U.S.News Study: Bad Credit vs Good Credit

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Recently, I had the opportunity to collaborate with  U.S. News & World Report regarding financial literacy and consumer credit focusing on bad credit.

The recent study showed that “68% of consumers with bad credit reported that they are working towards improving their credit score.” – U.S. News

Do you know what FICO Score means?

Do you know what you can do to take your credit score from a 500 to 700?

If not, you will after reading my takeaways from the study.

Check out the full study at U.S World News Best Credit Cards for Bad Credit of 2017.

Your credit determines your future.

Get Educated

What is FICO?

Formerly named Fair, Isaac and Company in 1956. FICO score is calculated based on the data on your credit report collected by Equifax, Experian and TransUnion credit reporting agencies.

FICO Credit Score Ranges:

  • Exceptional (800-850)
  • Very Good (740-799)
  • Good (670-739)
  • Fair (580-669)
  • Very Poor (300-579)

What you should know before applying for a loan or credit card

Your FICO score determines your credit worthiness for lenders to make their decision in the approval process before granting you credit.

The following credit behaviors that make up your credit score.

  • Payment history: 35 percent
  • Amounts owed: 30 percent
  • Length of credit history: 15 percent
  • New credit: 10 percent
  • Credit mix: 10 percent

Check out the full study at U.S World News Best Credit Cards for Bad Credit of 2017.

About half of people with bad credit sometimes need credit cards to pay for basic necessities. – U.S.News

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Repair Your Credit

Dispute, Dispute, Dispute

Pull your credit report from Annual Credit Report, it is totally free. You are allowed one free credit report each year from all three credit bureaus Experian, Transunion, and Equifax. Once you receive your report look for the most common errors.

  • identity errors (name, city, address etc.,)
  • incorrect account details (year, account holder, status)
  • fraudulent accounts

Create a Budget

You should know the amount of money coming in and going out of your household every month. Pull your checking/savings account bank statement for last month this will show your monthly income average and where you are spending your money.

Pay Off Debt

With the money you have left over in your budget pay off credit cards with high balances. Contact credit card holders to lower your interest rates. Or consider transferring your credit card balances to another credit card with a lower interest rate. Contact your credit card holder.

Check out the full study at U.S World News Best Credit Cards for Bad Credit of 2017.

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Bad Credit Cards – vs – Good Credit Cards

Various Types of Credit Cards

Once you have repaired your credit, its time to shop for credit cards. Determine which credit card fit your needs secured verses unsecured credit card.

A secured credit card is secured with a cash deposit. Usually have high cash deposits, less risk to lender, and low credit limit. An unsecured credit card is your traditional credit card. Unsecured cards have higher credit limits, annual fee, and no cash deposit.

Credit Cards for Bad Credit

Discover it Secured Credit Card

Capital One Platinum Credit Card 

First National Bank Secured Visa Card

Run From These Type of Credit Cards

Shy away from credit cards that does not help increase or help rebuild your credit.

  • Catalog Credit Cards ie., Finger Hut
  • Cards with no grace period. Your credit card interest accrues instantly.
  • Next Millennium Card, Emporium Card, Horizon Gold to name a new

Use Your Credit Responsibly

Be responsible with the credit you do have.

Make your monthly bill payments on time each month.

Manage the usage of your credit cards. Research and download financial apps such as MINT.

Setup automatic payment with creditors to avoid late fees. Pay your credit card balance in full each month.

I hope this information was helpful and gives you a head start to repairing and rebuilding your credit.

Check out the full study at U.S World News Best Credit Cards for Bad Credit of 2017.

Follow us on INSTAGRAM @iamzetaj

Shanna A. Jefferson, MSW, LCSW, LISW-CPS is a Life Coach, Psychotherapist, and Author. (1)

 

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