Category — Credit

Surfing through YouTube this morning I came across an interesting video by credit expert Erica Sandberg. If you’re looking for a few tips on how to improve your credit then check out this video.

Do you like your [tag]credit cards[/tag]? Do you use them for a lot of your [tag]spending[/tag]? Do you carry a [tag]balance[/tag] on your cards each month?

Let’s just start with some numbers to get our brains in gear. The average American has around $9,312 in credit card [tag]debt[/tag] (USA Today.)

It doesn’t take long to accumulate that. Some holiday shopping, a few nice restaurants and a family vacation will rack up the credit card debt quickly. Doesn’t seem like much?

Now what if we only pay the [tag]minimum payment[/tag]? The minimum payment on most cards is typically 2% of the total balance. That puts our starting payment right around $185 per month. Keep in mind that this amount will decline as the balance declines. For our calculations we’ll use an average credit card rate of 13%.

Alright, if we were to only pay the minimum payment on our credit card, we would pay the last bill 291 months from today. That’s 24 years and 3 months away! Our final [tag]interest[/tag] charge? $10,087.94. So our vacation just doubled in cost!

Now it really gets extreme if you have a high interest rate on your credit card. [Read more →]

So what’s the deal with a [tag]credit score[/tag]? What does it mean? How is it determined? How does it affect you? Everywhere I go there are commercials talking about [tag]credit[/tag] scores. Most people know that the higher your credit score the better interest rates you can get on credit cards, car loans, and mortgages. If you want a general overview of credit score check out [tag]myFICO[/tag].

What most people don’t know is how their score is determined and how to raise their score.

The credit score, also known as a [tag]FICO[/tag] score, is a three digit number used by all 3 credit reporting bureaus – [tag]Experian[/tag], [tag]Trans Union[/tag] and [tag]Equifax[/tag]. Credit scores generally range from 300 to around 900 (although I don’t think there are official limits.)

This number is determined from a number of factors which are a closely guarded secret held by Fair Issac and Co. Since I’m no expert in credit scores I’ll rely on HowStuffWorks explanation:

• 35% of the score is based on your payment history. This makes sense since one of the primary reasons a lender wants to see the score is to find out if (and how timely) you pay your bills. The score is affected by how many bills have been paid late, how many were sent out for collection, any bankruptcies, etc. When these things happened also comes into play. The more recent, the worse it will be for your overall score.
• 30% of the score is based on outstanding debt. How much do you owe on car or home loans? How many credit cards do you have that are at their credit limits? The more cards you have at their limits, the lower your score will be. The rule of thumb is to keep your card balances at 25% or less of their limits. [Read more →]