A good credit score

A good credit score is what each of us aspires to. After all, a credit score is one of the important determining factors when it comes to borrowing money – and getting a low rate when you do. But trying to pin down a specific number that means your credit score is “good” can be tricky. After all, there are lots of different credit scores that lenders use when trying to decide whether to grant you a loan and one lender’s “good” score may fall into another lender’s “fair” credit category. (Not to mention, you may score differently from model to model.) Luckily, there are broad rules of thumb that can help someone figure out whether their credit is good or not. Let’s break it down.

How Do I Rate?

Most credit scores – including the FICO score and VantageScore 3.0 – operate within the range of 300 to 850. Within that range, there are different categories, from bad to excellent. They generally look like this:

• Excellent Credit: 750+
• Good Credit: 700-749
• Fair Credit: 650-699
• Poor Credit: 600-649
• Bad Credit: below 600

But even these aren’t set in stone. Again, that’s because lenders all have their own definitions of what is a good credit score. One lender that is looking to approve more borrowers might approve applicants with credit scores of 680 or higher. Another might be more selective and only approve those with scores of 750 or higher. Or both lenders might offer credit to anyone with a score of at least 650, but charge consumers with scores below 700 a higher interest rate!

Confusion About Credit Reports

The information listed on the reports does not come from the bureaus, they come from creditors. Creditors pay a fee to the bureaus for the service of updating and recording this information about all of our paying patterns across the country. Experian shows accounts and account names with paragraphs to the right displaying more detailed information about payment history and dates. Experian and Trans Union both list negative information first and clearly display the beginning of positive information as opposed to Equifax that combines all accounts together which makes it more difficult to decipher negative from positive. The score given to the consumers are not the same as the score bankers use which are for the most part FICO Scores.

How Do I Get a Good Credit Score?

How Do I Get a Good Credit Score?

To ensure you credit stays “good” in the long-term, it can help to pick one credit score and monitor your progress over-time. It also helps to pay attention to whatever is being cited as a “risk factor” — for instance, say, the amount of debt you’re carrying is too high — instead of a particular three-digit number. Addressing whatever is weighing down a single score will likely bolster your standing across scores. That’s because, while the exact credit score ranges may vary, most models are based on the same five categories:

• Payment History (accounts for 35% of most scores)
• Credit Utilization (accounts for 30% of most scores)
• Length of Credit History (accounts for 15% of most scores)
• Mix of Accounts (accounts for 10% of most scores)
• New Credit Inquiries (accounts for 10% of most scores)

So, to build a good credit score, you’ll need make all of your loan payments on time, keep the amount of debt you owe below at least 30% and ideally 10% of your total credit limit(s), maintain credit accounts for the long haul, add a mix of accounts (installment loans versus revolving loans, for instance) over time and manage how often you apply for new credit in a short timeframe.  

Tips for Handling your 1st Credit Card

• Understand the terms of the card. Know the interest rate, the fees and the payment schedule.
• Beware of 0 percent teaser rates. While 0 percent interest is enticing, the offer may tempt her to spend more than she can afford to repay. When the introductory rate is over, the interest rate will swell and so will her balance. Know what the "go-to rate" is. 
• Play with interest rates. To show your daughter how debt can accrue thanks to interest, plug some hypothetical numbers into our credit card calculators for some examples. Those $50 shoes and last week's $15 pizza delivery at 20 percent interest can get really expensive.
• Set a budget. If your daughter receives an allowance, she should learn not to charge more than she'll be able to pay. If she does, her credit card balance will balloon with interest charges.
• Pay on time. Your daughter will start to build a good credit history if she pays on time, even if she can't pay the balance in full. That takes us to our next tip:
• Pay in full. To avoid costly interest charges, she should try to pay her bill in full each month. If she can't, she should pay as much as possible.
• Don't go over the limit. If she spends too much, she'll incur additional fees for spending more credit than she's been allotted.  

Digging Deeper

Let’s dive a little deeper into tracking your expenses and learn how that can help you save money.

First, recognize that there are two different types of expenses: one-time and subscription. One-time expenses are those that usually happen once. As one-time expenses, they don't generally reoccur over time. For example, you might pick up an ice cream cone at the store versus signing up for an ice cream cone subscription. This is considered a one-time expense - even if you end up buying the same type of ice cream cone again at a later date.

One-time expenses can be a big deal when it comes to eating away at your bank account, especially if they occur frequently. However, they can be fairly easy to track since you have to make these purchases manually. Because they are on your radar, it’s easier to identify these expenses and do something about them.

Subscription expenses are those that keep popping up over time, and even monthly. Recurring expenses include bills such as your water bill, cable bill, and rent. You’re signed up, so you expect to receive these bills every so often. The cost of these subscriptions may or may not be fixed.

Now, subscription expenses are a little tricky. For some reason, you might find yourself justifying the recurring, subscription expenses more easily than the one-time expenses.

After Bankruptcy

A bankruptcy may be listed on your credit report for up to 10 years and there is a good chance your credit score will be rather low until you take the necessary steps to rebuild your credit.

For an overview and explanation of your credit standing after bankruptcy,check out Banco Financial Services. You’ll also get a look at your credit scores.

Rebuilding your credit after bankruptcy takes patience, persistence and a steady stream of monthly on-time payments.

A low-limit credit card is a great way to start. But because of the bankruptcy on your credit file, you’ll need to think small when applying for credit cards. After bankruptcy, you may not qualify for a run-of-the-mill consumer credit card. But you do have other post-bankruptcy credit card options.

Know Your Credit

Credit reports can be confusing. But have no fear: Banco Capital  is committed to demystifying credit for you. We can break down the firms responsible for compiling your credit reports — mainly Equifax, Experian and TransUnion (affectionately known as the major credit reporting agencies). We can also explain how to read and interpret your credit report, how banks and financial institutions use your credit information to make lending decisions and how your credit reports influence your various credit scores. You can also get easy-to-understand explanations of what factors influence your credit report, including payment history and credit utilization, and tips on how to improve it by viewing your credit report , updated every 14 days. With our Banco Capital, you’ll be able to discover how certain financial decisions and actions can affect your credit report and receive advice on how you can go about cleaning them up.

Improving Your Credit score Before Buying a Car

Improving Your Credit Score Before Buying a Car

There is no quick fix or fast method for improving your credit score. A good place to begin is by ordering your credit report from each of the credit reporting agencies and reviewing them carefully. If something looks incorrect, you will want to contact the agency that provided the report right away to begin the process of updating the information.

You should also consider ordering your credit score. Pay careful attention to the risk factors that are included with your score. These risk factors will tell you which elements in your credit history are impacting your credit scores and help you to understand where you can make changes.

In general, the most important thing you can do to improve your credit scores is to make sure all accounts are being paid on time, and any past due accounts have been brought current. The second most important thing you can do is to pay down the balances on your accounts, and keep the balances low on revolving accounts

Common Credit Score Facts

Common Credit Score Facts

Credit Reports and Credit History: Credit scores are not included with credit reports. Additionally, credit scores are not stored as part of your credit history. Your credit score is calculated only when your credit score is requested. Your credit score can change over time, based on your credit history (including late payments, amount of available debt, and more.)

Joint Accounts: Joint accounts are meant to help individuals who cannot qualify for a loan by themselves. With joint accounts, all of the joint account holders, guarantors, and/or cosigners are responsible for repaying the debt. The joint account, along with its credit history, appears on the credit report for all account holders. When all payments are made on time, the joint account can help build positive credit. However, if someone defaults on payments, all of the joint account holders will see the default on their own credit reports. Depending on the severity of the late payments and negative information, everyone’s credit scores could be impacted significantly.

How To Improve Your Credit Scores

How to Improve Your Credit Scores

If you reviewed your credit information and discovered that your credit scores aren’t quite where you thought they’d be, you’re not alone. Since your credit scores use information drawn from your credit report, your credit activity provides a continually-updated basis of data about how responsible you are with the credit you’re currently using. At Experian, we provide information that can help you see credit in new ways and take control of your financial future. You can learn more about:

• How choices that you make can improve your credit score
• Why using secured credit cards can improve your credit history
• What a credit repair service can – and can’t – do for your credit
• How to protect or restore your good credit after major life events like marriage, divorce, or the death of a spouse
• Why knowing your FICO® Score* is important when you consider making a big purchase
• When you know the kinds of activities in your credit that can affect your scores, you can work to take better care of your credit, too. Things like late payments, liens or bankruptcies all have varying levels of impact in your credit scores since they’re reflected on your credit report, too. Getting familiar with your credit report can help you see the impact these kind of events can have in your credit.

2017 Must Do's

Here are some ways that you can boost your credit score in 2017

1. Get your credit report, and report any errors you find.

Any move to boost your credit score must begin with checking your credit report. Get a free copy of your report from all three credit bureaus – Experian, Equifax and TransUnion – once a year fromAnnualCreditReport.com, and go over them thoroughly. Make sure everything you see is accurate, and if something isn't, report it immediately. Some things to look for:

Accounts you don't recognize.
Late payments you didn't make.
Closed accounts listed as open.
Credit limits that are too high or too low.
If you see any inaccuracies, gather up any evidence you have and notify the credit bureau in writing. The bureau then has up to 45 days to investigate, and if the piece of information cannot be verified in that time, it must be removed.

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2. Get a new credit card, and use it sparingly.

A new credit card helps reduce your utilization rate, which is the second-most important factor in credit scoring formulas. Here's how: Say you have a card with a $5,000 limit and a balance of $2,500. That makes your utilization rate 50 percent, well above the recommended total of 30 percent or less. However, add another $5,000 limit card and suddenly your utilization is slashed. Now you have $10,000 in credit and a $2,500 balance for a utilization rate of 25 percent. That decrease will likely help your score creep higher; It will also likely offset any temporary drop that can come when you sign up for a new card.

Don't add too many cards at a time, though. Ten percent of the credit scoring formula focuses on new credit. Applying for too many cards at once or applying too often can make it look like you are experiencing some financial problems and make you appear riskier to a lender. Even though it could reduce your utilization even more dramatically, applying for too many cards in too short a time can actually hurt you.

drag your score lower

3. Make payments more frequently.

Consider paying your credit card bill twice a month. Even if you don't increase the total amount you pay in a month, paying multiple times in a month can help your score. Here's how: A credit report is a snapshot of your finances at a moment in time. If you have a balance on your card at that moment the snapshot is taken, it can drag your score down, even if you intend to pay that balance in full at the end of the month and never pay any interest. However, if you make multiple payments each month – say on the 1st and 15th of the month – you improve the odds that your balance will be low when that next snapshot is taken.

Lower balances bring lower utilization rates. Lower utilization rates bring higher credit scores.

4. Make larger payments.

This one goes without saying. Those with the best credit scores tend to pay their balances off at the end of every month. If you can't do that, you absolutely must pay more than the minimum. Once again, lower balances bring lower utilization rates, lower utilization rates bring higher credit scores and higher credit scores save you money.

5. Pay off the card that is closest to being maxed out.

Your utilization rate isn't just about comparing your total balance to your total available credit. Individual card rates have an impact, too. If you have multiple cards, try paying down the one with the highest utilization rate. If you can get a good deal, you can also consider moving part of that card's balance to a new 0 percent balance transfer card. That way, you're reducing your utilization and reducing the interest you'll pay at the same time.

NEGOTIATE WITH YOUR CREDITORS

Late payments and defaults are a surefire way to send your credit score as far below the 800 mark as possible. If you've had financial trouble in the past, or see it fast approaching, there are steps you can take to undo or prevent damage to your credit.

If you foresee having trouble making payments, you can try negotiating a payment plan with your creditor. An altered payment plan could make it easier for you to pay on time. If you have late payments or debt collection items on your credit report, try asking the creditor to remove the derogatory items from your credit report, according to consumer law website Nolo. It might take some effort, but if you're successful, these steps could improve your score.

Planning for 2017

1. Make a plan. Financial experts generally recommend either paying off credit card bills in full each month or at least figuring out how to pay down the balances with the goal of eventually paying them off. That approach will also help protect your credit score, which can suffer if you carry a high balance relative to your credit limit on your credit cards. It also means that when a real emergency comes up, such as suddenly needing to buy new car tires or pay an unexpected health care bill, you can more easily cover those costs.

2. Save more. It’s a simple but vital strategy ahead of the holidays, when spending tends to go up. Saving up in advance, so you can buy gifts and make travel plans without going into debt, will make it much easier to start 2017on the right foot – without a massive credit card bill. Studies generally indicate that Americans are saving slightly more in the wake of the most recent recession. In the Bankrate survey,17 percent of respondents named “saving” as a top financial priority.

The Secret to Improving Credit

ome people are surprised to find out that their credit scores can often be improved significantly without disputing even one item on their credit reports.

When a lot of people think about "credit repair", the main thing they think about is "removing negative items." If all of your credit repair information came the mainstream media, it might seem as if that were all there were to it.

In reality, there is a lot more to a credit score than just "derogatory" items. (And there is a lot more to credit repair than just removing them.)

According to www.myfico.com, around 30% of your FICO score is made up of what we call credit utilization, or your "debt to credit ratio."

Believe it or not, it is often possible to get a significant bump in your credit score by doing nothing else but adjusting your debt to credit ratio.

There are two basic problems tied to credit utilization that could be affecting your score:

1. Too much credit available (this is rare).

2. Not enough credit available.

The more common scenario is #2, in which a person is using too much of their available credit.

For these people, they can often achieve a score increase by simply improving their debt to credit ratio.

This is normally done in one of two ways:

1. Paying off a certain (sometimes large) amount of debt in order to reduce the amount of credit you're using.

2. Opening up a new credit line to increase your amount of total available credit.

For most people, option 2 is easier to accomplish than option 1.

When you open a new credit lien, the "credit limit" of that line gets added to your total available credit.

Here's an example of how it works:

If you have one $10,000 credit card and your balance is $8,000, your debt to credit ratio is 80%. This means your credit utilization is HIGH and it could be hurting your score.

Let's say you open a new credit line in the amount of $10,000. Now you have 2 $10,000 credit lines, and your debt to credit ratio has gone from 80% to 40% overnight!

Suddenly, you're using a lot less of the credit that is available to you. You're debt to credit ratio (or credit utilization) has improved, which should result in a higher credit score.

For people with bad credit, getting approved for an extra $10,000 in credit might seem next to impossible.

The key is to look for the right kind of credit to apply for.

There are four basic kinds of credit that people with bad credit can usually get approved for:

1. Secured credit cards
2. Sub-prime merchandise cards
3. Sub-prime Visas or Mastercards
4. Store credit cards and credit lines

Of these choices, sub-prime merchandise cards and store credit cards are the best choices for improving your debt to credit ratio because they usually come with much higher credit lines than a secured credit card or sub-prime Visa or MasterCard.

And when you're trying to improve your debt to credit ratio, the size of the credit limit is important.

The other important thing to know is whether the card reports positive credit to the credit bureaus. In order to be useful, a card has to report to at least one of the three major credit bureaus. (It's best if it reports to all three, but a card that reports to at least one can still be used as a foot in the door to important pre-approved offers.)

In this article we've explained just one way that you can improve your credit score without actually disputing anything on your credit reports. There are more methods like this available, and those are covered in detail in the Credit Repair Intelligence System.

Tip of The Day!

Scores are calculated using information in your credit files that are maintained by nationwide credit reporting agencies like Equifax, Experian, and TransUnion. The vast majority of consumers have errors on their credit reports that go undetected for years because they’ve never taken the time to review them.

If data in your credit reports is negative or incorrect, it’s probably dragging down your credit scores without you knowing. However, it’s easy to dispute errors and get your credit reports corrected. Start by visitingannualcreditreport.com to view or print each of your 3 free credit reports.

Saving Time Benefits

Credit repair companies can provide the expertise to ascertain the best and a lot efficient plan that you can choose to use clear your credit file, manage your existing debt properly, and optimize your scores. There are many benefits of employing among the reputable credit repair businesses positioned on the internet. The task will take a significant amount of experience and legal competence. If you don't have plenty of time available you will possibly not be capable of master the intricacies associated with finding the undertaking done properly. along with the advantages continue well in the evening initial stage

How An Consolidation Loan Can Be Helpful

A consolidation loan will help you to group together all your debts, but it must be coupled with self repair techniques in order to really get your credit score back up where you desire it to be.

5 WAYS TO KNOW YOU GOT THE WRONG CREDIT CARD

1. You carry a balance with a high interest rate
 2. You have a secured credit card and your credit score is up. 
3. You pay an annual fee but don't take advantage of the perks. 
4. You don't have a dedicated card for business expenses. 
5. You collect travel rewards and never go anywhere

What Is a Good Credit-Building Time frame?

Starting over or starting from scratch with your credit? Be patient.

Building up a brand-new credit history or re-establishing credit after some credit missteps (such as late payments) takes time.

Give yourself at least a year to see some progress with your credit.

Payment history accounts for 35% of a credit score and establishing or re-establishing your credit with a solid year of on-time payments on a credit account, such as a credit card or credit builder loan, is a good way to go.

Building Credit with a Credit Card

A secured credit card is a good credit-building option. With a secured card, you make a deposit with a lender and your deposit is used as a credit line.

Make sure to choose a secured card from a lender that reports to all three major credit reporting agencies — Equifax, Experian and TransUnion.

To build credit with a secured card, make a series of on-time monthly payments and use no more than 10% of your credit line. Stick to small purchases that you can pay off with ease each month.

After a year or more of on-time payments, reach out to your lender about applying for an unsecured credit card account.

Credit Builder Loans

Another credit building option is to apply for a credit builder loan from a credit union. These loans, which have terms of six to 18 months, are good alternatives to credit cards and good credit building tools in their own right.

With a credit builder loan, the money being borrowed is placed in a savings account.  And once you pay off a credit builder loan through a series of payments over the course of the six- to 18-month term, you will get access to the money in the savings account.

Loan amounts for credit builder loans can be small, just $500.  So there’s no need to borrow a lot of money to build a healthy credit record.

For maximum credit-building, choose a credit builder loan that reports to all three credit reporting agencies.

How to Get a Secured Credit Card

If your credit is damaged, or if you never established credit at all, a secured credit card might be the thing for you. With a secured card, you put down a deposit, usually $200 to $500, which becomes your collateral. Manage the card responsibly and you’ll get the deposit back.

First: Learn Your Options

Before you shop for a secured card, find out your credit score to learn what you qualify for. Why? Well, rejection stings, for one thing.

But more importantly, knowing your credit score helps you determine which cards you’re more likely to qualify for. The better your credit, the more options you’ll have, including money-saving choices not available to those with credit scores lower than yours.

Not sure if your credit is good, bad or fair? That’s not unusual. Here are some tools to help you find out:

• Subscribe. Numerous banks and other companies sell credit scores as part of a subscription to a monitoring service sold to help guard against identity theft. Or you can shop for a credit monitoring service. This may be helpful if you want to monitor your progress with more than one credit reporting agency.

Compare Secured Cards

Just as if you’re buying a car, compare the features and costs of each card. Look at the fine print on each card, including:

• Credit reporting. Get a card that builds your credit by reporting to not one or two but all three of the major credit reporting agencies – Experian, Equifax and TransUnion.
• Graduation features. Will the card let you raise your credit limit over time, either by increasing the size of your down payment or by earning a higher limit through responsible use of the card?
• Annual fees. Unfortunately, you may not be able to avoid annual fees. Make sure you do your research and compare annual fees across cards to find the best deal.
• APR. The annual percentage rate shows the card’s interest rate on your unpaid balance. APR can vary for different services – cash vs. purchases, for example. It may change, too. You might, say, get a low introductory rate that bumps up after six months. Be aware of any potential changes so they don’t take you by surprise.
• Other fees. Avoid application fees, if possible. Some cards have them, others don’t. Watch for and compare the host of other possible fees, including fees for balance transfers, over-limit charges, late payments, cash advances and other costs.
• Rules. Do the tedious but important due diligence: Read and compare the detailed rules accompanying each card so you don’t get tripped up by incurring surprise fees and possibly further damaging your credit.

Who Will Inherit Your Debt When You Die?

Student Loans

Federal student loans can be canceled upon the death of the borrower. In addition, federal loans typically do not require a co-signer, so there shouldn’t be an issue there. Parent PLUS loans are also typically canceled upon the borrower’s death. However, private student loans are not always canceled upon the borrower’s death, and they usually do require a co-signer, which means a parent, spouse or other co-signer may be held responsible for the loan if the student borrower dies before it is repaid. In fact, some lenders or servicers will accelerate the payment upon the borrower’s death, meaning they expect the balance to be paid immediately.

Who Will Inherit Your Debt When You Die?

Auto Loans

If you don’t own your vehicle free and clear, your auto loan debt could create problems for your loved ones. Again, if there is a co-signer on the vehicle loan, that person will automatically be responsible for the balance. And spouses in community property states may be responsible for the debt as well.

But what if there is no co-signer or spouse who is liable for the debt? Heirs may have a couple of options. One would be for a family member, such as a child, for example, to purchase the vehicle and pay off the debt. Another would be to contact the lender to find out whether it is possible to assume the payments. And the other option would be to return the vehicle to the lender. The lender will then sell it, but if the price they get is less than what is owed, the lender may try to collect the balance from the estate (if there is one).

Who Will Inherit Your Debt When You Die?

The IRS Wants Its Share

If a debt is not repaid, or if it is formally canceled due to death, there is another potential complication: taxes. The lender may report that amount on a 1099-C form. Canceled debt is considered taxable income unless the borrower qualifies for an exception or an exclusion. At a minimum, one of these forms may require help from a tax professional to make sure the “income” that results is handled properly on the tax return. Or worse, a co-signer could be saddled with a big tax bill due to this phantom income.

Who Will Inherit Your Debt When You Die?

Cleaning Up a Debt Mess

If a spouse, parent, grandparent or other relative has died recently, the person who is handling the estate (usually called the “executor” or “personal representative”) can order a copy of the deceased’s credit reports to find out which debts are still outstanding. Here’s how to order a credit report for someone who has died. Getting a credit report for someone who is deceased is also important because their information is sometimes stolen to commit identity theft.

While you are at it, it’s not a bad idea to get your own free credit report from all three credit bureaus to see which debts are reported. You can also get your credit score for free, but there really isn’t a point in getting a credit score for the person who is died.

Be very careful about taking money or property that belonged to the person who died if there are debts outstanding. Even if you aren’t personally responsible for those debts, creditors may have a claim on the property of the estate, and may look to you for payment if you took assets out of the estate without following the proper procedures. It’s best to get advice from an estate planning or probate attorney first.

Who Will Inherit Your Debt When You Die?

Protect Those You Love

If you have debts that would be a burden to your loved ones upon your death, try to get adequate life insurance so those debts can be paid off. Most financial experts recommend a term policy rather than credit insurance that only pays off a specific loan; however, if you are uninsurable due to a medical condition, your choices may be limited.

Also double check your insurance beneficiaries periodically to make sure insurance proceeds will go to the person actually responsible for the debt. If, for example, you were married to someone else when you first obtained your life insurance policy and you named them as the beneficiary but never updated it, they will get the proceeds — even if your new spouse is now stuck with debt you’ve incurred recently.

Of course, if you can get out of debt, that’s the best way to ensure your heirs won’t be stuck with your debt when you die.

5 ways to know you've got the wrong credit card for you

You had a closet full of clothes you adored as a teenager, but that doesn't mean you'd wear them now, right? The same thing goes for your credit card. Just because it worked for you 10 years ago doesn't mean it's a great fit for you today.

"As consumers, we evolve, and our needs change," says Bruce McClary, media relations coordinator for ClearPoint Credit Counseling Solutions in Richmond, Va. It only makes sense that our credit card changes along with us.

Unfortunately, we sometimes cling to an old card out of brand loyalty or sheer force of habit. But that can cost you cash in the form of useless fees, high interest rates and rewards you just can't use. Plus, you may be missing out on other advantages, such as the chance to pump up your credit history.

Granted, there's something to be said for keeping a credit card for a while, since a long history with a single creditor can boost your credit score. But if you haven't swapped cards since Bill Clinton was in office, make sure you're not making these mistakes:

Mistake No. 1: You carry a balance every month, but you have a really high interest rate.Welcome to the club, you're thinking. In this economy, who can get a great interest rate? Actually, it may not be as tough as you think. The average APR on a new credit card offer on Oct. 1, 2010, was 14.34 percent; meanwhile, the average default rate, which goes to cardholders who make late payments or other serious stumbles, was 27.88 percent. Even if you've been paying on time and have good credit, your credit issuer may have nudged your APR up around 20 percent.

On a big balance, sticking with that higher interest rate can cost you some serious cash. For instance, paid off over two years, a $5,000 balance on a card with a 21.99 percent APR will cost you about $1,225 in interest. With the 14 percent rate, you'll pay about $463 less. Of course, "moving debt around is not becoming debt-free," warns Gail Cunningham, vice president of public relations for the National Foundation for Credit Counseling. "You think, 'That new card we got has a really low interest rate, so surely it won't hurt to charge a little on it.' You add to the existing debt, and then when the introductory rate expires, you owe more than when you began."

Jumping from card to card can ding your credit report, too. But if you're committed to whittling away your balance before a low introductory rate rebounds, go to CreditCards.com's balance transfer credit card page to find a card that works for you. Or negotiate with your current card issuer for a lower APR. If they think of you as a valued customer, they may be willing to jump through a few hoops to keep you.

Mistake No. 2: You still have a secured credit card even though your credit score is on the mend. For credit card newbies or consumers with a Swiss-cheese credit history, a secured card -- one where you deposit your own money before you start spending -- is usually a smart way to build up a decent credit history. But according to McClary, it's not a card you want to live with forever. "It's the bottom rung of consumer credit card offerings at the most subprime level. So, once a year, check your credit score and see if it's where it needs to be for you to graduate to an unsecured credit card with a low rate and better terms."

What's the magic credit score number? It's a moving target, but aim for the high 500s or 600s before you start applying. CreditCards.com's list of credit cards for those with fair credit provides a good starting point.

Mistake No. 3: You pay an annual fee but don't take advantage of the perks. With 3 in 4 new card offers touting no annual fees, you've got to have a pretty good reason for shelling out $18 to $150 (and up) just for the privilege of keeping a card in your wallet. For some cardholders, generous rewards and better perks are reason enough, but if you can't remember the last time you actually used one of those rewards, it's time to rethink your card strategy.

For Galia Gichon, founder of DowntoEarthFinance.com, "the only reason to pay an annual fee is for frequent flier miles. But ask yourself if you've used a free flight in the last two years." If not, earn rewards with a no-fee card instead.

Mistake No. 4: You're racking up business expenses but you don't have a dedicated business card. For entrepreneurs and self-employed people, it's simple to charge business expenses to your personal credit card. But that's not necessarily smart. "I work with a lot of entrepreneurs," says Gichon, "and I'm a big fan of keeping personal and business expenses separate. You get more organized, you're more conscious of your cash flow, and when it comes time for taxes, your business credit card really helps you quantify deductions."

Mistake No. 5: You're still collecting travel rewards, even though you never have time to go anywhere. You may have opted for travel rewards back in the day when you still dreamed of your grand tour of Europe. But if you're now too busy to fly, those rewards may be going to waste. It could even happen if your miles are tied to a specific airline, but you've moved away from their hub. "I got an American Airlines card 10 years ago when I used to fly American a lot, but now I don't anymore," says Gichon, who ultimately swapped for a different card.

In the same boat? Switch to a card with rewards you'll love and use, such as gift cards, merchandise or a deposit to your kid's 529 account. Or go with the reward that 61 percent of American cardholders opt for these days: cash back. That's one reward you probably won't have to worry about using.

Learn the ABCs of credit scores, credit scoring

If you are completely confused by the concept of credit scores, you are not alone. In fact, you are probably part of the majority that finds themselves befuddled by how credit bureaus compile, calculate and use these scores to determine your creditworthiness, often with the input of credit card companies and other creditors.

Your keys to getting into the 700-plus credit score club
Having a solid credit history with a credit score over 700 will open doors to money-saving opportunities -- from low-interest mortgages and loans to lower APR credit cards, better insurance rates and even jobs. Here are a slew of tips that can help get you and keep you in the get and keep a great credit score.

A credit score is simply a numeric value that has been assigned to your historical credit habits. The original company that pioneered the creation of this score is called Fair Isaac Corp., which forms the acronym "FICO."

The combination of credit bureaus, credit card issuers and massive databases that warehouse consumer data means that virtually every American now has a credit score. This score is vital to determining whether a person can access low-cost credit, something more expensive or is even eligible to get new credit at all.

In general, the higher the score, the lower the interest rate a person will have to pay on a new credit card or consumer loan. Conversely, a lower score will translate to higher interest and less desirable terms.

FICO-based credit scores can range from a low of 300 all the way up to 850. Lenders generally segment scores into six ranges for the purpose of determining to whom they will make credit offers and at what terms. Anyone below the sixth tier can usually only obtain credit from a subprime credit card lender at very high interest rates. Listed below are the six average credit score ranges used by many of the nation's largest credit card, mortgage and auto lenders:

• 720 – 850
• 700 – 719
• 675 – 699
• 620 – 674
• 560 – 619
• 500 - 559

Individual banks solely determine the credit terms that they offer to each FICO score tier, but in general the best offers go to the top tier. Many of the top credit card issuers specialize in super-prime lending, meaning they target consumers with these tier 1 credit scores. However, competition among the largest issuers could allow those in lower tiers to be considered for leading offers, such as those that feature 0 percent APR introductory rates.

Keeping credit scores clean before you close on a home

You've done everything right. You started your home search with a personal credit score of around 700. You took your time finding the right lender, the best interest rate, and made sure you prequalified for a loan before you started hitting open houses. You found the perfect place at the right price.

Now you're at closing ready to sign -- but something's amiss. You check your loan papers against your earlier documents and find that the rate you thought you had is significantly higher. Or even worse, the closing officer walks in with a pale expression and a cell phone and says it's your lender calling.

You don't have the loan after all.

It happens. Unwitting prospective homebuyers who go on credit card binges -- be it for appliances, furniture, paint or decor items -- for their new homes the minute their loans are approved could face the same situation.

While it doesn't happen all the time, some lenders' underwriting departments take one last-minute look at your score to make sure you're not overextended by the time the first payment rolls around. It's one more sign that credit scoring is a 24/7 process in a world stung by economic hardship.

Says one Chicago-area lending expert, "It's not something loan officers would do because they want to close loans. But in this economy, there are nervous underwriting departments behind them that do double-check scores before closing just to make sure that people can actually pay that mortgage on time."

Lenders policies vary
Such credit roadblocks are a frustration for potential buyers facing the most affordable U.S. home market in recent years. IHS Global Insight, a forecasting agency, released figures early in December 2008 showing that by the end of the third quarter, home prices across the United States were 6.5 percent below their 2007 peak.

Hoping to buy a home? Do a 1-year credit makeover

If you fear your credit score -- or any other aspect of your credit history -- may keep you from your dream of homeownership, now is good time to clean up your act. Here are some suggestions: Get those balances down: An ongoing change in Fair Isaac's FICO scores will reward lower debt utilization. Make a plan to get debt levels in each account under 50 percent or less. And be smart -- pay off your highest-rate balances first. Get some advice: You might be focused on pulling together a down payment, but it might not be a bad time to sit down with a tax professional or a financial adviser to talk about the way you're going to manage your debt going forward. Set a credit report review schedule:You have the right to get all three of your credit reports -- from Experian, TransUnion and Equifax -- once a year for free. You can do so by ordering them atannualcreditreport.com. Don't order all three of them at the same time, though. By staggering receipt of each of your credit reports, you'll get a continuous picture of how your credit picture looks because the three bureaus feed each other the latest information. It's a good way to clean up errors and keep a steady watch for identity theft. Give up the late or minimum payment habit. If you've failed to make on-time payments of credit card bills, car loans or utilities, it's time to turn a new leaf. Likewise, adjust your overall spending -- give up a latte or six -- so you can pay more than your minimum balances. One trick for paying on time: get a calendar and when bills come in, mark the due date and then mark a mailing date five to seven days before that on the calendar. The other alternative? Go electronic. If you have electronic bill payment, you designate when the bill is due and pay the bill with a push of a button the day before. It'll keep you in good stead with your lenders while improving your cash flow. Lay off the cards (mostly), but don't close the account: Closing accounts -- even those that have had $0 balances for years -- is a bad idea. Lenders want to see a long record of credit management, and longtime accounts that you haven't touched in years may actually help your score because it shows you have some restraint. Card issuers have become quick to close dormant accounts, so break out the card and use it occasionally.

According to Tom Kelly, a Chicago-based spokesman for Chase, double-checking credit scores after a loan approval is given is not their policy. "Once a mortgage application is approved and the rate is locked, we do not make additional credit inquiries. Regarding credit advice, we always ask potential buyers to review their credit file in advance, clear up any errors and get prequalified."

However, Barry Paperno, consumer operations manager for Fair Isaac Corp., the company that created the FICO credit score, says that based on what his company sees, lenders of all sizes sometimes do re-check credit scores during the loan process. "Lenders have always had the right to do that."

Homebuyers face stricter lending requirements
Yet Paperno notes that lender caution has set the bar significantly higher in the past year alone for borrowers hoping to score a lender's best rate. "Right now, 760 is the minimum requirement for the best rates on a 30-year fixed mortgage -- that's about 20 points higher than it was at the same point a year ago."

Henry Apfelbach, assistant vice president and home loan manager for Countrywide Home Loans in Chicago, says credit scoring is important, but only one major part of the picture when it comes to approving borrowers for favorable rates. "Loan-to-value matters too. I just priced out a mortgage loan at a 666 (FICO score), but it had an LTV of 31 percent, not 80 percent, and it got a very good rate. Maybe not the best, but these people had the right compensating factors to keep them in the game."

As for the scenario of borrowers being approved for loans only to see changes or cancellations later once they've gone overboard with spending, Apfelbach won't confirm or deny such scenarios, but will add this. "Any professional in this business knows the No. 1 thing and that's to set a borrower's expectations properly. I have to represent my company in the proper way, and that means coaching your client properly to manage that credit," says Apfelbach. "If someone is buying a home for the first time, and they're tight on things, I always tell them not to go wild on things. It's not only about a closing scenario, it's about how they're going to afford everything in their lives once they get into that home."

In any event, Apfelbach maintains that "anybody who qualifies in the normal tradition of a loan is not seeing any more difficulty than they did in the past. The only customers I see surprised in my business are those looking for no-doc or low-doc loans (loans based on limited income verification). These were really meant for people who didn't want to disclose income, so they were willing to pay a higher rate. They weren't meant for everybody as they came to be during the past couple of years."

One real estate agent says she feels a responsibility to keep her clients informed about maintaining their credit.  Judy Demetriou, a partner with Village Green Realty in Winnetka, Ill., says, "I generally go over the whole issue of keeping good credit data when we  first talk ... usually, buyers here don't go crazy buying things before the closing, but I do tell them to wait until they are in the house or condo a while to see how they use their space." Yet she adds that "today's young people, first-time buyers, have lived with using credit so easily that they don't understand the importance of good credit and how much debt they should have, though there's the beginning of awareness about this. It's starting to change."

How a new credit score will affect borrowers
Paperno says that Fair Isaac next year will launch an update of its FICO score and the more important issue may be how vigilant consumers are not only about their on-time payment behavior, but how well they monitor their balances going forward. On the good side, there will be a certain increased leniency toward one-time late payments on bills. "Let's say you're late once, but your history has been very clean over the last couple of years. With the new version, being late on one account will not have as much of an effect as it does right now," Paperno says.

Borrowers will take a heavier hit on balance levels in the future, he says. "Folks with higher credit utilization, the score will be more sensitive. So get those balances down." Paperno suggests that the best idea is to bring balances on all lines of credit -- and particularly credit cards -- to 50 percent of their limit and keep cutting from there. "The lower your utilization, the better your score."

8 legitimate ways to improve your credit score now

Building a good credit score is a lot like building a good reputation: It takes years of work and consistency. "It's a tortoise and a hare kind of game," acknowledges Craig Watts, spokesman for FICO, which invented and popularized credit scores. "You score inches up at a tortoise's speed, and it drops at a hare's speed if you stumble."

That's disheartening news if you have a bad credit score -- but that doesn't mean you're out of options. While it's true that the best way to ratchet up your credit score is to pay off your bills and loans on time each month for years, there are a several ways you can nudge up your score, starting today.

1. Piggyback. If someone with high credit score (usually a family member) is willing to add you as an authorized user to one of their credit cards, you'll start reaping the benefits of their strong history. FICO "is fine with the piggybacking notion for family members," says Watts. "Within that context, there are ample opportunities for education, shared experience and coaching on how to use credit." But don't buy into a company's offer claiming that, for a hefty fee, it can boost your score by piggybacking on a stranger's account. A revised FICO scoring formula, due in 2009, will minimize the positive impact of piggybacking between strangers.

2. Report errors. An oft-cited study by the U.S. Public Interest Research Group found that 79 percent of credit reports contained a mistake -- and a quarter were errors that could lead to the denial of credit. Head to www.creditchecktotal.com to check your report for free -- and send a letter to bureaus to clear up mistakes.  "If you get those errors cleaned up, it can make a big difference," says Chris Farrell, economics editor at public radio's "Marketplace Money."

3. Get a rapid rescoring. Generally offered only at the time of a home purchase, rapid rescoring can help clean up errors fast, says Liz Weston, author of "Your Credit Score." "If there's a known error on an account, and you can provide legitimate documentation showing it's an error, you can get a quick recalculation of your score to help with a lending decision," she says. Judgments are made within 72 hours. Because of its expense -- generally more than $100 for each disputed line -- it's usually valuable only to those who need changes quickly for a substantial loan. Though it's not an option offered directly to consumers, a broker can arrange for this service.

4. Automate. Late payments can demolish credit scores faster than you can say "Where's a stamp?" If absentmindedness accounts for many of your late payments, it may be worth heading online to sign up for automatic payments. "Automatic bill payments is a terrific way to make sure you don't accidentally miss a payment because it got lost in the mail, or it fell behind the desk, or it got ignored when you were on vacation," says Watts.

Your keys to getting into the 700-plus credit score club
Having a solid credit history with a credit score over 700 will open doors to money-saving opportunities -- from low-interest mortgages and loans to lower APR credit cards, better insurance rates and even jobs. Here are a slew of tips that can help get you and keep you in the get and keep a great credit score.

5. Explain yourself. If the number on your credit score doesn't tell the whole story, consider attaching a note. "You can attach a letter of up to 100 words that explains extenuating circumstances ," explains Gail Cunningham, a spokeswoman for the National Foundation for Credit Counseling. "Instead of creditors looking at the information and wondering what happened, they'll know you lost job, got another one, and started paying on time again. That can bode well for you."

6. Pay twice a month. If you're someone who charges close to your credit limit each month -- even if you pay it off in full -- it could damage your score, says Weston. "Your credit score is incredibly sensitive to how much you're charging compared to what your credit limits are," she says, for many cardholders. The solution is to pay off the bill in installments -- once before the statement closing date, and once after. "It's kind of gaming the system a bit," Weston acknowledges. "But when I've been close to my limit like that, I've seen my score drop 40 points."

7. Pay down the card that's closest to its limit first. Your credit score is affected not only by your total debt-to-credit available ratio, but by that ratio for each individual card. If you have cards that are closed to maxed out, pay off those first, says Weston. "If you have cards that are way up there, it's depressing your score," she says. "You're risking having your other issuers raise their interest rates or having other credit problems."

8. Diversify. If you're someone who's only had revolving credit, your score may get a boost simply from getting another type of loan -- a personal loan or a car loan, for example. While you shouldn't rush out to get a loan simply to bring up your score, it's not always a bad thing to have a loan on your record. "The lift your score may receive from a richer mix of credit on their credit report can, in some cases, outweigh the negative pull that comes from opening a new account," says Watts.