How to Build Your Childs Credit

Build Your Childs CreditWhat can you do if you want to give your child a head start by helping them to build good credit from the beginning? Can you open up accounts in your child’s name, build that credit, and still protect your child from potential identity theft?

Where to Begin

A gift of excellent credit is one of the best things that you can give to your child. There are a few ways to help your child create a great credit report including the following:

  1. Allow your child to become an authorized buyer on your credit card. Even though you will be responsible for paying for all purchases, you will help to build your child’s credit when paying off all balances in full. This is one of the easiest ways to show your child how to handle credit responsibly as well.
  1. If your child is old enough, you can cosign on a credit card for him or her. All people under the age of 21 must have a cosigner according to the law, so this is the perfect opportunity to help your child build credit while also displaying responsibility credit-wise.
  1. If your child is not old enough for a credit card of their own, you can also open up a store credit card under your child’s name – again, you will have to pay the bill (or work out an arrangement with your child), but these cards provide a good way to build credit quickly.

Protecting a Small Child

Identity thieves don’t discriminate when it comes to the demographics of their many victims – they will go after the credit of an adult, or a child at any age. Even if your child is too young to open up a credit card account, there are still some things that you can do to protect your child’s credit.

1. Always check your child’s credit report – twice or three times per year. If you see anything strange, make sure to report it right away.

2. Open a credit account with a major credit reporting company like Equifax for your child. Then, freeze the account until your child is ready to build her own credit.

3. Make sure that you report anything suspicious right away. It can take time and there might be a process to it, but acting quickly when you see that something is not right about a credit report is important.

 

Your Credit Score and What It Says About You

Credit ScoreA person’s FICO credit score isn’t something that should be taken lightly. Obtained through a system called credit scoring, it greatly determines the decision made by creditors about whether or not to give you credit. A credit score may also be utilised to determine the terms and rates of credit advanced to you.

The score is arrived at after the evaluation of your credit report. Some of the elements that make their way to the credit report include the number, types, and ages of accounts you hold, bill paying history, whether you pay your bills on time, and the outstanding debt. Creditors then use a statistical program to compare your loan repayment history with that of consumers who have similar profiles.

Generally, the scoring system attach points to every factor that has the capacity to predict the person most likely to repay a debt. The credit score, which is the total number of points, predicts the creditworthiness of a person. Ideally, it represents the likelihood of a consumer repaying debts when they fall due.

Why is a good credit important to you as a consumer? As already mentioned, your score largely determines the decision made by the creditors on whether or not to lend you money. Should a lender decide to advance credit to you, your score will also be used to determine the amount as well as the terms and rates. Some insurance companies also utilise credit reports to anticipate your likelihood of filing a claim and the amount. As such, this information is useful to them when deciding if to grant you insurance, and the premium they will charge. This includes the auto insurance companies. Insurance firms refer to these scores as insurance scores.

Consumers are advised to maintain credit worthiness for various reasons. Below are other benefits that you can reap from having a good credit score:

• It makes it easier for landlords to approve your application for rental houses and apartments
• It gives you more borrowing power. Banks and other financial institutions will find it easy to allow you to borrow more money at lower rates. This is mainly because a good score adds to your negotiating power
• A good credit makes you feel good about yourself – especially if you have had to work extra hard to take your credit score from worse, or bad to good.

Bottom line: while lenders usually consider many factors, besides the credit score, to make credit decisions, a good score makes them perceive you as low risk. Ultimately, you will qualify for many types of loans and credit offers at the lowest rates availed to you.

12 Strategies to Improve Your Credit Score

Improve Your Credit ScoreWhen it comes to a poor credit rating, there’s no quick fix. It’s kind of like managing weight. It’s so easy to gain weight over a short period of time with poor health habits. Losing the weight is a different story. It takes sometimes 2-3 times longer to lose weight than it took to gain it. Credit scores are similarly difficult to rebuild. There are, however, strategies to help you strengthen your credit score over time.

Ask your credit card company to increase your limit: They may deny you, but if they don’t, it’s one way to improve your credit score over time. The catch is that you can’t max out your card once your limit has been increased. Leave the credit window open and pay down your balance to $0 for the best credit results.

Open numerous accounts: In the short term, this won’t do much to improve your score. Over time, however, it is the amount of credit you aren’t using or can pay down each month that will build your score. Spending on every card you open can lead you down a path of surmounting debt. Be very strategic if you try this method to build your score. Use them intermittently for small purchases to keep your account open, and pay them off immediately. You will also have more cards to track for fraudulent charges. Only open as many accounts as you can reasonably monitor for the best results from this strategy.

Never skip a payment or pay late: Paying your mortgage late or forgetting to pay a credit card bill can cause even good credit scores to plummet if they get listed on your rating. Having a high credit score can mean the difference in thousands of dollars in extra fees and interest over time for large loans and expenditures. If you know you’re going to have difficulty making a payment on time, contact your creditor. You may be able to get the payment date moved temporarily or work out some other arrangement to ensure your credit score does not suffer due to unforeseen circumstances.

Don’t max out your credit card: Having good payment history and owning a credit card are only pieces of the credit score equation. Try not to carry a balance that is over 35% of your credit limit. If you have a high balance on one card and relatively low balances on others, it may make sense to transfer the high balance to several low balance cards to keep the percentage of each card at or under 35%.

Don’t close unused card accounts: Long histories of holding a card positively impacts your credit score. Even if you don’t use a card, you should hold onto and monitor the account. It can be beneficial even if the account is completely inactive.

Use your home equity line to pay down debt: Occasionally, it makes sense to transfer your credit card debt to a new or existing home equity line. If you use this approach, you should only transfer debt if the interest rate on your home equity line is lower than that of your credit card. You should also focus on paying down the debt instead of carrying it on the home equity line. This strategy can improve your score because the scoring formula that FICO uses evaluates your handling of different types of debt.

Individualize your accounts after divorce: Since married couples share debt burdens, what one spouse does will affect the other’s score. Joint accounts should be paid down and closed or transferred into individual accounts. Then, you will have the challenge of rebuilding independent credit with new cards, loans, or a mortgage

Pay off debt as you go: Make extra payments throughout the month to prevent the appearance of debt accumulation over the course of a month. It will leave you without as much money in your bank account through the month but can help build and keep your credit score higher.

Become a joint credit holder on someone else’s account: If you know someone who has great payment history and a good credit score, tying into his or her account can actually help you improve your credit score. You need to be able to trust in whoever’s account you join, however, because his or her poor payments will affect you. Getting removed from a joint account may be difficult, as well.

Review your credit report: Make sure you contact credit reporting companies and get outdated or incorrect information removed from your history. Inaccuracies can take up to a month to correct, but is a short-term solution to boosting your score.

Don’t apply for too many credit cards at once: Inquiry information is reported to credit reporting agencies and will be listed on your report for two years. Multiple inquiries can significantly impact your credit score for up to a year. Mortgages and car loans are exceptions to this strategy. Multiple inquiries will be treated singularly and will not affect your credit score.

Talk with creditors: If you face a difficult financial situation, your credit may work with you to find a viable solution to help you pay off debt without defaulting. Not talking to your creditor and defaulting on a card may mean you will be contacted by a collections agency, and your credit score will certainly be impacted.

Keep your knowledge of your credit score up-to-date so that you know if you need to work on rebuilding or maintaining it. Contacting a credit specialist can also be beneficial in informing you about what is going on with your credit. At National Credit Advisors, we will provide you with a free credit case evaluation and help you build your credit with a number of proven tactics.

Call National Credit Advisors, today! For only $9.95 a Certified Credit Analyst will pull your credit report and give a comprehensive review of the items on your report!

 

5 Ways Of Increasing Your Cashback Rewards

Cashback RewardsCashback rewards are incentive programs offered by companies to encourage the use of credit cards issued to users. The programs have a percentage of money spent paid back to card holders; the rewards can be in points, miles or monetary amount. The monetary amount benefit is what is referred to as a cash back reward. Different credit cards offer different cash back levels in relation to the purchase made. Budget conscious card holders can really benefit from the rewards and there are a number of ways that you can increase the rewards that you get with every purchase.

1. Right use – Considering that different issuers offer varying incentives for the use, it is best that you find out as much as you can about credit cards available to you and what they can fetch you with every purchase. With the right credit cards, you will be able to plan purchases accordingly to make the most of the cashback offers.

2. Cashback website sign ups – There are very good websites that offer the cash back programs providing rebates for every use of their links to make online purchases. If you are a regular online shopper, then this approach can be a very good one at accumulating the rewards. Find a few of the most reputable websites and sign up to start adding up your rewards.

3. Use to pay bills – Most service providers now make it possible for their customers to pay monthly bills automatically using credit cards. Using your card for this purpose within a year can earn you a good amount of monetary rewards from the card issuer. The amount you can earn depends on the cash back reward percentage your card offers.

4. Get new cards – Whereas it may not be advisable to sign up for too many credit cards, especially over a short period because of credit score hurts, applying for a few new cards can be a great way of increasing the rewards that you enjoy. For instance, you can apply for a travel card that earns you bonus points in travel rewards when you travel. The only thing you have to ensure is that your cards are in line with the spending habits so you are able to earn more cash back rewards.

5. Read the fine print – Cashback rewards are attracted by purchases and other credit card usage. However, not everything credit card use will fetch you good value. In some cases, there may be limits to specific products and services to enjoy the rewards and there could also be targets of the amount spent before you can claim the bonuses and cash back rewards. To make the right choices, therefore ensure that you take the time to study the rewards catalogue and reading the fine print before you apply for a given credit card. The last thing you should do is end up spending way over your means just to claim the incentives.