Credit Score: All You Need to Know

“Confused what Credit Score is? We’ll help you answer that question and more. Check this out now!”

All About Credit Score

Your credit score determines your eligibility for credit cards, home loans, car loans, student loans, apartment rentals and even certain job positions. It can mean the difference between a reasonable or exorbitant interest rate, and the difference between an affordable or excruciating insurance rate. There are few, if any, 3-digit numbers that hold so much power.

Where can I find my credit score?
Once a year, federal law entitles you to a free credit report from each of the 3 major credit bureaus. If denied credit, you’re eligible for an additional report. To view your free credit report, simply go to AnnualCreditReport.com.

Unfortunately, getting a free credit score is a little more difficult and a bit more costly. You can obtain your credit score from a number of websites, but they all demand a membership fee. However, the fee generally comes with a grace period in which you can avoid paying if you cancel your account.

What is a credit score? And how is it different from a credit report?
Your credit score—also known as a FICO score—is a 3-digit number that summarizes your creditworthiness. Ranging from 300 (worst) to 850 (best), your credit score tells lenders how likely you are to pay back loans. Your primary score is determined by Fair Isaac Corporation (hence “FICO”) and is considered the most accurate assessment. The 3 major credit bureaus (Equifax, Experian and TransUnion) also issue credit scores that vary slightly from bureau to bureau.

A credit report is an in-depth analysis of your creditworthiness issued by the credit bureaus, a detailed examination of the components that comprise your credit score. You’re entitled to a free report from each of the 3 bureaus once a year—twice if you’re rejected for credit. You should check your credit report regularly and report discrepancies immediately. Mistakes in credit reports happen more often than you might think and can have adverse effects on your credit score. You can view your free credit report (like really, truly, totally, 100% free) at AnnualCreditReport.com.

How is my credit score calculated?
Your credit score is contingent on a number of factors that can be summarized in 5 categories:

  • Payment History (35% of your FICO score): Making payments boosts your score. Missing payments destroys it. Recent history has a greater impact.
  • Amounts Owed (30% of your FICO score): Debt can hurt your score, though installment loans (like student loans) are actually beneficial if you keep up with payments. Your debt-to-credit-limit ratio is also important. Letting debt come too near your spending limit reflects poorly on your creditworthiness.
  • Length of Credit History (15% of your FICO score): The age of your accounts is taken into consideration. Old accounts earn more trust, while new accounts are regarded with suspicion.
  • New Credit (10% of your FICO score): This category looks at recent credit acquisitions and inquiries into your credit score. Too many new credit lines or too many inquiries in a short period of time look bad.
  • Types of credit used (10% of your FICO score): Different kinds of credit impact your score in different ways. The best way to score points here is to diversify your credit types.

How do I raise my credit score?
Establishing credit is easier than you might think. A good credit score starts with smart spending. More at What’s My Credit Score?

You can also watch this video to know more about Credit Score:

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Debt Relief Solutions: 6 Ways to Get Out

“Looking for debt relief solutions? There are six main forms of debt relief solutions and choosing the right debt relief solution can be one of the most important financial decisions of your life. Read what these solutions are below…”

There are tons of debt relief solutions

There are tons of debt relief solutions

Each of the six choices offers positives and negatives, and no one choice is right for everyone in every situation. Debt relief is a broad term that defines many different types of debt relief solutions, including struggling to pay your loans, credit counseling, debt settlement or debt resolution programs, mortgage refinance loans, and two types of bankruptcy.

Debt relief can be a hard pill to swallow.

 

First, let us take a brief look at each choice. Later, we make a side-by-side comparison of each option, including the short- and long-term cost of each. Finally, we show you where to learn more about each option, and next steps you can take.

1. Minimum Payments

Making the minimum monthly payments on your credit cards can be a dangerous financial strategy. Although it may feel good to push a growing problem off to another month, if you have high interest rates and a credit card debt balance that has grown to become a problem it just might be time for a gut check and to look in the mirror.

We recommend consumers pay off their debts in full each and every month, especially credit card and high interest revolving debt. If you cannot manage to do that, make sure that you are aware of the true lifetime cost of that debt and what all of your debt payoff options are, and do not just blindly keep on the treadmill of making minimum payments.

2. Credit Counseling

Credit counseling is a program that enrolls you on a debt management plan (DMP), which usually allows you to qualify for concession rates from your creditors. The primary benefits of a credit counseling program are lower interest rates and lower payments.

Credit counseling, or signing up for a debt management plan, is a very common form of debt consolidation which is essentially a way to make one payment directly to the credit counseling agency that then distributes that payment to your creditors. Most times, a credit counseling agency will be able to lower your monthly payments by getting interest rate concessions from your lenders or creditors. Credit counseling is like aspirin for a mildly sick patient, where a little help and medicine solves a real pain or financial problem.

It is important to understand that in a credit counseling program, you are still repaying 100% of your debts — but with lower monthly payments. On average, most credit counseling programs take around five years. While most credit counseling programs do not impact your FICO score, being enrolled in a credit counseling debt management plan does show up on your credit report, and, unfortunately, many lenders look at enrollment in credit counseling akin to filing for Chapter 13 bankruptcy — or using a third-party to re-organize your debts. You can learn more about this debt relief solution at the Bills.com section devoted to credit counseling.

3. Debt Settlement

Debt settlement services offer to negotiate and settle your debts for less than you owe, many times reducing debts by as much as half, before provider fees. Debt settlement is an option for people who cannot afford their monthly payments, and who are not worried if their credit rating will be negatively impacted during the program. It is important to be aware that you are not making monthly payments and staying current on your debts while enrolled in a debt settlement program, so be aware of the credit impact and the potential collection harassment from your creditors. Debt settlement is also a very aggressive form of debt consolidation, and it is akin to chemotherapy for a seriously ill patient — it will hurt but will hopefully kill the cancer and get you financially stable and healthy again quickly.

Unlike other forms of debt consolidation, debt settlement is based on the future resolution of your accounts, which means that results vary significantly and it is very important to work with a qualified and accredited provider.

4. Mortgage Refinance

You may be able to consolidate your debts with a home equity loan, mortgage refinance or other debt consolidation loans. If you are confident that you will to make the payments without building more credit card debt, debt consolidation refinance loans can be an excellent path to reducing your payments, lowering the total cost of your debts, and a refinance mortgage loan can also possibly reduce your taxes. You must be a homeowner to qualify for a mortgage refinance loan, and usually have excellent credit and significant equity accumulated in your home. You can learn more at the Bills.com refinance portal or even apply with Bills.com’s approved lenders.

5. and 6. Chapter 7 and Chapter 13

Bankruptcy should be your last choice in a debt relief solution because it will damage your credit for 7 to 10 years and, depending on which type of bankruptcy you file, you could be forced to give up some of your assets or assigned a long-term payment plan. There have also been legal changes put in place by Congress that make it more challenging to qualify for achapter 7 bankruptcy, forcing many people to file for a Chapter 13 bankruptcy which is really a repayment plan….. More at Debt Relief SolutionsSolutions on How to Find Effective Debt Relief Partners

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Top 10 Tips to Show You Ways on How to Pay Off Debt Fast

“Below are the top 10 tips on how to pay off debt fast. Read on as there really is a light at the end of the tunnel!

Debt Relief.. Worry Free..

Debt Relief.. Worry Free..

Trying to pay off a sizable debt is no picnic. It can be discouraging to pay those bills month after month while it seems like the balances are hardly moving.

Top 10 Tips to Show You Ways to Pay Off Debt Fast

  1. It’s usually a good idea to negotiate a lower interest rate on each credit card account. With rates that can reach 30 percent or higher, credit cards can take decades to pay off. The lower the interest rates, the quicker the balances can be paid. Most credit card companies are willing to lower interest rates at least slightly if you just ask.
  2. If asked, credit card issuers will also lower the annual fee on an account, or they may even waive it entirely. This small amount adds up over the years, and you’re better off without it.
  3. Many credit cards come with numerous fees – late payment fees, over limit fees, and cash advance fees – which can pack hundreds of dollars onto your balance each year. It’s first necessary that you become aware of all the potential fees associated with your credit cards and do your best to avoid incurring them.
  4. While cash advance fees are not likely to go away, many credit card issuers will remove late fees and over-the-limit fees if you do not consistently incur these. All you have to do is ask.
  5. If you have gone through a period where you had difficulty paying on a particular account but have since paid at least the minimum due for several consecutive months, a credit card company may be willing to remove all or most of the late fees that were charged. This can reduce your total balance due by a few hundred dollars, depending on the particular situation.
  6. To successfully pay off debt, it’s essential that each credit card is paid on faithfully every month. Each statement will list a minimum amount due, but it’s best to pay more than this each month. Obviously, the more you can pay monthly, the quicker the balance will be paid off entirely.
  7. At the same time, it’s important to avoid taking on new debt. Credit card use should probably be stopped entirely while paying off accumulated balances. You may choose to keep the cards for some future time, or you may need to cut them up to eliminate the temptation.
  8. It can be very helpful to minimize your expenses in other areas and apply the money saved to your credit card payments. For example, you may decide to stop eating at restaurants for the next few months and put the money you would have spent toward paying down a credit card. Expenses like magazine subscriptions, add-ons to your telephone or cell phone service, and automatic car washes can add up quickly. Eliminating these extras for a short time can greatly reduce your credit card balances.
  9. It may be possible to negotiate a lower pay off amount with a credit card company. Many companies will accept around 20 percent less than the total balance due in a lump sum “settlement.”
  10. After paying off a credit card in full, it’s important to take the amount of money you have been paying each month and apply it to another credit card. This approach is sometimes called “snowballing” and will help you pay off the other cards faster….. More at How to Pay Off Debt FastTop 10 Tips to Pay Off Debt Fast

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