Is Good Credit Really Worth Working For?
Avoiding bad credit is a struggle individuals go though every day. They pay their bills on time by working. They put off their wants in order to pay interest on excessive debt just to achieve good credit. This is a difficult struggle to avoid bankruptcy or home foreclosure. But is good credit really worth all this effort?
Countless households end up paying off home mortgages that even exceed what they could sell their homes for in the market due to real estate bust. Many others are burdened by high interest credit card debt. Are all these worth it just to get good credit? At what point do the benefits outweigh the struggles?
As the real estate market is going upside down, more and more are making the tough decision to abandon their homes, downsize and let their banks foreclose.
Consumers are getting frustrated and are asking what the benefits of their good credit are over the years when the crisis has left many lending avenues depleted regardless of your credit score.
Your credit equals your financial reputation. Not to mention the ethical concerns of walking away from your obligations. Loans and credit cards are accepted by consumers without considering what the future of their fortune holds. The benefits of good credit include better financing terms, lower rates, easier payoff schedules and approvals for otherwise difficult loans. The benefits alone can make your living costs much more manageable. But would losing good credit benefits outweigh the relief you could feel from relieving yourself of your enormous debt?
There is always a chance that you could succumb, especially when you become overburdened and your current debt burden seems hopeless. Bankruptcy and debt relief solutions that are designed to help out in these situations should never be ruled out. Bad credit and the loss of good credit benefits will result, for a time, but in some circumstances this can still be a sound financial decision.
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Categories: Credit Score Articles Tags: Credit, Good Credit, Good Credit Score, Really, Worth
How Credit Scores Really Work
Your credit score is a 3 digit number which is assigned as a convenient way for the lenders to be able to understand how credit worthy they will consider you to be. It aids them in deciding whether you qualify for credit and what the associated interest rate will be. How do they really work? Watch this video.
Categories: Credit Score Videos Tags: Credit, Credit Score, credit score function, credit score purpose, credit score use, Credit Scores, Really, Scores
Q&A: can i get my credit score up if its REALLY low?
Question by : can i get my credit score up if its REALLY low?
Like if I overdrafted my bank never payed them then would my credit score go down? im 16 my mother is also on the account would my credit get ruined before i was 18? if so how do i get it up like can you actually get your credit score up? is it hard?
Best answer:
Answer by Johnny A
Dude especially now it’s hard because the banks aren’t lending that much, but it’s possible to get a joint credit card with your mother as a co-signer, like a student visa credit card. Your mom is joint on your bank account so if you overdraft your card, she pays for it or it messes up her credit. Same goes if you get a co-sign credit card. You might be able to get a credit card if you have a part time job, it’s known sometimes as a signature line of credit. If you owe money under your name, your only credit will be bad credit. Bad credit doesn’t drop below a score of like 400 i think. Good credit is around 700. Very good is 800+. Right now if you did a credit report with nothing negative like money owed to banks, or have a credit card or car, or loans, you would have what they call a “thin record” or “no data or score” Hope that makes sense. There are also 3 major credit beaureus that banks and collections report payments to Transunion, Experion, and Equifax.
Know better? Leave your own answer in the comments!
Is there really an easy way to fix your credit?
Question by supergirl789: Is there really an easy way to fix your credit?
I have horrible credit and I want to fix it. Are any of these “fix your credit” deals legit?
Best answer:
Answer by connemara
You can consolidate your debt but it will cost you. As for your credit. Only one way. Start paying your bills on time and don’t spend more than you make. No magic answers here, just reality.
Give your answer to this question below!
Categories: Credit Score Questions Tags: Credit, Easy, Really, there
I don’t want a credit card, and do I really even need one?
Question by BeachBoarder: I don’t want a credit card, and do I really even need one?
I’m 19 and most of my friends have credit cards. I told them I had no interest in getting one and they were like “but you need to start gaining good credit”.
I don’t really even get the whole concept of the credit card. When I buy something, I make sure I have enough cash for it and pay with that. It just seems much easier and I know that I definitely have the money and don’t have to worry about a bill later. If I want to buy something big, I save up for it.
So what’s the big deal?
Best answer:
Answer by teresathegreat
You need a credit card for certain things, like reserving a rental car or plan tickets. But you can use a debit card for most of these things as well.
Your friends do have a point – establishing a good credit history is important, and will be essential to you later on in life when you are ready to apply for loans or buy a house. Your credit history looks at how much money you are trusted with, and how responsibly you handle it.
So if you handle your credit card responsibly, it can benefit you in the long run. It’s best to think of a credit card as a debit card – you simply pay for the items at the end of the month instead of at the moment of purchase. If you pay the amount in full every month, you won’t have to worry about finance charges or interest, and you will build an excellent credit history.
So your friends have a good point – but I’d be interested to know how many of them really handle their credit responsibily, and how many foolishly carry a balance from month to month.
Give your answer to this question below!
Q&A: Does “piggy backing” really improve your credit?
Question by QNA: Does “piggy backing” really improve your credit?
I’ve read that there is such a thing as “piggy backing” wherein you are added as a user to the credit card of another person who has a long and consistently good payment history, and that this is supposed to boost your credit score.
How effective is this really? And how fast does it work? In theory, it sounds like it should only work for someone with “no credit”, but can it work for someone with “bad credit” as well???
Thanks.
Best answer:
Answer by Robin L
This technique of building credit, unofficially called “piggy-backing” has been around for years and is often used by parents to help their children beef up their credit scores. But what was a home-grown and usually family centered activity has recently been institutionalized with web sites popping up offering to act as intermediaries in brokering borrowed credit arrangements. In its current incarnation it is generally making lenders and credit reporting agencies crazy but is rapidly and significantly increasing credit scores of those that participate and creating an income stream for credit worthy persons who allow their credit to be piggy-backed.
The motivation behind piggy-backing is that increasing a credit score can mean real money in the pocket of a borrower with less than optimal credit. For example, Fair Isaac Corporation, the company that developed the gold standard FICO scores estimates the following interest rates that are available by score to a home-buyer seeking a $ 300,000 mortgage,
One major facilitator of piggy-backing is Instant Credit Builders, LLC (ICB). It advertises on its web site that it has “developed a system to counter the harmful societal impacts of an emerging market called ‘subprime lending.’ Mob-like blood suckers under the umbrella of legitimate lending institutions are targeting those who have poor credit scores but fall short of being beyond credit risk acceptance.”
Such companies do take some of the risk out of piggy-backing. They set up the renter relationship and handle the financial transaction, receive and destroy the cards issued to the renter and make sure that once the desired effect is achieved the renter’s name is removed from the account.
You have to give ICB credit for being right up front with its advertising. No need to register and jump through a lot of hoops to find out exactly what they are about – it is all laid out on its website. Want to rent credit? That will cost $ 900 for the first “trade line” or authorized user slot, $ 1,700 for two, up to $ 3,500 for five aged lines – i.e. those with a lengthy history of good performance. One borrowed account can supposedly increase a score between 40 and 45 points, two between 60 and 90 points, and five between 150 and 205 points.
ICB maintains that some of its credit lenders make up to $ 5,000 per month if they have high enough scores and multiple open credit lines.
Fair Isaac has long advised persons not to expect instant improvement in its scores from such dutiful activities as paying on time, and closing or paying down accounts, but apparently the impact of piggy-backing on scores is nearly instantaneous. The AP’s Elphinstone profiled a borrower who paid $ 1,800 in December for three credit card spots and in one month his score jumped from 550 to 715.
But lenders are concerned that while they are tightening credit standards in response to problems with subprime lending those improvements are being undone by piggy-backing. The practice is currently legal but perhaps not ethical and the Federal Trade Commission and several states are looking into it.
The phenomenon may not last long. FICO announced on June 12 that piggy-backing will soon come to an end on its watch. In September, when the company issues an updated version of its credit score system, the authorized user category will no longer have an impact on credit scores. It appears that this change will be retroactive, thus rolling back the scores of “authorized users.” This will, of course, also affect the scores of the kid who might benefit from a brief period as an authorized user of his father’s card but FICO feels that no more than 25 percent of credit scores will be impacted by the change. And maybe putting Junior on dad’s card is no more a legitimate use of the credit scoring system than if dad were renting out that slot for $ 150.
Give your answer to this question below!
How does one really build a credit history in the US if you have had none?
Question by Iverology: How does one really build a credit history in the US if you have had none?
If one obtained a secured credit card from a bank, is it true that you should not spend more than 50% of your limit? Also, that you should not pay your balance in full but only the minimum amount to “start building your credit score?”
Best answer:
Answer by Joseph M
A secured credit card is an option. The revolving line of credit should report to all three credit bureaus monthly, and generally reports the balance on the date that your statement closes as the balance on the account. Owing more than 30% of the credit line can negatively impact your credit score.
In addition to the secured credit card, an installment loan can have a positive impact on your credit.
As long as you make at least the current payment due, on time, the credit bureaus will still report you current. The size of your payment will not “boost” your credit score.
What do you think? Answer below!
What Your Credit Score Really Means
That mystery is created, in part, by the very agencies who determine the number. Formulas for figuring the scores are kept secret, and the numbers are not readily available; at least not without having to do some work to get them. People often want to know what exactly a credit score is, who is behind it, what things impact your rating and what effect a credit score can have on daily life. Add to that the tough economic times we’re now in, and your credit rating becomes more important than ever. Let’s take a deeper look at what a credit score is and how it affects you.
A credit score is nothing more than an attempt to rank your creditworthiness with an objective number. It used to be that if you wanted a loan you would go into the bank, and if you had a good standing in the community, or if the loan officer had a good feeling about you, you could get a loan. Obviously, there is a flaw in that system; anybody, no matter how well-respected, can be a bad credit risk. So, by calculating the effect of different factors on your ability to repay, the credit agencies came up with a way that seeks to treat everybody fairly.
There are several different things taken into account by the credit agencies when figuring out a score. The good news is that most of them are common sense. The one thing that makes up most of your score is your payment history. Therefore, one of the best things you can start doing (or continue doing) is pay all of your bills on time. Next, don’t owe too much. Your debt-to-income ratio should be at 25% or less. That means the amount you owe should not exceed 25% of your income. Don’t open too many accounts in a short period of time, and don’t close too many either. Only apply for a loan or credit if you really need it. As mentioned, most of these things are common sense and they will always go a long way towards improving your overall financial health.
Is a credit score really that important, after all, it’s only a number, right? Right, but it’s a pervasive number at that. The most well-known example are lenders. They will use your credit score to determine whether or not you get a loan, and if so, what terms you will get. However, your credit score is used by a lot more than just lenders. If you apply for a job, your potential employer may pull your credit report before making their hiring decision. Landlords use credit scores to see who they will rent to. Insurance companies use them as part of their risk assessment before offering you a policy.
There is no doubt that your credit score is important. Now that you have more information on what it’s all about, you can take steps to maintain or improve your score.
Written by Royyan
Categories: Credit Score Articles Tags: Credit, means, Really, Score