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

Posted on by Richard the MBA

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?

Today’s feature: MyFICO Score Watch product review

Posted on by Richard the MBA

I wrote in “Personal Finance 201: Credit scores” about how FICO scores are almost the only credit scores that matter. Most large financial institutions such as Bank of America, American Express, Discover Financial Services, and Citigroup, rely on FICO scores for creditworthiness measurement. Knowing your FICO scores is helpful in timing your credit application; a few points difference in credit scores can translate to thousands of dollars of payment on your mortgage.

MyFICO Equifax interest rates

Based on the table above, the difference between the first category and second category of credit scores translates to a difference between a 4.236% and a 4.014% on 30-year mortgage loan. For a $300k mortgage loan, the difference in payments is approximately $39 per month, which comes out to be around $460 per annum, or $14,000 over the duration of 30 years.

Continue reading Today’s feature: MyFICO Score Watch product review

How to access your annual free credit report – step by step instructions

Posted on by Richard the MBA

It is always a good idea to check your credit profile before making a major credit decision such as re-financing a mortgage or applying for a credit card. Sometimes there are errors on your credit report that you need to dispute, and other times there may be legitimate negative records that you may be able to remove in one way or another. Conveniently, the Fair Credit Reporting Act (FCRA) entitles you to one credit report from each consumer reporting agency (CRA). Continue reading How to access your annual free credit report – step by step instructions

Do you need to carry a balance to build credit?

Posted on by Richard the MBA

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?

Does checking your own credit report affect your credit?

Posted on by Richard the MBA

The other day I was having lunch with co-workers. I don’t remember how this topic came across, but one of my co-workers was convinced that checking your credit would lower your credit score. I just wanted to emphasize that checking your credit is totally harmless. Why?

Continue reading Does checking your own credit report affect your credit?

What happens to your credit when you get married?

Posted on by Richard the MBA

Saving-Your-Marriage-SmallI have a friend who recently got engaged. Last time we hung out, we had a little chat about his future plans. Being a financially savvy and provident guy, he did some research on the impact of marriage on future housing arrangement, and found out that in order to buy a house in the future he will have to have his future wife go through a credit score check. He was under the impression that his credit profile would be merged in some way with his fiance’s when they got married, and thus they would have a common credit score, taken as the lower of their individual scores pre-marriage. Is this true?

Continue reading What happens to your credit when you get married?

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

Posted on by Richard the MBA

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

Closing a credit card: let’s get the facts straight

Posted on by Richard the MBA

There are so many myths surrounding the issue of credit card closing I thought it’d be helpful to dedicate a whole blog post to this topic.
Why should you close a credit card? Well, there are several reasons:

  1. The credit card is pure junk, such as one of the worst credit cards in America which are listed here: http://abcnews.go.com/blogs/business/2012/10/6-worst-credit-cards/ – No questions about this.
  2. The credit card carries an unsustainable annual fee, such as most loyalty and transferable points cards (if you’re not familiar with reward credit cards, check this post out). Many cards of these types waive the first year’s annual fee, and many consumers don’t find them worth keeping beyond the first year.  Continue reading Closing a credit card: let’s get the facts straight

Credit cards for credit builders: what are your options? – Part 4

Posted on by Richard the MBA

If you have filled out an application for a credit card, you’d you know that one of the mandatory fields is ‘annual income’. Other than your credit profile, this is the single most important factor that creditors use to determine your eligibility for credit. But what if you’re going to school and not making any money? You still have money from your bank accounts or from family, but you don’t have a regular income. No worries: financial institutions will take care of that for you. Many creditors offer a student version of their cards, which is just about as good as the regular version.  Continue reading Credit cards for credit builders: what are your options? – Part 4

Credit cards for credit builders: what are your options? – Part 3

Posted on by Richard the MBA

Option 3 for credit builders: secured credit cards

I have previously described my personal experience with Bank of America’s Bankamericard Cash Rewards secured credit card. A secured credit card is a risk-free way for financial institutions to extend you credit: the money you deposit is also your credit limit. In other words, you spend your own money; the bank doesn’t lend you anything. Yet you still have the opportunity to build up your credit profile by making on-time payments which would be reported to the Consumer Reporting Agencies (CRA’s). Continue reading Credit cards for credit builders: what are your options? – Part 3