Posts Tagged ‘myths’
Are You The Parent (OR Grandparent) Of A New College Or High School Grad?: A Post From David M. Frees III J.D.
Are you the proud parent of a newly minted and soon to be “independent” adult? Ready to cut the cords and to stop paying their monthly bills?
Well, now’s the time to get ahead of a very dangerous and counter intuitive situation – The FICO credit score. And, this is one area of financial life where what you don’t know can hurt you and your child who is heading out into the world.
And by the way, when they first go out on their own, credit cards seem like a good way for them to pay the bills…. until they have gigantic and unmanageable debt AND as a result a bad credit score.
You see, nobody ever teaches our kids how to build and keep great credit.
And most kids don’t know that their credit score will radically affect whether or not they can buy a home, to buy or lease a car, rent an apartment, get reasonably priced auto or homeowners’ insurance, get a job and more.
That’s right, a good or bad credit score can mean a yes or no on these and many other buying decisions and bad credit or no credit rating can mean higher prices – much higher prices for car, rental, and home mortgage payments and even prevent your new adult from getting a job.
And I don’t know about you but once they move out of your house it’s hard (on both kids and parents) to have them move back in…especially if that could have been prevented with a little good advice and some “credit secrets”.
So let me tell you two stories to help you to understand why teaching our kids (as soon as possible) about how to get and to keep good credit.
Ray told me that he had always paid cash, even for his car and truck, and never had a credit card. He’d never really done anything wrong but……his credit score was only 680. You see that having absolutely no credit history can be just as harmful as a damaged credit history. He just hadn’t done a few things that really mattered.
Now that may not sound too bad, but he and his fiancée didn’t even qualify for a mortgage. His wife-to-be had a better score and could qualify on her own but they really needed their combined income to get the house that they wanted.
Even in the best-case scenario, where they did qualify, their interest rate, and therefore their monthly payment, would have been dramatically higher.
In this case, there was a happy ending.
I knew CR Publishing’s Alex Frees (yes he’s related) and put them in touch with Alex and The Starters’ Guide To Building and Protecting Your Credit.
With a few carefully executed strategies (described in The Starter’s Guide To Building and Protecting Your Credit) he was able to take his score from 680 to over 775. Those kids got their mortgage and their first home as a result of working hard, saving money for a down payment, AND having good credit scores.
So what’s the moral or the story?
Help to educate your recent grads…. before they make credit mistakes…about what to do to build and keep good credit.
Some of the rules are obvious – pay your monthly bills on time – and others are less apparent. For example, did you know that there are good reasons to get a second credit card and some bad reasons that can damage your credit score.
Are you aware that it’s not just how much credit you have available, but how much of the available credit you have used.
Do a few important things right and your score goes up. Miss them, or do them the wrong way or in the wrong order and you can easily damage your score.
Well, if you’re like me – a parent but not an expert on consumer credit scores – then getting your kids access to educational resources like the Credit Repair Intelligence System (a comprehensive guide to building and keeping better credit) and the super inexpensive The Starter’s Guide To Building and Protecting Credit can mean the difference between their life long financial success and independence and that knock on the door where they want to move back in.
Help your new grad to get a better start in life. It’s easy and effective to help them learn…. right from the start…how to build and keep a great FICO credit score.
Enjoy the exciting life of being a parent and grandparent!
Dave Frees, JD
P.S. I promised you a second story so here it is:
I knew another recent grad. He started life with a credit card balance that he couldn’t pay off. That in and of itself isn’t a problem. But, as the balance grew (he was using it to supplement his income) he was also using more and more of his available credit line.
This negatively affected his FICO score and the interest rate on his balance went up…and so did his monthly payment.
The next thing you know he missed or was late with a payment and his score dropped again.
He got another card but did the same thing there (and his interest rate was higher from the start).
It didn’t take long before the rent on his apartment was too much (along with his credit card debt) and he could no longer qualify to buy a new or used car.
Moving back in with his parents was the next step.
All of that could have been avoided with a little advanced help. Help your kids to study up on FICO. To learn more about credit and how it’s computed. And, if it makes sense get them a copy of The Starters Guide For Building and Protecting Your Credit or The Credit Repair Intelligence System.
The short answer is yes. In fact, it can be a great way to avoid late penalties and taking a hit on your credit score while you are on vacation or traveling to an area that you wont have the ability to pay your credit card bills. Many companies and lenders, including Discover and Barclays will allow you to switch your due date as long as it is within that billing cycle.
How is this useful though? In the past if you were traveling you either had to have access to the internet to pay online or pre-pay your statements to avoid any late fees or score penalties. This might still be a great option though because pre-paying statements and getting those balances paid down can free up more spending power without having to worry about going over that magic 30% number we have talked about so many times.
But If you are unable to pre-pay or you know that your budget depends on a check coming in you are able to move that due date and still make on-time or early payments before, during, or after your vacation.
It is important though to stick to your budget each month and especially for your vacation. Be sure to check out 3.5 Tips To Keeping Your Wallet & Credit Safe This Summer before you plan your next summer trip.
Be sure to also grab your copy of our free e-book on 28 credit secrets that banks and credit companies don’t want you to know!
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Summer is time to travel with friends and family! And if you have saved up and budgeted to travel internationally there are a couple things to think about before you get away.
International travel is expensive on its own so its silly to spend even more especially when you don’t need to. Its hard and risky to carry giant wads of cash around with you and in some countries small denominations are in coins which can be cumbersome to carry.
That means you will without a doubt use your credit card at some point on your journey.
It’s a good idea when you are planning your trip to first check out your credit cards. Many credit cards carry a 3%-5% foreign transaction fee. This can be a killer especially when you have your trip budgeted. Adding an additional 5% to each transaction can really hit your bank account and eat away your credit limit pretty quickly depending on how big it is.
So how do you avoid these foreign transaction fees and save more money this summer? Well there are many cards out there that don’t carry any foreign fees. This is easy to check for and if you have been building good credit you should be approved no problem! Even with less than great credit there are some cards that still do not carry a foreign transaction fee.
The internet, traditional media, TV media, news magazines, and papers are full of useful and accurate information. But, they are also littered with inaccurate and dangerous falsehoods and myths. It’s hard to know what to trust and to believe. And when it comes to credit and credit repair or building credit, much of the information is outright false or inaccurate. For example, have you ever heard or believed either of these two common credit myths?
Credit Myth No. 1: “The credit bureaus are government agencies.”
Completely false. Credit bureaus are for profit companies.
They collect data to sell to lenders and other credit providers, landlords, insurance companies and more. They are not affiliated with the government but are governed under the Federal Trade Commission.
Credit Myth No. 2: “Credit Repair is against the law.”
Again, totally false. Infant, federal and some state laws specifically protect your right to repair and enhance your credit score.
The Federal Credit Reporting Act and Credit Repair Organizations Act both specifically state that it’s legal for you both to repair your own credit, or hire someone to do it on your behalf.
It’s not always easy to repair your own credit. Many people don’t even know where to start. But, if you are a person who can and does do it yourself there are some great resources that will walk you through the issues and the specific steps that you can take.
Click here to get more information on repairing your own credit, a starter’s guide or the full Credit Repair Intelligence Guide.
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