How Do I Establish Credit?

How do I best position or establish myself to be able to obtain financing? Whether it is for a car or a home, the beginning is the same. It has been my experience that most car financing companies are looking for a minimum of credit that has already been established and proven for a minimum amount of time. What do I mean by this? As a Business Manager at car dealerships for over 10 years I have found these companies are looking for at least 3 trade lines (3 types of credit) usually credit card, installment loan, and perhaps a line of credit with at least one of them being for a minimum amount of $2500 dollars. This is how I recommend you start to establish credit. Once you do this you are well on your way to a 700 plus credit score.

This is only one way to accomplish this. Take $2,500 from savings and open a secured line of credit. For those who do not have $2,500 start with $500 and follow the same steps. I am available to help anyone with an individual plan. Now, this can be done usually at a local credit union as they have different rules then your traditional banking institutions. For those who are not familiar with the secured concept you will deposit the money in the bank and agree to leave it there while the bank opens an account in the amount you deposited. Make your first transaction in your line of credit a deposit of $1,000 dollars and open a secured installment loan. This can actually be done at the same institution on the same day and then take the check they give you and deposit that check into an account to open a secured credit card. This will give you 3 different type of credit accounts with one of them being at least $2,500!

Having made these transactions you will have a total of $4,500 dollars in credit extended to you. Now all you need to do is make your payments on time for the next 6 to 9 months and you will have created a very good credit score with all the qualifiers the financing companies are looking for. This is not always as easily done as said. There are other considerations you want to keep in mind. You will need to utilize these accounts and keep track of what you spend in these accounts. To achieve the best credit score I suggest you keep your charges at no more than 40% of the accounts available credit and keep your monthly balance at or below 30% of your credit limit. This will show the credit companies that you use the credit responsibly and give you the best scores you can achieve with the credit scoring models. This has been my experience over the course of my financing career. While I don’t claim to know the actual formula this is what has produced the best scores with my clients in the past.

By the time you have done this and made these payments on time you will have the credit necessary to purchase your first financed car. Now you will need to have the financial means (income) for most folks that is a job but the type of income is of less importance then the amount of income as these companies use a table of ratios to qualify you. Provided you meet their criteria you will get a car loan approved in your name.

Let us assume that you have qualified for a car loan. We have no reason to think you have not given up on the plan and have gone ahead and made your car payments for the following year. You will have made all your payments on time for over 2 years. On over 4 different types of credit now you should be able to qualify or least be credit worthy of qualifying and applying for a mortgage. You will have made all your payments for 2 years straight and established yourself as a good credit risk. You have raised the levels of your credit to a point well above the $4500 level when you bought your car. Now you need only have the income and savings qualifiers to get approved for a home loan. When you apply to buy a home you will be subject to qualifying based on a table of ratios; bills to income, payment to income both before and after the house payment is taken into consideration. By following the rules and steps laid out in this article you should be credit worthy to buy a home that is within your means. You will have established your credit and achieved a good credit score.

12 Strategies to Improve Your Credit Score

When it comes to a poor credit rating, there’s no quick fix. It’s kind of like managing weight. It’s so easy to gain weight over a short period of time with poor health habits. Losing the weight is a different story. It takes sometimes 2-3 times longer to lose weight than it took to gain it. Credit scores are similarly difficult to rebuild. There are, however, strategies to help you strengthen your credit score over time.

Ask your credit card company to increase your limit: They may deny you, but if they don’t, it’s one way to improve your credit score over time. The catch is that you can’t max out your card once your limit has been increased. Leave the credit window open and pay down your balance to $0 for the best credit results.

Open numerous accounts: In the short term, this won’t do much to improve your score. Over time, however, it is the amount of credit you aren’t using or can pay down each month that will build your score. Spending on every card you open can lead you down a path of surmounting debt. Be very strategic if you try this method to build your score. Use them intermittently for small purchases to keep your account open, and pay them off immediately. You will also have more cards to track for fraudulent charges. Only open as many accounts as you can reasonably monitor for the best results from this strategy.

Never skip a payment or pay late: Paying your mortgage late or forgetting to pay a credit card bill can cause even good credit scores to plummet if they get listed on your rating. Having a high credit score can mean the difference in thousands of dollars in extra fees and interest over time for large loans and expenditures. If you know you’re going to have difficulty making a payment on time, contact your creditor. You may be able to get the payment date moved temporarily or work out some other arrangement to ensure your credit score does not suffer due to unforeseen circumstances.

Don’t max out your credit card: Having good payment history and owning a credit card are only pieces of the credit score equation. Try not to carry a balance that is over 35% of your credit limit. If you have a high balance on one card and relatively low balances on others, it may make sense to transfer the high balance to several low balance cards to keep the percentage of each card at or under 35%.

Don’t close unused card accounts: Long histories of holding a card positively impacts your credit score. Even if you don’t use a card, you should hold onto and monitor the account. It can be beneficial even if the account is completely inactive.

Use your home equity line to pay down debt: Occasionally, it makes sense to transfer your credit card debt to a new or existing home equity line. If you use this approach, you should only transfer debt if the interest rate on your home equity line is lower than that of your credit card. You should also focus on paying down the debt instead of carrying it on the home equity line. This strategy can improve your score because the scoring formula that FICO uses evaluates your handling of different types of debt.

Individualize your accounts after divorce: Since married couples share debt burdens, what one spouse does will affect the other’s score. Joint accounts should be paid down and closed or transferred into individual accounts. Then, you will have the challenge of rebuilding independent credit with new cards, loans, or a mortgage

Pay off debt as you go: Make extra payments throughout the month to prevent the appearance of debt accumulation over the course of a month. It will leave you without as much money in your bank account through the month but can help build and keep your credit score higher.

Become a joint credit holder on someone else’s account: If you know someone who has great payment history and a good credit score, tying into his or her account can actually help you improve your credit score. You need to be able to trust in whoever’s account you join, however, because his or her poor payments will affect you. Getting removed from a joint account may be difficult, as well.

Review your credit report: Make sure you contact credit reporting companies and get outdated or incorrect information removed from your history. Inaccuracies can take up to a month to correct, but is a short-term solution to boosting your score.

Don’t apply for too many credit cards at once: Inquiry information is reported to credit reporting agencies and will be listed on your report for two years. Multiple inquiries can significantly impact your credit score for up to a year. Mortgages and car loans are exceptions to this strategy. Multiple inquiries will be treated singularly and will not affect your credit score.

Talk with creditors: If you face a difficult financial situation, your credit may work with you to find a viable solution to help you pay off debt without defaulting. Not talking to your creditor and defaulting on a card may mean you will be contacted by a collections agency, and your credit score will certainly be impacted.

Keep your knowledge of your credit score up-to-date so that you know if you need to work on rebuilding or maintaining it. Contacting a credit specialist can also be beneficial in informing you about what is going on with your credit. At National Credit Advisors, we will provide you with a free credit case evaluation and help you build your credit with a number of proven tactics.

Immigrants Can Ease Transition With Less Debt & Higher FICO Scores

A Social Security Number Is Important

To build or improve your credit, you’ll often need a social security number. Social security numbers are essentially 9 digit numbers that are assigned to residents of the United States. It’s important when talking about credit, because this number is generally used to track your reliability in financial situations.

Anytime a company is trusting in your financial dependability, whether it’s renting an apartment or buying a car, a good credit score can be a determining factor in whether or not they decide to do business with you.

Getting a social security number as an immigrant can be a complicated process, and in some cases very difficult. Generally, you can apply for a social security card if you’re approved for an immigrant visa. This, in turn, will give you the qualifications you need to start building credit. If you’re unable to secure a social security number, consider looking into other options, such as obtaining an individual taxpayer identification number from the IRS. This will also serve to help you get the credit you need.

Consider Working with a Credit Repair Agency

There are a number of organizations that offer free advice on credit repair to new immigrants. Reputable credit repair companies such as Pyramid Credit are staffed with experts in financial matters – especially related to credit – specializing in clients with either no credit history or poor credit.

Getting the initial opportunity to build credit, or recovering from financial mistakes in your past, can oftentimes be a difficult task. Taking advantage of these credit repair agencies for no additional charge is a great way to get advice and guidance on building credit without adding additional debt.

Keep Your Expectations Realistic

As a person with no credit, and especially as someone new to the country, there’s a limited amount you’re going to be able to do to start – even with the help of a quality credit repair agency. Expect to spend months or even years slowly building up a credit history before you’re able to make any large purchases. It’s a slow and steady process, but with commitment and financial responsibility, you’ll start to see your efforts pay off.

Realistically, however, you’re going to need a quick way to gain some basic credit if you want to find a good place to live. Some places will let you prepay ahead for several months of rent. If that’s not an option or you just don’t have the funds, you’ll need good enough credit to make your landlord or bank confident in your ability to pay.

The sections below deal with how to establish or repair credit as an immigrant, and assumes you’ll be starting from the very beginning with no ability to secure loans or credit cards.

Look for a Secured Card

Many banks will now issue a secured credit card to individuals with poor or nonexistent credit. These cards function differently from a regular credit card and have reduced risk associated with use for the loaning bank. Basically, every time a bank gives out a credit card or loan, they’re taking on a risk that the money won’t be paid back. Managing that risk is important for these companies to stay in business, so they often avoid dealing with customers who have low or new credit.

A secured credit card offers a card with a low spending limit. The “secured” part means that users have to transfer enough cash to cover their spending limit before they’re authorized to use the card. Basically, this means that the credit you’re using is already covered by the money you’ve paid to the bank. Essentially, there’s zero risk for the lender, even if you miss payments. Spending a small amount of money on a secured credit card each month and paying it off in full is a great way to slowly start building your credit.

Being approved for the first credit card is difficult. However, once you’ve jumped through that hoop and have started building your credit by spending responsibly, you’ll find the rest of the process will be a lot easier.

Secure Your First Real Credit Card or Loan

When you’ve built up some good credit from regular use of the secured card, it’s time to apply for another credit card or a loan. There’s only so much that a secured card can do for your credit, and you’ll need more lines of credit in order to continuously increase your score.

Apply for a credit card or loan that you feel you may have a good chance of being approved for. Do some research online on good beginning credit cards or banks that offer loans for customers with average credit and make the decision to add another line of credit to your history. Continue making payments on both your secured card and the new credit line. Then enjoy the increased flexibility and options that a good credit score will give you.

Keep on Moving Forward

These steps encompass only the first parts to a process that will span your entire life while you’re living in the United States. As long as you’re relying on credit for some portion of your lifestyle, you’ll need to maintain the good credit score you’ve worked so hard to establish. Continually make wise decisions, spend responsibly, and keep in contact with the expert staff at the credit repair company to make sure you’re still on the right track.

Immigration and establishing a life in your new home is a difficult process, however, following these guidelines will allow you to be one step closer to financial security with access to the resources you will need to prosper.

The Benefits of Cash Advance Payday Loans

The average person has many financial needs and sometimes it becomes impossible to keep up with all the necessary spendings. Unfortunately, most people cannot make long term plans and can only organize their monthly budget. In this context, if something unexpected comes up, such as a tax payment or worse, an accident or emergency repair, they cannot get the money they need. Some rely on the help of family and close friends, but this is not a very good long term solution; others have some money saved up and when they need something right away, they make a sacrifice and take how much they need from there. But is it an exciting prospect to take money from the savings for a house or college? One solution would be to get a loan from a bank, but the problem with emergency spendings is not necessarily the amount, but the short period of time to get the money. Obtaining a loan from a bank requires a lot of paperwork and considerable waiting times – and if a relative requires urgent hospitalization, you cannot possibly wait for one month. In the most frustrating cases, you might even be short of one hundred dollars and your payday is due in three days. If you don’t have another source of income and you really need financial help, then payday cash advance loans could be a solution for you.

Like the name says it, cash advance payday loans can be obtained more easily than bank loans and they are returned by the burrower when he or she receives the salary. Briefly, there is no need to put together a file with dozens of documents, submit it to the bank and wait for its approval. The main condition for getting these loans is to have a workplace and a stable source of income. The sums you can receive are smaller than bank loans, but you can obtain them in as little as 24 hours, which is actually the entire point of this service. The first and most important benefit is that you can have the money very soon, without waiting for days. There are many situations when you might need this type of financial help: for example, if your car has broken down, you have to buy a larger present, pay a fine or pay for unexpected hospitalization. The idea is indeed quite innovative and has helped countless people avoid complications. There are even some providers who can extend the pay back date, so if your salary is delayed, for example, you can still benefit from extra help.

However beneficial this financial service might be, it is still essential to point out that not all providers are professional and that, for best results, you will have to do some research in advance and choose a company that is truly reliable. Also, don’t forget to ask about the interest rate and the terms and conditions – it goes without saying that you should remember about the fine print too. This way, you can ensure that you will receive your money in time and that you will have a pleasant experience. The existence of this service once again shows that the modern world offers intelligent solutions for those who know where to look. Many years ago, the average person would have had to go through great lengths to get money on a short term notice, but now this endeavor is not at all impossible. There are many companies that can provide short term loans and, as long as you work with a professional one, there is no reason to worry about your financial security.

Poor Credit Vs Good Credit – "Cost of Points"

Poor Credit:

Poor credit describes an individual’s record as a consumer when it specifies that the borrower has a great credit risk. A poor financial assessment indicates bad credit, while a high FICO (Fair Isaac Corporation) score is an indicator of positive points. Creditors who lend money to a person with terrible credit face a superior risk of that individual missing payments or defaulting than creditors who lend to people with great credit.

Good Credit:

A capability of a person’s record as a consumer that specifies that the borrower is protected credit hazard. A high assessment score is a sign of good credit score, while a low FICO score indicates bad rating score. A person’s credit history relies on a number of factors, including the amount borrowed, the amount of accessible credit remaining and the timeliness of payments.

Cost of Poor Credit:

When it comes to your credit score, if you aren’t making the suitable or apt financial decisions to keep it as high as possible, you are playing with fire that could cost you a lot of money.

In recent times creditors have had to become more selective about who they loan to. As a result, the difference someone will pay with bad credit versus good credit is considerable. Lower scores can extremely change your financial position for your whole life.

Poor FICO rating points can really take a fee on a person’s life – and in a bad way. In fact, the effects can be worse than one might think.

Poor score can make it next to terrible to attain a new car, an apartment, a personal loan for any small requirements too. Even something as simple as getting a new credit card will be out of the question for a consumer with a negative history.

Cost of Good Credit:

The situation between two who make the same financial acquisitions and moves over the phase of their life. They may work at the same place; they live in the same area and have similar income and family. The only difference between the two is their credit score.

If one maintains the good score by:

  • Never maxing out the credit cards
  • Applying for credit sparingly
  • Paying bills on time

Creditors value this type of borrowing and reward the one by offering more credit, improving credit limits, which permits the one to spread her balances across numerous cards. One should know how important one’s be in debt and how should take the necessary steps to protect it.

  • People can get loans faster.
  • Credit decisions are fairer.
  • Credit rates are lower overall.
  • More credit is available.

Here Is How To Raise Your Credit Credit Score From 480 To 700

You can raise your credit score from 480 to 700 by following a few steps listed below.

Your credit score is your financial gateway to getting the things you want in life. Your credit score is used for the following; when you buy a car, lease a car, rent an apartment, buy a home, college loans, buy the newest computers, electronics and it’s also used by insurance companies when you need insurance.

Credit scores range from 300 to 850 and any score below 500 is considered a higher risk to lenders. Trying to maintain a score above 700 will improve your chances of getting a loan for larger purchases such as a car or a house. With a higher score you can get better interest rates and terms on your loans.

Obtain a 3 to 1 Credit Report

Go to Creditreport.com to get a free copy of your credit report. You want the 3 to 1 so that you can see the complete report from all 3 credit report agencies. Check your report for any inaccuracies such as someone else using your credit or anything that shouldn’t be there. This could be identity theft and should be reported immediately.

Make sure that each of your creditors have accurately reported your information. If you find there are mistakes, draft a letter and mail it to the credit report agency along with any proof to back up your dispute. You want to get this inaccurate information off your credit report as soon as possible.

Consolidate Credit Cards

Transfer balances on higher interest rate cards to ones that have a lower interest rate. This will lower your credit score by getting rid of too much debt.

Inspect Your Finances

Pull all your finances together. Look for somewhere you can squeeze say $100.00 additional each month. Take this money and apply it to the credit card with the highest interest rate each month until you get it paid off. Then, take that money and pay off the next highest interest rate credit card, and so on.

Avoid the Top End Limit of Credit Cards

Being maxed out on a credit card can lower your credit rating. A good benchmark is only holding 30% of the max amount available on the card. If you have a credit card with a balance of $1000.00, keep the amount on that card around $350.00 to improve your credit score.

Pay Your Bills on Time

Be sure that you consistently pay all your bills on time. Paying your bills on time is the one of the main elements that the credit bureaus use in calculating your credit score. (35% of your score is based on payment history)

Pay more than the minimum due on each credit card, only paying the minimum due is a sign you could fall behind on your payments and you may be a high risk.

Close Un-Used Credit Cards

Simply destroying your cards doesn’t work. You need to call the credit card company and request that they close your account so that it no longer shows on your credit report. This will help increase your credit score.

Refrain from Requesting More Credit

Each inquiry is reported to the credit agencies and multiple inquiries can negatively impact your rating. If there are no inquiries for a 2 year period, lenders are more willing to extend credit, confident that you will not overextend yourself and default on your payments.

Using these helpful tips can help you to increase your credit over time.