Articless of Interest

Articles of interest

April 17, 2017

Canceled Credit Card Could Harm your Credit Rating

By Joseph Parish

Few people realize that by cancelling a credit card it could potentially harm your overall rating. Most people think that if they get rid of an added expense it will improve their credit score however nothing could be more misunderstood than this fact.

People often think that if they are not using a credit card they should cancel it. In the financial circles there are many conflicting views on this topic and as it is with many credit issues it really depends upon the person’s particular situation. I must mention here that properly closing your credit card may not automatically damage your credit score.

Often the high rates of interest, excessive yearly fees, along with the temptation to use your paid off card are sufficient reasons to close the credit card account. This article is merely to advise you that you should be aware of the consequences on your credit report by closing the account.

There are certain benefits that can be realized by keeping an unused credit card account in an open status:

An increase in your available credit is lost when you close the account making you lose this advantage. By closing the account you lose the posting of the available credit on your credit record. In the event that you have debt accumulated on your other accounts, closing this credit card can dangerously reduce your debt-to-available-credit ratio. This in turn affects your credit score and rating.

An open account which is in good standing will stay on your credit report indefinitely. This is a positive factor that tends to increase the length of your credit history on that account. Fifteen percent of your credit score involves your credit history.

To have the least effect upon your credit report you must properly close your credit card account. Keep in mind that closing your account involves more than merely cutting your card into little pieces and tossing it in the trash. When you cancel your card ensure that you have a zero balance on that account. You must realize that on occasion if you pay off a card, an unbilled finance charge might magically appear on your next month's bill. Always wait for your credit report to show that the particular card has a zero balance.

Next contact the credit card company to inquire as to what their procedure is for closing your account. This process generally varies from one financial institution to another.

As with anything involving your credit there are certain myths that continue to prevail, these also center on closing your credit card account and its effect upon your credit score. It is often rumored that the act of closing an account will often erase that account's history and it will no longer appears on your credit report. The fact of the matter is, if you close your credit card account under good standings it will remain on your credit when you no longer have that account. Contrary to the myth a closed credit card account that is in good standing will not magically disappear from your credit report after it is closed. The confusion with this is that you will no longer be increasing your history on that account when it is closed. As with other accounts in ten years the closed account will drop off of your report.

Additionally, myths circulate that the credit bureaus will penalize you if you have too much available credit. Again this misconception is simply not true. Too much available credit will not harm your credit score however, bear in mind that your credit score could readily drop in the event that you open too many new accounts all at one time.

Another myth surrounding your credit accounts is that it doesn’t matter if you close an account or if the lender does so it still affects your score. Your credit report will indicate if your account was closed by you or the lender but it has no impact what-so-ever upon your credit score.

The final decision is in your corner. If you have a credit card that you do not use and its percentage rate is high and if you recently opened lower interest rate account you might consider closing the older account. Weigh carefully the pros and cons of closing the account before you make that decision. In conclusion, it is okay if you close your unused credit card accounts just think carefully about it.

April 16, 2017
Credit Inquiries Can Hurt You
By Joseph Parish

When reviewing your credit reports there are sections at the end which lists the various inquiries that have been made against your credit reports. Every time a request is made for your credit there is a notation printed on the report that someone has ask to review your credit information from the bureau. If a company makes such a request their name will appear on the listing under this section of the credit report.

If you are applying for a loan the lenders who obtain a copy of your report and they do not like to see a vast array of inquiries being made. Too many inquiries can readily result in a loan or credit request being denied. This result is the same as having bad credit listings on it. We verify the kind of inquires being made on your credit reports and take the necessary steps to remove any which may appear to be unauthorized. Keep in mind that all inquiries made are not viewed as negative in nature. Several types of inquires may not even appear on your credit report. These types of inquiries include:

Existing Creditors – It is likely that your existing creditors might do a follow-up review of your account. Perhaps they may be considering you for an increase in your credit allocation or for other reasons. In either case these inquiries do not negatively affect your credit standing.

Yourself – Notations are frequently included on credit reports when the owner requests a copy personally. This does not count against you nor is it a negative factor and the notation does not appear on the copy submitted to the requesting lender.

The Credit Bureau – On occasion the bureau may compile a mailing list for their customers or subscribers usually based upon certain criteria which have been identified by the lender. The data contained in your report may qualify you to be placed on this list. Once again, these types of internal inquiries never appear on the copy of your report which is provided to a potential lender and does not reflect a negative reporting.

Potential Lenders – These are the type of requests which reflect negatively upon your credit report. Of particular interest is that a lender does not necessarily need to have your permission to obtain a copy of your credit file. By law, they are only expected to reasonably use the obtained information within a credit transaction. Any active member of the credit bureau is able to obtain a copy of your file and require only your name, address and social security number. Always be on guard about providing such information to those you may not trust or do not know.

IRS – The IRS is another negative factor which can appear on your credit report. Judgments are other negative factors which often appear on credit reports. Additionally, lenders may view you as a risk if these negatives are recent and simply turn you down for your credit request. Inquiries can remain on your file for as much as a 2 year period of time, with those made within the most recent 6 months counting most heavily against you. It becomes important to frequently review your reports to make sure that each of the listed inquiries are valid and reasonable. At Delaware Credit Repair we make this happen for you. We review these inquiries and can possibly get many removed. To be valid an inquiry must be done with your permission in accordance with Section 604 of the Fair Credit Reporting Act (FCRA). The FCRA is the law which defines the "permissible purposes" which the consumer’s credit profiles may be provided to other people. In general credit reports may be provided if necessary for :

Collections concerning an account
Employment possibilities
Granting credit
Insurance underwriting
Response to a court order or by FBI investigation
When applying for a government license
With your written permission

Lastly, anyone who willfully and knowingly obtains another’s credit report under false pretenses is subject to being fined and possible imprisonment fr up to two years under title 18, United States Code. It is our goal to look out for your rights.

Copyright © 2017 Joseph Parish

April 15, 2017
5 Reasons to Have Good Credit
By Eli McCormick

A good credit score is important for anyone to have. Loans are a necessary part of life for most of us. Building a solid credit history and maintaining a high credit score can have a dramatic impact on your quality of life now and in the future when you're considering applying for a loan or even a prepaid debit card.

Buying a House

Purchasing a house is one of the greatest investments you can make in your own future. It s also one of the most difficult ones to achieve if you don t have a good credit score. The recession caused foreclosures and short sales aplenty. Even though the housing market has rebounded, banks are still cautious about lending, with more stringent requirements than ever to qualify for a loan.

If you re not ready to buy a home, it is important to know that renting a home involves a credit check for most people now. If you show delinquent credit, you may not be able to rent a house or apartment, or you may have to pay a larger deposit.

Buying a Car

This is a common purchase, and many Americans take out loans when they buy a vehicle. Car loans are much smaller than house loans, so they re typically easier to get with a poor credit score. However, a poor credit score will only qualify you for high interest rates and a larger down payment on a vehicle. This can mean you pay thousands more for the same car compared to someone with good credit.

After you buy that new car, you will need an auto insurance policy. Almost all insurance companies now factor your credit score when calculating your premium payments, so good credit will save you money on this part as well.

Starting a Business

If you re thinking about starting a business and need a business loan, your credit score and history will factor into your eligibility for small business financing. Regardless of whether you re starting a business from scratch or trying to get the funds to expand, your individual credit score will affect your ability to get a loan for your business.

Getting a Job

Many employers are now running credit checks on prospective employees prior to hiring them. This is especially common in the government and financial sectors. A negative score or history could potentially keep you from being hired.

Getting Lower Interest Rates

While a good credit score is an important factor in obtaining any type of financial assistance, many banks are still willing to give loans to individuals with poor credit. If your credit is damaged, you will have to provide more documentation for your loan. You will most likely be hit with a higher interest rate as well. This is how financial institutions outweigh the risk of giving you money.

If you want better interest rates to save yourself money in the long run, keep that credit score high. Work to repair your credit score by making house and car payments on time, paying off loans before the end of the loan period, and paying off your credit card in full each month.

©2017 Purch All Rights Reserved.

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