10 Credit Card Tips for Beginners

Posted on June 29, 2022 by James Paul

If you recently transitioned to adulthood, applying for a credit card is probably among the top five things you look forward to. In most countries, a person is eligible to obtain a personal credit card as soon as they turn 18. Credit cards add convenience to life, and are the preliminary means to start building credit. The shiny plastic unlocks so many possibilities, and they can make you feel invincible, which is addictive. Despite the many perks credit cards have to offer, they can become a liability if not used responsibly. Many newbies exploit their credit privileges, and then suffer long term consequences.

It is necessary to do your research and understand the obligations of owning a credit card before you get one. You can get multiple lines of credit, but beginners must start with one and keep it that way until they get the hang of it. If you have recently received your first credit card or plan to apply for it soon, the following tips will help you prevent a disastrous debt situation.

1. Curb your Excitement and Learn the Basics

Getting your very first credit card is indeed a milestone, but better not go all out on celebrations. You have a lot to learn about credit usage and debt management, so be prudent. Many young users treat credit cards like free money, which is a costly mistake. Credit cards are more of an emergency fund, and whatever you charge on them has to be paid back shortly with interest. It is best to stick to your debit card for day-to-day purchases, and reserve your credit limit for rainy days. For example, many people living from paycheck to paycheck exhaust their monthly income before the end of the month; under these circumstances, credit cards can be used for buying essentials or paying bills that are due by the end of the month.

If you don’t want to be deprived of your credit privileges anytime soon, and you are hoping to efficiently build a remarkable credit score, establish a budget. Your monthly budget should never exceed the sum of your monthly wages (after subtraction of taxes and miscellaneous deductions). If you have plans to purchase real estate or make another big investment in a few years, you cannot afford to screw up at the beginning of your credit building journey.

2. Shop around before finalizing your first Credit Card

You cannot trust any random credit card provider and sign up for the first package they suggest. Everyone’s financial needs and priorities are different, so you need to find a credit card program that puts you first and addresses your unique requirements. Every time you apply for a card and the issuer checks your credit score, it will be noted as a hard enquiry; each hard enquiry can lower your score a few points, so reserve them for the card/cards you actually want.

Some credit cards have no annual fees, which is ideal for beginners. However, others having a yearlycharge might provide benefits that you prefer, and hence could be worth the added expense. Look for the lowest interest rates and check for a rewards system that might interest you. If you are a student, it is recommended to settle for a card with the lowest limit because they are easier to manage on a limited budget. Some credit card companies try to lure in consumers with sign-in bonuses, but if you read the fine print, you’ll know it’s a trap. It is crucial to read (and understand) all the terms and conditions before committing.

3. Pay your Bills on Time in Full

If you pay all your bills by the due date in full, you shall never have to worry about crippling debt, or find yourself in a difficult situation where the only way out is to file Chapter 7 bankruptcy. Timely payment of bills is the fastest way to build credit and avoid interest fees. Credit card companies allow card holders to make a minimum payment, which is a small percentage of the outstanding balance. Many inexperienced credit users think that this is great, since they get to pay off debt in miniscule installments over an extended period; they don’t realize that the smaller the installment, the greater is the interest rate levied upon it.

Even though writing off the minimum every month sounds convenient, in reality you end up paying a lot more than you originally owed (sometimes double the actual amount). Most credit cards come with a ‘grace period’, i.e. the time between the statement closing and bill payment deadline. The grace period typically lasts 21 days, depending on the policy of your card issuer. If you pay your bill in full before the deadline, you are not charged with interest. The portion of your balance carried off to the next month will accrue interest.

4. Never Max Out

The rule of thumb is to never spend more than 30% of your credit card limit; even better if you can lower your limit to 10%.This is an essential step to building credit and maintaining a good score. Your first card will have a low limit to begin with, but it gets tricky once you acquire additional lines of credit and your overall limit increases. Maxing out your credit card is a bad idea and may potentially ruin your finances. For starters, maxing out your credit card signifies that you are struggling to make ends meet, i.e. you are using your credit for everything, as opposed to emergency purchases.

Once your available credit is exhausted, you cannot charge anything on it until the next cycle. If you are making the minimum payment each cycle, you will be accumulating massive debt over time. You shall eventually reach a point of no return and your credit score will hit rock bottom. If you apply for a new loan or credit, you are likely to face rejection due to your poor credit history; if you get approved, you will be subject to extravagant interest rates that would further deteriorate your financial position.

5. Review your Statements for errors

Reviewing your credit card charges every time and double checking your bills is a useful practice. This routine will enable you to recognize your spending habits and discover possible fraud. If you have been overcharged or notice an unauthorized purchase, report it to the service provider immediately. Even though credit cards are a highly secure payment method, identity theft and technical errors occur occasionally. Unlike with debit cards, users are rarely held liable for fraudulent activity on a credit card. Most credit issuers will compensate you in full, as long as the fraudulent charge is reported within 24 hours.

6. Avoid Paying Interest as much as possible

Money problems are commonplace, and can happen to the best of us. Even the most frugal and responsible consumers fall behind on payments sometimes. You may have incurred some unanticipated expenses that forced you to spend beyond your budget or max out available credit. You have until the end of the grace period to make up for the outstanding dues. If possible, take out some money from a savings account, liquidate an asset, or borrow from a loved one whom you can pay back at your convenience.

If none of the mentioned options are available, the dues will move on to the next cycle and become subject to interest. When this happens, opt for the fastest repayment method rather than settling for the minimum percentage scheme. For example, if you pay off 25% of your total debt every following month, you will be done within four months whilst paying a small percentage interest. On the other hand, if you pay 5% every month, you’ll be stuck with the debt for nearly 2 years and pay a lot more in interest.

7. Keep Track of your Credit Score

Earning a good credit score is of utmost importance because lenders review your credit history before approving you for a loan. Your credit report enlists your active credit accounts, payment history, and debt details. New credit users with a single credit card have limited activity in the beginning; nonetheless, it is fundamental to make sure that the info provided is free of mistakes. Consumers get one free credit report every year, so you should thoroughly review it at least once a year. Misinformation or errors in the credit report can hurt your score, so immediately file a complaint if you discover discrepancies.

8. Don’t be afraid to swipe your Card

What you hear from peers and read on the internet about credit card usage may have raised concerns. Many people are afraid to make their first purchase from a credit card long after acquiring it. It is true that you won’t accumulate debt or encounter interest if you never swipe your card, but you won’t be able to build credit either. If you want to be able to take out a loan one day or qualify for a mortgage, you cannot do so without a credit history and score. Using credit does not have to be complicated; just follow the rules and stick to your budget.

9. Don’t let Rewards go to waste

Most credit card companies offer some reward system that allow you to earn points on purchases, which can be redeemed later. You may qualify to claim discounts from specific retailers, earn cash back, or get travel points that translate to cheaper air fare. It’s a good thing if you reviewed the reward system while signing up for the card, though it is not unusual to forget about it afterwards. There are deadlines for availing promotions and cashing in points, so keep track and don’t miss out on these benefits.

10. Contact the service provider for help

If you are facing any problem with your credit card, you should refer to the service provider without hesitation. Your friends and family members using a different service provider or plan will not be able to help you out. It is common of new credit users to struggle with credit and debt management in the beginning. If you have accidently missed a deadline and received a penalty, you can explain it to the issuer and request for some concession. Most credit providers are willing to accommodate new users, as long as they ask politely.

Top Features of a Truly Modern Credit Union

Posted on September 27, 2021 by James Paul

Credit unions are popular for several reasons. They have a personalized approach with a member-centric model. You are both the customer and owner here. This lets you enjoy lower charges as well as interest rates on loans. You can also enjoy several financial benefits, even with a low credit score. No wonder the US market size of credit unions, measured by revenue, stands at $81.6 billion in 2021. Studies have found that factors that influence this industry are household debt and the rising lifespans.

Credit unions are an excellent low-cost alternative to traditional banks. But you need to tick off a few basic features to get the most out of their potential. For instance, ensure that the institution has adopted innovative practices and the latest technologies. What else is crucial? Take a look.

1. World-Class Customer Service

The 2020 American Customer Service Satisfaction Index for credit unions, conducted by the University of Michigan, stood at 77 on a 100-point scale. Credit unions strive to serve the community for the greater good by rolling out technology solutions and mobile apps. This is why members insist “they’ll never leave their credit unions.” The customer experience benchmarks or key metrics are usually staff courtesy, variety of financial services and branch locations. So, make sure the organization you pick has a member-first approach for the best service and support experience.

2. Impact of Technology

Your credit union should offer electronic signature authentication, online share account application, remote deposit capture, electronic bill payments and electronic loan application. These are the main areas that appeal to potential members. A few 2021 credit union technology trends are cloud computing, machine learning and AI, digital ID solution, analytics and marketing automation. All these help improve operations and support members more accurately and efficiently.

3. Basic Membership Requirements

The credit union you pick should not restrict membership to limited people. It must allow the general public from all walks of life to enjoy the benefits offered. All you should need to do is open an account and start your membership. The customer support team of the top credit union of New Jersey will explain the basic and complex functions. This way all members can democratically operate the not-for-profit organization. You will remain a valued part of the team, rather than just another customer on their database.

4. Works with Less-Than-Impressive Credit Score

An ideal credit score is 750 and above. Banks are usually reluctant to offer loans if you do not have the minimum score. But credit unions wish to make the process easy for you rather than making it another burden. Even if you do not have a good credit score, you are eligible for a loan. So, if you wish to get an auto loan or personal loan with a poor credit score, your credit union should be able to help.

However, you can build a positive record by making regular bill payments, reducing the interest amount and taking small personal loans that you repay regularly. A good credit score can prove useful in other areas, such as renting a home, where landlords check your credit history to determine your ability to pay the rent on time.

An ideal credit union will be committed to human relationships. Make sure the system is user-friendly, cooperative and evolves with time for the best customer experience.

The Balancing Act: How To Get Through Any Credit Check

Posted on November 25, 2019 by James Paul

There are loads of services in today’s world which involve going through credit checks. When you buy a new insurance package, try to get a credit card, and even when you have to change over to a new utilities provider, you will have people snooping around into your financial past. Of course, it makes sense that this has to be done. Without it, there wouldn’t be an easy way for companies to test the means of their applicants, and this has resulted in severe issues around the world in the past. If you can’t get through them, though, you can find yourself in a horrible position.

Avoid Unnecessary checks:

In day to day life, there are a lot of chances to have a check run on your credit, and a lot of people don’t realise that it is happening. When you get a quote for car insurance, for example, this part of your finances will be looked into. Each time this happens, you will lose a small amount of the good points you have. After a lot of searches, this could start to have a dramatic impact on your score, and this is something worth avoiding when you want to go for a bigger financial service in the near future.

Pay Bills On Time:

When you miss a bill payment for something like your electricity or credit card, the companies who provide them to you will let the whole world know. To avoid this impact, it’s a good idea to work hard to keep up with these sorts of payments, especially when you’re living by yourself. It can be hard, but bills are very important, especially when they are used as a metric to decide how good you are with money.

Go With The Right Companies:

While everyone is using credit checks to make sure that customers are reliable, each of the businesses out there will have their own standards for what is acceptable. You can often find this out before you put yourself through a rejection, too. There are loads of sites around the web which are dedicated to helping people to figure out what they might have to go through when they are applying for different types of financial services.

Get Some Help: Of course, if you already have very poor credit, it can be hard to find yourself being accepted for anything on the market. To help you out with this, credit restoration services can give you help and advice to get your money back on track. While it may take some time, going through this process is essential if you want to be able to make a difference with your money, and will be the very best way to get yourself through checks in the future.

With all of this in mind, you should be feeling ready to take on whatever the world’s financial institutions can throw at you. There are loads of companies out there which use credit checks to make sure that their customers are trustworthy, and it can be horrible when no one will accept you because of it.

Proven Credit Score Improvement Tips To Follow

Posted on December 15, 2016 by James Paul

Credit scores are essential since they determine future eligibility for any financial assistance from financial institutions. Thus, if you have a low score, it is more than likely that you may not get a home loan or mortgage. All you need a better credit score.

Many compare credit score improvement to losing weight. The idea is to hold patience and not look to any quick solutions, as they tend to do more harm than good.

Some good ways to keep control on your credit score is as follows:

Payment alarms:

One of the most important factors which help keep the credit scores good is timely payments. The best idea is to provide the bank where you have an account direct debit instructions. This means that the bank should be given standing instructions to deduct the amount on due date. Further, minimum amount due should not be paid. Whenever possible, opt for paying the entire bill value.

Errors and differences:

There are times when the credit card company makes errors. One can dispute these errors through designated agencies in this regard. Hence, you should scrutinize the statements carefully.

Monitoring balances:

You should be able to manage the score by better control over the revolving credit balance of the card. The lesser the ratio, better the credit score. In order to keep this factor in check, experts suggest to ensure that the balances are kept low by constantly paying them off on time. This is better since even if the entire balance is paid off, it does not negatively affect the utilisation ratio. Thus, it could still remain higher since the statement balances usually get reported by the banks to the bureau. Thus, credit scores will still reflect the monthly balances in spite of full payments each month.

Credit limit:

You must keep real time track of changes in credit limit. If the card issuer has forgotten to update the new credit limit in the statements, then bring it to notice immediately. This is so since regularly exhausting the credit limits completely does not look well. Thus, reducing the credit utilisation will translate into better scores. This can be also be done by taking advantage of pre-approved offer based credit cards which increase the total credit available. A word of caution here is to choose the card issuer carefully. Be wary of those issuers with high rates of approval since they adversely impact credit scores even if for a little while. Ensure the new card does not have annual charges and is low on interest charges.

Usage:

You may want to have one to three credit cards. The use of plastic will do wonders for your score. This is subject to being a responsible user. Thus, make payments by due date positively. Experts nowadays advise to go for a secured credit card which has reporting obligations to all the major credit bureaus.

Time:

For those who wish to improve their credit eligibility, the issue is usually credit history. Reasons such as delayed payments consistently and defaulting on dues, add negatives to the credit report. Negative actions such as delinquencies remain on record for up to 7 years, bankruptcy and tax liens – 10 years and inquiries up to 2 years.

Credit report accuracy:

A study conducted by the Federal Trade commission in 2012 stated that error in credit reports had a recurrence ratio of 1:5. You should always ensure that the credit report is reflecting accurate details of your position. This is essential since the credit line is based on this report. These reports can be accessed relatively easily online. The errors if any found should be reported to the issuer. Reports from all the 3 major credit score institutions should be checked, since error in anyone can impact your credit limit.

Debt management:

It is advisable to leave old debts on the report. They basically are evidence of debts which have been paid in a timely manner. This shows good credit worthiness. Further, old accounts where the payment record is impeccable is preferred as well. Thus, advisable to let them be on the report longer.

Negotiation:

There are instances where due to some unforeseen exigency payments are missed. You should attempt at getting the creditor to agree in writing, for a settlement. It can either be a complete removal or a “paid as agreed” reporting from his end. This can usually be done through a letter where you promise to pay the balances unpaid on date. One may also apply for removal for negatives on account of past history where there were no misses.

Regular and responsible use of the credit card aids in enhancing the credit score. Hence, automatic payments are suggested to ensure that deadlines are not missed. Some people also try to use other people’s good credit history. This can be done by getting added as an authorised user in their card. You should also refrain from unplanned card applications as the inquiries for the same impact the credit score as well.

10 Credit Improvement Tips to Up Your Financial Standing

Posted on July 22, 2014 by James Paul

Low credit point reveals your inability in money management. Not only that, it also obstructs in obtaining bank loans.

Let us now guide you through some credit improvement tips.

Ask for your credit report copy

This is the foremost thing you should start with. You can start working on credit repair only when you have the details in regards to your credit record. Take a hard look at it; you will surely have some bad accounts that are spoiling the entire matter just like a fly in the ointment. There are three major credit bureaus and get report from each of them. Mark the areas which need immediate attention.

Remove the erroneous entry

Have you found any wrong entry in your credit report? If yes, then write to the credit bureau regarding the wrong listing and ask them for its removal as early as possible. An inaccurate entry brings your credit score down by more than 50 points. Once it is erased, a good aftereffect will show in your credit chart.

Pay back previous dues on credit card

Do you know how much your dues affect your credit history? More than 35%! More dues, more damage – it is just a simple equation. Your creditors directly repot the credit bureau regarding your dues and it hampers your status. Meet your credit card issuer and convince him to re-age the account. It will show that you have always been regular as far as timely payment is concerned.

Don’t apply for new credit cards

When your credit record is undergoing repair, don’t try for another credit card. Further credit inquires will negatively impact your score. Furthermore, a new card will curtail your credit age, implying a disadvantage for your already ailing credit record.

Pay off debts

Unpaid loans affect 30% of your credit score. So, clear them in full. If you can’t afford to pay back all dues, sell some of valuable possessions. It is a worth sacrifice to enjoy financial freedom through credit rank improvement.

Say no to new credit card buy

Credit card purchases will up the ratio of balance on credit card and credit limit. Higher balance will affect your credit rank more and more. So, make it a habit to pay in cash at least until the time your credit is back on the line.

Make sure to have accounts open

Closing even a delinquent account may infuse negativity into your credit record instead of improving the rank. So, don’t be in such a hurry.

Consult a professional

When you are at a credit mess, professional help can successfully get you out of the trouble. An expert will give you a complete guidance how to come out of troubles and not to slip into it any further. You may want to read Credit Zeal’s review of Sky Blue Credit who are one of the reputable credit repair companies in the industry.

Talk with your lenders

To your utter surprise, you may get the most valuable guidance from them. They even go far to reduce the monthly payment until you stand on your feet once again.

Have some patience

Nothing will change within weeks. At least six months – yes, that is the minimum time to pull out your dipping credit status. Be patient to witness a rosy picture in future.