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Save Money By Making Internet Shopping Harder

MoneyTipsFor years, shopaholics had to battle against the ease and convenience of late-night TV ads. Their classic pitches led thousands of people to buy items that they did not need, all available with a simple phone call. The advent of 24-hour shopping channels like QVC and the Home Shopping Network made it even easier to spend yourself into bankruptcy. Then, the Internet arrived. Internet shopping allows you to search for any item you can think of and purchase it online with a simple click of the button and entry of a credit card — or just the simple click if your payment information is already on record. Even browsing the Internet with no intention to buy can turn into a shopping spree if you run across items that you "simply cannot do without." What's a shopaholic to do? The first order of business is to admit that you have a problem with impulse shopping on the Internet. After that, it is a matter of setting up minor roadblocks to make Internet shopping more difficult without taking drastic measures like closing your credit card accounts. Consider these measures that will slow down the process and give you time to reconsider whether or not you really need that customized bowling ball or package of thirty smartphone covers. Do not Store Information – Most sites encourage you to store your basic information so that they can expedite the checkout process — especially your shipping and credit card information. Your browser is probably set to autofill the information into most forms. Disable the autofill capability of your browser and decline to store credit cards and other information online. It will take you several minutes to enter that information, which may be enough time to talk yourself out of the purchase. Budget your Small Purchases – Apps for mobile devices are so cheap that it is easy to make impulse buys without thinking how quickly small purchases add up. That is also true for music purchases through iTunes, or other similarly inexpensive downloadable items. Set yourself a budget by using a prepaid gift/credit card and use it to budget small app and download purchases. Load it at the beginning of the month with your budgeted amount and track the balance during the month. You may run out in the first month, but with time, you will learn to track your spending and get in the habit of controlling your purchases throughout the month. Pause Before Checkout – Websites give you the opportunity to review your basket before purchase to make sure that all the details are correct. Take a set amount of time (perhaps five to 10 minutes) to leave the items in your checkout basket and simply walk away from the computer. If you still want the items when you return to the computer, go ahead — but at least you will have had some time to think about it. Block Sites – If nothing else works, try blocking sites at various times during the day when you are most vulnerable to impulse purchases. Programs like StayFocusd or Leechblock can allow you to block websites temporarily and save you from draining out your bank account. We hope that these tips can help you from maxing out your credit cards with Internet impulse buys. If not, you may want to shop exclusively at stores with liberal return policies. At least, then there’s a chance you’ll have come to your senses by the time the now-unwanted purchase arrives. If you want more credit, check out MoneyTips' list of credit card offers. Photo © Originally Posted at: Online Store Return PoliciesWackiest "Of The Month" ClubsToday’s Headlines: Online Shopping Surpasses In-Store

Survey Shows People Using Credit Cards For Home Renovations

MoneyTipsAre you planning to renovate your home in 2017? There's a better than 50/50 chance that you are, if a recent poll by LightStream is accurate. The January 2017 LightStream Home Improvement survey found that 59% of homeowners plan to spend money on renovations during this year, with 42% of the planned renovations costing $5,000 or more. Surprisingly, while 60% of those planning renovations intend to fund their project out of savings, 29% plan to pay for their home improvements with a credit card. That's far more than the 9% expecting to use a Home Equity Line of Credit (HELOC) or the 7% who prefer to take out a home improvement loan. Use of credit cards to pay for home renovations appears to be on the rise. The 29% cited in the 2017 survey represents an increase of four percentage points over the 2016 survey. Is it wise to put such a large expense on your credit card? That depends on your financial situation and your renovation plans. Paying for home renovation costs with your credit card can earn significant credit card rewards, but those rewards can be quickly negated by interest charges if you have to carry a balance. Review your renovation budget to see how long it will take to absorb the costs, and whether the costs can be spread out evenly enough that you can avoid carrying a balance throughout the entire project. Compared to a HELOC or a home improvement loan, credit cards are likely to have considerably higher interest rates. If your renovation budget is likely to surpass your cash flow, it makes more sense to review loan options and rethink the use of plastic. There's no guarantee that loan terms will be better, especially if you have a poor credit score or enough collective debt that you only receive high-interest rate offers, but at least you have options to consider. (You should probably also consider whether you can afford to renovate at this time.) Do you need to move forward quickly with your renovation? If so, credit cards may become a more attractive (and instantaneous) option – but loan approval process times vary by vendor, and you may be able to find loans with attractive terms that only delay your plans by a few days. In essence, if you cannot afford to pay off your renovation costs out of your savings, you should compare your credit card terms with loan options. How do HELOCs or home loans that you can qualify for compare to your credit card interest rate? Use online resources to compare the interest charges over the life of a loan with the estimated interest charges on credit card balances. Don't forget to consider the effect on your credit score under either scenario. You can check your credit score and read your credit report for free within minutes using Credit Manager by MoneyTips. If you can afford renovation costs up-front, it probably makes sense for you to use your credit card instead. Pay off all charges at the end of the month, and reap all the possible rewards. You may temporarily close in on your credit limit and lower your credit score, but your credit score should fall back into shape once your spending returns to normal levels. Perhaps you can apply your credit card rewards toward a final accent piece that makes your renovation complete – or take a well-deserved vacation instead. You can always enjoy your new home renovations when you return. If you want more credit, check out MoneyTips' list of credit card offers. Photo © Originally Posted at: Improvement Spending On The Rise5 Home Improvement Projects under a GrandMortgages for Buying and Improving a Home

The Costs Of Convenience

MoneyTipsWe live in a world where convenience is king. Sometimes we buy products purely for the convenience aspect without even giving them a second thought. If you are struggling with your budget or just wondering whether a particular purchase was wise, perhaps it is time to rethink the balance of cost vs. convenience. There is no single answer for cost versus convenience — it is an individual decision based on many factors. Your income level, available free time, stress levels, where you live, and even your particular stage in life come into play. Your decisions may be different when you are young and single compared to when you are a parent with multiple toddlers or past retirement age and into your twilight years. Spend Time or Spend Money If you are questioning some of your cost vs. convenience decisions, consider the following examples below and some of the tradeoffs involved. Which philosophy do you agree with? Dishwashers – You have a dishwasher because dishwashers save time — but do they? Are you one of the people who pre-washes their dishes to the point that putting them in the dishwasher is superfluous? Do you overload your dishwasher or make such messes that dishes do not come out sufficiently clean? In either case, why did you spend $300 to $500 on a dishwasher? Disposable Diapers – For many parents, disposable diapers are a godsend. Any parent who has dealt with a diaper emergency two minutes before they have to leave for work understands its appeal. However, not only are they expensive compared to cloth diapers, they are unquestionably worse for the planet. Your decision here involves social costs as well as economic costs. Convenience Foods – From frozen dinners and pre-packaged small bags of lettuce to 100-calorie snack packs, specially packaged foods are likely the most often-used convenience items in your home. Yet with time, most of them could be easily replaced for half the money or less. It may take a lot of time and effort to prepare a fresh dinner compared to a frozen one, but how hard is it to buy snacks in bulk and package them into 100-calorie portions yourself? Another consideration with convenience foods is whether the packaging fits your needs for perishable items. If you are eating solo, it may be cheaper to buy a head of lettuce and throw away half of it compared to buying a small prepared bag that is twice as expensive — but is it responsible to do so? Robotic Room Cleaners – These sound so simple — just turn them on and let them go. For $400, you can have something that automatically vacuums your house while you are at work. The tradeoff depends on how much time you spend sweeping/vacuuming your house, and whether the robotic cleaner is reliable enough to meet your needs. There have been tales of robot vacuums meeting animal waste that resulted in more mess, not less! Microwave Ovens – Today these seem like a necessity, yet for years people got along just fine without them. Just for fun, write down every use of your microwave for a month. Could you have used your oven or other appliances to create the same meal? Most of us would consider a microwave a necessity now, but it ties in with the concept of convenience foods listed above. How much time do you save and is the microwaved dish equivalent to oven-baked? In most of these cases, the question is how to place a cost value on your time. If you were a business, you could assign yourself the cost of a salary and make a decision from a purely economic standpoint. While that analysis is possible, let's face it ... most of these decisions have little to do with economic tradeoffs. They usually boil down to likes and dislikes ("I hate cleaning the floors or chopping vegetables"). That is why convenience items exist, and often sell briskly. If you want more credit for that "must-have" convenience item, check out MoneyTips' list of credit card offers. If there is one direction modern society has been moving in during the last 100 years, it is convenience. We are living in an era of conveniences, but at what price? Let’s not forget that the first syllable of convenience is con. Photo © Originally Posted at: to Create a BudgetSpending Less than You Make Paying for Fish That You Don't Get

College Students Wasting Millions On Avoidable Fees

MoneyTipsCollege is not only supposed to give you the skills you need in a particular field of study, but also the general life skills that you need to survive and thrive. Without good habits, your collegiate financial education can come via the school of hard knocks – through incurring fees and interest charges. According to a new NerdWallet study, America's college students spend almost $800 million per year on bank and credit card fees through college-sponsored accounts with partnering financial institutions. These fees are generally avoidable through responsible handling of finances. Students incur typical overdraft fees and late payment fees of around $35 per incident on average. Given that the average college student overdraws a bank account 2.2 times annually, undergraduate students in America rack up over $722 million in overdraft fees alone. That’s nearly three-quarters of a billion dollars! The study also found that one-third of soon-to-be-graduating students with credit cards have missed a payment date and incurred a late payment fee, adding up to approximately $73 million annually. Combined overdraft and late fees were near $800 million in the past year and are likely to continue on past the $800 million mark before the end of 2017. Throw in interest charges from carrying credit card balances, and the annual cost to students surely passes the $1 billion mark. Through a 2015 set of guidelines aimed at colleges and universities, the Consumer Financial Protection Bureau (CFPB) has tried to act as an advocate for students. The guidelines were intended to assist schools in selecting partner banks that provide the best financial packages for their students. Progress is slow, as the CFPB's 2016 Student Banking Report found that "many general marketing agreements do not prohibit certain fees account providers may charge students." These fees could include overdrafts, maintenance, and ATM fees on out-of-network devices. How can you avoid these charges? Overdraft charges can easily be avoided by selecting an account that doesn't charge them, whether or not that account is part of your college's network. Credit unions or online banks may offer you a better alternative. You can generally set up your account to de-activate "overdraft protection," meaning that banks will reject transactions instead of allowing you to spend beyond your limit and incur a charge for the privilege. Make sure that your account doesn't charge an insufficient funds fee for rejecting the charge – and that you have a second means of paying for important charges. As to late fees, the only way to avoid them is to make your payments on time. Even if you must carry a balance, you must pay on time to avoid the double penalty of late charges and a drop in your credit score. You can check your credit score and read your credit report for free within minutes using Credit Manager by MoneyTips. In addition to late fees, many cards for the collegiate market will activate a penalty APR that can approach 30% – imposing a heavy penalty on carrying a balance. College students can use one advantage they have over older Americans – their love for technology and apps. Gerri Detweiler, Head of Marketing Education for Nav, explains, "You can set up alerts for your bills...use technology to stay on top of your bills, because one late payment can drop your credit score 50, 75, 100 points or more." That same philosophy will keep you from accumulating unnecessary late fees, not to mention interest charges from carrying the balance over to the next month. The easiest way to avoid banking fees is simple yet difficult – don't spend more than you can afford to pay off at the end of each month, and make sure that all bills are paid on time. This requires budgeting skills. Track your expenses to get a feel for where your money really goes. Incorporate those expenses into a long-term budget, and stick to that budget. It's best to get used to budgeting prior to college before you are faced with college's unique combination of expanded freedom and temptations to blow cash. College is expensive enough without throwing away money through unnecessary fees. Educate yourself on proper handling of personal finances, and put what you learn into practice. That way, you will have plenty of pizza and beer money when you need it, and your friends will be asking for your secret. Be sure to teach them fiscal responsibility as well – next time, they can buy. If you are starting from scratch with no credit history, check out MoneyTips' list of credit cards for limited or no credit, which can help you to build a credit history. Photo © Posted at: Overdrafts 101How To Avoid Bank Overdraft Fees30% Of Credit Cardholders Carry Balances

Tips For Downsizing

MoneyTipsMost people have no idea how much stuff they have accumulated in their lives until they decide to move. Try packing all of your possessions and watch the boxes multiply. You will be amazed at how your stack of possessions becomes larger than the house they were stored in. Moving defies the laws of physics. In a similar vein, you may be wondering where all your money goes. You may think that you have budgeted properly, but constant unexpected and undocumented expenses slip through the cracks and consume your paycheck. You always end up with too much stuff and not enough money. There is a common thread to solving both of these problems. Downsize and simplify. Here are a few tips to help you restore order in your physical house as well as your financial house. Avoid Procrastination – It's important to dive right in, even with the understanding that you cannot deal with the whole task at one time. Simply starting the downsizing process will help to create positive momentum. Cleaning up your house by sticking all of your things in a storage locker just prolongs the inevitable and gives you a false sense of having dealt with the problem. Similarly, cramming all your bills into a shoebox with the intention to sort them out and prioritize it later delays the process. Start the simplification process today. You will feel so much better once you do. Downsize in Consistent Increments – To paraphrase, Rome wasn't de-cluttered in a day. Unless you are already in a position where you have to move soon, or nearing the point of being featured on a TV show about hoarders, attack your downsizing and organization in manageable increments. Downsizing and simplifying in increments on a regular basis is an excellent way to be prepared when you hit the empty-nest years. Instead of spending months trying to deal with twenty-plus years of accumulated possessions and feeling pressured to make snap judgments, you have the time to think about items that you cannot get rid of just yet. Think of it as a series of trial runs at de-cluttering. Make Value Decisions – Too many people simply let items pile up or accumulate running expenses out of a combination of tradition and laziness. Do you have a premium cable package, but only watch three channels? Consider downsizing the premium package or cutting the cord. Do you auto-renew gym memberships you don't use or magazine subscriptions you don’t read? Out they go. Have a stack of magazines and books you've been meaning to read someday? You will probably never get to them. It's good to evaluate possessions and expenses periodically to see if you are getting value out of them. If an object or expense doesn't provide value, you don't need it. Beware Duplicates – Possessions have tremendous powers of accumulation. Do you have 47 storage boxes full of each child's mementoes from preschool to grad school? The chances are pretty good that you won't need all of them to retain your happy memories. Make choices that preserve the sentimental value without adding to the clutter. Keep one third-grade project if you must, but not all of them. Apply the same principle to all of your possessions. Budget Money and Space – Set a goal for a certain amount of space in your home for storing mementoes. Similarly, set a budget for your expenses, and leave yourself a certain amount for discretionary purchases. If you want more credit, check out MoneyTips' list of credit card offers. Now, stick to those goals and follow the principle of something in, something out. Any new memento displaces an older one, and any new discretionary expense replaces an older expense. With expenses, this may not always be possible, but do the best you can to stick to the rule. Once you are comfortable with periodic reviews, shrink the allotment over time. Shrink your expenses and transfer the difference to savings. Shrink the memento space in your home and enjoy the reduced clutter. Consider novel space-savings methods. For example, sentimental mementoes can take up enormous amounts of space. Would any of them be equally preserved with a space-saving photo of yourself with the memento instead of the physical memento? We'll say it again: Downsize and simplify. Do this on a regular basis and you are likely to enjoy less stress, better physical and financial health, and greater efficiency with your time. You may even have time to watch some hoarding shows on TV featuring people who could never make value decisions in their lives. Feel free to gloat. Photo © Originally Posted at: Living Paycheck to PaycheckMillennials are Not Saving for Retirement1 In 5 Have No Emergency Savings

Video: How Your Credit Score Affects Your Mortgage Rate

MoneyTipsShould you wait until your credit score is higher before taking out a home loan? Personal Finance Expert and Author Jordan Goodman explains your options for getting the best mortgage rate. You can check your credit score and read your credit report for free within minutes using Credit Manager by MoneyTips. Originally Posted at: Can I Get the Lowest Mortgage Rate?7 Ways To Reduce Your MortgageToday's Headlines: Credit Scores Drop For Mortgage Refinances

4 Simple Ways To Make Money At Home

MoneyTipsThe monthly bills are due again, and it seems you are getting further and further behind. You've scrimped and cut costs as much as you possibly can, there's no change left in the couch cushions or the car seats, and it looks like another month of Ramen noodles and raising/lowering the thermostat to cut down on energy bills. How about turning things around and looking at this from the income side instead of only cutting expenses? You may already be working two jobs to make ends meet, but there are legitimate ways to make side money online that don't involve illegal or morally questionable activities. Depending on your skill level and available time, you may be able to make enough to supplement your budget and start chopping away at debt. The opportunities fall into a few basic categories. Marketing Tasks and Surveys – There are dozens of online sites and apps that pay participants simply to take surveys, from Harris and Nielsen polls to sites like SwagBucks and SendEarnings. You can also join focus groups to give marketing feedback on websites' products and services — assuming you are comfortable with the terms of the site and how your information is to be used. Read the terms carefully before signing up. Small Odd Jobs – Can you teach crafts or tutor? Try Udemy. Do you like extremely simple and quick odd jobs? Try Amazon Mechanical Turk. Other sites will pay you to do various forms of testing on their sites, such as search engine reliability. You can even propose your own odd job and promote your skills on Fiverr. Selling/Renting Things You Own – Consider eBay and similar sites as the garage sales of the Internet, just waiting for you to post your wares. Look around the house for things that you are not using or using sparingly — old appliances, books, clothing items, or knick-knacks you don't care about anymore. Set up a PayPal account and place your unused items on auction sites for sale — but do some homework first on postage and shipping rates so you know how to set shipping costs and maintain a profit. How about renting out your house straightaway? That's a possibility as well, thanks to Airbnb. We suggest looking over Airbnb and their tips for homeowners. You do not want to come home to find party residuals, farm animals, or a meth lab in your living room. Selling Things You Make – Do you like to knit or create special craft items? You might be amazed how much they would bring on Etsy or similar craft sites. Look the sites over for inspiration, as well as an idea of how much you can charge for your creations. Sale items are not just for traditional hobby store crafts. If you are handy with wood or metal crafts, there are plenty of opportunities to make and sell anything from handcrafted knick-knacks to furniture and accessories. Again, it's important to set your shipping/delivery policies and costs properly. Another possibility is selling photos to stock photo houses such as Foap. You can even sell smartphone photos if they are high enough quality. Why not take advantage of all the opportunities you have to make money? You may not get rich, but you may be able to put a dent in your debt and stash some cash away for a rainy day or a special future purchase. If you want to reduce your interest payments and lower your debt, try the free Debt Optimizer by MoneyTips. At worst, you can crank up the heat or air conditioning a bit and add some toppings to your Ramen. Photo © Originally Posted at: How To Find Your Perfect Side HustleVideo: Getting Your Customers To Pay MoreHome-Based Business Twitter Chat Recap

6 Things To Do 6 Years Before Retiring

MoneyTipsCongratulations! At your 60th birthday, you've actually entered your seventh decade of living. We hope that you have given some thought to your retirement by now and made significant plans toward meeting your retirement goals. If so, age 60 is a good milestone to trigger a review of your retirement plans. (If not, start planning immediately, because you are rapidly running out of time.) Now is the perfect time to think about your post-career life and take some meaningful actions. Here are six steps at 60 that can guide you toward a happy retirement. 1. Review/Create Your Retirement Plans – What does retirement mean to you? Whether it's relaxation, travel, a second career, or some other pursuit, outline what you plan to do in retirement now that the end of your career is in sight. You need to firm up your plans in order to perform the next steps 2. Map Your Social Security Strategy – Are you planning to wait until your full retirement age (FRA), retire early, or continue working beyond your FRA? Has your strategy changed as retirement gets closer? Keep in mind that your monthly benefits will be reduced if you retire before your FRA, and you can gain up to an extra 8% per year until age 70 by delaying your retirement — but ultimately, your decision on when to retire should be based on a work-life balance. 3. Run Some Numbers – Calculate how long your savings will last under different scenarios of income and expenses during retirement using the MoneyTips Retirement Planner. Doing best- and worst-case scenarios can give you an idea of whether you need to increase income or decrease expenses to maintain your retirement comfort level. April-Lewis Parks, the Director of Education and Public Relations with Consolidated Credit, suggests using online tools to assist your efforts. "There's all kinds of apps and calculators that will let you see ... how much more money will I save over time.... Once people are aware of how little changes have a huge impact, then they will start to make those changes." 4. Adjust Financially – Based on your scenarios, adjust your income and expenses to meet your goals. Adam Carroll, the Chief Financial Officer at National Financial Educators, uses the sporting analogy of playing "great offense and great defense" — with offense referring to ways you can increase your income and defense referring to cutting expenses to the greatest extent possible. It's hard to win any game, sporting or financial, by focusing on just one aspect and ignoring the other. Don't forget to review your investment portfolios and make sure they are meeting your criteria of risk vs. returns. Even if you have a target fund designed to adjust automatically over time, it's wise to review its performance over the past few years. 5. Start Networking for Retirement – It's easy to get isolated in your work environment and forget to maintain friendships outside of your career. Start networking to make more connections related to whatever pastime you plan to engage in after retirement. A solid but diverse network of friends will keep you grounded and ready to make the transition into retirement. 6. Assess Your Health – Have you been taking care of yourself with proper diet and exercise? If not, today is an excellent day to start. You want to be in suitable health to enjoy your chosen retirement activities, as well as to avoid prohibitive medical costs. Fidelity estimated that 65-year-old couples retiring in 2016 would require an estimated $260,000 to cover lifetime medical costs, with another $130,000 if long-term care insurance is included. Medicare does not cover all health care expenses now, and it still won't when you reach your FRA. Assess your insurance needs and long-term care plans for you and your spouse, and make sure the proper costs are built into your retirement scenarios above. Once you reach age 60, retirement is a short distance away. Why not use today to review your retirement planning, especially if today is your 60th birthday? After blowing out 60 candles on a birthday cake, retirement planning should be a snap. Let the free MoneyTips Retirement Planner help you calculate when you can retire without jeopardizing your lifestyle. Photo © Posted at: Dreams And Concerns Around The World (Infographic)Families Not Saving Enough For Retirement3 Retirement Numbers

What Happens When You Go Over Your Credit Limit?

MoneyTipsCredit is a great convenience, but it's a convenience that you will pay for — especially if you go over your credit limit. Traditional over-limit fees were radically changed by the Credit CARD Act of 2009, which switched credit card over-limit fees to an opt-in basis — meaning that consumers have to specifically consent to pay over-limit fees and must have the ability to opt out at any time. The Consumer Financial Protection Bureau (CFPB) estimated that the change in over-limit fees produced a saving of $9 billion for Americans between 2011 and 2014. However, there are still a number of consumers that pay directly for going over their credit limit. Why would anyone choose to pay these fees? In some cases, it may be that consumers simply don't pay attention to the terms and conditions and opt-in, not understanding the consequences. In other cases, it's a decision based on spending habits. When banks apply a strict limit, retailers must reject any over-the-limit transaction. Some consumers choose to retain the option to go over their limit if necessary. (Imagine having your credit card rejected on a first date, or while entertaining a group of business clients.) The fees that you incur must be traded off against the risk of embarrassment or the inability to cover a bill with an alternate card. Banks offer various forms of over-the-limit protection, including linking with a checking or savings account that automatically transfers funds to cover the shortfall. If you wish to opt in to such protections, be sure that you fully understand the fees that are associated with the protection. Compare your options with other card offers if you find the fee structure to be unsatisfactory. Aside from declining a transaction if you have not opted in for overdraft protection, banks have other methods of making you "pay" for going over your credit limit. They have the option to accelerate your payment schedule, raise your minimum payment amount, revoke your eligibility for certain rewards, reduce your credit limit, raise your interest rate or charge a penalty APR, or even cancel your card for large or chronic overdrafts. In addition, your credit score may be affected in multiple ways by surpassing your credit limit. Lenders have the option of reporting your breach of your credit limit to the credit reporting agencies. At best, your overall credit utilization (the amount of credit in use relative to your total available credit) will go up, sending your credit score down. You can check your credit score and read your credit report for free within minutes using Credit Manager by MoneyTips. Many cards offer some form of alert that notifies you when you are approaching your credit limit. By taking advantage of these alerts, you can reduce the likelihood of going over your credit limit and feel more confident in going without over-the-limit protections that open the door to fees. If all else fails and you know you will be over your limit for a time, contact your card issuer. They may be able to approve an increase in your credit limit, at least on a temporary basis. It's wise to understand what happens when you pass your credit limit, but consider this: no matter how well you search the terms and conditions in your credit card agreement, you will never find any benefit to you in going past your limit. All the benefits are for the creditor. The best you can hope for is no damage. Why even risk it? Know your credit limits and stay under them. This will help you preserve your peace of mind as well as your credit score and bank account. If you want more credit, check out MoneyTips' list of credit card offers. Photo © Posted at: Credit Limits Help Improve Credit ScoresDoes Your Credit Card Limit Measure UpWhy Are Millennials Avoiding Credit Cards?

Rapid Rescore 101

MoneyTipsImagine that you are applying for a mortgage, and you discover that your credit score is just below the necessary range to qualify for a mortgage loan (or a better interest rate). The frustrating thing is that you have already taken steps to improve your credit score, but those steps have not yet been reflected in the credit bureau's information. That is the ideal scenario for what is known as a rapid rescore. A rapid rescore is just as you would expect from the name: it's a process where, for a fee, the credit bureau expedites the process of updating your credit score. It can take up to a full 30-day billing cycle from the time the corrective action is taken to the time it is reported to the credit bureaus and updated in your credit report. By reflecting the most recent positive information, your credit score can be adjusted in time to meet the time-sensitive aspects of a mortgage loan. First, you must understand why your score is below your expectations. You can check your credit score for free and read credit reports from all three credit bureaus within minutes using Credit Manager by MoneyTips. Check why your scores are low. Is there an erroneous entry on one of the reports, or is there a common thread in all three reports that you can correct, such as paying down a high credit card balance? For the rapid rescore to be effective, you must correct the situation and show proof that it has been corrected. For example, you can prove that a high credit card balance has been paid down by showing that the bill has been posted with your credit card issuer — and that more debt has not replaced it. Keep in mind that any negative information coming in from another source, such as a different credit card with upcoming high charges or a missed payment, may negate your efforts. Make sure that you and your lender are aware of all recent items that can affect your credit score before proceeding. It's important to note that lenders initiate the rapid rescore process, not the mortgage loan applicant. Beware of services that claim to offer direct rapid rescoring to consumers, and ask how they have leverage with the credit bureaus. Mortgage lenders are not allowed to charge the borrower directly for any part of the cost of rapid rescoring, and as a result, this service is not available with all lenders. Mortgage lenders will offer rapid rescoring if your case is in their best interests. In essence, they see you as a low risk to pay your debts in full and on time given this added boost to your credit score. Why is rapid rescoring in your best interests? Literally, because of interest — or in some cases, the ability to qualify for a loan at all. A rapid rescore could result in a significant difference in the interest rate available to you. Adam Carroll, Chief Education Officer at National Financial Educators notes that while a 0.5% to 1% difference may not seem like much, when people ignore this difference, "…they're not looking long term in the actual cost of money.... One of the greatest expenses we have in our life is the interest expense on debt. Every single percentage point that you can decrease means massive amounts in your savings and investments later on." For reference, a typical 30-year fixed-rate loan in the 4%-5% range for $250,000 that is dropped by 0.5% interest should save tens of thousands of dollars in interest over the life of the loan. Online calculators are available to help you calculate the exact difference in your case. MoneyTips is happy to help you get free mortgage quotes from top lenders. Rapid rescoring is not for everyone — but if you and your lender agree that you are on the edge of qualification for a better mortgage deal and have the means and proof in hand to change the situation, a rapid rescore could save you thousands of dollars or help you get over the threshold to purchase your new home. Photo © Posted at: With Low Credit Not Applying For Mortgages3 Points To Remember About Compensating Factors Key To Mortgage ApprovalMortgage Lenders Put More Emphasis On Credit Score
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