Before the economic challenge took its toll, people dealt with short-term financial challenges by paying a check at a grocery store while hoping that it won’t clear before their next payday comes. This can be quite risky especially when the check bounces and there is a need to pay additional fees. The lack of option to make ends meet when cash is short is to take a loan from payday lenders.

Payday lenders give loans for the short-term. Loanable amounts range from $100 to $1000 with fees averaging at $15 to $30 for every $100 borrowed. This type of loan can be easily obtained. However, they can be very expensive. If the annual fee is considered, the rates can range from 381% to 700% according to NCLC or the National Consumer Law Center. More than the high interest rates, a cause for worry is the repeated loans of many borrowers because of the inability to pay their current loan when it becomes due. Many individuals get stuck in unmanageable debt because of this type of loan. But, payday loans are not the only options to provide for short-term cash needs. There are other fast-cash sources like 401K loans and credit card advances.

401 K allows employees to loan up to $50,000 or 50% of the total amount invested whichever is lower. Interest rates in 401K loans are generally lower than other types of consumer loans. On the average, a 1 to 2 percentage points higher than the prime rate is charged as interest. Payments are deducted from the paycheck, interest is paid to oneself and there is no need to undergo a credit check. Moreover, 401 K loans do not give limits as to how or where the money will be used.

Credit card cash advance is also a quick way to obtain short-term funds. However, they can be very expensive. The fees and interest rates for cash advances are usually higher than credit card purchases. It does not give a grace period for payment.

Running short on cash can be a challenge especially when the payday is not coming soon. However, short-term emergency funds can be obtained by borrowing from payday lenders, 401K loans or making credit card cash advances.

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In the world of credit scores, 850 is the lucky number and the perfect score. This is clearly not a result of accidents. This is not just achieved by making timely payments of bills. This requires strong determination and dedication to increase a credit score, the knowledge on how to increase it and the time. Here is a personal experience of a 23 year old associate who was able to obtain this excellent score.

Joshua Duvachelle, an associate editor of a nonprofit organization takes pride of his 736 credit score. At this very young age, he attributes this achievement to the way his parents raised him. That is, to be a person who practices strong work ethics and someone who knows how to save beginning at an early age. He shares having seen the way his parents enjoyed abundance and suffered scarcity. This led him to build a strong foundation for his financial future.

He took his knowledge of building good credit from working on full-time credit projects. He also studies financial magazines. At age 18, he opened his own credit card. Currently, he checks his scores monthly by subscribing to any of the three credit bureaus. Annually, he also obtains a free report from these three reporting agencies. Experian, Trans Union, and Equifax are the main reporting entities.

Mr. Duvachelle boasts of having a perfect history of payments. Through all these time, he experienced having an incorrectly sent account but he gave time to dispute it for many months until it was fixed. Even his student loan that amounted to $15,000 was all paid down until the last few amounts of the loan. This unpaid amount was purposely done to maintain an installment form of debt which credit bureaus consider in giving a high score. Aside from this, Duvachelle spends only about 30 to 40% of the total limit in his credit cards. He knows that this is the maximum amount he can consume to maintain his credit rating.

Expenditures that will exceed 40% of the credit limit will cause a decline in the credit score.
From this personal experience, it is easy to point out the factors that contribute to a good credit standing. This include proper financial management, constant checking of one’s credit reports, disputing errors, making timely payments, creating a perfect payment history, paying down debts, maintaining different types of loans and limiting credit card usage to a maximum of 40%.

More Credit Score Resources:

www.myfico.com/crediteducation/creditscores.aspx

www.nytimes.com/…/credit-scores/primerscores.html

It used to be that “people” made decisions about your credit worthiness. You knew your banker and your handshake was all the collateral you needed. Those days are long gone, and now a single number – your FICO score – determines your credit worthiness.

Several credit models can be used for this article, however we are going to focus on the Fair, Isaac Company model. Better known as FICO.

Your FICO credit score can be used to determine your interest rate and how much credit a lender will give you. So taking care of your score, and keeping your credit clean will save you money.

Getting and improving your credit score is not hard at all, just takes time. Here is a tip or two that will help you improve and increase your score.

FIRST: You need to get a copy of your credit history

There are many reasons you may have no credit history. Maybe you’re just starting out, maybe you pay cash for everything and have never needed a loan. In any case, if you have no credit history, your FICO score is likely to be low.

The easiest way to raise your score is acquire a loan, and pay it off on time. In general, installment loans are weighted more heavily than credit cards. In other words, you will improve your credit score faster if you buy goods with an installment loan, rather than acquiring a credit card.

Another option is to take a $1000 and open a 6 month CD at a bank. Now turn around and get an installment loan using the CD as the collateral. You then take that $1000 loan and do it again at another bank. Do this for a total of 3 times.

Let the CD’s mature, paying only the minimum for the 6 months. Once they mature you cash them out and pay off all three loans. Congratulations…you now have a credit history.

SECOND: Maintain Your Good Credit History

Good job – you have paid your bills on time, and do not have high credit card debt. Here’s some ideas to keep your FICO score as high as possible.

Don’t close your old accounts. One part of your credit score is based on the amount of credit available verses amount of credit used. Closing old accounts can lower this part of your score.

Something to think about. The day of the month you pay off your credit card may have a lot to do with your FICO score. Let?s say you have a $2000 credit card. Every month, you charge about $1800 to that card. And, every month you pay it off. But here’s what happens – your credit card company reports your credit information monthly to FICO, but they report it on the 10th of the month…and you pay on the 15th. This would cause the credit agency to see you carry forward a balance every month. Try changing the payment times…just is sure NEVER to pay late.

THIRD: Fix your bad credit

For whatever reason, if you have a poor credit history, there are things you can do to improve your score. Some of them take time, and you will probably be best served by talking to a credit counselor to be sure that you not only repair your credit history, but also eliminate what caused that poor credit history in the first place.

The FICO score is most affected by your credit history. To repair a low credit score start paying your bills onetime. In order of value you need to pay your Mortgage, Installment loans, and last your credit cards.

The next largest portion of your FICO score is based on how you use credit. The fastest way to improve this is to pay down your credit cards.

When you?re all done with the rest of things…review your credit report. Get one from all the credit agencies. Look for errors and mistakes. Contact them to see if they can remove them or correct the errors.

A good FICO score is a huge part of your financial life. Keep it healthy. Use these tips and watch your score climb.

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Debt which is sent to collections will adversely affect your credit score. However, if your creditor seeks and is awarded a judgment, your credit score will be affected even more drastically.

Your creditor is sending a clear signal that it is through playing games if you are served with a Notice to Appear in court for a judgment proceeding. You will have 30 days from being served to object to the filing. You can have the case dismissed if you can prove that the debt is invalid.

Some creditors may threaten to file a law suit but are not serious. However, going to court will be the kiss of death for your credit score and, therefore, should be avoided at all costs.

An “unpaid” judgment will be shown on your credit report for 10-12 years. At the end of this 10-12 year period, if the judgment remains unpaid, it can be renewed. A paid judgment can be shown on your credit report for up to 7 years from the date paid.

It is wise to contact your creditor to arrange a lump sum payment or a payment plan. However, do this only after checking your state’s statute of limitations laws to determine if your debt falls within or outside of the laws. If your debt falls within the statute of limitations, you are still obligated to pay the debt and you should try to negotiate payment. Adversely, if your debt falls outside of the statute of limitations laws, you no longer owe the debt though, if you offer to make payment, you will start the clock running all over again.

If the court issues an official court order for payment of the debt, your credit score will suffer drastically. This negative mark will not show up on your credit report if you contact your creditor and negotiate a settlement prior to the entry of judgment.

Offering to negotiate a settlement is the best solution for all parties. Typically, creditors do not want to go to court and will accept a portion of the amount owed just to bring the matter to a close. If you do not have a lump sum to offer as payment, you can always attempt to negotiate a payment plan. If your creditor is not “in the mood” to consider any offers, you might think about calling the lawyer handling the case for your creditor.

Your credit report will show the debt as “legally void” if the judgment is dismissed. This is much less damaging than a “paid judgment,” which can be shown on your credit report for seven years from the date paid.

It would be best to negotiate a settlement which includes a complete deletion of all negative information from your credit report related to the transaction. If you and your creditor are able to agree, be sure to obtain a written agreement with both of your signatures. You should always remember that, once the court becomes involved, negotiating opportunites become slim to none.

You might consider hiring a good consumer credit attorney. It may cost you a little bit, however, you may find that, by having an attorney handle the negotiations, you may save money as well as minimize the damage done to your credit score.

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Most folks struggle with debt, and often find that they cannot reduce their debt because they are barely making ends meet. Do not feel bad, tons of folks are in that situation and try very hard to get fix it.

Where to begin is one of the hardest things to figure out. A good starting point is a budget. If you do not have a budget and are living check to check you will find that you can never get ahead. So you should start with a budget.

Once you have your bills divided into these categories, start making a list of bills. This list should go from the Necessary bills, then the important bills and finally the less important bills. While you are including these bills on your list, think if there is anything that you can do to reduce you balances. For example, if you have two car payments could you live with only one car? Many families find that they use a little more gasoline but save quite a bit each month by not having that second car payment. Additionally, if you are making payments on recreational vehicles like an RV, a boat, or a motorcycle you should determine if you really need that expense right now.

Finally, the last stack you should tackle is your bills such as your credit card balances. This is the stack that you should take any money you have saved and use it to reduce your balances. Do not put anything more on your credit card debt and get your balance down. By making the time to get your budget lined up and find those simple nooks of cash, you can reduce your debt and start saving some money.

It can be done even though you will see that you have some tough choices to make. These choices often are not what you want to do but see that they need to be made. My family had a hard time giving up dining out, but now I have a son that wants to be a chef and go to culinary school, all because we started cooking at home. Make it a family event and that will help. My children were ages 12 and– when we started the budget and it brought us much closer together. Make the time to work with your family on this family problem. Including your children in the situation also helps them understand the needs of the family.

There are numerous solutions available to help you with bad credit. Call Ovation Credit today for a free consultation and learn about some of the options that may help you.