Category Archives for Credit

Paying bills every month can be pretty monotonous, yet overwhelming. If you have the responsibility of taking care of your own bills, you can definitely relate! Unfortunately, managing bill payments is an essential part of adult life.

Paying your bills each month is essential so continue to have the services you need and the credit you’ve earned without interruption. However, that doesn’t mean you are always on top of getting those bills paid.

How can you best manage recurring expenses?

These five commandments for managing bill payments can help you stay on track:

1. Focus on necessities first. In many cases, the challenge with bill payments comes from trying to manage expenses. You have a limited income, so you want to ensure the money is spent most efficiently. To do that, ensure you’re paying for necessities first.
• Since utilities like electricity and water are most important, ensure you take care of those before anything else.
•  In order to keep the roof over your head, be sure to allocate the correct portion of your earnings for the rent or mortgage payment.
•  If you feel like you’ll lose your mind without cable, how about just adjusting the package you have? Instead of 100 channels, why not cut it down to 50?
•  Look into getting things done without taking on an additional payment. Use your community center gym instead of the expensive club in the city.
2. Review bills for accuracy. You’d be surprised how often billing companies make mistakes! In order to pay only what you’re supposed to, constantly review your bills.
• If printed bills arrive in the mail late, switch to electronic versions. Those are usually available as soon as they’re generated.
•  Call the billing company to clarify any charges you’re uncertain about.
•  Document when you request to add or remove services.
3. Setup recurring payments. Sometimes the challenge lies in trying to remember when to pay bills. If that’s the case, and if the bill totals are usually the same each month, setup recurring payments.
•  Setup direct deposits from your bank account to the account of the billing company. You won’t have to worry about remembering when to pay. Just ensure there’s enough money in the account to cover the bills!
4. Pay bills online. If time is a real issue for you, avoid standing in line to pay bills. Many companies facilitate online payments. Make use of it!
5. Know your due dates. Being able to keep track of due dates can help you manage bill payments.
•  If the dates for different bills vary, you can know how to use your money. It’s not always necessary for you to pay all your bills at one time. Put your money to other uses as long as you know the money will be available before the bill is due.

These are pretty easy commandments to follow to effectively manage your bill payments. Remember it’s your responsibility to maintain a positive history of payments. Use these strategies and you’ll be surprised at how easy it can be!

Do you feel like your credit card debt is insurmountable? The good news is that, no matter how high the mountain appears, you can climb it and pull yourself out of the metaphorical hole you may find yourself in.

Here are some ways to tackle that debt and bring it down to size:

1. Only buy what you can afford. The best way to keep debt from becoming a problem is to avoid the problem altogether from this point forward. Rather than splurging on a fancy piece of electronic hardware, just wait and save up for it.
•  By staying within budget and paying off your bills every month, you don’t need to worry about debt piling up on top of you.
•  You can still get out of debt and feel the sweet relief of being debt free by changing your mindset from “having it now” to one of enjoying it even more when you have the money.
2. Pay off the lowest balance first. Financial advisor Suze Orman often advises people in debt to take care of the higher interest debts first. In general, this is a good way to go, however, if you have a credit card with a balance of only a couple hundred dollars, it would also be beneficial to knock that one off right out of the gate.
•  You can eliminate a whole payment, save on interest charges, and put that money towards another bill.
3. Prioritize bills by interest rate. In the long run, paying off the higher interest cards first will save you the most money. It’s usually the interest that keeps knocking you back. By taking out the higher interest cards, you’ll feel a greater sense of progress when paying your bills every month.
4. Consolidate. One of the more overwhelming aspects of being in credit card debt is constantly being reminded of it with so many bills from different cards. One way to fight back is to consolidate your debt. You can do this by either taking out a loan from a bank or transferring the balance to another card.
• If you recently got a new credit card, you can transfer a portion of the balance to that. This will save you a bit of interest since most cards will put that balance under the introductory rate.
• If you take out a loan, you can pay off several of the cards and reduce the amount of mail you receive. It’s less daunting psychologically to receive one big bill as opposed to a bunch of tiny ones.
5. Convert to cash and debit only. One of the best ways to keep yourself in debt is to keep using your credit cards. They’re convenient and it’s easy to justify their occasional use by saying that it’s only a soda or a tank of gas.
•  Those tiny charges add up quick! A dollar here, a few more there, and you’ll negate the payments that you’re making in a very short amount of time.
•  Paying with cash will help you develop new spending habits. By the time you get your debts paid down, you’ll have disciplined yourself to the point where you no longer put yourself in that situation. Debt is a problem that happens to nearly everyone at some point.

Even wealthy people find themselves overextended by debt.

Even if you’re working on a shoestring budget, it’s possible to pull yourself out of debt. With discipline, focus, and hard work, you can find yourself relieved of the mounting pressures

Your credit score not only determines whether or not you can get a credit card, mortgage, or auto loan, it’s also a critical factor in determining the interest rate you have attached to those items. A low credit score can cost a lot of money over your lifetime. 

Not everyone is aware of the many factors that determine a credit score. It’s easy to make assumptions that seem logical, but are actually false. Acting on incorrect beliefs is a sure way to make a critical mistake.

Save money and make your financial life easier by avoiding these seven credit destroyers:

1. Carrying a big balance on your credit cards. While having a lot of debt is never a good idea, using more than 30% of the available credit on your credit cards hurts your credit score.
   • For example, if your credit limit is $10,000, your score drops if your balance is over $3,000. This is commonly referred to as the “utilization ratio.” Keep yours under
2.  30%. Paying late is a huge factor in your credit score. Experts estimate that 35% of your credit score is determined by your payment history. Any late payments will lower your score.
3. Closing credit cards is a credit score killer. This is related to your utilization ratio. By closing a credit card, you lower the amount of credit that’s available to you. Your credit score is also sensitive to the length of your credit history.
4. Defaulting is an obvious credit score mistake. When you fail to pay back a loan you owe to a lender, you can lose as much as 100 points from your credit score. Make every effort to pay back your loans. 
   • If you’re struggling, contact the lender and attempt to make other arrangements. They can be very flexible if failing to do so means not getting their payments.
5. Applying for too much credit. Everyone needs to have some credit, but applying for too much has a negative effect on your score
   • Each time you apply for more credit, your potential lender makes an inquiry of your credit history.
   • Each of those inquiries lowers your credit score.
   • Avoid sending in every credit card offer that shows up in your mailbox.
6. Not having a credit card at all. Many people are getting rid of their credit cards in an effort to avoid debt. Unfortunately, this does nothing to help your credit score. 
   • Experts believe that the ideal credit score includes 2-3 credit cards. Credit diversity can account for as much as 10% of your credit score. 
   • Credit cards help to keep your credit history current.
7. Co-signing for someone else can be a mistake. Putting your credit on the line by co-signing for someone else is a huge risk. Their failure to stay current with the payments can destroy your credit score.
   • You’re equally responsible for that debt, so any late payments or defaults will show up on your own credit report.
   • You can even be subject to collections and lawsuits. If a lender won’t do business with them, you might want to reconsider before co-signing.

By simply avoiding these common mistakes, you can’t help but have a great score that will guarantee you the lowest interest rates, even if your credit score is poor now. It may take time to boost your credit score, but it’s definitely possible.

Give your credit score the amount of attention it deserves. It makes life a lot easier!

It’s possible to raise your credit score with some simple changes. Credit scores affect insurance rates, loan interest rates, and other important financial products. A higher score can lead to a brighter financial future.

Consider using these ideas to raise your credit score:

1. Piggyback on good credit histories. You can use a family member’s or friend’s good credit history to help you.
   • If you add yourself to an account in good standing, your credit score will go up.
   • Most credit cards allow users to add family members and distant relatives to their accounts.
   • You’ll be an authorized user on the account and able to make purchases and pay the bills.
2. Keep old accounts open. It’s important to keep older accounts like credit cards open because they influence credit scores. Credit scores can decrease if you close accounts.
   • Account age also matters. Scores are affected positively by older accounts because they show a history of maintaining credit.
   • Plus, these old accounts add to the amount of credit you have access to, thus lowering the percentage of available credit you’re using, which raises your score.
3. Set up auto-payments. Automatic payments are a convenient way to pay bills every month. They’re also an easy way to avoid a late payment and a fee. Auto-payments can help improve your credit score by preventing these issues
4. Pay credit card bills more than once a month. Credit scores rely on a debt utilization ratio. This ratio compares how much debt you have to the size of your credit limit.
   • One way to improve credit scores is to lower the debt utilization ratio.
   • Paying your credit card bills more than once a month can help you improve the score by decreasing the ratio. Extra payments lower your debt while increasing how much credit is available during the month.
5. Ask for good-will deletions. It’s possible to ask credit reporting agencies and lenders for good-will deletions. 
   • Late fees, late payments, or unpaid bills can affect credit scores. A good-will deletion is a request to remove these items based on a prior good history. This method works best if you’re a long-term customer with few issues.
6. Avoid pre-approved offers. The pre-approved offers that come in the mail usually require a credit check, and multiple credit checks affect your credit score by lowering it.
   • It’s also beneficial to avoid creating too many accounts. It’s easier to manage a smaller number, so you’re less likely to make mistakes.
7. Avoid new utility accounts. Utilities like gas, electricity, and phone services require credit checks that lower scores. It’s better to transfer utilities to a new address instead of opening new ones.
8. Remember library fines. Did you return all of your library books? Unpaid fines can decrease your credit score, and libraries can send unpaid bills to collection agencies
9. Avoid online quote comparisons. Online quotes for insurance or loans count as inquiries on your credit score. These credit checks affect the score each time you ask for a quote.
   • Getting quotes from multiple websites can lead to many credit checks. It’s best to narrow down the options before getting a quote, so your score isn’t affected.
10. Establish long-term credit. Instead of switching to a new company that promises lower rates for a few months, consider staying with the previous one.
    • Credit scores go up based on positive, long-term relationships with lenders.
    • It may be tempting to take the lower credit card offer from another company to move balances, but your score may suffer.

It’s possible to raise credit scores with several strategies. Careful planning is an important part of getting a higher score.

As the world becomes more complicated, you have the responsibility to guide your children the best you can. One of the most trying subjects to teach your kids about is how to appropriately manage money.

More specifically, teenagers develop great interests in the almighty credit card. Credit cards are not to be taken lightly at any age, but especially during adolescence. How can you educate your teens about the use of credit cards? 

These strategies will help them learn to use credits cards responsibly:

1. Ask where the money will come from. Insist your teens know specifically where they’ll get the money to pay off the credit card charge before they charge anything. 
2. Encourage responsibility. Explain that your teens are responsible for paying their credit card bill on time. In addition, require them to pay off their credit card balance within 30 days. Discuss how interest charges and other fees work and that paying such fees is like giving away their money for nothing.
   • Take care to listen to how your teen takes part in this discussion. If you determine your teen requires more maturity or understanding of the information, avoid giving them a credit card and explain briefly how you arrived at your decision.
3. Consider starting with a limited balance credit card. Have your teenager save money until a certain amount accumulates, like $100.00. Then, accompany them to your banking institution or a store to obtain a pre-paid card for the $100.00.
   • Even though your teen paid for the card with their own money, it’s a good 1idea to tell them to make every effort to stretch out their use of the card. A benefit of this method is that your child saved the money upfront before actually charging items. 
   • They can, therefore, understand that the credit card balance is tangibly their own hard-earned money. The downside of this method is it may not teach your child the responsibility of charging only what they can pay off within the next month. 
4. Provide a credit card to replace weekly allowance. Consider converting their allowance to a monthly credit card balance. This method allows them to learn about credit card management. Consider this example:
   • You normally pay your teen $30 cash weekly allowance. When they turn 16, state you’ll now provide a credit card rather than the $30 cash weekly. Explain that they can charge up to $120 per month (4 weeks times $30 equals $120) as you'll pay up to that amount monthly to cover their credit card purchases.
   • Stress that if they charge over $120, they must come up with the difference to pay off any balance over the $120 when the statement arrives.
   • If they charge over $120 for the month and are unable to come up with the difference, they must surrender the credit card until they pay you the difference owed (even though you’ll go ahead and pay it off to avoid monthly fees).
   • Using this method to teach your teen how to handle credit cards is a helpful lesson in managing their money with limited funds. Your teen learns to limit spending to stay within their means.

Teaching teens how to handle credit cards is challenging.

The good news is that if you start early with your kids about how to earn, save and spend money, they’ll easily progress to understanding the above concepts with your help and guidance.

Praise your teens' efforts when they manage their finances and credit card issues well. You’ll build their confidence for the future when you teach them how to handle credit cards wisely