Viewing entries tagged
hope4usa

3 Ways to Keep Black Friday from Busting Your Budget

Comment

3 Ways to Keep Black Friday from Busting Your Budget

Depending upon your personality, you likely either look forward to the excitement of Black Friday with gleeful anticipation or you dread the Black Friday hype and plan to avoid it like the plague. If you are of the sect of people who loath Black Friday to its very core then this article is not for you. After all, if you have no interest in shopping on Black Friday then there is zero chance of Black Friday wrecking your budget to begin with, right?

However, if you get a kick out of the hustle and bustle and deal-seeking fun, you are exactly the person who needs to read this article. Check out the following Black Friday mistakes to avoid and you will still be able to enjoy your shopping experience without having any regrets about bad financial decisions in the morning!

1. When it comes to your shopping budget, deciding to “wing it” is a bad idea!

There is no faster way to start a money management disaster than to embark upon the busiest shopping day of the year without a solid plan in place. First, you should determine how much money you can afford to spend after your monthly bills have been paid. Once you have calculated what the number should be, determine to stick to it.

Some savvy shoppers will leave their credit cards at home and only bring along cash to ensure that there is no temptation to spend more than they had initially planned. Personally, I am not a huge fan of shopping with cash (if you lose your cash you are in big trouble where if you lose a credit card you can call the bank have a shiny new piece of plastic issued). So, if you believe you have the discipline, set a budget for yourself and shop with your card. (Plus, by using a rewards card or a cash back card, you might earn some extra bonuses this way as well.) However, if you don’t trust yourself not to overspend on a card then cash might be the best way to go.

2. Making your list…it’s more important than you think.

Once you have determined how much you can afford to spend on Black Friday, it’s time to write down everyone for whom you wish to buy a Christmas present during your shopping spree. Shopping without a list sets you up for failure.

Let’s say that you have a budget of $500 for Black Friday shopping. If you are shopping without a list you could potentially spend the $500 on 10 people, only to remember two more people you forgot to purchase a gift for after you get home. It is also a good idea to put yourself on your shopping list. Putting yourself on the list allows you to have a little self indulgent fun without going overboard on impulse purchases.

3. Thinking that you can find the best deals on your own is a mistake.

When it comes to Black Friday deal hunting, technology is your friend. There are countless blogs, articles, and apps which can help you find the best ways to stretch your holiday budget to the max. You can follow couponers and deal hunters on social media sites like Facebook, Twitter, and Instagram.

Don’t forget to check out the app store on your smart phone or tablet for even more money saving help. Apps like RedLaser and ShopSavvy can help you to compare prices on a particular item in order to make sure you are getting the best deal. Finally, don’t forget to check RetailMeNot.com and other similar sites before you step one foot outside of your front door on Black Friday to find coupons and special offers for all of your favorite stores.




Michelle Black is an author and a credit expert with nearly 2 decades of experience, the credit blogger at HOPE4USA.com, a recognized credit expert on talk shows and podcasts nationwide, and a regularly featured speaker at seminars on various credit and financial topics. She is an expert on improving credit scores, credit reporting, correcting credit errors, budgeting, and recovering from identity theft.  


Comment

Why You Should Never Pay to "Rent" a Tradeline

Comment

Why You Should Never Pay to "Rent" a Tradeline

The desire to earn better credit is not only understandable, it is also incredibly smart. The condition of your credit will have a big influence over your financial life. Want to purchase a home or vehicle? Your 3 credit reports and scores play a big role in your ability to qualify for a loan and help determine the rate you will be offered if you are approved. Applying for a new job or promotion? Your credit reports might play a role again. In fact, the condition of your credit could be considered whenever you take out insurance coverage, open a new mobile phone account, and in many more situations than you probably ever believed possible.

Hopefully you already understand the importance of earning good credit and you are working to try to repair the damage from any past credit problems you may have encountered. Yet the truth is that the road back to healthier credit is not always a quick journey. You can certainly do things to help speed the process along such as establishing new, positive accounts and perhaps working with a reputable credit repair professional. Even so, it may require a little patience and discipline on your part before you can expect to earn good credit again.

Tradeline Rentals

Because credit is so important and because improving your credit can sometimes be a slow and tedious process (especially if you are working to repair your credit on your own), you may find yourself tempted to take a few shortcuts along the way. The temptation is understandable, but taking shortcuts to try to improve your credit can actually be quite dangerous. One such shortcut which you should avoid at all costs is known as tradeline renting.

There is no question that being added onto someone else's credit card account as an authorized user has the potential to help your credit scores. If a loved one adds you onto an existing, well managed credit card account (no late payments, low or $0 balance) the impact upon your personal credit scores might be very positive once the account shows up on your credit reports. If the account has been opened for a while (aka it is "seasoned") and if the credit limit on the account is high then the positive credit score impact may be even more significant.

There is certainly nothing wrong with being added as an authorized user onto a credit card belonging to a friend or family member. As already mentioned, the authorized user strategy can potentially be a very effective step toward building or rebuilding your credit. If you are considering gaming the system by renting or "piggyback" on a stranger's credit card account as an authorized user, however, you could possibly find yourself in hot water, legally speaking.

The tradeline renting scam comes in a few different flavors. Typically it is a service which is facilitated by a broker or a middle man who, for a sizeable fee, will connect you with a stranger who has older or seasoned credit card accounts which are in good standing. Once you pay your fee, the stranger adds you onto their credit card account as an authorized user. The middle man pays the stranger with good credit a small portion of the fee collected from you and then puts the remainder in his own pocket.

It is arguable whether or not the practice itself of paying a stranger to add you as an authorized user is illegal. However, if you apply for any new loans after paying to be added to a stranger's credit card account then there is no question that you could run the risk of being charged with bank fraud. Plus if you applied for your new loan over the phone or via mail, you may risk being charged with mail fraud or wire fraud as well.

Additionally, FICO's newer credit scoring systems have logic designed to detect piggybacking scams. As a result, even if you pay to be added onto a stranger's account, you might receive no benefit from the tradeline whenever a lender pulls your credit scores. With so many legitimate means of repairing poor credit, it simply is not worth the risk of renting a tradeline in an attempt to speed up the process.

CLICK HERE to schedule a no-obligation credit analysis with a HOPE4USA credit expert and discover legitimate ways to work toward repairing your credit problems.





credit-expert-michelle-black

Michelle Black is an author and a credit expert with nearly 2 decades of experience, the credit blogger at HOPE4USA.com, a recognized credit expert on talk shows and podcasts nationwide, and a regularly featured speaker at seminars on various credit and financial topics. She is an expert on improving credit scores, credit reporting, correcting credit errors, budgeting, and recovering from identity theft.


Comment

Will Increasing a Credit Limit Help Your Credit Scores? 

Comment

Will Increasing a Credit Limit Help Your Credit Scores? 

When it comes to improving your credit, there are a lot of different strategies which can help you to reach your goals. Of course, paying your bills on time, every time is the first place you should start. You can also work with a credit repair professional to help try to clean up inaccurate and unverifiable information off your credit reports. You may be able to pay down credit card debt to bring about a positive credit score increase as well. However, there are also some lesser known credit improvement strategies which might surprise you.  

How Will a Credit Limit Increase Impact Your Credit Scores?

If you are approved for a credit limit increase, the higher limit will often have a positive impact upon your credit scores. However, this is not always the case. Determining whether or not a credit limit increase is likely to increase your credit scores is going to depend upon a variety of factors. Let's walk through them together.  

1. Will a credit limit increase lower your revolving utilization ratio?

Credit scoring models like FICO and VantageScore are built so that they pay a lot of attention to the relationship between your reported credit card balances and your account limits. This relationship is known as your revolving utilization ratio. Here is a quick example to show how revolving utilization is calculated:

  • Original Credit Limit: $5,000

  • Account Balance on Credit Report: $1,000

  • Revolving Utilization Ratio: $1,000 (Balance) ÷ $5,000 (Limit) = 0.20 X 100 = 20%

The lower your revolving utilization falls, the better the impact is for your credit scores. Naturally, paying off your credit card balances is probably the best way to achieve a lower revolving utilization ratio. However, if you cannot afford to pay down your credit card debt sufficiently, a credit limit increase might lower your revolving utilization as well. Here's how it works:

  • Increased Credit Limit: $10,000

  • Account Balance on Credit Report: $1,000

  • Revolving Utilization Ratio: $1,000 (Balance) ÷ $10,000 (Limit) = 0.10 X 100 = 10%

As you can see in the example above, the revolving utilization ratio was cut in half simply by increasing the credit limit on the account. This would be very likely to have a positive credit score impact.

2. Can a credit limit increase hurt your credit scores?

Generally a credit limit increase will not harm your credit scores. However, if your credit card issuer wants to check your credit report in order to review your request for a limit increase (a common requirement) then a hard inquiry would be added to your credit file. If your request for a limit increase is denied (typically due to credit problems), then you will have undergone a hard inquiry with no upside.

Hard inquiries have the potential to damage your credit scores. Of course, you should keep in mind that not every hard inquiry automatically has a damaging effect upon your credit scores and, even when they do, the impact is typically minor. If your request for a credit limit increase is approved and the result is a lower aggregate revolving utilization ratio, the overall result for your credit scores will still probably be positive in spite of the new inquiry.

Managing Your New Credit Limit Increase

It is important to remember that while a well-managed credit card account can potentially be great for your credit scores, credit card debt is another story. Credit card debt can be both expensive and can damage your credit scores, even if you make all of your monthly payments on time. If you request a credit limit increase as a strategy to help boost your credit scores, you will have to be extra vigilant and commit to not charge up additional debt. Otherwise, or you could find yourself in a difficult situation to manage in the not-so-distant future.  





credit-expert-michelle-black

Michelle Black is an author and a credit expert with nearly 2 decades of experience, the credit blogger at HOPE4USA.com, a recognized credit expert on talk shows and podcasts nationwide, and a regularly featured speaker at seminars on various credit and financial topics. She is an expert on improving credit scores, credit reporting, correcting credit errors, budgeting, and recovering from identity theft.


Comment

Why Do the Credit Scores I Pull Look Different Than the Ones My Lender Pulls?

Comment

Why Do the Credit Scores I Pull Look Different Than the Ones My Lender Pulls?

“Help! I’m really confused! I got all 3 of my credit scores online last week and they looked really good. Today I applied for a mortgage and the scores the lender pulled look totally different. All 3 scores are about 50 points lower than the scores I saw online. Thankfully, my scores were still high enough to get a mortgage loan, but why are the scores so much lower today?”

In the credit world there are few things which frustrate and upset consumers more than discovering the sometimes vast difference between consumer credit scores and the credit scores used by lenders. Popular TV commercials for credit monitoring websites often confuse consumers and lead them to believe that they have only one credit score. However, the truth is that there are actually hundreds of different types of credit scores. The idea that you have one "official" credit scores is a complete myth.

Consumer Scores Vs. Lender Scores

While there are hundreds of credit scores available, most of these scores can be boiled down into one of 2 categories - consumer scores or lender scores. (Insurance companies often use credit based insurance risk scores as well, but for the purpose of this article those scores will fall into the "lender" category as well.) Consumer scores are scores that are accessible to you individually. You can purchase these scores from the credit bureaus directly, from FICO directly, or from a host of consumer credit monitoring websites. Some websites will offer you free credit scores in exchange for signing up for a trial offer of their credit monitoring services. Other websites will offer you a free score from 1 of the 3 major credit bureaus (not all 3) in exchange for your email address and the right to advertise financial services to you. CLICK HERE if you would like to compare websites where you can access your 3 consumer credit scores.

Lender scores are almost always some version of a FICO score. There are some lenders which have begun using VantageScore credit scores (a score created by the credit bureaus themselves) in recent years, but FICO is still the most popular lender score in use today by a landslide. Both FICO and VantageScore have released multiple generations of their credit scoring software. Additionally, FICO scores come in many varieties (FICO Mortgage Score, FICO Auto Score, FICO Personal Finance Score, FICO Installment Loan Score, etc.) and each different FICO score variety typically has different versions in use as well. If today you were to pull a copy of your consumer credit scores, have a mortgage loan officer pull your credit scores, and have an auto lender pull your credit score then you have almost a 100% chance of getting a different set of numbers every time. Credit scores can vary pretty wildly depending upon which credit scoring model is being used to calculate them.

Focus On Healthy Credit

If you are feeling frustrated or overwhelmed as you try to keep track with all of the different possible credit scores, you are not alone. Remember the statement above revealing that you have hundreds of credit scores? It would be practically impossible for a consumer to keep track of each one of these scores individually. Instead of spending time and energy focusing on the numbers, it is much better to focus on the health of your credit as a whole.

The fact of the matter is that all credit scores are based upon the same data. Your credit scores are calculated from the information which is contained in your credit reports. (Don't forget, you can get a copy of all 3 of your credit reports, without scores, completely free once a year at www.annualcreditreport.com.) If your credit reports show that you routinely make late payments on your accounts, your scores will suffer regardless of who pulls them or which credit scoring model is used to calculate them. If you have clean credit reports with no collections, no late payments, and low credit card balances then all of your many scores will likely be in great shape. You may have hundreds of scores, but you only have 3 credit reports. You may not be able to control your credit scores, but you can absolutely control your credit management habits.  


michelle-black-credit-expert

Michelle Black is an author and a credit expert with nearly 2 decades of experience, the credit blogger at HOPE4USA.com, a recognized credit expert on talk shows and podcasts nationwide, and a regularly featured speaker at seminars on various credit and financial topics. She is an expert on improving credit scores, credit reporting, correcting credit errors, budgeting, and recovering from identity theft.




Expert Credit Advice:



Comment

Where Do Credit Scores Come From?

Comment

Where Do Credit Scores Come From?

Credit scores can affect your life in many important ways. First, anytime you apply for a mortgage, car loan, credit card, or financing of any kind, your credit score will typically be looked at to determine whether you are approved or denied for your financing application. If you are approved, your credit scores are looked at again to determine the type of interest rate and terms you will be offered. Credit scores are often the #1 factor considered whenever you apply for a loan.

Since credit scores are generally the first key to loan approval, it is important to understand where your credit scores come from and how they are calculated. There are 3 major credit bureaus in the United States: Equifax, TransUnion, and Experian. If a lender were to pull your credit report and score from each of the 3 bureaus, all 3 of those scores would likely be at least a little different.

There is more than one type of credit score available as well. In fact, there are hundreds. Currently, the type of credit score brand which is most commonly used by lenders is the FICO Score (though VantageScore continues to gain ground in the marketplace).

FICO Scores range from 300 - 850 with higher credit scores indicating less credit risk. The following chart shows the basic makeup of how your FICO credit scores are calculated:

hope-4-usa-credit-scores-explained

Payment History, which considers factors pertaining to how you have managed your credit obligations both currently and in the past, accounts for 35% of your FICO Scores. This category can also be described as "the presence or absence of derogatory information."

If you have a history of making late payments on your financial obligations, your credit score will almost certainly be on the lower end of the spectrum. It may sound crazy, but some late payments could potentially damage your credit scores more than any other factor on a credit report including bankruptcy, foreclosure, or repossession (especially if the late payment is severe, recent, and if the account is currently past due).

Amounts Owed accounts for 30% of your FICO Scores. The primary factor considered within this category is your revolving utilization ratio. FICO's scoring models will consider the amount of credit card debt (aka balances) on your credit report and will compare it to your available credit limits. This higher your debt to limit ratio climbs on your reports, the worse the impact will be upon your scores.

Here is an example of how revolving utilization is calculated. If you have a credit card with a $500 limit and your credit report shows a $500 balance on the account, your utilization ratio is 100%. At 100% utilization your credit scores are practically guaranteed to be impacted negatively. However, keep that same credit card account paid off and your credit scores will almost certainly receive a boost. High credit card balances can significantly lower your credit scores, even if you pay every single monthly payment on time.

Length of Credit History makes up 15% of your FICO Scores. FICO considers the average age of your credit lines as well as the age of your oldest account to determine how many points will be awarded to your credit score for this category.

The older the accounts appearing on your credit reports, the better. Merely opening a new account can potentially lower your credit scores, even if you have never missed a payment on the account – so proceed with caution when applying for new credit. You do not have to be afraid to open new credit; however, you should probably develop the habit of only opening new credit when really necessary.

New Credit makes up 10% of your FICO Scores. One of the primary factors considered within this category is how often you apply for new accounts.  Every time your credit report is pulled as part of an application for financing a record of the pull, known as a "hard inquiry," is added to your credit report(s).

Hard inquiries have the potential to impact your credit scores negatively. However, a “soft inquiry” of your credit report (such as requesting a copy of your own personal credit report) does not hurt your credit score at all.  If you have not reviewed your credit reports in a while, you are entitled to a free copy of all 3 of your reports every 12 months from www.annualcreditreport.com. Checking your reports at least several times a year for errors is highly recommended.

Types of Credit Used accounts for the final 10% of your FICO Scores. To maximize your scores in this category it is important to have the right mixture of account types on your credit reports. FICO rewards consumers who show that they have experience managing a variety of account types (i.e. mortgage accounts, revolving accounts, installment accounts, student loans, etc.). The more diverse the accounts on your credit reports the better your scores will fare.

Have specific questions about your credit reports? Our caring credit experts are here to help. Please contact us via email or call 704-499-9696. We would love to hear from you!

Don't forget to follow us on Facebook and Twitter!


michelle-black-credit-expert.jpg

Michelle Black is an author and a credit expert with nearly 2 decades of experience, the credit blogger at HOPE4USA.com, a recognized credit expert on talk shows and podcasts nationwide, and a regularly featured speaker at seminars on various credit and financial topics. She is an expert on improving credit scores, credit reporting, correcting credit errors, budgeting, and recovering from identity theft. .







Comment