Authorized User, Does It Improve Your Credit

Good credit is important when applying for loans or even obtaining a place to live. Employers are starting to check employee’s credit history. If you have bad credit, there usually isn’t a lot you can do to fix it quickly. It takes time. Therefore, it pays to open lines of credit early and always make your payments on time. This can take years. You may be wondering if there is anything that can be done to boost your credit quickly. If you’ve ever activated a new card, you’re often asked if you’d like to add anyone as an authorized user.

Boosting Your Credit as an Authorized User

authorized userEvery time a new card is opened your score will take a hit. This affects the average age and inquiries. Since you’re introducing a new credit card, this will affect and lower the age of all your cards. Credit issuers do not like to see too many inquiries on your report. Your score will bounce back by adding a new account and increasing your overall credit limit. However, that is not enough to offset your bad credit.

Being added as an authorized user is just like applying for a new card without the hard inquiry. Some companies will even backdate your card to the original owners ‘member since date’. For example, if you were added to an account that was 10 years old, you would have received the same age. This rarely happens.  As an authorized user, you receive your own credit card that is linked to the main users account. This will allow you to make purchases and payments, but not able to make any significant changes to the account.

It is important to keep in mind there are risks to adding an authorized user. You will be responsible for all charges the user makes. If a user doesn’t pay their bills, your credit is now at risk. To avoid this, you can add a user but not actually give them the card. They will still get the benefits but you won’t take any risk.

Secured vs Unsecured, What’s the Difference?

If you’re considering applying for your first credit card, or trying to repair your credit card history, you’ve likely come across the term “secured” credit card. What is a secured credit card? How does this differ from an unsecured card? Each type of card targets different users and have their own set of risks and benefits.

Secured vs Unsecured

One way to categorize credit cards is to look at them as secured vs unsecured. A secured credit card is backed by a cash deposit you pay after you’ve been approved. The initial deposit is collateral for the account. This means that the issuer can use those funds if you’re unable to pay the bill. This is what makes secured cards a good option for those with no or damaged credit. Deposits generally determine the credit limit. Most deposits start around $200.

securedAn unsecured credit card is not backed by a deposit. Without a deposit, you have more freedom to spend on the card. If you miss a payment, the issuer can come after o you instead of using the deposit. This is makes unsecured cards more suitable for those with more credit card experience. The credit limit is determined based on factors like your credit score and payment history. Unsecured cards usually have lower interest rates than secured cards.

So, how does an unsecured credit card work? Because an unsecured card doesn’t require a deposit, qualifying for one will depend on your payment history, credit score, and credit report. Usually you need an average to excellent credit score to qualify for an unsecured credit card. If you do get an unsecured card with poor credit, you’ll have higher rates and fees.  Like secured credit cards, you can use an unsecured card to rebuild your credit. Both cards pose different benefits and risks. Deciding which is best for you will depend on your personal finances and spending habits.

Debt Collectors, How Not to Deal With Them

It is never fun to deal with a debt collectors. It can be even more stressful when you’re sitting on a pile of debt. There are times a debt collector may fail to follow the rules outline in the Fair Debt Collection Practices Act. If that is the issue you’re facing, it may be best to file a complaint. However, if you’re personally making the following mistakes, your debt issue could go bad to worse.

What Not to do With Debt Collectors

  • Ignoring the debt collectors. Screening calls and avoiding collectors won’t help control your debt. While debt generally has a debt collectorsstatute of limitations, it does vary depending on your state. Once it expires, the collector may not be able to sue you, but you could still be responsible for paying back what you owe in addition to any interest. Letting an old bill pile up can destroy your credit score. Any unpaid debt can remain on your credit report for up to seven years.
  • Watch what you say over the phone. Once you’ve decided to no longer dodge your bill collector, it is important to avoid sharing certain details over the phone. You never want to say that you’ll pay a specific amount by a deadline or give access to your bank accounts. Anything you can say can be used against you. By agreeing to make a payment can even extend the statute of limitations. A collector’s main goal is to collect missing funds. Stay calm, keep the call short and keep your comments to a minimum.
  • Verify the debt is yours. When talking to a collector, it’s important to make sure they’re legitimate. Debt collection scams are common. Before you send over any money, confirm that the debt belongs to you and not someone else.
  • Keep proper documentation. Whenever you communicate with a bill collector, it’s a good idea to take notes. Jot down the details about who you spoke to and what you discussed. If you’re forced to appear in court or report a collector this will help.

Credit Cards, Should They Be Used to Pay Off Loans

The idea of a low-balance transfer is enticing. They are also a large part of credit card companies’ offerings. This is one way to attract new business in a field that is already overwhelmed with credit card offers. Some have considered using their high-limit, low-interest credit cards to pay off a car loan to save monthly interest and pay off the lender. While this may seem like a great idea. Instead of continuing to rack up interest on a car loan, why not go with a lower rate and get the title of your car?

Should I use my credit card to pay off my loans?

credit cardsVery few have figured out how to play the system, so to speak. They endlessly transfer their balances to different low or no interest cards. Sometimes they score big and get travel points or even cash-back rewards. This is almost like giving yourself a debt consolidation loan. Allowing yourself to avoid lower interest credit card fees.  However, consumers need to be careful in how they manage their balances, their payments and when opening new accounts to pay off old accounts. It can have an impact on your overall credit utilization. Those that use balance transferring to pay off a car loan should also be wary. Car loans don’t carry the same weight as credit cards when it comes to evaluating your credit score. Transferring a balance to pay off your car could have a positive impact. However, having much larger credit card debt can also be negative.

Some balance-transfer plans also prohibit the use of paying off a car. Auto lenders may also have a penalty for early payoff. It’s important to do the research before making any moves. Be sure to read the fine print and continue to pay your bills While that zero percent interest offer seems like a great idea, the lender knows that many consumers will not be able to pay off their balance before the interest-free time limit expires. If you miss the deadline, this could be an even larger balance.