A prepaid credit card is a good way for the student to stick to a budget. Parents feel that instead of giving their student a credit card that lets them charge too much that a prepaid card is much better. The prepaid credit card works very simply for the student but it can become a problem if you are not careful of the type that you receive. When you apply for a prepaid credit card you should check out the types that are available. This is the best method to use for a student to gain a good credit score.

You find that some prepaid cards charge a high interest rate along with an annual fee. When you secure this type of card then the most of your money goes toward all these fees. You normally make a deposit into the bank and that lets you make charges but you are still responsible to make monthly payments. The system works in this respect when you are late you pay late fees and in some cases you are charged interest on the loan. Even though you have placed the money in a savings account to be held for your charge card it is still considered a loan. The money is the lenders security that the loan will be repaid even though your account is holding enough money to cover the debt you are still responsible to make your payments in a timely manner. You will build a good credit score by using the prepaid credit card.

Your credit score, commonly referred to as a FICO score, is a numerical representation of your current and past financial tendencies. Essentially this score is used to show potential lenders exactly how likely you are to make your payments on time. The higher your score, the more trustworthy you will appear to anyone who is considering whether or not to give you a loan.

How is My FICO Score Calculated?

Your numerical score is the direct result of your past and present financial activities being passed through a complexed mathematical formula. This process takes all of your previous credit cards, mortgages, utilities, car payments, and many other debts. into account. The more consistently you have made all of these payments on time, the higher your FICO score will be.

It is very important to frequently look over a copy of your credit report, as errors, fraud, and out of date information are very commonly overlooked and can have a drastically negative effect on your rating. It has never been easier, more affordable, and more important to check your report. The internet provides an excellent opportunity to obtain a free copy of your FICO score.

What is the Average US Credit Score?

FICO scores generally fall into a range between 300 to 850, with 300 being the lowest (bad credit), and 850 being the highest (excellent credit). The average score for borrowers in the USA is approximately 720. Lenders will usually tend to give clients with a score of 700 or above a more favorable interest rate and terms on their loans. While those with a 600 or less will generally receive a higher interest rate and tighter restrictions.

Are you someone who has not established credit yet? Are you being denied the same access to credit cards, loans and other credit ways simply because your credit score is too low from not having enough credit or no credit at all. Don’t fret, because help is on the way!

If you are planning on getting a personal loan, owning a car, having a home of your own, working in a bank or finally acquiring the furniture you’ve been longing for a long time then establishing a credit is the answer.

Here are a few ways you can start building up your credit report and get on the road to good credit!

- Start to apply for a guaranteed approval credit card that reports to the credit bureaus. Take your time and always read the fine print in order for you to find the best deal for yourself. These cards are similar to debit cards but they have the Visa or Mastercard logo on them and they report to the credit bureaus.

- Another option might be to check if the lending institution of your choice has a secured credit card being offered. The interest may be higher but you may be able to upgrade to an unsecured card within 12 months if you maintain your payments on time.

- Another type of credit card with easy approval requirements is the merchandise credit cards and department store credit cards. These are an excellent source to start to establish a line of credit. Make sure it’s a store where you can purchase a lot of your shopping needs. This way, you don’t need to apply for a multiple cards at once which can be seen as a negative on your credit report. One word of caution. Department store credit cards tend to have high interest rates, many of their interest rates start at 15%. So keep an eye on your balance and try to pay as much as you can each month. NEVER make just the minimum payment, especially on a department store credit card.

- Don’t forget to fill up any application for a loan or credit card completely. If something doesn’t apply put N/A on that line. Include your checking and savings accounts and any accounts you pay for on a monthly basis even if they do not appear on your credit report. If they do not appear on your credit report, please make sure you include a way for your prospective lender to contact them for a trade reference.

If you are thinking about applying for a car loan, it’s good to do research on the dealership or car lot where you want to make the purchase. Most dealers will provide a source of financing. Some may carry their own loan and payment plans. Be on the lookout though and read contract carefully if you don’t want to get stuck with an interest rate that is through the roof. This venture is where a good cosigner may come into play.

Use these tips to help jumpstart your credit history and get approved for the credit that you deserve!

Copyright (c) 2006 Liz Roberts

A, B, C, D, or F? What’s your grade? Similarly, just like in school, you are being graded on your credit performance. However, unlike schools you are not told what you are being graded on. The Fico score is your credit report card. The first thing that needs to be done before you can begin to improve your credit grade is to find out what grade you are starting with.

When it comes to your credit report card, there are six things that you must choose to do on a regular basis, that is, check it, compare it, track it, build it, protect it and repair it.

Check It – Know your FICO score and the factors affecting it. Your FICO scores are the credit scores most lenders use to determine your credit risk. You have multiple FICO scores, one from each credit bureau (Experian, Equifax, and TransUnion). It is crucial to note that each bureau may have different information.

Compare It – Monitor your credit report at least four times a year. The worse time to discover a problem with your credit report is when you go to obtain credit for that new car, mortgage, or vacation. Also, trends can also help identity spending patterns, both good and bad.

Track It – Tracking is an essential component to maintain and achieve a good credit score. You can set up alerts to receive changes to your report automatically. There are three main credit bureaus that manage credit records, Experian, Equifax and TransUnion.

Build It – Establishing a satisfactory credit history has never been as important as it is today. Two most influential factors in your scores are, whether you pay your bills on time and how much of your available credit you actually use. Don’t charge more than 30% of the card’s limit. Don’t charge more than you can pay off in a month.

Protect It- Make sure you pay the bill, and all your other bills, on time. Also, you can use a credit monitoring service that will give you with quarterly updates.

Repair It – How Will a Letter Help Me Fix my Credit?

According to The Fair Reporting Credit Act if an account is not being reported 100% accurately, by law the bureau must delete it from your file, within 30 days of your dispute. The majority of negative information is deleted using the dispute method. Here is how the process works.

If the bureaus cannot verify the accuracy of any account you dispute, they MUST remove the account within 30 days of receiving your dispute. It’s the law.

The first (and most crucial step) is to order a copy of your credit reports from http://www.myfico.com and reviewed them for errors and negative information that has caused your credit scores to drop. Disputing negative information on your credit report is the most effective method to increase your FICO Score.

Afterwards, make a list of disputed accounts so they are separated from your good accounts. Make sure that you arrange these accounts so that the oldest record is listed first and the newest is listed last.

Then, when you find errors or out dated information on your report, you want to write a hand written credit dispute letter for the first two accounts to each credit bureau that is reporting negative information on this account. This is necessary because there are three bureaus and they all report differently. So, you want to make sure that you are not sending a dispute letter to a bureau that is not reporting negatively about you! If you are confused by this, 30 Days to a Better Credit Report covers this process and other techniques quite well, so having a copy will help you tremendously.

At one time or another, many of us have wrangled with credit card debt. While, there is no magic secret to getting out of debt, there is a strategic plan to follow to tackle your debt head on. You first want to find out what you really owe. Write down every credit card you have that has a balance, with the interest rate and current balance you owe. Write down every person or other institution you owe money to. Include student loans, loans from 401(k) plans, mortgage and auto loans.

Your next step is to run your current credit report and get your credit score. One place to do this is at http://www.myfico.com. You will get your FICO score and a credit report from each of the 3 credit agencies: Experian (www.experian.com), Equifax (www.equifax.com), and Trans Union (www.transunion.com). If this list (not including the persons you owe money to) is different from your credit report, your credit report is the list to go by, unless you know for a fact there is a mistake on your credit report.

The next step is to consolidate all your debt and lower your interest rate as much as possible. Before you do that, call your credit card company today (ask for a supervisor) and ask for a lower rate. Most of the time they will work with you. If they give you a hard time, let them know you are switching your card to another company. This will lower your interest payment right away. Consolidate your credit cards to as few cards as possible. To look for permanent low-interest rate credit cards, check out http://www.bankrate.com. I am not a fan of the “balance transfer game”; transferring your balance from one card to another, specifically 0% cards that then jump up to a higher percentage rate (i.e. 14%) after a period of time. Most of us end up missing that transfer period time and lose everything they saved by having a 0% interest rate for a short period of time. If you can, stick to a permanent low-interest rate credit card, preferably under 7-10%.

This is the most important step you can do to pay down your debt. Setup a payment plan to pay off your debt and stick to it. For example: If you owe $10,000, have a current interest rate of 6%, and pay $400 monthly, it will take you 2.3 years to pay off your debt. To find out your debt repayment plan, visit http://www.kiplinger.com/tools/ debt calculator. You also need to find the $400 a month to pay off the debt and the only way to do this is to change your spending habit. Find a budget that works for you and stick to it.

There are a few more points that are essential to paying off your debt. Stop using your credit card and debit cards – now! Get yourself on a cash only basis. I can’t stress enough how important this is. This is the key to keeping your budget! If you are paying off different credit cards, pay off the ones with the highest balances first. Save your student loans for last. If you are not able to pay off more than the minimum balance on your credit cards and are truly in over your head, you might need to work with a debt consolidator. There are many unethical ones out there, so visit the National Foundation for Credit Counseling http://www.nfcc.org. They are a government agency that can recommend one in your area.

Finally, enlist a friend or family member for support during this debt repayment time. Having their moral support will really help you towards being debt-free in no time!

Written by Galia Gichon

DOWN-TO-EARTH FINANCE

(Copyright Down-to-Earth Finance LLC 2006)

Understanding your credit score rating scale can seem like an overwhelming and almost impossible prospect. A credit rating scale can be confusing, especially if you have trouble with numeric systems. In a scale you have several numbers that all mean something different. Even though it can be a hard and overwhelming to try to understand your rating scale, doing so can be rewarding and a necessity in fixing it if need be.

One of the first things you should look at it is how exactly your credit score rating scale is composed and put together. Companies look at a couple of different aspects to put it together. One thing that determines how your credit rating is put together is your past payment history. This includes how well you pay your bills and whether or not you pay them on time or not. This aspect also includes any outstanding debt, too much can make your credit rating lean towards the lower end. Something else that is considered is your credit history in general. Beginners as well as a poor one can lower it as well. Sometimes if you are just starting out it may be even lower than someone who has a history that is poor.

Other things that are considered as part of a credit score rating scale are any credit applications or inquiries into your credit. Too many of either can lower your score and reflect poorly on you and your score. Different types of loans and credit can also have an affect as well. Balances that are too high and the number of balances that are too high can be a bad sign to a credit reporter as well. High interest rates can even be a negative mark as well.

On the rating scale a score of seven hundred or more is excellent and someone with this type of score should have no problems with credit or interest rates. While those with scores around six hundred and fifty to four hundred and fifty will have some difficulty obtaining credit, though could still have a chance. A lot of times those who fall on this part of the scale will have to secure any loan they apply for with some type of collateral. Those who fall below four hundred and fifty will most likely not get approved at all, whether secured or not. These people need to find a solution to their credit problems and a way to improve where they fall on the scale if they wish to stand any chance at all.

Speaking of help in rising where you fall on the credit score rating scale there are a lot of places to start from. Free credit counseling is available if you know where to look and will greatly help you if you are in need. These credit counselors will not only help you improve your score but can also help you get back on track and be more responsible in the future to avoid the problem again.

After sifting through all the information and getting your bearings you can learn a lot. Things may not be so overwhelming after all. When it comes to the credit score rating scale and understanding it, all it takes is a little patience, which in the end can be well worth it.