Time and good habits will fix your credit score
July 31, 2009
Recently I’ve heard from more and more people who want to know how to “clean up” or “fix” their credit reports.
With lenders using stricter standards to screen out risky borrowers, credit reports and credit scores seem to have taken on a whole new importance for people.
The bit of bad news is that if you’re someone with a bad credit history, there is no quick fix for your credit report. Only time can remove negative items that are accurate from your report.
In general, negative items will remain on your credit report for seven years. A bankruptcy can remain on your report for seven to 10 years.
You should review your credit report from each of the three credit reporting bureaus (Equifax, Experian and TransUnion) once a year. You can get a free copy of your reports at www.annualcreditreport.com. If you do see a negative item that is on your report in error, you should dispute the item with the credit reporting bureau. If you get your reports online, you can also dispute any incorrect items online. The web site will guide you through the process.
As time goes on, the negative items will carry less weight. Though it won’t remove the negative items, it may be helpful to pay any accounts that are past due and/or are in collections.
After that, the best thing you can do is to begin to rebuild a positive credit history.
Start by making sure that you pay everything on time. Past due accounts and collection items really hurt your credit score. You need to show potential future lenders that you are responsible and pay your bills on time.
If you have outstanding balances on your credit cards, pay off the balances. Once your cards are paid off, use them sparingly. Charge only a small amount each month and pay that amount in full.
With a little patience and wiser use of credit you can raise your credit score and make yourself more credit worthy.
More employers running credit checks
July 28, 2009
More and more employers are starting to do credit checks on their job candidates. This seems to have led to uncertainty on the part of job seekers who wonder why their potential employer is conducting a background check and what effect that check will have on their credit.
Employers may check your credit history for a variety of reasons. In particular, if you have applied for a job handling money, your employer will likely want to know how you’ve handled your own finances. Other jobs, such as with the federal government, may be high security, and you may be considered at risk to take a bribe if your finances are poor.
You must sign a form giving the interviewer permission to pull your credit reports, so you will know if the employer is going to run a credit check.
If you have a poor credit history, be prepared to answer any questions your potential employer may have.
These types of credit checks do not hurt your credit score.
There are two types of inquiries that can show up on your credit report, hard inquiries and soft inquiries.
Hard inquiries are the credit checks that are made when you’ve applied for credit. These types of checks could be made by a credit card issuer or a bank if you have applied for a car loan or a mortgage. Hard inquiries do put a little ding in your credit score.
Soft inquiries are credit checks made by you, your potential employers or creditors you already have accounts with. These soft inquiries will not have any effect on your credit score.
Find reputable foreclosure help to keep your home
July 23, 2009
This is a topic I’ve addressed before, but it bears repeating.
If you are struggling to pay your mortgage, or if you know someone who is, please remember that there is reputable, free help out there.
It has come to light that many of the same mortgage brokers who peddled sub-prime home loans have quit the business of making loans and have started new businesses to “help” homeowners who are facing foreclosure to modify their loans. Take a couple of minutes to read this New York Times story about the new mortgage modification businesses that are popping up.
Yes, that’s right. The same guy who sold you a home loan he knew you couldn’t afford is now offering to help you make the loan affordable.
What? That doesn’t sound right? That’s because it’s not.
There is help available for homeowners who are having trouble making their mortgage payments, and it’s reputable and free help.
Advantage CCS has certified housing counselors who will work with you to see what options are available to help you. There is no cost for this service. Our counselors will offer practical advice and educate you regarding your options.
You should avoid any company that charges upfront fees, will not disclose the terms of their contract in writing, and does not have housing counselors who are certified through the U.S. Department of Housing and Urban Development (HUD). You can find a list of HUD-approved housing counseling agencies at www.hud.gov.
Coffee on a budget
July 20, 2009
Many people are trying to turn over a frugal new leaf lately. Faced with the possibility of job loss, wage reductions, increasing costs and an unstable stock market, even people who are doing okay are trying to buckle down.
There are tons of web sites dedicated to frugal living. One topic that seems to garner some attention is the cost of coffee. Like people on opposite sides of the political aisle, there are people on opposite sides of the coffee aisle.
You have the people who are coffee connoisseurs and especially love good quality coffee. Those people are often willing to pay for it. Then you have the occasional coffee drinkers, or those who see little to no difference between a cup at the gas station versus the brew served at a specialty coffee house.
I would put myself into the first category. I love my coffee. I love good coffee. And I can tell the difference between a good and bad cup of coffee, regardless of where it came from or how much it cost. And I should note that with coffee, like with wine, cost is not necessarily an indicator of how good the product will be. I just have certain brands that I like the best, and some are more expensive than others.
The expensive coffee critics love to cite the infamous $4-a-cup Starbucks coffee. That’s a bit of an urban legend. A regular cup of coffee at Starbucks is less than $2. The drinks that push the $4 price range are the large, fancy espresso drinks.
I say drink what you like … as long as you can afford it!
Even if you have expensive coffee taste but money is tight, you can still indulge your gourmet tastes on a gas station coffee budget.
If you buy a pound of coffee from a coffee house to brew at home and you pay $12 a pound, you can average approximately 56 cups of coffee from that pound. (That’s if you like your coffee on the strong side.) That averages out to 21 cents a cup. Not a bad price.
One other thing to watch out for is the actual amount of whole bean or ground coffee you are buying. I’ve noticed in some stores you’ll see a package of coffee for $8, but you’re only getting 12 ounces of coffee, not a full pound. If you’re comparison shopping by price, make sure to compare apples to apples, or, in this case, ounces to ounces.
Cash for Clunkers sites could be scams
July 2, 2009
It’s been awhile since I’ve issued a scam alert here on the blog, but I have one today.
You may have heard about a new government program called “Cash for Clunkers.” Its technical name is the “Car Allowance Rebate System.” The program is designed to offer an incentive for people driving old cars that aren’t fuel efficient to buy a new, more eco-friendly vehicle.
Like so many other programs out there, plenty of web sites have popped up that look official and claim to be the way to access this program. Some of these sites say they are a place to pre-register for the program and then ask for personal information. You can read more about it here.
There is only one official government site for the Car Allowance Rebate System. That site is run by the National Highway Traffic Safety Administration (NSTSA). The web address for that site is CARS.gov.
That CARS.gov site is the only web site you can rely on for the government-backed program. Do not go to any other web site because it could be a scam.
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