Recent college graduates face a new batch of challenges and experiences as they head out into the real world. Most graduates will likely be focusing on finding a perfect job or applying for graduate school, but they need to be aware of their finances during this new & exciting transition from college life.
Finance & credit mistakes made at this age can cause major issues and the ability to secure credit, loans and mortgages in the future.
While this can be overwhelming, here is a great 5 part guide to help college grads build a strong credit foundation that will reward them for years to come.
Let’s face it, we all come upon hard times now and again. Using a credit card to pay the bills and guy groceries isn’t the best financial plan, but when you have no other option, you do what you have to do. Then again, some of us are just bad with credit & finances and tend to spend more than we earn on a regular basis. Either way, if you find yourself getting in over your head with credit card debt, there are some ways you can start to knock that balance down each month.
Obviously paying more on your balance will help, but by earning extra money through some creative methods which give you the additional income to take care of your credit card debt.
This will begin to lower your monthly financial burden, stress levels, and keep your credit report in good standing at the same time. You may not be able to use every single one of these tips, but I’ll bet you could use at least 8-10 of these methods to start making some extra cash each month. Check it out.
Creditors and financial institutions are always drawing up plans to increase their revenues. Most of the time, consumers like you fall prey to their hidden charges or confusing rules. This is why a lot of you doubt whether the creditors can actually resort to such mischievous loan origination tactics or not.
To help you make smart decisions, I have discussed five of the most popular misconceptions related to credit and the banking
practices observed in our country.
Myth 1: Credit card companies cannot increase the rate of interest on my cards.
Fact: Actually, they can. However, the CARD Act has been put into place to protect you from their most horrendous abuse, i.e., they can no longer hike the interest rate on your card’s existing balances without you being 60 days late in making the payments. Still, there are certain loopholes that you must be aware of like:
- Rate of interest on credit card’s are variable and that they are always dependant on their prime rates. So, the interest charges on your balances will not increase any further unless the interest rates go up.
- You could be slapped with higher interest rates, depending upon your creditworthiness and payment history. If you pose higher risk to the creditors’ money, then you’ll be charged with higher rates of interest on all your future transactions.
- Your creditors can increase the interest rates on your cards for practically any reason after a 12-month period. However, the new, increased rate will only be applied to future purchases and not on the present balances. For that too, your credit card issuer, is bound to notify you at least 45 days ahead of any change in your cards’ rate of interest.
One of the most effective ways to resolve this of kind credit problem is to get your balances transferred or to payoff your dues through a personal loan, but make sure you are never made to pay as per the purchase annual percentage rate (APR).
Myth 2: Credit card payments are always used to pay off the highest interest incurring debt first.
Fact: This isn’t always true. Creditors use different rates to charge different kinds of transactions. The rate of interest on a purchase (is high) but then, it differs from the balance transfer that is basically low. Now, with the advent of the CARD Act everything such thing has changed. The payment made by you must be applied to the highest interest rate balance first. But, your payments should be greater in value than the minimum outstanding balances.
So, if you make minimum payments every month, then your money will be used to pay back the lowest interest rate balance first. The best tip would be to avoid having balances transferred and spend money from a single credit card. Frankly speaking, banks usually get to have your balances trapped when there are multiple kinds of balances incurred in a single credit card.
Myth 3: Every zero percent offer means the same.
Fact: No, all such credit card offers aren’t. A huge difference exist between a zero percent APR credit card and a zero percent purchase financing. Former is actually a balance transfer card wherein you’ll not be charged any interest on all your purchases for certain period known as the promotional period, whereas, the latter will defer interest from getting applied to your balances in some chosen departmental or retail stores.
In case of deferred interest credit cards, make sure you’ve paid off all the balances before the expiry of the promotional period because if you don’t pay off the balances within the said period, then you’ll be charged interest for the entire promotional period. Similarly, zero percent APR credit cards either have their interest reduced or stayed during promotional period. This is one of the most suitable ways to wipe out your overwhelming credit card balances and stay financially healthy.
However, as soon as it is over, the interest on their balances increases drastically. So, be careful with your use of these offers and always make it a point to pay off all the bills before the promotional period expires, as it might take you years to repay them all.
Myth 4: Closing credit card accounts will increase my credit score.
Fact: Actually, canceling old credit card accounts or any other debt is never a good idea to promote your credit score. People have the misconception that old debts look ominous to potential lenders. But, it is a lot better to pay off your bills on time and not missing a deadline than to keep a card with $5,000 available as credit lying idle in your closet.
So, basically its foolish to wipe out old credit card balances by having them cancelled. This is because old credit card accounts will elongate your credit history that plays an important role in improving your credit score. It would help creditors to evaluate whether you can manage your financial obligations responsibly or not. However, there are certain acceptable ways to have old debts removed from your credit report, if you’re hell bent on doing so.
Myth 5: Credit card issuers don’t provide any freebie to college students for signing up for their cards.
Fact: This is not always true. Though credit card companies are barred from doling out freebies like T-Shirts in front of schools, as per the CARD Act, yet that doesn’t stop them from signing-up students for the sake of bonuses. They can even promote their services/products on campus. Still, the practices isn’t good for students, as they are asked to spend with the lure of getting a free gift on every purchase they make. This is much worse than getting a T-Shirt for signing up.
Myth 6: I am protected from any kind of credit card or debit card fraud.
Fact: Not necessarily. In order to defend yourself against a credit fraud, you must report such an incident within 60 days of its occurrence. Or else, you’d lose a lot of your rights. In case of ATM/debit cards, banks can hold you responsible for not more than $500 in fraudulent transactions, provided you’ve notified them about the incident after two days of it from happening. On the other hand, credit card companies will not hold you liable for a fraud of not more than $50. There are some banks that waive off a fraud of $50 altogether.
If you are charged and held liable for credit frauds, then you’ll have to make the payments and in turn have your credit rating damaged. However, you can work to improve your credit score after negative trade lines like payment defaults, credit frauds or bankruptcy is reported against your accounts.
Whatever be the case, it is your responsibility to avoid any kind of liability. Utilizing a credit monitoring service is a good, proactive way to prevent identity theft. Always keep a record of your transactions and inform the concerned personnel of the bank or the creditor, the moment you detect any suspicious activity. Moreover, guard your confidential financial details and never share your Personal Identification Number (PIN) with anyone, or keep an easy, obvious one.
Last week we mentioned how Your Credit Rating Might Be Ruined Even When You’re Not Doing Anything Wrong. This week we’ll be addressing The 10 Most Frequent Credit Mistakes you’re making.
What’s a Credit Rating?
Your credit rating is a judgment about your fiscal well being, at a certain time. It suggests the threat you represent for lenders, in contrast to other consumers.
There are various approaches to work out FICO scores. The credit rating agencies Equifax and Trans Union use a scale from 300 to 900. High scores on this particular scale are great. The larger your rating, the lower risk you pose to the lender. Lenders might also provide their very own methods for arriving at credit ratings. Additionally, lenders must choose the lowest score you’ll be able to have and still borrow cash from them. They may also apply your score to create the interest you may pay.
Which are the 10 Most Frequent Credit Rating Errors?
1. Neglecting to review your own credit history for mistakes: Assess your credit report at least yearly. Errors on credit reports are somewhat more frequent than you could have visualized and you should stay along with the problem. Should you find any mistakes, contact the credit reporting agency when possible to fix the scenario.
2. Not using your complete legal name in monetary records: It Is possible that individuals with common names or similar sounding names could have their name imputed to a credit report that’s not theirs, as was the situation for Mr. Dave Johnson of Pembroke, Ontario. Use your complete legal title on credit programs, bank accounts as well as other files that become segment of your own credit history.
3. Paying your bills late and neglecting to make at least the minimal monthly payment:In time your lenders will finally report your account as past due, which can damage your credit If you do not pay at least the minimal amount due on score When there is a rationale why you will not be in a position to cover your invoice promptly, get in touch with your lender prior to your invoice is arrangement if due to work-out an feasible
4. Maxing out on your charge cards: If your charge cards are maxed out, prospective lenders may challenge your ability to refund. You might be billed an increased rate of interest to compensate for what exactly is viewed as a higher hazard in case you are qualified to get a loan.
5. Not alarming lenders if you have proceeded: Your statement may arrive late and as a result your payments could be late, possibly damaging your credit score.
6. Registering for too many new charge cards: Consumers who often open new credit cards are viewed as a greater danger than those who do not.
7. Closure older credit card accounts: Closure this can adversely impact your credit score and older credit card accounts shortens the duration of your credit history.
8. Do Not cosign for someone else’s loan: You could be liable for that man’s debt and harm your credit.
9. Do Not share your charge card or social insurance number with anyone: There are a lot of abound where individuals strive by telephone, e-mail or mail to get your charge card or social insurance scams number This is a fast-track to fiscal catastrophe and id theft.
10. Dismissing the warning signals of credit issues: If you’ve problem making the minimum payments on time and have maxed out all of your credit, you’ve severe debt issues.
Professional assistance is required by serious debt issues. Contact a reputable credit repair company or a debt management service to help get your credit moving upward again.
Also Read: The Best Credit Monitoring Services 2018
The Fair and Accurate Credit Transactions Act, or the FACT Act, was passed in 2003 as an amendment to the Fair Credit Reporting Act. It’s passing gave consumers some powerful weapons in regards to being proactive against identity theft, yet many people don’t realize what benefits the FACT Act provides. From being able to get free credit reports from the credit bureaus every 12 months to being able to place fraud alerts on your credit reports to eliminating credit card numbers from receipts, consumers are able to get a lot of protections now that they weren’t able to have before.
Here’s what the FACT Act does for you:
1. You Get 1 Free Credit Report from Each Credit Reporting Agency Every 12 months
Through the FACT Act, the three major credit reporting agencies, which are Equifax, Experian, and TransUnion, set up the website AnnualCreditReport.com. This is an easy place for you to be able to request in writing a credit report from any or all of the credit reporting agencies. You are allowed one free credit report every 12 months from each agency, so many consumers choose to make a request for one every four months from just one of the agencies so that they have a more consistent review of their credit. Besides the website, you can also request your free credit report in writing by sending a letter directly to the credit reporting agency of your choice through standard mail.
2. You Are Able to Place a Fraud Alert on Your Credit
If you suspect that your identity has been compromised, you can request a fraud alert to be placed onto your credit report through any of the credit reporting agencies. Once you have placed a fraud alert at one agency, this alert will then update to the other two. An initial fraud alert can last for up to 90 days, and when identity theft has been confirmed, this fraud alert can last up to 7 years. In addition, anyone who is actively serving in the military can have a fraud alert placed on their credit report for up to 12 months. You can learn more about fraud alerts through this informative blog post as well.
3. No More Credit Card Numbers on Your Receipts
If you keep your tax records for seven years or more, then chances are you can go digging into that box or file and find some point of sale receipts there. Chances are they contain your entire credit card or debit card number on that receipt. Fast forward to today where thanks to the FAST Act, all card numbers must be truncated to only display four or five of those numbers. Often it is displayed as XXXX-XXXX-XXXX-1234 these days. This was done because a fast majority of people simply crumple up their receipts and then throw them away in the nearest trash can… which was a very easy way for identity thieves to get their hands on a valid number. You’ll also notice that there aren’t any expiration dates on receipts any more as well, and this is for the exact same reason for truncating the numbers.
4. Help to Identity Possible Identity Theft
Sometimes referred to as the “Red Flags” rules, the FACT Act required the formation of regulations by the major Federal finance agencies involved in consumer finance to help people discover identity thieves as quickly as possible. This boiled down to three basic points:
It requires financial institutions or creditors to develop and implement an Identity Theft Prevention Program in connection with any account they hold and it must include reasonable policies and procedures for preventing, detecting, and resolving identity theft event;
It requires users of consumer reports to respond to Notices of Address Discrepancies that they receive when there is more than one permanent address for a consumer; and
It places special requirements on issuers of debit or credit cards to assess the validity of a change of address if they receive notification of a change of address.
These Red Flag regulations are intended as a measure to help keep you safe from circumstances that could be out of your direct control. Identity thieves have always held an arsenal of weapons that they can use to gain access to a victim’s identity – these implemented regulations are designed to help give consumers weapons to defeat identity thieves before they can strike.5. Blocking Information that Occurs Because of Identity Theft
An identity thief can create a lot of damage for their victims. It could just be from spending money on existing accounts, or it could be the opening of new accounts, maxing out those credit lines, and then not paying them. It could be that a false name was given when an identity thief is arrested, thereby putting an arrest on a victim’s record. It could even be pretending to be the victim in order to receive medical treatment and coverage, and then not paying for it.
Thanks to the FACT Act, the false information that is generated thanks to the identity thief’s activities is to be blocked from your permanent record once contested. This means that potential lenders will not be able to see any accounts in collection thanks to the activities of an identity thief, false judgements, or anything else that could have a negative impact on your application.
In addition to these five key points, it was also mandated that consumers have access to specific resources to gain the help they need should they discover that they have become the victim of identity theft. Despite all of these efforts, however, identity theft is still the fastest growing crime right now in the United States. Why? Because people simply haven’t taken the time to empower themselves with the knowledge they need to combat identity theft effectively. For some it’s because they feel invulnerable. For others it is because they just don’t care. Then there are those who just don’t realize that identity theft is a problem.
Until we all fight back against the identity thieves, there will always be new victims because identity thieves profit to the tune of $40,000,000,000 every single year. Be sure to request your free credit reports every 12 months, sign up for an effective identity theft protection plan, and take the fight to the identity thieves today.
Of the three main credit bureaus, Equifax is the largest as well as the oldest. It has over seven thousand employees in fourteen different countries. Equifax collects and maintains credit records for approximately four hundred million individuals and businesses.
Every individual is entitled to one free credit report per year but the report does not show your credit score. There are a number of ways you can obtain a free credit score; sign up for a credit monitoring service. Most of these services offer some type of free trial and as long as you cancel within the trial period, you will be able to obtain your credit score along with your credit report for free.
With your paid subscription to Equifax credit reporting services, you will have the Equifax credit watch. This service constantly monitors all activity on your credit report, allow members to obtain credit reports, credit scores and set credit locking settings.
Equifax also offers security freeze protection in case you feel as if your identity has been compromised or stolen. This freeze prevents information on your credit report from being shared with others and makes it almost impossible for anybody using your name to apply for any type of credit.
Equifax offers three paid membership plans
The Equifax Complete Advantage Plan gives you:
-Comprehensive monitoring of key changes from all three credit reporting agencies as well as unlimited access to your credit score from Equifax
-Get all three credit bureau credit scores once every twelve months
-Track your credit score and see how it changes
-Get up to $25,000 in Identity Theft Protection
The Equifax Complete Premier Plan not only monitors your credit, it helps protect your identity as well. Included with this plan is:
-Help with cancelling and reissuing credit and debit cards, checkbooks and travelers checks
-Help with cancelling and reissuing passports, visas and immigration documents
-Help with cancelling and reissuing id cards, driver’s licenses, social security cards and military id cards
-See all three credit bureau scores once every twelve months
-Get 24/7 monitoring and alerts of key changes to all three credit files (learn more at https://www.stopidentityfraud.org/credit-monitoring-services/)
-Unlimited access to your Equifax credit score
-Helps detect possible identity theft with Equifax’s automatic fraud alert feature
-Get up to $1,000,000 in Identity Theft Insurance
Use Equifax’s Score Watch feature to get your FICO score, see interest rates that you are likely to receive and track your score so you can choose when to receive alerts. The higher your FICO score, the lower interest rates you will receive on a loan; making monthly payments lower. With Score Watch you get:
-A full FICO score twice a year
-Set a target score and receive an alert when it changes
-Daily monitoring of your Equifax credit report via email or mobile alerts
-Find out how lenders will see you and what interest rates will apply to you
-Customer service available seven days a week
Choosing any of the three subscription services that Equifax has to offer will give you access to your credit report and score as well as offering fraud and identity theft protection all with one company.