Understanding Credit Utilization

How much you owe is an important factor in determining your FICO® Scores, making up 30% of the total calculation. One of the elements that FICO considers in this factor is your credit utilization ratio.

Your credit utilization ratio provides insight into how you manage your credit card debt. While it's a good idea to avoid using too much of your available credit, it also doesn't help if you're not using any at all.

If you're trying to figure out how your credit cards impact your FICO® Scores, here's what you should know.
 

What Is the Credit Utilization Ratio and Why Is it Important?

Your credit utilization ratio is the percentage of the available credit that you're using on a given credit card account, as well as across all of your credit cards.
 
For example, let's say you have three credit cards:
 
Card A has a $5,000 credit limit and a $1,000 balance.
Card B has a $10,000 limit and a $4,000 balance.
Card C has a $1,000 limit and a $750 balance.

To get your utilization ratio for each card, divide the balance by the credit limit, and you'll get 20% for Card A, 40% for Card B and 75% for Card C.
 
To get your aggregate credit utilization ratio, you'll add up the three balances and credit limits, then run the same equation. This would give you a total utilization ratio of roughly 36%.
 
Your credit utilization ratio is important because it provides creditors with an insight into how you manage your finances. Credit cards are generally used for everyday spending, and if you regularly max out your credit cards or get close to it, it could indicate that you're having a hard time managing your money without the use of debt.
 
This could spell trouble if you take on a new credit account and don't have the funds to keep up with all of your financial obligations.
 
As such, the more of your available credit that you're using at a given time, the more at risk you are of defaulting on a payment, which results in a lower FICO® Score.
 

What Should My Target Credit Utilization Ratio Be?

Some financial experts recommend keeping your credit utilization ratio below 30%. However, the data doesn't support the implication that your credit score will dip once your utilization ratio crosses the 30% threshold.
 
Just like every other factor in your FICO® Score, the impact your credit utilization ratio will have on your score will vary based on a number of factors.
 
That said, generally the lower your ratio is, the better. Generally, keeping it below 10% (and consistently paying bills on time) can help you build and maintain a good FICO® Score.
 
That said, you want to be careful about having a utilization ratio of 0%. This is because it signifies that you're not using your credit cards at all, giving FICO less information about how you manage your money. While a 0% utilization ratio won't cause your FICO® Scores to drop significantly, it can prevent you from achieving maximum points for the amounts owed score ingredient.
 

How to Lower Your Credit Utilization Ratio

Your credit utilization ratio is determined by two things: your reported credit card balances and your available credit. Keeping the former low and the latter high is key to maintaining a low ratio. Here are some quick tips to accomplish that goal:
 
Avoid spending too much: Avoid using your credit cards too often, especially if you have trouble overspending or if you have cards with low credit limits. Even a balance of $200 on a card with a $300 limit (e.g. 66% utilization) could negatively impact your FICO® Scores.
 
Hold onto old credit cards: Closing a credit card takes away its available credit, which could increase your overall credit utilization ratio. As a result, it's best to avoid closing credit cards unless you're at risk of overspending and getting into credit card debt or there's an annual fee or security deposit, and you no longer use the card.
 
Make your payments strategically: Credit card companies typically report card balances to the credit reporting agencies based on your balance each month when your statement closes. Making a payment before that date could drop your utilization ratio enough to keep it at a satisfactory level. Alternatively, you could make multiple payments throughout the month to keep it low at all times.
 
Make paying off credit card debt a priority: If your credit utilization ratio is chronically high because you have a lot of credit card debt, make plans to pay down your balances as quickly as possible. Pay down your balances can not only benefit your FICO® Scores by lowering your utilization ratio, but it can also have a positive impact on your budget and overall financial health.
 

The Bottom Line

Your credit utilization ratio is an important factor in your FICO® Scores, so it's crucial that you know where you stand and take steps to maintain a low ratio every month.
 
Depending on your situation, this can take time, but the good news is that, as soon as you lower your ratio, your FICO® Scores will respond accordingly— you won't see lingering negative effects as you would with late payments and other negative items.
 
If you're not sure what your utilization ratio is, sign up for a credit monitoring service and keep track of where you stand. If you want to reduce your ratio, start taking steps now to reduce your credit card debt and maintain a low level going forward

Planning for a Credit Worthy Future

 

Credit seems like a complicated fickle thing when you don’t understand it. There are many unforeseen and preventable things that can come about and bite you in the rear leaving you in a credit mess when you are not aware of the ground rules to good credit. 

The best way to avoid those messes or recover after coming out of a financial mess is to plan your financial future and set some boundaries for yourself for a better, more solid financial future.

Planning for your future can look like a lot of things and should involve many different aspects, like living within your means, things you want to accomplish financially, what you want out of your future credit, how you will build and maintain your credit and how you will set guidelines for yourself to avoid making common credit and financial mistakes. This blog post will briefly touch on each one of these to offer readers, regardless of age and current situation some insight into how to plan ahead for a credit-worthy future.

Living Within Your Means

What does this mean exactly, well it means not spending more than what you make each month. This is one of the hardest things for most American families to do, especially when your household expenses exceed your income. 

Ideally, you need to be able to pay all your bills on time each month and still be able to buy amenities like food and clothing, while also putting aside 20% to 30% of your income for savings. To live within your means can be making choices between eating out or learning to cook and eat home cooked meals most of the time, including taking lunch to work from home. 

There are lots of ways to creatively shrink your monthly expenses and live within your means.

What Do You Want to Accomplish Financially?

This is a big part of living within your means, because if you are just distraught over the situation and want to have more luxuries in life, then you simply need to earn more money. You should look at the life you would like to live and then estimate what it would take monthly to make that life happen.

Put together a plan to meet those needs before you start living that way. That could be as simple as seeking out additional training in your industry, working towards a job promotion or asking for a raise, changing jobs or taking a second job. The important thing is to always stay within your current means, even if you are looking for a way to increase your income. 

Until you are making that higher income, it is not available to you.

What Do You Want Out of Your Future Credit?

Most will answer buy a house, buy a car, vacations, college for the kids and retirement. These are all valid reasons and should be part of your goals depending on your family and personal situation, but all these things and many like them require decent to good credit and some careful planning to obtain in a secure, responsible way.

Think about the types of things you want in these areas and speak with professionals in those industries to get a clear picture of what it would look like on paper. This will give you a realistic look at what it takes to get both your credit and savings healthy enough to help you afford and finance the things you want. 

Build and Maintain Your Credit

To build and maintain a good credit score you need to stick with the guidelines surrounding the living within your means section and that also includes paying your bills on time consistently month after month, year after year.

This is not always possible but it's what everyone should strive towards. If you have setbacks beyond your control in this area you should work towards getting back on track as quickly as possible building and maintaining good credit because bad credit also increases the interest rates you pay for credit and insurance!

Set Guidelines for Yourself

It’s important to set some spending rules and good habits for yourself. Don’t completely deprive yourself because that will only lead to failure and can have catastrophic results for your finances and future. Instead, set some ground rules with occasional indulgences and stick money aside in savings for the big rewards.

•  Smart money practices will always win out over excess in the long run.

MyCreditSystem is not just a DIY credit repair system for those already in trouble it is a Credit Education Program that helps you repair your credit yourself and also empowers you with the knowledge to keep a good credit score and maintain your credit rating. 

It's a great gift for High School Seniors and College Students so that they learn early one how to avoid the pitfalls of credit recklessness and also how to get out of it if they need to. They can also build a business around it! Who knows maybe your teenager or young adult is the one that fixes everyone's credit in the family or your neighborhood?

To learn how you, your teenager or young adult can build their own business helping their friends and family fix their credit sit with them and watch this video  
 

9 Steps to Removing Credit Report Errors

Checking your credit reports on an annual basis is a must in this day and age of rampant credit fraud and identity theft, specially since there is a fairly good chance that your credit reports will have one or more mistakes more than once in your lifetime. Think about that!

• A study done by the Federal Trade Commission found that 25% of all consumers have an error on their credit report that negatively impacts their credit score. 

The study also showed that 80% of people who challenge items on their credit report are able to get at least some of the negative information altered or removed. That’s great news! 

Follow this process to get these errors corrected: 

1.    Get copies of your credit report from the three major bureaus. You can get a free copy of each report each year from AnnualCreditReport.com. If you’ve recently been rejected for credit, you’re also entitled to a free copy of the report containing the derogatory information from the creditor that denied you credit.

2.     Get your official credit scores. It would be a shame to do all this work and not know how much of an effect your efforts had on the metric that matters the most. I personally have a subscription to MyFico.com simply because the ability to access both my credit reports and FICO Score all in one place and have live credit monitoring is of great value to me.  

3.     Find and highlight all the errors that are harming your credit score. Some people challenge all the negative information, whether it’s accurate or not with great results but beware of doing so online. You give up a lot of right and protections under the FCRA when you don't dispute errors in writing via certified mail, return receipt requested to document your records but more on that later.

4.  Write a dispute. Your dispute can be very simple. Provide enough information that the credit bureau can identify you and the item you’re disputing. In general, it’s most effective to declare that you were never late or that the account isn’t yours. MyCreditSystem gives you access to all the dispute letter templates you need once you become a member. 

5.  Mail your disputes via Certified Mail Return Receipt Requested. The credit bureaus are on the clock from the time they receive your credit dispute in writing. 

• If they can’t complete their investigation within 30 days, they basically have to make the changes you requested. Include only one dispute per letter. 

• The credit bureaus would love for you to file your dispute online. It saves them time and  money because it automates the process. What's more it usually doesn't resolve your issue favorably. Receiving your letter is much more cumbersome for them. So send your complaints via the postal service.

6.   WATCH THE CALENDAR 

• Their response must be postmarked within 30 days of receiving your letters.

7.   Evaluate the responses you receive back. It’s very likely that some of your disputes will be resolved in your favor. It’s also likely that some will not. 

• One credit bureau has been known to simply give you what you want without investigating at all!

8.  Continue disputing all the negative items. At the end of the day, the credit bureaus exist to make money. They make money by selling credit reports, not by dealing with consumers. Your disputes cost them money. With a little diligence, you’re likely to get your way, so be persistent. 

• Consumers have historically done well when suing the credit bureaus. It’s difficult for them to truly verify the information in your credit reports. If you’re not satisfied with the results, consider filing a claim in small claims court. Credit bureaus get fined $1,000 per infraction. You’ll likely settle out of court and get your credit report cleaned up.

9.  Stay organized. Maintain records of all your correspondence. Make copies and keep those copies filed in an organized manner. Be sure to keep track of dates. 

Fixing the errors on your credit reports is simple, but it does take time. It’s important to check your reports every year and whenever possible subscribe to a credit monitoring program. 

The cost of credit reporting errors can be staggering, as they can dramatically increase your interest rates on any loans you receive, credit cards and insurance rates. 

A BAD CREDIT REPORT CAN PREVENT YOU FROM GETTING HIRED OR EVEN RENTING AN APARTMENT.

Request your credit reports today and spend the time to examine them carefully. Consider making it a part of your annual financial housekeeping and if you want to make sure your credit is repaired correctly become a MyCreditSystem member and doing it yourself. 

You can do it and it will change your life. 

7 Credit Score Destroyers

Your credit score not only determines whether or not you can  get credit cards, cell phones, utilities, a rental apartment, auto loan, auto insurance and even job security clearance or the job itself and a mortgage to buy a home, it’s also a critical factor in determining the interest rates you have attached to all those items. 

A low credit score can cost you a lot of money over your lifetime.

Not everyone is aware of the many factors that determine a credit score. It’s easy to make assumptions that seem logical but are actually false. Acting on incorrect information is a sure way to make critical mistakes.

Save yourself money and make your financial life easier by avoiding these seven credit destroyers:

 1.     Carrying a big balance on your credit cards. While having a lot of debt is never a good idea, using more than 30% of the available credit on your credit cards hurts your credit score.

• For example, if your credit limit is $10,000, your score drops if your balance is over $3,000. This is commonly referred to as the “utilization ratio.” Keep your credit utilization to no higher than 30% of your available credit limit.

2.     Paying late is a huge factor in your credit score. Experts estimate that 35% of your credit score is determined by your payment history. Any late payments will lower your score.

3.     Closing credit cards is a credit score killer. This is related to your utilization ratio. By closing a credit card, you lower the amount of credit that’s available to you because your credit score is also sensitive to the length of your credit history.

4.     Defaulting is an obvious credit score mistake. When you fail to pay back a loan you owe to a lender, you can lose as much as 100 points from your credit score. Make every effort to pay back your loans and to do it on time.

• If you’re struggling making loan payments, no matter the type of loan, contact the lender and try to negotiate other payment arrangements. They can be very flexible if failing to do so means not getting their payments at all.

5.     Applying for too much credit. Everyone needs to have some credit but applying for too much credit does have a negative impact on your score.

• Each time you apply for more credit, your potential lender makes an inquiry of your credit history. 

• Each one of those inquiries lowers your credit score.

• Avoid accepting every credit card offer that shows up in your mailbox.

6.     Not having a credit card at all. Many people are getting rid of their credit cards in an effort to avoid debt. Unfortunately, this does nothing to help your credit score.

• Experts believe that the ideal credit score includes 2-3 credit cards. 

• Credit diversity can account for as much as 10% of your credit score.  

• Credit cards help to keep your credit history current. 

7.     Co-signing a lease or a loan for someone else can be a huge mistake because if they fail to make on time payments can destroy your credit score.

• When you co-sign a loan or lease you are equally responsible for that debt, so any late payments, defaults or even repossesions will show up on your own credit report as if they were yours.

• You can even be subject to collections and lawsuits. If a lender won’t do business with them, you might want to reconsider before co-signing.

By avoiding these common mistakes, you can protect your credit score and a good credit score guarantees you the lowest interest rates. And don't worry even if your credit score is poor now it is possible to repair your credit and boost your credit score with a good DIY credit repair system. 

Give your credit score the amount of attention it deserves. It makes life a lot easier! If you or someone you know would like more information about MyCreditSystem click on the link. 

You can also follow me on Facebook 💙 Instagram   See You There!

8 Good Reasons to Use a Credit Card

 

Personal finance gurus spend a lot of time and energy attempting to prevent us from using credit cards, usually for very good reasons.

Credit cards are frequently abused and are the cause of a lot of personal debt. However, credit cards bring you a lot of advantages as long as you use them wisely. In fact, credit cards are frequently a better way to pay for things.

Consider these benefits:

1.) Sign-up bonuses. Many credit cards offer significant rewards when used responsibly. For example, consumers with good credit can be approved for credit cards that offer signup bonuses. These bonuses can be worth $50 to $250 or even more. Some credit cards provide reward points that can be used to redeem things like gift cards or airline tickets and much more!

2.) Cash back. With the right credit card, you can earn from 1-5% back on all your purchases. Depending on how much you use it, that can be like getting a raise at work!

3.) Investment rewards. Some credit cards, such as the Fidelity Investment Rewards Card, give a higher rate of cash back. However, that cash back must be deposited directly into an investment account. This is also nice because it encourages you to invest and save.

4.) Frequent-Flyer miles. Nearly every airline has at least one credit card offering. The ultimate value of these cards is really determined by the specifics of the card and the airline tickets you actually receive and use. The details can vary so shop around.

5.) Safety. Using a credit card makes it a lot easier to avoid financial losses due to fraud or unfortuna timing on automatic payments.

For example, if you pay your bills with automatic payments directly out of your checking account, these automatic drafts can also potentially result in insufficient funding fees and late payments, which will have a negative effect on your credit score.

If your debit card is used fraudulently, your money is taken out of your account instantly. It can also take some time to get your money back. By comparison, when your credit card is used fraudulently, you don't lose any money; you simply notify your credit card company and you don't have to pay for those transactions.

6.) Grace period. Credit card usage gives you time to pay, usually a couple of weeks on the average before any interest kicks in. With a debit card, the money is gone instantly. If you have your money in a high-interest checking account, the amount of interest you will earn can be significantly more over time by paying for your purchases with a credit card.

When you put your purchases on your credit card, your money will spend more time in your checking account, where it's earning money for you. If you use a debit card for your purchases, the money is in your account for a much shorter length of time, thus earning less interest. 

7.) Insurance. Most credit cards include a plethora of consumer protections that most people aren't aware of. This includes things like rental car insurance and travel insurance. Some product warranties are also made more advantageous when you pay for the item with your credit card. 

8.) BUILDING CREDIT

If you don't have a credit history or if you need to improve your score, a credit card can help raise your credit score. Obviously, this assumes that you use your card wisely. Debit cards do nothing to help your credit score.

As you can see, credit cards aren't bad provided you use them responsibly. In fact, credit cards have a lot to offer. So dust off that credit card and put it to good use; just be sure to pay it off in full every month or as close to it as you can to maintain a good credit score.

The Easiest Way to Remove Bad Items from Your Credit Report

Did you know that it's possible to remove bad items from your credit report? Any inaccurate item showing up on your credit report that's damaging your credit can be removed, otherwise you have the right to sue the credit agency. 

Here's how to remove bad items from your credit report. 

1. Get a Report from All Three Agencies 

The first step is to get a credit report from all three credit reporting agencies. You can get your report once a year for free from annualcreditreport.com

Look through each and every one of your accounts carefully. Is there anything you don't recognize? Anything that's overstated or understated? 

Highlight any suspicious accounts. Note the account numbers and descriptions. 

Some bad items will appear on just one agency's report, while other errors will appear on all your credit reports. 

2, Beginning the Dispute Process 

Look for the dispute address of the credit agency you want to contact. It's usually on their website. Also look at their expected response times and policies for removing items. 

The FCRA states that they must respond within 30 days. If you don't get a response within 30 days, you may be eligible for a lawsuit and the item has to be removed from your credit file. 

Your dispute letter must illustrate exactly why you believe the account is erroneous and it also needs to list the exact account number(s) as it/they appear(s) on the credit report including the account description listed on the report.

MyCreditSystem gives you full access to a DYI Credit Repair / Credit Literacy Program including precise credit dispute letters and instructions for each case scenario to dispute credit report errors and/or remove collections, charge offs, medical collections, bankruptcy, repos, foreclosure, evictions and even student loans,

Be sure to be very clear about what you want them to do. For example, if the account exists but isn't actually delinquent, let them know that you want them to update the status to "Never Delinquent" rather than to remove the item because your credit history can be adversely affected by removing long standing accounts you have paid but have been late on.

3. The Next Steps  

One of three things will happen once you've sent in your dispute letter: 

• They respond and remove the item. In this case, no further action needs to be taken. 

• They respond and say that the item is not an error. They need to also provide documentation stating why this is the case, including the actual credit filing by the creditor.  

Look over the filing. Was this account opened by you? If not, you may have an identity theft and credit fraud issue on your hands. If it was, but is being incorrectly reported, you need to contact the creditor directly to work out the issue. 

• If they don't respond. In this case, you have certain rights, including at times the right to have the items removed or the right to a lawsuit. Consult a lawyer for specific rights in this case or use MyCreditSystem to save thousands of dollars and repair your own credit legally.

The whole process of disputing a report item should take no more than three hours each. Those three hours could result in your ability to open credit cards, your ability to buy a home or your ability to buy a car at much better rates. The choice is yours. Can you rely on someone else to do this for you immediately or are you going to take control of your credit repair timeline. 

The Advantages and Pitfalls of Credit Counseling

Credit counseling services receive a lot of mixed reviews. There are many reputable services, but there are also credit-counseling companies with horrible reputations. Credit counseling is now required before filing for bankruptcy. 

If you’d like help with your debt, be aware of the advantages and disadvantages of using a credit counseling company. 

Positive Features of Credit Counseling 

1. They tend to have more clout with creditors. Some creditors are more willing to negotiate pay-offs and payment plans with credit counselors. You might get a better deal and more breathing room with a credit counseling service.

2.    It’s possible to consolidate your payments. Many firms will consolidate your payments into one payment each month. You’ll be making a payment to the counseling company. Understand that the credit counseling firm must then make all the individual payments for you.

3.     It can be easier to get new credit. As part of your credit counseling, it’s common for new credit to be secured for you. They’ll go out and work to have your credit applications approved.

4.     An end to the harassment. When you’re put on a repayment plan, the debt collectors will leave you alone. Remember that you can do this yourself by simply making a request in writing. 

A reputable and honest credit counseling service can be helpful. There are many potential advantages to utilizing the expert assistance they can provide. But there are also several possible negative consequences. 

Pitfalls of Credit Counseling 

1.     They might not actually pay your bills. There are many complaints every year of credit counseling companies taking your money and then failing to make the agreed-upon payments to your creditors.

2.     They often over-promise. Just like any other company vying for your dollars, sometimes the marketing is a little too good to be true. After the counseling company takes their cut, you might not be any better off.

3.   It can possibly make your credit worse. There is one tactic commonly employed that can have a negative impact on your credit score. The credit counselor may advise you to stop paying on your debt and instead put the payments into an account. 

·   Once a large enough lump sum has been accumulated, the counselor would then approach your creditors with offers to pay off the debt at a reduced amount.

·       During this process your credit will suffer due to the non-payment.

·      The account used to store the money is under the control of the counseling firm. Do you trust them? 

The potential pitfalls are serious. It’s very important to do the necessary legwork to locate a reputable credit counseling service. 

Many consumers believe that a service with non-profit status must be reputable. Understand that being non-profit is primarily about not showing a profit at the end of the year. Paying bonuses and higher salaries can accomplish this feat. 

Ideally, you’ll be able to find a counseling service in your state that you can visit in person. Checking with your state Attorney General is an effective way to see if any complaints or legal action have taken place. Doing an online search is also likely to turn up any negative reviews or complaints. 

Inquire about the services offered and the fees. Ask how the employees are paid. Are they compensated more for signing you up for certain services? Get everything in writing. Verbal promises are likely to be conveniently forgotten. 

Credit counseling can be beneficial or counterproductive to your goals of reducing and eliminating your debt. Find a reputable credit-counseling firm by doing the necessary research. Be sure your financial situation will move in a positive direction. 

If you want to save hundreds or thousands of dollars and make sure your credit is repaired correctly you can do it yourself with a DYI Credit Repair System like MyCreditSystem it gives you access to a complete Financial Literacy Program and all the necessary template letters you will need to successfully fix your credit 

The Basics of Credit Clean Up

Credit can be a fickle thing and if you don’t know much about credit, your credit report or score and how credit works it can seem overwhelming to try and find ways to fix or clean it up.

As overwhelming as credit practices may seem there are ways to clean up your credit and plan for a better financial future with smarter spending and borrowing practices.

There are four main ways to clean up your credit and the more cohesively you use them together the better the result at the end. This article will briefly go through the four areas and how to take part in them. Through your research you are likely to come across more in-depth information that will play a part in working with the information provided here to give you the best results in cleaning up your credit.

The first way to start your journey toward better credit and a higher credit score is to review your credit report for errors, dispute and/or demand that all inaccuracies be removed immediately and any collections or accounts you do not recognize be validated. To do this you need to get all three of your current credit reports and lay them out in front of you. 

Take your time reviewing the credit reports and use different color highlighters to highlight all the accounts that are currently open and have a balance, collection accounts and credit report errors. Some of your the accounts are likely past due, while others may not be. To get a complete look at what you need to pay off, you need to color code and highlight them all. 

Remember NOT to include your monthly living expenses like utilities or rent that may be listed on your credit report. Highlight only the debt you need to get out from under, credit report errors and accounts you want to dispute or that need validation. Once you do that the next step to forming a debt pay off plan for your open accounts is to consider the highest balances or highest interest rates first since these are more harmful to your credit, though the smaller accounts may be easier to pay off. 

Remember, while you are paying off larger debts with larger payments, you must still maintain the minimum payments on monthly accounts and living expenses to keep from worsening your debt.

The next step in the credit cleanup process should be to consider the good accounts you have and work hard to keep them in positive standing. These accounts will help to steady and improve your credit when you get the "bad accounts" paid off or removed from your credit reports through disputes or debt validation. 

When you have paid off or removed "the bad" and past due accounts, you can consider adding a good or small account to keep in good standing, but don’t consider adding anything until you have dug yourself out of the hole you are currently in.

Next, you want to make sure you check over your credit report for errors at least once a year. This can happen by accident or through the presence of identity theft. Either way you need to find it and dispute it in a timely matter. 

Each credit reporting agency has their own dispute policies and procedures. Often times this information will print at the end of your credit report and should be readily available on the agency web sites as well however, never dispute anything on your credit report online. 

Always submit your credit disputes and debt validation requests it in writing via certified mail, return receipt requested so that you have proof of your dispute/debt validation requests so that the credit bureaus are obligated to follow through within the Federal and State Consumer Protection Laws.

When you dispute credit errors online you loose a lot of the protections and safeguards in place that benefit you!

The last and probably most important thing to consider when working to clean up your credit is to form and set up a plan for future financial success. You need to be able to handle money in a smart way and avoid getting back into the same situation or having to work so hard again. To do so you need to learn to live within your means and learn the difference between need and want. This can be especially hard if you’ve become accustomed to a certain standard of living or have friends with a higher standard of living than you can afford. 

You need to be honest with yourself and with others about the life you can currently have, this will help you be about to reach the life you want in the future. Realistic budgeting is a discipline that will take time to master but is essential to good credit and your financial future.

I have learned a lot about personal financial management and how to clean up my credit myselt thanks to   myCredit System - myEcon  membership which includes myCashFlowManager  it has been a game changer that opened the door to better credit and better personal financial management for me and my family. 

Debt Consolidation to Raise Your Credit Score ?

Debt consolidation is a form of debt management that allows you to find a way out from under debt while still avoiding bankruptcy, garnishment and other extreme financial measures. 

Debt consolidation allows for you to use one loan to a pay off all other accounts and loans you have leaving you with one monthly payment and interest rate. 

The way this can help your credit score is by allowing your current accounts, regardless of status, to be considered paid and in good standing. You also open another loan account which shows a certain level of good credit and it then becomes your responsibility to pay the payments on time to keep the debt consolidation as a positive loan in good standing.

There are many debt consolidation companies and with any consumer driven industry there are fly-by-night scam companies to watch out for. When looking for a debt consolidation company and loan take the time to do a little research and learn as much as the company and the people who work for that company as you can. You should also ask for references to talk with real people who have experienced the company and staff members you are considering. The company and employees should be trained and certified to work on debt consolidation cases and offer debt consolidation loans that are reputable and quality.

Before contacting a debt consolidation company you should take the time to get your debt in order. This includes making a list of all the debt you want to include in the debt consolidation. For each of the items you include on the list, the following things should be included: creditor, creditor contact information, monthly payment, interest rate and current balance. This will give you an idea of the debt you have and the basic information about each one. You also need to total it all up and write it in big numbers on top of the list. This is often one of the hardest parts of debt consolidation, as you have to look at the whole picture and if you haven’t been keeping track along the way, it can be overwhelming. But, this is among the first steps to taking control of your debt, instead of letting it control you.

Debt consolidation can also be followed by other debt management tactics, like debt negotiation, that can help to minimize the debt to allow you to take out a smaller loan and save you more money in the long run. Many credit counselors are trained in the art of debt negotiation and should offer that as a service with your debt consolidation. When you negotiate your current debt you have the opportunity to settle at a lower amount than the current balance, which helps your debt consolidation loan and your repayment over the life of the loan.

If you are looking for a way to get out from under debt and help your credit rating and score, debt consolidation could be the right choice for you. Debt consolidation is a smart way to get rid of debt while still preserving integrity on your credit report and can boost your credit rating. When all your debts are paid, this changes the status of the account and when your credit score is recalculated it should reflect this new positive status and boost your credit score. This can bring you hope and instant success in getting your debt under control if and only if you are able to get a loan for debt consolidation. 

If you are struggling with your debt, paying bills and need to repair your credit score before you can get another loan I recommend a DYI credit repair program like MyCreditSystem which can save you thousands of dollars and may even help you remove those collection accounts from your credit report without paying them. 

Understanding Your Credit Report and Score

Your credit score is based on a formulation used by the credit reporting agencies that creates a general average of your credit history and assigns a number to show whether you have excellent, good, fair or poor credit. While, your credit score is an average of your credit history, it is often the first thing creditors look at when deciding whether or not to give you a loan or credit account. While, you are unable to change the credit score directly, you can change and better your overall credit and credit report which will directly reflect on your credit score.

When looking for a way to improve your credit score there are many steps in the process and it will take a little bit of time for the improvements you make to reflect on your credit score. You can go through the process alone, or you can enlist the help of a credit counselor which can help with the process, paperwork and the law on what you are allowed to change and dispute and what you are not.

1-    Request all of your current credit reports 

Your credit report is available from each of the three major credit reporting agencies, including Experian, Equifax and TransUnion. All of these agencies have a web site where you are able to order your credit report that can be delivered in paper form or instantly electronically. Once you have your credit reports, print them out. This will take lots of paper, but it worth it to have them spread out in front of you for the best results when looking over them. 

2-    Know your credit

You may not know your current credit or have kept up with what is on your credit report until now. This is a big mistake. You should purchase, or get a free credit report, once a year to check for mistakes or fraud. If you never have, you will need to pay extra close attention to the items on your credit report.

3-    Go through your credit report with a highlighter

Go through every part of your credit reports including the personal information, highlight anything that is incorrect. This should include wrong addresses, misspelled name(s), any accounts and other items you don’t recognize. Also, mark items that are yours but that you may want to dispute the balance, interest rate or other parts of the account.

4-    Follow the directions for disputing inaccurate information

At the end of the printed and electronic credit reports are the instructions on how to dispute items on your credit report that you feel are inaccurate. You can complete this process in writing or online. When doing so you will need to provide ample proof of the item you are disputing, whether that’s receipts for an item you paid or proof of your identity to dispute an identity or past address problem. You should also always make copies of everything you send to the credit reporting agency.

Regardless, of the information you find on your credit report, it’s important to understand how credit works and how you can improve and dispute the information on your credit report. The most important thing to take away from this is the need to get all three of your credit reports every single year to check for inaccurate information. This is not only smart financial practice, but one of the best ways to protect yourself from identity fraud.