Posts Tagged ‘debt’

Credit 101: How To Improve Your Credit Score

Scary Credit

If your loan officer reacts like this to your credit file, there are things you can do to improve the situation.

In the Dark About Credit Scoring? We’re Here to Shed Some Light on it for You
The affordability of major purchases often depends upon the quality of your credit score. Unfortunately for many people, the recession has taken a high toll on their credit scores, and banks and other loan providers are making it difficult to obtain reasonable interest rates. Unless your credit score is 720 or higher, you are probably paying more in interest charges than you’d like to. If this is the case, here are some suggestions to get you back on track to spectacular credit.

Check Your Credit Report
The first thing you can do to improve your credit score is to request free copies of your credit report from each of the three major credit reporting agencies: TransUnion, Experian and Equifax. You have a right to receive one free copy per year. Your credit report will list all current debt and your debt history, including: student loans, credit cards, mortgages, etc. It will also include information regarding your payment history, how much of the original balance is left, and other important details.

One important reason to check your credit report is to look for any mistakes. Many people find small inaccuracies that could be having a large effect on their credit score. Often, this is a debt that was paid off but is still reported as outstanding. Or, someone else’s debt could be incorrectly listed as yours …especially if you have a common name, or share a name with a family member. Report inaccuracies immediately to the proper reporting agency, which will follow up with the lender to confirm your claim.

Know Your Credit Score
If you don’t know what your credit score is, shelling out a few bucks to get it may be a good idea. Upon receiving your report from the three major reporting agencies, they will refer you to companies that will provide your score for a fee. Be sure to read the fine print, especially if you search for your score yourself online … many will advertise a free score, but unknowingly sign you up for a service that charges a high monthly fee. If you applied for a mortgage after January 1, 2011, the lender will be required to reveal new information about your credit score.

Make Regular Payments
Making regular, on-time payments on your credit cards, loans, and lines of credit will boost your credit score higher. Lenders also review how much outstanding debt you have in your accounts. Balances below 30% of your total available credit could improve your score.

Consolidate Your Debt
While creditors like to see that you have a long credit history, keeping a large number of credit sources available is not a good idea. If you have five cards with a $10,000 limit on each card, creditors will consider you as having $50,000 available in credit. Their assumption is that you may go out and max out your credit cards, adding debt on top of whatever loan they give you. Keep it simple; limit your credit cards and loans. Contact PFCU to ask if you qualify to consolidate your debt to a low-cost credit union credit card, personal loan or line of credit. Be sure to check out the  National Endowment for Financial Education’s free, comprehensive program Smart About Money found at . You’ll gain valuable insight and make a solid plan for the future. No one sees the information but you and no one tries to sell you anything. It’s just a tool to help you.

When You Need a Loan, Search for the Best Deal
PFCU offers competitive rates and flexible terms for car loans. credit cards, signature loans and mortgages.  Do your homework to get the best deal.

PFCU also recommends contacting the National Foundation for Consumer Credit Counseling if you need additional help managing debt and improving your financial education.

Don’t See Red on Black Friday!

Holiday Bills
Don’t Dampen the holiday cheer with too much spending

The Friday after Thanksgiving Day has come to be known as “Black Friday” because it is a day where many retailers that operate “in the red” much of the year actually turn a profit, thus “going into the black”.  But it can have an ominous connotation for shoppers who aren’t careful.  Indeed, a poll conducted by Harris Interactive for the National Endowment for Financial Education® (NEFE®) shows that 51% of American adults plan to brave the crowds in the early morning hours to shop for bargains.  Most will do so without a plan.  Don’t let it happen to you! 

Take a Lesson from Old Scrooge

How much can you afford to spend?  Do you have money saved up?  Many credit unions have Holiday Club accounts that allow you to set aside a little every paycheck for use at the holidays.  If not, be very careful about racking up huge credit card bills.  With interest and any fees, you’ll end up paying much more for an item, and keep paying for it long after the lights have come down and everyone has moved on.  It’s possible, in fact, that you may still be paying today on balances you’ve accumulated on Christmases past.  Remember Scrooge from Dickens’ A Christmas Carol?  He was visited by the ghost of past Christmases and saw what the future would look like if he didn’t change his ways.  You can’t change the past, but you can make intelligent choices today that can make all your future days more merry and bright! 

Make a List, Check it Twice

Assuming the loved ones in your life have been nice, it’s important to get them something they will appreciate without a flow of red ink.  If you haven’t asked them what they want, doing so can save you time and help ensure that they appreciate what you get them. 

Consider a Gift of Service

Be creative.  My brother and his wife obtained some of my old baby and childhood pictures from my Mom, scanned them, and had them put into a beautiful bound book.  There are many online services that will do this very inexpensively these days.  It was personal and is a real treasure.  Do you have a family member who just loves your brownies, cookies or homemade jam?  Are you great at fixing cars and have a relative who needs some work done?  Mechanic bills add up quickly!  If you have culinary skills, what about preparing a romantic dinner for friends?  Put your talents to work and it will mean so much more than a gift hastily selected and save you money. 

For items you purchase, take some time before you hit the stores to research online.  Search for items on your list and find the best prices.  Most retailers will advertise their Black Friday specials because they want you to come in.  Read the fine print.  Sometimes there may only be a handful of advertised items at a given price.  When you do hit the stores, stick to your list.  If you see something not on it that is a great bargain, it’s only a bargain if you actually need it to replace something else on the list.  This is about blowing through your list and sticking to your budget. 

You may run across great deals on items for yourself.  Consider these points before adding it to your cart:

  1. Is it something I need, or something I want?
  2. It’s a great deal, but can I afford it?  If I have to put it on credit, how quickly can I pay it back?  It stops being a great deal if you end up paying a lot of interest for it. 
  3. Can I ask someone else to get it for me as a gift?

Online Alternative

If you have family living out-of-state, shipping costs can be scarier than the ghost of Jacob Marley!  Some online retailers will waive shipping costs for purchases over a certain amount.  Some will even gift wrap for you.  Online retailers have different ways of structuring their prices, offering an item very inexpensively but then building a lot of their profit into the “Shipping and handling” charges.  Sometimes you wonder if the ‘handling” part involves a limo ride and a goose down packaging!

While you’re at it, don’t forget the gift of credit union membership!  More people every day are discovering the benefits of belonging to PFCU and Suze Orman and Jane Bryant Quinn are two big advocates.  It’s free and a benefit your friends and family will appreciate for years to come.  Referring is easy, and PFCU will enter you into a drawing for $750 at the end of the year.  Now that’s a great way to pay off your Christmas bills!