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Creditors..the Good, Bad, and the Ugly |
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Depending on where you are in your personal finances, creditors can be your friend or your worst nightmare. Most people seem to be on the side of the fence that views them as nightmares. Avoiding their phone calls, not opening their mail, just wishing they would go away. Unfortunately they won’t. Creditors had some faith in you, gave you a loan for something you wanted or needed, and they expected you to pay them back. Of course there are times when something happens beyond your control, and you just cannot make the payments you agreed to. Believe it or not, the best thing you can do in this situation is to talk to your creditors. They are human beings after all, and they do understand thing happen. You can try to make arrangements for smaller payments, ask them to stop adding interest, offer them a one-time settlement on a lesser amount; if you at least talk to them when they call you may find out they have ways to help you. It is much better than dodging phone calls for years on end and destroying your credit rating. Some day you may be in a situation where you could buy a house, but your past credit won’t allow it. So the bottom line is that when you pay your bills on time you don't hear from the creditors unless it's to offer you more credit. On the other hand when you don't pay your bills you have to deal with the creditors calling you for payment it's their right. |
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Understanding The Relationship Between Credit Cards And Ratings |
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Today, there has been a significant rise in the prices of real estate which has led to an increase in the need to carry mortgages. In such a scenario it becomes necessary to understand the value of credit ratings and also that of these plastic cards, both of which are closely related to each other. The numbers of people using plastic cards has increased quite dramatically but at the same time, approximately a fifth of all American households do not use these cards.
On the other hand, many households use more than one such card and it is not unusual for an average American household to be using 4 active cards and about fifteen percent of the American population has more than ten cards.
Credit cards are a normal part of numerous households and it is quite obvious that today people that do not use such cards are being left behind in the consumer rat race. The ability to make a purchase without having to pay an immediate payment holds much attraction though today debit cards also offer a lot of convenience. The conclusion that one can draw is that these plastic cards are useful but not entirely necessary.
The trouble is that these plastic cards can multiply quite rapidly and once you have used one such card, you will want more of them. When people use more than one card, they risk running up credit card debts that can become a major worry. With the passage of time, their poor ratings will be reported and exposed and this is why credit rating reports have so much importance.
Without a card there will however be no rating while without ratings it will not be possible to get loans and without the loan it is impossible to purchase a home, car and other items. Your plastic card is also governed by its own history as well as its own ratings.
Your ratings with regard to your plastic card help banks (potential lenders) understand how you use your card and whether you pay your interest regularly. In this way the bank can know whether you are a safe risk or not. Of course, your plastic card is just one part of the overall ratings which will also be affected by factors such as your loans which could have been taken to purchase a car, home or even furniture.
The bottom line is that those with stable incomes and who have good ratings will generally get more joy out of using credit as compared to those whose incomes are flaky and whose ratings are not good. |
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Build Your Credit With Proper Budgeting |
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If you have decided that your ultimate goal is to become debt-free and have a good credit score, you have to achieve some smaller goals in order to be able to get to the big one.
Your first goal should be to create an savings fund (emergency fund) that equals three months' income within next twelve months. You might think that if you were able of saving 3 months' income you would not need help. That is not true; every financial expert will tell you that emergency savings fund is very important and that everyone is able to save that money. Until you have that emergency savings fund in place, you will never feel truly secure.
This fund will give you the chance to live for 90 days without needing any money, if necessary. This goal cannot be achieved overnight; you have to look at your finances and complete a budget so that you see how much money you can set aside every month.
Track your expenses for at least a month; track every single penny if possible. Mapping out your expenses will help you get to know what you are spending and where. When you spend is as important as where you spend. Once you have a picture of your spending, you can assess where you stand and why your debt is that high.
The point of budgeting is to stop incurring new debt and to set aside money for the things you really need and want. This can work very well if you stick with your goals. When consumers free up extra money they feel an urge to spend it.
You will want to save the extra money you set aside when you budget; your first goal is to create a savings fund and the second to reach your financial goals. You need to learn to make spending decisions intelligently, saving the money until you know that there is something important to spend it on.
Keep in mind that financial experts are not against cards or credit in general. Don't make that mistake; credit is indeed good and everyone should have it in order to participate in the greater economy of his country. But it requires control and good management.
Its misuse has to stop in order to eliminate debt. Building credit preserves your access to it. Debt allows you to get college education, buy a car, a house, things you need. If you don't have a good score, good luck finding someone to lend you money. Keep that in mind and be moderate with your spending. |
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Ways to Improve your Credit |
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Everyone has credit problems these days. Unless you are a millionaire, you probably have had a late payment or two at one time or another. The trick to solving the credit problems and improving your credit is to buy only what you need, not what you want! With credit cards, try to make a little more than the minimum payment, and pay on time. That is the most important thing to remember. Even one day late can reflect on your credit report and damage your credit. Pay cash if you can for anything you can't live without. Call the companies that you have credit with if you find that you can't make your payment on time. They are usually willing to work something out with you that is agreeable to both sides. That way, your credit doesn't go south. Skipping and ignoring payments only puts you further in the hole and makes you look bad. Don't apply for numerous credit cards. Try to stick with one or two that have a low interest rate, and only use them for emergencies. If you make a few dollars extra in your paycheck, apply it towards your payments. This helps build credit up. Sometimes you can borrow enough money from a relative to pay off the high interest debts, and pay them back at a low rate of interest, or no interest if you pay them back soon. Spend time talking with your creditors and show them that you are willing to work something out and that you want to get back on track. Save where you can. Take your lunch to work and use the money you would have spent by adding a little extra to that next payment you have. Every little bit counts toward repairing your credit, and you will find that you are out of debt in no time, and your good credit has been restored. |
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Credit Cards for Consumers with Bad Credit |
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It seems to me that bad credit comes from using money that you don’t have and not being able to pay back what you use. Of course we live in a society where it is virtually impossible to obtain certain things without some form of credit card in your possession. Millions of companies send advertisements via emailpromising you thousands of dollars in credit if you will just go along with the program being provided. These requirements range from paying participation fees, purchasing various memberships or giving you a $300 credit limit with $299 in fees applied to the card already. I have never been able to figure my way through the indecency or proprietary lending. That is what I call it. There are pre approved unsecured cards, secured cards, prepaid cards and cards that don’t care if you’re bankrupt or create any income at all. I am not saying that they don’t or won’t come in handy in desperate situations but they are something you really need to think about and regulate the use of if you are in a bad credit situation. There are thousands of cards being offered by the major and minor lending institutions to consumers who are less than financially astute. I am just not sure it is the wisest idea for those who value our ability to earn and pay our way through the economic life we live. I am not telling you to not apply for or use credit cards if you have bad credit. I am asking you to take a look at your personal situation and consider the consequences of making not only your credit worse but your ability to function in a society based on your willingness to spend what you do not have. Be sure to read the fine print and find the card with the best terms. There are legit credit card companies that do in fact offer consumers good credit cards to help them rebuild thier credit. |
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