Why Does Credit Matter?

Insurance providers use credit scores to provide customer premiums because research has shown that there is a relationship between how people manage their credit and finances and possibility of a consumer filing an insurance claim. Those with good credit who pay bills on time consistently are shown to be more stable than consumers who make late payments or miss them entirely.

How to Find a Good Premium

One way to ensure a good premium is to boost your credit score. You can clean up your credit relatively easily by paying bills on time consistently , not overextending your available credit, and keeping accounts active but to a minimum. Request copies of your credit reports and scores to see where you stand and then work to dispute inaccurate information. These simple steps can increase your credit score and help you find more options for your auto insurance coverage needs.

While repairing your credit does take some time, you can still find the best premiums available by exploring several insurance companies before making a commitment. You can get online quotes but you should also research insurance providers to see who has the best rates for your situation.

You can also investigate the provider you currently have insurance with for other reasons like house insurance. Many providers offer discounts for multiple policies so if they also provide auto insurance you may get a decrease in your proposed premium amount. You may also get discount for being a loyal customer. Check with your current agent to see if they can beat any of their competitor’s premium rates.

Be careful with insurance companies who advertise they cater to people with bad credit. Since some consumers feel they have no other options with providers, they may actually end up paying more by signing on with a ‘bad credit’ insurance provider. Without doing the proper research, consumers may not be aware of what other offers they can take advantage of for insurance coverage. Because it is the law to have auto insurance coverage, there is much more competition in the market these days, especially since many online providers have opened for business. Keep your options open and you will likely be able to find a good deal while you focus on cleaning up your credit.

What Is On Your Credit Report?

Your credit report will contain the vital information about you including your name, current and previous address, your phone number, and your Social Security number. This information is generated from your credit applications.

Also on your report is a listing of all accounts you have currently or in the past. It includes the name and address of the creditor, the date you opened the account, the credit limit or amount of the loan, the balance remaining on the account, the amount of the monthly payment, and the payment plan you currently use to satisfy the debt. The information is generated by the creditors who report your financial data to the three credit reporting agencies Experian, TransUnion, and Equifax. Information can be either positive such as you pay on time as agreed or negative, in that you have missed payments or made late payments on your account.

The credit report will also list information about the names and contact information for all persons who have made recent inquiries on your credit report. The credit reporting bureaus provide this data.

Consumers may also provide the credit card company with statements to dispute the account history which may be inaccurate. The statements are incorporated on the report when a consumer makes an official dispute and it has been investigated. The statements can help a lender make a decision in light of a poor credit history.

Who Can See My Credit Report?

Every consumer is entitled to receive a free credit report each year through AnnualCreditReport.com. A credit score is not included and must be purchased separately. Consumers can also request a copy of their credit history at any time for a fee. In addition to individual consumers, any business or persons who have a legitimate business reason for viewing your credit report can view the information. This information gives lenders insight as to where else you may be applying for credit.

Reporting Timeline

Creditors report the account activity each month to the credit reporting bureaus. Information that is positive is listed on the report for an indefinite amount of time. Negative information typically remains listed for seven years except for bankruptcies which stay on the report for 10 years and unpaid tax liens stay for 15 years. Inquiries into your credit history will show up for a two year time period.

Ironically, sometimes the only way out of debt is by taking on a little extra debt and additional credit can be the hardest thing to come by when you cannot convince lenders of your credit worthiness. The following a just a few ideas for loan options for people with bad credit.

Borrow from Family and Friends

In most instances borrowing from friends and family might be the absolute last option, but it is commonly one of the only ways that people with really bad credit can access additional funds. Since friends and family are not going to go through your financial history with a fine-tooth comb or rely on your credit score to make the decision of whether or not you can borrow some money it makes sense to turn to them in your time of need. Of course, it goes without saying that these loans must be treated with the seriousness they deserve and a proper method of repayment must be finalised before the money is handed over.

Get Someone to Co-Sign on Your Loan

Another way for people with bad credit to access loans is to ask a friend or family member with a respectable credit rating to co-sign on your loan. You should never ask for this favor if you think you will not be able to meet the terms laid out in the loan contract because then this puts a strain on your friend or family member. However, in many cases lending institutions are overly cautious about what they are willing to lend based on set criteria that may not be reflective of your willingness or ability to repay.

Offer Collateral to Boost Your Low Credit Score

If you are in a situation where your credit score has been damaged because of recent defaults on loan payments that were caused by situations that no longer exist and you have collateral you can offer to secure a loan then this should certainly be done. For instance, you may have defaulted on a car loan because you lost your job, but maybe you have found alternative employment and your home has equity that you can tap, you can use your home to get the loan you need.

Approach a “Bad Credit Lender”

You must have seen advertisements for “bad credit lenders” before. These companies basically lend money at very high interest rates to people who cannot access loans using more traditional sources because of the state of their finances. If you are not averse to taking on these punitive interest rates then this could be an option for you as well.

There are a number of ways for people with bad credit to get loans. All you need to do is think outside of the box for your solution.

• Notify the card issuer- Credit card companies often flag accounts that they feel may be used fraudulently. If the spending pattern changes on your card or your card has been inactive for some time, the credit card company might suspend your account until they determine if you are in fact the person making the charges. By calling the bank in advance you can let them know you will be traveling and using the card, therefore your account is less likely to be flagged.

• Make copies of the card- When traveling, have a copy of your credit card (both front and back) that you store in the hotel safe. This can provide you with the necessary information should your credit card become lost or stolen. If you are traveling outside of the United States, find out what number to call for emergencies from your destination. This can save you time and trouble should you find yourself in need of contact information in a foreign country.

• Research your card- Know where your card is accepted (not all countries accept American Express or Discover) as well as the credit limits and available balances on that account. You do not want to get thousands of miles away from home and realize you have the wrong card or a card that is not accepted as your means of payment.

• Have cash for purchases- Your credit card will be great for hotels, rental cars, dinner and big purchases. For souvenirs, vendor shopping, public transportation, tips and other situations, having cash (in correct currency) is a good idea.

• Keep your card safe- As always when carrying a credit card, make sure you always know where it is and how to keep it protected from being lost or stolen. It is also a good idea to have a plan in place should you lose that card or your entire purse or wallet. Always have the telephone numbers needed to report problems with your card as well as back up money stored safely not on your person. When you return home, carefully check your statements for accuracy and dispute any questionable transaction immediately.

There are plenty of benefits to using a credit card. When traveling credit cards offer a convenient and secure method of payment. Always remember to only use credit cards if you can afford to pay the bill in full when you return. Otherwise your dream vacation could turn into a financial nightmare.

Not one bit.

The solicitations you are receiving stem from your credit report and third-party companies have the ability to purchase your information from the credit bureaus. The program, known as a trigger lead program,

How Does a Trigger Lead Work?

Any time you apply for credit and authorize a lender to request a copy of your credit report, the information on your report is automatically reported into the trigger lead program. The information is pooled into a searchable database so that third-party companies can search specific criteria in the data pool and select individuals that make up their target audience. The search data can include your gender, age, residence state, monthly mortgage amount, annual income amounts, and credit score.

For instance, companies who are targeting consumers in Ohio that make $50,000 a year and have a credit score of 600 or less can purchase the names of all qualified individuals from the credit bureaus and use the data to solicit business. The process of selling trigger leads is rather fast and your information can be in the hands of other within 24 hours.

Are Trigger Leads a Good Thing?

For some people, trigger leads make it easier to comparison shop among different companies offering the same services and products. Since the information is sent directly to you, there is less research to do on your own. For other people, the idea of having their private information sold and bought is dangerous and leaves the door open for incidents of identity theft, especially since there are no limitations being place on how much or how often the data can be sold.

How To Stop the Leads

Consumers can opt out of the trigger lead program and stop information from being sold to other companies. To stop the leads, you can complete the consumer credit bureaus’ official online form at this website. Your opt out confirmation will eliminate trigger leads for a period of 5 years. If you visit the site and complete the mail-in form for opting out, the request will stop the trigger leads permanently. Once your application is completed, it will take at least five days for your request to be confirmed and effective.

To Buy or Not to Buy
For some families, a vehicle or two is a necessity. People need transportation to work and for kid’s activities. Many with bad credit have plenty of income to cover the cost of a car payment each month but still can’t wait to save up a hefty down payment. So what can be done?

First, a consumer needs to determine if a new vehicle purchase will hurt their budget. There are several financing calculators available online that can help decide how much car a person can afford in light of their other financial obligations. Once the payment amount is determined, consumers should scour the Internet and the local newspapers to find out where the deal is at. Look for a vehicle that is priced affordably based on your own finances and make sure the type of vehicle will meet the needs of the family. There is no point in buying a small economy car when a family actually needs a minivan to accommodate their lifestyle. If the pricing is not working out, it may not be the right time to buy.

Getting a Deal
If the consumer finds the right vehicle at the right price, it’s time to get financing options. One can still finance through the dealership or explore the local banking institutions or credit unions for financing. There are also many options online for finding a vehicle financing loan.

Keep in mind that while a consumer can still get a loan with bad credit, there will be consequences. It is very likely that a consumer with bad credit will not get an interest rate under 9%. The actual rate will depend on past credit history and current credit score. Bankruptcies and repossessions of other vehicles will also weigh heavily in the lender’s decision.

It is good practice to come to the table with some kind of down payment. If there is a trade-in, consumers should know the value before making the deal. With a down payment, a borrower will show the lender they are serious about the loan and will also have less to finance in the loan. The amount of down payment should be sizeable and it can pay off to wait until some cash has been saved up.

For consumers with bad credit, the best advise is to not accept just any deal put on the table because of the thought negotiations may be limited due to poor credit. With proper research before stepping on the lot, those who can truly afford a new vehicle purchase can still walk away with a deal.

It is beneficial for companies to lose the paper because it cost money for the paper, postage, envelopes, and manpower to prepare and send out thousands of account information each month to every customer. While it does make a lot of sense for customers to declutter their lives by having less paper to deal with, only a small percentage – around 15% – of consumers have switched to online billing statements and payments.

Companies Push Incentives

Since the numbers of customers moving to paperless billing is so low, companies are working to make incentives that are beneficial to the customers. Some examples of the offers put on the table to go paperless include:

For every person who signs up for paperless billing:

• Consumer names are entered into a giveaway for a chance to win thousands in cash or luxury merchandise.
• Consumers are directly paid small transition fees.

Some companies used negative tactics to get customers to switch including:

• Consumers were charged small fees for continuing to receive paper statements.
• Consumers were restricted to certain online features for not subscribing to the paperless billing system.
• Consumers can only view account information online if they decline receiving paper statements.

Many consumers were still hesitant to switch over to electronic accounting. Being forced to go paperless left many people angry and companies had to find better methods for making paperless billing more attractive. Research discovered more people were apt to convert if the message was right.

Consumer Advantage

While many companies still offer incentives to switch to paperless billing, the system itself is still beneficial for consumers.

Less Filing – Typically, you can keep statements for 6-12 months online. By receiving less mail, you have less filing to do. You always have the option to print statements for later filing.

Instant Access – You no longer have to wait for a statement each month. This can help you keep tabs on fraudulent activity and your own spending at any time you wish.

Better Scheduling – With online bill pay, you can make payments in an instant and save money on the stamp, the check, and the trip to the post office. Log in and pay bills as needed or set up your account for automatic bill payments. You never have to be late making payments again.

Online Advantage – You may have access to information and tools through your online account that you don’t get with paper statements.

Environmental Concerns – By not accepting paper statements, there is more energy conservation and less waste in your own household.

Security Concerns – Ultimately, security issues may be the root of consumer’s wariness to convert to paperless. Companies are investing in top-notch security measures to keep your information safe. By going paperless, you also reduce the risk of security breeches with your paper statements should you not dispose of them properly by burning or shredding your statements.

Late payments, missed payments, delinquent accounts, and maxing out credit cards are all ways to destroy your credit history and bring down your credit score. If you had suffered a job loss or were cash-strapped enough to miss your monthly financial obligations, your credit likely suffered. Since credit scores are vital should you ever need financing in the future, it is important to beef up your credit and keep your score as high as possible.

If you think ‘I don’t need any loans so why bother?’ – think again. Credit scores are now used to determine more than your credit worthiness. Employers are running credit checks on new job applicants and insurance companies are checking the scores of drivers to determine risk. So if you don’t plan to get a loan, a job, or insurance then rebuilding your credit may not be a priority. For the rest of us, we can take action to building better credit.

Here are 4 things you can do to get back your good credit:

Order Your Credit Report and Score

Every year, consumers have the right to order their credit reports at no charge from three credit reporting agencies: Experian, Equifax, and TransUnion. You can also receive a free copy after you have been denied credit. In addition to the free annual reports, consumers can purchase a copy at any other time. Credit scores are not free. They usually run about $15 for each report. Order each report and score and review every bit of information.

Correct All Mistakes and Misinformation

Credit reporting bureaus receive information from your creditors about your account activity. There is no guarantee this reported information will be right so it is up to you to ensure it is. Misinformation can lead to a drop in credit score points. Any information you find to be incorrect should be noted. After all information is reviewed, use the reporting bureaus form to list the mistakes contained in the report. The credit bureau will then investigate all claims with the creditor. Results will be reflected on your credit report.

Pay Off Debts

Using your credit report, you should make a list of all outstanding debt balances and the creditor to whom you owe the debt. Make every effort to pay off the debts, even if you have to do it one debt at a time. You may have to negotiate your debt settlements and payoffs with the creditor or collection agency to eliminate the debt. It will take time and effort but paying off all debts will eventually be worth it. Your credit will be strong and your financial future will be more certain.

Apply for a Secured Credit Card

After you have completed the above three steps, opening a secured credit card will start the process of rebuilding your credit foundation again. A secured card typically involves consumers sending in a specified amount of money. That money will then be held in the customer’s account and essentially be the credit limit of the card. For instance, if you set up your secured card with $500, you could only spend up to that limit. While this type of credit card sounds more like a bank, the difference is that the card company reports monthly back to the credit bureau. As long as the account is in good standing, positive information will be recorded on your report and you will start to see your scores rise again. If you had lost your creditworthiness in the past, a secured credit card is a good way to reopen the door to a traditional card. After six months to a year of using a secured card and gaining the credit benefits, you may be eligible to then switch to a traditional card once your scores have improved.

One of the biggies we are taught to protect is our credit reports. They contain almost all of the personal financial information we want to keep private. The reports outline not only our name, contact information, social security number and employment history, they also outline every account we have or ever opened, the associated account numbers, the list of companies from which you have applied for credit, and the financial data on every loan, credit card, or other bill you have. It is all laid out in black and white.

Who’s Invading Your Privacy?

If you think you are the only one with access to all this coveted data, you are very wrong. There are a lot of individuals that can access this information as long as they have a legitimate business reason to do so. The following is a list of those allowed to get their hands on your credit and financial information:

Companies granting credit – any company where you apply for a loan or other line of credit can access your credit to check for eligibility and to monitor your credit moving forward.

Insurance companies – too few people realize that insurance agencies look to a credit history report to determine risk. Low credit scores can mean higher premium rates.

Employers – your employer may require a credit check during employment or for potential employment. Job offers may be limited by a poor credit history if the employer gauges your ability to handle your own credit as a reflection of how you would fare out on the job.

Landlords – if you are planning to rent, a landlord can request to check your credit to determine your risk of not paying on time or defaulting on rent payments. More landlords are requesting such credit checks to weed out bad tenants.

Child support enforcement – any state or local agency can pull a credit report to see what your financial affairs look like.

Government agencies – the government has the right to pull your credit report for a variety of reasons.

With that many people holding the ability to check your credit, it is really important you also keep tabs on what your reports contain. Keep in mind that while the above-noted list of individuals authorized to look at your reports must have a valid reason, it is also legal for companies that generate lists to offer pre-approved credit and loans can also use your credit history for solicitation. The three credit reporting agencies actually sell their lists to companies to promote such offers. As a consumer, you have a right to limit who sees what. You can opt-out from the marketing lists that are sold by Experian, Equifax, and TransUnion by contacting the companies directly and requesting they opt you out of future lists.

Every little measure can help keep your credit history safe. Always take advantage of the free credit report you are allowed to receive annually and check over all of the information for accuracy and to prevent fraud.

How to Make Small Payments Work
Micropayments are smaller payments made towards bills throughout the month rather than just once a month. By making these smaller payments regularly, you can cut down on the amount of interest you have to pay. The more often you pay, the less interest you have to pay rather than paying a month’s worth of interest with just one payment. Credit card companies add interest fees daily. By making payments more often, you are reducing both your balance and interest in a faster time frame than using one monthly payment.

To find out how much money you can pay using micropayments, take your monthly bill and divide it by two. You can pay that total every two weeks. Instead of making just 12 payments a year, you’ll actually have made an extra month’s worth. You can also take it a step further and divide your payment by four, making a small payment each week. As any financial expert will tell you, extra payments result in the faster elimination of debt.

You will need to contact your credit card company to find out if weekly or bi-weekly pay are acceptable. If they are, you can set up automatic payments if it is available to make it easier for payments to be processed regularly and reduce the risk of forgetting to make the payment.

Why Pay More Often?
Besides reducing debts more quickly, you are also more likely to afford the smaller payments than one large payment during the month. You’ll get a better handle on your budget too because you’ll have to keep a closer eye on your spending and bill paying.

By regularly making payments, you’ll also help resurrect your credit score. The regular payments will have a positive affect on your credit score and can help give your history a boost, especially if you have been late in the past.

Smaller, more manageable payments can also help reduce the financial strain of living paycheck to paycheck. You won’t have to worry about having enough cash to cover your debts at the end of the month since you are making smaller weekly, or bi-weekly, payments and financial stress can be reduced. Plus, overall you are eliminating debts faster than you otherwise could which enables you to start saving more money each month. You might be more inclined to stick with the regular payments as they will be more manageable and produce faster results. As you begin to see your debts reduced, you’ll likely be inspired to keep working towards your goals of total debt elimination.