First Time Credit Users Beware

Read your credit card agreement. In reality, not many credit card applicants take the time to read their credit cards’ Terms and Conditions in full. As a first time credit card applicant, make it a habit to read the fine print before signing up for anything. Why is it crucial to read the fine print? Because the true costs of your credit card are disclosed here. What you see in the ads are only the best features of the credit card, the actual conditions are explained in the Agreement and it is up to you to find out.

Set your monthly budget. As a student, practice effective budgeting or money management starting now. This will greatly help you in handling your finances in the future. Set a definite amount for you to spend each month and make sure that you have enough to set aside for your debts, credit card payments and for your savings. Every month you should be putting something away in savings. If you can’t put something away in savings each month then you are living outside of your means and you need to take a hard look at your spending habits.

Pay off your credit card balance in full each month. Make it a point to pay back your monthly credit card balance in full to avoid paying the interest. There are some credit building companies that say its good to leave a running balance on your credit card because it will encourage the credit companies to increase your credit limit. I don’t know how true that is. I’ve had cards that I have paid off each month that have given me regular credit line increases. What matters most in building your credit history is how you use your available credit and how timely you are in submitting your payments.

Stay within your credit limit. Staying within your credit limit means more than just not going beyond your allotted credit. Financial advisers recommend not using more than 30% of your available credit if you want to keep your credit history in excellent standing. This habit will not only protect your credit history, it will also protect you from the risk of incurring more debts than you can afford.

Check your credit card statements regularly. It is your obligation as a credit card holder to check the accuracy of your account statements. If you find errors or unauthorized charges in your account, call your credit card issuer immediately. If your credit card company provides online access to your account, take advantage of this feature by checking your account on a daily basis. Doing so will also alert you about your due dates of payment.

Use your credit card with caution. Credit cards are meant to be financial tools when you need them. Nevertheless, credit cards are not supposed to be used without careful consideration. Before charging a purchase to your credit card, ask yourself, do you really need to make this purchase? Can you pay back your balance by the end of the month? Is it a necessity or just a want? How will this purchase effect my monthly budget?

This entry was posted on Saturday, May 3rd, 2008 and is filed under Credit. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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How Credit Scores Affect Mortgage Applications

With a good credit score an applicant will receive prompt response from many lenders, all of them offering low interest rates and low down payment options. The loan amount offered also may be high. On the contrary a low credit score would result in a lot of rejection from various mortgage financers. Because creditors wouldn’t come forward easily to give credit to individuals that have a history of difficulty in repaying existing loans. After all, creditors take risk when they finance mortgages against the credit history of a debtor. Naturally, they will wish to remain on the safe side and pick up less risky ones that have good credit histories. A good credit score means less chance of missing on payments and therefore less risky.

But there are some real risk takers that will come forward to finance mortgages for individuals with bad credit scores. They would charge high down payments and always high interest rates though. They may also fix additional charges for every little paper work and may charge high closing rates. The loan amount offered will also be considerably less. The individual with poor credit scores will not have much choice but to accept the terms and conditions as there are no other alternatives. This is a tight situation and to avoid this you must have a good credit score.

People with bad credit may fall in to the trap of ’secured loans’. Secured loans are the ones where the loan applicant offers an asset as collateral security. The lender becomes secure about the repayment of the loan and not the borrower. Securing a loan with bad credit score becomes easy only when the applicant is willing to offer some asset as collateral security. This again is a very dangerous situation where an individual runs the risk of losing his entire collateral asset in case of failing to pay the loan installments in time. An individual should always avoid such type of a loan.

Resort properties normally require large amounts of finance which a person with bad credit may find it difficult to obtain. So it is always advisable to keep your credit score high. Incase the credit score becomes low due to unavoidable financial reasons it can be improved upon. There is no need to lose hope simply because a person has a low credit score. If the property that he intends to buy has good equity he should go out and try to obtain finances for it. There are many sub prime lenders willing to offer their services.

For a review of your credit report as it relates to a mortgage loan and a consultation on the best loans available to you, give us a confidential, no obligation and no cost call.