carlsmith's Blog

Credit cards have become vital parts of today’s busy lives. They are needed for almost every transaction so a person can have access to certain products and services. More importantly, credit cards are essential parts of one’s life- both for personal as well as business purposes. This is the reason why from the very first step of getting a credit card – the credit card application- careful thought as well as adequate effort must be given to ensure that one’s chances of getting approved will be extremely high. For this is the first step in getting the quality of life one dreams of.

The credit card is issued by a bank, consumer store or retailer. It gives the cardholder the capability to purchase services and goods for an interest rate, in a given time period and for a specific amount limit. As with most decisions, careful consideration must be made in order to choose what the best credit card is, in accordance to each specific individual’s lifestyle needs. This enables the potential cardholder to get the most benefits and services out of the credit card – that is, if he is fortunate enough to be approved for his application.

Shopping around for the right credit card includes reading all the information for each card type. All the information (the benefits as well the downside) should be weighed, to ensure that the card is exactly the right kind the person is looking for. It is tempting to just go for the first card one sees that has attractive benefit and services, but it is still smart to read the fine print – there might be some hidden terms that might not be beneficial for a person’s lifestyle in the long run. Again, like most major decisions that will involve finances or money, extra effort should be exerted to ensure that the best decision is made.

A person can either fill out a paper application form or do it online, on websites for specific credit card companies. If filling out a paper application form, one must make sure that it is the original and not a photocopy, and that it is duly endorsed by the merchant bank. This is extremely important as identity theft as well as fraud may be made by getting access to the personal/confidential information that a person includes in every credit card application. Another way to apply for a credit card is to call the customer service hotlines provided by merchant banks, specifically for credit card applications.

To have smaller chances of getting rejected for the application, it is important to include all the necessary documents that the credit card company is asking for. These documents include copies of valid identification cards, proof of billing and any proof of employment. There are some card companies that ask for financial statements or copies of bank account balances; if there are any issues or problems regarding the presence of a bank account, this may be considered as well in choosing what credit card to apply for.

There is no limit to the number of credit cards a person can apply for. If he thinks he has more chances to get approved (or maybe just to save time), then by all means he can apply for numerous cards at once. Regardless of the credit card type, the application process results in just two possible scenarios – for it to be accepted or rejected. That said, no matter how common application forms are nowadays for credit cards, they should still be given the careful consideration they need. After all, an approved application for a credit card can mean the beginning of a better way of life.

A credit report shows a lot of important details and information about an individual. The report shows where the person lives, how he has been paying his bills, whether he has filed for bankruptcy, been sued or arrested any time in his life. The credit report is scrutinized to help in making decisions for credit-based applications like insurance and loans; it is also used for purposes of employment or when renting a home. This is the reason why every person needs to meticulously review his credit reports, making sure that all the information posted is accurate. After all, it can spell the difference between getting a much-needed service and being denied its availability.

According to the Fair Credit Reporting Act (FCRA), an individual has the right to dispute or question any credit report information that he believes is incorrect. The first thing a person should do then is to make sure he gets a copy of his credit report. All of the credit bureaus are bound by federal law to provide one free copy to each individual every year. These credit reports can be accessed by going online and checking out each credit bureau’s website, through calling the designated number, or by printing a request form and then mailing it to the specified address.

If an incorrect entry is found in the credit report, the individual should immediately notify (in writing) the credit bureau who supplied the report as well as the information provider. This is the start of the credit report dispute process. In the statement, the person should include his name, complete address, the information or entry he is disputing, and the reason why that information is believed to be incorrect. It is best to attach a copy of the credit report with the inaccurate information highlighted. If it is possible, the person should also include copies (not originals) of cancelled checks or statements that may help him support his claim. Afterwards, the credit report dispute should be sent via certified mail, with a request for a return receipt. This will not only ensure that the individual has evidence that he sent the dispute, but that the dispute was received by the credit bureau as well.

From their end, the credit bureau has 30 days to do their investigation regarding the dispute, and to respond in writing with the results of their investigation. All the information that was provided by the individual will then be sent to the original provider of information. The information provider is in turn obligated to do their own investigation and report back to the credit bureau. Once the investigation has been completed, the credit bureau will give the results to the person concerned, along with a free copy of the credit report if changes were made as a result of the dispute. A person can also request for the credit bureau to send correction notifications to each company that accessed his credit report in the last 6 months.

It should be noted that if the information on a credit report is incorrect with one credit bureau, there is a big possibility that the same holds for the other credit bureaus. It is then important to check that all information is correct and complete for all three bureaus. As each company meticulously scrutinizes a person’s credit report, that individual should be as meticulous in making sure his credit report only contains accurate information. His way of living may depend on the simple task of checking all details and, if needed, making a credit report dispute.

Being in college is part of a transition stage in a person’s life. That person is not a child anymore, but is not yet a full-fledged adult in terms of age and responsibilities. This stage of transition is the best time for a person to start being responsible for his finances, paving the way for even more responsibilities when he goes out into the “real world”. College student credit cards are the perfect companion to young adults who are testing the waters of the adult world. These cards also help them build their credit history early on so it can be used to their advantage when the time comes. As the saying goes, “it’s never too early to start”, at least as far as learning what it takes to be responsible financially is concerned.

Searching for the best credit card starts with looking for the one that fits an individual’s needs. So a college student credit card should have all the features that would make a student’s life easier; it should also have some limits or restrictions to teach the student how to properly control expenses. It may be easier to just search all the available credit cards in the market, but it’s best to look for something that is geared specifically towards college students. Case in point: a business credit card may have a lot of features that are not necessary for a college student’s life. The goal here is to look for something that gives just enough benefits for a student to gradually learn how to manage his expenses and finances.

Some of the things that should be taken into consideration are annual fees (are they going to be waived or not), late charges (how flexible are the terms), interest rates (compared to other available cards in the market) and spending limits (to control expenses, and to avoid incurring debt as much as possible). These all take into account the restrictions a college student has in terms of managing or controlling his finances. Added perks and features like accumulation of points, air miles or rewards points for every purchase are a huge bonus, as they can make future purchases or transactions that much easier to manage. Another beneficial feature is the discounts for specific purchases or services like school supplies, utilities, etc.

Young adults are raring to get a taste of what the real (adult) world is like. They are more than eager to take on responsibilities and new challenges that were not available to them when they were younger. During college, a student is that much closer to leaving his childhood behind, and this may also be the best time to learn how to take care of every aspect of his life, by himself. Some people may argue that credit cards are for those who already have stable jobs, who are considered adults in every sense of the word. However, the right type of credit card can not only assist a student in getting a taste of what it’s like to be an adult – it can teach him about responsibility, and can help him build a strong credit history that would be beneficial for his future.

There is no doubt that credit scores and credit histories have an impact on an individual’s life. The impact can be small or huge, depending on what a person will be using the credit history for. The reasons for getting a less-than excellent credit standing can sometimes be controlled by the person (like how he manages his finances or how diligent he is in paying his bills); there are also times when the reasons are beyond an individual’s control. Whatever the reasons are, it’s best to discuss how they affect the credit standing, and how it in turn affects a person’s way of life.

In a nutshell, bad credit scores are connected to an individual’s name and records when one or more factors are considered. First is a history of late or missed payment of bills. This may be deliberate or not, but past credit history accounts for about 35% of a person’s credit score. However, while the bad entries in the credit history remain in the credit file for up to 6 years, the significance of late or missed payments may be reduced in time. In cases when payments are made on time for at least the last 12 months, the negative notations will start to have reduced effects on the credit standing.

Another factor that adversely affects a person’s credit standing is the length of time of his stay at his current address. Lenders thrive on seeing signs of continuity. In general, a score is more likely to be higher for a person who has been residing in the same address for the past 3 years. There might still be a small effect if a person has 2 addresses for the past 3 years; multiple addresses in the span of that 3 year time frame will have the most negative impact. It is also typical to have a low score if a person has only been staying in his current address for 6 months or less.

Continuity in employment status is also a big influence in credit scores. It is common for lending institutions to look for someone who has been in the same company for a certain number of years. Applicants who have been staying long in the same company are more likely to have a higher score than the ones who have been in the company for a short period of time. That said, it is then natural to expect a low score for someone who has changed jobs/companies for 2-3 times in the last 3 years. It is then a wise decision for individuals to wait until they have been in their current job for a while before attempting to apply for a loan.

Numerous credit applications will have a huge impact on credit standing as well. Multiple applications for credit (especially credit cards) in a short or limited period of time will have a negative effect – they give the idea that a person is desperate to get his hands on a credit card or to extra finances. It is generally acceptable to make one credit application in a span of one or two months; this should not have a negative impact. However, is a person has already been declined numerous times for his credit application, it is recommended that he should not make any new applications for 6 months, to give his records a time to breathe.

Having a bank account will greatly contribute to a high credit score. However, it should be noted that a recently opened bank account will have a lower score, compared to one that has been in existence for a longer period of time. The biggest negative impact on credit scores is if an individual does not have a bank account at all.

There is nothing worse than being declined for a credit application just when it is most needed – all because of bad credit scores. To avoid being in this situation, the best thing to do is to refrain from doing the things that are proven to lower credit scores. If they can’t be avoided, then the next best thing to do is to wait for the proper time to re-build the credit standing. After all, strengthening and re-building an individual’s credit history will not only affect his present lifestyle, but his future as well.

Choosing a credit card, like any decision to be made, would require a lot of weighing of pros and cons. Among the first few aspects that people consider when credit card-shopping are: interest rates (if they are at a bearable and considerate level); annual membership fees (if they are waived, or just a discount will be extended); late payment charges (how high the charges will be if a payment is late, or how flexible the card company’s definition of “late” is) and last but certainly not the least, the rewards program offered by the credit card company. There are people who consider this last aspect to be just an add-on, but others think that it is the most exciting thing to look forward to.

Credit card rewards are given by card companies in exchange for (frequent) card usage. In a nutshell, the more a client uses his credit card (and presumably the bigger his expenses are), the bigger his rewards will be. There are times when high interest rates, or even steep annual membership fees are overshadowed by how attractive a rewards program is.

One of the most well-liked rewards program is the cash back program; this program offers a certain percentage of what the cardholder charged to his credit card to be given back to him as a rebate. The amount accumulated can either be paid to the credit card account or to the client directly in the form of a cheque. It’s a great idea in the sense that a customer gets to earn a percentage of what his expenses are.

Another form of reward is the accumulation of airline miles – this program uses basically the same idea as the cash back, but clients get to convert the points that they earn from their purchases into air miles. Clients who are frequent flyers will benefit the most from this kind of program; some can even save up their airline miles for longer (and costlier) flights, which will naturally save them a lot of money. As long as there is availability on the flight that a cardholder wants to be on, and as long as he has enough airline miles to cover the cost, he can essentially get to travel for free. There are even cases when the cardholder does not have enough points/airline miles for the flight, but still gets to fly – paying just a fraction of the actual cost.

Another credit card rewards program is the accumulation of points when the card is used for a minimum amount. The points can then be used to redeem products (electronic gadgets, household appliances) and services (spa treatments, special access to exclusive events, hotel accommodations). This program provides the cardholder with the freedom to choose what he wants in exchange for the points he has accumulated. The card company usually provides a catalogue where cardholders can check what products are redeemable with the number of points they have.

Whatever the rewards program of a credit card is, a huge percentage of customers will appreciate its presence. Without a doubt, it is nice to be able to get something back from using a credit card. Regardless of the product or service that will be offered in exchange for the credit card usage, this added bonus from card companies can be such a rewarding experience.


 

Is there such a thing as a “right” credit card? Looking around at the numerous credit card offers sometimes adds to the confusion instead of helping one make a concrete decision. One of the simplest solutions to battle the information overload? Decide what you really need in a credit card; more specifically - decide why you need it. Don’t get too excited with the prospect of your first purchase using a shiny, spanking credit card, and instead focus on the responsibility of having one. It may seem too serious, but this may very well spell the difference between a great deal and a gigantic debt for you.

As a new credit card holder, it is easy to get tempted with the freebies and perks signing up for a certain credit card might include.  Some of these tempting goodies include automatic and/or free club membership, free products or services at partner stores, initial discount offers on consumer goods – and the list goes on. But remember- everything comes with a price, and oftentimes it’s a hefty one. The freebies might be a way to cover up the high interest rates, or the exorbitant activation or participation fees. This does not mean that the perks are always the devil in disguise - depending on your lifestyle and needs, the free services and goods might just be what you need.

Going back to the matter of how to choose the right credit card - it’s all objective. Credit card X might be the best for your friend and her lifestyle, but may not be able to provide you with the services and benefits you need. Asking around can be your guide in choosing what credit card has the most benefits, but nothing beats choosing a card that is tailor fit for most, if not all, of your needs. To help you choose the best out of all the credit cards out there, here are some simple guidelines:

•    Identify what the credit card will be used for/how it will be used - Will the card be used for huge purchases? Or just for utilities? These are just some of the questions that need to be considered so you can check which cards have the benefits you need, like rebates for gas purchases, special deals if you reach a minimum purchase amount, frequent flyer perks, and so on.

•    Take the time to read the fine print - Are there any late payment/finance charges? If so, how much would they be? These can be answered by carefully reading the fine print. Avoid just browsing through the long and somewhat redundant terms and conditions, and make an effort to really understand them. The terms discussed on the disclosure section are one of the most important things you should consider when shopping for the right card - think things over and decide if you can definitely keep up with the credit card company’s policies.

•    Determine how you will manage the payment - Do you plan on settling the full amount of the bill each month? Or do you plan to carry over a certain percentage? Be sure to take into consideration not just the interest rates but how long the grace period would be before your bill incurs late charges (for payments not made on time).

The fact of the matter is, nothing beats the convenience of having a credit card. In this day and age, there are certain places and situations when carrying cash would not be advisable, so the next best thing is to pay with plastic. Just make sure that you’re getting the best deal out of your credit card - think more than twice before deciding and choosing what type of “plastic” might take over your (real) financial life.

Credit Reports - What's On Them, and How to Check Yours

Businesses in the United States buy more than two billion credit reports every year. Since there are currently fewer than 300 million people in the country, this means that the average adult has his or her credit reports examined by someone about once every other month. And yet, only a small percentage of Americans have ever laid eyes on their own credit reports. Viewing your credit reports at least twice a year is a necessity in today's electronic age, and while it may not always be free, getting access to your credit reports is much easier and less expensive than it has been at almost any time in history.

What is a Credit Report?

There are three major credit bureaus in the United States. They are Equifax, Experian, and TransUnion. These three companies are competitors, and therefore they don't share information with one another. As a result, your Equifax credit report may be significantly different from your Experian credit report, and your TransUnion report may be different still. Sometimes this is a good thing - if only one of the credit agencies reports a bad history, for example. But more often than not, it's a headache, since at least one of your credit reports is bound to have some incorrect, negative information on it.

What's On Your Credit Report?

Although each of the three credit agencies record slightly different information, the following is a basic list of what you'll find on each of your credit reports: Your name and your spouse's name. Where you live, where you work, and where you used to live (and used to work). Your social security number, phone number, and birth date. A list of your credit accounts and when you've paid your bills - on time, late, late by more than 30 days, late by more than 60 days, etc. How much total credit you have available. Whether and to whom you've made an application for credit in the past six months. Which companies have requested and obtained your credit report. And finally, dreaded "public records" - bankruptcies, foreclosures, repossessions, court judgments, convictions, and tax liens.

How Long Does Information Stay On Your Credit Report?

Positive information stays on your credit report indefinitely, which is a good thing. Most negative information should be deleted after seven years, with the exception of certain types of bankruptcy, which can stay on your report for ten years. If one of your credit reports is missing positive information or contains negative information that's older than seven years, contact the appropriate credit bureau.
 

Larry Lindsey is probably not a name that you know, but he is an important figure in the history of personal finance.   Currently, Mr. Lindsey is President Bush's chief domestic economic advisor. Prior to that, he was a Federal Reserve Board Governor. But neither of these distinctions are what make Larry Lindsey significant. Instead, it was a little incident at Toys 'R Us that gave birth to "The Larry Rule."

The Larry Rule - What No Retail Clerk Will Ever Tell You

In 1996, Larry Lindsey was a Federal Reserve Board Governor. While it isn't known for sure, it's probably safe to assume that Mr. Lindsey was then, and is now, a millionaire. An even safer assumption is that he always paid his bills on time and should have had a top-notch credit score. After all, he was a member of the most prestigious financial committee in the world, and his personal credit history was undoubtedly vetted by politicians and regulators before he could be appointed to the Fed.

Despite all of this, Mr. Lindsey was denied a store credit card - at Toys 'R Us of all places. The reason? He lacked a sufficient credit score due to too many recent inquiries. You see, Larry Lindsey had been trying to prove a point. Whenever a retail clerk offered him an opportunity to apply for credit, he did so. He filled out the application correctly, even stating that he was a Fed Board Governor under "employment." He listed his six-figure income and all other pertinent data, and until Toys 'R Us came along, he had always been approved.

It wasn't that Mr. Lindsey actually wanted or needed all of these retail credit cards. His objective was to point out this flaw in the credit scoring system - applying for too many retail charge accounts can hurt your credit and prevent you from qualifying for real credit cards. Ask yourself, which is more important - the charge card at JCPenny that can only be used at JC Penny, or a real Visa or Mastercard that can be used at JCPenny and everywhere else, too?

To Apply or Not to Apply - That is the Question

On one level, the Larry Rule makes at least a little sense. After all, someone who is out there applying for credit all over town would seem to be in some form of financial distress. When the credit bureaus created their scoring criteria years ago, they didn't factor in pushy retail clerks who get bonuses for getting people to apply for cards they don't need. You do need a real credit card. Having two or three isn't a bad idea. But department store cards count as lines of credit on your credit report, and having too many of them can make you look like an unworthy applicant in the eyes of real credit card companies.

Armed with the knowledge that applying for and receiving retail store credit can be harmful to your credit, you should think twice before applying. First, ask yourself if you really want the store credit card, or are you just filling out the application so that the clerk will stop bugging you? If the store offers you a discount for applying, ask yourself if the money you'll save is worth the negative impact that the inquiry (or even being accepted) could have on your credit score.

If you actually do want the card or the discount is a real money-saver, then ask yourself this question: Will I need to apply for credit for something important, like a real credit card, a car, or a home loan, in the near future? If the answer is yes, then it is probably best to "just say no" to the retail application. You wouldn't want an inquiry from Toys 'R Us to inhibit your financial future.

We highly recommend that you research your credit card options before applying for a card. Then, choose the best one that is best for you, not one placed in front of you by a store clerk.  With this sound financial advice, you will be on track for a great credit future.
 

America is quickly becoming a cashless society. Whereas it would have seemed odd, or even in poor taste to do so in the past, people routinely use plastic to pay for even the smallest purchases, such as a Slurpee from 7-Eleven. Almost all gas stations allow you to "pay at the pump," and even fast food restaurants began accepting "debit or credit" a few years ago. And that's not to mention the millions of cashless transactions that occur every day in cyberspace, through web sites like eBay, Amazon.com, and other popular e-tailers.

Clearly, having some form of cashless payment is essential to being a fully functioning American consumer these days, and millions of people are opting to use a debit card attached to their checking accounts rather than traditional credit cards. Is this a wise move?

Dr. Jekyll's Lovely Little Debit Card

The primary advantage of debit cards is that they give you access to cash. A little known fact about cash advances on traditional credit cards is that they begin accruing interest from the moment you get your hands on the money. This means that even if you paid last month's bill in full, you will still have interest charges on your next bill whenever you take out a cash advance. Debit cards allow you access to cash through ATM's at no interest - after all, it's your money.

The other major benefit of debit cards is that they're an option for credit constrained consumers. While it may seem like credit card companies will give cards to anyone, the truth is that once you make a serious mistake - such as falling behind on your card for a few consecutive months, resulting in a "charge off" - it can be very difficult to qualify for credit again anytime soon. Since some form of plastic is required for so many of life's necessities, debit cards offer these people a means of remaining viable members of our cashless society.

Mr. Hyde's "Instrument of Financial Death"

But there is a downside to debit cards, too. Consumer advocate, Howard Strong, even refers to debit cards as "financial death" cards. While his perspective may be a little over the top, he does cite several disadvantages of debit card usage in his 1999 book, What Every Credit Card User Needs to Know.

First, by using a debit card, you lose the advantage of using the credit card company's money interest free. This interest free period occurs from the time you make a purchase until the due date of your bill. If, for example, you used your credit card to buy a $2,500 sofa the day after receiving your statement, you would then have more than 30 days to come up with the $2,500 before being charged interest. If you used a debit card, you would have $2,500 sucked out of your account the moment you made the purchase.

Secondly, using a debit card typically has no positive impact on your credit. Credit card companies report payment information to the three major credit bureaus each and every month. When you pay your bills on time, it has a positive effect on your credit score. Debit cards don't utilize credit, so there's nothing for the bank to report - unless, of course, you overdraw your bank account and then are unwilling or unable to pay whatever egregious fees the bank charges. In this way, using a debit card can have a negative effect on your credit.

Finally, using a debit card puts you at more risk than using a credit card because it is easier to "stop payment" of erroneous or fraudulent charges with a credit card. When Mr. Strong wrote his book in 1999, this was more of a problem than it is today, since much has been done to improve the security of electronic transactions. Still, the fact remains that someone could use your debit card to empty out your bank account, and while you would almost certainly get your money back, it could take some time. Since credit cards have no ability to draw on your savings or checking, this possibility doesn't exist with them.

The Reality - You Need Both

If you can qualify for a credit card, even at a high interest rate, you should almost definitely have one. After all, credit cards help you build credit and the interest rate is irrelevant if you're responsible and pay your bills in full and on time. You should also have a debit card for getting cash quickly and easily without the up-front interest that credit cards charge on cash advances.

If you're really worried about the "Mr. Hyde" effects of debit card usage, consider opening a separate account tied to your debit card. You can set up automatic weekly or monthly transactions that move money from your primary account to this special account, so that the amount you could lose is always limited to $200, $500, or whatever you decide.

 Carl Smith is a freelance financial consultant.  Learn tips on how to manage your credit cards debts and access free credit reports.

Although credit cards may be what land the most people in credit trouble, they're also the best tool for credit repair. If you find yourself faced with mounting debts and worsening credit, the most important things you can do are always paying your minimum credit card bills, and not exceeding your card's credit limit. If you allow your card to be cancelled or "charged off," you will have a very hard time getting credit in the future, which will make it even more difficult to restore your credit rating. Or, if it's too late and you've already had your cards cancelled or charged off, you should apply for a card from a company that specializes in servicing clients with not-so-good credit. Even if the card's interest rate is exorbitant and there's a costly annual fee, it's worth it to have an open, active credit account. Otherwise, how are you ever going to rebuild your credit?

Rebuilding + Revamping = Repairing

But rebuilding your credit through the timely payment of your new bills is only half of the credit repair equation. There's also the matter of the items that are already listed on your credit reports. If you can get an item deleted from one of your credit reports, then to that credit bureau and all who use it, it's as if it never happened - the instance of not-so-good credit will have been expunged from your record. Surprisingly, it's easier to have this done than you might think.

Obtain and Review Your Credit Reports

First, you need to obtain your credit reports from the three major credit agencies - Equifax, Experian, and TransUnion. This can be accomplished by visiting their web sites (equifax.com, experian.com, and transunion.com), and paying the necessary fee. If you've been denied for credit, insurance, or employment in the past 60 days, you are entitled to free credit reports. Send documentation of your denial along with your credit report requests. Once you have your reports in hand, scan for inaccurate information - negative, of course. If some untrue positive information somehow made its way on to one or more of your reports, you are under no legal obligation to identify it as being false. It's probably best to turn a blind eye. But as for the negative information, photocopy your reports and use a highlighter to indicate what you would like to be changed. Send a letter explaining how the information is false and include any corroborating documents that support your claims. If you prefer to have a professional handle this matter, we highly recommend the services provided by Lexington Law. They are a professional law firm who can help you rebuild your credit and they will work with all of the appropriate agencies on your behalf. Their site can be reached at: Once you've dealt with the inaccurate information, it's time to move on to the things you only wish were inaccurate. It's important to note that any negative information (excluding a bankruptcy) that's older than seven years old should not appear on your credit report. You have every right to request its removal, and the credit agency must comply.

Set Realistic Goals - And Make Them Concrete

But next you need to decide what you would like to have removed, and how realistic your chances are of having it deleted. If you declared bankruptcy last year, or you have an unpaid judgment against you, there's not much of a chance you'll succeed. But if you got divorced four years ago and your husband stopped making the car payments, which ultimately resulted in a repossession on your credit record, you just might get it expunged. Other, minor debts aren't as difficult to have removed. For example, if you owe a credit card company $1,100 for a canceled card, you may be able to get them to remove the information from your report if you pay them in full. Normally charges like this go unpaid or end up being settled for pennies on the dollar, so if you have the ability to pay your debts in full (or close to it), you may be able to get your creditor to send letters to the credit bureaus saying that it was all a big misunderstanding. The key is to evaluate your credit report and decide what can realistically be accomplished. Give yourself three achievable goals and go from there. And in the meantime, make sure you don't repeat the mistakes of your past. Keep two or three credit cards open and active and pay the bills in full and on time. It won't happen overnight, but by following these guidelines, your credit will be rebuilt, revamped, and restored. The sooner you get started, the sooner the process will be complete.

College Student Credit

If you’re a college student, chances are you’ve been offered more than a few credit cards. Maybe you have a friend who has already run up credit card bills on par with her student debt, and so you’ve steered clear of the credit card offers. Or maybe you’re one of the few who have received their first credit cards and used them responsibly - so far, at least. Regardless, you probably don’t realize just how important responsible use of your first credit card is to your financial future. It could have a significant impact on whether or not you’ll be able to get financing for your first new car or house, and increasingly, it could even determine whether or not you get hired for your first professional job.

If you’re not a college student, be sure to forward this message to anyone you know who is — it’s that important.

The Importance of Building Credit History

For many people, credit is a Catch-22: They can’t get approved for credit because they don’t have a credit history, but they can’t build a credit history without first being approved for credit. Luckily for them, college students don’t tend to have this problem. Credit card companies view them as low risk, at least compared to other young people with no credit, and so they’re willing to give them a first chance. As a new cardholder, it’s vitally important that you make good use of this first chance.

When you have a credit card, the issuing company reports information to each of the three major credit bureaus - Experian, Equifax, and Transunion. This information includes the amount of credit you’ve been approved for, how much of that credit you are currently using, and most importantly, your payment history. All payments - both late and timely - show up on your credit report, and even one late payment can hurt you rather badly when you lack a solid credit history. This is why you should always, no matter what, pay at least the minimum due on each of your credit card bills.

Always Try To Pay More Than The Minimum Due

While it’s important to always pay at least the minimum due, you should never only pay this amount unless you are completely unable to pay more. In fact, it may not be a bad idea to pay the minimum immediately upon receiving your bill and then pay more later in the month when you have more money.

If you pay less than the total amount due, you will be charged interest on your next bill. Even though the credit card company holds you in higher esteem than one of your high school peers who didn’t go on to college, they still regard you as a rather risky proposition - which means you’ll probably be paying a very high interest rate. If you only pay the minimum due on a card with a high interest rate, it could take you several years to pay off even a modest amount of debt.

Take Advantage of Your Opportunities - But Use Your Credit Wisely

Believe it or not, it may be easier to get approved for credit while you’re in college then after you get out - particularly if you don’t start a professional job right away (or at all). The high interest rates you’re asked to pay are just part of being a newcomer to the world of adult finance. But then again, if you always pay your credit card bills in full, interest rates will be irrelevant.

Regardless of all the cautionary tales, you should definitely open up at least one credit card account while in college to begin building a solid credit history. If you can show the credit card companies that you’re responsible, you’ll soon be paying much lower interest rates, and you’ll be able to get that new car or house when the time is right. If you ignore or abuse your credit opportunities in college, it could be one of the worst mistakes of your life. You’re an adult now - it’s time to stand up, take responsibility, and enjoy your share of the American Dream. And it all begins with responsible use of credit!