Credit Monitoring, Why You Should Use Them

Some people believe that credit monitoring is only necessary if you have a troubled credit history. This is not the case. It’s just as important to use credit monitoring to maintain a great credit rating as it is to improve a poor one. When you sign up for credit monitoring you will get important information from your major credit reports through Equifax, Experian, and TransUnion. This allows you to track them and ensure all your reported information is accurate. Most monitoring services also allow you to dispute negative items.

Top Reasons You Need Credit Monitoring

credit monitoringCredit monitoring can be used as a credit repair tool. This is in addition to avoiding any inaccurate notes on your file. This can help you figure out what weak points you have in your credit and improve this going forward. Most credit monitoring show major factors in your credit score. As a result, this allows you to adjust your financial approach to get a better credit rating. This impacts your chances of getting a car or home loan.

Monitoring your credit can protect against identity theft. This is a fairly important feature. Identity protection is becoming increasingly important. We live in an era where so much information is stored online. Credit card fraud and identity theft are becoming significantly more common. Cyber criminals have been able to hack databases of major companies and obtained credit card information. No one’s information is completely safe.

Some monitoring services will provide you with all three scores for free. This is a great feature when you’re in the process of repairing your credit, it gives you a way to track your progress on a monthly basis. Information can be the difference between improving your finances or staying the same.

Credit Card Consolidation, What is it?

Credit cards do come in handy, however, they do carry a certain amount of risk. You have to focus on paying the bill in full each month and on time. Along with everything else in life, keeping track of credit card balances can be stressful. There are options to juggling multiple credit cards. There is credit card consolidation.

What is a Credit Card Consolidation?

credit card consolidationCredit card consolidation is the process of combining existing debts into one new debt. This is an opportunity to get yourself out of a bad situation. The goal of the consolidation is to become debt-free in a quick and cost effective way. If you have multiple credit cards a consolidation will merge these into one account. This allows you to make one payment per month to one creditor, rather than multiple payments to multiple creditor. Another benefit to this is you only have one interest rate. If you play your cards right, this make paying your debt down cheaper and faster in the long run.

Credit Consolidation with a Loan

There are two ways to consolidate your debt. You can do a balance transfer or a loan. A balance transfer card will combine all your credit card balances into one new card. Depending on the lender this could come with a fee, usually this is a percentage of the transfer. Like most other credit cards, your score will come into play. If you have a good score this will be a viable option. Balance transfer cards typically have low introductory rates, sometimes even as low as 0%. However, these rates generally last for about 12 to 18 months.

Another option is consolidating your debt using a loan. With this all your debts are collected under a single payment. There are a few types of loans you can choose from, personal loans, home equity loans, or 401(k) loans. You can get a personal loan from a bank, credit union or an online lender. The interest rate will depend on your credit score. However, personal loans generally have low interest rates.  Personal loans come in various sizes and term lengths.  Home equity loans allow you to borrow against your home’s value. You can get a home equity loan if your home is worth more than what you owe. These typically carry a low interest rate and is like a second mortgage.  Lastly there is a 401(k) loan. These should be considered a last resort option. Home equity loans borrow against your home’s value and a 401(k) loan borrows against your 401(k).

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.

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.