How Credit Cards Impact Your Credit Score

Staying on top of your credit card bills is a key part of building and maintaining strong credit.  Here are a few things you need to know:

 

Credit Utilization
 
You’ve probably heard at some point that you should keep your credit card utilization under 30 percent. 
 
What does this mean exactly? 
Credit Utilization is the total amount of credit you’re currently using divided by the total amount of credit you have available and is one of the most important factors in determining your credit score.
Managing your credit utilization rate can be a simple way to help improve and maintain your credit. Focus on both parts of the equation – your balance and your credit limit.

 

Payment History
 
Payment history is an important component of your credit score and one of the most damaging habits you can have is failing to pay your bills on time.
Understandably, life can get busy and it can be challenging to keep up with your payment due dates. So how can you make sure you don’t miss a payment?
  • Consider a mobile app to manage your credit card and bank accounts you’re your smart phone.  You can track and pay bills with Dudatez – Just set it up and the app goes to work for you.
  • Alternatively, set up text or email alerts to be notified when your payment due date is coming up.
  • If you have multiple credit cards, consider requesting the same payment date for all your accounts.
Consider The Credit Score Affect
 
Paying off money you owe is always a good idea, as is knowing what kind of debt your dealing with and prioritizing what will give you the biggest boost. Money you borrow for a home or student loan is considered ‘good debt’ because it can help boost your financial position.  
The ‘other’ debt is usually in the form of credit card debt or a personal bank loans. You should always tackle these debts first. It will lower your utilization ratio, having a positive impact on your credit score and make you more attractive financially.
Have questions about your debt or credit score?  Reach out to our team of experts at asktheexpert@thdcreditconsulting.com.
 
– Erik Kaplan

How to Build Credit in Your 20’s

 Your school years might be over, but there is one grade you still want to work hard for… your credit score.
 
If you are just starting to build credit, you may find yourself at one of two extremes: struggling to get past an almost non-existent credit history or using your credit card excessively thinking you will worry about it later. While opposite ends of the spectrum both can hinder your credit score.
 
Building a solid credit history is essential to qualifying for a mortgage, auto loan and credit scores may be used by landlords and even potential employers.  In addition, without credit it will be very hard to qualify for a decent credit card.
 
Here are 4 ways to build your credit:
 

1) Don’t spend too much

You landed your first job and might even have money deposited into your account twice a month…but go slow spending it.  You want to start building up a cash reserve, so figure out how much you can live on and save the rest. 

2) Pay your students loans but don’t worry about paying them off
Typically, student loans have low interest rates so paying them off quickly won’t save you a ton of money.  Stay current on your payments but focus on putting money aside for an emergency fund or retirement.
 

3) Think about the future (yes, retirement is a long ways away)

Saving even a little in your 20’s can make a big difference later on in life.  If your company has a 401k plan, make sure to participate. Try to place a minimum of 10% of your pre-tax salary into this account.

4) Create a healthy credit score

Do your homework and find a starter credit card account to start establishing a credit history. Spend a little each month and pay your balance in full. By making payments on-time you are proving yourself to lenders. 

 
The decisions you make in your 20’s about money could pave the way to a lifetime of financial health.
 
Have questions?  
 
Reach out to our team of experts at asktheexpert@thdcreditconsulting.com.

Helping You Pay Bills On Time Every Time!

Dudatez (pronounced do͞o-dāts) is now available in the app store.   

 

What can Dudatez do for you?

– Manage all your bills, bank and credit card accounts.

– Set reminders to pay your bills.

– Keep track of all your accounts and due dates in one place.

– Have a credit question?  Ask a credit expert a question right from the app!

Dudatez is the solution that can prevent people from ever

being 30-day delinquent again!

 

www.dudatez.com

What happens AFTER you file for bankruptcy?

Keeping track of your credit is a crucial step in rebuilding your credit profile, especially after a bankruptcy.  Let’s take a closer look at what happens, after the dust has settled.

Q:  What happens AFTER you file for bankruptcy?

THD Expert:  When you file for bankruptcy, the law says that you must list all of your debts, even if you plan on continuing to pay them. You pick and chose what debts you want to continue paying- such as the house if you want to live there or your car if you need it to get to work.  But you don’t pick and chose what debts are covered.  When a creditor is notified about your bankruptcy, they then report to the credit bureaus that a particular loan was “included in bankruptcy.” At that point, creditors stop reporting the payments you continue to make, such as for a mortgage or car payment. This explains why payments don’t show up on credit reports.

Q:  So why is the information on your credit report wrong?

THD Expert:  If the credit bureaus worked for you and me, rather than the creditors, it would probably look more like this: The credit bureaus would report your house payments as long as you are current, but they come off if you get behind. Unfortunately, we don’t make up the rules. 

Q:  How can you make credit bureaus report your payments?

THD Expert:  Start off by requesting a payment history from your lenders (such as the mortgage company or car finance company), and use it to dispute the incorrect entries. Lenders are required by law to give you a payment history once per year if you request it.  Next, take this payment history and use it to dispute the missing payments on the loan with each of the 3 credit reporting agencies (Equifax, Experian  and TransUnion).

Unfortunately, you may have to do this every year as the lender may not start reporting your payments even after you have successfully disputed it.

Now that you know why payments are not showing up after filing for bankruptcy and what you can do about, you can take steps to fix it. 

If you’re need help, or have additional questions give me a call or email me today.

Erik Kaplan
CEO, THD Credit Consulting
erik@thdcreditconsulting.com
Phone: (800) 822-7120

Do you have questions you would like to submit to the THD Credit Experts?  Email your question to: asktheexpert@thdcreditconsulting.com

Coming Soon!

A Residential Mortgage Credit Report vs. a Consumer Credit Report.

When it comes to your credit, applying for a home loan is different than applying for just about any other type of consumer loan.   

Since a mortgage loan is for a substantially larger amount and for a longer time frame there is more risk for the lender.  Therefore, to qualify for a mortgage more information is required in the underwriting process than for a credit card or auto loan.

For example, when applying for a credit card or auto loan, your lender will most likely request a copy of your credit report from one of the nation’s three credit reporting agencies, and either approve or decline your loan request.  

When you apply for a mortgage loan, it is a whole different ball game.   

What is a Residential Mortgage Credit Report?

Also referred to as a RMCR and tri-merge, this report is a composite of merged information from the three major reporting agencies – Experian, Equifax and TransUnion.  It basically puts a ton of information in an easy to read format for a lender.  All scores in one place, all negative accounts in another, all positive accounts in yet another, etc.

Can pulling a RMCR lower your credit score?

 Since this type of report is a hard pull, you may see a small dip in your credit score.  

If you are contemplating buying a home the first step is to figure out where you are at RIGHT NOW!

Here are a few things you need to do:

  • Get a copy of your credit report and make yourself comfortable with the information on your reports.
  • Check for errors that could be dragging your score down. 
  • Do NOT make any major changes, like closing an account. It could send your score down.   

If you need help improving your credit in order to buy a home, give me a call or email me today.  I help clients with this type of repair work everyday, and know how to make good things happen!

-Erik Kaplan

Coming Soon!