The best defense against making a credit blunder is to better educate yourself.
Myth #1: Avoid Using Credit Cards FALSE!
This may be a good way to get rid of debt, but it's utter destruction to your credit score. Why? Because of the 5 factors that make up your credit score, one is how you use and manage your credit, a factor that makes up 30% of your score. That's 255 points! Use the cards every month for gas, groceries etc. but pay them off.
Myth #2: Consolidate Debt onto 1, Low-Interest Credit Card FALSE!
Everyone gets the tempting credit offers to consolidate your debt onto one credit card but when you max out that card, your credit score will drop 60-100 points overnight! Do not consolidate your credit card debt UNLESS, the balance will be under 30% of the available limit.
Myth #3: It's Okay If You Go Over Your Credit Card Limit Because The Bank Authorized the Purchase FALSE!
Going over limit, even if it's just by one dollar deals you a double penalty a 50 point lower score and usually a $39.00 fee.
Myth #4: Closing Credit Card Accounts Will Help Your Score FALSE!
Don't close credit card accounts at all, with the exception of closing a joint account after a divorce. You will lose points in two areas: in the Amounts Owed Area which is worth 30% of your credit score, and in the Length of Credit History Area which is worth 15% of your credit score.
Myth #5: Becoming an Authorized User on Someone's Credit Card Makes You Legally Responsible for the Account FALSE!
While the activity on these accounts, good or bad will show up on your credit report if you are an authorized user, but you are NOT legally responsible for terms of the agreement.
Myth #6: The Type of Credit Card Doesn't Matter FALSE!
The credit scoring system does not like third-party finance cards (e.g., department store cards, furniture store cards, etc.) Always try to stick with major credit cards (e.g., Visa®, MasterCard®, etc.)
Myth #7: Your Divorce Decree Protects Your Credit Score FALSE!
Even if your divorce decree stipulates that your ex-spouse is financially responsible for debt that is held in both of your names, you remain financially liable for that debt until it is paid in full.
Myth #8: Marrying Someone Who Has Poor Credit Will Hurt Your Credit Score FALSE!
Although getting married generally means that you'll be combining finances, your credit reports won't be combined.
Myth #9: Making Arrangements to Pay a Charged-Off Credit Card Account Will Help Improve Your Score FALSE!
If you have an old charged off credit card debt and you make payment on it, or make a written or oral promise to pay it, you will renew the 7 year credit reporting statute from that date. The best path to take in this instance is to debt negotiate. Offer the creditor .30 - .40 cents on the dollar as payment in full in exchange for a deletion letter from the creditor.
Myth #10: Those Pre-Approved Credit Card Offers Do Not Hurt Your Score FALSE!
Just because credit is offered to you, does not mean that you should accept it. Your credit report has not been pulled yet, so you are NOT approved for the account but once you call and your credit is pulled, your score will lower 10% due to the inquiry.
The bottom line about misinformation? It's always going to be out there, with tempting offers but remember - if something seems too good to be true, it probably is.
Friday, February 18, 2011
Are you on a budget? These days it seems most of us are, so I have compiled a list of very useful software tools that are of good quality, yet free of charge. If you are like me, you may ask why are these tools free? There are many reasons; some are free because they are new and are trying to get known. Others try to get you to use their product, so in the future you may buy some of their other products, or buy the enhanced features of the current product. While others are “open source” which means the source code is available to anyone to develop, and some do just that for fun and recognition to further their careers as programmers. The reasons are many, so why not take advantage? Let’s get started...
- Want to burn a CD or DVD? Try Infrarecorder at http://infrarecorder.org/.
- Want to see what software and hardware you have on your computer? Take a look at Belarc Advisior at www.belarc.com/free_download.html.
- Do you backup your computer regularly? Try cobian backup at www.educ.umu.se/~cobian/cobianbackup.htm or http://www.dropbox.com/ (2GB free online storage).
- Are you combating email spam? Try mailwasher at http://mailwasher.net/.
- Need to transfer files between computers? Try www.flexense.com/downloads/windows.html.