Federal Reserve

Fed Survey Finds Credit Card Standards Tightened in Third Quarter

If you want to get an idea on how lenders are predicting the economic future, look no further than the most recent survey from the Federal Reserve. Specifically, the survey noted that banks and credit card companies got stingy when it came to consumers opening new lines of credit in the third quarter of this year, something that typically happens during times of economic uneasiness. In fact, according to the survey, the underwriting standards for credit card approval have increased to a point that hasn’t been seen since 2009, and we shouldn’t need to remind you of the fragile state of the economy a decade ago, at the cusp of this generation’s great economic recession.

So what does this Fed survey indicate, exactly? In layman’s terms, it means that if you want to open a new line of credit, your credit score had better be in really good standing. In fact, the Fed survey specifically indicated that it’s gotten a lot harder for consumers with credit scores under 620 to get approved for new lines of credit compared to what it was at the beginning of the year when there was much more confidence about the economic outlook. The bottom line is that if your credit isn’t in good standing, banks are going to worry about your ability to pay back any loans or lines of credit that you’ve opened now in uncertain times than they would in prosperous economic times. As a result, they’re going to be more stingy about what they approve. And while we always recommend taking the appropriate steps to make sure your credit is in good standing, it’s going to be arguably more important than ever in the near-term if banks continue to tighten the strings on the money they hand out. The good news is that if your credit score is in good shape or you work to ensure that it’s in good shape, you’re likely to benefit from reduced interest rates.

How to Improve Your Credit Score

Even if your credit score isn’t below the 620 mark that we indicated above, it always behooves you as a consumer to take the necessary steps to improve it. Here’s a look at how you can get improvement fast so that you’re not on the outside looking in if you need to take out a loan or line of credit down the road:

  • Keep balances low on existing credit cards: Keeping balances low on any revolving credit that you have (i.e., credit cards) can help improve your score. Generally, expect your score to be highest if you’re at or below about 30 percent of your credit utilization rate. For instance, if your credit card has a limit of $1,000, you want to carry a balance of no more than $300 for the best possible credit score.
  • Ask for an increase in your credit limit: To piggyback off the above point, if you’re eligible for a credit limit increase that can help out your credit utilization ratio and thereby improve your score, consider taking it.
  • Check your credit report: This gives you an idea of where you stand and what needs improvement so you can come up with a plan of attack. It can also help you identify and dispute any inaccuracies that may be present on your report.
  • Negotiate away: Have outstanding balances or debt that’s gone to collections? That can really hurt a credit score. Try negotiating with the lender to settle any debts so that they appear more favorable on your credit report.

Cash Is No Longer King: Stockholm Homeless Now Take Plastic

We’ve been hearing about the “cashless society” for years, a time when paychecks are replaced by ACH and you swipe a card or even scan your phone to pay for everything from your morning paper to nighttime drinks. But, in the states at least, there are still plenty of times that you need cash on hand. Many small shops still don’t take plastic, and you are likely to find that cab drivers, farmers markets and others aren’t ready to take anything except folding money.

But, in Europe, many people have transitioned entirely to virtual transactions. And, members of Stockholm’s homeless population have learned to adjust. Many of the city’s homeless support themselves selling a local culture magazine called Situation Stockholm. The publication covers local celebrities and can be purchased for 50 kronor (about $8). Sellers keep half the money they earn selling the magazine. But, with a little less than 3% of transactions in Sweden being made with cash, very few Swedes carry coins or bills anymore, which made it hard for Situation sellers to get a sale.

To combat this, magazine sellers are now carrying mobile card readers. Experts at the magazine suggest that the switch could increase sales by 20% or more. Many people in Sweden believe that the country will soon be the first truly cashless society.

Going cashless has a number of benefits, but also some serious drawbacks. When you go plastic, you get to enjoy a few perks:

  • instant records of all transactions so you know where your money goes.
  • protection against theft. With debit and credit cards, you are usually only responsible for up to $50 of unauthorized charges if you report the irregularity immediately.
  • bonuses like points and cash back. Many people choose to put every transaction possible on a rewards credit card so that they can get reap these perks.

But, there are also some downsides to trading paper for plastic:

  • you need to be much more careful about your spending. People who pull out the plastic can spend up to 30% more than those who use cash.
  • you can get hit with a lot of fees. Gas stations often charge a small premium for using credit instead of cash. Many credit cards come with annual fees. And, if you are rebuilding and need to use prepaid debit cards, those can have everything from monthly fees to charges for using the card.

In the end, the most savvy shoppers will keep a combination of cash, debit cards from a free checking account and at least one credit card with no annual fee. By having all of those available, you can pick and choose in each situation which option works best for you.

The Fastest Fixes for Your Credit Score – Tips

Are you this close to approval for a home loan? It can be frustrating to go to so much work in your credit repair efforts but still fall just a bit short. Luckily, there are a few tactics you can use to increase your credit rating fast:

The Fastest Fixes for Your Credit Score

Go over your credit report with a fine tooth comb to ensure that there are no errors that are lowering your score. You can request copies of your report from the three major reporting agencies. This can be done free once a year or after being denied credit or for a small fee at any other time. Common errors include:

  • Failing to remove old negative reports. If these linger after they are resolved, they can lower your score. Contact the credit bureau to get these removed.
  • Failing to report increased credit limits. If the limits shown on your credit report are too low, it can look like you are maxing out a card when you are not.
  • Failing to show accounts that have been paid off.
  • Duplicate report entries. If a debt has been transferred from one creditor to another, it can sometimes appear twice on your credit report, making it look like you owe more than you do.

Contact creditors and the credit reporting agencies, in writing, to get these potential negatives fixed. There are also errors that matter less, such as outdated address or employer information. These do not negatively affect your score, so correcting them is not worth your time.

Pay Down Balances

This is one of the quickest way to increase your credit score. The ratio of available credit to balances makes up about a third of your credit score. If you are carrying a high balance on one of your cards, it can be worthwhile to dig into savings to pay it off. Experts recommend carrying a balance equal to no more than 10% of your available credit. That means, if you have a $10,000 credit limit, keep your balances under $1,000 at any given time.

Use an Old Credit Card

The age of your accounts is one of the factors that go into your credit score. Lenders like to see that you have had an account for a long time; it is a sign of stability. But, if you stop using an old card, your credit card company might close it for lack of use or stop reporting on it. If you have a credit card that you haven’t used in a few years, put one of your recurring payments like a health club or your Netflix account on it. This way, a small amount gets charged to the card each month without affecting your regular spending habits. Just remember to pay it off in full every month.

Don’t let minor credit issues hold you back from your home purchase goals. By finding the problems and correcting them, you can increase your score and get lenders to take a second look.

For more information on professional credit restoration services you can reach out to us monday through friday between 9am and 8pm.

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More on How To Legally Repair Your Credit

The best ways to Boost Your Credit report Record Legitimately If you have a history of late repayments, accounts payable, or accounts sent out for collection, your credit rating document will certainly suffer. A bad credit record offers you a low credit history and makes it tough for you to obtain required credit history or financings for factors you truly need. Your credit rating past history Many every little thing you finish with credit, both good and bad, is reported to a credit history reporting company. A past history of paying late, or not paying whatsoever, is sent out to credit rating reporting agencies. Liens, personal bankruptcies and also judgments additionally discover their means to your credit history guide as well as hurt your credit ranking The good news is that good info is additionally sent out to credit report reporting companies. To monitor your credit rating standing, you ought to review your credit rating record anyway as soon as annually. You can remedy errors as well as clean up any wrong info that might be on your guide. Assessment your credit history record and also proper mistakes. Ways to boost your credit report ranking. Right here are some of the most effective means to enhance your credit report rating: Late repayments really injure your credit history standing. It is best to pay the whole equilibrium on your credit history cards each month. Do not review your credit line. Some credit cards allow you to look at your credit line. They often bill you extra in fines for doing so. Along with paying penalties, examining the limit hurts your credit history. It mentions to companies that obtain your credit rating guide that you aren’t observing the limits of your account. If you don’t surpass your credit limit, you will not need to pay penalties. This permits you to pay your balance down quicker. Cancel some of your bank card. Having lots of credit cards can injure your credit report. When you get brand-new credit history, the business checks your credit history record. One of the important things they try to find is the amount of your combined credit limits are as well as the amount of you owe. As you get closer to your credit line, your credit history goes down. Securing great deals of credit cards lowers your credit score. One bank card and also a department store or fuel credit card is all you really require. Cancel the others. Offer straight with lenders. Some companies (financial institutions) you owe cash to could want to take negative details they stated off of your credit rating guide if you pay some or every one of the cash you owe them. Financial institutions have to state settlements you make, however they are not needed to take unfavorable info off your report unless they agree to do so. You will certainly have to consult with each creditor separately to view just what, if anything, they are willing to do. Obtain their promise in writing before you pay if a creditor concurs to take information off of your record in exchange for full or component payment. If you pay the balance, even without an agreement, they must upgrade your credit history report to mirror a paid-in-full status. If you discharged debts in personal bankruptcy, those items could still be included in your credit record. Avoid Scams Credit repair work business promise to enhance your credit report. They might likewise assure to obtain you a credit or a lending card. They lead you to believe that they have unique means to obtain adverse details off your credit report. They do not. Credit rating repair companies have no special powers to improve your credit history. There is absolutely nothing they can do for you that you can not on your own. Paying them leaves you less money to pay your previous debts as well as present expenses. Rigorous regulations were passed to manage their activities considering that of the issues with credit history maintenance and repair companies. They should provide a written contract that you could cancel within 5 days. They can not call for settlement ahead of time and all guaranteed services have to be completed in 90 days. They should additionally register with the Division of Justice and also submit a $100,000 bond with the Assistant of State. Understand that very few credit history maintenance and repair companies adhere to the law. Many every little thing you do with credit history, both great and also bad, is stated to a credit reporting company. Bankruptcies, liens and also judgments additionally discover their means to your credit guide as well as hurt your credit score To keep track of your credit history standing, you ought to access your credit history record at the very least once each year. Some credit report cards enable you to go over your credit report limit. When you apply for new credit report, the company checks your credit rating guide.

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