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3 Ways to Keep Black Friday from Busting Your Budget

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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.  

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Will Increasing a Credit Limit Help Your Credit Scores? 

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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.

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3 Ways to Keep Black Friday from Busting Your Budget
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Preparing Your Credit for a New Mortgage

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

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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:

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Preparing Your Credit for a New Mortgage

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Preparing Your Credit for a New Mortgage

So you are ready to take the plunge and apply for a new mortgage loan this year? Great! Congratulations on making the decision to become a homeowner. With low interest rates, tax advantages, and a host of other benefits that come along with purchasing a home, you have about a million reasons to break free from the shackles of renting.

You can set yourself up for success during your entire home buying experience by knowing what to expect ahead of time. Most importantly, you should be sure that your credit is in tip top shape so that you can qualify for the most attractive rates and terms available on your new mortgage. Check out these 5 steps to help you get started.

1. Check Your Credit

There’s nothing worse than filing out a mortgage application only to find that some unwanted “surprises” have shown up on your credit reports. Unfortunately, this is a very common problem. However it doesn’t have to be since you can access your own credit scores and reports online 24/7. Plus, contrary to a popular credit myth, checking your own credit does NOT harm your credit scores whatsoever.

CLICK HERE for a list of great resources where you can access your 3-bureau credit reports and scores. Finding out exactly what is on your credit reports prior to your loan application should definitely be the first item on your “to do” list during the home buying process.

2. Dealing with Surprises

If your credit reports were all 3 squeaky clean when you checked them in step 1, then skip down to step 3. However, if you found errors or blemishes on your credit reports then you may have some work to do before applying for a mortgage.  Remember, you have the right to dispute inaccurate and unverifiable accounts with the credit bureaus. You can dispute accounts on your own, but you also have the right to work with a professional if you are too busy or feel overwhelmed by the process. CLICK HERE to schedule a no-obligation credit analysis to develop a professional plan to help you work toward cleaner credit reports.

3. Optimize Your Scores

Even if you have no errors or derogatory items on your credit reports (i.e. collection accounts, charge-offs, tax liens, judgments, etc.), it may still be possible for you to improve your credit scores. Take a long hard look at your credit card balances. Paying your credit cards down to $0 can potentially have a very BIG impact upon your scores. (CLICK HERE to read “The Perfect Credit Card Balance.”)

Can’t afford to pay off all of your credit cards? You still have options. Paying down even a few of your cards to zero might still be beneficial to your credit scores. Plus, you can always consider a debt consolidation loan to transform that score-lowering, revolving credit card debt into much more credit score friendly debt – an installment loan.

4. Avoid Mistakes!

When preparing to apply for a mortgage, you need to be a credit boy scout. You don’t want to make any credit mistakes which could result in lower credit scores and a loan denial. Some of the most common mistakes you will want to avoid include making late payments on existing accounts, charging up your credit card balances, opening new accounts (that new car loan needs to wait!), and having your credit reports pulled excessively by lenders.

5. Monitor Your Credit Reports and Scores

There is no better time to keep a close eye on your credit scores than while you are preparing to apply for a mortgage. However, with so many credit monitoring options available, it can be difficult to choose. Keep in mind that a credit monitoring service which allows you to keep an eye on just one credit bureau and one credit score is not going to be enough. After all, when you apply for your mortgage the lender is going to take a look at all 3 of your credit scores and all 3 of your credit reports – Equifax, Trans Union, and Experian. CLICK HERE for a list of several different 3-bureau, 3 score credit monitoring services to see which one is the best fit for you.

Buying a new home is an incredible and exciting experience. However, credit problems during the mortgage application process can often turn what could be a wonderful experience into a nightmare. Follow these 5 steps above and set yourself up for mortgage success. It can be tempting to take shortcuts, but putting in the work on your credit ahead of time will pay off every time.

michelle-black-credit-expert

Michelle Black is an author and a credit expert with over a decade 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. You can connect with Michelle on the HOPE4USA Facebook page by clicking here.

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Credit Scams You Should Avoid

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Credit Scams You Should Avoid

Poor credit can lead to a lot of painful and embarrassing moments. If you are currently struggling with credit problems then you already know just how miserable bad credit can be. Credit problems can make it difficult to secure a place to live, to finance a vehicle, to qualify for a credit card or loan, and even to do something as simple as opening a new utility account without a sizable deposit.

Unfortunately, scammers are very aware that bad credit makes life hard too. They know that many consumers are absolutely desperate to change their credit situations and they eagerly try to prey upon this desperation. Thankfully, you can help to protect yourself from these con artists by learning a little more about some of the most common credit scams you need to avoid.

The New Credit Identity Scam

One of the most popular credit scams involves the practice of paying someone to create a "new" credit identity for you. On the surface, it is understandable why the idea of a fresh start might sound attractive to you. Unfortunately, what a scammer will not tell you is that by using a "new" identity you could actually be guilty of committing a number of different crimes.

The new credit identity scam, also known as file segregation, typically involves a few steps. First a fraudulent company, likely pretending to be a credit repair outfit, will offer to sell you a new credit identity number (typically an EIN number or a CPN number) which you can use in place of your social security number on future credit applications. By using this alternative number you will be creating a separate or segregated credit file with each of the credit bureaus which will supposedly replace your old, damaged credit files. Yet not only is this file segregation scheme typically illegal, it can also be expensive and ineffective.

Fees for new credit identity services often run into the thousands of dollars, although the scammer will probably try to argue that the fee is a small price to pay for an instant fix to all of your credit woes. Be careful not to be fooled by such tactics.

Additionally, when you use an EIN or CPN number in place of your social security number on a credit application you are likely guilty of bank fraud. If you submitted a fraudulent application over the phone, online, or via mail then you might be guilty of wire fraud or mail fraud as well. Furthermore, that EIN or CPN number you thought you were purchasing could actually be a real social security number which has been stolen from someone else. (Are you really surprised that your friendly neighborhood scammer might be an identity thief as well?) If you use someone else's social security number on a credit application then you might just be guilty of committing identity theft yourself.

The Tradeline Rental Scam

Piggybacking is a term which refers to the process of being added to someone else's existing credit card account as an authorized user. Becoming an authorized user on someone else's credit card account can sometimes be a wise part of your overall credit improvement strategy. If you are added onto an older, well managed credit card account it certainly has the potential to help improve your credit scores when (and if) that positive account shows up on your credit reports. However, the authorized user strategy is only really safe and effective when done with someone whom you know personally.

Tradeline renting describes the process of paying to piggyback on a stranger's credit card account in an attempt to trick the credit scoring system. Typically you pay a middle man (most likely a sizable fee) who will then act as an agent to connect you with someone who is willing to add you onto their account as an authorized user. The bad news if you fall for the tradeline renting scam is that you could be guilty of bank fraud and a number of other associated crimes as well. To add insult to injury, newer versions of FICO's credit scoring models have been designed with logic that helps to detect fraudulent tradeline renting. So, not only can tradeline renting be expensive and illegal, there is a chance that it might not even work. 

Legitimate Credit Help

Although you should be careful not to fall for credit scams, the good news is that there are legitimate credit repair professionals who may be able to help you with your credit problems. Remember, a trustworthy credit repair company will never ask you to change your identity, rent a tradeline from a stranger, or to pay upfront fees for services.

CLICK HERE or call 704-499-9696 to schedule a no-obligation credit analysis with a HOPE4USA credit expert today.

michelle-black-credit-expert

Michelle Black is an author and leading credit expert with a decade and a half of experience, a recognized credit expert on talk shows and podcasts nationwide, and a regularly featured speaker at seminars across the country. She is an expert on improving credit scores, budgeting, and identity theft. You can connect with Michelle on the HOPE4USA Facebook page by clicking here.

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