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Past Due Amounts or over credit limit amounts do and will hurt your credit score. I’m sure you’re not surprised to hear this but you may be surprised to see what damage they can really do.
Maxed Out credit card: 30-45 points
Past Due : 60-110
Double whammy double the ouch. Some cards have the option where you can say yes allow me to go over my high credit limit or no. Let them know its not ok. I know from personal experience this causes a huge mess. I won’t go into that whole mess because it would take us to a different category on communication and marriage.
Back to my topic….. I can’t stress how important it is to answer the phone when your lenders call you. Inform them of whats going on. Try to work with them, but whatever you do please keep your cards open. Not only will you have taken a hit for being maxed out and past due but now you will take another additional hit for having closed an account. If you are working on improving your FICO/credit score this will hurt multiple areas of your FICO score calculations.
There are easy ways to help your score and even easier ways to accidentlly hurt it. Please read up on what to do and what not to do and speak to an expert in this area. It will benefit you greatly.
I wouldn’t have thought this big of an increase would be possible with everyone talking about tougher credit card laws. Credit card companies shutting down card limits. Credit scores dropping so people no longer qualify for the loans they are applying for. When I saw this statistic I was floored, needless to say I am still sitting here baffled.
Between the first and second quarters of this year, Americans added to their debt by a whopping 249% over the same time period last year. -CardHub
I see this as a sign that more people still need help as we try to recover as a country. Many people are still looking for jobs. To anyone who is trying to borrow from Peter to pay Paul, stop the madness and start moving forward. Call the companies you are having a hard time repaying and work something out. The phone call is well worth the time and money you may save in the end.
Step 4 is to Pay your bills on time. Sounds simple but to someone who is barely making it day to day the thought of paying all their bills on time may seem impossible. Some days its down to paying the bill thats due or putting food on the table for your family. Again step three is critical to keep up on step four. You must have a budget; a place to start. Step four will always be a struggle without completing your budget and becoming knowledgeable about the whole picture.
Now assuming that you’ve completed step three; you can now look at your bills and their due dates. If the dates fall during the middle of a pay period, set it up to have them paid out of the earlier paycheck. This may be easier said than done, but it really does help out. Once you’ve switched your mindset and you get used to this happeneing, you’ll have the peace of mind of knowing you will never miss or be late on a payment.
*(this step may require you to get another part time job maybe sell some items you don’t use around your house)* You will need to build up some money so you have the ability to switch the payments to an earlier pay date.
When you get paid, Ialso suggest you immediately put money aside for groceries. That will help eliminate the desperate situation of having to choose to pay a bill or put groceries on the table. It takes time to switch your thinking and day to day lifestyle habits; but paying your bills on time is another critical piece of your FICO score. A late payment or missed payments hit your score hard. Payment history is 35% of your credit score
Missed Payment:
30 day late payment: if your credit score is around 680 you risk a possible 60-80 point drop in your score
30 day late payment: if your credit score is around 780 you risk a possible 90-110 point drop in your score
YIKES…. another reminder, please please please ….even if you setup all of your payments to deduct out of your banking account automatically, stay on top of your balances, due dates and any changes in the monthly payments required. This will also hurt you if the full payment is not made… more on that later.
Questions? Contact me, I’d love to help.
Remember if you find yourself in a situation where you can’t make the payment, contact the agency you owe the money to and work out a plan.
Consumers beware of new credit card offers that may be arriving in your mailbox. Due to the increased regulations mandated on the credit card act (Credit Card Accountability and Responsibility and Disclosure Act of 2009), creditors have become more creative. Beware of “Professional Cards” not covered by the act. In the old days, professional cards were sent to small business owners or corporate executives, but now they are starting to target consumers. According to an article in Wall Street Journal, “Beware That New Credit-Card Offer” written by “JESSICA SILVER-GREENBERG“ “in the first quarter of 2010 issuers mailed out 47 million professional offers, a %256 increase from the same period last year.”
By switching to a professional card the following practices may pertain to your new professional card:
*Issuers do not have to allow 21 days after a billing statement is mailed before a payment is due
*Issuers can raise the rates on existing balances if a late payment has been made to another creditor
*Issuers can hit cardholders with big fees if they exceed their credit limit
*Issuers can change card agreementswithout giving advance notice
Make sure you know what type of credit card you are signing up for. Read the fine print and ask questions.
If you have ever wondered…….”Is my credit bad?” give us a call we can walk you through your credit report , credit score and what steps you may need to take to help your situation.
Looking for an inspirational, motivational video? I have watched this video numerous times. The section on “You have to believe” is so true. I would love it if you took some time out of your busy life to watch this 10 minute video by Will Smith. The excerpts are from different interviews he has done. Definitely one of my favorite videos on youtube. Thank you to Will Smith for the words of wisdom and to youtube “themindguru” for posting it.
ENJOY… and Never let anyone tell you that you can’t do something
A new report issued by FICO, still the number one company that provides credit scores lenders view to assess an individual’s credit risk, shows a number of interesting facts about the current U.S. economy.1. More Americans have poor credit than ever before.
2. There are also more Americans with excellent credit than there have been in the past.
3. The number of people with a mid-range score (650 – 699) has dropped.
43.4 Million Americans Probably Cannot Get a Loan
According to the FICO report, 43.4 million Americans have a FICO score below 599, which is considered poor. This number represents 25.5 % of all Americans. Their poor credit score will make it harder (or impossible) for these people to:
Get a mortgage
Buy a car with a loan
Get an unsecured credit card
Rent an apartment
Sign up for a cell phone plan
Additionally, these individuals may pay higher interest rates if they can get credit, and may pay more for car, homeowners’ or renter’s insurance.
Since the effects of financial problems don’t appear on your credit score immediately, the number of Americans with low FICO scores may get worse, according to the AP report. The U.S. Department of Labor says that 26 million people are out of work or underemployed — with many facing foreclosure.
Financial hardship often leads to foreclosure or failure to pay debts, which means millions more credit scores may drop before the year ends.
More Americans with Better Credit
On the other end of that spectrum, 17,9 percent of Americans (up from the historical average of 13 % and down only slightly from last year’s report) have a FICO score of 800 or more. This shows that many Americans have gotten more conservative in their spending and are learning how to manage their credit better.
It takes effort and financial savvy to raise your score from a 750 to that highly-coveted FICO score of 800 or more. This shows that Americans with good credit are getting even smarter about managing it. They are doing things like minimizing hard inquiries on their credit files, paying close attention to their debt-to-available-credit ratio, and balancing the types of credit they show in their final with a mix of installment loans and revolving credit. They might also be using credit monitoring services to keep track of their FICO score and make sure there are no errors on their credit reports.
Less Americans in the Middle — and What That Means
Borrowers with a credit score in the moderate range (from 650 – 699) may be hit the hardest by changes to their credit score.
According to the FICO report, this sensitive group makes up only 11.9% of all Americans, but they are the ones who may find it harder to get a mortgage or good rates on a credit card or car loan. A few wrong moves or late payments can put them in the “high risk” category, too.
On the positive side, though, smart money management can see them increase their score to an excellent credit rating of 750 or higher.
But the report is even more telling than that. The real estate market will continue to suffer as it’s harder for people to get mortgages with lower scores — or people may choose to rent rather than paying higher interest rates. Several other industries, including banking, which rely on people borrowing money, will continue to experience problems.
Awareness has already created a mindset shift, and sources are reporting that retail spending has dropped since the report was released.
It’s interesting to compare our FICO scores and see how we stack up against other Americans. But, regardless of what the numbers say, your main financial focus should continue to be paying your bills on time, not charging more than you can pay off within that billing period, and making sure your debt-to-available credit ratio is 50% or lower.
What’s my credit score? What does it mean? Why do I need a credit score? How will a short sale, bankruptcy, foreclosure affect my score? How often should I pull my credit report? I can’t afford my debt, now what? Divorce, Credit card bills, late payments…the list goes on and on ….
Consumer debt is at an all time high, stress levels are rising, people often wonder if they should consider consumer credit counseling, look for credit solutions, debt settlement and maybe bankruptcy.
Its time for everyone to take charge of their credit score. Its time for all of us to become knowledgeable about our scores and how they are affecting our lives. Many of us think our credit is only considered when you are about ready to purchase a home or automobile, did you know that phone companies make credit inquiries, your employer may pull your credit, your insurance company, if you are trying to rent a home/apartment the list goes on and on. The higher your score the easier your life.
Step Number 1 out of 10 steps to a better score:
Pull / order your credit report. How are you ever going to know where to start unless you are willing to take the plunge and face reality. I suggest you go to :http://annualcreditreport.com its a free creditreport site that will give you the score from all three credit bureaus. There are more sites to choose from, annualcreditreport.com is just a suggestion.
Make sure you check out the company you order your report thru. There are many scams out there. Let me know if you have any questions. I’d love to help you out. Look for more steps to come on unraveling your credit score and what to do now that you have your report.
You got married… Sorry we could not help ourselves. And if ever there was a time for a laugh, we thought this was it.
Neglect to create a budget after the divorce. It’s very important after a divorce that you confront your financial needs and your current financial limitations. Will you be getting alimony? Paying alimony? Avoid “treating yourself” to big ticket items that may hurt you financially. Visit http://www.utahcreditcoach.com for a free budget calculator.
Not cutting the financial ties and making a clean definite break from your ex. Don’t let your credit be unnecessarily destroyed. Hope for the best, but plan for the worst. Cut these ties quickly and be adamant about closing all joint accounts.
Filing your taxes without consulting a professional CPA for tax advice. Should you file joint or separately, who gets to write off the kids, the house, the business expenses? Make sure you are taking into account key credits and deductions that may affect your return and liability. (http://www.divorcesource.com/info/taxes)
Not making time to plan for long term financial goals (retirement, children’s college funds and weddings, etc.) These are all important items that beg for help from a professional advisor. Ask us for a referral if you don’t have one!
P.S. (We’re making up for number one) Forgetting to update all your beneficiaries on every investment, retirement, savings account, insurance policy, Will and Trust.
P.S.S. Neglecting to check your credit report. You need to see what your credit score is currently and what accounts are in both of your names. Once the divorce is final, many people need to start improving their credit score along with establishing new credit in their name only. For more great credit coaching information visit www.UtahCreditCoach.com
