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HOW TO IMPROVE YOUR CREDIT SCORE

April 21, 2020/0 Comments/in Resources /by Eva Sims

If your credit score has taken a hit, you already know how much it can impact your finances and your opportunities. It can make it more difficult to find an apartment or secure a mortgage. It can make purchasing a car more expensive and even require you to pay extra security deposits for your utilities. Improving your score will be worth your time and effort, but it’s going to take plenty of both to move your number in the right direction.

Get Your Credit Reports

The first step to improving your credit score is to get copies of your credit report from each of the three main credit reporting bureaus: Equifax, Experian and TransUnion. The Fair Credit Reporting Act entitles you to one free copy from each per year. You can choose to have all three pulled at once, or you can monitor your credit over the course of the year by ordering one from each bureau every four months.

Most credit scales, including FICO, break down into the following segments:

Excellent: 750+
Good: 700-749
Fair: 650-699
Poor: 600-649
Bad: 599 and below

Check Your Report for Errors

It’s important to carefully check each report for any errors. An error can be as simple as a misspelling of your full name or an error with your Social Security number or a past address. Errors that might be more difficult to spot will have to due with inaccurate reporting of accounts, particularly payment dates and amounts. If you find any late or missed payments reported that you can prove you made on time, make a note of these. Also take note of any accounts or applications that you don’t recognize.

For each error you’ve noted in your review, you’ll need to file a separate dispute with each of the three main credit bureaus. For example, if you found two errors, you’d need to file a total of six disputes, two for each of the three bureaus. Once your disputes have been filed, the bureaus have 30 days to respond. You can find additional information on filing disputes at the Federal Trade Commission’s website.

The Most Important Credit Score Factors

According to Bruce McClary, Vice President of Communications for the National Foundation for Credit Counseling, the two most important factors in determining your credit score are your payment history (35%) and your credit utilization ratio (30%). It makes sense then that the most effective way to improve your credit score would be to start with these two factors.

Payment History

When a lender wants an indication of what your future behavior will be, they look to your past behavior for clues. Specifically, they want to know if you paid your bills on time and in full. This includes the full range of accounts on your credit report, from your mortgage to your light bill, and if any of your bills was settled for less than the original amount or was sent to collections.

Although you can’t go back in time and change past behavior, you can take proactive measures if you know you’re going to be late or miss a payment. Contact your creditor as soon as possible and explain your situation. Although the creditor may still report the late/missed payment, it doesn’t hurt to try. The next step would be to bring your account current as quickly as possible because the longer you go without a payment, the bigger the hit will be to your credit score.

You might be more motivated to make the call to your creditor when you keep it mind that late and missed payments stay on your credit report for seven years. The impact does decline over time and can be offset with positive marks. Your best bet is to keep your future payments on track by setting up automatic payments and using calendar reminders.

Credit Utilization Ratios

Your credit utilization ratio concerns how much you’ve charged on your credit cards compared to your available credit limit. McClary defines credit utilization ratios as “the combined balance of how much you owe on your credit cards compared to the total amount of credit you still have available. Your credit score takes into consideration both the individual credit utilization of each card and your overall utilization ratio.“

While many experts suggest keeping your ratio at or below 30%, McClary advises taking a more conservative approach and keeping the ratio at or below 25%. He believes your credit score could suffer if the percentage creeps above that point. People with the highest credit scores tend to have credit utilization ratios at or below 10%.

Improve Your Ratio by Paying Off Maxed-Out Cards

According the John Ulzheimer, formerly of FICO and Equifax, the most significant way to improve your credit utilization ratio is to pay off your maxed-out credit cards. He says doing so could improve your credit score by as much as 100 points. It seems like a daunting task, but Ulzheimer suggests starting with your credit card that has the highest utilization rate and working your way from there.

Improve Your Credit Ratio by Raising Your Credit Limit

Improving your credit utilization ratio could be as simple as calling your credit card provider and asking for an increase to your credit limit. If your balance stays the same and your limit increases, your ratio will automatically improve. However, be sure to ask for the increase without a “hard” credit inquiry. A hard inquiry will have a small negative impact on your credit score for the next two years.

Improve Your Ratio With Multiple Payments

Unfortunately, your credit utilization ratio isn’t calculated once a month. If your ratio goes past the 30% mark at any time during the billing cycle, even if you pay off the entire balance when your bill arrives, your credit score could suffer. To avoid this situation, make multiple payments on your credit cards throughout the billing cycle. Better yet, set up automatic payments or use calendar reminders to stay on top of your balance.

What’s the Remaining 35%?

Since the bulk of your credit score (65%) is determined by your payment history and your credit utilization ratio, that leaves us with 35%. McClary attributes the remaining percentage to credit history length (15%), new credit inquiries (10%), and your credit mix (10%).

Credit History Length

The age of your credit history also helps creditors determine your creditworthiness. This means that the credit card you got in college but haven’t used in years may actually be helping your credit score. Not only does it help establish your credit history, it also helps your credit utilization ratio. For these reasons, don’t be tempted to cancel credit cards you’ve had for years but no longer use. Follow the same reasoning when it comes to having paid accounts removed from your credit report, especially if they show positive payment histories. It’s “like making straight A’s in high school and trying to expunge the record 20 years later,” Ulzheimer says. “You never want that stuff to come off your history.”

If you have a trusted friend or relative with a long and positive credit history, you could ask to become an authorized user on his or her credit card. This involves risks on both sides, so don’t be surprised if the answer is “no.” He or she would be putting their own credit rating at stake, as would you, because your credit ratings would be tied to each other’s payment practices, both positive and negative.

New Credit Inquiries

Although a new credit card may help with your credit utilization ratio, applying for unnecessary lines of credit shouldn’t be taken lightly because a hard credit inquiry will cause a small negative impact on your credit report that lasts for two years, even if you aren’t approved for the card.

When you’re buying items that require financing, like a home or vehicle, try to limit the amount of time you spend rate shopping. Scoring formulas do take rate shopping into account, meaning that you may be submitting multiple applications but only taking out one loan. FICO typically ignores such inquires made 30 days before scoring. Inquiries older than 30 days will be counted as one if they were made within a typical shopping period (between 14 and 45 days, depending on the form of scoring software used).

Credit Mix

Your credit mix is the combination of revolving credit and installment loans you have. A credit card is an example of revolving credit, and an auto loan is an example of an installment loan. Even though lenders like to see a variety of accounts, it wouldn’t be advisable to take out a loan just to improve your credit mix.

Be Patient and Have a Plan

Improving your credit score isn’t going to happen overnight. It’s going to take patience, planning and plenty of hard work, especially if your score is closer to the bottom. Focus on improving your payment timeliness and credit ratio, and you’ll see changes that will impact your opportunities and your bottom line.

https://zenresolve.com/wp-content/uploads/2020/02/InterestFree.jpg 400 600 Eva Sims https://zenresolve.com/wp-content/uploads/2020/11/ZenHighRes.png Eva Sims2020-04-21 22:03:142020-04-21 22:03:14HOW TO IMPROVE YOUR CREDIT SCORE

CATCH UP ON YOUR RETIREMENT SAVINGS

April 21, 2020/0 Comments/in Resources /by Eva Sims

In a perfect world, everyone would start saving for retirement their first day on the job. In that hypothetical utopia, all workers would max out their retirement funds, and there would be no worries about falling short or running out of money. In the real world, however, saving for retirement is not that easy.

If your retirement saving has gotten off to a late start, you have plenty of company. Getting a late start on saving for retirement is not ideal, but it’s not the end of the world either. Here are some smart strategies you can use to make up for lost time and still enjoy a financially secure retirement.

Build a Better Budget

It’s easy to forgo retirement savings when you don’t have any extra money. If you’ve been using a lack of money as an excuse for putting off retirement savings, it’s time to take a hard look at your budget. You could find the money you need by building a better budget, jump-starting your retirement savings and improving your financial situation over time.

Start by looking at categories like dining out, entertainment, clothing, gym memberships, and cable television. Ask yourself how much you could save by eating at home more often or switching to a less expensive cable package. Keep in mind that the sooner you start saving, the less you will need to save each month, so squeezing your budget tighter now could pay off big later.

Use Tax Savings to Boost Your Retirement Savings

One of the most significant advantages of saving for retirement, aside from future financial security, is the immediate tax savings. When you stash money in your 401(k) plan at work or contribute to a deductible IRA account, you enjoy lower taxes now and tax deferment for years to come.

If you are looking for a way to boost your retirement savings, then grab your calculator and see how much you can save on taxes. Then use those tax savings to finance your retirement plan contributions. As the savings accumulate, you can use the extra funds to boost your retirement savings further, creating a virtuous cycle that will last all the way to your post-work years.

Increase Your Income With a Side Hustle

If you’re still having trouble saving for retirement, you may want to boost your income with a side hustle. Thanks to the power of the internet, there are more ways to make extra money than ever before, all without the commitment of a part-time job.

You can dedicate the money you make from your side hustle to boost your retirement savings. Even if you make just $500 a month, that is enough to fund your IRA account fully, and the more you earn, the more you can save.

Delay Your Retirement

It is not always easy to make up for lost time when saving for retirement. If you got off to a late start or made some mistakes along the way, the best solution could be working a few more years than you intended.

Working past your original retirement age will give you extra time to boost your savings, but it will also delay the withdrawals from your retirement funds. Instead of pulling from your IRA or 401(k), you can keep contributing. When you are finally ready to retire, you can enjoy greater financial security and a better lifestyle, and that is well worth a few extra years in the workforce.

When armed with the power of hindsight, it’s easy to see the value of starting early and socking money away from day one. Even so, few workers heed the call, and they find themselves left behind and struggling to keep up. If you are ready to make up for lost time, the strategies listed above can help you boost your retirement savings, so you can truly enjoy your golden years.

https://zenresolve.com/wp-content/uploads/2020/04/Rates_Banner.jpg 400 600 Eva Sims https://zenresolve.com/wp-content/uploads/2020/11/ZenHighRes.png Eva Sims2020-04-21 22:02:012020-05-13 23:35:18CATCH UP ON YOUR RETIREMENT SAVINGS

HOW TO SAVE ON YOUR SHORT-TERM INSTALLMENT LOAN

June 21, 2019/4 Comments/in Resources /by root

Unfortunately, situations may arise when you don’t have savings available to respond to unexpected expenses. If traditional avenues like credit cards, bank loans or assistance from family and friends aren’t available, you may start scouring the internet for a short-term loan from an alternative lender.

What Is a Short-Term Installment Loan

A short-term installment loan can range from several hundred to thousands of dollars. It is typically repaid over a period of months with a fixed interest rate and predictable payments made on a prearranged schedule. Short-term loans rarely require collateral.

After the financial crisis of 2008, banks became less willing to lend money, especially to borrowers with low credit scores or no credit history. Alternative lenders filled this void in the marketplace, offering short-term loans to consumers with less-than-perfect credit. Interest rates for these loans are higher than traditional financial products because the risk of default is significantly higher.

Do Your Research

The online marketplace now offers consumers a large selection of alternative lenders, which means consumers have a choice to make and doing so wisely can be the first step in saving money on your short-term installment loan. When comparing lenders and products, consumers must carefully analyze APRs, payment schedules, contracts, and policies regarding early pay-off and late payments to find the combination of elements that best suits their needs. For instance, if a lender has a lower APR but has a shorter pay-off period, your installment payments may be too high for you to afford. You might be willing to put up with a higher APR (and pay more for the loan overall), in order to make smaller payments over a longer period of time.

Stay in Contact with Your Lender

If it becomes apparent you won’t be able to make a scheduled payment on time, contact your lender as soon as possible. A reputable lender will be willing to work with you because neither party wants to go down the path to default. By communicating your situation with your lender in a timely manner, the lender may provide you a one-time extension on your payment, saving you fees and protecting your credit score.

Pay Off Your Balance as Quickly as Possible

When researching the terms of your short-term loan, pay special attention to your lender’s policy on prepayment. If the lender charges a prepayment penalty, consider it a red flag because it denies you one of the most effective ways of saving money on your short-term loan. By paying off the balance in full as soon as you are able, you avoid paying interest on the remaining payments. As stated above, APRs are high on these types of loans, and preempting even one scheduled payment will save you money.

Never Borrow More Than You Need

Alternative online loans are expensive financial products and should only be used if traditional financial products are unavailable and when the expense is absolutely necessary. If you choose to use a short-term loan from an alternative lender, do so responsibly by only borrowing the minimum amount needed to resolve your situation. You want to make sure you can afford the scheduled payments, and if possible, pay the loan off early. Taking on more debt than necessary will cost more money in interest and potentially harm your credit score if you make late payments or default on your loan.

Save by Being a Smart Borrower

Yes, short-term loans are expensive, but you can save money by being a smart borrower. Do your research and know what you’re getting into before signing any loan agreement. Make sure you have the option to pay off your loan early without being subjected to a prepayment penalty. Stay in contact with your lender if you encounter any bumps along the way, and never borrow more than you need.

https://zenresolve.com/wp-content/uploads/2020/04/Resources_Banner.jpg 400 600 root https://zenresolve.com/wp-content/uploads/2020/11/ZenHighRes.png root2019-06-21 06:42:272020-04-21 22:39:53HOW TO SAVE ON YOUR SHORT-TERM INSTALLMENT LOAN

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