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Navigating Your Credit questions

Navigating Your Credit Questions

This page links to all of the Articles in the Blog. Credit Basics What is Credit?   What is difference between your Credit Report, Fico Score, and your Credit Karma Score? Why is your Credit Score Important? How are Credit Scores Calculated? Where to get your Credit Report/Score for Free Why are Credit Cards Important? Debit Card Advantages and Disadvantages Debit Card Debacle Debit Card Fees The Credit Card Minimum Payment Trap Student Loans and Debt Building Credit Building Credit with No Credit History What is a Secured Credit Card? Secure Credit card Special Note What is a Credit Builder Loan? What is an Authorized User? How do Airline Miles work?    How to choose a Bank or Credit Union Managing your Credit No Grace Period or Float for You Managing your Credit Cards with Auto pay Credit Card Cash Advances Zero Percent Credit Card Offers The Tenth/Twenty-fifth Credit Card Game OOPS I missed a Payment How the Minimum Credit Card Payment will Break You Credit Card Statem...
Recent posts

How does a Car Loan go Bad?

  Jae’s story….. ****How to go broke buying a Used Car. A friend of mine bought a used car.  She paid about retail book value.  She had been repairing her credit from some hard times so her credit was not very good.  She had been turned down for a couple of loans.  She found a dealer that could get her financed at 18%.  She spent $20,000 on the used car, it was only a year old and in great shape.  The dealer told her if she did not miss any payments for the next year she could probably get it refinanced at a lower interest rate in a year as her credit score increases.  He also sold her a warranty for $4,000 that was added onto the car loan.  It is now 18 months later.  The car has dropped in value by another $3500.  She has paid down the loan $2400.  She cannot get it refinanced because she is about $5000 upside down in the car. So she is stuck in a car that is depreciation faster than she is paying it off.  She got the lo...

Paycheck to Paycheck

Some extimates say 60% of Americans are living Paycheck to Paycheck.  It doesn't matter if they have $20,000 a year or $20,000 a month to live on. The reason many people are living paycheck to paycheck is they cannot stand to have a dollar in their pocket that is unspent. As an example in the grocery store she (my ex wife) had to have the most expensive cute little bottle of olive oil.  Was it better?  Well if it was more expensive it must be better.  As long as there was $3.89 in her bank account she had to spend down to the last ten cents.  When going shopping she knew, to the penny, how much was in her account so she could spend it all. It is Monday and she gets paid on Friday. With $38 in her account she orders takeout Pizza for $32 and gives a $5 tip.  On Tuesday she discovers she is out of gas and needs to borrow another $20 for gas to get to work just like last month. It is the continuous little decisions that keep paycheck to paycheckers without ca...

How Chase Bank Makes Money on their Credit Cards

 Fees and Interest and Merchant Charges. Late Payment Fee, Over Limit Fee, Annual Fee, Cash Advance Fee, Very High Interest. The banks will offer you credit when you have proven that you can make payments.  Basically that is what your credit rating tells them. When you get a new credit card or loan it signals to the banks you are probably credit worthy.   Credit Card Companies lose money on their reward programs.  However they make 80% of their revenue from fees and interest that the majority of their customers are willing to pay.   The Average American has over $6,000 in credit card debt.  The average interest rate is between 20 and 24%.  This means the Average American pays over $100 per month in interest. Many people spend over $1200 per year on credit card interest. This is why the banks are so happy to offer you a credit card. Merchant Charges When you use a credit card the merchant will have to pay between 1.5% and 4%.  This means ...

My Introduction to Airline Miles

 I was first introduced to airline miles by a friend who had just gotten a United Airline Chase Credit Card .   I signed up and started getting airline miles for all of my business purchases.  Just for signing up I received 50,000 miles.  I believe I had to spend $3,000 in the first three months to get the 50,000 points.  This was a great bonus, two free flights anywhere in the US for spending $3,000 which I would have spent anyway.   The annual fee for this card is $95 which is waived for the first year. It took 25,000 airline miles to get one round trip ticket anywhere in the US.  Short flights would only cost 20,000 airline miles. I used just this Chase United card for a couple of years and earned a couple hundred thousand Airline Miles on the purchases my business made.   More Chase Points Cards I applied for and got more Chase credit cards for points.  I got the first Chase Freedom card with no annual fee.  This ca...

How Home Loans Impact Your Credit Report

Home loans have a different impact on your credit score than credit cards. Since most home loans last for 30 years after a few years they are an excellent credit reference. That is if you make your payments on time. The monthly grind of making the Home Mortgage Payment isn't much different after a few years than paying rent.  The rent increases over the years while your Mortgage payment will stay the same except for tax and insurance increases.  For many households the increase in house prices creates the largest family asset. The Home Loan is often the longest loan to show up on your credit report.  It also shows lenders you can make payments over an extended period of time.   The size of your Home Mortgage payment when compared to your claimed income when you Apply for a loan may also have a significant impact.  

Should I Carry a Balance On My Credit Card?

 No Many people think that it will help your credit if you carry a Balance on your Credit Card.  This is simply not true.   The only things that change if you carry a balance on your card is you will pay a high rate of interest and you will pay interest.   You do not need to pay interest on your cards to keep them active and for them to have a positive effect on your credit score.   Use each of your cards a few times a year and pay them off in full at the end of the month and they will stay open and eventually have a positive effect on your credit score.  

Secured Credit Card Tips

 What is a Secured Credit Card? A secured credit card is a type of credit card that requires a cash deposit to be made when you open the account.  The deposit acts as collateral for the account, and the amount of the deposit is usually equal to the card's credit limit.   Secured credit cards are reported to the three major credit bureaus, so responsible making payments on time will help improve credit scores over time. Using a Secured Credit Card For most people a Secured Credit Card is used to start their credit journey or to start rebuilding their credit after a significant Credit problem. You must pay your Secured Credit Card bill on time.  Even though you made a $500 or $1,000 deposit to get your Card you must pay your regular bill on time.   Remember you will be rated by the Secured Credit Card Issuer on whether or not you make your payments within the allowed payment time. Normally you will have Twenty One to Thirty days to pay your bill from the...