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Money Basics

2009-09-28T08:33:00.000-07:00

Tips for Setting Priorities

- Narrow your objectives

You probably won't be able to achieve every financial goal you've ever dreamed of. So identify your goals clearly and why they matter to you, and decide which are most important. By concentrating your efforts, you have a better chance of achieving what matters most.

- Focus first on the goals that matter

To accomplish primary goals, you will often need to put desirable but less important ones on the back burner.

- Be prepared for conflicts

Even worthy goals often conflict with one another. When faced with such a conflict, you should ask yourself questions like: Will one of the conflicting goals benefit more people than the other? Which goal will cause the greater harm if it is deferred?

7 Tips to Improve Your Credit

2009-09-25T08:44:00.000-07:00

Tip #7 Pay all of your bills on time.

Once you've made sure that your credit reports are correct, the next step in repairing your credit is to make sure that you pay each and every bill on time. Even if you're paying just the minimum amounts due (more than the minimum is strongly recommended), pay those at least, and pay them a few days ahead of time for safety's sake. Just as delinquent and missed payments have a negative impact on your credit score, regular on-time payments will have a major positive impact. Simply put, the longer you pay your bills on time, the higher your credit score will be.

This is a relatively slow route to improved credit, but it's one that's important to have in the long run. Creditors place a great deal of value on consistent behavior. So, if you can't avoid being late with one payment down the road, having an established track record of paying on time can make a world of difference. Source: http://www.finweb.com

7 Tips to Improve Your Credit

2009-09-22T10:41:00.000-07:00

Tip #6 Keep older credit.

The average American has three or four credit cards, so that's a number that the credit reporting agencies consider to be normal. Consequently, that's the number that you should aim for (virtually no one really needs more than that). Just remember, you don't have to get there overnight.

Your credit score may possibly be improved by getting rid of extra accounts. But, again, the key is to consider your utilization ratio before you get rid of any credit cards. For instance, don't close two and leave two charged to the hilt. In order to get the best effect on your credit score, if you're going to close more than one account, do it slowly over a period of several months. Furthermore, when you've paid down your outstanding balances enough to consider getting rid of one of your cards, don't close the account that you've had the longest. Even if it has the highest interest rate of all your accounts, keep the card you've had for the longest time. Lenders like to see a long credit history. So, if you close the one account you've had for twenty years and keep the two that you acquired within the last two years, your credit history will suddenly look a whole lot younger, and that will adversely affect your credit score.

Finally, check your credit reports after you've closed the accounts to make sure that they were reported as "closed by consumer." You don't want them listed as "closed by creditor" because this will give other potential lenders the impression that your line was revoked because you didn't live up to your contractual obligations. Source: http://www.finweb.com

7 Tips to Improve Your Credit

2009-09-20T19:20:00.001-07:00

Tip #5 Obtain and closely examine your credit reports.

If you haven't already done so, the first step in improving your credit is to get a copy of each of your credit reports. You may be surprised to learn that the majority of reports have at least one error, however small. But, if you find something substantial that's both wrong and negative, its correction can help your score leap upward quickly. Keep an eye out for things like:

payments that the report shows as late, but which you actually paid on time;
accounts that don't belong to you;
debts that you paid off, but which still show an outstanding balance; and
charge-offs, late payments and other negative entries that should have come off your report by now, assuming it's been more than seven years (or more than 10 years for a bankruptcy)

If you've applied for credit recently and were turned down, pay close attention to the reason stated on the rejection letter. By law, lenders must tell you what specific item (or items) of information in your report prompted the credit denial. This can be a vital clue in turning your score around. It can also be a tip-off that something is wrong in your credit file. Source: http://www.finweb.com

7 Tips to Improve Your Credit

2009-09-18T08:04:00.000-07:00

Tip #4 Avoid new credit

The number of hard inquiries on your credit reports does play a role in your credit rating. Therefore, if you're trying to improve your credit, don't apply for more credit cards than you need – even if they dangle that free toaster in front of you just for filling out the credit application.

A large number of credit card inquiries gives lenders the impression that you're planning to run up a lot of debt. They're unable to tell just how many of those accounts you've actually opened, since there's a delay between the time new accounts are opened and the time that they show up in your credit file. Furthermore, new accounts will lower the average age of your credit history; and the longer your history, the better your credit score. Source: http://www.finweb.com

7 Tips to Improve Your Credit

2009-09-10T12:02:00.000-07:00

Tip #3 Keep your accounts active.

It is a common belief that when trying to improve your credit you should close any credit cards you aren't currently using; however, many credit rating experts beg to differ. To improve your credit rating, you should rethink closing any accounts. Instead, as stated earlier, a better approach would be to hold your outstanding balances at or below about 30 to 50 percent of your total available credit.

For example, let's say you have three credit cards, and you're thinking about closing one that has a $10,000 credit limit. Right now, the outstanding balance on your two other cards is $10,000, and their two credit limits add up to $15,000. If you get rid of the card with the $10,000 credit limit, then your ratio of credit to debt would immediately rise to 67 percent. If you keep the card, your ratio is 40 percent. One solution might be to cut up the card, but keep your account open. By keeping the account active, you look better on paper financially. You actually look further away from maxing out your existing credit limits, and that translates into a better credit score.

On the other hand, you may not want to keep that third card with a zero balance. Some experts are of the opinion that lenders would rather see three credit cards at 20 percent of their limit than two cards with a zero balance and one at 80 percent of its limit. Of course, paying down the balances is much better for your credit score than just moving them around. But spreading out the debt may also have a positive effect. Source: http://www.finweb.com

7 Tips to Improve Your Credit

2009-09-04T08:46:00.000-07:00

Tip #2 Work on paying down your balances.

Potential lenders get very uneasy when they see you have several maxed out credit cards with a matching bad credit rating. To counteract this – and improve your score – work on paying down your credit card balances as well as other accounts. Lenders prefer to see a lower ratio between the amount of credit that you have available on your credit cards and their outstanding balances (also known as your utilization ratio).

Aim to reduce your balances to 75 percent of your total available credit as a first step. Then, over time, bring the percentage down even lower. No one is exactly sure what the perfect number is, but some experts believe that lenders prefer outstanding credit card balances to be no more than about 30 percent of their available credit limit. Others say that 50 percent is acceptable. But whatever a particular lender's preferred number, they all want to see that you're making progress in paying down your total credit card debt, and not just moving it around from card to card. Source: http://www.finweb.com

7 Tips to Improve Your Credit

2009-09-02T12:47:00.000-07:00

Let's face it...times are rough and there are many people are struggling financially and having credit problems doesn't help. There are ways to begin improving your credit on your own and you can start today!

Improving your credit won't happen over night and some repairs will appear sooner than others. Credit scores are constantly changing as information in your credit reports changes. Making smart adjustments to repair your credit for a about a year can significantly improve your score. We are going to share 7 tips to help you improve your credit. Keep coming back to get all the tips and feel free to post comments as well.

Tip #1 Don't stop using credit.

Often times people with credit problems feel it is best to stop using credit, but they are wrong. Despite unfortunate financial situations such as loss of a job or bankruptcy, lenders will want to see that you've turning things around. You must prove that you have learned to use your credit responsibly. Without reestablished credit, lenders will view you just as risky the person experiencing a financial meltdown. So the lesson here is to keep your current credit but to use it wisely and responsibly. Source: http://www.finweb.com

Save Money by Paying More

2009-08-24T12:53:00.000-07:00

Credit Tip: Pay more than the minimum credit card payment each month.

Paying more than the minimum payment on your credit card each month is so important because of the effects of compound interest on your balance. Add the fact that credit card rates border on usury these days, and paying only the minimum amount required by the credit card company can be disastrous.

For example, let’s assume you have credit card debt in the amount of $10,000 and an interest rate of 20%. If you only pay the minimum amount (generally 2.5% of the total balance) each month, it will take you more than five years to pay off the debt. And you will end up paying more than $6,000 in interest on the original $10,000 debt. That’s 60% of the face value of your original debt being paid to the credit card company in the form of interest!

The reason why the percentage is so high is the phenomenon of compound interest. Compound interest is known as one of the “Great Wonders of the World” because it accelerates the amount someone can earn on his or her money exponentially. Unfortunately for those of us carrying credit card debt, it also accelerates the amount of money owed exponentially.

If you have credit card debt at a 20% interest rate and you cannot earn a 20% annual rate of return on your other investments, you should not be investing. Instead, you should be paying down your debt as quickly as possible. In rough economic times like these, it is insane to pay 20% annually to a credit card company. Pay off credit card debt as quickly as possible by paying as much towards each payment as you possibly can. http://www.recessiontips.com/

Understand how your credit score is determined

2009-08-21T16:38:00.000-07:00

Your credit score is usually based on the answers to these questions:

Do you pay your bills on time?
The answer to this question is very important. If you have paid bills late, have had an account referred to a collection agency, or have ever declared bankruptcy, this history will show up in your credit report.

What is your outstanding debt?
Many scoring models compare the amount of debt you have and your credit limits. If the amount you owe is close to your credit limit, it is likely to have a negative effect on your score.

How long is your credit history?
A short credit history may have a negative effect on your score, but a short history can be offset by other factors, such as timely payments and low balances.

Have you applied for new credit recently?
If you have applied for too many new accounts recently, that may negatively affect your score. However, if you request a copy of your own credit report, or if creditors are monitoring your account or looking at credit reports to make prescreened credit offers, these inquiries about your credit history are not counted as applications for credit.

How many and what types of credit accounts do you have?
Many credit-scoring models consider the number and type of credit accounts you have. A mix of installment loans and credit cards may improve your score. However, too many finance company accounts or credit cards might hurt your score.

A Tale of Two Credit Scores

2009-08-19T11:27:00.000-07:00

Credit scores affect whether you can get credit and what you pay for credit cards, auto loans,mortgages and other kinds of credit, but don't take our word for it...ask James and Jenny.

Another way to build good credit

2009-08-14T06:30:00.000-07:00

Another way to get some good credit history is by getting and paying a loan. Borrow $1000 from your bank to use for a $1000 savings account. You pledge the savings account as collateral for the loan, and they hold the savings for safe keeping. Of course, there is some expense to you involved, you will have to pay a small spread on the loan. For example, if the savings account pays 4% and the loan is at 8%, so your cost is 4%. You may be able to arrange to have the savings account paid automatically against the loan payment, with the rest deducted from your checking account, with the final balance of the loan due. Make sure to pay the loan monthly, to create a pay history on the loan. Also, make sure that your bank agrees to report the loan to the credit bureaus, and request that it be listed "secured" and not "secured by savings account". This is just an example, and should work with any amount of money. Of course, keep in mind that the larger the loan, the greater the loan costs in interest. Your credit rating will improve with a good payment history.

One way to build good credit

2009-08-12T01:57:00.000-07:00

The basics of good credit start with having three open trade lines, with twelve months of good payment history. For example, get three credit cards, even secured credit cards, and use them responsibly for a year. Charge only small purchases, such as your groceries and gas for your car, and always, always, always pay on time, every time, and in full if you can manage. Do not foolishly fall back into a poor credit situation after all of the hard work just to get to this point.

What a little planning can do

2009-08-10T09:16:00.000-07:00

If your spending practices are doing something for you, chances are your savings and investments are still growing, your retirement is being fully funded, equity might growing in a home, and there is no credit card debt. Hurtful spending practices (the ones that do things to you) - especially the credit-based ones - are often reflected negatively on credit reports. This is common among the John and Sue Workhards of America.

Sharpening spending skills and transforming bad money handling habits and practices is relatively easy especially compared to dieting and quitting some other things like nail biting or smoking. It begins with some simple planning. Some folks refer to it as budgeting, a somewhat negative term that implies one has to do without. A lot of people and financial planning professionals prefer to call it a spending-plan.

A simple monthly spending plan includes a listing of income received and also a list of anticipated expenditures, some reoccurring every week or month and others maybe every three, six or 12 months. Setting money aside each income period to meet a portion of the annual and semi-annual expenses is good planning and allows one to avoid getting into the paycheck to paycheck routine. Unplanned spending results in wasted money. Many times people find themselves owning things others wanted them to have instead of buying things they needed or really wanted to buy.

Are your spending habits doing something to you or for you?

2009-08-06T12:59:00.000-07:00

Let’s face it most of the material things we desire are ones that require some type of financing. Financing options and costs are determined by your credit rating. But most people don’t realize how everyday spending decisions will do far more to harm your financial future than any investment decision you can make.

Don’t let impulsive or unnecessary spending habits ruin your credit rating. You work hard for your money and deserve a great lifestyle for both you and your family. According to the Institute of Consumer Financial Education (ICFE)” the biggest reason that leads to a low credit rating is impulse spending and the convenience effect. “Sighting convenience as a main reason, people say it prompts more spending without much forethought and research on whether or not the purchase is a good value, whether or not the purchase is even necessary and whether or not the purchase takes money away from debt payments which may become due and/or eliminates any money being put aside to accumulate”.

The ICFE challenges you to ask yourself "Are your spending habits and practices doing something to you or for you?" The honest answer to this question is a real eye opener for many people. When people seriously consider how and where they spend their money it can often make them more uncomfortable than asking them about how their religious affiliation, income, or other areas of their life.

Credit Education

2009-08-05T09:04:00.000-07:00

At driversselect we feel the best way to serve people is through educating them on ways to improve the quality of their life. So we have developed one of the most extensive credit education curriculum and hired the best people to deliver it. Our credit education curriculum teaches you how to use your next automotive purchase to demonstrate how to make responsible spending decisions on a regular basis that can result in your ability to obtain a greater value for your money. Stay tuned as we dive into understanding credit and how it effects your overall lifestyle.

Why we care about more than just selling you a car...

2009-08-04T19:28:00.000-07:00

Our goal at driversselect is not just help you obtain financing for your next vehicle. It goes much deeper than this. We want to see your lifestyle improve and we can show you how your next vehicle purchase is the first step to a better life for you and your family. We believe if we can add value well beyond the initial purchase of your next vehicle and make a significant improvement in the quality of your lifestyle then we know you will return to us for future automotive needs and allow us the opportunity to help your friends, family members, and co-workers.