What Are the Advantages of Having Excellent Credit?

When your credit is excellent, you’ll enjoy the privilege of lower interest rates on credit cards and loans. You also might be able to get loans without needing collateral or a cosigner, which is something people with lower scores often have to deal with. Another advantage of good credit is having the freedom to shop around for loans. For example, a person with a 570 credit score might have to take whatever he can get regardless of the interest rates offered when he needs a loan, but you shouldn’t have to worry about that. However, you should keep in mind that some lenders do look at more than just your credit score.

Is 702 a Good Credit Score For Getting Any Loan?

Even though 702 is a good score, lenders also take into consideration how many credit accounts you have open as well as your current and past employment information. If you have multiple accounts open, this indicates you’re in a lot of debt, which could hurt your chances of getting another loan. It’s also not looked on favorably by most lenders if you’ve had several different jobs over a short period of time. They might view this a sign of irresponsibility or failure to stick things out. Even though there’s a great chance you could still get a loan if these other factors apply to you, the loan terms might not be as favorable. If you’re struggling with debt in spite of having a high credit score, you might want to pay some of it down before borrowing any more money.

Beware of Credit Repair Scams

Just as there are no real fast debt solutions for getting out of debt, there’s also no such thing as credit quick fixes. There are several fraudulent companies out there that would  have you believing otherwise. They’ll promise to patch your credit history up – for a fee. What many people who are taken in by these scams don’t know is that it’s not possible for credit to be patched up instantaneously, and people who attempt this are often breaking the law. To make matters worse, if they get in trouble for it, so could you. Legal website NOLO lists a few ways in which credit repair clinics try to patch up your report, one of which includes stealing social security numbers from people who are either dead or under the age of 18. Never trust any company offering any kind of quick credit fix. You can do it yourself – legally.

Repair Your Credit On Your Own

How does credit repair really work when you go about it the right way? It works when you make an effort to pay down your debts, make timely payments on everything you owe, and avoid applying for credit over and over again. Don’t open up new credit card accounts if you already have several. However, it might not be a bad idea to apply for a credit card if you don’t have one at all just so you can charge small items and then immediately pay them off. This is actually a great way to improve your score. Even if you have a 570 credit score or below, it’s still possible to raise your score slowly and steadily by doing these things. You’ll find that many potential employers, landlords, and lenders will all begin to start trusting you again once your score climbs into the mid-600s.

Changing the Money Saving Mindset

According to respected financial expert Dave Ramsey, people can begin to understand the importance of saving money by changing how they look at saving. The idea that putting money away for later is no fun because it doesn’t provide immediate gratification should be dismissed. Instead, it’s best to view saving money as a way to have things without going in debt for them, ultimately eliminating a lot of money spent on interest and worry over a new bill to pay each and every month. When people begin to look at saving in this manner, they often get excited about the idea of putting money away and might even start looking into all sorts of other practical ways to save money in every area of their lives.

Making Purchases With Cash

When people go into debt for expensive items, it tends to leave them with a sick feeling. People who use money they saved up to buy something they really wanted rarely experience this feeling. Instead, they might feel proud of themselves for setting a financial goal and seeing it through to the end. The idea that going into debt for things like cars, houses, and other expensive items is necessary just isn’t true. There are many people who put aside enough money over the course of several years to purchase or build their own homes without having to go into debt at all. This happens even more often with car purchases. It ultimately comes down to mind over matter. If the importance of saving money is at the forefront of the mind, a person is much less likely to go into debt for something he can’t really afford.

Is Consolidating Payday Debt a Good Idea?

It probably isn’t wise to use a debt company set up for the consolidation of unsecured payday loan debt. Many of these companies are operated by payday loan companies and do nothing more than take advantage of the poor and desperate with promises of fast debt solutions. A person who wants to consolidate any of her debt, regardless of where it originated, would be better off to talk to an actual bank or see if a non-profit credit counseling agency could either offer advice or set up some reasonable payment arrangements.

Breaking Free of the Payday Loan Cycle

Payday lenders will attempt to take funds directly out of a person’s bank account for repayment whether that person has it to spare or not, and this would likely be the case with companies offering debt consolidation for these loans as well. As a result, people end up owing numerous insufficient funds fees to their banks in addition to what they owe payday lenders. Sometimes it’s best to close bank accounts that payday lenders have access to and start from scratch so no more fees accumulate. Instead of going through a consolidation company in search of simple debt solutions, a person should make arrangements for repayment directly with the lenders he originally dealt with. It’s best to avoid giving out new bank account info to any payday lenders regardless of what threats are made. If collection threats get out of hand, a person should educate himself on the laws regarding interest rates and small loans in his area to get a better understanding of what his rights are and what a lending agency can legally do to get their money.

Debt Relief Warning Flags

People who are considering participation in various debt relief programs should be immediately be on their guard if potential companies request large upfront fees for their services. According to MSNBC, a company that requests more than $50 upfront for providing debt assistance is asking too much. It should also raise a red flag if certain companies are very vague with details — failing to explain exactly how monthly payments would be distributed and what any extra upfront or monthly fees would go toward. Thanks to the Debt Settlement Consumer Protection Act, companies are not able to get away with such practices as rampantly as they were before, but it still happens.

About Credit Counseling Companies

Credit counseling companies differ from most debt relief companies because they actually provide counseling. They generally abide by all the debt settlement regulations and do not charge astronomical fees for their services, although small fees are typically charged. Credit counseling companies have programs available to distribute payments amongst various creditors just as debt relief companies do, but if it looks like a person wouldn’t benefit from such a service, they generally don’t recommend it. Even though there may be some credit counseling scams, there are far more legitimate companies of this nature in existence than there are legitimate debt relief companies.

The bottom line is that any plan to help manage and reduce debt should be workable and realistic. Any company, regardless of whether or not it’s a credit counseling or debt relief agency, should not be trusted if they are making promises that seem too good to be true. The Better Business Bureau is a great place to start if there are any doubts about a specific company.

Why You Should Avoid Most Quick Debt Fixes

The majority of companies out there who are willing to lend you money when you have bad credit or are sitting underneath mountains of debt are going to charge absurdly high interest. There are very few legitimate debt relief companies out there. Sometimes you’ll end up paying back the exact same amount you borrowed in interest, if not more. Sure, the money in hand will take care of immediate problems like paying your light bill or making sure your car doesn’t get repossessed, but these fast debt solutions are leaving you with more long-term problems. Taking care of your immediate needs with borrowed money could add five more years onto your total debt. You have to ask yourself if it’s worth it.

The Right Way to Recover From Debt

The only true way to recover from debt is to manage it effectively and begin to look at practical ways to save money so you’ll have some breathing room when you get into a bind. If you don’t have enough money to pay a bill, try at least talking with the people you owe money to before borrowing it from someone else. Many lending companies might be willing to work with you by giving you more time to get the money you need together. You should also start budgeting out your monthly funds so you’re at least giving some money to everyone you owe it to each week while also setting enough aside to cover immediate needs, like food, gas, or medicine.

In truth, there are no real fast debt solutions. Even filing for bankruptcy comes with it’s share of consequences. The majority of opportunities available claiming to help solve your debt problems will do nothing more than prolong them.

Work Toward Paying Off Debt, Not Building It Up

Your credit score is partially determined by how much debt you are in. If you have multiple accounts open through different lenders or lots of credit card accounts, this can negatively impact your score. Make an effort not to open any new credit accounts and start paying down on what you already owe.

Catch Up Late Payments

Credit card companies, mortgage lenders, and most lenders offering car loans or any type of unsecured credit report regularly to the credit bureaus. Try hard to get your past due payments caught up – particularly those that are running more than 30 days behind. Avoid fast debt solutions offered by untrustworthy lending companies like the plague – they may promise to improve your credit, but in reality they will damage it more severely than it already has been.

Use Your Credit Cards Responsibly

If you have a credit card, paying off everything you charge in a given month when you get your statement should help to improve your credit score. Your minimum payment may only be $15, and it might be tempting just to send this much in, but you’ll never get card paid down this way. You should also avoid charging more on your card than you know you can pay back the next month.

It could take a year or more to see a 570 credit score bounce back up from the high-risk range to the average credit score range, but at least you’ll know you’re making progress. A score that falls within the excellent range is entirely possible, but only if you continue to keep up your good credit and debt-management habits.

Basing a Utility Budget Off Averages

When trying to figure out how much are utilities per month for the purpose of creating a budget, it may be helpful to look at past utility bills. The total amount for specific utilities over a 12-month period should be added up and then divided by 12. This should give the monthly average, and basing a personal budget around this amount is usually safe. If the monthly total turns out to be less than the amount budgeted, the leftover money can be used to go toward the next month’s bill. This creates a safety net for months when utilities cost more than normal.

Average Utility Rates For Specific Cities

If it is not possible to dig up old utility bills to determine how much are utilities per month, it’s generally safe to base figures off average utility rates for nearby cities. A good resource for finding these averages is Whitefence, a website with national and city utility averages for 21 different areas in the United States. Whitefence is also a good resource for people who have just moved to a new town with no idea how much their monthly utilities might end up costing.

Using a Savings Account For Utility Funds

Putting utility funds into a savings account is a good idea for making sure that the money doesn’t get used for other things. There are also many savings account incentives offered by banks to people who don’t have savings accounts, which makes the idea of opening an account that much more attractive.

Cash Incentives

It is becoming common practice for many banks to offer cash to potential customers as an incentive for opening accounts. The majority of banks offer the cash when checking accounts are opened, but it’s occasionally done with savings accounts, too. Most banks require that a certain balance is maintained in the account for a specified period of time before awarding the cash.

Fund Matching

Fund matching is one of the most popular savings account incentives. The programs tend to vary from one bank to the next, but most banks agree to equally match each dollar placed inside the account for a limited time period, which is usually around three to six months after the account is opened.

Higher Interest Rate Returns

Many banks are beginning to pay more interest on savings account funds to lure people into opening accounts. The high rates of interest are usually guaranteed for a certain period of time before reverting back to the standard rate.

Round Up Programs

Bank of America has a popular program in place called “Keep the Change” that helps people with savings accounts build up their savings without really trying. People who opt in to the program agree to have the amount of all their bank debits rounded up to the nearest dollar, with the rounded amount going directly into their savings accounts.

Opening a savings account is considered one of the most practical ways to save money because people tend to believe that money they are saving is safest in the bank’s hands rather than their own. These extra savings account incentives seem to be mutually beneficial for both the banks offering them and the people who sign up for accounts.