Category: Building Credit

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How Do Secured Credit Cards Work?

Do you have bad credit and want to repair it?  Maybe you have no credit history and need a place to start.  One way to build your credit score is by using a secured credit card!  By making monthly payments with a low credit limit, you will gradually be able to improve your credit history and qualify for better banking products in the future!

People get hit by tough times.  Maybe you lost your job or had some unexpected medical expenses.  In the process, you racked up the debt and your current credit score reflects those woes.  Credit cards, even secured credit cards, are not for everybody.  Let’s face it, to qualify for an auto or home loan, you need to have a decent credit score.  Using a secured credit card is not an instant fix, but the odds of getting approved increase dramatically by demonstrating to lenders that you can consistently make monthly payments and carry low monthly balances.

What Is A Secured Credit Card?

Secured credit cards get their name because they require a security deposit to start using it.  Non-secured cards, the most common type of credit cards, do not require a security deposit to use and are only issued to people with fair, good, or excellent credit cards as they are less likely to miss monthly payments.

Secured credit cards work identical as non-secured credit cards but normally have higher fees and lower credit limits.  A secured credit card is a credit card that requires an initial security deposit the same amount as the credit limit.  Credit card issuers require the security deposit in case the cardholder cannot pay the monthly balance, similar to landlords and new renters.  As an example, a secured card with a credit limit of $1,000 will require a $1,000 security deposit that is normally put in a Certificate of Deposit account.  If the cardholder has a balance of $750 for the month and cannot pay it off, then the issuer (aka “the Bank”) will pull from the security deposit to cover the loss.  The bank doesn’t lose any money, but the cardholder still needs to pay off the balance to keep using the card.  If the card is closed, the holder will get the security deposit back minus any outstanding balance.

Although a secured credit card sounds very similar to a prepaid debit card, the secured card has a monthly bill that needs to be paid.  If you miss the due date, the issuer can charge additional fees, interest, and report the event on your credit report (damaging your credit history).  The security deposit cannot pay the monthly balance and is only in place to protect the bank from paying from their own pocket if the cardholder becomes delinquent in payments.

Who Can Use A Secured Credit Card?

Secured credit cards are intended for people with poor or no credit that typically do not qualify for non-secured credit cards.

The following potential credit cardholders might benefit from a secured credit card:

  • Those who have declared bankruptcy or defaulted on a loan within the previous five years.
  • Currently 30 or days late on a credit card or loan payment.
  • Have little or no credit history.

A secured card is great for somebody that wants to build a credit history without the temptation of high credit limits offered by non-secured cards.  A prepaid debit card does not build a credit history, but a secured credit card will.  The secured credit card has a higher initial expense due to the security deposit, but the ability to establish a credit history can be worth it.

How To Choose A Secured Credit Card

Here are some of the best secured credit cards , although your personal bank probably offers a secured card too.

Here are several factors you will want to consider when applying for a secured card:

  • Annual Fee
    • Most cards require a fee ranging from $25-$35 annually.
  • Security Deposit
    • As the security deposit amount determines the credit limit, certain issuers will permit higher credit limits.
  • Interest & Fees
    • Interest rates & fees for secured cards can vary widely between card issuers. If missing a payment is a large concern of yours, consider cards with a lower APR & fee.
  • Rewards
    • Point & Rewards are normally reserved for non-secured cards, but some issuers will put the security deposit into a “high-yield” savings or CD account. It might not amount to much but anything is better than nothing.

As the primary intent for most who have a secured credit card is to build or repair their credit history, you will want to ensure the prospective issuer reports the payment history to the three credit bureaus: Equifax, Experian, and TransUnion.  When applying for a loan in the future, you do not know what bureau the lender will acquire your credit history from so it’s important to verify this before applying for a card, as each application will pull your credit history and temporarily reduce your credit score.

Also, ask the prospective issuer if they will “flag” the credit card as a secured card.  Flagging your card may prevent the credit history from improving your credit score.

You will also want to apply for the highest credit limit possible.  This might depend largely on how much of a security deposit you can afford, but you do not want to “max out” your card every month.  The same principle applies to non-secured credit cards too, but your goal should be to keep your monthly balance lower than 30% of the total credit limit.  For example, your monthly balance shouldn’t be higher than $300 if you only have a $1,000 credit limit.  Keeping the monthly balance below the 30% mark will help improve your credit score quicker.  Making monthly payments is essential, but this practice helps the process.

How Long To Keep A Secured Credit Card

After getting accepted for a secured credit card, the next question is how long you need to make on-time payments before you can either apply for a non-secured card or a new loan.

Your card issuer will periodically review your file and may offer you the opportunity to upgrade to a non-secured card within one year!  You might also start receiving offers in the mail for non-secured cards from other companies.  Of course, you can always monitor your credit score yourself and ask your issuer to upgrade as well.  If they say yes, you can close your secured account and the issuer will refund the security deposit.

With any application for new credit, do not apply for too many at once.  Each application will penalize your credit score & you might have to wait even longer to get qualified for a loan or non-secured credit card.

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How to Manage Multiple Credit Cards

For those entering into the credit card arena for the first time, how do you decide which card is right and best to use? There are just so many cards out there, each offering their own sets of rewards and incentives and bonuses, so from all of these options, how on earth do we pick just one card ? Well there’s great news for you, and that news is that you don’t have to stick with just one single credit card ever.

You can have as many cards as your credit will approve you for, but although you can have more cards to your name than you thought you ever could, this doesn’t by any means translate that you should apply and hold onto every card application that you see. Responsibly managing even a single card is hard work as it is, and with every card you add to your repertoire the job only gets harder and more complicated. Below is a breakdown of how you can manage multiple credit cards all at once, and do so responsibly.

 

Control the cards.

The biggest note to remember is that you need to remain in control of the cards and the “opportunity” that they represent. Yes, a credit card does mean that you spend credit rather than your own money when you purchase things, but like we remind you of quite a bit, credit is not your money but somebody else’s, and they are not looking to do you any favors by having you borrow their money.

When you do use your multiple cards, keep track of what you use them on, and the more cards you have and use, the more methodical you should be when pulling out the plastic. Don’t carelessly use cards based off which one you think haven’t used in a while or which one is your simply your favorite, but rather use them as they help you best.

This method of using cards that serve you best can be quantified by what kinds of purchases offer you the most rewards for specific purchases. Or, if the rewards are for the most part even all across the board for your general purchases, then use one card for every different area of spending: use one card just for fill ups at the gas station, one card just for groceries and necessity purchases of the like, and another card for recreational actives like movie tickets and things of that nature.

Keep the purchases you make on the cards organized, and this will help you keep mental track of how the cards are being used and how much you have spent on them recently that much easier come time to settle up on the monthly bill.

 

Know yourself.

Before you begin to sign up for multiple cards, you should first assess yourself and determine what kind of a spender you are. When you look in the mirror, do you honestly see the face of a responsible spender looking back at you? Even if you have answered yes to this question, you still should reconsider having multiple credit cards.

NOTE: When we say say multiple credit cards, we don’t mean two or three, but rather four or seven or anything more than that. Multiple cards. Second, having multiple cards does not mean that having more cards is a bad idea, because in fact, having multiple cards can be, when used responsibly, a huge help to attain purchases that otherwise would be impossible without upstanding available credit.

So before you consider adding more credit cards to your already existing line up, review how your spending has looked in the past with your credit cards. Is your credit history riddled with late and overdue payments, and even credit limits being reached? These factors are some pretty bright signals that should be considered in the conversation about whether or not you should invite more credit cards into your wallet. Know what kind of spender you are.

 

Know how credit cards work.

Remember how credit cards work: lenders let you use their money in exchange for the possibility of paying interest on late payments and over-drafting of allowed credit limits. So unless you want to pay up on fees that you very easily could avoid, keep your credit limit in mind when the cards have to come out, and keep your payments flowing on time, every time.

Banks and lenders only make money off of you when you let them, so stay on top of every single card that you have active that your payments are regular and frequent.

 

Does each card have a real reason to be there?

We all think we need more, and it doesn’t really matter what it is for, we just feel we need more. Yes, you can apply for as many cards as you want (keeping in mind your credit score is effected every time), but do you really need multiple cards? More cards can be useful for various situations, but to have multiple and active cards all at once just to have more can lead to more of a curse than a blessing.

So consider and reconsider if you truly need more cards than what is absolutely essential.

 

Do the pros outweigh the cons?

Before you open up another credit card, think about having this card forever and never being able to close it. Not that you cannot close out a credit card, thinking about having this card for the long term will help you determine if this card is truly worth signing onto.

Along those lines, you also should consider that some cards have annual fees, so be sure that the benefits and rewards outweigh the fees. Make sure you really are making a wise choice before you sign onto another credit card, and not just signing on to chase more rewards.

 

To summarize, consider and reconsider the amount of cards you own and be diligent with everything that you swipe on. Keep careful track of everything you place onto a card and try to keep your purchase history organized to specific cards, as this will help you remember what purchase was made on which card. While you swipe, keep in mind what your credit score looks like before and after you sign onto more cards. If not kept track of, your credit score could get ripped to shreds with an abundance of credit cards running unattended to.

As always, remember that credit is not your money, but money that is being lent to you with the condition that anything you spend outside of their restrictions result in you handing them over some of your own money. So regardless of how many cards you have, whether it’s one or 12, keep your payments on time and in full. If you can honestly and responsibly keep track of every single card you have in your wallet and keep them paid up and organized, then there is no reason you should run into any problems, regardless of how many cards you have. Stay alert out there, credit users.

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Tips to Raise Your FICO Credit Score

Your FICO credit score is one of the major factors a lender will consider when determining whether or not to approve you for credit. There are many things that go into your FICO score, which means that there are things that you can do to improve it. Careful attention to your FICO score can help you build your credit.

Here are tips that can help build and raise your FICO score

Apply for credit cards

You may be wondering if applying for credit cards can hurt your credit, but, just the opposite is true when you use them responsibly. The same goes for installment loans. Those with no credit will be a higher credit risk than someone who has demonstrated responsibility by making payments regularly and on time.

Make every payment on time

When you make your payments late, this shows up on your credit report. Lenders do not like to see you making a habit of late payments. As your FICO score is computed, 35% of the score is dependent upon you making timely payments for credit cards and loans. Never missing a payment is the best way to get the most from this factor. The longer the history that you have of making payments on time, the better this part of your score will be.

Pay off balances in full each month

While this is difficult for some, especially those who have accumulated large amounts of debt, making the largest payments you can afford is smart. This will help you lower the balances. Once you get your credit cards paid off, try to pay the entire amount that you owe each month. Never make less than the minimum payment required. The lower your overall balance, or credit utilization, the better your FICO score will be.

Communicate with creditors if there are problems

If you fall on hard times financially, contact your creditors before you begin to miss payments. Often they can work out a temporary solution, or negotiate a payment plan with you before your credit is adversely affected. When you are making regular payments, even when you are struggling financially, you can often keep your credit score from dropping too far.

Don’t rush to close credit cards to raise your FICO score

Closing credit card accounts can actually have a negative impact on your FICO score, especially if you have had the credit card for a long time. If you close credit cards that are paid in full, yet you still have others open that you carry a balance on, then you are going to see your credit score drop because your credit utilization will increase. This means that you will be using a higher percentage of your available credit. You are going to be better off keeping cards open when they have a zero balance, particularly if you have a long history with that creditor.

Keep track of your credit utilization

If you have a high credit utilization or a high debt-to-credit ratio, contact your creditors to see if you can have your credit limit raised. This can help improve your ratio and also your FICO score.

Don’t open too many accounts too close together

This is especially important for new credit users. When you are just starting out, one or two cards is plenty. Even if you have well-established credit, opening too many credit cards in too short a time period will have a negative impact on your FICO score.

Make sure your creditors know how to reach you

Always notify your credit card companies if you have an address change. If you miss a bill because they moved, it will not be their fault. You will likely see a change in your FICO score as a result. This is a common mistake, and one that is completely avoidable.

Immediately report if your card is lost or stolen

Reporting a lost or stolen card as soon as you are aware of it is crucial. Most credit card companies will not hold you liable for unauthorized purchases under these circumstances. If you do not promptly report it, you could be held responsible for large purchases. This will also affect your FICO score.

Check your credit report regularly

You should check your credit report at least once a year. Make sure that there are no inaccuracies. Most free credit reports will get information from the three major credit bureaus—TransUnion, Equifax, and Experian. Checking your credit report will not hurt your credit score. It will help you keep tabs on any accounts that you are responsible for. If you notice any inaccuracies, contact those creditors immediately to have the issue resolved.

Your FICO score is important. You should know what it is and make efforts to keep it solid or improve it. Use these tips to keep your credit great!

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How to improve your credit score through credit cards

Trying to clean up your credit score just before applying for a loan is a lot like working out to get 6-pack abs just a few days/weeks ahead of your beach vacation!

Such shortsighted efforts won’t be good enough to undo months of reckless mistakes. However, people who know how to discipline themselves and who can get into the habit of making well-informed decisions, can definitely see some improvements. That sort of discipline is all the more important for people who’re about to apply for a loan within the next 2-6 months.

Good credit score

While there are some tried and tested methods that can help you build a long-lasting healthy credit score, you can also make some small-small changes into your credit card habits right away and see an improvement in your score in some time.

Just by changing the frequency and timing of your monthly payments, apart from using the right credit cards for your purchases, can lift up your score by around 20 points or even more, in a matter of two months! The extent of improvement will depend on your present financial habits and some other factors. Following are some useful ways in which you can use your credit cards to improve your credit score:

Pay your monthly card bills on time

This is easily the best thing you can do to improve your credit score. The payment history of your credit cards carries a 35% weightage in calculation of your FICO score (used by most lenders). That weightage is higher than any other factor that makes up your credit score. So, ensure that every credit card of yours is paid on time, every month.

Keep your account balances low

The amount of money you owe on your different credit cards carries the second biggest weightage (30%) in calculation of your FICO score.

A good way of understanding this factor is by paying heed to something known as credit utilization ratio. This ratio is the percentage of credit you’re actually using, from the total credit available to you. For instance, if the total credit limit on all your credit cards combined is $ 20,000 and you currently carry a collective balance of $ 4000 on them, you’re using 20% of your available credit.

Normally, people pay off all their cards in full, or to the maximum extent possible, to keep this ratio closest to zero. However, anyone who can’t afford to keep a zero balance must ensure that his/her credit utilization ratio is well below the 10% mark. At any cost, he/she should never exceed 30%.

And that applies to all of your cards. Many times people who’re looking for a loan in the near future, opt for balance transfer cards for bringing their card balances well below the 30% threshold, but they often do so without paying heed to the balance transfer fees involved. This fee can be 3% or more, often resulting in a fee amount that may not be worth paying for a credit score boost.

Make frequent payments

Paying your credit card bill only once every month may not be good enough for improving your credit score. The balance appearing on your credit report is normally the balance from your last statement/s. And people running up high balances on their credit cards may get penalized in terms of their credit score, even if they do clear those balances in full every month.

For instance, if a person makes a $ 5000 purchase on a credit card (with $ 10,000 credit limit) in a specific month, his/her credit report may still show him/her as having used 50% of his/her credit limit on that card, even if s/he pays that card in full by the end of the month.

Such records may not matter much to someone who isn’t planning to apply for a loan anytime soon, but for an individual preparing himself/herself for a credit check, they may make or break the deal. Hence, it’s always better to make multiple credit card payments every month as and when you use your cards.

Put your credit cards to use

Although you should never run up your credit card balances to the extent that you can’t afford to pay them in full, you can’t help using your cards if you want them to be counted as a part of your payment history either.

It’s not necessary to use your cards every month, but make sure that you use them every once in a while, so that there are records of purchases and their timely payments. Furthermore, there is a risk of card issuers cancelling the cards that haven’t been used for many years. A cancelled card can reduce your total available credit, putting a dent into your credit score.

Keep your oldest accounts

Although it may seem tempting to get rid of your old credit cards that you’ve rarely used, people wanting to apply for new loans should hold onto such cards until the completion of their credit checks. Closing a credit card automatically reduces the total available credit to you. Such a step can be even more detrimental if you’re carrying hefty balances on some of your other credit cards, as it can increase your credit utilization ratio. However, such dips are only temporary in nature, and the credit score normally rebounds in the next few months as the credit agencies discover that you’ve actually not taken on more debt. But, even if temporary, such dips can indeed become the cause for loan rejections. So, avoid closing any credit card if you’re planning to apply for a loan in the next 2-6 months’ time.

Keeping or closing the old card accounts can also impact the length of your credit history, which carries a 15% weightage in your FICO score. Nevertheless, the impact is most likely to be minor in nature. Moreover, if you’ve been paying those cards in full every month, your credit score may not drop at all by their closure.

Following these basic suggestions, you can effectively use your credit cards to improve your credit score. Last but not the least, check your credit history at least once every year to ensure everything is in order and all the information in it is correct.

 

 

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Why You Should Apply for a Business Credit Card

If you own a small business, you probably should consider establishing some credit in the name of the business, rather than relying entirely on your personal credit. You might be surprised to know that fewer than 50% of small business owners are using business credit cards that are in the name of the business and not their personal name! Keeping everything in your own name may put your personal assets at risk, so read on and consider these great reasons to apply for a business credit card!

Tips For When You Apply For A Business Credit Card

So what should you look out for when you apply for a business credit card? Here are a couple of tips to consider.

Keep Business Expenses Separate

Keeping business expenses separate not only comes in handy at tax time, but it helps you stick to both a business AND a personal budget. When you are simply comingling all of your money and spending it as needed, it can be difficult to know how much money you are making from your business and how much you may be investing towards the future.

When you carefully keep everything separated, you are protected by a “corporate veil,” which allows you to be separately responsible for profits and losses. Your personal assets will have protection. Having a business credit card helps you to reinforce that protection, and reduce the risk to your personal assets.

Details, Details, Details

When you use a business credit card, it is far easier to keep detailed records of any expenses related to running your business. Whether you keep your own books or use a bookkeeper, the tasks will be monumentally easier when you keep your finances seperate. Business credit cards often offer you special spending reports and graphs that can help you build a balanced budget and stick to it. It also makes it easier for you to quickly see your profits and losses.

Establishing Credit

One final, and very important reason for getting a business credit card is that you can establish a credit history for your business. When it comes time to apply for a loan or any other kind of financing, you will have a solid credit history and be able to show that your company is credit-worthy. You won’t have to worry about depending on your personal credit history. Plus, you will be eligible for different rates and terms for loans as they pertain to a business, rather than an individual.

Additionally, it is important to keep your business credit separate from your personal credit, especially if you are going to incur any significant business debt. You don’t want this appearing in your personal credit history and bringing down your credit score.

Here’s what you need to know before you apply for a business credit card:

Consider the type of business credit card that you need.

How much of a credit limit do you need? Will you be considering a secured or unsecured card? Are you hoping to get a rewards credit card? There are many things to think about before applying!

Find out your credit score.

This means you need to know your personal credit score, as well as any credit score for your business if you have any credit established yet.

Don’t be blinded by perks.

Sure, special benefits and great perks can draw you to a particular card. But, don’t rely only on the perks. Know the actual terms of the credit card—annual fees, APRs, any other charges, and fees, etc., before applying. Make sure you know whether or not any special offers are going to expire after an introductory period, too.

Be selective.

Don’t apply for a ton of business credit cards. In most cases, one is probably sufficient. If you have employees, then make sure you look for a business credit card that offers low cost or free additional users, because these are the kinds of charges that can add up quickly.

Always be careful when applying for credit, whether for business or personal use. You need to protect your personal—and business—assets and maximize profits. When you are educated about the various terms and conditions, and understand what you are getting into, you will be able to make the right decision for your company.

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You May Be Eligible For A Credit Card Retention Bonus

Earning miles and points from your credit card is fun—especially when the annual fee is waived for the first year. Once that anniversary comes around, however, you may be required to pay an annual fee—which might not be what you planned. Since you have earned tons of points, you don’t want to simply cancel the card. Let’s talk a little bit about your options and what might be available to you.

Consider the Retention Bonus

Many of the bigger credit card companies will offer you a special “retention bonus” on your anniversary date. This can range from a tidy sum of extra bonus points to a free baggage check, to a free night in a hotel, and more. Often the value of the retention bonus is far greater than the cost of the annual fee—so consider this part carefully when you are thinking of canceling the card. It might be well worth it to keep the card. While there are some cards that have pretty hefty annual fees, taking a look at what you get is a wise move. See if it is worth it to keep.

Consider the Credit Impact

Closing a credit card can negatively affect your credit score, so consider this move carefully. Now, this doesn’t mean that you should automatically keep a card with an expensive annual fee just because you don’t want a short-term ding on your credit. But, you should not be opening and closing credit cards on a whim if you want your credit to stay clear and clean.

Take an inventory of all of the cards you have and consider the fees and benefits. Also, consider your history with them and your available credit. Then, and only then, should you determine whether or not to close a card when your annual fee is up. Don’t rush to close a card simply because the fee is due.

Make Your Plea

You may not realize this, but you can actually request that the fee is waived for another year. Keep in mind that if you are a good customer, the credit card company will not want to lose your business. They may agree to waive the fee for another year. Sure, that will put you in the same position next year, but that gives you time.

Ask for a Downgrade

Many credit cards offer no-fee versions of their more expensive cards. The perks are fewer, but you don’t have to close the card and take the hit on your credit score. If you have a good history with the credit card, consider this option. When you can keep the line of credit open for free, and not have a hit on your credit card, this is really a win-win.

Final Thoughts

You will hear about loopholes and how you can exploit the system by getting a retention bonus just before the anniversary and canceling. Alternatively, you can pay the annual fee for a huge retention bonus and then cancel and keep the bonus. But the reality is, many of the best credit cards out there will offer you some sort of incentive to stay.

Whether you get a companion certificate, bonus points, or something else, it is up to you to determine if that is worth it for you to stay. Don’t impulsively cancel a credit card. You may regret it when it hits your credit score. As with any decision related to your credit, be careful and do your homework to figure out what is going to be the best decision for your personal situation. Often you won’t be able to reapply for a card once you cancel, so make sure it’s really what you want to do!

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Why Your Credit Score Might Dip When You Pay off Your Debt

When you start reading the advice of financial advisors, you will discover that most of those experts agree that the first step toward getting out of debt is paying off your credit cards. This will make your budget more flexible when you do not have to make credit card payments each month.

But what they don’t tell you is that your credit score may drop a little as a result. Doesn’t make sense? Well, there are a few reasons why it happens. However, it is not usually a serious problem. Let’s discuss some of the reasons so that you can understand and be prepared if this happens to you.

How Good Your Credit Score Is Matters

If your credit score is already high (over 720), then you probably have nothing to worry about when you pay off your credit. You might see a slight, temporary dip in your credit score, but when you have a solid credit history you have nothing to worry about.

Having an 850 is not necessarily required. There is a range when it comes to “excellent” credit. Generally anything in the mid-700s and above will get you approved for any financing you need.

Why Does A Credit Score Drop?

It might seem strange to have your credit score drop when you show that you can pay off what you owe. But, when you understand the various things that go into figuring a credit score, and you understand the concept of credit utilization, it might make more sense.

For most of the credit bureaus, 30% of your credit score is based on credit utilization. While you should aim to keep this figure low—by owing no more than 30% of what you can borrow, having no credit utilization is not necessarily the best thing.

What Should I Do To Keep My Credit Score High?

For the best credit scores, it is wise to utilize your credit cards regularly. Do so within the appropriate credit utilization recommendations, and pay off your credit card monthly. When you do this, your credit score will stay high. Plus, you will show that you are responsible and creditworthy. You will not suffer by having to pay any interest charges.

Applying for more and more credit is not a good idea though. Keep a small number of cards, and choose them well (i.e., based on terms and conditions, rewards, or whatever factors are most important to you). Monitor your credit report regularly to ensure that it is accurate. Immediately address any problems should there be any.

What’s the Bottom Line?

The bottom line is that, when it comes to good credit, you have plenty of control. Make wise credit decisions. Don’t spend beyond what you can pay off. Make every single payment on time. Don’t have more credit than you need.

This is how you can get the best credit score, or raise a poor credit score most effectively! Don’t worry too much if your score dips slightly when you pay off your card. Simply get back to your good credit habits and you will be fine.

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How To Improve Your Small Business Credit Score

It’s probably very likely that you know that you have a personal credit score, and, if you are really on top of things then you probably even know what that score is. But, as a small business owner, do you realize that your business also has a credit score?

Is a Business Credit Score the Same as a Personal Credit Score?

A business credit score does not follow the same index as a personal credit score, typically FICO. Your personal credit score is a three-digit number that ranges from 400-850 (ideally much closer to the top of that range!). Your business credit score is probably based on the most common business credit score system, called Paydex. This index gives your business a score between 0-100, with 75 or above being considered the “good to excellent” range.

Why Do I Need a Business Credit Score?

Building up your business credit score is just as important as your personal credit score. It will help you expand your business over time by being able to secure business loans or get financing for expansions, equipment, and investments. Instead of relying on your personal credit score to get loans and financing, you can get the financing you need based on your business credit score.

Also, it is important to be able to separate your business and personal finances. This is not only important for tax purposes, but also for liability and other reasons. In the event that your business fails, your personal credit will not be affected. That may allow you to head in a different business direction or rebuild, without harming your personal credit. If you had to file bankruptcy because of a failed business, you may have that follow you for up to 10 years.

How Can I Raise My Business Credit Score?

There are several important things that you should do if you want your business credit score to stay strong or improve. Here are four great tips:

  1. Make every payment on time. Just like your personal credit, your business credit score will be affected by your payments. Making every payment on time will help keep your business credit score strong. It will also help it continue to rise as your business looks like a good credit consumer. Not only does this help your credit, you also avoid penalties and late fees!
  2. Keep your debt at a manageable level. Even if you need to take out a loan, you want to make sure that you are not overutilizing your available credit. Monitor any revolving debt to make sure that your ratios stay in a healthy range. If your credit utilization becomes too high, your credit score will drop.
  3. Use the credit that you do have. Don’t just let your business credit card sit there and gather dust. It should not be reserved just for emergencies! Make regular purchases and payments. This will help you to establish and build credit. Plus, if you use the right business credit card, you can accumulate rewards points and get cash back or other rewards!
  4. Monitor your business credit report. Just like your personal credit report, you need to monitor your business credit report. Make sure that the information contained within it is accurate and current. Any inaccuracies should be immediately reported.

When you can build up a great credit score for your business, it becomes easier to separate your business and personal expenses, taxes, and liabilities. Build a stronger business by developing a credit history specific to the business. You will find it easier to invest, build, and watch the business grow.

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What Effect Do Student Loans Have on Your Credit Score?

should i refinance my student loans

It’s no surprise that the average college student graduates with well over $30,000 in student loan debt. However, too many people fail to realize that not paying their student loans, or not paying them in a timely manner, can seriously hurt their credit. A student loan is just like any other loan. It must be paid back according to the terms and conditions that were agreed upon at the time the loan was given.

Paying a student loan is a great way for college grads to build up credit. A good credit history makes it easy to get a car loan or qualify for a nice place to live. A good credit history can also help students qualify for a credit card.

Making Your Student Loans Work In Favor of Your Credit

Unfortunately, there isn’t a magical solution to this. One of the best things that you can do for your credit is to pay your student loans on time and pay off your student loans as agreed. So, for those who feel frustrated by paying student loans, realize that there is something very positive that can come from having student loans.

Additionally, when you make your student loan payments on time each month, the three major credit bureaus will be notified. You will appear to be a responsible, low-risk borrower. That will open more opportunities for you.

What If You Cannot Make Your Payments?

Defaulting on your loan, or just not paying it, is the least desirable option. Defaulting on a loan has terrible consequences for your credit. A loan default will leave you struggling with your credit for years. Not only will it affect your ability to get loans and credit, but some employers and landlords check credit to see how trustworthy you are. Seeing a defaulted student loan doesn’t leave the best impression.

If you find that you are struggling to make your student loan payments, you should contact the lender before you actually fall behind. If you explain your situation, you might be able to negotiate a smaller payment or even get a temporary deferment. When you try to work with the lender, you may be able to protect your credit, which you definitely will not be able to do if you default on the loan.

What About Interest Rates?

You should realize that when you defer on a loan, the interest continues to accumulate. Hence, you will end up paying more in the long run. But, when you can’t make the full payments, or any payments at all (which is more common than you might think), paying what you can and getting through is important enough. In some cases, it can help justify the deferment.

You’ve spent the last several years carefully attending your classes, completing your projects, and making sure you had a great GPA. You don’t want to disregard the next part of your life—becoming a responsible adult with a good credit score. Make your student loan payments on time each month. Slowly but surely, the amount you owe will go down. Someday it will be paid in full!

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The Best Walmart Credit Card

As the world’s largest retailer, you might visit Walmart for your everyday shopping and groceries. If that’s the case, each shopping trip can be even more rewarding with the best Walmart credit card. Whether you shop online or in-person, find out which credit card is the best for you.

When you shop at Walmart, be sure your credit card or rewards debit card always earns at least 1% (1 point) per dollar spent. All the cards on this list earn at least 1% on each Walmart purchase, and you can qualify for at least one of these cards when your credit score is higher than 550.

Walmart Credit Card vs Walmart Mastercard

Let’s start with Walmart’s own two credit cards.

Walmart offers two co-branded consumer credit cards through Synchrony Bank:

  • Walmart Credit Card
  • Walmart Mastercard

You can apply for either card online or at any Walmart store.  Both cards have the same 3-2-1 purchase rewards program, but the Walmart Credit Credit only works at Walmart stores; it’s a store charge card.

Best Walmart credit card

Between these two cards, Walletpath recommends the Walmart Mastercard because it is a full-fledged credit card that is accepted by any merchant in the world that accepts Mastercard. However, you generally need a credit score of 660 or higher to be approved. If your score is between 550 or the mid-600s, you may have to apply for the Walmart Credit Card instead.

Neither card charges an annual fee. Both cards will improve your credit score with on-time payments.

Earn Up to 3% on All Walmart Purchases

No matter which co-brand Walmart credit card you go with, you will enjoy the 3-2-1 rewards program that is rewarded with a cash statement credit:

  • 3% back on all Walmart.com purchases (includes Walmart Pickup and Site-to-Store)
  • 2% back on Murphy USA & Walmart gas purchases
  • 1% back for in-store Walmart purchases and anywhere else

Remember, only the Walmart Mastercard can be used for non-Walmart purchases.

The Walmart credit cards earn the highest rewards for online purchases. This higher reward rate is most likely Walmart’s way of taking the online retail fight to Amazon. Since Walmart now lets you buy your groceries and non-groceries online, you can get 3% back by shopping ahead of time and then driving to Walmart to pick it up.

Citi Double Cash

If you want a flat rate cash rewards card that earns 2% on every single purchase, regardless of where you shop, the Citi Double Cash is one of the best. The reason why is because most cash back credit cards only earn 1% or 1.5%; you get an extra 1% on every dollar by paying your bill on-time.

Citi Double Cash

If you shop online at Walmart.com, the co-brand Walmart credit cards will still earn an extra 1%. Otherwise, the Double Cash pays the same on Walmart gas purchases and an extra 1% on in-store purchases.

When you primarily shop in-store, the Double Cash is a better option if you qualify. Online forums indicate you typically need “excellent” credit of 700 or above to qualify for the Citi Double Cash. You can usually qualify for the Walmart Mastercard with “good” credit (660 or above) and the Walmart Credit Card (Walmart purchases only) is issued to applicants with a credit score of 550 or higher.

Chase Freedom

If you want a card with more flexibility but can still earn bonus points at Walmart, take a look at the Chase Freedom.

The Freedom is a cash back rewards card that earns 1% on all purchases but has a 5% rotating bonus category. In 2017, consumers earned 5% on the first $1,500 spent at Walmart in the 4th quarter.

Chase Freedom

The 2018 Chase Freedom bonus categories make it even better to earn bonus rewards at Walmart. In the first quarter 2018, you can get 5% cash back when you pay with a digital wallet (i.e. Chase Pay, Apple Pay, Samsung Pay).

If Chase offers 5% back at Walmart to close 2018, that’s two-quarters of 5% cash back at Walmart! No other credit card can make the same claim.

Two Reasons to Consider the Chase Freedom

There are two reasons the Chase Freedom can be the best Walmart credit card for you.

Firstly, you can redeem your rewards points for statement credits (like the Walmart co-brand credit cards) or you can also redeem them for gift cards or even award travel. As a part of the Chase Trifecta, it’s even possible to transfer your points directly to your favorite airline or hotel if you prefer travel rewards to cash back.

Secondly, the Chase Freedom earns bonus rewards points on non-Walmart purchases too. If you primarily shop in-person at Walmart, you will only earn 1% with Walmart’s own credit cards–the same reward rate as the Freedom in non-bonus months.

You have nothing to lose by using a flexible rewards card to keep all your points in one place. Not only will you earn potentially more rewards, they will also be more useful and practical.

Discover It Secured Credit Card

If you have poor credit (550 or higher), you have two good credit card options to earn at least 1% back at Walmart. When the Walmart Credit Card isn’t flexible enough, you need to take a look at the Discover It Secured Card.

This is one of the few secured credit cards that doesn’t charge an annual fee and also earns purchase rewards. You will earn:

  • 2% on restaurants and gas stations (first $1,000 in combined spending every quarter)
  • 1% for all remaining purchases

You sacrifice 3% cash back on all Walmart.com purchases, but you get a credit card that earns at least 1% anywhere you use it. Since you probably shop at more places than Walmart, this can be a better option.

Another reason to consider the Discover It Secured Card is that Discover will match your purchase rewards dollar-for-dollar at the end of the first year as a sign-up bonus. If you earn $100 in rewards, Discover will give you an additional $100 for free!

What is the Best Walmart Credit Card For You?

So you can easily choose the best card for you, let’s do a quick review of why you might like or dislike each of the recommendations.

  • Walmart Mastercard: Earn 3% on Walmart.com purchases, accepted anywhere, only need good credit
  • Citi Double Cash: Earn 2% on all Walmart and non-Walmart purchases, need excellent credit
  • Chase Freedom: Earn up to 5% at Walmart, rewards points can be redeemed for cash, gift cards, and travel
  • Walmart Credit Card: Only works at Walmart, good option if you have poor credit (550+)
  • Discover It Secured: Get up to 2% back on all purchases while you build credit

If you primarily shop online at Walmart, their own co-brand cards will give you the most cash back on a consistent basis. A flexible rewards card is better if you don’t want a monthly statement credit or want to earn bonus points for non-Walmart purchases too.