Credit reports can be overwhelming and may be ignored if you are unsure which habits are good or bad.  There are myths that are associated with credit that are actually false.

Closing Credit Cards Will Improve My Score

Some think that just because you paid off an account that it should be closed, but this will actually hurt you as it decreases your total available credit.  The best thing you can do is cut up the card, never use, and keep the account open, proving you do not spend your max capacity.

Opening a New Credit Account Will Kill My Credit Score

If you are opening many accounts, yes they will lower your score a few times for each lender that is reviewing your credit account, but if you are being responsible, the short-term score dropping a few points will actually help in the long run as your credit availability will increase as will your score.

Too Many Credit Checks Will Lower My Score

As long as you are checking your own credit your score will not be impacted, as these are called “soft pulls”.  Having lenders check your credit while taking an application for a home, auto, or credit card purpose will lower your score a few points each time, so make sure that if you are getting approved for something, you will go through with it, and do not open up too many credit accounts. Though it is possible to learn how to remove credit inquiries from lowering your score.

My Income or Bank Account Impacts My Score

Although your employment history may be reported on your credit report, typically your salary will not, and for sure will not impact your credit score, as well as the amount of money in the bank.  Credit scores factor in payment history, debt, and inquiries, so there is no need to worry, at least about the income and asset piece.
Bad Credit is here for Good

Well although it may seem like forever until your score goes from “poor” to “excellent”, bad credit is not forever.  Sure it may take years to improve your score, but with responsible payment history, removing debt, and not living beyond your means, you will see your score steadily rise quickly.  Late payments significantly lower scores so any days of being over 30 days late need to be gone, and watch your credit balance versus your availability because scores factor in your spending reaching its max.

It would be fun to rack up your credit card bill and go on a shopping spree, but that’s not what I’m advising.  As long as you are responsible and pay off your balance each month, it can actually make smart financial sense to use your credit card for everything.

Rewards Program

I use my Costco American Express credit card for everything.  At 3% back for the Costco gas stations (make sure to check the Costco gas hours first), 2% back at restaurants, 2% on travel purchases, and 1% on other purchases, not the cashback from purchases from Costco, that’s a lot of money you’re throwing away.  Add in paying your electric, gas, and cable bills with your credit card you imagine how much each month you’ll rack up in rewards dollars, let alone over the course of a year.  Don’t believe, take a look at what you currently spend each month on bills and spending money and do the math!

Your Credit Score is Important

Whether you’re just starting out and have no credit, or you’re looking to continue to build your credit due to mismanagement in the past, using your credit card responsibly by paying off the full balance each month will actually help your credit.  A solid payment history is reported to credit bureau’s each month, whereas a debit card does not show on your credit report.

Convenience

Whether it’s making a big money purchase, or simply do not want to carry cash around, credit cards are more universally accepted than even debit cards.  Ever try to check into a hotel or rent a car with your credit card, a hold is placed on your checking account for incidentals, and that hold is even higher when using a debit card.  Why tie up the money from your bank account when you can use your credit card and the hold will come off in a couple days from your credit account, which can take twice as long to come off with a debit card.  Not to mention the rewards you’re getting by purchasing with your credit card…see…

If you find yourself enjoying the seemingly endless credit limit and are spending too much each month and cannot pay the full balance when it’s due, then perhaps going back to a budget with your debit card works better for you.  If you’re disciplined though, and want to earn hundreds of extra dollars every couple months just by spending what you normally spend each month, but this time using your credit card, you can enjoy those rewards checks!

Almost 50% of Americans have now used a free credit score company to get their credit score in the last 12 months, and 14% have done so in the last 3 years, even though some studies have shown that Americans aren’t exactly up to snuff when it comes to their credit.

A recent survey from Bankrate Money Pulse shows that Americans are finally taking a little bit more interest in their credit because of the fact that they can get their credit score for free. That’s quite a bit different from an American Banker’s Association study in 2013 that found almost 60% of US consumers had no idea what their credit score actually was.

The big difference? The fact that consumers can now get their credit report, and find out their credit standing, for free. Bruce McClary, the vice president of public relations and external affairs with the National Foundation for Credit Counseling, states that credit scores have become “far more accessible than they ever have been,”, and one of the main reasons for that is that consumers can now get their credit score at no cost.

In fact, over 40% of Americans recently surveyed said that their latest credit score was on their credit card statement, while another 15% used a credit score simulator online for free. 13% of consumers surveyed said that they had purchased their credit score from one of the three major credit reporting bureaus.

One of the big reasons that it’s now much easier to get a free credit score is because of the Consumer Financial Protection Bureau and an initiative that they launched in early 2014 call the “free credit score initiative”. This initiative was the key to encouraging most of America’s big financial institutions to provide consumers with their 3 digit credit score at on cost and, since starting, many of the nation’s biggest banks have also begun to provide them for free as well.

It was recently announced by FICO, one of the biggest credit scoring companies in the country, that they would also provide free versions of their credit score, a huge win for financially strapped consumers.

Still, the fact is that many Americans still completely ignore their credit and credit score until it gets out of hand. In fact, over a quarter of Americans have never checked their credit score and 35% have never checked to see their credit report to see if there were any errors or signs of fraud like identity theft.

Point being, now that it’s relatively easy to get your credit score, and get it absolutely free, there’s no reason to not get it and check to make sure that everything is correct, as well as that your score is as high as it can be.

In fact, experts recommend getting it 3 times a year, staggering your requests across the various credit reporting bureaus as you go.

Sometimes, in the rush to transfer a balance from one credit card to another and save money, a person can leave themselves open to increased interest rates and other charges. In fact, the Consumer Financial Protection Bureau (CFPB) recently sent out a warning to credit card issuers about their deceptive offers when it comes to reduced interest or zero interest balance transfers.

The problem lies in the information, or lack thereof, given by the credit card companies to consumers, information that should inform them that by creating a monthly balance, even if it has zero interest, the interest-free grace period that they would normally get on most purchases will be lost. For people who pay off their credit card balance in full every month, that could mean the loss of significant savings.

What normally happens when a person doesn’t carry a balance on their credit card is that, as long as they pay the charges in full by the payment due date, interest on new purchases doesn’t accrue. That changes instantly when they transfer a balance from another card as, in most cases, that grace period is given up until the transfer balance is paid in full. Unfortunately, even if they continue to make payments in full on their other new purchases every month, the loss of that grace period means those purchases will start accruing interest immediately.

The CFPB has a problem with the fact that most card issuers don’t make this information clear in their promotional materials, especially those that refer to their convenience checks, balance transfers, deferred interest/promotional interest rate purchases and so forth.

The agency says that the information is missing in some cases and, in others, it’s covered by language that’s too technical for the average person or buried under volumes of legal-speak. This results in many consumers being misled into thinking that the only fee they’re going to have to pay is the transfer-related transaction, which in most cases is entirely wrong.

Richard Cordray is the director of the CFPB and, in a statement that he made announcing the agency’s warning to credit card issuers, he said that “Credit card offers that lure consumers and then hit them with surprise charges are against the law.”

What can you do to avoid paying these extra fees and interest?

Simply put, before you take advantage of any balance transfer offer, make sure you read all of the fine print so that you understand the cost and transfer fees included. If you have any questions about anything, you need to ask before you sign on the dotted line and keep in mind that, even if you pay off your balance every month, there’s a very good likelihood that you’ll be getting charged interest on purchases from the moment that you make them. Depending on how many purchases you make every month, this could actually cost more money than if you haven’t made the transfer at all.

One excellent way to avoid this problem is simply to stop using any card where you just transferred a balance until that balance is paid off. Use a different credit card or cash, and don’t forget that most promotional offers require a minimum payment that you’ll need to make in order to keep getting their promotional rate. Paying off that transfer amount during that period is in your best interest as well because, if you don’t, you’ll be facing higher interest charges on any unpaid balance.

Something else to keep in mind is that you should never make a transfer to any card that already has a balance on it. The reason is because credit card issuers are allowed by law to apply the minimum payment portion of your future payments to your promotional balance. They don’t have to apply it to the higher interest rate balance that you’re trying to pay off.

One last technique that you might want to try is simply to call your credit card issuer and ask them to voluntarily lower your interest rate so that you’ll avoid transfer fees and other costs altogether. They don’t have to do it but, in some cases, they will, and so asking won’t hurt and won’t affect your credit score either.

While US consumers rightly believe the recession has faded away there are still signs in the US Economy that there is work to be done. The latest growth figures for the first quarter of 2015 are disappointing, annualized to just 0.2% though there are mitigating reasons for that. It does bring into focus, however, the need for everyone to look at their individual finances to ensure they are on the right road. It is unlikely that interest rates will rise to any appreciable extent in the next year. That is plenty of time for everyone to take advantage of the cheap money that is available as long as they have positive and sensible reasons for doing so.

Repairs

Some households, however, are still in the process of repairing their finances after the effects of the recession. That may involve trying to improve their credit history and the resultant credit score that many traditional lenders use as their guide to whether to approve a loan application. The good news is that people can improve their history over time by paying their bills on time. In addition, negative entries on a credit history do have less and less impact on the credit score over months and years.

Online

There is another piece of good news as well, and that is that modern online companies in the financial sector generally take a different approach to lending that the traditional financial institutions. They look at the present. If an applicant has a regular income and can afford the installment payments for any prospective term loan, then their application will be seriously considered. It will generally be granted even if the interest rate charged is slightly higher than the one on offer to those with an excellent credit record.

Credit Cards

If you have had financial trouble, it is important that you take some time to look at the whole picture no matter how black it may seem. There is always someone who can help if you have a regular income. There is no doubt that some have made their financial position worse by ignoring the problem or not recognizing its extent. Credit cards are a prime example of why people have got themselves into trouble.

Even today, after all, the problems of the recession, credit card companies are looking to expand their clients offering them immediate credit. If those who sign up for a credit card use them to buy things they cannot afford, their troubles begin. They can pay off a minimum each month. Suddenly the bargain they bought takes months to pay off in full. Every month interest adds to the original cost. Stupid, isn’t it?

It highlights the dangers of a credit card and the financial mess they are capable of creating. It is easy to ignore such a problem in the early stages. Somehow the reality of having to pay back a balance does not hit until the position is far worse.

Imagine that problem multiplied several times! Many people have several cards and have found themselves with several balances with an increasing problem of paying the minimum off each every month while the balances do not diminish.

Balance Solutions

It’s time to investigate the chances of a loan that can pay off the balances, at least as many as possible. It is important to realize that a loan over a fixed term is a commitment. The most important thing from that point onward is not to fall back into using a card for credit and building up balances again. It is unlikely there will be a second chance without a dramatic change in financial circumstances.

Once you have written everything down you have taken the first step. Another obvious step is to look online for financial companies that have built up a reputation for service. The time spent learning more about what is available is time well spent. Headlines are one thing; the detail is far more important to ensure any product that you might consider is exactly what it seems. Once you have found a company that seems to offer everything you need you your future is likely to have fewer worries than your immediate past.