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Articles about credit cards and credit scores.

How to Build Credit in a Recession - Even with No Credit

The American economy is spiraling downwards. Unemployment is rising quickly. Consumer confidence is down. Mortgage defaults are up. The Dow Jones is up and down. How, in such an unstable economy, can you build good, solid credit when all around you there is default, foreclosure, and rising prices?

It is possible to build credit, even in a recession. Despite what happens to the economy, your spending and repayment habits can work for you in positive ways. Since most of your credit score is based on how well you pay your credit obligations, as well as how much of your available credit you actually use, you can still be in control of building good credit, even in times of recession.

  1. Obtain a Gasoline, Department Store, or Secured Credit Card If you have bad or no credit, you can still use credit cards to start rebuilding a positive credit history. Make positive results on your credit report by getting approved for a secured credit card or by obtaining a gas or department store credit card. Gas and department store cards typically are easier to obtain, and a secured credit card is almost guaranteed with your monetary deposit that acts as your credit limit. With a new card, you can begin the process of rebuilding credit.

  2. Use Only One Credit Card If you already have multiple credit cards, determine that you will only use one, or no more than two, with the lowest interest rates.

  3. Keep Well Below Your Credit Limit Regardless if you have a secured or non-secured credit card, you can improve your credit score by keeping your balance well below your limit. Part of your credit score is determined by what percentage of available credit you use. If you keep your credit balance low and available credit high, you will start making positive marks on your credit score.

  4. Pay on Time Always pay your credit card bills on time each month. The thing that affects most consumer credit scores is late payments showing up on credit reports. Every late payment shows up as a negative mark. And payments 30 days late or more have an even greater negative impact. In order to build your credit, you need to discipline yourself to pay on time every month.

  5. Pay In Full Each Month In order to stay well below your credit limit and avoid interest and finance charges, you should pay your credit balance in full each month. If you are unable to pay in full, you should at least pay much more than the minimum required payment. Paying only the minimum amount as determined by your credit card company can translate into years of payments before you pay in full. Avoid this hassle by paying in full as often as you can.

Your credit history is always keeping score. Regardless of whether the economy is working full speed or in recession, or whether the stock market is bullish or bearish, you can improve your credit score. Take the time to make the right choices and disciplined payment practices, and you will be on your way to building a higher credit score.

Credit Report Primer

Credit Report Primer

With more consumer credit extended each year through home mortgages, car loans and credit cards, understanding the role of credit reports is important for anyone planning to borrow money. A credit report is simply a document containing a detailed history of a consumer’s credit. Creditors—banks, lenders, credit card issuers and retailers—provide information to credit bureaus about the status of each borrower’s accounts. They also rely on the information contained in the reports when deciding whether to offer credit to a consumer and when determining what terms—down payment, interest rate, loan length—to offer.

Credit Report Details

Credit reports contain several important pieces of information about each consumer, including identifying information, credit information, public record information and recent inquiries. Identifying information may include the consumer’s name, birth date, Social Security number, current and past addresses and current and past employers. Credit information may include a list of current and past accounts with banks, credit card companies, utilities, retailers and other lenders, as well as the each account’s opening date, credit limit and payment history. Public record information may include court records showing arrests, tax liens, bankruptcies or court judgments. Recent inquiries may include information regarding creditors or other entities that have requested copies of your credit report.

Credit Bureaus

A credit bureau, also known as a credit-reporting agency, is a company that collects and compiles information about consumers’ credit activities and makes the information available for a fee to credit grantors and other entities. In the United States, the three major credit bureaus are Equifax, Experian and TransUnion. Federal law requires each of these companies to provide consumers with a free copy of their credit reports annually upon request. For details, visit or call (877) 322-8228.

Credit Report Access

Federal law regulates who has access to consumer credit reports. Credit bureaus may provide your information only to entities with a legitimate need, including current or potential creditors, employers, insurers and landlords. In some cases, such as employers and potential employers, a consumer must provide written consent before the credit report will be issued.

Credit Report Errors

Periodically, incorrect information appears in a consumer’s credit report. Under federal law, the creditor that reported the error and the credit bureau are responsible for correcting inaccurate credit report information. When a consumer finds a credit report error, he or she should notify in writing both the credit bureau and the creditor that supplied the incorrect information. Notification should include details about the error and copies of any documents that prove an error has occurred. The credit bureau and creditor are responsible for investigating errors and correcting them if they are found to be legitimate.

5 Ways to Improve Bad Credit, Even in a Weak Economy

The current American economy has created financial difficulties for many people. Those who have been hit hardest are having trouble paying credit card bills, utilities, and even making mortgage payments. However, even through a tough economy, people with bad credit (and worsening) can make efforts to improve their credit score.

If you have suffered foreclosure, repossession, and credit card cancellation, you can still work to turn bad credit into good. Below are five intelligent ways to start making a positive mark on your credit report. However, remember that turning bad credit into good will require effort on your part, and it does not improve overnight. Plan at least six months to a year to actually make some headway on your credit report.

  1. Get current with your debts In order to start making a positive mark on your credit report, you need to start managing your current debts. If you currently have outstanding credit card debt, loans, or other debt that is delinquent, make the effort to catch up on payments and get current. That may mean paying a credit card amount in full or simply getting current with your car payment. Late payments of 30 or more days and delinquencies show up on your credit report and have an adverse effect. Get current as soon as you can.

  2. Use only one or two credit cards If you have many credit cards, use only one or two that has the best interest rate. However, don’t close your other accounts. Closing a credit card account can also negatively affect your credit score. Simply make sure you either pay off the balance or make the minimum payment each month.

  3. Use a secured credit card If you have no credit cards, or your credit cards have all been cancelled, try to obtain a secured credit card. A secured card allows you to make a deposit into an account with a credit card company in exchange for a card with a credit limit up to the amount of the deposit. For instance, you may choose to make a deposit of $300 after approval of a secured card. Your credit card will arrive and have a credit limit of $300, which you can use to start making small charges that you will pay off regularly.

  4. Apply for a gas card Most gasoline companies are generous with their approval for gas credit cards. You can use these cards at any company gasoline station or convenience stores to charge for gas or food items. Be sure to pay your bill on time each month.

  5. Contact your credit card company If all else fails and you are simply unable to make all your payments on time, contact your credit card company. Rather than making harassing phone calls and letters on a delinquent account, a credit company would much rather hear from you and work with your situation to resolve your debt. Making the first step with a phone call can help your credit report immensely.

Credit Score Basics

Credit Score Basics

Maintaining a good credit history helps ensure borrowers have access to credit when they need it. But how do creditors decide whether to extend credit and loan you money? Their decision is based largely on your credit score. Credit bureaus, creditors and insurers assign everybody a numerical credit score based on the information contained in their credit report. A high credit score reflects lower risk for the lender and improves the borrower’s chances of getting approved for a loan with better financing terms than someone with a lower score.

Credit Score Factors

Credit scorers determine a consumer’s credit score by performing a complex statistical analysis of all of the information in that person’s credit report. Following are several factors that help determine credit scores:

  • Type, age and number of credit accounts and loans held.
  • Current account balances.
  • Payment history.
  • Collection activity.
  • Amount of outstanding debt.

The credit scorers analyze and compare this information to that of other consumers to help determine the likelihood you will repay your loans on time. The result is a credit score number lenders can consider before extending credit.

Improving Your Credit Score

Each credit scorer uses a different system for determining credit scores. Because their “secret formulas” are proprietary, they don’t share specific details about what factors are the most important to their analysis. However, it is known that many scoring systems consider the following factors most important:

History of on-time payments. - Amount of current debt compared to total credit available. - Length of credit history. - Number of recent credit applications. - Total number of open credit accounts.

Improving your credit score can be achieved by paying bills promptly and, thus, decreasing account balances; avoiding opening new credit lines; and demonstrating a history of positive credit use. Increasing your credit score may not happen over night, but it is possible over time.