Posts tagged with ‘credit card’
5 shortcuts to raising your credit score
Sometimes responsible users of credit wonder why their credit score isn’t higher. If you pay your bills by the due date and pay your credit card balances in full each month, shouldn’t you have a top-notch credit score?
A few little-known facts about how credit is calculated could be keeping you from the score you deserve. Your credit card balance, which impacts your utilization rate and therefore your credit score, is often calculated on the statement date, not the due date. So even if you pay your full balance by the due date, a card issuer may report a balance on your credit score.
Here are five almost-secret ways to boost your credit rating:
1. Pay bills before the statement date: Typically, your credit card balance on the last statement date is the balance that will be reported to the credit bureaus. If you pay most of the bill before the statement date, you can lower your utilization rate. Some lenders select another day to report the card balance other than your statement date. Call your lender and ask when the balance is reported, so you know when it is best to pay.
2. Make multiple payments: Another way to lower the balance on your statement date is to make periodic payments throughout the month. Check with your card issuer to learn how they handle multiple monthly payments. Your card company could place a limit on how many times you can pay in a month.
3. Ask for a “good-will deletion”: If you have only one or two bad marks on your credit record, you may be able to get them deleted. You can ask your lender for a “good-will deletion.” Essentially, what you’re asking is for the creditor to cut you some slack. Start with customer service, but don’t be surprised if you have to work your way up the ladder to someone who has the authority to make the deletion.
4. Pay for removal: If you have an account that’s gone into collection, sometimes collectors will agree to remove the debt from your credit report if you agree to pay it off. But before you agree to or pay anything, make certain to get the arrangement in writing. Get a letter on company letterhead that spells out the terms of removing the debt from all three major credit-reporting agencies.
5. Protect yourself in a short sale: After a short sale, the mortgage lender often will report to credit bureaus that the home loan was settled for less than the full amount. It can also note the amount of the deficit as “balance owed” on the report, even though no additional money is owed. While the short sale will damage your credit score dramatically, you can mitigate the damage a bit by arranging with the lender not to report a balance owed.
The catch to a credit card sign-up bonus? You have to sign up for it. Sounds pretty innocent … but it’s not.
Savvy credit card management tips for the New Year
If you have credit card debt, you’re probably welcoming 2011 as a chance to start anew with your finances.
Use these tips to stay on track throughout the new year:
· Tally up all of your credit card balances. Make a note of each card’s balance, annual percentage rate, due date & minimum payment.
· Beware of any introductory rates that may expire, and find out what the new interest rate will be … and when it will kick in.
· Note the monthly finance charges for each card. Add together each of those monthly finance charges to see how much carrying credit card debt costs you each month. This shocking sum will encourage you to take action.
· Commit to a pay down strategy: Increase credit card payments on the card with the highest balance to give the biggest boost to your bottom line, or increase payments on the card with the lowest balance, to boost your momentum by quickly paying off one card.
· You may also want to start by paying off the balance with highest APR first. Then focus your payments on the card with the next highest interest rate and so on.
· Monitor your credit card accounts carefully. Changes to a credit card account shouldn’t take you by surprise. According to the CARD Act, credit card issuers must provide notice of certain changes to your credit card accout 45 days before they take effect. (Changes include increasing your minimum payment & rate increases on future transactions once you’ve had a new credit card open for a year, for example.)
· Monitor your credit lines. Credit card issuers can lower your credit limit without 45 days’ advance notice.
Happy debt-slashing New Year!
J. Mohammad, a Tennessee-based accountant, decided in 2001 that she’d had enough of the constant stress she felt over $11,000 in credit card debt, her mortgage and a host of other bills. Inspired by Dave Ramsey’s radio show on life, money and debt, she decided to pull out all the stops to reach her goal of “financial peace.”
To get there, she worked at as many as seven extra jobs, even cleaning buildings at night, and she and her husband kept to a tight budget. It was tough going, but by 2005 she was debt free, having paid off her credit card debt and even her mortgage, she says.
Now, she sticks to a strict budget and banks all the money she used to plow into monthly payments to service debt into savings and a new-car fund.