Tips on Getting a Good Credit Score

The moment you think about applying for a loan, first question that pops up in your mind may be, ‘Is my credit score good enough?’. It is the one number that holds sway over the lender’s judgment of your financial record. It is a prime indicator of your fiscal health and default parameter studied by banks and other financial institutions, when you apply for credit or a loan.

What is a Good Credit Score?

You need to have an idea about credit score ratings scale and how these scores are calculated. In USA, the most widely accepted credit score rating system is FICO. It is calculated using a statistical algorithm, developed by Fair Isaac company by credit bureaus for every individual in United States of America. As explained on the FICO website, the prime determinants of a credit score calculation in ascending order of importance are credit history length, total amount of money owed, current outstanding balance on various credit lines and your credit repayment history. Every defaulted loan payment and credit card bill hurts you in the form of a lowered credit rating and consequently decreases your creditworthiness in the eyes of your lenders. The FICO credit score range extends from 300 to 850. Any score above 660 is a good credit score.

How to Improve It?

So, what can you do to improve your credit score? You don’t need to take any extreme measures but follow some simple guidelines that are as follows.

Pay Your Bills On Time
The simplest way of improving credit scores is to ensure that timely bill payments are made. Make sure that credit card bill clearance is given top priority as one defaulted payment can degrade your score. On the other hand, consistent credit card bill payments will raise credit score certainly. The fact that you are using your credit lines wisely, automatically boosts your credit score.

Use Credit Cards Sparingly
One of the things that can leave a blot on your credit report and lower credit score is unpaid credit card debt. Use your credit card as an emergency option and avoid buying on credit as much as possible. The revolving credit system employed in credit card interest rate calculation can mount your debts very fast. So, be careful while using credit cards and don’t use them unless you absolutely must. If you must use them, then make sure you pay back a sizable portion of the monthly bill or clear it entirely.

Clear Your Debts
Another straightforward way is to clear your debts as top priority. This will improve your repayment history over time and you will eventually see an increase in your credit score. See to it that sufficient funds have been allocated for repayment of your mortgage loan installment and reminders are set for payment deadlines.

Plan Your Yearly Budget & Expenses
If you plan out your yearly budget and decide on spending limits, you won’t make the credit score hurting errors that happen because of haphazard expenses. A sound financial plan and planned use of credit lines will reflect on your credit score rating, in a positive way. This is the prime suggestion of most financial advisors when they explain how to make your credit score better.

Avoid Opening Multiple New Accounts
Opening or closing multiple financial accounts for credit in a short time or making too many queries for credit lines is inadvisable. It may hurt your credit score. Open up a new credit account if you must, but availing too many credit lines in a short period of time may lower your credit score. So take all these points into consideration.

Wise Usage of Multiple Credit Types
Another factor which may substantially boost your credit score is the variety of credit types which you may have used. Your non-reliance on a single credit type and usage of multiple types of credit with timely repayments, improves your creditworthiness and helps increase your credit score.

So, now that you know how to increase your chances of landing up with a good score, create an action plan. Chalk out your budget and expenses to achieve a set goal. The key to a good credit rating is to have a well planned strategy for managing your finance and expenses. Think before you make an impulsive purchase using a credit card and go for surplus expenses only after you have cleared your monthly bills and debt payments. When you borrow more than you can return in time, credit score will take a hit.

Ways to Improve Credit Score

The range of the credit scores is between 300 and 850. Late bill payment or a lapse in the payment of the bills can damage your credit score. If the credit score is below 620, getting any kind of loan is difficult. When the economy is booming, credit score of 700 is considered as an excellent score. At the time of an economic recession credit score of 700 is considered as an adequate score.

Statistical reports say, there are several million people in the US, with a severely damaged credit score, in the wake of back-breaking recession that has been eating into the economy, for the past few years. Credit blemishes are a hindrance in obtaining loans and credit cards. If the credit score is bad and a loan is granted, you would have to put down a huge down payment and pay high premium rates. When there is an economic crisis, you would need a credit score of 720, to get a mortgage or an automobile loan. It is wise to repair your credit score, if it is bad, before approaching the financial institutions or banks for a loan or a credit card. If you have an adequate credit score of 700, you can also improve it to 720 before applying for a loan. In this Buzzle article, you will find some essential tips on improving your credit scores by changing your financial habits.

Ways to Improve Credit Score

Prior to applying for a loan, you should check your credit rating. You can get a copy of the credit report from either one of the major credit bureaus (TransUnion, Equifax and Experian). Review the credit report for any discrepancies. If there is any, you can send a credit repair letter to the concerned official, pointing out the discrepancy. Here are a few useful steps to improve your credit score.

Payment History
One of the significant attributes that determine the credit score is the payment history. The creditors will look into your most recent credit history to evaluate your credibility. Improve your credit history by paying the bills on time. Delinquent payments can lower your credit score. Paying bills on time will help in rebuilding your credit rating.

You can avoid late payment by setting up an alerts or reminders on your mobile phone. Other options are online bill payment and automatic deduction from your bank account. The utility bills, credit card bills and loans can be linked to one of your bank accounts. Ensure there are sufficient funds in the linked bank account. You can ask the utility service providers to send you email and mobile alerts.

Put Down Extra Amount in Credit Card Balance
It is wise to use only 25% of the total credit card limit. One of the factors that affect the credit rating is the total amount you owe on your credit cards. Suppose you hold four credit cards and the maximum limit of each card is $3000. Your total credit card limit is $12,000 and you can use 25% of $12,000. However, if you have crossed the limit, you should put down more than the minimum amount due. This helps in improving the credit score.

Wider the gap between the total credit limits on the credit cards and the amount of debt reported, the better. The total amount left in the credit limit is taken into consideration by the banks and financial institutions when you approach them for a loan or a new credit card.

Do Not Close Unused Credit Accounts
One of the models used by the credit bureaus to calculate your credit score is FICO credit scoring model, which was developed by Fair Isaac Corporation. According to FICO, “Closing accounts can never help your score, and often it can hurt.”

Suppose you have several credit card accounts and are using only a couple of them, the total credit limit will be more. If you close the unused credit card accounts, it will lower the total credit availability and the ratio of balance-to-limit will become more. This will affect your credit score, quite badly.

Another point is, when you close one of your oldest credit accounts, it will shorten your credit history. This would not only affect your creditworthiness, but also make you unworthy of credit.

If the economy is booming and you have a good credit score, closing one of the unused credit accounts would not affect your score much. However, at the time of recession, you have a good credit score and want to improve the score, then closing the unused old credit accounts would affect the credit ratings badly. You need to take into consideration the current economic scenario before closing unused and old accounts.

When you apply for a new credit card, the card provider would check the length of credit history first before checking your credit score. Do not close your old and unused credit accounts because the credit card company would reject your application. The credit companies treat the customers who are perpetually in debt but have never defaulted on the minimum payments.

If you have a good and adequate credit score, then it is wise not to apply for new credit cards, even if it offers a good discount for new customers. Each new account can hurt your credit score, if it is not put to use wisely. Again, closing accounts can also be detrimental to your score. Therefore, remember to apply for a new credit account only if there is a need for it.

Get Professional Help
If you are neck-deep in debt, it is advisable to meet a credit counselor for credit counseling. There are many nonprofit credit agencies such as ‘Consumer Credit Counseling Service’ that help you out to formulate a debt repayment plan and provide debt counseling. Another option to improve your credit score, in case of high-interest debt, is to go for a debt consolidation loan.

Appearing for credit counseling is considered as a positive trait and the credit counseling references are removed from the credit report, once you are free of debt. This means there are no long-lasting entries of your debts, in your credit history. A survey conducted by FICO reveals that the people who approach a professional credit counselor for help, have been able to repay the credit, without defaulting or filing for bankruptcy.

Prior to approaching a credit counseling agency, check out the authenticity and the credibility of the counseling firms. Do not pay the credit-counseling firms, unless your contract with them is over. A credit-counseling firm would have to give you a written statement about their terms and conditions and also the services offered by them.

Avoid Filing for Bankruptcy
Filing for a bankruptcy should be your last resort. Do it only if you are badly in debt and have many black marks on your credit. When you file for bankruptcy, you could lose 200 points. This would affect the credit score if you have a score above 650. However, if you have multiple delinquencies and lapses in your credit report and if you have score below 620, it would not affect you much.

When you file for bankruptcy, the credit score will fall below 620 and obtaining credit with a favorable rate would become difficult. In short, the credit would become more expensive. You would also need to understand, the credit report becomes blemished for next ten years.

Do not hesitate to meet a good and reputed credit counselor once you know you have a poor credit score and you are not in a financial position to repair it. Remember, if a credit counselor asks you to file for a bankruptcy, take time out to cross-check with another credit counselor. Many of the profit-making agencies would be keen on filing for bankruptcy than on helping you to apply for debt consolidation loan.

To sum up, take into consideration the points given above while trying to improve your credit score. Credit score can be improved if you are organized and disciplined enough to follow a stringent repayment plan.

Easy Ways to Get Out of Debt

Almost everyone has debt in some form or another, but if you are one of the people with excessive amounts of credit card bills, you are probably feeling the weight pulling you down. You don’t have to feel that way though. Getting out of debt is a long process in most cases, but ultimately, it will be worth it in the end. There are a lot of different ways to handle your financial situation, but here are a few simple ways that The Motley Fool recommends if you are working to get out of debt.

Put one foot in front of the other

One way you can work on getting out of debt is through trying to just take one step at a time. If you can afford it, make an extra payment once every few months or pay a little more every month to reduce the number of total payments. One example might be paying $400 a month on a car payment instead of $375 or paying one extra house payment every year to reduce your mortgage by 4 years. Just doing a little extra when you can goes a long way, even if it doesn’t seem like much to you at the time.

Consolidate all your debt

Debt consolidation is a really popular method for paying off your credit card bills because it allows you to have one payment every month instead of focusing on multiple payments for multiple lines of credit. Oftentimes, you can also get a lower interest rate on the loan than you had on the debt, giving you smaller payments and making it so you owe less money in the end.

Start with the most expensive debt

Every time you finish paying off a credit card bill, you’ll feel accomplishment, which will give you the drive to focus on another piece of debt. There are a couple of ways to do this. In some instances, you may want to start with your smaller bills and pay off that one first, so you can feel the high of paying off debt and get the urge to pay off more. In other instances, it makes more sense to start with the most expensive debt, or the debt with the highest interest rate. If you follow this route, you’ll end up paying less money over time.

Ways to Become a Chartered Market Technician

There are trillions of dollars flowing in the economy and expertise in understanding financial markets can give you an edge to create a promising career. Thanks to the establishment of the non-profit global organization, ‘The Market Technicians Association (MTA)’, in 1973, proper training procedure for studying financial markets came into existence. The journey from pencil graphs to high-tech computers has been rewarding for numerous chartered market technicians who have been in this profession for a couple of decades.

While some have invented new or improved methods of financial analysis, many have moved on to become well-established financial analysts, teachers, investors, educators, and mentors. Some have even formed their independent brokerage firms.

Becoming a Chartered Market Technician

Candidates who aspire towards this career option, must firstly study the official website of the Market Technicians Association (MTA). The MTA provides certification programs in which candidates are required to demonstrate expertise in numerous aspects of technical analysis. This exam is conducted in three levels, the first two being MCQ-based tests and the last one, an essay-based test.

In the course of a few years, the MTA has certified nearly 3000 members worldwide and it has become popular in financial marketing services for training competent candidates. To become a CMT, one has to pass all the three exams conducted by the MTA.

Candidates must be able to read, as well analyze financial charts and graphs. The relationship between price patterns and fluctuating markets, and every associated minute detail must be understood well. Candidates are also provided advanced training in numerous facets of the financial markets. It is good to have some background in finance and commerce to become a member of MTA, so that it is easier for candidates to grasp the concepts.

To pass the tests, candidates have to go through 3 levels of tests. In the first level, they are tested with the basics of charting methods, terminology, and ethical principles. In the second level, applications like Dow Theory, Elliott Wave, intermarket, etc. are the subjects of testing.

In the last and most vital part, candidates are tested on the basis of essays that must be well-researched and written properly. Those who have a background in finance, especially a bachelor’s degree in relevant subjects, or those who are working in fields related to finance, securities, financial services, fund management, and stock markets can appear for the test to enhance their careers.

To join the MTA, one is required to become a member of this program and every individual must be sponsored by at least 3 other MTA members. There are certain terms and conditions that must be followed by every member joining the organization and all these have been specified on the official website. It has to be remembered that passing the tests conducted by the organization is recognized by U.S. Securities and Exchange Commission and it is also regarded equivalent to passing Series 86/87 examination. This is certainly a great career booster for individuals in the finance field. Even the Financial Industry Regulatory Authority (FINRA) prefers employees who have passed the first two levels of the exam, as an alternative to the more difficult – Analysis Series 86 examination for technical analysts.

Chartered market technicians are required in the finance sector for diverse jobs, just like chartered accountants or certified financial planners. Candidates interested in this career must make efforts to get relevant education and carve a niche for themselves in this segment of the market.