Unsecured Debt Versus Secured – Which to Use?

Many people think of debt as a bad thing, and in many cases, they're absolutely right. However, there are several instances where debt can be a good thing, and can help you achieve your financial dreams. Here's a primer on the difference between good and bad debt.

The Good Debt.

Certain debts can help you live a lifestyle otherwise impossible. Mortgages are a great example of good debt, if used properly: most of us could never afford to pay for a house out of pocket. However, with a down payment and a reasonable mortgage that fits our budget, that debt provides us with home ownership- a dream for most families.

Car loans can also be good, for similar reasons. Most people need a vehicle to get to work (in order to make money and pay all the debts!) and are unable to pay for a car in cash.

Investment properties can be very profitable if you can secure a mortgage with low monthly payments. By using a mortgage, you can have renters pay for your property, while enjoying several tax advantages and appreciation over years to come.

Bad Debt Defined.

Debt can be murderous, especially in the form of credit cards with interest rates as high as 30%. If you find yourself taking on credit card for items that do not appreciate - such as steroes, CD players and computers - you are fighting debt every step of the way.

Should you begin to miss payments on your existing debts, your assets could be at risk. In addition, your credit score will take a hit, which translates to higher interest rates on your future and possibly current purchases. It is a slippery slope - missed payments lower your credit score, making it even harder to make the monthly payments. This is the type of debt you should steer clear from whenever possible.

Want to find out more credit score tips, then visit our site on the difference between good and bad debt.

Credit Repair – What You Can Do

If you have bad credit it is important to get it repaired. There are many things you can do to repair your credit. You can repair your credit by going to a credit repair agency or you can do it yourself. Either way, you are making a good decision toward a better financial situation for you and your family.

Credit repair is very important, especially if there is something you want to buy and you cannot get qualified for it. It is almost impossible to get a loan for anything if your credit scores are low. The process of credit repair can take up to a year or more for some people. It usually depends on the amount of debt you are in and how much you can afford to pay on your debt. This process can take a little time and it is important to remain committed until you have paid everything off.

Choosing a credit repair agency may be your best solution if you find that your credit seems to be too out of control to handle. You also may not have the time in your busy schedule to work with every creditor also. An agency can help you repair your credit and they will do all of the interaction with your creditors. You can repair your credit on your own. No one has to hire a company to help them with their credit. These agencies are there to help. Repairing your credit on your own is simple to do and you can do it.

Once you have all three reports you need to verify that everything on the report is current and up to date. If your name has changed due to a marriage you should update it. Address information and phone number updates can increase your score a full point on your credit. It would be a shame to be denied on a car loan because of one point that you could have had if your contact information was incorrect. In addition to updating proper information you will need to dispute any items on your reports that are not really your debts. You will do this by writing letters to the bureaus for each item.

Another thing you can consider when you want to repair your credit is that you can get a consolidation loan to pay it off. Many people consider consolidation loans when they are in debt in large amounts. This will pay off all of your debt at once, which looks great on your credit. Then you will have one easy monthly payment that you have to make to pay off the consolidation loan. This is a great idea but you must pay off this loan.

Repairing your credit is the best thing you can do if you are hoping for financial freedom or if your bad credit is negatively affecting you. By taking a few simple steps you can repair your credit.

Take 30 Minutes To Raise Your Credit Scores 40-100 Points.

One of the most powerful pieces of knowledge you can have is understanding how the three major credit bureaus assign your score to you. Most often, people are never taught about their credit scores.

Here's how it all goes ...

Payment History: 35%
Payment history makes up the largest piece of your credit scoring model. It reflects how timely you make payments to your creditors.

Credit Utilization: 30%
Credit utilization shows how much credit you're actively using. One simple way to increase your scores is by keeping balances at or below 50% of your overall credit limit.

Credit History 15%:
How long your accounts have been open. Longer more established accounts are more positively weighted than newer accounts.

Recent Inquiries - 10%
Your recent inquiries show any inquiry made to your credit report from a prospective creditor. Too many inquiries can cause your scores to be lowered.

Types of Credit In Use - 10%
Your types of credit in use lists how many accounts you have, and what kinds of accounts they are. Having too many loans can lower your scores.

Now that you know a little bit more about credit scores, here are a few things you can do in the next half hour to add some more points to your score!

Raise your limits!
Raising your credit limits is much easier than you might think. Most people don't realize that just by simply asking for a credit limit increase, you will most likely get one. We have proven this over and over again with clients. Just call the phone number on the back of your credit cards, and tell them you are considering transferring the balance to another card with a higher limit and lower interest rate, but that you would like to keep the account if they could just raise the credit limit. In my personal experience, it has worked 100% of the time. Often they will also lower the interest rate as a bonus. Lowering the interest rate will not help your credit score, but it will sure help your finances.

Let's say for example you have a credit card with a $5,000 credit limit, and you currently have a $4,000 balance on it (80% utilized). After your quick phone call, they agree to raise your credit limit to $6,500 (now 62% utilized). This alone will immediately increase your credit scores. Remember in the "Credit Utilization" section above, we want to ideally keep our balances below 50% of the credit limit. This brings us to the next powerful tip.

Lower Your Balances: Referring to the example above, your credit utilization on your card is at 62%. There's even more you can do to improve your credit with this one account! Bringing the balance down to 50% would mean making a one-time payment of $750. And even if you can't afford to pay the $750, you're still better off than you were before, thanks to the new high credit limit you received from that phone call you made. If you're trying to make a big purchase (such as a home or a car), though, you'll wind up saving yourself thousands of dollars on your new loan as well as being granted an even lower monthly payment, if you pay down your existing accounts. The result will be higher credit scores and your loan terms will be even improved as well!

The aforementioned tips have proven to be very powerful and effective in the past and have shown to help people achieve better credit scores. One person in particular was able to get the credit limit on 3 of his cards raised, and his scores increased by 105 points immediately.

If you have a good credit history and at least 3 open, established accounts on your credit report, these tips could produce fantastic results! If you have less than perfect credit or a negative credit history, a more aggressive approach might be the way to go.