3 Ways to Build Your Credit Score – Without Using Credit Cards

credit scoreYou’ve probably heard over and over that it’s important to have a credit card or two and to use them responsibly if you want a high credit score. No doubt you’ve also been told that making monthly, on-time payments on your mortgage and car are other ways to keep your credit score healthy. All true.

Your credit score — for young adults perhaps just joining the credit conversation — is the number credit bureaus offer up as a symbol of your ability to repay a loan. Generally, the credit score number everyone is concerned with is the FICO credit score, which ranges from 300 to 850. The higher your score, the more likely lenders will allow you to borrow money, and the better the rate you’ll qualify for.

But what if you would like to see your credit score climb — but you’re not crazy about having a credit card? What if you live in an apartment and aren’t making mortgage payments? What if you live in the city and take the subway? What then? Here are some somewhat under-the-radar ways to build credit for those who prefer the road less traveled.

1. Use Your Rent Payments to Build Credit.

For most of credit and rental history, on-time rent payments haven’t officially counted as a sign of someone who is responsible with money. Things are slowly changing, however. Since 2011, Experian has included rent payments in consumers’ credit histories. But it isn’t automatic. If you want your rent payments to be included, you need to be proactive and opt in.

There are a number of websites that will send rental-payment information to the credit bureaus. Consumers who visit WilliamPaid.com can register and pay their rent through the site, and it’ll be reported to Experian (it’s free if you opt for electronic withdrawal; if you pay with a credit or debit card, it’s 2.95% of the total payment; if you pay in cash, a $10 flat fee).

2. Get a CD Secured Loan.

CD secured loans are typically extended by credit unions, precisely to help members build or rebuild credit reports and credit scores. Some community banks also offer them.

“The loan is approved for some small amount, normally not much more than $1,000,” says John Ulzheimer of CreditSesame.com. “But instead of the consumer getting that $1,000 like they would with a normal loan, the money is placed into an interest-bearing account with the credit union. The consumer makes payments monthly, and after a year or two, the loan is paid off, and the funds, plus dividends, are released to the consumer.”

Ulzheimer adds that because the loan was an extension of credit, the credit union can report the loan to the credit bureaus. “Everyone wins,” he says. “The consumer gets the benefit of the account on their credit reports, plus the loan proceeds with dividends.”

3. Self-Report.

“Credit reports only track money you’ve borrowed,” says James Miller, owner of Biltmore Wealth Advisors, LLC. That’s why credit reports don’t include information on whether you’ve been paying your utility bill and monthly rent on time, he adds.

Miller suggests consumers check out Payment Reporting Builds Credit, a national company that has been around since 2002 and allows consumers to sign up for free and self-report payments like rent, rent-to-own purchases and utilities like your water or electric bill.

“PRBC might not yet have the clout of the big three credit bureaus, but a solid report from PRBC might be enough to get your foot in the door with a lender,” Miller says. The PRBC site is free to use, but not all self-reporting third parties are free.

Keep in mind that none of these strategies will work if you don’t pay your bills on time. In fact, you could make things worse by self-reporting if the information being reported shows you’re always late with bills. But if you are paying without trouble, and you simply don’t own a house or credit cards and aren’t making payments on car or student loans, then getting lenders to see that you’re consistently paying bills on time may just lead to a higher credit score — eventually.

“The quickest way to build up a favorable credit score is to borrow and pay back the debt on time. There really is no way around that,” Miller says.

“It isn’t necessarily hard — it just takes discipline,” says Hitha Prabhakar, a retail and consumer analyst based in New York City and a spokesperson for Mint.com, a free and well-known money management website.

Having a well-paying job also helps. A good relationship with your bank or financial institution is another plus, Prabhakar adds. But above all, a long credit history without a lot of black marks is what will really make all the difference.

Click here to view the article source, from Dailyfinance.com.

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My Kid’s Drowning in Credit Card Debt! What Do I Do?

consumerismIf you trusted your son or daughter to keep track of their finances, and they slipped up, what in the world are you supposed to do?

Let’s say they’ve racked up a big, nasty credit card debt — to the tune of thousands of dollars. Should you pay off their debts to help keep their credit score above water? Or is it better to let them learn from their mistakes and suffer the consequences? Though each individual situation is different, here are your options, what’s at stake, and a few pointers to help you plot your course of action.

A Personal Loan, With a Contract

If you have the means, think about whether or not you want to loan your child the money. Sometimes the debt is manageable enough that you can pay it off in the form of a personal loan to your child. You can even decide to charge them interest as well, so they learn just how much a high APR can cost them.

But you have to examine the situation from a lender’s perspective, rather than simply write a check and expect your child will make payments. What is the child’s employment situation? Will he or she be able to make payments to you without the security blanket of your relationship making them complacent? Has your child typically been a responsible spender in the past, or does he or she impulsively purchase on a grand scale regularly? If you do decide to help protect their credit history, it’s a smart idea to sign a contract with your child to make your agreement more official and binding.

If You Co-Signed, You’re on the Hook

If you co-signed on your child’s account, you’re responsible for their debt. Because of regulations passed in the CARD Act of 2009, it’s more difficult for young adults to qualify for credit cards, so more and more parents are co-signing on accounts and acting as guarantors for their children. If you’ve already taken that step, you should hopefully have realized that your child’s purchases will affect your credit, regardless of your involvement.

In this case, it may be more prudent to pay off the debt if you can, cancel the account, and work together to come up with a payment plan to rectify the situation and make sure it never happens again. If you haven’t co-signed yet, sit down for a serious conversation with your child on your values and financial responsibility.

Lessons to Be Learned?

Bad credit now will impact their financial future later, but so will bad habits. If your child doesn’t learn from his or her mistakes now, there could be bigger and more damaging mistakes ahead. Will bailing your child out of their financial mess with creditors make them realize the gravity of their mistake? Or will you just end up fostering their sense of dependence on you? You won’t always be there, wallet in hand to save them, so if they can manage to take the credit hit, perhaps it’s best to let them learn the lesson this time, and give them some tough love.

Communication Is Key

Loaning money to someone you love is always, always messy. While your child should intellectually know that your love is unconditional (which is why your help comes so willingly), it’s emotionally very difficult to face your parents when you owe them money. Plenty of relationships have been ruined by debts of personal loans, both from neglected payments and feelings of shame. Be sure that if you choose to help your child, you commit to maintaining an open dialogue and doing your best to keep business and family separate.

Ultimately, each family and financial situation is different. But before you make a plan to tackle your son or daughter’s debt, you need to examine the situation from all angles. There are many factors in play, but above all, your relationship and your child’s sense of responsibility from this learning experience should be at the forefront of your mind.

Click here to view the article source, from DailyFinance.com.

Budget Tips for Planning for Life’s Unexpected Curve Balls

couple-worry-moneyLife doesn’t always go as planned, and many of life’s major events, like getting married, having a baby and buying a home can crowd your savings capability and even throw you into a financial tailspin.

When it comes to making ends meet, retirement is often left out of the savings equation. Eighty-four percent of people say saving for retirement has been undercut by a life event, according to this year’s HSBC Future of Retirement survey of more than 15,000 people. But people react differently when in crunch mode, the survey says, and in some cases, extreme measures are required to cover budget needs. Three tactics improve cash flow in a financial crunch: increase income, decrease expenses or a combination of both.

Time to Downsize?

In reality, you have more control on your spending side, particularly with flexible expenses like travel, entertainment, gifts and food. But if your financial woes seem irreversible, you may have to take a hammer to large expenses like housing.

In fact, 21% of women surveyed say they would downsize, compared to only 14% of men. And 31% of men say they would dip into their retirement savings to cover unexpected expenses.

Though experts concede downsizing may be extremely emotional, it’s more preferable than taking a chunk out of retirement savings. Actually, 29% of respondents say the financial strain of home ownership puts a real crimp in retirement savings.

If you have any questions about the home buying process, feel free to ask us! We know it can be an intimidating process at times, and we’re here for you. To apply for a 10, 15, or 30 year First Financial Mortgage – click here.* You might also want to subscribe to our mortgage rate text message service, by texting FIRSTRATE to 69302. When our mortgage rates change, you’ll be the first to know!**

Rethink Your Lifestyle.

Today’s lifestyle norms may have something to do with one-dimensional thinking. Items once seen as luxuries are now seen as necessities, says Ravi Dhar, director of the Yale Center for Customer Insights.

Plus, what people do with their money has more to do with psychological and emotional issues than it does with crunching the numbers, claims Marcee Yager, a retired certified financial planner. “It’s never just about the money.”

Because non-financial issues often dictate financial decisions and create a domino effect, consumers need to look at both quantitative (intellectual) and qualitative (emotional) issues when making life choices, says Yager. “Without shared thinking, people’s heads start spinning.”

The idea that emotional understanding must be factored into financial decisions has gained very little traction, claims Yager. “Big investment banks don’t tend to make things soft and fuzzy.”

Dhar even questions the effectiveness of some system resources like the many online investment tools available to consumers. Calculators project four, six, or eight million dollar targets for a retirement 30 years into the future. He says the timeframe seems intangible and the goals unattainable.

For consumers looking to navigate their way out or steer clear of the financial weeds, experts offer the following:

Take small steps to wealth. The only way to build up reserves is to do it gradually. Budget a realistic portion of your paycheck to start an emergency fund or return to the basics. “The best thing people raising families can do is go back to the old traditional practice of putting money in an envelope or a cookie jar,” adds Yager.

Be flexible. Think about what’s possible to mitigate a tight financial situation. Baby boomers tend to be fearful of change, particularly of moving to unknown places, says Yager. In fact, new locales both in and outside of U.S. borders can create wonderful opportunities that improve your quality of life.

Keep a minimum three-month reserve for savings. Learn to cut corners, live on less and shop in cheaper places.

Write it down. Take a financial fitness quiz then put your pencil to paper. You need to see the numbers then monitor your day-to-day situation.

For a FREE and anonymous online debt management tool, try Debt in Focus. In just minutes, you will receive a thorough analysis of your financial situation, including powerful tips by leading financial experts to help you control your debt, build a budget, and start living the life you want to live!

First Financial also hosts free credit management and debt reduction seminars throughout the year, so be sure to check our online event calendar or subscribe to receive upcoming seminar alerts on your mobile phone by texting FFSeminar to 69302.**

Turn to professionals. Reviewing your savings situation and retirement potential with a professional financial advisor can help to ensure that all your future requirements are identified.

If you would like to set up a no-cost consultation with the Investment & Retirement Center located at First Financial Federal Credit Union to discuss your brokerage, investments, and/or savings goals, contact us at 866.750.0100 or stop in to see us!***

Click here to view the article source, from FoxBusiness.com.

*A First Financial membership is required to obtain a mortgage and is open to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties. A First Financial Mortgage is subject to credit approval. See Credit Union for details. **Standard text messaging and data rates may apply.***Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC , a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free 800-369-2862. Nondeposit investment and insurance products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution. CBSI is under contract with the financial institution, through the financial services program, to make securities available to members. CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America.

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4 Tips to Help 20-Somethings Manage Their Debt

Debt can be a heavy burden on anyone, no matter what their age, but increasingly, young adults are starting out deeper in the hole. A recent report from credit-score provider FICO shows that student loan debt has climbed dramatically for those ages 18 to 29, with average debt rising by almost $5,000 from 2007 to 2012.

The good news, though, is that young adults are taking steps to get their overall debt under control, reducing their balances on credit cards and their debt levels for mortgages, auto loans, and other types of debt. With 16% of 18 to 29-year-olds having no credit cards, young adults are getting the message that managing debt early on is essential to overall financial health.

With the goal of managing debt levels firmly in mind, let’s take a look at four things you should do to manage your debt prudently and successfully.

1. Get a Handle On What You Owe.

In managing debt, the first challenge is figuring out all of what you owe. By pulling a free copy of your credit report you’ll get a list of loans and credit card accounts that major credit bureaus think you have outstanding, along with contact information to track down any unexpected creditors that might appear on the list.

Once you know what you owe, you also have to know the terms of each loan. By making a list of amounts due, monthly or minimum payment obligations, rates, and other fees, you can prioritize your debt and get the most onerous loans paid down first. Usually, that’ll involve getting your credit card debt zeroed out, along with any high rate debt like private student loans before turning to lower rate debt like mortgages and government subsidized student loans. With your list in hand, you’ll know where to concentrate any extra cash that you can put toward paying down debt ahead of schedule.

Debt in Focus is the perfect anonymous online tool for those who need financial help but might not be open about their current financial situation or do not have the time to go to face-to-face counseling. In just minutes, users will receive a thorough analysis of their financial situation by answering a few questions, including powerful tips by leading financial experts to help control debt, build a budget, and start living the way you would like to.

2. Look for Ways to Establish a Strong Credit History.

Having too much debt is always a mistake, but going too far in the other direction can also hurt you financially. If you don’t use debt at all, then you run the risk of never building up a credit history, and that can make it much more difficult for you to get loans when you finally do want to borrow money. The better course is to use credit sparingly and wisely, perhaps with a credit card that you pay off every month and use only often enough to establish a payment record and solid credit score.

First Financial hosts free budgeting, credit management, and debt reduction seminars throughout the year, so be sure to check our online event calendar or subscribe to receive upcoming seminar alerts on your mobile phone by texting FFSeminar to 69302.*

3. Build Up Some Emergency Savings.

Diverting money away from paying down long term loans in order to create a rainy day emergency fund might sound counterintuitive in trying to manage your overall debt. But especially if your outstanding debt is of the relatively good variety — such as a low rate mortgage or government subsidized student loan debt — having an emergency fund is very useful in avoiding the need to put a surprise expense on a credit card. Once you have your credit cards paid down, keeping them paid off every month is the best way to handle debt, and an emergency fund will make it a lot easier to handle even substantial unanticipated costs without backsliding on your progress on the credit card front.

4. Get On a Budget.

Regardless of whether you have debt or how much you have, establishing a smart budget is the best way to keep your finances under control. By balancing your income against your expenses, you’ll know whether you have the flexibility to handle changes in spending patterns or whether you need to keep a firm grip on your spending. Moreover, budgeting will often reveal wasteful spending that will show you the best places to cut back on expenses, freeing up more money to put toward paying down debt and minimizing interest charges along the way.

Click here to view the article source, from The Daily Finance.

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