work simply to pay off debt, in order to experience the finer things in life, it is imperative to have multiple streams of income. Even an extra $500 a month can be valuable when building credit and wealth.

Bringing in multiple streams is income is vital for protecting yourself and your family against the constant ups and downs of the economy. See below for seven super ideas for diversifying your income stream.

Make YouTube Videos
In this age of communication, anyone with captivating-enough video content can make money with YouTube. Videos can be created on any area, such as sports, music, gossip, news, food critique. Attach Google AdSense to the videos, which will place advertisements with your videos. You earn money when viewers click on those ads.

The videos will have to be interesting to gain an audience; they must be promoted on social media. And there must be new videos uploaded frequently. Once a video grows legs, it can generate long-term income. Just ask Rosanna Pansino, who turned her YouTube baking channel into a $2.5 million profit in 2015.

Sell Your Photography Online
Do you have a burning desire for photography and a good eye for taking good pictures? If so, there may be a way to turn your hobby into a lucrative side hustle. There are several photography websites that can provide you with platform to sell your photos. They may charge a percentage of each sell or a flat rate for photos sold.

You can create a photo portfolios on several sites with hundreds or thousands of pictures in each portfolio. Each photo can uploaded to the sites and sold again and again and again, making residual income while you sleep.

Purchase Rental Property
Mark Twain’s famous quote “Buy land, they’re not making it anymore” still rings true.

So buying property and renting it out is a great way to ensure lasting income. Monthly rental payments yield cash flow from rent every 30 days.

Most times, property owners get a loan to pay for the property. They begin with an initial 20% in startup capital before securing the loan, but each month, tenants pay off the loan. Once the mortgage is paid off, your profit margin increases dramatically.

Write an E-Book
Do you have an interesting story to tell? Can you captivate an audience? Well, a side career as an author just may be the path for you. Selling your own literature online does not require a lot of upfront money. Anyone can become a self-published author.

There are no books to have printed nor physical product to ship. All you need is time, a few computer programs and time.

Offer a Service
Dog walking, car detail, lawn care service, tax filing and fast food delivery are all services that offer quick cash in your spare time.

Start a Travel Blog
If you are a globe-trotting road warrior, viewers can live vicariously through your adventures while you make money from it. Take Johnny Ward, for example. Born in Ireland, he started his travel blog after visiting the U.S. and Thailand. His viral explorations made him a millionaire.

Sell a Product
After cutting the feet out of a pair of pantyhose and wearing the hosieries to feel more comfortable, Spanx owner Sara Blakely turned her invention into a multi-million-dollar company. One well-thought-out product could turn a part-time side gig into a very profitable endeavor.

What Is Bitcoin?

August 21, 2018

Bitcoin is a digital currency used to purchase items online. Payments are cheap because bitcoins they do not carry any additional bank charges, government control or regulation. Many companies such as Microsoft, Virgin Airlines, WordPress and Subway use bitcoin to buy and sell items.

Bitcoin differs from traditional currencies such as the U.S. dollar because there is no actual physical currency. Small businesses like bitcoins because they alleviate credit card fees. Physical currency, such as the dollar, is managed by the US Federal Reserve, which can print more money or withdraw currency from circulation. In contrast, bitcoin is not linked to a central bank nor regulated by any state.

Where Did Bitcoin Come From?
On 18 August 2008, the domain name bitcoin.org was registered. Later that year, a link to a paper authored by a mysterious, anonymous person using the alias Satoshi Nakamoto titled Bitcoin: A Peer-to-Peer Electronic Cash System was posted to a cryptography mailing list. The paper showed how a peer-to-peer network to generate “a system for electronic transactions without relying on trust.” Bitcoin officially came into existence on January 3, 2009.

How Much Is Bitcoin Worth?
The price of bitcoin is regulated by what people are willing to pay for it. After entering the mainstream in 2009, its price rose only slightly over the years. Bitcoin was worth $2 in December 2011, $3 in December 2012 and saw rapid increases in early 2013 when it rose to $153 and then to $800 later that year.

Bitcoin’s worth dropped down to $300 in December 2014 before experiencing a decline and a steady rise and decline in price over the next four years, remaining between $500 and $1,000.

In 2017, Bitcoin’s worth continued to increase, and on January 3, the price rose above $1000 for the first time. The price had doubled by May and again by August. By November, it was worth almost 10 times its value in January 2017 and climbed to more than $11,000 for the first time on November 29 2017. Bitcoin’s price changes can be followed here.

How Can I Get Bitcoins?
First, uses need to get a “digital wallet,” basically an online bank account in the cloud or on a user’s computer. That digital wallet allows users to send and receive Bitcoins, pay for goods and services or simply save their money.

After obtaining a wallet, you can buy Bitcoins on exchanges or directly from other people. They can be purchased with cash, debit cards, via wire transfers or with other cryptocurrencies in whole or fractions of one Bitcoin.

Five Reasons to Avoid Payday Loans

August 21, 2018

The lure of quick cash from payday loans may seem like an easy solution to money shortages during a time of need. Also called check loans or cash advances, the borrowed money is secured by your next work paycheck or government benefit check.

To qualify, borrowers provide personal, financial, benefit and employment information. And in a few, short minutes, the cash is available via paper check or deposited directly into your checking account within 24 hours. Payday loans may seem like an attractive option at first glance, but truth is, they may actually push you further into financial bind in the long run. Below are five good reasons to avoid payday loans at all cost.

High Interest Rates
The average interest rate on a biweekly loan is 15%. Most payday loans are renewed or rolled over within the first two-week period, making the interest rate 30%. If the loan is renewed every other week for a year, the interest would 15% interest would be multiplied by 26 weeks, ballooning the interest to a whopping 360% per year.

Hidden Fees
Buried deep within the fine print of payday loans are the hidden fees. Many lenders asses a $17.50 charge for every $100 borrowed on top of the loan capital and interest rates. These fees can swell up to a cap of $300. So before signing up for a payday loan, be sure to read the fine print to know exactly what you’re getting into.

Banned Or Tightly Regulated in Many States
Because payday loan companies have been accused of taking advantage of borrowers who can’t get a loan anywhere else and trick them into higher interest rates and ridiculous fees, payday lenders are illegal or tightly monitored in 18 states.

Require Access To Bank Account
It may seem like a good idea to have payments automatically drafted from your bank account. But if you fall behind, your balance continues to grow, and they won’t stop drafting the money. If the money is not available in your account, this can cause overdraft fees from your bank.

May End Up In A Cycle
According to Center for Responsible Lending research, 76% of payday loans are used to pay off previous payday loans. The nonprofit consumer group also reported that on average, borrowers stay in debt for more than six months.

How to Deal with Debt Collectors

August 21, 2018

There’s nothing more aggravating than having debt collectors hound you early in the morning when just waking up, at work or during dinner time with your family. The constant annoyance of your phone ringing from those pesky and persistent parasites are enough to either drive you insane or drop your head from the shame of being constantly reminded that you failed to pay back a debt.

These agencies are known to be intrusive, belittling, harassing and intimidating in their efforts to collect money. While the best way to get the collection hounds off your back is to simply pay back all your debts on time, financial hardships unfortunately can sometimes make this difficult if not impossible. So if you find yourself the target of a collection agency, remember that you have rights and you have options.

Make Sure the Company is Legitimate Before Paying any Money
In April 2017, MarketWatch.com reported that scams were up nearly 60% from the previous year. According to the site, an estimated one in every 10 American adults lost money in a phone scam just last year, with each scam victim losing $430, totaling about $9.5 billion overall. That was an increase of 56% from the 2015 survey, when victims on average lost $274 each.

Keep this in mind when a collection agency contacts you. There are scams where con artists pose as debt collectors to trick you into sending them money. Collection agencies are legally required to prove that you owe them money before you have to pay. So don’t pay them a dime before verifying who they are.

Collect All of the Agency’s Information
If a debt collector calls, write down the name of the collection agency, the name of the person speaking to you, and the amount owed. Do this every time you speak with an agency. Collectors must disclose all of this information to you according to federal law.

Keep all letters sent from the agency. Make copies of all letters that you send the agency, and send via certified mail and request to be notified when successfully delivered. This will scare off potential con artists and help your case should you wind up in court.

Record Conversations
Debt collectors will tell you almost anything to make you pay your debt, so it would be a good idea to record all telephone correspondence between you and the collection agency. Twelve states (California, Connecticut, Florida, Illinois, Maryland, Massachusetts, Michigan, Montana, Nevada, New Hampshire, Pennsylvania and Washington) require consent from all parties when recording telephone conversations.

Even in states where it is not required, it is a good idea to tell the collector that the call is being recorded, as they are less likely practice unscrupulous tactics.

Do Not Divulge Any Personal Information
Debt collectors may tell you that your personal information is required, but this just is not true. Do not divulge banking information or place of employment. Don’t even send a personal check because this provides them with your banking information.

Also, make sure all of your social media pages private and accessible to friends only, and don’t approve any friend requests from people you don’t know. If a debt collector finds your Facebook page or LinkedIn profile is public, your place of employment and other personal information may be used against you.

Try to Strike a Deal
A debt collector’s job is to collect as much money owned as possible, so at first contact, they’ll try to get you to pay the debt in full, but don’t be afraid to negotiate. Oftentimes, they are willing to take less. So start with a low number and offer to pay 10% of what is owed. They more than likely won’t accept the offer, so try to settle between 30% and 50% of the full debt.

Get Everything in Writing
After striking a deal with the collection agency, demand any agreement in writing and signed by a representative of the agency before sending any money. Keep a copy of the agreement just in case there’s a dispute regarding the arrangements

Learn the law
Collection agencies are regulated by the Fair Debt Collection Practices Act, and several practices have been banned. Prepare yourself before dealing with debtors by researching the laws. These illegal practices include calling before 8 am or after 9 pm in your local time zone, using obscene or abusive language and threatening to take property or garnish your paycheck without going through the court system.

How to Dispute Errors on Your Credit Report

August 21, 2018

Let’s face it. Nobody is perfect, and even your credit report can fall victim to imperfections. Your credit report could be a deciding factor in obtaining a credit card, landing that new job, buying a house or having utilities turned on. Many businesses use your credit report to make determinations about your credit worthiness. So it is important that your credit report is accurate. Any deficiencies on your credit report could cause higher fees, deposits and interest rates, as well as possibly being declined.

According to a 2012 study by the Federal Trade Commission, about 25% of consumers found errors on their credit reports. The same study concluded that one in five consumers had errors that a credit bureau corrected after a dispute had been made. Anything from inaccurate late payments, a falsely reported car repossession or unpaid balances that are not yours could damage your credit report. See below for steps in having the credit bureaus to remove incorrect items from your credit.

Online
The quickest, easiest and most convenient way to correct an inaccuracy on your credit report is via the online Credit Report Dispute process at https://dispute.transunion.com. A drawback to disputing items online is that you can only get the results and check the status online. If documents are needed as proof, you will still have to mail them in to the credit-reporting agencies.

Should you decide to dispute an item online, use these links to the major credit bureaus for submitting an online credit report dispute:

Equifax
Experian
TransUnion

By Mail
Snail mail may not be the speediest method to disputing inaccuracies on your credit report, but it does give a paper trail between you and the three major credit-reporting agencies. Credit bureaus have 30 days to investigate and make a decision regarding your credit report dispute or 45 days if additional information is needed as proof during the investigation process. If they don’t respond within the allotted time, you can sue them in Federal court for up to $1,000.

When disputing a credit report error by mail, write a letter to each agency explaining what should be removed and what makes the information inaccurate. Include any proof of the error, and send via certified mail to show when the creditor receives it and prove that you made the dispute. See below for dispute addresses for the three major credit bureaus:

Equifax
P.O. Box 740256
Atlanta, GA 30374

Experian
P.O. Box 4500
Allen, TX 75013

TransUnion LLC
Consumer Dispute Center
P.O. Box 2000
Chester, PA 19016

Over the Phone
When calling credit bureaus to dispute items on your credit report, be sure to keep a record of when you called, with who you spoke and any information given to you regarding your dispute. You may want to record the conversation as well. Just be sure to tell the other party that the call is being recorded. See below for telephone numbers of the three credit bureaus.

Equifax: 1-866-349-5191
Experian: 1-888-397-3742
Transunion: 1-800-916-8800

The Difference Between Secured vs Unsecured Cards and Which Is Better For You

August 21, 2018

Secured Credit Card
A secured credit card is funded by a cash deposit supplied beforehand by the cardholder. The amount deposited onto the card is your credit limit, which can be increased by adding more funds after demonstrating a good payment history. The credit line with secured credit cards will be from 70% to 100% of the security cash deposit.

Depending on the credit card issuer, the deposit will be required for a limited time, such as one year. If the payment history with the credit card is good for a select period of time, your credit limit may be increased, or the credit card issuer may offer an unsecured credit card.

Unsecured Credit Card

Unsecured credit cards have no collateral associated with them. They are primarily intended for individuals with good or excellent credit with the credit limit being based on the cardholder’s credit score, credit report and payment records. Many unsecured credit cards offer rewards such as cash back, miles, and points.

Which Is Better For You?

Both cards have their own benefits. If you have strong enough credit, an unsecured card just may be the way to go. They generally have lower fees, higher credit limits, rewards and perks. On the other hand, however, unsecured cards may actually come with higher fees and interest rates for cardholders with less-than-perfect credit.

Individuals who have money management issues or are trying to build or rebuild credit may want to consider a secured credit card. They can actually establish credit for newcomers and improve credit for cardholders dealing with bad credit. In general, secured credit cards are designed for individuals with poor credit or no credit at history at all.

When choosing a secured credit card, be sure that your secured card activity is being reported to the credit agencies.

Unsecured Credit Card
Unsecured credit cards have no collateral associated with them. They are primarily intended for individuals with good or excellent credit with the credit limit being based on the cardholder’s credit score, credit report and payment records. Many unsecured credit cards offer rewards such as cash back, miles, and points.

Which Is Better For You?

When choosing a secured credit card, be sure that your secured card activity is being reported to the credit agencies.