Monday, December 25, 2006

How To Build Good Credit

By Daniel Wesley

This is a must-read for all those people who are amateurs in the world of credits. Including those consumers recovering after a bankruptcy, new to America, or applying for a credit card, car loan, etc.

If you do not establish your creditworthiness, you will be turned down by lenders or charged a higher rate of interest. In short, life will not be easy for you financially. Building a good credit score requires you to have a credit for at least half year with a minimum of one account updated and reported.

Here are five top ways to establish a good credit record. Let’s have a look at them.

Five Top Ways To Build A Good Credit

Way #1: Open Checking As Well As Saving Account

A good credit holder should give the impression of a financially responsible person. Although the accounts are not directly regarded as credits, the lenders certainly notice them and view them as symbols of stability. Eventually, your account transactions will reveal your responsible nature towards money matters. It shows that you have the “substance” and can save to pay. However, take care not to bounce checks or else it will have the reverse effect.

Way #2: Pay Bills On Time Always

A record of timely and regular payments is the key to a good credit. Even a single late or skipped payment can taint your credit. Here’s a hot tip to ensure you don’t miss any of your payment: arrange for the payment of your bills through automatic withdrawal system from your account. You can also prepare a list, along with their due dates. However, you should be careful with automatic system. If you don’t check your account often, you could get withdrawn and end with multiple overdraft fees posted by the bank.

Way #3: Obtain A Secured Credit Card

This is the ideal way to build good credit from scratch. How to do it? Well, simply deposit a fixed amount of cash at your lender bank. This amount becomes your credit limit. Here, the issuer has no risk because even if you default on payments, they will simply withdraw the money they owe from your deposit, thus, securing your credit limit.

It takes less time to set up a good credit with the help of a secured credit card. Such a card is reported just like a regular one. Once you make timely payments for 12 months with your secured card, you can try for an unsecured credit card. However, stay away from secured cards that demand processing or application fees.

Way #4: Obtain A Student Credit Card While In College

This is a superb way to build good credit. Student credit cards come with flexible eligibility criteria. Even if you don’t have a credit record, you can easily get an approval. However, you must be enrolled for a four-year university course. Once you establish a good credit record in school, you will enjoy an easy road ahead in terms of getting credit. At present, an average student in America leaves college with a burden of around $2,000 as credit card debt and a possession of four credit cards. Do not follow the footsteps of such students. Limit yourself to a single card and pay the full balance every month, if you wish to have a good credit.

Way #5: Never Open Several Accounts At A Time

A good credit cannot be build overnight. Begin with small steps. One or two accounts are okay. Use them thoughtfully for a year. Then apply for more, if needed. Too many accounts in too less time can damage your good credit.

Follow these ways and flaunt a good credit with a few years!

Good Credit It's easy to build a good credit provided you show a sense of responsibility towards money matters.

Wednesday, December 20, 2006

Credit - Repair

By Den Braun

To make the life more comfortable people purchase lots of things from clothing to cars and homes that can be very expensive. Thus, when the financial situation of an individual does not correspond to the purchasing desires, he/she has to use credit.
Banks make it quite easy to obtain credit. But the system of credits is complicated enough and most people today are not really taught how to manage their money. So, one day you may find yourself in a bad situation with your credit. You can start improving the credit score yourself: ordering your credit report, checking its accuracy, keeping any credit card balances low…and a few more things you can do. It goes without saying it will cost you much time, skills and effort.

There exists another saving way. There is a great number of organizations, agencies, bureaus that assist in guiding individuals through this complex process. When you seek help at such organizations remember that definite laws protect your interest.

There are two acts, the FCRA (Fair Credit Reporting Act) that has been recently revised into the Fair and Accurate Credit Transactions Act (FACT Act), and the FDCPA (Fair Debts Collections Practices Act). These two acts were set up to protect your credit rights. They hold your creditors and credit bureaus responsible. That means every claim against your credit they have to back up and prove.

No credit repair organization may charge or receive money or other valuable consideration for the performance of any service, which the credit repair organization has agreed to perform for any consumer before such service is fully performed.

Due to these acts everyone can get a copy of their credit report for free at your request, once every 12 months.

You also have a right to dispute inaccurate information in your credit report by contacting the credit bureau directly. You may notify in writing that you dispute the accuracy of the information in your credit file. In such a case the credit bureau must reinvestigate and modify or remove inaccurate or incomplete information (usually within 30 days). What else you can do is to cancel your contract with any repair organization for any reason within 3 business days from the date you’ve signed it.

Whenever you use credit you just always need to be cautious and disciplined. You also should be well informed – means what you can do for free, the payment terms for services (including their total cost), a detailed description of the services to be performed, how long it will take to achieve the results, any guarantees the organization offers, the company’s name and business address.

Den Braun is an expert in finance. The author is a business writer specializing in finance and credit products and has written authoritative articles on the finance industry. Den Braun writes about Debt settlement & debt negotiation and other related topics on the debt-settlement website. To learn more about debt and finances in general, visit

Wednesday, December 13, 2006

UK mulls consumer carbon credit card

The UK government has released a feasibility study on a consumer emissions trading scheme that would see every British citizen issued with a carbon credit card, The Guardian newspaper reports.

Under the scheme, everyone in the country would be given a quota of carbon emissions for the food they buy and the energy they use for transport and heating. In this way household and individuals’ contribution to climate-change-producing carbon emissions could be monitored and kept in check.

The study was commissioned by the environment secretary, David Miliband, who said the scheme could be up and running within five years.

Anyone who exceeded their quota would have to buy carbon credits to cover the excess from someone who had not used up their quota and had a surplus to sell. This would encourage “carbon thrift”, Miliband told The Guardian.

For consumers, the system would work in a similar way to their popular supermarket loyalty cards, which shoppers hand over to be swiped for points every time they shop at one of provider’s outlets.

The study, carried out by the Centre for Sustainable Energy, argues that the success of the Tesco loyalty card shows a carbon card is viable.

Miliband conceded the cost of running a card, fraud risks and “big brother” ID card hurdles would have to be overcome. How consumers would react to such a limitation on their consumption habits has also not yet been tested.

But the political fallout for a government introducing such a scheme may not be as great in Britain as it might be in other countries. Both the Conservative and Labor sides of politics are competing to be the one seen as doing most on climate change.

Wednesday, December 06, 2006

Your loan repayment record will decide your credit score


NEW DELHI: The ‘unknown citizen’ gets another number — his credit score. With retail credit the way forward, the credit score of a borrower will attach a value to his creditworthiness.

Banks will soon be relying on credit scores to assess customers. The Credit and Information Bureau of India (CIBIL) is expected to rollout credit scores, built on databases provided by various banks.

Under RBI regulations, banks and financial institutions (FIs) have been instructed to facilitate submission of details of all borrowing accounts to the credit bureau for compilation of credit information. This data will soon be accessible to member banks to help improve the quality of credit appraisal and decisions. This will benefit credit card issuers, where credit growth is to the tune of 199%.

Parameters are previous track record of loan repayments, default rate, payment delays and outstanding loans, among others. Punctuality of payment in the past, amount of debt expressed as the ratio of current revolving debt to total credit limit, length of credit history, types of credit used (installment, revolving, consumer finance), amount of credit obtained recently are some of the parameters used globally.

Lenders can now evaluate potential risk and mitigate chances of accruing bad debt. For borrowers, a good credit score will guarantee qualification for a loan, cheaper interest rates and enhancing credit limits on their own terms. So, each customer will have a credit risk attached to the credit score. Both domestic and foreign banks have been supplying credit history of commercial and consumer borrowers to CIBIL.

The credit bureau will provide this information to its members in the form of credit information reports (CIRs). The CIR is a snapshot of a borrower’s credit-payment history compiled from various credit grantors.

According to Deutsche Bank’s Asia Pacific head Shameek Bhargava, “Banks can broaden their universe by lending to different types to borrowers once their credit scores are known. Self-employed, for instance, will find it easier to borrow money, on the back of a healthy credit score.”

Credit scores are expected to give a fillip to the credit card industry by introducing competitive pricing among issuers, an analyst said. Different banks can perceive the same information differently, he added. Details such as income or revenue, amounts deposited with the bank, borrowers’ assets, value of assets mortgaged and investments will not be part of a CIR.

This is akin to the FICO score used in the US. FICO is an acronym for Fair Isaac Corporation — designed to indicate the likelihood of a borrower turning delinquent within the next 24 months. A FICO score generally ranges from 300 to 850.