5 Ways to Improve Your Credit Score

Image by www.gotcredit.com via Flickr/CC
Image by http://www.gotcredit.com via Flickr/CC

One of the things I feared when I filed my bankruptcy was that my credit would be shot forever. That was as far from the truth as the east is from the west. Whether you have filed a bankruptcy plan, debtors court plan or credit counseling plan or not, here are a few tips that can assist you with improving your credit score.

  1. ORDER YOUR CREDIT REPORTS

First things first, order your credit report from the three credit bureaus: Experian, Trans Union and Equifax. Your credit report will contain a list of accounts that are hurting your credit score. You are entitled to a free credit report from each bureau once per year. To save time you can go to http://www.annualcreditreport.com and order all three for free. If you want to see your score there may be a charge to upgrade to include the score. You won’t know your credit score unless you order your credit report. You will need to have all three of them, because each report differently and you will need to see how your accounts are being reported on each one. Don’t just assume that each report contains the exact same information. Remember, you can’t improve your score if you don’t know exactly what you need to work on!

  1. DISPUTE ANY ERRORS

Now that you have your credit reports review them for errors, such as, accounts that are closed but are still being reported as open, any erroneous accounts that may not belong to you, or anything that you know to be incorrect. Write the credit bureau or the creditor and have this information removed. THIS IS YOUR RIGHT!! Errors hurt your credit report more than you think. For example, payments that are reported inaccurately can bring your credit score down anywhere from 60-110 points.

  1. REDUCE THE AMOUNT OF DEBT THAT YOU OWE

The amount of debt you are carrying makes up 30% of your credit score. You will need to start paying off your debts in order to improve your credit situation. Come up with a payment plan that will put most of your available budget for debt payments towards the highest interest credit card or account first, while paying the minimum on the remaining credit cards or accounts.

  1. PAY BILLS ON TIME

I know that should go without saying, but I’m going to say it anyway. Paying your bills on time will only have a positive effect on your credit score. As a matter of fact, paying your bills on time is one of the biggest contributing factors to your credit score. Write down all of your bills and their due dates. Keep them posted where you can see them and make sure that you paying on or before the due date.

  1. AVOID NEW CREDIT APPLICATIONS

Since you are in credit repair mode, you should avoid making new applications for credit since some inquiries hurt your credit score.  New accounts can hurt your credit score as they lower your average credit age.  So stick with the accounts you have and work to improve their standing.

 

Be patient and persistent during this process. You didn’t ruin your credit overnight and you can’t repair it overnight. Continue to make your payments on time each month and watch your credit score improve over time.

 

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Why You Need To Start Investing TODAY

Image by www.gotcredit.com via Flickr/CC
Image by http://www.gotcredit.com via Flickr/CC

No matter what your age, you will retire one day. Now I don’t know about you, but I don’t want to retire just to have to pick up a few hours at my local Wal Mart greeting customers to make ends meet. And this why I started investing. I know investing is a scary word for some, but it doesn’t have to be. Let’s pretend for a moment…

There was a 65 year old gentleman with a median net worth of $170, 156. Let’s pretend that all of that net worth is invested in assets that will earn him an annual return of 7%. This is a reasonable return for a fairly conservative stock and bond based mutual fund. Let’s also pretend that he expects to live for 25 more years to the age of 90. That means this $170,156 has to last 25 years.

Based on these assumptions, this gentleman will have just under $15,000 to live on each year. That is barely above the poverty line for a one person household. No less than half of all retirement-age residents of the U.S. have only that much to their name.

Can you see the dire situation that this gentleman is in?

No matter what your age, it is time to start investing in assets that will earn you more money. This is the key principle that makes some people wealthy while others get stuck living paycheck to paycheck. If you set money aside, invest it and learn to live on less than you earn, you will end up with more than those who spend their money as soon as they earn it, or worse, before they earn it.

Here is another illustration to show, the difference between beginning your investing at the age of 25 versus starting later in life.

Most 25- year- olds think they have their whole lives ahead of them, and they do, but let me tell you those years pass by quicker than you think. People in their 20s may think they don’t need to save for retirement because that feels so far away. Boy, are they wrong. If at the age of 25 you start investing just $50 a month into a plain old mutual fund that earns a long-term average of 10% per year, then at age 65 those $50 per month will be worth about $265,000 and you will have only actually invested $24,000 over those 40 years.

I know what you are thinking: I don’t have that kind of money to invest right now. I’ll have to wait until I’m a little older. Let’s take a 35- year- old. They will have to invest $134 per month, (totaling over $48,000) to have as much as the 25-year-old in the previous illustration by age 65. That’s twice as much! And a 45- year- old will have to invest $386 per month totaling $93, 000 over those 20 years from 45 to 65.

If you want to save for retirement I have two suggestions for you:

  1. Invest your money. Use it to buy assets that pay you back and
  2. Invest early. Start as soon as you possibly can

Whatever your situation, I suggest that you take a moment and think about your golden years. You really can’t afford not to invest today. Whatever you do, do it now!!! None of us are getting any younger.

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10 Ways to Save Money This Summer

Image by D. Sharon Pruitt of Pink Sherbet Photography via Flickr/CC
Image by D. Sharon Pruitt of Pink Sherbet Photography via Flickr/CC

School’s out for summer, and you know what that means: expenses seem to multiply! From higher utility costs and increased grocery bills you may find lately it seems that your budget is busted! And this doesn’t include summer camp or daycare fees for the kids. Plus, it’s difficult to save money during the summer months due to vacations. But don’t fret, I am here to help! Here are a few tips on how you and your family can have fun this summer without breaking the bank and still put money aside for savings.

  1. Plan ahead. I know it is too late for this summer, but you can get a jump on next summer by simply planning ahead. If you know that you will spend more during the summer, set aside some money each month. It is much better to do that than to rack up debt and pay for it later (with interest)
  2. Find free entertainment. Check around your city or neighboring cities for free carnivals, festivals or family- friendly musical entertainment. Invite some friends with kids to make the afternoon even more fun.
  3. Take day trips. Check out lakes or beaches within a couple of hours driving distance. Leave early and stay all day to maximize the fun without adding the hotel stay
  4. Seek out free trips. Mark your calendar for free days at the museum, nature center or the zoo to battle summer boredom
  5. Create a camp. Don’t have enough money for camp? That’s OK, create your own! Create a theme for each day. Let the older kids in the neighborhood be the counselors to the younger kids in the neighborhood.
  6. Visit your local library. Head to the library each week for a steady supply of free reading materials and educational media. Some libraries also offer family movie nights during the summer.
  7. Plan a staycation. Pick a weekend and pop some popcorn and watch movies. Here’s a bonus: while you are at the library checkout some movies. That saves on the cost of renting them.
  8. Go camping – in your backyard. Pitch a tent in the back yard, build a campfire, make smores, tell ghost stories, roast marshmallows and have fun
  9. Be smart when booking hotels. When you do want to get out of town for a few days be sure to – book a hotel with a kitchenette as eating out for every meal tends to become quite pricey. With a kitchenette, you can prepare meals in the room and save tons of money.
  10. Reserve rental cars midweek. If you need to rent a car to get away, reserve your rental for midweek pickup and you will often get a better price. Rates can spike by as much as 10% during the weekend rush. Also consider prepaying. If you pay in full when you make a booking, you can slice as much as 35% off the total cost.

Here’s a bonus for you:  Use summer downtime to teach your kids about money. Teach kids resourceful lessons about money by encouraging entrepreneurism and lemonade stands. Have them make their own piggy banks. Open up a savings account for each child. Set goals for earning and saving,- and offer fun rewards for meeting them.

HAVE A GREAT SUMMER!

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Can I Tell You Something?

can i tell you something

Psssst, hey you!!! Yes, you!!!! Can I tell you something? I used to be broke, busted and disgusted!!! That’s right— I’ve been just where you are now!! Let me be transparent for a moment. I was a young mother with five stair- step children. I was married and had a good job making good money. But, I was broke. I had more month than money and I had more bills than money. Have you been there or are you there right now? I was robbing Peter to pay Paul. I had payday loans out of the wazoo. You know the killing part of it all? I worked in banking and finance AND I was raised in a household where I was educated on the importance of good credit and financial management! Well what happened you ask? I got caught up in appearance, in what I thought success should look like. My credit was in the toilet and I wasn’t even 25 years old. I knew I had to do something, after all, I had five children under the age of 10 and they were counting on me.

I had to have a plan! I sat down and wrote out every bill I had and exactly how much money I had coming in. I spoke with my friends at the bank and told them my goal. They helped me get on the right track. I revisited each lesson about money taught to me as a child. I was so deep in debt I had to file bankruptcy, but that was okay because I knew deep down inside that I could and I would recover.

Today, twenty years later, I have a nice retirement nest egg, my credit score is excellent and I have never looked back to my former days. I want to show you step- by- step how you too can achieve financial freedom starting right where you are. If you want to change your financial situation then this is the place for you. The first step is to change your mind.

Come back next week where we will begin discussing what it takes to live a life of financial freedom.

Tracie Threadford

 

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