In this site you will find tips and ideas on how to handle your credit card right

Credit Tips - How Does Credit Work? Here's the 5 Key Factors

Very easily one of the most important aspects of having a good credit score, is to understand how exactly how credit scores work. By understanding this, you'll be well ahead of 90% of the people out there with your knowledge.

Your score is broken up into 5 different areas: (explanations to follow)

1. Payment History
2. Debt to Credit Ratio
3. Length of Credit History
4. Types of Credit Used
5. New Credit Applications

Payment History - 35%

This is the largest portion of what makes up your credit score. I think that most people understand that making payments on time will help, and missing payments is going to hurt a credit score. The longer a payment goes unmade, the more damage it will do to a credit score. An example of that is a 30 day late payment isn't going to hurt your credit score nearly as much as a 90 day late payment. The saving grace is that late payments only affect your credit score for 24 months from the date the payment was missed.

If you do ever find yourself in a position of being behind with payments, do everything in your power to set up some type of arrangements with the creditor to get the payments current. If the account gets charged off, and sent into collections then your score will be affected for far longer than 24 months. In fact that's when the real long term trouble starts.

Debt to Credit Ratio - 30%

The next largest percentage of how credit scores work is debt to credit ratio. Exactly what does this mean though? In order to better understand this, it's important to know the two types of accounts that make up your credit history.

1. Installment Loans - Examples of these are mortgages, auto loans, and student loans. These have fixed payments for a specified amount of time.
2. Revolving Loans - Examples of these are your standard credit cards from Visa and MasterCard, as well as American Express and Discover. These are far more important when calculating your credit score.

Your debt to credit ratio is directly tied to the amount of debt in proportion to your balances on your Revolving credit loans. What that means is that installment loans, don't hold nearly as much weight as it pertains to your credit score... as long as you make your payments on time with these that is. To figure out what your ratio is real simple. All you need to do is add up your total credit limits, write that down. Then add up what you owe on each card, write that down. Then divide your total balance into your total allowed credit limit and that is your debt to credit ratio.

Example: John has 3 credit cards that each have a $1,000 limit on them. He owed $400 on each card.

Total Credit Limit: $3,000 Total Balance: $1,200

1200 balance divided into 3000 limit = 40% Debt Ratio

If John wants to get his score up there is a couple of ways he can go about it:

1. Pay down his balances to where they are combined no higher than 30%. The lower the debt ratio, the better it will be for Johns credit score.
2. Get limit increases on all of the revolving accounts if possible. This will instantly lower his debt ratio and increase his score.
3. Get more revolving accounts. Contrary to popular belief, the more credit that is available the higher Johns score will be. In fact, all things being equal, someone that has $20,000 limit is always going to have a higher credit score than someone that only has $5,000. Higher limits=higher scores

Length of Credit History - 15%

The next portion of how credit scores work is the length of credit history. To keep this simple, the longer you have credit, the better it will be for you. If you have very little credit established it will take longer to raise your credit score than if you have a lot of established credit for years. The people that have credit scores in the high 700's or even low 800's have had years of good payment history, high credit limits with low balances.

A tip when establishing credit, and more importantly revolving lines of credit, is to never close an account. Keep your accounts active forever. All that will do by closing an account is take away from length of credit history and increase your debt to credit ratio. Less open/available credit=lower credit scores.

Types of Credit Used - 10% of Your Credit Score

This is a more passive portion of how credit scores work, but is very important if you're looking to maximize your score. Again there is two types of accounts, installment and revolving, and having a good proportionate balance of the two is part of the calculation of your credit score. What that means is that if you have 4 credit cards, having 4 installment loans will be a good mixture.

New Credit Applications - 10% of Your Credit Score

The final portion of how credit scores work is new credit applications. What that means is that anytime you apply for credit, your score will drop because of an inquiry. (Note: If you only apply for one card, there is a chance your score won't drop, but if you apply for a lot of credit within a short time frame you can drop your score significantly) The thinking behind this is that the credit bureaus will penalize you because you're looking to get into more debt.

For inquiries when rate shopping for a mortgage or automobile loan, inquiries within 30 days will not affect your score if you get approved for a loan within that 30 period. For lenders using an older FICO scoring model, you will only have a 14 day window.

Credit inquiries only remain on your credit report for 24 months, and will have less impact as they get older. Also, when you pull your own credit you don't get an inquiry. An inquiry or application only happens when you apply for credit.

Two Credit Cards - Double The Benefits Or Twice The Problems?

By: Reflexiones Facil24 on 4:12 PM

Should a person have more than one credit card. The answer to this question is yes and no! It will depend on how you are going to use them and if they are for a particular purpose.

A simple reason is because there are a few places that do not accept all cards. This is the most common reason why someone would want a Visa and a Mastercard at the same time. Another common reason is one is for business and another for personal use.

I have two credit cards one for my small home base business and one for personal purchases. I use a Discover business card, which is good for all kinds of purchases and points. For me these two cards work well together and I am assured that I can use them anywhere. I am thinking though I will use only one to keep it easier to budget.

A friend of mine has a home based business as a computer analyst and needs to travel frequently, sometimes over long distances. He uses two types of personal credit cards and really cleans up on his rewards. What he does is he uses his chase freedom rewards card for all personal items and gas purchases so he can reduce expenses and then he uses a airline rewards card which is a blue sky from American Express when he travels far.

He will then use the travel points for vacationing with his family. This works very well and he gets a great deal of rewards out of it. These are a few of the benefits to having two credit cards.

An accountant friend of mine has two credit cards for keeping all his monthly purchases in order. One card his and another his for his wife's purchases. They sit down together at the end of every month and go over each others statements to see where they could have saved money. For this to work you really should have two incomes to make it work properly. You should also be collecting different rewards to maximize your benefits.

If you are single or married and still want to use this type of financing to budget, you can still have two cards. This type of accounting does take more dedication on your part but it does work. You would use one for all purchases and keep another just for emergencies or when you feel you might have to carry a balance.

Drawbacks of using more than one card

If you miss the payment on one it will affect your credit on all your accounts because all credit companies report to the same credit reporting agencies. This can lower your score and increase your interest on all your accounts, so you need to be very careful. In the long run it may cost you more money than any benefit you would get from any of the rewards.

Having more than one card makes it easier to mix things up and create account problems for your account if you use your business credit card for personal purchases. The IRS may take a second look at your books if you do mess up and they see it.

Another problem that is becoming more frequent and alarming is identity theft. People do this by stealing the information from either your debit card or credit card or both. Thieves are getting very good and finding new ways to do this. One of the more popular ways is by stealing pin pads and replacing them with blue chip technology that then gathers all your financial information. It would be a good idea to signup with one of the credit monitoring services, if you have more than one card.

If this is your first credit card, I would not apply for two right away. Wait until you have established a good credit rating and have a 0 balance owing. Then carefully review other offers that would compliment your first card.

The rewards that you would want are the ones that are not offered with your current credit card. They should compliment each other and match your shopping habits. By this I mean don't apply for two that offer the same rewards. One should be a shopping rewards card that also covers gas purchases and the other should match your business or travel situations. Really though you should find all of the above benefits offered to you with any of the the lowest rate credit cards.

In case you were wondering I also have 2 debit cards from different banks. One account only holds a hundred dollars and this is just used in case one bank has it's debit machine down and I don"t have any cash with me. I have been caught in this situation a couple of times.

Does "Credit Repair" Really Work?

By: Reflexiones Facil24 on 4:37 PM

There are a lot of "credit repair" companies out there, and they promise a lot. How good are their promises, and what can they really do for you. We will take a look at the realities of the credit repair business in this article.

Credit Repair involves a company contacting the three major credit bureaus for you, on your behalf, and disputing derogatory items on your credit report.

Understand this, first of all: the purpose of the three major credit bureaus, Equifax, Transunion and Experian, is to accurately report a client's credit and payment history to potential lenders.

They generally do a very good job of fulfilling this mission. If items are true, you really have no right to expect those items to be removed before seven years have passed, or, in the case of bankruptcy, ten years have gone by.

That being said, the credit repair companies basically exploit a part of the law, under the federal Fair Credit Reporting Act, which states that a consumer has the right to dispute any item they feel or believe to be inaccurate on their credit report. A disputed item can be presented to the merchant who granted the credit, and that merchant has 30 days to validate that that debt is correct. If the merchant fails, for any reason, to verify that debt as accurate within a 30 day period from the time the dispute is filed, then, by law, that derogatory item must be removed from your credit report!

In the real world, especially during the Christmas holiday season, merchants often do not have a chance to respond within the required 30 days and verify legitimate debts, so the credit repair company will then be able to have that derogatory item removed. Other merchants may have gone out of business, etc., so it is not necessary to wait a full 7 years to have that item drop off your credit report.

You as a credit consumer can dispute any item on your own credit report. Are you able to do that? Are you a good letter writer? Do you know how to navigate the complexities of obtaining and updating your reports? Some people can, some people cannot. The credit repair companies will do all this work for you. And they are good at it, they do it every day, all day long.

There are a lot of credit repair companies, however, that promise too much, and charge too much up front. Some companies want you to pay hundreds of dollars up front before they go to work for you.

A good credit repair company will charge you by the month. The first month may involve a small set-up fee in addition to the monthly fee. You are not committed to a contract, you use their services for as many months as they need to get your credit scores improved sufficiently. For example, $75 to set up and $49 a month, no contract.

Under the law, a credit repair company cannot usually obtain your credit reports for you, they will advise you as to how to obtain them, whether for a fee or free. You need to provide them with your credit reports that they can work from to begin the repair process.

Everyone has a right, under federal law, to a free annual credit report. Google this and you will find the site for this.

I am a mortgage broker and I deal every day with clients whose credit is not up to snuff, and I do have a credit repair company I refer clients to, and, 3 or 6 months down the road, they are in better shape and I can then help them get the loan they seek.

As always, seek the advice of a certified financial planner or mortgage planner when you begin the credit repair process, so you can steer clear of the scammers and get aligned with a good credit repair company.

Prepaid Virtual Credit Cards Can Make Online Purchasing Much Simpler

By: Reflexiones Facil24 on 10:08 PM

Purchasing on the web is made much simpler with prepaid virtual credit cards. Such virtual prepaid cards present a variety of safety and privacy benefits, which attract some customers.

These cards are fundamentally an internet based prepaid card account. A customer can make use of their card data to expend funds in the internet as one would accomplish by a standard credit card. The main specialty here is that they aren't permissible for a regular plastic card. Every transaction can be made through the internet.

Importance of Online Credit Cards

Many people simply are bothered on the subject of employing their conventional credit card for online purchasing. Having account details stolen or embezzled can show the way to troubles with ID thievery and scam. Additionally, restoring a card can be a lengthy process. Shoppers like this answer as it permits them to buy confidentially and anonymously. Some virtual card issuers even offer the latest technology for highest security and generate one-time use card numbers for safer online shopping.

How do it Works?

Prepaid online charge cards work like any other card, although are the online account based. Such accounts are compensated via web and while a customer purchase minimally uses their virtual card number as if they were having regular charge cards. A good number of prepaid virtual cards work on prepaid resources and no means of credit can be supplied. The consumer just registers a virtual account and credits the funds into it to finance their card expenses.

How much charges are deducted?

These prepaid virtual cards will have some form of fees included with them. This is the technique the issuer makes their profit. This will differ from one card issuer to another, however could comprise:

One-off fee to register the account
Monthly account charge
Charges while money is funded on to the online credit card
Charges while shopping are made

These extra charges can be made on a ratio basis or as a flat cost. It is worth purchasing around for the most excellent deal here to evade paying for avoidable fees. The most important aspect to think about while preferring prepaid virtual cards for most individuals is, although, how much it will rate. All of these cards come with a payment system, although they don't all incriminate in the analogous means. Comparing online funds and terms is straightforward to do and possibly will compose it a lot simpler to prefer the precise product.

Unsecured Debt Consolidation - How Do They Work?

By: Reflexiones Facil24 on 10:40 AM

You can lower your rates and payments with an unsecured debt consolidation loan. Even without a home as collateral, you can find lower interest rates with a personal loan after some shopping. Then all you have to do is close out your old accounts to start saving money and getting out of debt.

Lower Credit Card Interest Rate and Minimum Payments

Credit cards have one of the highest rates, especially if you have missed a payment or had other credit issues. High rates with large balances can make it nearly impossible to get out of debt. However, by trading in those accounts for a low interest loan, you can make progress.

A debt consolidation loan helps you pay off all those accounts. So in the end, you only have one low interest loan to pay off. You can further reduce your payment amount by extending the loan term.

When you decide to consolidate your debt, it is a good idea to look at your budget. Decide how much you can afford to pay a month for this new loan and how soon you want to get out of debt.

Finding a Lender for Personal Debt Loans

Finding a lender for an unsecured loan is as easy as surfing online. Most financing companies have interactive sites, allowing you to view rate quotes, terms, and answers to frequently asked questions. You can also turn to a broker site, which collects quotes from several different lending companies.

For an unsecured loan, you most likely will want to apply for a personal loan. Generally, they have lower rates than credit cards and terms that can be extended for several years. Your other option is to apply for a credit card to pay off other accounts. Promotional offers can provide great rates, at least for a short while.

Closing Your Credit Card Accounts

Once you receive your funds, pay off your old accounts. Every day you delay making that payment is another day you pay interest. You may also want to close some of these accounts. However, be cautious of closing accounts that you have had for a long time since it will negatively affect your credit score. After that, you just have one loan payment to worry about.

How Do Debt Consolidation Loan Companies Work?

By: Reflexiones Facil24 on 7:12 AM

When struggling to pay off credit card bills and multiple loans, it can be difficult knowing what is the best action to take. In today's society it has become normal to take on a lot of debt. Most households have a mortgage, car loans, personal loans, credit cards, as well as other payments that need to be met on a regular basis. If you have found yourself in a situation wherein you are having severe problems keeping on top of your commitments, it can be worth consulting with a selection of debt consolidation companies to see if they can help you.

Debt consolidation is a service that has become popular over the last few years, and specifically as the economic situation in the country has worsened. Consolidation involves taking out a single loan of a value that is large enough to cover all your outstanding debts.

What you are left with is a loan that although may be large in value is easier to manage and which should involve smaller monthly repayments than what you have been paying. Before you get overly excited at the thought of this prospective solution to your economic worries, you should understand that there is a catch.

It is likely that you may end up paying back more than what you would have should you have carried on with your original multiple loans. The reason for this is that the overall term of the contract is likely to be longer. You need to decide whether smaller monthly payments and a lower rate of interest are a fair trade for a longer agreement.

It is important to note that the deals offered by consolidators are not all the same, and neither is the reputation of the lenders. If you are to change your situation around positively, you should carry out your own independent research into your options. Search online for reviews on the services offered by the different companies, you would then be better placed to choose a lender that is known for their dedication to customer service and offering loans that are excellent value.

Debt consolidation companies offer householders a lifeline during times of economic distress. No matter how many loans and credit cards you presently have, by exploring the option of consolidating your lines of credit, you should find that you have a greater amount of money left in your bank account at the end of each month.

Does Your Small Business Want To Accept Credit Cards? It's Never Been Easier

By: Reflexiones Facil24 on 11:11 AM

If you are a small business in today's consumer-driven world, you understand the need to accept credit cards as payments for customer purchases. In fact, offering the ability to accept credit is no longer an option, it is a necessity, especially when you consider that according to a recent report at CreditCards.com as of the end of 2010, there were an estimated 488 million credit cards in circulation in the U.S. Add to that the number of debit cards out there, and the total comes in at roughly 520 million cards. With over 176 million buyers using those cards on a regular basis every year, what business can afford not to accept credit cards?

But what happens to many small businesses is they realize they need to accept credit, but are unsure how to go about it. With so many options available today it's important to do your homework.

Here are tips to finding the right merchant account provider for your small business:

1) A good starting point is to first outline what your needs are now, and what you anticipate them to be as you continue to expand your business. Pay special attention to how your customers currently buy products or services and where you generally meet your clients. Do your clients visit your shop, buy out in the field, on your website, etc.? Knowing this helps you decide on the type of credit card processing plan you need. For example, a small business that operates solely in a traditional store or office setting, will have different needs than say a business that operates out in the field such as massage therapists, trade show and flea market vendors, artists, electricians, landscapers, etc. And these needs will differ from the business that solely does work online. Knowing this ensures you get exactly what you need to make it work.

2) After you know what your needs are, research options and features and then compare providers in order to determine the best online credit card processing company for your business. You now know how your buyers buy from you, so consider what methods of payment would work best for you. Determine if you need to accept credit cards over the phone, need swipe capabilities, a virtual terminal, etc.

3) If you want to accept payments over the phone, look for a company that offers cell phone processing as well as credit card processing on the popular smart phones such as iPhones, Droids and Blackberrys. Also, keep in mind that even if your business doesn't regularly work out in the field, you can benefit with the ability to accept credit over the phone. According to industry association CTIA as quoted recently in Sun Sentinel, wireless data revenues totaled $46 billion in 2010, up from 41.5 billion in 2009 and 32.3 billion in 2008. That being the case, using a mobile card processing system can increase overall sales revenue for your company; some sources report by as much as 30-100%. Now that's what you need to grow your business.

4) While comparing companies, look to see what additional options are available. One example of this might be swipe capabilities for your cell phone. This allows easy processing by swiping the credit card rather than entering the card numbers by hand. Not all companies offer this; so if mobile credit card processing is important for your business, find one that does.

5) Also, take into consideration your invoicing needs. Do you need online invoicing capabilities that will allow customers to easily create, track, and send invoices and accept credit card payments instantly.

6) Rates are also an important consideration. Make sure you compare rates to make sure that you are getting the best company for your needs. Also, look for the overall pricing. Many companies promise the lowest rates, but when you factor in all the extras you actually end up paying much more. A few select companies (such as CellCharge, Inc.) will give you a comparison of your current rates and what they offer to see if they can provide better coverage. That's a great way to determine that you are getting the best possible rate for your needs.

7) Lastly, look for the providers that offer ease of setup, great customer service and tech support, and a variety of products and features to best serve the needs of your particular business.

The bottom line is that it's not enough to offer great products and services. You need to make it easy for your customers to do business with you. Using the right credit card processing company is one way to ensure that you are providing your customers with the best service available. Remember, look for the best online credit card processing company by reviewing all that they offer, then sign up, and begin growing your business today.