If you are one of those many people with no credit or bad credit, you surely have a difficult time in obtaining a loan or getting a credit card. Fortunately, there are different financial institutions providing credit cards that do not require a credit check. Although these credit cards usually charge higher interest and charges, they are a good way to improve your credit standing. But, if you are thinking of getting these cards, you should consider some facts before obtaining them.

Fact 1: Most of these cards are not credit cards

Most cards that do not require a credit check are really not credit cards. They are mostly prepaid debit cards. Since you have to deposit your money to be able to use the card, you are actually not borrowing anything from the card company. This is the reason why there is no risk in taking them. If you are having a difficult time controlling your spending, then this is the right option for you.

Fact 2: Your card providers report to the credit bureaus

Whether you have a low limit or a prepaid debit card, there is a great chance that your transactions will be accounted for by the major credit agencies. Because of this, the use of the cards is a good way to enhance your credit score. Moreover, there are cards that give you a small loan that you can pay in full for 12 months. If you can pay on time, your scores will be greatly improved. At the same time, you can show the lenders that you have already changed your financial behavior.

Fact 3: Credit Cards with No-Credit Check Have High APRs

One of the attractive features of a prepaid or loan card compared to a credit card is that it does not require a credit check. But, most of these cards charge high interest rates. This is the card company’s way of safeguarding themselves against the chance that you will be in more debt because of your previous bad rating.

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In an effort to teach students about handling their finances, the Financial Wellness Peer Educators of the University of Illinois conducted a presentation entitled “Staying on Good Terms: Managing Credit and Debit.”
It was a part of a series of presentations that will happen for three consecutive Thursdays from 5:30 to 6:30 PM at the Activities and Recreation Center of the University’s Wellness Center.

Kathryn Sweedler, the program’s coordinator and an educator for consumer economics, says that the aim of the program is to help students to effectively manage their money with a focus on debts and credit cards.
The program consists of 16 peer educators from different majors. But, most of them are interested in finance. For every presentation, two peer educators are assigned to present.

The idea of having peer educators teach the students makes the dialogue easy because their ages are close to each other.

Sweedler said that there are usual misconceptions about debt and credit card that students are unaware of. For example, holders of credit card have the option to fully pay their debt or make minimum payments. But, with the first option, it will take a very long time to pay off.

Sweedler added that it is important to have a balance between the two. Just by paying more will make a big difference in the debt of the credit card owner.

Sweedler hopes that in the long run, students will know how to effectively use their cards and obtain loans. She remarked that it is difficult to have plenty of debt in this unstable economic condition.

The Financial Wellness Center is planning to conduct a similar series during the spring season. But, schedules have not been made yet. The next presentation will be entitled “the Secrets of Credit Reports Unveiled” and will be held at the Wellness Center.

Why Are Credit Unions Better than Banks?

Without the free checking and with the increasing fees of banks, you may benefit more from a credit union.
Credit unions basically have better deals on loans, checking accounts and other products compared to banks. And it is easier to join them at the present times because there are around 7,000 of them nationwide.

However, there are cases when you are only eligible for basic services. This means that you cannot have online banking or other perks that banks offer.

Credit unions are already beating banks nationwide because of their nonprofit nature and their members’ ownership. Because of this, they can offer the best possible deals says Bankrate.com’s senior financial analyst Greg McBride.
Some credit unions also offer free checking which most banks today do not provide. Moreover, overdraft charges are cheaper on the average among credit unions. In addition, out of network ATM transactions are charged about 99 cents in credit unions whereas banks charge $1.41.

Aside from these benefits, a lot of credit unions belong to a network that allows customers to transact with other credit unions and withdraw funds from different ATMs all over the country.

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In terms of interest rates, credit union offer better rates. For example, a one year certificate of deposit is on the average paid at 0.7% whereas banks only pay 0.42%. For credit cards and loans, credit union rates are also much better with an average of 4.67% interest for vehicle loans compared to 5.47% charged by banks. Home equity lines of credit are at 4.16% in credit unions and 5.38% in banks.

A lot of people are also qualified to join credit unions. You can participate in a credit union that is affiliated with your employer or those that accept employees coming from different companies. You also have an option to join community credit unions which are open to people you work, live and go to school with in a specific area. Colleges and religious groups also have their own credit unions that you may be able to join.

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With the historically low rates, different financial institutions such as mortgage servicers, credit unions and banks are doing everything to encourage you to refinance. Before choosing one, make sure to know how long it will take.

Wells Fargo is sending out solicitations through mail showing the difference in their customers’ payments when they decide to refinance to a lower rate and shorter term loan.

Chase is going a little further than Wells Fargo. They are providing their customers with one day air informing their customer that they promise no closing costs and no appraisal for refinancing.

Advantis Credit Union offers their clients a 10-year mortgage that has a low interest rate of 3.29%. It has already given out 200 of this loan type since the month of January.

OSU Federal Credit Union has a raffle program that allows anyone who refinances their home, credit card or vehicle to join. The program will be giving out three cash prizes amounting to $1000 each.

Mentioning these different solicitations does not mean that they are right for you. Make sure that you compare the balance of your present loan and the overall interest payments with any possible cost of refinancing such as closing costs, interest payments and appraisal fee for the entire duration of the loan.

Even if there are long-term advantages of paying your debt in full, do not disregard the impact of a higher payment in your cash flow every month. You do not want to be forced in a cash crunch that will push you to sell your home in a struggling housing market.

Moreover, check around as much as you can. In the past year, many customers of major banks complained that their refinancing was slow. By looking at all your possible options, you can save money on lower fees and rates and you can find a lender that can quickly approve your loan.

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How to fix a credit score or even how to improve a credit score is a hotly debated concept these days. Especially wit

h the current state of the economy, many people are plagued with bad credit and are looking for ways to get a higher credit score to get better interest rates or even to buy a house.

The thing is, who do you follow or who do you even trust? Afterall, it’s hard to even listen to governments. With some of them looking at going into default, even they seem to have credit issues.

That being said, here are a few notes on common misbeliefs regarding credit and how to improve your credit.

You may have heard some of these things in your time. I bet you may be surprised to see that some of them are just plain bad advice.

Three Myths in Boosting a Credit Score

Credit building is one of the many things in life that can sometimes revolve around myths. People think that there are certain things they do that increases their score even if these things really do not impact their scores in any way. The truth is there are really no easy credit score fixes just like what commercials claim. The simple formula to credit score improvement is having good payment behavior and possessing a healthy mix of credit. Here are some of the wrong beliefs that are not helpful in boosting your credit score.

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Credit Improvement Myth # 1: Choosing to get rid of credit card offers will help

John Ulzeimer, SmartCredit.com’s consumer education president, said that it is a common belief among people that if they choose to get out of credit card offers, the credit inquiries in their reports will be lesser. But, the truth is, these inquiries are “soft” and do not really affect the score. He further adds that people can still welcome the offers but it will not strengthen their credit scores.

Credit Fix Myth # 2: Closing old accounts improves score

Trey Loughran, Equifax’ personal information solutions’ President, says that closing your accounts are not really helpful to a credit score. It can even cause a slight damage by shortening your credit history and leaving you with a minimal amount of remaining credit.

Credit Repair Myth # 3: Opening more accounts helps boost credit score.

Several consumers experiencing problems in their credit think that having many accounts will show that they can manage credit. Actually, this has a reverse effect. According to Experian’s public education director, Rod Griffin, more accounts will make lenders wonder why all those credit are needed. He added that it is even a sign of risk that can make your credit score suffer. What lenders will actually see if you have several accounts is the number of hard inquiries in your report. Those inquiries will decrease your score and lenders will worry that you might be in dire need of financial help because you are gaining access to too much credit.

So, while you are working to get that perfect 800 credit score, just know that there are some things that will help you and some things that are just plain malarky.

Here’s to your credit and financial freedom!

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