3 Ways to Improve Your Credit Score in Less Than 5 Minutes

If you are looking to buy a car, rent an apartment or take out a loan, you need to make sure that your credit score is at its best. While it takes seven years for most derogatory items on your credit report to be removed, there are a few things you can do to raise your credit score sooner.

Pay off your credit card balance

This is the easiest way to improve your credit score quickly. One of the major factors of your credit score is how you are using your credit. A big factor of that is your credit utilization ratio. This ratio compares your overall credit limit with the amount of credit you are currently using. Say you have an overall $10,000 credit limit and are carrying a balance of $5,000 total across your credit cards, then your credit utilization ratio would be 50 percent. Most credit experts advice to keep your credit utilization ratio below 30 percent, but if you can get it to zero, it will help dramatically raise your credit score.

If you cant pay off your entire balance, even paying off a little can help. The lower your credit utilization ratio, the more available credit you have and the better you look to outside lenders. Even paying of 10 or 20 percent of your overall balance can help.

Get a new credit card

Taking out more credit may seem counter-intuitive, but adding to your overall credit limit will raise your credit utilization ratio. Here are the two ways that getting a new credit card can help raise your credit score:

Increase your credit limit: A new credit card will increase your overall credit limit, which in turn lowers your credit utilization ratio. The more credit that lenders approve you for, the more trustworthy you seem to other lenders. As a bonus, look for a credit card that has some great perks like cash back incentives, so you can earn money while you use it. Here is a good list of the best cards with great perks.

Transfer your balance: If you are carrying a balance on your credit cards, you can kill two birds with one stone. If you transfer your balance to a new balance transfer credit card, you can increase your overall credit limit while also being able to pay down your credit card balance. Even better, find a credit card that offers a 0% intro APR for up to 14 months so you will have time to pay down your balance without being charged extra interest on it. These are some good all-around credit cards with a 0% intro APR for balance transfers.

Fix errors on your credit report

If you have errors on your credit report, fixing them is an easy way to raise your credit score. Errors can include a credit lender reporting false late payments, accounts that reportedly went to collections even though you paid, or even accounts opened in your name without your knowledge.

First, you need to pull your credit report see if you have any errors. The government allows each person one free credit report each year from each of the three credit bureaus (Equifax, TransUnion and Experian). You can get these reports from annualcreditreport.com. Look over each credit report for any errors. Each credit bureaus website includes instructions on how to file the paperwork to get an error fixed.

If you dont want to go through the effort of fixing errors yourself, you can also hire a credit repair company to send fix requests on your behalf. Keep in mind that credit repair companies might try to convince you to try other ways to fix your credit, but you are paying by the month, so make sure they are focusing on your errors. Here are the two best credit repair companies compared side by side.

Credit Cards For People With Bad Credit

Consumers with poor credit scores were once locked out of the credit card game. But lenders are beginning to court those whose low scores once typed them as too risky to be offered a credit card.

In the first quarter of 2014, 3.7 million subprime borrowers - those with a FICO credit score below 660 - were issued credit cards, according to Equifax, Inc. That’s a 39% jump from 2013 and the highest level since 2008, according to Equifax data provided to the Wall Street Journal.

Federal regulations tying the hands of card issuers wanting to raise interest rates on existing balances have convinced banks and other credit card issuers to do business with consumers who otherwise might not be offered a card.

That’s good news for consumers with poor credit scores who hope to rebuild their credit with the help of subprime credit cards.

Not surprisingly, the cards offered to those with less-than-stellar FICO scores are accompanied by an array of less-than-stellar fees and interest rates – far removed from the attractive incentives typically offered with prime credit cards. Other than a prepaid card, which doesnt offer any credit and works like a gift card, people with poor credit have two basic choices.

Subprime Credit Cards

Like prime cards, subprime credit cards dont require borrowers to deposit money with the bank before they use them. Thats where the resemblance stops. Subprime borrowers can expect to pay maximum interest rates, higher fees and possibly an annual fee, says Igor Tselenchuk, a personal finance and credit card expert in San Francisco. Rates for new purchases can go even higher if you are late with a payment or skip one altogether.

To reduce their financial exposure in the event a consumer defaults, credit limits are often initially set low on subprime credit cards. And very few subprime credit cards offer rewards incentives and perks. Those that do often package those rewards with steep interest rates and fees. For instance: Credit One Bank Credit Card with Gas Rewards card offers 1% back on all gas purchases and there’s no limit to the gas rewards you can earn. However, there’s an annual fee of $35 to $99 and a variable ongoing interest rate of 17.9% to 23.9%. 

Interest rates can go much higher. The First Premier Bank credit card has a whopping 36% interest rate for purchases and cash advances. There’s also a one-time processing fee of $75 and an annual fee of $75 the first year, $45 for additional years. On top of that, cardholders are charged a servicing fee of $6.25 per month after the first year. Some of these fees are charged before you ever use your card and will reduce the amount of credit you initially have available. For example, if your initial credit limit is $300, your initial available credit will be only about $225.

4 tips for using home equity

Remember, borrowing against your home puts it at risk of foreclosure if you cant pay the bill. For most purchases, that risk isnt worth it.

HELOCs can be an excellent money management tool when used properly, says California-based mortgage consultant Greg Cook. Unfortunately, many consumers used them as ATMs during the housing bubble and as a result found themselves in worse financial shape than when they started.

If youre thinking about borrowing from your homes equity, take a conservative approach.

Our 4 tips will help get you started.

1. Choose your loan wisely.

Home equity rates are very attractive right now.

An average $30,000 HELOC costs 4.86%, while home equity loans charge 6.10% interest on average, according to our most recent survey of major lenders.

Both offer lower interest rates than most other forms of consumer credit, and the interest is typically tax-deductible.

But they arent as easy to get as they once were.

Credit score and loan-to-value requirements are considerably more stringent than they were prior to the housing crash, Cook says.

Lenders often require borrowers to have a combined loan-to-value of no more than 90%, he says.

That means if your home appraises for $300,000 and your mortgage principal balance is $200,000, you might be able to borrow as much as $70,000 with a home equity loan or line of credit. Youd retain 10% equity, or $30,000.

Some lenders require 80% loan-to-value.

To get the best interest rates with most lenders, youll need a credit score of at least 740, says Gregory B. Meyer, community relations manager for Meriwest Credit Union in San Jose, Calif.

If you can tap your home equity, its a much cheaper way to borrow than, say, using a credit card. But you wont lose your house if you default on a credit card.

There are two ways you can borrow from your homes equity:

  • A home equity loan lets you borrow a lump sum and pay it back over a fixed term at a fixed interest rate (like a mortgage or car loan).
  • A HELOC works more like a credit card. It makes a certain amount of credit available on an as-needed basis for a limited term, such as five or 10 years, followed by a repayment period of up to 20 years. Its interest rate changes with the market.

A home equity loan makes sense if you need a large amount all at once for a specific project.

A HELOC might make more sense if you need to borrow smaller amounts over a longer period.

You might be tempted to choose a HELOC because of its lower interest rate.

But since todays interest rates have almost nowhere to go but up, a HELOCs variable interest rate could end up costing you much more over the loan term than a home equity loans fixed rate, even though the fixed rate is higher initially.

HELOCs have another significant drawback.

Most HELOCs will have a feature where the lender can freeze the line of credit at any time for instance, if the lender believes the value of the home has dropped significantly since the line of credit was opened, says loan officer Hillary Legrain of First Savings in Bethesda, Md. So that line of credit you open may not always be available to you in the future.

For either option, youll need to provide full documentation of income and assets and an appraisal, she says.

2. Calculate your own repayment schedule.

If you choose a HELOC, take steps to reduce your risk.

HELOCs typically offer some initial flexibility in how you repay them.

During the draw period, usually the first 10 years, you can make interest-only payments.

However, if you only pay the minimum now, youll experience payment shock later when the full monthly payments, including principal, kick in.

Its not safe to assume youll be able to afford the higher payments in a few years, especially because the interest rate could increase in the meantime.

Were seeing the effects of consumers faulty assumptions right now.

About 40% of all outstanding US home equity loans are at or near their 10-year mark, and borrowers are increasingly missing their payments, which have already doubled or tripled and will jump even higher when interest rates increase, Reuters reports.

You also may not want to choose the longest loan term possible.

A better option is to pay the loan back quickly to minimize the amount you pay in interest, get rid of the monthly payment and eliminate the risk of having your home as collateral for a secondary purchase.

Our line of credit calculator can help you do the math and determine how long it might take to pay off your credit line.

3. Limit your use of equity.

Borrowers traditionally have used their homes equity to pay for everything from cars to planned renovations.

Today, auto loans are both less risky and cheaper. And the prudent approach to home renovations is to use cash if you can. It doesnt make sense to pay interest on a project with a negative return.

There are few appropriate uses of home equity loans, because it doesnt make sense to put your shelter at risk for nonessential purchases, says Cecily Welch, a certified financial planner and certified public accountant with Welch Financial Advisors in Atlanta.

Welch says one appropriate use is to make essential home repairs of things that wouldnt pass a home inspection in order to sell your home.

With rising college tuition and borrowing costs, you might be tempted to use home equity to pay for your childs tuition. The interest rates can be lower than those on student loans, especially private student loans.

But a cash-out refinancing on your first mortgage could be even less expensive, since first mortgage rates are below home equity loan rates. Youll need to compare the interest rates and closing costs to see which option is cheaper.

Financial experts say you shouldnt sacrifice your own future to help your child pay for college, though.

While we dont recommend leveraging all of your equity to pay for school, using a HELOC for short-term cash flow is a much better option than putting part of a semesters tuition on a credit card.

4. Use equity to cut your interest payments.

You could use the loan proceeds to pay off all your high-interest credit card debt and diminish the damage from your past mistakes by repaying your debts at the home equity loans lower interest rate.

Paying off consumer debt with tax-deductible funds can improve a homeowners overall financial situation if they use the savings to reduce the balance of the equity line, Cook says.

In other words, if you just make the minimum interest-only payments and stretch out your debt for another 20 to 30 years, you wont come out ahead.

If the debt consolidation will save $500 a month, apply at least 50% of the savings to pay down the principal balance of the home equity line, Cook says.

Keep applying the interest savings to the new loans principal balance until youve repaid the total amount in full.

Borrowers also have to change their spending habits, or they will get back into the same or a worse situation with their bills, Meyer says.

This article originally appeared on Interest.com.

Get A Free Credit Report That’s Actually Free

Fortunately, there is a way to actually obtain your free credit report with no strings attached. Many people dont know this, but you are legally entitled to a free copy of your credit report from each of the three major credit reports once a year, and without going through a third-party service. Heres how to do it, and the best way to use this to your advantage.

How to get your reports
The three major credit bureaus (Equifax, Experian, and TransUnion) have joined forced and set up a centralized website where you can request any or all of your credit reports. There are also phone and mail request options, and they are listed here if you would be more comfortable going that route.

Under the Fair Credit Reporting Act (FCRA), you are entitled to one free copy of each credit report once a year, at a time of your choosing. Websites other than the one linked above are not part of the legally mandated free report program, and are likely trying to sell you their services.

The Federal Trade Commission (FTC) has an informational page that details more about the legalities and the process for obtaining your report.

You might even be able to get more than one per year
Also part of the FCRA, there are some other reasons you might be entitled to a free copy of your report, even if youve used your annual freebie.

The main reason is if youve been denied credit or employment within the past 60 days because of information contained in your report. If you are denied for credit, you should receive a notice with the name of the credit bureau whose report was a deciding factor.

Youre also entitled to one free copy per year if youre employed and planning to look for work in the next 60 days, if you are on welfare, or if your report has incorrect information due to fraud or identity theft.

Alternate your reports for the best results
If you suspect that you might be the victim of identity theft, or if youre getting ready to apply for a mortgage or car loan, go ahead and request all three of your credit reports at the same time.

"A war without bullets": Rising trade tensions a long-term threat

Dont call it a trade war but protectionist battles are cropping up with increased frequency, most notably with Russia and China.

This is a war without bullets, says David Nelson, chief strategist at Belpointe Capital. Its more than a skirmish…theres a wave of protectionism around the world.

Trade tensions with Russia are a fairly straightforward response to developments on the Ukraine border: The US and its European allies launched a series of sanctions against Vladimir Putins regime, which in turn slapped sanctions on America’s poultry industry. Other tit-for-tat sanctions may be in the offing: The Wall Street Journal reports that Boeing (BA) and United Technologies (UTX) are stockpiling titanium parts in case economic tensions between Russia and the West disrupt supplies.

China, meanwhile, is seemingly responding to the NSA putting backdoor surveillance technology in US-based software, as revealed by Edward Snowden last year. China may also be seeking revenge on the US for the indictment of five Chinese military officers for alleged industrial espionage.

This weekend, Reuters reports that China is looking to develop its own operating system, the latest step in the countrys pushback against US tech giants. In recent weeks, the Chinese government or its agents in the media have launched rhetorical assaults against big America tech companies, including Apple, IBM, Google, Cisco, and Qualcomm.

Related:Apple sets new iPhones as China omission looms

Microsoft has come under particular scrutiny in China, which banned government agencies from using Windows 8 in May and more recently raided several of the software giants offices, citing anti-trust violations.

China very much wants to have its own operating system but has a lot to lose here if they really move away from Microsoft, Nelson says. A lot of their infrastructure runs on US-based software. I dont know if they want to put their air traffic control system at risk.

Similarly, Chinese consumers want the best product so unless it meets the world standard, [Chinese firms] may find it rough going, he says.

In an effort to reduce the political heat, US corporations are increasingly likely to partner with local Chinese companies, Nelson notes. The risk is you partner with these guys, and theyre notorious: You give up a lot of your intellectual property and a few years down the road theyre going to say a few years from now,we dont need you guys. What the [US] government does regarding the theft of intellectual property is going to be very important.

To be sure, being replaced by home-grown Chinese technologies isnt a big near-term risk for US multinationals. But China has both national security and economic interests behind its Buy China campaign and investors ought to at least start paying more attention to these developments.

Aaron Task is Editor-in-Chief of Yahoo Finance. You can follow him on Twitter at@aarontaskor email him ataltask@yahoo.com.

A Secured Credit Card Can Be The Solution To Bad Credit

pixabay/ jarmolux

There are several options here. You can choose to wait it out
until the bad information to fall off your credit report, which
can take up to seven years. You could choose a credit card
specifically designed for people with bad credit, which can end
up costing more than its worth. Or, you could choose to get a
secured credit card, which can benefit your credit and personal
finances in several ways.

How secured cards work

A secured credit card work just like any other major credit card.
You can use it at any retailer who accepts that particular type
of card (Visa, MasterCard, etc.), and you can also use it to pay
for goods and services that require a credit card hold, such as
renting a car or staying at a hotel.

The only real difference is the secured part. In order to
receive your new credit card, you are required to deposit money
into an account with the issuing bank, generally in an amount
equal to your desired credit line. So, if you deposit $500, you
can get a $500 credit limit. Sure, it requires a substantial
amount of cash, but unlike traditional bad credit cards, the
money you put up remains yours, and will be returned to you when
you close the account.

A secured credit card reports to the three major credit
bureaus, and lenders will have no idea that its a secured card.
It will look just like any other credit card listing, with a
payment history, credit limit, and balance information. This can
be the best feature of a secured card, and Ill get into the
specifics on how it can impact your credit score a little

So, how do you choose a secured card?

The best options

There are several options to choose from here. Basically, you
want a card with a low annual fee and the lowest interest rate
you can find. Ideally, youll also find a card that will add to
your credit limit as you establish a solid payment history.

Source: company

For example, the
Wells Fargo Secured Card

charges a $25 annual fee and currently has an interest rate of
18.99% which will change with the market. This is pretty close to
the terms you can expect from a standard good credit card. You
can deposit any amount from $300 to $10,000, and your initial
credit line will be the same as the deposit amount. The bank
reviews accounts periodically and cardholders with a solid
payment history may become eligible for an unsecured card. The
card has some other useful benefits, such as using it for
overdraft protection on a Wells Fargo checking account and free
access to online credit education.

Other products from
Capital One

US Bank

have similar terms and benefits, so choose the card with the best
benefits for your situation. In addition, US Bank has several
secured credit card products that offer rewards through partners
Harley Davidson


. These have slightly higher interest rates than the banks basic
secured card, but depending on how much youll use the rewards,
it may be worthwhile.

There are plenty of other secured credit cards to choose from,
so do your research. Your own bank is a good place to start the
search, as many offer the ability to link bank and credit
accounts together.

How much of a difference can it make?

As long as you use the card responsibly, having a secured credit
card can make a huge difference in your credit score, and the
effects might be seen quickly. For example, 30% of your FICO
score (the score lenders look at) comes from the amounts you owe
on credit cards relative to your balance. Well, if you currently
dont have any credit cards, this is an untapped portion of your
score. As long as you keep your balance low (say, less than 20%
of your limit), a secured card can really help this category.

Another 10% of your score comes from the types of credit you
use. Essentially, lenders want to see a diverse mix of loans,
credit cards, and other accounts. If you dont have a credit card
right now, this category is not helping your score as much as it

And over time, other categories such as payment history (35%
of your score) and length of credit history (15%) will

The bottom line here is that having a credit card in good
standing is essential to establishing and maintaining better
credit, and a secured credit card is a cost-effective and very
beneficial way to get one.

Will all credit cards soon be completely worthless?

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The article
A Secured Credit Card Can Be The Solution To Bad

originally appeared on Fool.com.

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5 Alternatives To Maxing Out Your Credit Card

Do you have a tendency to max out your credit card from time to time? Do you wish there was a different way to make the purchases you need?

Why You Dont Want to Max Out Your Credit Card

Maxing out your credit card can have a big impact on your credit score. One of the major components in the credit score formula is the percentage of your available credit you have used. If this number is over 30%, your credit score can be negatively affected. Thus, it would not be wise to owe $5,000 on your credit cards if you only have a $5,000 credit limit. Youll be much better off lowering this percentage.

Most credit card companies also have fees for going over your credit limit if you have opted in for such a service. Know that if you do opt-in, you will likely run into trouble. One of the best ways to keep your credit card debt down is to not allow yourself to spend more than your credit limit. So not opting in for this over-the-limit coverage makes good sense.

There are a number of ways to make a credit card transaction without reaching your credit limit. Here are five alternatives to maxing out your credit card.

1 – Split Up Your Purchases

Instead of making a big purchase on one credit card, consider splitting up your purchases over several cards or payment options. Ideally, try to use as much money as you can from your bank account or cash. This will be money you dont have to pay back. If you cant do that, at least try to disperse the charge over a couple different credit cards.

2 – Transfer Your Balance(s)

Another option would be to transfer the balance to a credit card that has a larger limit and, ideally, a lower interest rate. This will free up the other cards and still leave some room on the new one. Keep in mind, most credit card companies charge a 3% fee for balance transfers, though there are some like the Chase Slate card that offers a balance transfer without the fee if it is done within a certain period of time of becoming a cardholder. Weigh out the costs before jumping into a decision youll regret.

As an alternative, you might consider a personal loan to consolidate your credit card debts. This will most likely have a lower interest rate, and may free up your credit cards for emergencies. Make sure this does not tempt you to spend more money on your cards.

3 – Increase Your Credit Limit

If you have made consistent payments on your credit card, your creditor may be willing to increase your credit limit. This doesnt mean you should spend your newfound money. It just means you now have a cushion between your existing balance and your credit limit. Most credit card companies will not increase your limit within the first six months, so dont ask until then. Youll end up wasting a credit pull for no reason.

4 – Pay off Part of Your Balance

To get your card out of that maxed out state, you could make a payment on the account to free up some of your funds. Try to pay more than the minimum monthly payment, as that will most likely only cover the interest on the account. Pay as much as you can on the card, and continue making more payments in the future.

5 – Adjust Your Spending Habits

If you know your credit card is close to being maxed out, dont charge anything more on it unless it is an emergency. Wait until you save enough money to make a purchase and then buy whatever you need. You can still use your credit card at that point, as long as you pay off your purchase right away. In this way, you can still get rewards if your card offers them.

If you are worried about not catching a sale, ask the store if they have a layaway program. This will let you lock in the low price for a deposit and pay off the rest of the balance when you have money. Use this idea and the others as alternatives to maxing out your credit card.

Home Depot nails it; A decade since Google’s IPO; Consumer inflation and …

New home construction rose sharply in July to its highest level in eight months. The Commerce Department said housing starts rose 15.7% to 1.09 million homes, beating economists’ expectations of 963,000. June housing starts were revised up from 893,000 to 945,000.

Lower energy costs canceled out rising food prices in July, pushing inflation only slightly higher. The Labor Department said the Consumer Price Index rose 0.1% last month, which was in line with economists’ expectations. Food prices rose 0.4% last month, but energy prices fell for the first time since March, falling 0.3%.

Home Depot (HD) the worlds largest home improvement chain reported earnings of $1.52 a share, beating analysts estimates by $0.07. Revenue also topped expectations, rising 5.7% percent compared to a year ago thanks to home repairs after the harsh winter. Same-store sales rose 5.8%. The company also raised its full-year earnings outlook.

Google (GOOGL) went public ten years ago today. The company has changed since then, when it was mostly just a search engine. Gmail had just been released, YouTube hadnt been in invented, it didn’t own a drone company and it wasnt designing driverless cars. As of yesterday’s close, Google stock has gone up more than 993% since the IPO.

New signs the housing market is approaching normal?

More fresh reads on housing this week as an industry group reported applications for home mortgages rose last week — driven by refinancing demand — and home improvement retailer Lowes came out with second quarter earnings, lowering its outlook on sales for the year.

Related: Target misses the mark; Lowes lowers sales outlook; Hertz hurting

Yahoo Finance Editor-in-Chief Aaron Task in the video above points to a dichotomy in the housing market as evidenced by the data from the Mortgage Bankers Association, which showed a seasonally adjusted index of refinancing applications up 2.7% last week but a gauge of applications for home purchases falling 0.4%. The MBA points out a recent interest rate drop pushed mortgage rates lower.

Related: The government calls for more subprime lending–then prosecutes it

In addition, with Lowes (LOW) reducing its sales forecast just a day after rival Home Depot reported better-than-expected earnings and raised its guidance, Task says theres something for bulls and bears alike in the data. Task contends the difference between Lowes and Home Depots (HD) performance is likely retailer-specific versus reflective of the housing sector.

Related: Housing sector seems to be warming up after a rough winter

The bulls are also bolstered by data out Monday showing new home construction rose sharply in July to its highest level in eight months. The Commerce Department reported housing starts rose 15.7% to 1.09 million homes, beating expectations for 963,000.

In addition, The Wall Street Journal reports that home median home sizes are leveling off, pausing a trend of new houses getting bigger and suggesting more entry-level buyers may be entering the market.

Task says he believes after the housing bust and the sharp recovery, the market is leveling off to something now approaching normal.

Let us know what you think below.

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