Tag Archives: Credit score

Should You Pay for Credit Repair Services?

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Should You Pay for Credit Repair Services? Probably not.

Call it a coincidence. Call it savvy marketing. Whatever you call it, there always seems to be a spike in credit repair advertisements around the time the first holiday shopping bills arrive. Maybe you’re staring wide-eyed at a balance that’s higher than you expected, wondering how you’re even going to keep up with the minimum payments. This kind of uncertainty can the stage for bad decisions. So, before you scramble and sign up for credit repair services, take a deep breath and realize you have more control than you think.

Risk vs. Reward: Is credit repair worth the cost?

It’s important to remember that some credit repair services are legitimate businesses, able to follow through on their claims. Unfortunately, the reputable companies reside in a corporate landscape littered with scam artists and opportunists. If you’re willing to devote enough time and research, it’s possible to separate the upstanding services from the scams, but as NerdWallet columnist Liz Weston points out, “If you’re able to do that kind of research, then you can certainly figure out credit repair and do it yourself.”

While the trustworthy credit repair companies aren’t necessarily too good to be true, there’s a good chance they’re too costly to be worth it. When you consider that many of these services charge monthly fees ranging from $30-$100, the boost in your credit rating may not justify the ongoing expense.

Facing credit challenges? Your credit union can help.

Good credit isn’t the result of tricks and trade secrets. It’s established by applying solid financial habits over time. The same holds true for credit repair. While there may be some additional steps required to clean up your credit report, rebuilding good credit requires a consistent commitment to responsible money management.

Credit unions exist to ensure the financial success of their members. Educating people on proper credit management is part of that mission. If you’re drowning in debt and struggling to regain your financial footing, your credit union could be the lifeline you’re looking for. Discussing your current challenges with one of the credit union’s representatives can be the first step toward putting those struggles behind you.

Repairing damaged credit is no walk in the park. But with a little hard work and dedication and the guidance of your credit union’s financial professionals, you can be on the way to reclaiming the good credit you deserve.

Need a little help understanding your credit score or want to sit down with a First Financial representative to help with debt management strategies? Stop into your nearest branch location, email marketingbd@firstffcu.com, or call 732-312-1500 to schedule an appointment. We’ll help you get back on track!

Check out out guide for understanding your credit score.

 

Is Your Credit Score Affecting Your Quality of Life?

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The American dream is usually characterized as working hard from the bottom up, making a good salary, buying a house, and having time to create and enjoy your family life. But the vision doesn’t always come together so neatly – despite strong buyer demand, the inventory of affordable, available starter homes is relatively low, and to secure a mortgage, you need a strong credit score (something that not all Americans have or understand).

Even in the face of this unfamiliarity, most people realize that your credit score is the main determining factor in whether you qualify for a loan, and what rate you’ll pay on that loan. However, your credit score has the power to affect your life in far more than just one area — it can make or break your vision of the American dream on all sides.

JOBS

Though not all employers will check your credit score before hiring you, and most employers won’t rule out a candidate just because they have a bad credit score, your credit score could have an impact on how you’re seen by prospective employers. If they run a report and see that you’ve had a checkered financial history, and realize you’ll be handling financial responsibilities in the office, they may believe you’re underqualified, and move onto other candidates.

The good news is employers aren’t always allowed to view your credit report. According to Credit Karma, “The short answer is no, credit bureaus do not share your credit score with employers. Subject to restrictions in state law, employers may, however, ask to see your credit report. When your information is requested, credit bureaus will send over a variation of your credit report meant specifically for employers.”

APARTMENT RENTALS

Similarly, your credit score affects housing in more ways than solely influencing your mortgage rates and availability. Landlords will frequently check prospective tenants’ credit scores before choosing whether to rent the apartment to them. Obviously, if a tenant has a history of missing payments, or being late with payments, they’re going to be secondary options to tenants with strong financial backgrounds.

BILLS AND PAYMENTS

Your credit score could even affect how you’re expected to pay for utilities — especially when moving to a new location. When turning on utilities for the first time, a utility company may require you to leave an upfront deposit. If you have a high credit score, they may waive that deposit, but they may charge you more if your credit score is especially low. According to the FTC, “Like other creditors, utility companies ask for information like your Social Security Number so they can check your credit history — particularly your utility payment history. A good credit history makes it easier for you to get services. A poor credit history can make it more difficult.”

RELATIONSHIPS

Your credit score can even affect the quality of your relationships. It’s no surprise that money and financial issues are the biggest causes of couples’ fights (and breakups). If your partner is fiscally responsible, but you’ve had a more questionable history, it could lead to bigger arguments. For example, will you be willing to buy a house together? Will your credit score negatively impact your joint mortgage rate? Will you be paying off your debt together? Even a little money-related stress can quickly escalate into a bigger problem.

HOW TO IMPROVE YOUR CREDIT SCORE

If you’re reading all of this and feeling nervous about your own credit score, take a deep breath. Even if your credit score isn’t as strong as you’d like it to be, there’s always time to revise and improve it. Your first step is to know what your credit score is – and thankfully, you can check it for free. Once you know your credit score, you can take the following steps to improve it (and along with it, the quality of your life):

  • Understand your weak points. First, understand why your credit score is where it is. Is it because you’ve accumulated a lot of credit card debt? Is it because you missed several payments? There are many reasons here, but almost all of them can be corrected with better habits in the future.
  • Avoid new credit or debt. Don’t apply for any new loans or credit cards, this could tank your score even harder. Instead, focus on the lines of credit you already have.
  • Pay all your bills on time. This is the most important factor to focus on – from here on out, make sure you pay all your bills in full and on time. If you need to create a strict budget to do it, then do it. Without a steady history of on-time payments, you won’t be able to lower your score.
  • Start paying off your debt. Finally, work to start paying off your debt. Consider moving to a lower-cost area, taking on a second job, and cutting any unnecessary expenses. You can even call your credit card companies to negotiate for a lower rate. Once your debt totals start decreasing, you’ll feel happier and more optimistic as well.

Unfortunately, there’s no quick fix for a bad credit score. It takes years to build an initial score, and months to years to make a significant change. You’ll have to be consistent and patient if you want to succeed, but as long as you stay committed to your financial future, it can be done.

Need a little help understanding your credit score or want to sit down with a First Financial representative to help with debt management strategies? Stop into your nearest branch location, email marketingbd@firstffcu.com, or call 732-312-1500 to schedule an appointment.

Learn to manage your credit and reduce debt with our easy guide.

Article Source: Anna Johansson for NBCnews.com

5 Times Your Credit Score Matters Most

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Credit - Arrows Hit in Red Target.Your credit score has a huge impact on the net loss or gain of some of life’s biggest financial moments: a good score gives you more options, better terms and bigger savings. Your credit score will follow you throughout your life and affect a variety of situations, but these five times are when your credit score really matters the most.

1. Financing a Car

There are three factors that determine how much financing a car will cost: how much money you put down, the length of the term of the loan and your credit score. On a $10,000, 60-month auto loan, a borrower with a low credit score could pay nearly $4,000 more in interest charges than a borrower with a prime credit score. If you have a less-than-stellar credit score, shop around for the best car loan rate available — the savings will be well worth the effort.

2. Buying a House

It’s common knowledge that your credit score matters when applying for a mortgage, but just how much your score costs you in the long run is often ignored. The difference between an excellent score and good score can cost you tens of thousands of dollars over the lifetime of a loan, and having a poor score can cost you your dream of homeownership altogether.

3. Starting a Business

If you are a small business owner or have dreams of entrepreneurship, your personal credit is a major influence on the kind of capital you can access. Even if a business is set up as a corporation to limit personal liability, credit scores are often tied to the owner’s ability to personally guarantee the business’ debts; an analysis by the Federal Reserve estimated that 40.9 percent of all small business loans and 55.5 percent of small business borrowing is personally guaranteed.

4. Renting an Apartment

Though there are no official credit score requirements to rent an apartment, the higher your score, the better your housing options. A competitive credit score can give you the edge you need to rise above other applicants or take advantage of offers, like low down payment promotions for qualifying applicants.

Rental markets can be competitive, especially in large cities where many owners of multi-unit apartment buildings have a minimum score requirement to rent within the community. If you have a low score and have a hard time getting your rental application approved, you may have better success with a private landlord — your options will be limited but the requirements tend to be less strict.

5. Qualifying for Insurance

Insurance companies have standard practices for setting their rates, weighing various risk factors to calculate the exact rate to charge a customer, including their credit score. But the scores insurance companies use are different than the ones used by banks and financial services companies — these scores are called Insurance Credit Bureau Scores, or Insurance Risk Credit Scores.

Insurance scores consider credit information and previous insurance claim information, which allows insurers to determine how much of a risk someone is to insure. Actuarial studies suggests that someone who pays all of their bills on time, has a good credit history and hasn’t filed any insurance claims is less of a risk and a more profitable customer, according to the Insurance Information Institute. Therefore, a favorable credit score will not only get you a better rate on your insurance premiums, it could be the determining factor on whether you even get approved for coverage.

If you are looking to finance a vehicle, buy or refinance a home, or start your own business – be sure to contact First Financial for low rate loans and personalized service!*

*A First Financial membership is required to obtain a First Financial loan and is available to anyone who lives, works, worships or attends school in Monmouth or Ocean Counties. Subject to credit approval.

Article Source: Morgan Quinn for gobankingrates.com, http://www.gobankingrates.com/personal-finance/5-times-credit-score-matter/

5 Credit Assumptions You’ve Got All Wrong

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Credit Inscription on Red Billboard.Let’s face it – when it comes to credit and credit scoring, there’s a lot of misinformation out there. As a result, many people make assumptions about their credit that are incorrect. Here are 5 common examples of false credit assumptions, and the truth behind each one.

1. Paying a late fee means you won’t get reported to the credit bureaus.

If you slip up and pay a bill late, getting hit with a late fee probably seems like punishment enough. After all, forking over an extra $25-$35 for your forgetfulness feels like a sufficient slap on the wrist.

But if your payment is more than 30 days overdue, you could expect a negative mark to land on your credit reports, regardless of whether or not you’ve coughed up a late fee. This is a good reason to prioritize paying on time – if you don’t, it could be costly in a number of ways.

2. Your credit utilization ratio is 0% if you pay your balance in full each month.

Paying off your credit card in full each month is a good habit to get into. But as you’re patting yourself on the back for avoiding interest charges, don’t forget to remain diligent about keeping track of your credit utilization ratio.

Here’s why: Your credit card issuer could send a balance report to the credit bureaus at any time during the month – not necessarily right after you’ve paid your bill. Consequently, keeping your balance below 30% of your available credit on all your cards throughout the month is key to maintaining a solid score.

3. All of your monthly bill payments are being reported to the credit bureaus.

Personal finance experts commonly recommend that we pay all of our bills on time. This is certainly important for avoiding late fees (see above), but it causes many people to assume that all of their bill payments are being reported to the credit bureaus.

This usually isn’t the case. Rent and utility payments are typically not reported unless you become seriously delinquent. You still should always pay on time, but these payments generally won’t give your score a boost.

4. Avoiding credit cards will help your credit score.

In an effort to avoid getting into debt, some people choose to forfeit credit cards altogether. While it’s true that maxing out a card will do damage to your credit score, avoiding plastic entirely usually isn’t a good idea, either.

Getting a credit card as soon as you can and using it responsibly (which means paying your bill on time and in full every month), is one of the easiest ways to start establishing a solid credit profile. The longer you go without establishing credit, the harder it will be to do so.

The takeaway? Using a credit card to build your credit doesn’t have to result in debt if you make a budget and track your spending carefully. Usually, the benefits of doing so outweigh the risks.

5. A bankruptcy will affect your credit for the rest of your life.

It’s true: Declaring personal bankruptcy will have a serious, negative impact on your credit. But don’t let Internet rumors or sensational media reports warp your thinking – a bankruptcy won’t actually trash your credit for life.

In most cases, a bankruptcy will stay on your credit reports for 10 years, and the effect of this event on your credit score will lessen over time. This is not to say that you should treat bankruptcy lightly, but it’s important to know that no negative mark has to affect your credit forever. By letting some time pass and cleaning up your credit habits, there’s always a way to bounce back.

Article Source: https://www.nerdwallet.com/blog/tips/credit-score/credit-assumptions/

How to Build Credit if You Have a Small Income

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Building and maintaining a good credit score is one of the best moves you can make for piggy bankyour financial health. It might seem intimidating at first – the credit scoring system is definitely complex – but when it comes time to apply for a mortgage or other loan, you’ll be happy you made building a solid score a priority.

How does the picture change if you make a small income? As it turns out, not much. You don’t need to be a Rockefeller to achieve good credit. Take a look at the details below to learn how to build a great score, no matter how large or small your paycheck is!

First, know what makes a good score.

Before digging into specific recommendations, it’s important to understand the factors that affect your credit score. The FICO scoring model – which is the most widely used credit scoring system in the United States today, takes a lot of variables into account to create your score. These include:

• Payment history
• Amounts owed
• Length of credit history
• Mix of credit accounts
• Recent credit inquiries

You’ll notice that income is not one of the factors used to determine your credit score. This means that earning a big salary doesn’t equate to earning a high credit score. Even if you have a small income, you can succeed at scoring high, as long as you’re using the right strategies.

Obtaining credit is an important first step.

It’s empowering to know that the steps to good credit are about financial behaviors, not the size of your bank account balance. But what exactly should you be doing to get there?

Above all, it’s important to start using a credit account responsibly as soon as you can. Proving to potential lenders that you can be trusted with borrowed money is the best way to start building your credit momentum.

One of the easiest ways to do this is with a credit card. If you’re not earning much money, you might be shying away from plastic to avoid the temptation to overspend. But this may in fact stall your efforts to build good credit.

If you’re not interested in getting a credit card, obtaining another type of loan to establish a credit history is a good idea. You might have trouble getting approved if your income falls below the lender’s requirements. In this case, offering a big down payment or securing a co-signer might help you qualify as well.

Keep up with good habits.

Once you’ve gained access to credit, keeping up with good habits is essential to building your score further. Specifically, you should focus on a few important behaviors.

The two most important factors the FICO score looks at are:

  • Payment history – Are you making the minimum payment required on time every time? This accounts for 35% of the FICO Score.
  • Credit Utilization – Are you keeping the balances on revolving credit (typically credit cards) below 30 percent of your available credit? This accounts for 30% of the FICO Score.

In short, paying your bills on time and in full are the two most powerful things you can do to create and hold onto a good credit score.

And just to be clear: Neither requires a big income. Spend and borrow within your means, and it will be easy to manage your payments properly.

The takeaway: Those with small incomes have the same opportunity as their high-earning counterparts to build good credit.

Use the tips above to get started today!

Article Source: Lindsay Konsko of NerdWallet

http://www.usatoday.com/story/money/personalfinance/2014/09/01/credit-score-financial-health/13628811/

3 Ways Moving Can Hurt Your Credit Score and How to Combat Them

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Stack of cardboard boxWhether you are moving because it’s an upgrade to go along with a higher salary, or simply a change of scenery, many of us love to hate moving – and do so frequently. But between asking around for free boxes and trying to comprehend how you’ve acquired so much stuff, watch out for your credit! Here are three ways moving could impact your credit score and how to deal with them.

1. A credit check will initiate a hard inquiry.

When you apply for a new apartment, your apartment management company will likely pull your credit to see whether you’re responsible with money. This will trigger a hard inquiry, which can pull down your credit score a few points. Hard inquiries remain on your credit report for two years and affect your credit score for one.

Because of the minor impact of a hard credit pull, it’s generally not a huge concern. However, if you’re initiating multiple hard inquiries each year, you could hurt your score more significantly. Hard inquiries may include: applying for credit — such as credit cards, mortgages, and loans, or applying for a service that requires financial responsibility, such as a cell phone.

Solution: To keep your credit score from suffering multiple inquiries, you should limit your annual credit applications and take advantage of rate shopping when possible. This will keep your inquiries low and your credit score high.

2. Bills that go to your old address may go unpaid.

A new study released by the Urban Institute states that over 1/3 of Americans have an account in collections. But what does this have to do with moving? An account can easily end up in collections because it isn’t forwarded correctly, instead being sent to an old address. There are two easy things you can do to prevent such a mix-up.

Solution: First, change your address with the U.S. Postal Service before you move. It will forward your mail to your new address for one year. By that time, you should have your address changed on all of your accounts. Remember to update your address on your accounts as soon as possible.

While you’re updating your address, you may also want to enroll in paperless statements and automatic bill pay. In an increasingly paperless world, it’s best to handle your financial dealings electronically. If you don’t want to use auto pay, have statements sent to your primary email so you can pay them before the due date.

3. You’re putting too many moving expenses or new purchases on credit cards.

Moving can be expensive. Between paying for a moving truck and covering your security deposit and first month’s rent, it may be tempting to put moving-related expenses on credit cards. This is all well and good, but only if you have the funds to pay off your credit card in full before the due date to avoid accruing interest.

It’s also easy to fall into the trap of charging new items for your home. After all, new digs require new furniture, right? Wrong! Unless you can reasonably pay for your new purchases, resist the urge for now.

Solution: Save money well before your move-in date to cover all moving-related expenses. And in the case of buying new things for your new place, purchase the decor of your dreams slowly as you have the money. Your home shouldn’t be a source of stress, so make sure it isn’t filled with things that are hurting your finances.

Bottom line: Moving can hurt your credit score, but only indirectly. To keep your credit from being damaged by your upcoming move, avoid getting too many hard inquiries in any given year, change your address with the USPS and switch to paperless billing, and try not to buy anything moving-related or otherwise that you can’t pay for before your credit card due date.

Article Source: Nerdwallet.com