How to save your credit in bankruptcy

Today, after watching some NFL games, I suddenly became curious about bankruptcy, so I did a quick google search and the first figure I found was astonishing. According to official records, in 2013 there were over 1 million non-business bankruptcy filings. 1 million. 1,000,000. On average, for every 300 people in the US you know, 1 of them filed for personal bankruptcy last year. This figuratively blew my mind.

So the topic for my blog post today was quickly decided.

You know, life happens. Someone in your family falls critically ill and you have to borrow money to pay for medical expenses without being able to pay it back. You lose a job because of the financial crisis and can no longer pay your bills. I offer my condolences to those that have a legitimate reason to file for bankruptcy. The road ahead, credit-wise, is going to be tough. Bankruptcy stays on credit reports for up to 10 years, and this is not the kind of record you want on your credit profile. Lenders that see bankruptcy when reviewing your credit report will not be very likely to extend you credit.

So, if bankruptcy is inevitable, how can you minimize its negative impact on your credit?

Continue reading How to save your credit in bankruptcy

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Why paying off your loan is bad for your credit

Recently, a friend of mine asked me if he should pay off his auto loan he had acquired years ago. While the interest rate on the loan is very low, less than 3%, he wanted to be free of debt and felt tempted to finish making monthly payments for the loan. He makes good income and is very disciplined about expenses, so paying the remaining balance would not cause any financial burden to him, and neither would maintain the monthly payments. His main concern was the impact on his credit.

I talked him out of it.

My friend should not pay off his auto loan early.

Continue reading Why paying off your loan is bad for your credit

How do I improve my FICO credit score in a month?

Even though I said that a good FICO credit score takes a long time to build, there are situations where time is against you and the last few points really matter. Many mortgage lenders have FICO score thresholds for interest rates, and you may fall a few points short of the next threshold which may mean thousands of dollars’ worth of payments. You don’t have another few years to carry your FICO score to that threshold. So what to do?

Continue reading How do I improve my FICO credit score in a month?

What sets American Express apart from other lenders

Unlike Visa and Mastercard which only process but not issue credit cards, and like Discover, American Express also issues credit cards. The origin of American Express is also very distinguished from those of the competitors. They started out as a domestic express mail service back when the US Post Office did not yet deliver packages. They made a lot of money, and very quickly established the American Express brand as a premium service provider. Later on, American Express gradually transformed itself into a financial services company while skillfully retaining and enhancing the brand nationwide and worldwide.

Amex logo. Plain and simple.
Amex logo. Plain and simple.

Continue reading What sets American Express apart from other lenders

Why is your credit card bill so huge: how credit card interest is calculated and what grace period means

I personally don’t carry a credit card balance unless my credit card is offering a 0% APR promotion because one of my goals in the credit quest is to build a perfect credit history without paying a penny in interest. But from my observation, I’m not the norm. Many people I know carry balances from time to time, and when they come to me for advice, I always tell them to at least pay the minimum to avoid late payment fees, and over time I have helped them save quite a bit of money from that.

Honestly though, paying just the minimum amount is never going to pull you out of debt since credit card interest accumulates everyday at an absurdly high rate. There are many reasons to underestimate interest charges.
Continue reading Why is your credit card bill so huge: how credit card interest is calculated and what grace period means

Do you need to carry a balance to build credit?

I often get inspiration for my blog posts from people I interact with. I learn of my readers’ needs through talking with friends, acquaintances, colleagues, and everyone else with whom I have a conversation that involves personal finance matters. In a recent conversation like that, I learned of someone who keeps her credit active by making a large purchase on her credit card and paying the balance gradually, over months, obviously accumulating and paying interests. She learned of this practice from someone else.

You know that I advocate paying off balances before due dates so you’d never pay a penny in interest. Let’s discuss which approach is better for your credit.

Continue reading Do you need to carry a balance to build credit?

Today’s feature: Bank of America’s BankAmericard Better Balance Rewards credit card review

Odd-category rewards credit card
Odd-category rewards credit card

From my experience with their consumer products, Bank of America is an unusual credit issuer. They have many fantastic credit cards without putting much effort in promoting them. The BankAmericard Cash Rewards and Travel Rewards are two examples. Recently, Bank of America rolled out another card in the BankAmericard series: BankAmericard Better Balance Rewards. I’ve never quite seen another card like that : instead of rewarding you for spending, it rewards you for paying balances. Let’s take a look at this hidden gem.

(Edited on 4/11/2013 to clarify the rewards requirements: paying off the statement balance will also qualify you for the rewards.)

Continue reading Today’s feature: Bank of America’s BankAmericard Better Balance Rewards credit card review

Reblog and analysis: “Five Surprising Things That May Impact Your Score” from Transunion

parking-ticketTransunion is one of the three consumer reporting agencies (CRA’s) which are responsible for keeping a record of your credit profile. Today I came across a brief and helpful article on their “Credit Education” section that I’d like to share with you and attach my comments to. The article is titled “Your Credit History: Five Surprising Things That May Impact Your Score.” Let’s analyze these 5 surprising things, one by one.

 

Continue reading Reblog and analysis: “Five Surprising Things That May Impact Your Score” from Transunion

Bank of America’s credit cards: an insider’s view

Last week, I featured Bank of America’s BankAmericard Cash Rewards credit card, compiling most relevant information that is more or less public, meaning that you can obtain the information without actually having the card. As an actual cardholder, I have the advantage of knowing exactly what’s inside Bank of America’s online banking system, what other benefits a BofA card offers, as well as the details of the card’s features.

Continue reading Bank of America’s credit cards: an insider’s view