To know why these financially savvy customers are referred to as 'deadbeats', lets look at it from the credit card company's point of view. Credit card companies want customers that are 'revolvers'. Revolvers are customers that carry college debt and credit card debt; that's how they make their money. A perfect customer in their eyes is one that makes the minimum payments. These people will have carry credit card debt for a long time. Depending on the interest rate, if you make just the minimum payments, it could take you more than 15 years to pay credit card debt off.
Credit card companies also like customers that frequently make late payment and go over their limit. Just by paying late, credit card companies can jack up your interest rates and charge you additional fees. Going over the limit can have the same consequences. The credit card companies may force you to pay the balance below the limit or you risk having these fees add up month after month.
So strive to be a 'deadbeat' and 'freeloader'. Always strive to be the credit card companies worst customer! This is the first step to long term financial success planning.
Use credit cards to build your credit score. Before you empty your wallet or purse and destroy your credit cards, it is important to understand the benefits of having open revolving credit. Of course credit cards make it easy to reserve a hotel room, rent a car and are a convent way to pay. It's important to understand that they do a lot more. Credit cards are an important tool in your financial toolbox.
Credit cards offer you an effective way to raise your credit scores. Most already know that by having good credit scores it will help you qualify for loans easier. What's more you could receive lower rates and lower closing cost. A side benefit of higher credit scores is that it will help you avoid the embarrassment of being denied for a loan.
Credit cards can raise your credit score becasue of the way the credit bureaus grade you. Credit bureaus grade customers based on their ability to repay loans (debt). So if you never established or maintain credit transactions, your credit scores will be lower. So if you always pay cash and don't have any loans you will have poor credit.
An easy way to understand this is by looking at how teachers grade you in school. If you have never taken a quiz, test or completed and assignment then how can the teacher grade you? It's the exact same thing with the credit bureaus. It's your responsibility to prove to the credit bureaus that you have the ability to repay debt. So by using your credit card and paying it off in full each month you are rewarded with a higher credit rating.
To use credit cards to raise your credit score there are some simple steps you can take. First, once you have a working budget and money saved, build up $25,000 to $45,000 worth of available revolving credit. Then use your credit each month and pay them off in full. Make sure not to carry any balance over otherwise you will have to pay interest on the amount you owe. By paying it off in full before the next month you will not have to pay interest charges to the credit card companies.
Before starting to build your credit scores it is important you take the necessary safety precautions. Make sure you are financially secure before starting to use credit cards to build your credit score. Before you go apply for a credit card you must have:
1) Six month of bills saved. You should have an emergency fund that is equal to six months worth of your monthly bills. Set this money aside in your savings account. To illustrate, if you have bills of $1500 a month you should have $9000 in your savings account. This safty feature protects you in case there is an unexpected expense. You will be able to avoid the credit card debt black hole.
2) A working budget. An easy test to see if your budget is working is if you're able to save money each month. In other words, check to make sure that you bring home more money than you spend.
3) Automated bill payment method. Set up an online automatic bill payment for all your bills that are reported to the credit bureaus. By having an automated system in place you won't have to worry about forgetting a bill. It can happen easy and one late pay will haunt you for 7 years.
You're in complete control of your budget. If you're the type that will spend money if you have it, you probably should consider waiting to get a credit card. Get your spending habits in check before signing up for a credit card.
5) Protect your identity. Make sure to destroy all financial statements. Shred all sensitive documents before throwing it away in the trash. There are plenty of dumpster diver that would love to get a hold of your personal information. Also be careful when submitting personal information online.
Those 5 steps will help you to become a great 'deadbeat'. A 'deadbeat' with a great credit score!
Boost your credit score by collecting all your bills and financial papers and giving them a spring cleaning, regardless of the time of year. Everyone wants a perfect credit score of 850 or to increase their credit rating to the best possible credit score. This is the main factor lending agencies consider when extending a loan or approving credit cards. Lenders want to know your payment history and credit scores are the way they get this information quickly and easily.
What makes up a person's credit score? How it becomes part of their credit history? A credit score is based on information gathered by the three U.S. credit bureaus: Equifax, Experion and Trans Union. Your credit score history began with the first purchase you ever made using credit. You didn't do anything for the credit information to get into your credit history. You simply signed a credit note or credit agreement promising to repay the credit lender the funds of the loan or credit card through payments of a specific minimum amount over a specific period of time. The credit lender extending the credit, whether is was for an automobile, furniture or something else, automatically entered your credit information into the credit bureau systems and your credit payments were recorded and monitored until you paid in full. When you paid a loan in full, that account was marked "closed". In the case of a credit card, the account would remain open as long as you are authorized to use that credit card account.
If you made no late credit payments, the credit entry became a good reference for your next purchase. All late or insufficient payments were noted and if there were many, a bad mark was placed on your credit history. As you began to use more credit, your credit history grew. The credit bureaus generated a credit score based on your credit repayments. Today, a credit score of 750 is considered a very good credit rating; a credit score over 750 is excellent while a credit scores below 600 is poor.
Boost your credit score by keeping your credit history up-to-date and making every credit card or other credit payment on time. Commit to avoid making any late credit payments. Pay off some of your credit debit completely. Reduce your overall credit debt to income ratio.
You should obtain a copy of your credit score report. Credit reports are now available, at no cost to you except postage and handling, once per year by requesting them from the credit bureaus. Check each credit entry, making certain that all credit entries actually belong on your credit record, that credit accounts you have paid off are marked 'closed' and clear up any errors or credit entries that haven't been recorded properly. You might even find credit history that has not been recorded at all. The credit bureaus will send a form to request any corrections; simply fill out this form and return it by mail. After a few months, obtain another credit report and verify correction to your credit records. Check to see if you have successfully increased your credit score. By increasing your credit score even a few points at a time, you will be able to gain more buying power through prudent use of credit.
Both Vince Shorb & Greg Aldrich are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Vince Shorb has sinced written about articles on various topics from Free Credit Report Score, self improvement and motivation and Family. Vince Shorb, author of several books designed to improve financial literacy, has personally reviewed the credit reports of over 10,000 people. His latest book 'Financially Free by 30' gives practical step-by-step advice on how to raise credit scores. Get. Vince Shorb's top article generates over 22200 views. to your Favourites.
Greg Aldrich has sinced written about articles on various topics from Computers and The Internet, Free Credit Report Score and Credit Cards. Greg Aldrich helps match consumers to the appropriate credit cards. His site, www.FindYourCard.com, allows anyone to sorted by features and apply on. Greg Aldrich's top article generates over 12100 views. to your Favourites.