credit help Savings Accounts

Five Things You Probably Don’t Know That Will Improve Your Credit Score

Your credit score influences many aspects of your life. Not only do lenders use it to determine whether to give you a credit card or loan, but insurance companies, landlords and employers also use it to assess your worthiness. A good credit score can help you land a job, make security deposits for utility turn-ons unnecessary, lower insurance rates and get you approved for a rental home. If you have bad credit, you may deal with denied credit applications, difficulty finding a place to live, problems getting the job you want and higher interest rates overall.

You probably already know the basics for improving your credit score, such as making all your payments on time. However, if your score isn’t quite where you want it yet, there are five more methods you can use.

1. Diversify Credit

Dozens of data points that indicate credit risk go into figuring your credit score, which credit repair companies like www.ovationcredit.com can help to untangle, but you need to know why your credit score is low to begin with.

Your credit account mix, often called your credit diversity, looks at different categories on your report. For example, if you only have credit cards, you could improve your score by adding an installation loan or mortgage.

Lenders want to see that you can handle multiple forms of credit responsibly. You show this by branching out into these categories and building a history. If you’re only applying for a new loan product to introduce more diversity into your report, consider a store charge card. These accounts are unique to a particular business, such as a fashion retailer, and may offer useful rewards.

2. Pay Down High-Balance Cards

Talking to http://www.myfico.com/ about your credit can help you figure this step out, but just be aware that you need a strategy for paying off your debt. You have to do more than pay your credit cards on time if you want to get as many points as possible for your score. Credit utilization has a major influence on your numbers, and it’s one of the factors you directly control. It is calculated by looking at your revolving credit balances and comparing those to your overall credit limits. High utilization percentages are undesirable and bring your score down. By keeping the overall and individual card usage low, your score gets a real boost.

Do you have extra money to put toward your debt? Consider focusing on your high-balance cards if you need to improve a credit score quickly. A few extra points before you apply for a mortgage could save you a lot of money over the long term due to lower interest rates.

3. Increase Your Credit Limits

Another way to adjust your credit utilization percentage is by changing another number in the equation — your overall credit card limits. If you have a good relationship with a lender and your payments are on time, you can ask for a credit limit increase. Whether or not your request is granted depends on several criteria and differs with each company. If you are denied, ask for reconsideration if you feel that you do meet a lender’s criteria.

4 Keep Long-Term Accounts Open

Have a 10-year-old credit card you don’t want? Before you call up the company to close it, reconsider. Your credit history is another big influence on your score, and it’s averaged across all your accounts. If you close an old card, it no longer contributes to the length of time that you’ve held lines of credit.

The only exception to this method is a card with an annual fee. If you have to pay to keep the card active, you need to weigh the potential score benefit with the money you’re throwing at the card. In some cases, it may make sense to cover the fee, but some lenders charge too much.

5. Group Your Loan Inquiries

When you apply for a car loan or a mortgage, you may want to compare quotes or go through a broker. The process of applying for credit creates a hard inquiry on your credit report. This indicates that a third-party has examined your credit information as part of a loan application process. Its opposite, a soft inquiry, occurs when you or a third party look at your report for other reasons, such as an account review for a credit limit increase. Since the information isn’t used for creating a new line of credit, it falls into a different category.

Too many hard inquiries bring your score down when you’re loan shopping, but you can get around this by grouping your credit inquiries within a specific period. Every loan inquiry made within this time span counts as a single inquiry, so you limit the hit to your credit score. Exactly how long you have depends on the credit reporting agency and ranges anywhere from two weeks to a month.

Make a concentrated effort to keep these inquiries tightly grouped. If you don’t think you have the time to apply with all the lenders you’re interested in within a given time span, consider using a mortgage broker to help you streamline the process.

Credit scores can dictate where you live and work, as well as how large your lines of credit are. By using every method available to improve your credit score, you can improve your financial health and save money with lower interest rates. These methods are an excellent way to work on improvement after you use all the basic techniques.

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Savings Accounts

High Interest Savings Accounts

Life is full of uncertainty, anything can happen to you at any time, it doesn’t take long for matters to get worse and all you can do is just face them. However, being prepared never hurts and that’s why its always better to have an emergency fund to handle these uncertainties. Bad times are not so bad when you have money on your side. That’s where high interest savings accounts come in; they are exactly what you look for when building up your emergency fund.

How to start an emergency fund?

You can just start by opening up a high interest savings account with a few dollars (mostly the minimum needed to open up an account is quite minimal) and every month you can make an effort to save some extra money and transfer it to your saving account.

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You should also keep in mind that this account is your emergency fund and so spending that money is out of question. It is only for the bad times or the big problems. Make some ground rules for yourself and then stick to them.

Some people also have a habit of saving some money in the corners of their homes (secret places). That’s also a good habit, the only drawback being that money just sits their loosing its value in addition to the risk that it can be stolen. The more sensible thing to do is to put that money in a high interest savings accounts and start compounding the interest on it, this way you money will keep increasing and you will have a considerable amount in your fund.

How much money should I put in my emergency fund?

As a rule of thumb, its recommended that you keep enough money on your liquid savings to be able to cover at least four to six month of your daily expenses. That is, mortgage, insurance, gas, groceries and everything else you need on a regular basis.

This way, if you loose your job, or get sick and loose your salary; you have the peace of mind to know that you can still keep paying your bills for several more month and avoid getting into debt.

How do high Interest Savings Accounts work?

Although different banks have different policies, usually these accounts use compound interest rates. They also give you higher interest rates if you agree not to take any money out of the account for a set period of time, which normally is a year.

Another thing to keep in mind is the fact that you will need to have a considerable amount of cash to enjoy that extra high interest rate, however that varies with the bank and there are some banks which do not require very large amounts in return for a better interest rate. Be aware that you may be charged a fee for withdrawing money from your account and if you are not able to maintain that minimal level or go below it, you can be fined as well.

How does compound interest work?

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It basically work in the way that the interest is charged on the principle amount; then the principle amount increases and then again the next year the interest is charged on the new principle which is higher than last year which in return gives you more interest.

So compound interest rates mean that every year you will be getting more total return than the year before, even if you have not transferred any more money in your account. This is the big advantage of high interest savings accounts.

However, before committing yourself to a savings account, just be sure to read the bank policies and all of the fine print before you make your final decision. Shopping around in internet can help you find good banks that offer high interest savings accounts.