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How You Can Become CreditworthyJust a short four years ago, my finances and credit score were horrible. Multiple bad decisions left me with a credit score that was in the 500’s. As someone who was nearing thirty years old, that was not good. I got a better job and decided it was time to get my credit in order. In January 2015, I officially started working on bettering my credit. By August of that year, my credit score had gone up by 168 points. It was unbelievable. Who knew that by making a few changes that my credit would go up? Today, I want to go over some things that you can do that will help you become creditworthy.

Better Job

As I stated earlier, I got a better job. Yu should do that as well. I had been working two part time jobs for six months. I wasn’t making enough money to do anything except for getting by. The next job was just what the doctor ordered. I was able to make more money. This was actually the highest paying job that I’ve ever had. My stress levels went down. I was able to start saving money finally. I also devised a plan on what to do with my debt.

Making more money meant that I was able to get current on every debt that I had. I had been months behind on a few of my bills. To have enough money to get current was great. For some of them, it took me a couple of months to get current because I was so far behind. I was able to get there though. I learned that 35% of your credit score is your payment history. That was more than a third of my score. If you aren’t making enough, it’s time to consider getting a better job. More income will help you.

Pay On Time

The second thing that you can do is pay your bills on time. As I stated earlier, there were times where I was late. That was one of the reasons that my score was so bad. Whatever you need to do, make sure that you pay your bills on time.

Stop Using Credit Cards

The third thing that you should do is to stop using your credit cards. I used to use my cards all the time when money was low, which was a lot back then. At one point I was using 95% of my available credit. That wasn’t smart. The credit bureaus don’t like that. You are looked at as higher risk customer. The ideal credit utilization is 30%. I was nowhere near that amount, so I stopped using my cards. If you’re in a similar situation, you should stop using yours as well.

Doing those three things that I discussed above will help you become more creditworthy. You just have to have a little discipline. I know that anybody can do those things. I was horrible with money a few short years ago. Now, I’m not. Don’t let your past be an excuse. Decide that you want a better score and make it happen.

What is your excuse?

What is Debt Consolidation?A lot of us are in debt. Many people feel helpless when it comes to the debt they have. If you’re flooded in debt, one option that you might have heard about is debt consolidation. There are pros and cons to using a debt consolidation program. In this post, I will be going over how debt consolidation works.

Debt Consolidation 101

Basically, debt consolidation works like this. Let’s say you have four different debts. They total up to $1400 a month in payments. You simply can’t afford the payments anymore.

Instead of going into bankruptcy or going into default, you decided to go to a debt consolidation company. The debt consolidation company will go to your lenders and negotiate a deal to pay off all your loans for you. Typically they will get you a deal for between 25% to 75% off.  That’s a heck of a deal.

The debt consolidation company will pay off the loan; then you will owe them the money instead of your lenders. Instead of having to make four payments, you only need to make one now. Your monthly payment is much lower than your previous monthly loan payment amount.

They need to make money too

Remember, debt consolidation companies, even if they are a non-profit company, need to make money as well. Some companies will structure their program in a way that you will end up paying more at the end of the day. For example, they can lower your $1400 payment down to $900 a month while extending your loan terms by 24th months. This is something that you must consider if you are thinking about going the debt consolidation route.

Your monthly payment may be less, but in terms of the full loan, you may end up paying a couple of thousand dollars more. For the debt consolidation company, it’s a trade off. They need to make money, but if you can’t afford the higher monthly payments, then a smaller monthly payment, with a higher overall payment might be the lesser of two evils. Consider all of your options befoe you make that decision.

How does it affect your credit?

This is the million dollar question. Does debt consolidation affect your credit? Settling a debt is not as good for your credit as paying it off in full. It is better than ignoring it or not paying it off at all.

How it affects your credit depends in part on how delinquent you were before the consolidation. It also depends on if the creditor charged off the debt to a collection agency. If that has happened, the charge-off will appear on your credit report even if the consolidation company reaches a settlement with the collection agency. Timing is everything.

Working with a debt consolidation company does not lower your credit. Getting your debt charged off, settling for a lower amount than you owed and being delinquent on your debt can negatively affect your credit report. Is that something that you want?

Debt consolidation isn’t for everyone. If you are struggling and or near bankruptcy, it may be the option for you.

Your financial health depends on the spending decisions you make. Unfortunately, a majority of the decisions people usually make are mistakes that only lead to financial instability and regret. Here are the top six most common financial mistakes you should avoid.

Living on Borrowed Money

Bad credits loans are common in the US. They are common because people find it normal to use credit cards to buy everything they want without establishing a robust repayment plan. Their credit rating begins to drop as they continue to default on the loans. In the end, they resort to bad credit loans to enable them offset their balances.

You can live without credit cards if you simply take some time and plan your finances. Track where your money goes and change those habits that are making you to use credit cards. Create a household budget and stick to it. Stop carrying your credit cards wherever you go and save in an emergency fund to eliminate the option of using a credit card for unexpected expenses.

Paying Your Debts with Savings

Some people use their long-term savings to pay off debts. They even go to an extent of withdrawing money from their emergency and retirement savings accounts to pay off debts. Withdrawing money from these accounts is easy, but it is very difficult to replace the amount you have removed. Do not touch your savings. Instead, look for alternative means of paying debts. Assess your situation thoroughly and come up with a strategy on how you want to pay the debts. Analyze your resources and determine how much you can cut from your spending to add to the monthly payments.

Failing to Build an Emergency Fund

Almost 34 percent of Americans do not have a savings account. Such individuals risk huge financial burdens following an emergency like a sudden illness, accident or home repair. Those who have an experience with unforeseen expenses can tell you how joyful they were for having an emergency savings account. You need to have a savings account that is worth at least three months of your salary. This amount should cover up to three months of your expenses in case you lose a job. You first have to calculate your living expenses in order to come up with a suitable amount to save every month.

Not Writing a Budget

Only 33 percent of adult Americans prepare and follow household budgets. This is quite unfortunate because budgeting is a stepping stone towards financial well-being. A proper budget monitors how you spend and ensures you don’t deviate from your financial plan. It helps you focus on things that are important like getting out of debt, saving for a car or starting your own business. A budget will also save you a lot of money and stop you from worrying about your finances.

To make a budget, you need to first assess your financial situation. Break down your expenses over the past few months and categorize them into needs and wants. Evaluate your spending on each category and find ways to reduce them, beginning with the wants.

Ignoring Insurance

Life is full of unexpected events. These events can happen to anyone, regardless of their financial might or age. You want to make sure you are financially armed for them by buying an insurance policy. You can go for a homeowner’s, liability or health insurance.

Failing to Invest

Having the thought of working your entire life and living from one paycheck to another is enough to compel you to invest. You need to let your assets make money for you. Do not keep your money in the back of your pocket without placing it somewhere to multiply. There are many ways to invest in the US. You can open a small business or invest in stocks, bonds and mutual funds. Make sure you consult with an adviser to know the potential risks and challenges of each investment option. Investing is quite essential in getting you to where you want to be in life.

Is Debt Relief Better Than Bankruptcy?A lot of people have debt. Some are struggling, while others including myself are working hard to pay it off. If you’re struggling with your debt, I know that you possibly have considered bankruptcy or debt consolidation before. Do you consider debt relief a better option than bankruptcy? Do you think bankruptcy will help you out? There are arguments for both sides. It depends on your situation. There are a few things that you should consider.

Pros & Cons of Debt Consolidation

We all know what debt consolidation is right? It is taking one big loan to pay off your other debt. One drawback of debt consolidation is that you are not out of payments. You will still owe money.  You still have to make a debt payment every month. It may be a smaller payment so it might be more manageable.

One key benefit of debt consolidation is that it can address other kinds of debt that bankruptcy can’t eliminate. Some of those types of debt are alimony and child support. With debt consolidation, you’ll have someone that will take you by the hand and guide you through the debt repayment process. That can be a good thing especially if you’re stressing about payments.

One of the main things you need to ask yourself about any debt consolidation program is if you can stick with it or not. Certain statistics show that only 55% of the people who sign up for a debt relief program make it all the way through. So, 45% of people will spend months or years going through the debt repayment process and then give up. That’s crazy. Not only does that cost them money, but it could slow the process of them getting better credit.

Pros & Cons of Bankruptcy

People have different thoughts when it comes to bankruptcy. Some say they will never file for it. Others don’t mind. If they get into a financial situation, they will do what they have to do. The main benefit of bankruptcy is that you basically owe nothing once it’s done. As started earlier, with debt consolidation, you still have to make payments every month to the consolidation company. If you file bankruptcy, you don’t have to pay any more.

The next thing is a huge con. A bankruptcy will knock your credit score down by 200 to 250 points. That’s not something that I’d want to happen. I’ve worked very hard over the last couple of years to raise my credit score to over 700. I wouldn’t want one decision to mess it up.

If you decide to go the debt consolidation route, it is usually reported, but creditors as settled on your credit report. It will impact your score by only 50 points. Your bankruptcy will not only mess up your score; but it will also do something else. Future creditors who see a bankruptcy on your credit report will know that you ran away from your debt. Some of them would be less likely to trust you in the future.

If you have a lot of debt, you want to try to pay if off. If you are struggling, then debt relief may be the better option for you. Just make sure you can stick to the plan. It takes discipline. If you really are having problems, then you may be better off filing for bankruptcy. Before you make any decision review your situation.

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When you shop for a new auto insurance rate, there are a lot of factors to consider. Either we enjoy being covered by this policy or we’re just too lazy to shop for a new one and sometimes when we are complacent on this, it could cost us money in the long run.

Over the course of the past few years, technological growth has increased as car manufacturers create vehicles with advancements such as enhanced safety features and in some cases, even driverless cars. Now if cars are being made to be safer, can the auto insurance companies survive? When the future becomes a total reality, would we still need liability insurance for our car? There are a couple of situations wherein we would need insurance coverage such as theft or when another vehicle crashes into your parked car.

Now even with all these innovations, insurers can definitely evolve with the pace of technology and thrive within. There are still a lot of things a car can and cannot do so there won’t be much impact at this time yet, although there are a few accidents that can be eliminated with a driverless vehicle such as:

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credit-card-851502_640A lot of people have a bad history with money. Maybe they took out a loan that was too large to pay back or maybe they lost their jobs and had trouble just getting by, causing their loans to default. Either way, if you have a bad history with money, you may think that you will no longer be able to qualify for a good credit card.

The good news is that there are things you can start doing today to fix your credit so you get approved for those credit cards you may need. It takes time and it isn’t a cakewalk, but if you try hard enough, you can rid yourself of your bad money history and move forward financial. Here are a few tips to establishing credit and get back on track.

Look at Your Credit Report

The first thing any financial institution does before approving loans or a line of credit is to look at your credit history, so you need to know exactly what they will find so you can be prepared.

There are plenty of websites that you can use to look at your credit history, but the important thing is that you look at it thoroughly. There could be mistakes or items that should be expunged from your record but are still on there. These will hurt your chances of improving your credit, so should dispute them with the credit reporting companies. If the same thing appears on all three reports, you need to dispute it with all three companies to make sure the mistakes are expunged properly.

Start With Outstanding Debt

Once you know what’s on your credit history, then you can start fixing it. It will take some time, but you need to start with the largest debts on your report and try to get them taken care of.

You can often negotiate a price that will take care of defaulted loans. You will need to pay a lump sum, but you may be able to settle for pennies on the dollar, saving you money in the long run. Start with the biggest debts and work your way down until all of your outstanding debts are cleared.

Keep Up With Payments

Just one missed payment can affect your credit score, so make sure to keep up with any payments you currently have so the problem doesn’t get worse.

Make sure you pay all of your current bills before you throw money at outstanding debt. This way, your score won’t get any lower and it may even improve a little if you are constantly on time with payments. Pay off all of your credit cards each month if you have any with balances and never be late with payments on things like utilities, car loans or mortgages.

Again, your credit will not improve overnight: it’s a long process that takes time. But if you have a plan and stick with it, you’ll be approved for those new credit cards sooner than you think.

Nicole Humphries works in the personal finance sector and contributes to a selection of blogs with her articles on personal finances.

payday loanSome people just seem to be good with money and make the rest of us look like novices but don’t feel too bad if you are not amongst that elite number, as the majority of us could do with some extra money management skills.

Here is a look at some of the basics, which will provide a solid foundation to help you become savvier and confident with your money.

There is an overview of the importance of budgeting, how to keep on top of your monthly bills, why clearing your credit debt is a no brainer, and how to change your attitude toward saving.

You can’t expect to get far without setting a budget

You only have to mention the word budget when talking about personal finances and you can almost see many people glaze over with a disinterested look, but boring as it might be, setting a budget is at the very heart of good financial management.

You just have to accept that sometimes the most useful advice is not exactly going to get the pulse racing. The main thing is that you need to sit down and work out exactly how money you have coming in each month and exactly how much money is going out, and where it is being spent.

Once you see your finances laid out in front of you will then have the opportunity to see where savings can be made and start developing a strategy for managing your money more closely in the future.

Keeping your bills under control

Another important tip to follow is to remember to regularly review your monthly payments to see if there are any better deals available elsewhere.

If you have older kids and need to insure your teenager for their car, you will know that this is a cost that can easily blow a hole in your monthly budget unless you manage to find a good quote.

Once you have secured a decent deal don’t automatically accept the renewal invitation without checking whether you can find it cheaper elsewhere. The same rule applies to your deals for broadband, gas, electric and mobile phones.

Always be on the lookout for a better price so you can save as much money as possible to help your budget.

Prioritize your debts

It feels good to have some money set aside in savings but what so many people don’t realise is that a better long-term strategy would be to prioritize clearing your most expensive debts over having some money in a savings account earning very little interest.

With average instant-access savings account rates well below 1% and credit card interest rate charges heading north of 12% for most consumers, it would be smarter to pay off this expensive borrowing and be able to keep more of your money to yourself in future, which could then be invested.

Little and often

It is also worth saying that you sometimes need to change your mindset to become successful at saving regularly.

Many of us are dissuaded from saving because we can’t commit to putting away a reasonable amount of money each month. Even small amounts set aside regularly can add up to a tidy sum over time, so starting to save with even modest amounts is better than doing nothing.

If you get to grips with the money management basics everything else should start to fall into place.

Isobel Carter writes about money matters for a selection of personal finance related blogs. She works in the banking sector and is a Mother of two daughters.

How to Become a Credit Card ProHello, everyone. Some people can live with, while others can’t. Credit cards can be good for helping you manage your finances. If you use them the right way, they can be useful for building good credit. Even though I wouldn’t do this, they can also be used as a backup plan if you have an emergency. Keep reading to get more info about credit cards and their use.

On time payments

Pay your credit card bill on time each month. If you are the type of person, who may forget the due date, set up a reminder or two. If something happens that doesn’t allow you to pay your credit card on time, don’t freak out. You should call your credit card company as soon as possible and let them know your situation. There is a chance that they may be able to help you out. They might be able to delay your due date, set you up with a repayment plan or work with you in other ways that won’t mess up your credit as much.

Pay the credit card in full

The next thing that you should do is pay the credit card in full every month. I’ll be the first person to say that I haven’t been able to do that. I’ve had credit card debt for years. There were times where I had to use my credit card when I didn’t have a job. It wasn’t possible to pay it in full. Now, I’m doing much better. I’m able to pay more money on it. If you use your credit card for ordinary expenses such as for gas or paying a utility bill, you should proceed to pay off the balance at the end of the month. Doing this will help you build your credit. You will also gain rewards from your card. Lastly, you won’t be getting any debt because you paid off the card.

Watch out for free

Credit card companies target people with freebies. I’ve seen different companies give away shirts, bags and even beach towels. I can’t lie, I’m a fan of free, but you have to be careful and pay attention to any free offer. The freebies that you are offered can be considered traps. The credit card company may lure you in. That could end up costing you a lot of money down the line.

Practice Discipline

It can be easy just to swipe that credit card without thinking. Don’t fall into that trap. Many folks lack the discipline to handle credit responsibly. The world tells you to spend, spend and spend again. Heck, you can get a “Black Amex Card” which is seen as a status symbol if you use a credit a lot. By having discipline, you can avoid getting into debt and possibly messing up your credit score.

Multiple credit cards

If you have multiple credit cards, you have to pay attention to them carefully. You don’t want to mix up the due dates. When you have a moment, review the balances and figure out which credit card you want to pay off first. Paying off the balance of the card with the highest interest rate is a good way to save more money in the long run. If you don’t want to go that route, you can also pay the credit card with the smallest balance.

Credit cards can be great to have. You just have to make sure that you don’t abuse them. They can help you build up credit. They can also make your credit horrible. Practice common sense and discipline when using them.