Secured Credit Cards

LIST OF TOP SECURED CREDIT CARDS

              

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Money Saving Minute #046 - Secured Credit Cards

Kip Warzon     NMLS 289451

Most loans are secured by collateral. Standard credit cards, however, have no security for the lender so a borrower must first show a positive credit history before being issued an unsecured line of credit. This can make it difficult for individuals that are trying to build or rebuild their credit profile.  Secured credit card accounts, however, bridge this gap.

When applying for a secured credit card a borrower will be asked for a security deposit.  Generally this deposit is equal to the line of credit requested. This protects the bank against the risk of default. 

In all other ways, a secured card operates just like a standard credit card. Cardholders receive monthly bills that they must pay on time. In return, banks report payment information to the credit bureaus, allowing cardholder to build their credit history. To note, do not confuse a secured credit card with a prepaid credit card. The security deposit is to secure the line of credit, not to pay for purchases made with the card.

When shopping for a secured credit account, look for a card with a low annual fee and perhaps one that might pay interest on the deposit. Stick with reputable banks and avoid unreasonable fees.  Applicants with outstanding liens or a recent bankruptcy may not qualify for some programs so be sure to ask questions when applying. 

Once you have your new credit card, keep the following rules for building credit in mind: (1) keep your total purchases for the month under 10% of the available limit. (2) Pay off the balance in full every month and (3) your total purchase for the month will be reported on credit. Even if you pay off the balance in full one hour after making the purchase the lender will still report the high balance for the month as your total of purchases.

(1) Stay under 10% of the available limit

(2) Pay off the balance in full every month 

(3) Total purchase for the month will be reported

Budgeting Revisited

Download your free budget workbook by visiting
http://tinyurl.com/TeamWarzon

              

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Money Saving Minute #045 - Budgeting Revisited

Kip Warzon     NMLS 289451

Everyone should use some sort of a budgeting tool.  Budgeting is the roadmap that leads to financial confidence.  Following a budget puts you in control of your money instead of letting your money or debt control you.  If you have a significant other, a budget will help you both to avoid spending mishaps that cause arguments.  By using a budget you can create an emergency fund so you won’t be left wondering what to do when something unexpected happens.  Budgeting also helps people to be more price conscious when shopping as well as pay more attention to how resources such as water, electricity, and gas are used around the house.  A budget can also help you get out of debt and help you money save money for the future.  Simply put, having a monthly budget in writing will help you track your money which will help you save your money.

Download your free budget workbook by visiting
http://tinyurl.com/TeamWarzon

Five Factors of Credit Scoring

              

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Money Saving Minute #044
Five Factors of Credit Scoring

Kip Warzon     NMLS 289451

Most people don’t really know where that magic credit score number comes from.  The general assumption is that if I pay my bills on time then I will have perfect credit.  The reality, however, is that paying bills on time will produce good credit but not perfect credit score.  

The positive and negative information in your credit report is grouped into five categories. Each category is weighed differently and is calculated into a percentage.  These percentages are based on the importance of the five categories for the general population.  Please note, however, that every individual's situation is weighed slightly differently.  In other words, this is the guideline, not the rule.

Also to note, credit is needed in order for one to have a score.  The misnomer that paying cash for purchases will equal great credit is false.  Cash is king but it doesn’t buy 800 scores.

Payment history (35%)
Payment history is the most heavily weighed factor in credit scoring.  A few late payments can have a large impact on your scores and can stick with you for up to seven years.  The number of trade lines that you have in good standings will determine on how quickly you will earn those points back.  Please note, however, that having no late payments on your credit report doesn't mean you’ll have perfect credit.  Your payment history is just one of the five factors in calculating your credit Scores.

Amounts owed (30%)
Owing money on credit accounts doesn't necessarily mean that you're a high-risk borrower.  However, when a revolving account is reported as close to the account limit, this raises the risk level for the lender and therefore lowers your credit scores.  Note that even if you pay off your credit cards in full each month, your credit report will show a balance on those accounts equal to the purchases made that month. If you charge close to your maximum credit line each month consider requesting a credit line increase so that your usage ratio stays under 50%. 

Length of credit history (15%)
Your FICO Score takes into account how long your credit accounts have been established.  This includes the age of your oldest account, the age of your newest account and an average age of all your accounts.  This is why short term loans do not help to reestablish credit.  A high interest short term loan from a store might get you a new TV but it's not going to get you and 800 credit score.  Reestablishing credit takes time and the proper tools.  

Types of credit in use (10%)
Scoring will consider your mix of credit cards, retail accounts, installment loans, finance company accounts, utilities and mortgage loans.  Diversity shows financial responsibility.

New credit (10%)
Opening several credit accounts in a short period of time represents a greater risk - especially for people who don't have a long credit history.  Also, reaching the maximum level on a new account as soon as you open the account may have a negative impact.  If you are taking out a line of credit for a specific purchase, such as a new washer and dryer, request a limit that is higher than your purchase.  Even if you are planning on paying off the purchase within a short period of time the account will always show that the limit and the historic high balance were the same.

Use these ratios as a guide to build a healthy credit profile as well as a planning tool when making credit related decisions.
  

Summer Snack Savings

              

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Money Saving Minute #043 - Summer Snack Savings

Kip Warzon     NMLS 289451

Summer is here…and what’s better on a hot summer day that a delicious frozen treat?  Well, that would be a frozen treat that doesn’t break the bank or your daily calorie count.  Instead of buying expensive, high calorie ice cream bars why not try this.  

Start by making your own sugar free Instant pudding using skim milk. Pour the pudding into a blender, add your favorite fruit, and blend. Spoon into pop molds and freeze. The pudding provides protein and calcium while the fruit adds vitamins to the mix.

Good for the body, easy on the wallet and very tasty.  

Gift Giving Savings

              

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Money Saving Minute #042 - Gift Giving Savings

Kip Warzon     NMLS 289451

Last minute gift buying can be costly and maybe even embarrassing.  Planning ahead will save you from both.  Some people plan out the perfect gift but wait until the last minute to buy so they end up paying full price.  Others of us don’t plan and end up buying the first thing that we see…which may be okay or may be something that will never be used.  Instead, try using Microsoft Outlook, Google Calendar or Facebook Calendars to help remind you of special events.  This will help you save money, time and help you give the perfect gift.