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Beginners Guide to Credit
I remember back when I was 18 and completely oblivious to the concept of credit. It seems like eons ago! If only I had known then what I know now about credit. Hopefully, this short guide will be able to give you some ideas on how you can build a solid credit rating... even if you have to do it from scratch!! Everyone has to start somewhere, whether you are 18 like I was, or even 30, there is no better time than the present to start thinking about your financial future. Chances are, your credit score will come into to play during some point down your financial-life road. And when that time comes, you had better have some concept of credit and how it can help you, or else you might find yourself unable to qualify for much of anything. First of all, if you are starting from scratch, don't worry! It will take some time, but eventually you will be able to qualify for the bigger things like a car or a mortgage. The first thing you need to do is establish your credit. The easiest way to do this is to get a credit card issued by your bank. Chances are, the bank already knows you and won't have as much of a problem with issuing a card to one of it's current clients. If you don't already have a checking account, get one! There are a ton of great banks out there that issue free checking accounts with check cards to new customers. But take note! A check card or ATM card isn't the same as a credit card! With these you are simply withdrawing the money that you already have in your checking or other accounts. A credit card is very different... A credit card is actually a right given to you by your lender to borrow a set amount of money from them. You might be shocked to find out that the only card you can get when you are first starting out comes with an outrageous interest rate. Sometimes as high as 15-25%. But don't fret... as long as you pay off your balance every month, those interest rates will be easier to swallow, and you will eventually to be able to qualify for a card with a much lower rate. A note for the beginner: In order to have a good credit score for life, you need to develop a personal goal... never, EVER make a late payment for anything. I was lucky when I first started building credit to have a mother that ruthlessly instilled in me a healthy respect for the power of paying bills on time. It not only builds your credit quickly, but makes you a good steward of your finances. There were times when I owed money for a credit card bill, and I was so deathly afraid that the creditor would take the bill to collections and ding my credit, that I stooped to borrowing money, just to make sure my credit record stayed clean! I know that seems a little crazy... but trust me, it is extremely important to pay all of your bills on time, even if you have to go out of your way to do it. You will appreciate your diligence down the road. A warning for the Beginner: Be careful with your spending! It may seem exciting when you first get a credit card with a $1,000 limit, but it can be very dangerous. It is very tempting to pretend that your credit card represents money that you have in the bank. My advice, don't ever spend more than you can pay off in that same month. And if you aren't able to pay off your entire balance in a month, pay more than the minimum requirement. This will help give you a slight boost. Moving on... After you have had your bank issued credit card for a while, and feel that you can handle the responsibility, try moving onto one of the major credit card companies. There are many out there. Try to find one with the lowest interest rate and no annual fee. Don't apply for too many at once! Each time you apply for a C.C., the company will run your credit to see if you will qualify, and to see what your spending limit should be. One or two should do just fine. If you did well in handling your bank C.C., you should have no problem qualifying. A company I like is Providian; mostly because they give you a brief snapshot of what your credit score is each month, and as a beginner, you will want to start paying attention to what your score is and how it can be effected by your different spending habits. After a while of responsible spending with your new credit cards, your score will really start to move. You'll notice multiple credit card offers from many companies mysteriously start showing up in the mail. Your score will probably be somewhere around 600-650. This isn't a bad credit score, but it could be better. Most likely, it is around this range because of your lack of credit history. As you can see in our Credit overview section, length of credit history accounts for around 15% of of your overall score. Another factor that comes into play with your score is the type of credit you have been issued; approx.10% of your score relies on it. You can only build so much credit with your credit cards. Eventually lenders will like to see some other forms of proof that you are able to be responsible with monies borrowed. This is where a personal loan, or a car loan can be helpful. Lenders view this as a different kind of borrowing than from the credit card companies. In terms of building your credit, these types of loans are great. After that, you should see a significant leap in your credit score, and should be able to move onto bigger and better things like a home mortgage loan! Just always make sure you remember the fundamentals: always pay your bills on time, and never spend beyond your means. With these tips in mind, you will be on your way to making sound financial decisions for life. Justin Smith is the President of the Christian Real Estate Network -- www.Hismove.com">http://www.Hismove.com
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Do you Know the Benefits of Checking your Credit Report? Do you know why you should check your credit report?Of course you do, because you have undoubtedly experienced one working in your life!No matter where you roam, your credit report follows you through life, updating all aspects of your life: your employment, where you live, your opened credit accounts, your closed accounts, your payment history, and even public records on you.In this country, a good credit history brings you benefits of all kinds--a home mortgage, an apartment lease, an auto loan, or even more credit--with ease. Your Consumer Rights If you have ever fallen behind on your debts you already know that dealing with your creditors can be a hassle. Sometimes it can be downright humiliating. 10 Simple Steps to Manage Your Credit By far the greatest invention the banks have ever come up with came out in the 20th century. Also the new field of Credit Management was born with the invention of the credit card. How to Improve Your Credit Rating So you got into debt, had problems but you got yourself back on your feet through hard work and sacrifice and how are you rewarded? A Bad Credit Rating.You would be forgiven for thinking thats not fair and why did you bother sorting yourself out if your hands are still tied when it comes to applying for anything financial? There are ways to improve your credit rating and get back on track completely. Watch Out For Credit Repairs It is very easy to find a site that is neat, professional-looking, and one that offers a free three-agency credit report and free credit report without a credit card.This scam is too good to be true. Preventing Credit Card Mess Credit card debts problem is extremely common today. It is usually the first sign of longer term financial troubles. What Is the Fair Credit Reporting Act and What You Should Know About It The Fair Credit Reporting Act (FCRA) and the recent update to this law called the Fair and Accurate Credit Transactions Act (FACTA) protect consumers against inaccurate information being reported by credit bureaus and the privacy of that information. What does this mean to you?When you make purchases on a credit card, make payments to your accounts, open new bank or credit accounts, borrow money, buy a house or a car, and even fund your education, your financial information is reported by creditors and lenders to a credit bureau. Your Guide On Choosing a Credit Card To Suit You Reach into your wallet or purse, pull out a card, swipe, and you're done. It is very easy to use a credit card. New Credit Advice: Dont Pay off Those Credit Cards! Credit needed for real estate mortgage financing differs from credit needed for consumer loans. If you need help getting a home mortgage, these credit tips will help you. Big Brother Knows Whats in Your Credit Report - How About You? Whether you are aware of it or not, credit bureaus have been keeping tabs on you and how you use credit. When it's time for you to apply for a mortgage, credit card, or personal loan, your credit report is what lenders look at to decide to approve you or not. Credit Card Balance Transfers Can Help You Stop Putting Money Down The Drain As you probably know, interest rates are at all time low right now and if you aren't getting the best deal from your credit card company then they owe it to you to either lower your rate, or you owe it to yourself to find a better deal. You see, credit card companies need your business in order to succeed and if you refuse to pay a penny more than you have to then you'll be doing yourself and others a big favour indeed. Start Building Credit Fast! There are a couple of reasons for this. You can pay your bills on time for years and never gain more than a few points on your credit score. Avoiding College Credit Card Traps Congratulations college freshman! You're about to embark on one of the most exciting times of your life. By now your parents, siblings, and friends have offered you all kinds of advice on how to make your transition to college smoother - how to get along with your roommate, what classes to take and which ones to avoid, where to find the best off-campus food, and how to stay safe on campus. 10 Tips To Prevent Credit Card Fraud Imagine opening your credit card statement one morning and discovering to your horror that you suddenly owe thousands of dollars - on purchases that you never made.Impossible?Credit card fraud on the rise, so you need to treat your card and its information with extreme care. Borrowing on a Credit Card One of the easiest ways to borrow money of a financial institute is to use a Credit Card, available from all banks, building societies, and other financial organisations. The choices available are enormous, with a wide variety of interest charges, annual charges, loyalty schemes, and bonus points available. How To Choose Your Credit Card Application The articles and tips provided on this site are intended to help you access credit card offers that suit your lifestyle. By providing you with some basic information, we are confident that you will be able to easily identify which are the best credit cards for you. All About Balance Transfers What is a balance transfer?A balance transfer can be explained simply as a balance transfer! When a balance is transferred usually from a credit card, but possible from a bank account or loan to a credit card with a offer interest rate (usually 0%) for a set period. It does not have to be the entire amount. Bad Credit? No Credit? Yeah, Its a Problem. Many companies use the slogan "Bad Credit? No Credit? No Problem!" The truth is that it is in fact a problem and there is no easy way to correct it. It takes a lot of time and effort to obtain credit when you do not have any and even longer to fix bad credit. Five Reasons to Repair Your Credit Score - You Can Do It Yourself There are multiple reasons that tell us why we should have a 700+ Credit Score, but these five facts will definitely give you the big picture and hopefully will drive you to want to fix your credit score starting today.Fact #1: Did you know that consumers with Credit Scores of 700+ are likely to get interest rates up to four points lower than those with scores under 640. The Ghost of Expected Surprises Here, Cratchet, what do you think you're doing?Uh, er, leaving sir.Leaving? It's 5 minutes to the hour.
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