5 Ways Poor Credit Can Cost You

Your credit is one of the most important aspects of your finances. Your credit situation can mean savings — or costs. In fact, poor credit can cost you significantly. And the costs aren’t always in terms of money. While the most obvious costs of poor credit are financial, you also have to watch out for some of the other costs of bad credit.

Here are 5 ways that poor credit can cost you, financially and in other ways:

1. Pay More In Interest

Anytime you borrow money, you are required to pay interest. When someone lends you money, the goal is to earn, and that means that they charge you an interest rate. However, the interest you are charged is usually based on your credit rating.

Poor credit means that you present a bigger risk of not repaying the loan. The lender could lose some of the money it has put up. In order to mitigate some of that risk, you are charged a higher interest rate if you have poor credit. On a short-term loan of two or three years, the extra you pay might amount to a few hundred dollars. For long-term loans, though, like home loans, you could pay tens of thousands of dollars extra because of your poor credit.

2. Higher Insurance Premiums

In some cases, you might pay higher insurance premiums because of your low credit. Some studies link poor credit to other risky behaviors, such as car accidents. Your low credit could, in some instances, result in a higher insurance premium. This means that you could very well pay an extra $20 to $75 each month because of your poor credit. Over time, that can add up to quite a lot.

3. Inability to Access Some Products and Services

Your poor credit might actually cost you in terms of opportunities to get products and services. If your credit is poor enough, you might not qualify for a cell phone service. You might want a specific credit card to help you get back on track or ease your cash flow, but you might not qualify because of your poor credit.

In some cases, a bank will check your credit before allowing you to open an account. If you have poor credit, you might be denied a checking account or a savings account. You might have to use costlier services, such as check-cashing services, or prepaid debit cards. These can lead to fees that can cost you more than $100 a year. Over time, that adds up and your poor credit can mean that you are stuck in a financial services rut that is hard to get out of.

4. You Might Not Get Certain Jobs

Your credit history might be used as part of a background check for certain jobs. If you are applying for a job that involves access to sensitive information, or requires financial knowledge, your bad credit can be a hindrance. An employer might worry that you can be bribed to share sensitive information or participate in corporate sabotage. In some cases, there might be a concern about embezzlement. In any case, your financial situation could raise red flags with some employers and cost you a higher-paying job or a promotion.

While employers aren’t supposed to check your credit score, the story that your report tells might be enough to cost you a good job. This can be frustrating, especially if you are otherwise qualified.

5. Your Relationships Can Suffer

 More on Bad Credit

• What Your Credit Score Says About You
• Build Your Credit Score Faster
• Relationships: Is Bad Credit a Deal Breaker for You?

In many cases, the things that come with poor credit — or that cause poor credit — add stress to your life. When you have a lot of debt and poor credit, and when you are worried about your financial situation and all the extra costs you are paying, it’s hard to maintain healthy relationships. Your stress and anxiety can make you irritable, and you might be reluctant to share the full extent of the situation with a significant other.

In these cases, relationships suffer. Whether you yell at your kids more, or keep secrets from your spouse, it’s not healthy for your relationship. Your mental and emotional health can also deteriorate as a result of the stress related to poor credit. If you aren’t careful, you could end up with costs that are even greater than the financial.

source: financialhighway.com

How To Check That Your Credit Score Is Accurate

Did you know that if you are refused credit, you can find out exactly why under the Fair Credit Reporting Act (FCRA) and even if you do business or work overseas there is similar legislation to allow you to do the same, like the UK’s Data Protection Act and the EU Data Protection Directive. I ordered and received a review of my application to see just what they had on my report when they reviewed my credit.








Errors in Credit Reports 

Poor credit ratings are repairable but it takes time – and mistakes on your credit ratings make it all the more difficult. Five percent of people report mistakes in their credit report but if you have minor problems on your credit report, mistakes or not, it shouldn’t take more than a year to get your rating to where you can use it to your benefit again – as long as you continue proper credit habits.

Many times, if the information is incorrect on your rating, it can help to contact the company or agency that claims you missed a payment. This can often rectify a mistake.

Identity Theft

However, it could also be that your debts in question may be registered under someone else’s name and address. It could be that someone stole your identity, or a spouse used your credit card information to obtain their own card. In either case, it helps to find the source of the mistake first and then contact the credit agency with proof that the mistake is not yours. These kinds of services can be tremendously useful.

To make sure you are aware of all transgressions in your rating, complete this basic checklist below:

*Clarify that all your debts are registered under your own name and address.

* Make sure your debts and payments are not made under another person’s name.

*Space your applications over time and apply only for credit you know you have a good chance of receiving. Otherwise, it looks as if you are acting in haste and irresponsibly applying for as much credit as you can.

*Show you are a responsible borrower by spending very small amounts on your credit card and then paying it all back. This keeps you from paying interest costs as well as showing that you are responsible.

*Make sure you cut in half and shut down any and all credit cards you don’t use.

*Keep away from jointly financing with someone who has a bad credit rating, which may affect your own rating adversely in the long-run.

*Look for outdated information on your credit report and update it.

*Keep a detailed record of what you do when you’re rectifying issues on your report so that you can have all the evidence at your fingertips. Make sure you keep originals in your files and send only copies of documents and correspondences.

*When contacting a credit agency to dispute an item, make sure you have all the proof you need. Creditors are required to resolve issues within 28 days and update your record.

I can tell you it will make a world of difference on your credit if you complete this checklist. More information can be found at this site and others like it.

source: financialhighway.com

Bad Credit Effects Go Beyond Your Finances

When we think of bad credit, many of us think about the ways that bad credit can harm our chances at getting a loan. Bad credit can lead to higher interest rates, which can cost more money in the long run. Part of borrowing smart is making sure that you have good credit so that you pay the lowest possible interest charges.

However, paying more money for your loan is not the only way that bad credit can hurt you. Poor credit can harm you in other ways — including causing you problems in your personal life.



Emotional Stress

 

In many cases part of the reason consumers have bad credit is due to their high levels of debt. Your credit score suffers when you have high credit utilization. If your credit cards are maxed out, it can weigh on your credit score.


The poor credit score isn’t your only problem. When you have that much debt, it places emotional stress on you. This emotional stress can affect your mental and physical health at home. Emotional stress can cause anxiety and depression, and lead to difficulty in your personal life.

When you are stressed about money, as evidenced by your bad credit, it becomes difficult to effectively manage your emotional state — much less enjoy financial security.

Relationship Problems

 

Your bad credit can also prompt relationship problems. Money problems can lead to fights about money, and place strain on relationships. Disagreements about how to tackle the bad credit situation, and the bad debt situation, can lead to difficulty in your romantic relationship.

However, bad credit can also affect other relationships as well. Your stress and anxiety regarding money can lead to you having less patience with your children, and with other people in your life. You might be embarrassed to participate in activities with others, or afraid that they will learn about your credit problems. If this is the case, it can cause strain in your other relationships, and lead to problems relating.

Trouble Finding Housing

 

Another difficulty that can come from poor credit is difficulty finding housing. If you rent, some landlords will check your credit before approving you. This can mean that you don’t qualify to live in the apartment or house that you are interested in.

In some cases, you might be required to pay a larger security deposit, or pay first and last month’s rent — even if someone else who doesn’t have bad credit wouldn’t have to pay such a large amount of money up front.

Having bad credit can limit your opotions and result in you not being able to live where you want. If you can’t afford the larger security deposit, or if you are denied altogether, you might be forced to live somewhere you don’t want to. This can be a disappointing state of affairs — especially if the results mean that you are farther from amenities you are looking for or if your children won’t be in your preferred school district.

Passed Over for a Job

 

No, an employer isn’t supposed to look at your credit score when making a decision about whether or not to hire you. However, an employer can look at your credit report; at least a version of your credit report is available for employer perusal.

If you have poor credit, and you are applying for a job where you might have access to proprietary information or if you are going to be working in security, an employer might worry that you are vulnerable to bribery or other issues. While you will have to give your permission for a potential employer to check your credit, withholding that permission might indicate that you do have something to hide.

With more and more employers using credit checks as part of the overall background check, having poor credit could hurt your long-term career prospects.

Bottom Line

 

Your credit doesn’t just affect your loan situation. Your personal life can be affected by poor credit, and it can also have far-reaching effects on your finances and life beyond just what happens with your debt. As a result, it’s vital that you work to improve your credit score.

 source: financialhighway.com

How to Sabotage Your Credit Score

You don’t need a good credit score, right? After all, do you really need lower interest rates? Plus, lower insurance rates are kind of over-rated anyway.

If you are ready to really take your credit score down a notch or two, here are some solid ways to take your rating to new lows:






1. Pay Late

One of the best ways to bring your score down in a hurry is to pay late. Since payment history accounts for the largest chunk of your credit score (35%), paying late can be one of the best ways to drop your score.

Even better is if you can skip a payment altogether. Skipped payments can weigh on your credit score like few other individual items. It’s also worth noting that an account doesn’t have to be credit related in order to affect your score. Repeated missed payments or late payment made to utility companies or landlords can result in reports made to the credit bureaus. And never underestimate the power of ignoring payments altogether and having your account sent to collections.

Bigger payment issues, like foreclosure or filing for bankruptcy can result in a 200 to 300 point drop in your credit score. Now that’s the big time.


2. Add More Debt to Your Budget

The more debt you use, the lower your credit score. With credit utilization accounting for 30% of your FICO score, you can do some serious damage just by running up the credit card bills. If you are squeamish about paying late or missing payments, you can live beyond your means and just add more debt.

If you begin using more of your available credit, your credit score will reflect that. Someone with a good credit score will try to keep credit utilization to no more than 30% of what’s available. But if you want to keep your score low, you need to pile the debt higher. Carry a balance from month to month, paying only the minmum or a very little more, and you can work on building up your credit utilization.


3. Ignore Your Credit Report

You can’t improve what you aren’t aware of. One of the best ways to stay in the dark about your situation, and to keep your credit score low, is to ignore your credit report. Your credit report is a history of your credit related transactions. However, sometimes the information is inaccurate. This inaccurate information can impact your credit score.

Now, if you’re committed to keeping a low credit score, you don’t need to even look at your credit report. No reason to dispute errors if they are helping keep your score down. Plus, ignoring your credit report can leave the door open for identity thieves. When one of these scammers open an account in your name, that can be a great help in bringing down your credit score.


4. Apply for Lots of New Credit

If you are running out of room on your current credit cards, you might consider getting a new credit card. Applying for lots of new credit can be a great way to bring your score down a little bit. It’s not as dramatic as missing payments, but this strategy still has its place.

When you apply for a lot of new credit, it can appear that you are trying to run up your balances. Several hard inquiries into your situation in the space of a few months can lower your score a little bit. Soft inquiries, like those for “pre-approved” offers won’t bring down your score, though. If you really want to create maximum impact, you need to get out there and apply for more credit.

source: financialhighway.com

New Rules for Renters

Look for the next housing bubble in the rental market. Apartment rents will rise 5% in 2012, says commercial real estate brokerage Marcus & Millichap. Landlords report receiving multiple applications for each listing and are picky about tenants. The market for single-family rentals is just as competitive. In Minneapolis–St. Paul, Renters Warehouse broker Brenton Hayden calls demand "insatiable."

Rachel LeBlanc scoured online listings for an apartment in Boston’s Back Bay but couldn’t find much that was affordable—or even available by the time she requested a showing. LeBlanc called Charlesgate Realty, a brokerage specializing in rental properties. An agent helped her find a studio for $1,600 a month (the fee was one month’s rent). LeBlanc leased the apartment the same day she saw it and will move in September.

With a pro or on your own, it’s best to start your search at least two months before you want to move. Expect to supply proof that you earn two to three times the monthly rent. Landlords might set a minimum credit score (680 is common in Boston). Landlords probably won't negotiate on rent but may be flexible on pet deposits or utility costs. Or you may get a deal in exchange for signing a longer lease or helping to maintain the property. Hot markets have attracted scammers. Beware listings that sound too good to be true, and don’t pay anything until you’ve seen the place in person.

This article first appeared in Kiplinger's Personal Finance magazine. For more help with your personal finances and investments, please subscribe to the magazine. It might be the best investment you ever make.

source: kiplinger.com

5 Tips to Help Rebuild Credit Score

If you have ended up with bad credit score in the past few years then you are not alone. It can feel like a helpless situation but with time and a little effort you can reverse the situation and the best time to start is right now. Rebuilding your credit score won’t happen over night, it is a long process and requires patience and discipline. If you are looking to rebuild credit score these five simple ways on how to improve your credit score can help you stay on track.

1: Streamline Your Debts

If you have bad credit and are struggling to stay on top of things it can be easy for a bad situation to get worse. For example, if you have multiple credit cards and loan repayments each month it is easy to forget one and receive another dent in your credit rating, making it harder to rebuild credit score. Think about consolidating your credit cards and personal loans to reduce the number of repayments due each month and to reduce the interest rate. Set up an automatic payment to cover at least the minimum repayments each month to avoid damaging your credit score further and then make extra repayments from every pay check. If you do consolidate your debts then make sure you cancel any cards you consolidated rather than using them to extend your debt.

2: Create a Budget

Chances are you got into this situation by spending beyond your means. If you are spending more than you are bringing in then things will get worse and rebuilding credit will be impossible. Start by noting down your household income from wages as well as other sources such as share dividends or government benefits. Then think through all your outgoings such as rent or mortgage, utilities, cable, cell phone, groceries, automobile costs, travel, entertainment, clothes and so on. It can be hard to know exactly where you spend all your money when looking back at bank statements, especially if you spend a lot with cash. Try creating a spending diary for a couple of weeks or use a spending tracker app on your phone such as Toshl to get an understanding of where your money is going.

3: Change Your Habits

Now you know what you are spending money on, it is time to make some changes. You need to review your budget and find things you can cut out and reduce. For example, perhaps you can use free online services such as Hulu for on demand TV and cancel your cable subscription. Shop around for better deals on things you need to keep such as cell phone plans, car and home insurance, utilities as so on. Try looking for discount coupons for products you would use or switching to cheaper brands. If entertainment is an area you are spending up on then look for cheaper ways to do things such as eating in more, enjoying the great outdoors and so on.

One habit you will have to change is racking up debt. Take your credit cards out of your wallet and try shifting most of your spending to a debit card linked to your everyday bank account. This will force you to live within your means and avoid clocking up more credit.

4: Clean up Your Credit File

You’re now getting things in order and avoiding the risk of your credit getting worse. The next step to rebuild credit is to clean up your credit file. Request a copy of your credit file and look for any errors such as default or late payment notes which are not correct or unauthorized credit file enquiries. You may be able to request for mistakes to be removed which can speed up the path to financial recovery.

5: Rebuild Credit

The steps taken so far should be putting you in a good position to rebuild credit. Set up automatic payments for all your bills and loan repayments to ensure they always get paid on time. Creating a good repayment record will result in your credit score going up over time. While it may seem tempting to avoid all forms of credit this may not be the best option to restore your credit as the banks want to see repayment history. Safe options to help rebuild credit are secured credit cards or certain prepaid credit cards that rebuild credit. Secured credit cards work by securing the debt against money you deposit with the card issuer. You make repayments each month and the card issuer reports these on time payments on your credit report causing your score to rise over time.

Start your recovery

Getting into debt resulting in bad credit can be very stressful but it’s not a problem that will go away by ignoring it. Grab the issue by the horns and take control of it today. You should control your finances and not the other way around.

Article by Richard from credit card comparison website Secured Credit Cards 4U which compares credit cards to rebuild credit including secured credit cards and prepaid cards from leading US issuers.

source: financialhighway.com

Bad Credit History Loans - Bad Credit Disputes are Solved Easily

Bad credit history loans can surely be considered as a life savior for those individual's who are suffering from unfavorable credit scores. These will be offered to you on the basis of your current monetary standing as well as re - payment ability. Thus, in difficult times these loans are proved to be perfect for you. With the help of these loans you will be capable to access strong financial backing for meeting some of the essential fiscal needs that requires big budget. Under the provision of such loans, lenders are not bothered about your bad credit scores and allow you to acquire finance without feeling any kind of hesitation.

Here, all your bad credit excuses are acceptable which may be such as IVA, bankruptcy, late payments, insolvency, foreclosures, CCJs and so on. By simply repaying the loan installments within the stipulated time, you will get an amazing chance to improve your credit scores. Bad credit history loans can be acquired in both the forms which may be secured as well as unsecured form. This secured type of loan will be offered if you put any of your valuable assets such as your home, automobile, vehicles, shares or stocks as security to the lender against the particular loan you want to avail. With the help of these loans you can obtain large amount of loan at lower rate of interest and for a long time which varies from 5 to 25 years.

In comparison, unsecured type of loan is free from the obstruction of placing any of their valuable thing as collateral against the loan amount. With the help of Instant Bad Credit Loan you can derive sufficient loan funds till the flexible re - payment duration of 1 to 10 years. These loans certainly carry higher interest rates due to its security free nature.

The clients can even acquire this type of loan for fulfilling their various kinds of personal needs or desires and that may vary from one individual to another and even upon their preferences as well as choices. Their requirements may include all sorts of utility bills such as electricity bills, household bills, grocery bills, telephone bills, purchasing a vehicle expenses, educational bills which may include admission fees along with examination fees, medical expenses, wedding expenses, shopping bills, home improvisation bills, car repair bills and many more of similar sorts. So people with bad credit score can easily avail loan with the help of bad credit history loans.

Allan Marwick is working as senior financial analyst with Loans For People with Bad Credit. For more information about Bad Credit History Loans, Instant Bad Credit Loan and Bad Credit Personal Loans please visit http://www.loansforpeoplewithbadcredit.net/

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