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Simple Mistakes That Affecty Credit Score

Keeping a healthy credit score is something that you will have to do consciously. Simple mistakes, such as the following, will often lead to a drop in the score. This is unfortunate, because these mistakes are completely avoidable.

1. Don’t miss a payment. The payment history takes up 35 percent of the credit score. Missing a payment can make big negative impact. In the past, lenders reported late payments only after 30 days. But with the unfortunate impact of the credit crunch, lenders have now resorted to reporting accounts that are even a couple of days late in paying.

2. Don’t max out. Going on a shopping spree is not the best of ideas if you end up maxing out your credit card. About 30 percent of your credit score depends on the balance you maintain between the percentage of debt and the available credit. Maintaining a healthy 30 percent is advisable.

3. Don’t get more cards. Too many credit cards also show up badly on your credit score. Ideally your credit mix should consist of only two credit cards, a car loan, a mortgage and some student loans. Even if you do want to get a few new cards, don’t get them all at once. Keep a good time span between each request and you will be alright.

4. Don’t close the old accounts. Getting rid of old credit card accounts is actually detrimental. This will wipe out part of your credit history and also affect your available credit.

Settling your Debts with Debt Settlement

Sometimes, debt has a way of snowballing. When it gets out of control, you will find that you have no way of settling what you owe to your creditors. Fortunately, there is a way in which this situation can be handled without filing for bankruptcy.

In a nutshell, Debt settlement is a process whereby a mediator negotiates on your behalf to reduce the amount owed. Debt settlement is handled by financial firms that specialize in this area. Depending on how good the firm is, the discount you will get from you debt can be substantial. The percentage can vary from 20 percent to around 75 percent; but keep in mind that the higher percentages are only possible through a combination of excellent negotiation skills and the perception your creditor has of you.

One fact that is to your advantage here is that all creditors’ view the amounts owed in a practical way. They have no real advantage in sending you to jail and getting no remuneration in the process. Instead, they prefer to get whatever they can from bad debts. In their eyes any money from a bad debt is good money. This is one reason why most financial firms get good results for their clients.

Most firms will give you a loan to pay off the altered amount in a lump sum. However, to get to this stage you need to have certain documentation cleared by them. You should also have a regular salary from which a fixed amount can be deducted towards the loan.

Prepaid Credit Cards

The first thing to understand here is that a prepaid credit card is not the same as a debit card. Debit cards require you to have a bank account and expenses on those cards are paid off from the money that is in the account.

Prepaid credit cards are empty until they are “loaded” with money. It is a relatively simple process, where an individual requests for the card and specifies the amount that they are going to put into it. From this point on the card functions as any other Debit card would, in the sense that you will not be able to purchase more than the amount that is left on your card.

But why would you want to get one of these cards?
1. They are easy to get. Several companies offer them in the U.S. and Canada. A few even offer them to international customers.
2. You have a limit to your spending
3. You can avoid carrying cash
4. You can never get into debt as there is no interest
5. No monthly payments
6. Useful in situations where you don’t want to have a credit card but are forced to use one.(e.g. online purchases where Debit Cards are not accepted)
7. Safe to give out to kids due to a limit being imposed
8. They have all the features that a normal credit card does without the negatives.

Although they are beneficial, there is a cost for using them. After all, the company that offers you this method of possessing a credit card has to make money. There are maintenance and loading fees as well as fees for withdrawing from an ATM. As long as you are mindful of these costs, using a Prepaid Credit Card should be a pleasant experience.