1. Open a checking and savings account at a bank or credit union, manage your accounts carefully and never bounce checks. This is the initial step to take to start proving your credit worthiness.
    
2. Get a copy of your credit report from all three of the major credit bureaus once per year and check the accuracy of your reports. If you find discrepancies, follow the directions on the report and dispute them with the credit bureau. There may be inaccuracies on your credit reports and it is up to you to monitor them. You are entitled to one free copy of your report from each bureau once per year. Go to www.annualcreditreport.com or call 1-877-322-8228.
    
3. Pay all of your bills on time, every time. Your payment history accounts for 35% of your credit score and it only takes one missed payment to hurt your score. Set up automatic payments when possible and keep a calendar of due dates and a payment reminder system.
    
4. On your revolving accounts (credit cards) keep the balance you owe under 30% of your credit limit. One more thing; paying your bill in full each month is the smartest way to use credit and will have the greatest positive impact on your score.
    
5. Be sure that your lenders are reporting your credit limits accurately. If the limits are too low, it can affect your score. Remember the 30% rule!
    
6. Do not apply for more credit if you already have open, unused credit lines. Also, do not open new accounts simply to pay off existing accounts. Opening several new accounts can cause your score to drop.
    
7. If you do not have a credit history and are trying to build one, consider a secured credit card, but shop carefully! The lender will require you to deposit money up to the credit limit. Try your own bank or credit union first and make sure that the card you pick:
    
   1. Has no (or a very low) application or annual fee
   2. Converts to a regular unsecured credit card after 12 – 18 months of on-time payments
   3. Will be reported to all three credit bureaus. If the issuer does not report to the credit bureaus, the card will not help build your credit history

    

8. Keep older credit card accounts open. *One thing you shouldn’t do if you’re just trying to boost your score is close unused accounts, says Craig Watts, consumer affairs manager for Fair Isaac Corp. “If someone tells you to close unused accounts to improve your score, they’re pulling your leg,” he says. “It won’t help you and it can hurt you.”
    
9. Be patient. It takes time to build or rebuild credit. Continue paying all of your debt on time, and if you are behind on accounts – get current.
    
10. Look for help if you feel overwhelmed. Credit counselors can help you put together a plan to manage your credit. You can find a credit counselor by contacting the Association of Independent Consumer Credit Counseling Agencies by visiting www.aiccca.org, or calling them at 1-866-703-8787.
     

Source:

*Curry, Pat. 2007 August 3. Tips for Boosting Your Credit Score. Bankrate.com. Retrieved from http://www.bankrate.com/finance/credit-debt/tips-for-boosting-your-credit-score-1.aspx.

Just like a food diet that helps you watch what you eat, a spending diet helps you manage what you spend. Last year a poll conducted by American Research Group showed that Americans planned on spending an average of $431 on Christmas gifts.  However, intentions are not the same as actions. In evaluating the difference between what people said they were going to spend and what they actually spent, Catherine Rampell, Economics Editor for the New York Times, said, “Consumers may say they’re going to spend less [this year], but they buckle when they actually hit the mall.”

So how can you make a reasonable shopping budget and stick to it? Below are some actions you can take on your spending diet which will make this holiday season more enjoyable and less expensive.

Get organized

First create your own budget and see how much money you have available to spend on holiday shopping. It may not be very much and that is okay. Having an enjoyable holiday season does not mean it has to be an expensive one. What do you enjoy about the holiday season? Visiting with friends and family, singing carols or holiday songs, enjoying a good meal? Some people spend an evening driving or walking around their neighborhood looking at the decorations. 

Make a list of everything you want to buy this season; decorations for all the upcoming holidays, gifts, costumes and special foods. Now review your list and find items where you may be able to cut back. If you plan on having a dinner party at your house, could you make it a potluck instead? Could your children make decorations rather than purchasing new ones from the store? Really evaluate whether or not the items in your list are necessary for enjoying the holidays.

Impulse spending

Leave your credit cards at home and pay cash when you go shopping. Credit cards make it easier to spend more than you budgeted. According to research conducted by Dunn and Bradstreet, people spend, “on average, 12 – 18% more when making a purchase with a credit card as opposed to cash.” When the cash is gone you are done shopping.

Stick to your list. If you have trouble saying no to sales or “good buys”, avoid going to the store without a list or a reminder of what you know you can afford. If only certain stores cause temptation, try to avoid those completely.  Finally, take a notebook with you when you shop. Jot down the items you purchase and the amount of money you have spent. This will help you stay within the limits of your holiday budget.

Reduce the obligations

If you typically purchase gifts for extended family and friends, think about ways to change that tradition. Talk to them about limits on spending, drawing names, simply exchanging cards, or having a get-together instead. Chances are they would like to reduce their spending as well and would appreciate the suggestions.   

Be realistic

Many people feel the need to spend a lot of money on gifts for their children in order to show them that they love them. Others worry that telling kids there is a limit to the amount of money spent on gifts or that they need to scale back the holidays will cause the child to worry about the family’s financial situation. In reality, parents are a child’s primary financial teacher and holidays are a perfect opportunity for learning about budgeting.  However, rather than explaining that they’ll receive less gifts this year due to money constraints, let them know that you’d like to have a simpler holiday. Emphasize being together as a family and creating new, fun memories.  Perhaps spend an evening together baking holiday treats as gifts for friends and neighbors.

Finally, remember, you do not have to accept every invitation to a party, or buy the biggest and the best gift to show someone you care about them. Just like eating a well balanced meal will keep you healthy, a well balanced budget will keep you in solid financial shape.

A: There are a variety of factors that lenders may look at when determining credit worthiness for a loan, one of those is your credit score. Depending on the creditor’s lending guidelines, they may also look at your income, the amount and type of credit that you currently have, etc. With the current economic conditions, credit is becoming much more difficult to obtain.

In general, it is not recommended that you try to “borrow” your way out of debt. As a credit counselor, I hear stories everyday from clients that have attempted to do so. Frequently people will pay off the old credit card debts leaving their credit cards open for use again. Then people find themselves making payments on the consolidation but also additional new debt! There are other dangers with borrowing your way out of debt as well; adding another line of credit to your credit report may further decrease your credit score and the interest charged on debt consolidation loans is typically high so you end up repaying even more in interest.

There may be another solution! Have you considered a Debt Management Plan? With a Debt Management Planyour monthly payments and interest may be much lower than you are currently paying, the entire debt will be paid off quickly (usually within a 3-5 year timeframe), and there is no requirement for a certain credit score or need to meet other lending requirements!

For additional information about Debt Management plans, see About Counseling on our website.

By Steve Axtell

Our challenge: We live in a rural area and traveling great distances is not easy on my husband. I also have a job with long hours (5 am – 5 pm) followed by 90 minute drive home. Is there any way using email and phone, to do 99% of this work using the technology we have? My husband can join by phone if needed for answers, but the lion’s share of knowledge and access to these accounts lays with me as he does not like internet and he stresses easily if mounting bills are mentioned. However, he understands we have a responsibility to address this debt. I can make myself available to do the “heavy lifting” on this project and my husband is 100% supportive.

Alternatively, we have considered going to a bank for a debt consolidation loan and are not entirely sure what comes first, credit counseling or the bank. Guidance on that decision would be helpful.

One last thing, am I alone in thinking I had to struggle with this type of surprise? I can absolutely see now how building our new home whacked our financial situation but not until we were done paying off the construction loan – then we realized “not enough in the budget to pay all of our expenses”. Of course, we sunk all our cash into the initial construction (permits, apps, etc) – adding in my commute with high gas prices and living in the RV on the construction site for 12 months…now the dust is settling and a huge miss is apparent.

Tell us what we need to do to bring some peace to our life and my sleep.

A: Believe me; you are not alone in your struggle! We help hundreds of clients every month who find themselves in need of financial help.

We will be more than happy to work with you, and appreciate your “team” approach!

Typically, our counseling sessions are completed over the phone. When you call, one of our Certified Credit Counselors will review your current financial situation and budget, and help determine the best solution for you. When you contact us it is very helpful to have your most recent creditor statements available. You may also start your application on line at http://www.myfinancialgoals.org/ but then must call a counselor to complete the counseling session.

We have Certified Credit Counselors available Monday thru Friday from 6 a.m. to 7 p.m. Pacific Standard Time. Just call 1.888.282.5494 and enter the option for the next available counselor.

Be sure to review the resources and free classes that are available online at http://www.myfinancialgoals.org/ – they are very helpful.

By Steve Axtell