Not necessarily.  If you have any bills that you’ve been late making payments on – bring those bills back to current immediately.  Banks care about two things.  The first being your ability to pay your bills on time over an extended period of time.  The second is that you have not maxed out your credit cards, because this shows you are desperate for credit.  As a rule of thumb, try to make sure that you are using below 60 percent of the limit extended to you across all of your credit card accounts.  Meaning, if you have a combined credit line of $10,000, limit your spending to $6,000 or less.  If you’ve been practicing this rule and paying your bills on time, you should have a good credit score, and shouldn’t have any problems securing a home loan.  But before you apply, it’s a good idea to get a copy of your credit report to ensure it matches your expectations.

This rule applies to the amount of credit extended to you across all of the revolving accounts on your credit report.  This is called the debt to credit line ratio, and represents the amount of debt you have accumulated against the amount of credit that’s been extended to you.  Only revolving accounts are included to calculate the debt to credit line ratio.  This includes credit cards, store cards and home equity lines of credit.  And no, you don’t need to obsess about keeping this ratio low, just try to make sure it is under 60 percent.

No.  Not at all.  This is actually a very good thing for both you and your credit.  If you have a credit card and you choose not to use it, it will affect your credit score positively.  Even if you don’t use your card, your account will still be reported to the credit bureaus every month as being in good standing.

Paying off your credit cards and loans is not the answer to improving your credit score.  While it is important to keep paying off your debts in full as your end goal, the key to a good credit score is paying your bills on time – all of the time.  A combination of secured and unsecured loans actually looks good on your credit report, given that they’ve been handled responsibly.  Even after you pay off all of your credit cards, keeping the account open with a zero balance will help improve your credit score.

Since you intend on paying it off, don’t over analyze this.  Make the purchase for your friend as you’ve planned.  If you are sure she’s good for the money, and have the funds in hand on the day you make this purchase, you will be fine.  What gets reported to the credit bureaus is your balance on the last day of your billing cycle.  As long as you bring down your balance before then, there will be no indication that you made a large purchase.

If you have a credit card and you choose not to use it, it will affect your credit score positively.  Even if you don’t use your card, your account will still be reported to the credit bureaus every month as being in good standing.

One denied credit card application won’t affect your credit score much, but if you apply for a number of credit cards or loans in a short period of time them, your credit score will drop.  If you have a large number of inquiries on your credit history, yes your future applications will be affected.  When potential creditors notice a large number of inquiries on your credit report it makes them think that you are desperate for credit.  Your best bet is to apply for a secured credit card.  You’re guaranteed approval, and you’ll be required to make a security deposit – minimum $200.  You can use a secured card to build up your credit history.  If you have any debts that caused your initial application to be denied, use this time to pay them off, which will also help your credit.  After you’ve had the secured credit card for sometime, check your credit score.  Once it’s above 660 or 680 try applying for an unsecured credit card again.

When you choose debt settlement, you withhold payments from your credit card companies, intentionally defaulting on your account, if you have not already done so.  By doing this, you hope that at some point your credit card issuers will be willing to settle for much less than what you currently owe them, at which point you will need to be able to offer them a large lump-sum payment.  You can do this on your own or hire a Debt Settlement Agency to guide you through the process.  It can absolve your debts, but if you haven’t already defaulted on your credit card, doing so will seriously damage your credit score and there’s no guarantee that your credit card companies will be willing to settle.  If you have already defaulted, debt settlement will not affect your credit score any further.

Banks want to see how you have handled significant amounts of credit over an extended period of time.   If an unsecured line of credit makes you nervous, your best bet is to get a secured credit card.  If you don’t have any credit cards or loans of other types, you have no credit history, which will seriously hurt you if you ever need to apply for a credit card, mortgage or auto loan in the future.  A secured credit card will help you build credit history with low risk to you.  With a secured credit card, your line of available credit can be as little or as much as you choose.  Usually starting around $200 dollars, a deposit is required to open a secured credit card, and you can add to your available balance at any time.  This raises your credit limit and looks favorable on your credit report.  However keep in mind that going over the limit or being delinquent on your payments with a secured credit card will negatively affect your credit history and score.  A secured credit card can act as a personal savings account while building your credit history at the same time, but responsibility while using a secured or unsecured card is the key to a good credit score and history.

Yes, it will affect your credit score. How it will affect your score depends on your parents payment history and amount of debt on the credit card in question. More specifically,

• Under the assumption that your parents always pay this credit card ontime and the credit card has a balance of less than 60% of the credit limit (i.e. a $6,000 balance if the credit limit is $10,000), your credit score will go down because your credit report will get deprived from the ontime payments that your parents make + all the available credit that your parents have, but choose not to use.
• Under the assumption that your parents, on occassion, have missed more than 2 payments in a row on their credit card and/or are ”maxed-out” on the credit limit of this credit card, then your credit score might actually get a boost assuming that you can do a better job in managing your credit than your parents.

Our recommendation: If your parents have Good or Excellent Credit then you should stay as an authorized user (or co-signee) on their card for as long as you can. If they are concerned about what you charge on the credit card, they should keep you as an authorized user, but take the plastic away from you. In addition, you should at least get your own credit card before they remove you as an authorized user (i.e. co-signee).

Identity theft occurs when someone uses your personally identifying information, like your name, Social Security Number (SSN), or credit card number, without your permission, to commit fraud or other crimes. The FTC estimates that as many as 9 million Americans experience some form of identity theft each year.

The crime takes many forms. Identity thieves may rent an apartment, obtain a credit card, or establish a telephone account in your name.

First of all there is no FICA Score! There is only FICO Score or simply FICO.

FICA is a United States payroll (or employment) tax imposed by the federal government on both employees and employers to fund Social Security and Medicare.

Credit scores are calculated from a lot of different credit data in your credit report. The first step in improving your credit score is understanding what is a credit score and what affects it.

Once you are clear on the basics, here are some things that will improve your credit score:

The 3 major credit reporting agencies in the U.S. are Equifax, Experian, and TransUnion.

On a previous article we mentioned how to get a free credit report from all 3 of these credit reporting agencies (or credit bureaus). If for whatever reason you need to contact one of these credit reporting agencies directly we have also summarized their contact info below:

Anyone with what is considered a permissible purpose can look at your report. These companies, groups, and individuals include:

• Potential lenders
• Landlords
• Insurance companies
• Employers and potential employers (usually only with your written consent)
• Companies you allow to monitor your credit report for signs of identity theft
• Some groups considering your application for a government license or benefit
• A state or local child support enforcement agency
• Any government agency (although they may be allowed to view only certain portions)
• Someone who uses your credit report to provide a product or service you have requested
• Someone that has your written authorization to obtain your credit report

If you would like to block lenders, credit card companies, and insurance companies from getting access to your credit report without your approval, you should opt-out. It takes less than a minute and it’s completely free.

There are many different versions of credit monitoring. Be aware that every company tries to persuade you that their service is much better and different than anything else out there.

The reality is that all of them are very similar and offer the same types of popular features. The most common features include:

If you become a victim of identity theft there is going to be a lot of hassle and even money involved. As a result, we recommend credit monitoring as the best way to get identity theft protection.

At the same time, the risk of becoming an identity theft victim is fairly low (below 5%), and thus, if you do not want to spend the money for a credit monitoring service, here are a few tips from the FTC that you can do yourself, for free:

Credit monitoring services track your credit file every day and alert you whenever there is a change. Occasionally, they will also tell you your most recent credit score. Credit monitoring services offer two primary benefits.

The first (and most important) benefit offered by credit-monitoring services is that they help you prevent identity theft. Identity thieves operate by opening credit accounts under other people’s names. Identity theft occurs when someone uses your personally identifying information, like your name, Social Security number, or credit card number, without your permission, to commit fraud or other crimes.

There are several sites where you can check your credit score. Most services want to lock you into a monthly subscription (i.e. a credit monitoring service), by offering a free trial.

We do not like the idea that you have to remember to cancel the free trial and as a result we recommend that, if you just want to check your credit score, you should get it from Equifax for a one time fee of $15.95.

A good credit score is a score above 660, but a really good score is above 720. If you do not know your exact credit score you can either pay $15.95 to check your credit score or you can use the guidelines from below (obtained from the Capital One website) to get a directional assessment of how good is your credit score.

In order to make the most of your credit score you should start by ensuring that there are no errors on your credit report. Did you know that you are entitled, by law, to get a free credit report once a year?