Chase Credit Journey: Check Your Credit Score For Free

Chase Credit Journey is one of the many credit monitoring services that gives you a credit score for free. Launched by Chase, Credit Journey also monitors your score and gives you advice on to improve it.

One of the best ways to get approved for a loan or a credit card is to have a good credit score. Think of this 3-digit number as a representation of your credit worthiness and credibility.

In fact, lenders use your credit score to see how risky it is for them to let you borrow.  The higher your score, the better.

So,  it is very important to use a free tool like Chase Credit Journey, to know your credit score before applying for a loan, a credit card, or an apartment.

Doing so will give you an idea whether or not you will be approved or denied.

One way to get a credit score for free and monitor it is through Chase Credit Journey. If your credit score is excellent, then you are all good.

All you have to do is maintaining it. If it’s bad, then you can take steps to raise your credit score.

In this article, we will address what Chase Credit Journey is, why you should use it, and some of its limitations.

What is Chase Credit Journey?

Chase Credit Journey is a free online service offered by Chase that gives consumers a credit score and credit report for free. You don’t have to be a Chase customer to use the service.

You’ll need to register by entering personal information, including your credit cards information, existing loans, etc.

Checking your credit on Chase Credit Journey does not hurt your credit score, because it counts as a soft credit inquiry. Soft inquiries, as opposed to hard inquiries, leave your credit score untouched.

In addition to getting a credit score from Chase Credit Journey, you can get one from the following credit monitoring services all for free:

  • Credit Karma
  • Credit Sesame
  • Credit.com
  • Lendingtree
  • NerdWallet
  • WalletHub
  • Creditcards.com

How Does Credit Journey Work?

Chase Credit Journey uses Experian, one of the three credit bureaus, to give you a credit score and report.

Chase Credit Journey uses the VantageScore 3.0 model, which is a collaboration from the three credit bureaus.

Your score is updated weekly but you can access it as much as you can and anytime you want.

Get Matched With 3 Fiduciary Financial Advisors
Answer a quick question to start your matching process with advisors in your area.
When would you like to retire?
Select an answer

Also, you can sign up for credit alerts through Credit Journey which can notify you if your score changes or if something suspicious is happening on your credit file.

If there are errors, Chase Credit Journey will guide you on how to file a dispute with the credit bureaus. You can’t get your FICO score via Chase Credit Journey.

In addition to getting a free credit score, you also get an analysis of your score and advice on how to raise it and other free resources. This way you can take steps to improve your credit score. 

If you’re ready to give Chase Credit Journey a shot, go online to the homepage to see how Credit Journey works.

You can also access the Chase Credit Journey through the Chase mobile app as well.  If you’re not convinced yet, keep reading.

Chase Credit Journey helps you understand the 6 factors to come up with your VantageScore credit score. They are:

1) Payment history (or late payments): payment history accounts for 35% of your total credit score. In fact, it is the most important factor in your total credit score. Late or missed payments can negatively affect your credit score.

2) Credit utilization ratio (or credit usage): Credit utilization is how much of your credit limit you’re using versus your balance. Credit card utilization accounts for 30% of your total credit score. So keeping it low is ideal. Keeping your credit card balance under 30% is the way to go. For example, let’s suppose your credit card has a credit limit of $5000. You have used $2500 of that credit. Then your credit utilization is 50%. To keep it below 30%, you should only use $1500 of that credit.

3) Credit age: The third most important factor of your total credit score is your credit age. That means how long you have had credit. Lenders like to see a longer credit age. In your credit report, you’ll be able to see your average credit age.

4) Hard Inquiry: The higher your credit inquiries, the lower your credit score can become. Anytime you apply for a loan or a credit card or when a landlord checks your credit, it can cause a small dip in your credit score. So multiple credit inquiries can hurt your credit score rather than improving it.

5) Total Balances: total balances refer to the amount owed over all of your credits, including your mortgage, student loans, credit cards, personal loans, etc.

6) Available credit: This factor represents the current amount of unused credit you have over your accounts.

Chase Credit Journey best feature: the score simulator

In addition to providing you a free credit score and report, a credit alert, and credit resources, Chase Credit Journey has an invaluable feature called the score simulator.

The score simulator gives you an estimate of how certain changes in your credit behavior can affect your credit score. Those changes include missing a payment, card balance transfer, and closing an old account, etc.

The importance of checking your score via a free credit service like Chase Credit Journey

Your credit score is perhaps the first thing lenders look at to decide whether to approve you for a loan or credit card. The better your score, the higher is your chance of getting that loan.

On the other hand, if you have a bad credit score, getting a loan or a credit card not only can prove very difficult, but applying for it puts a hard inquiry that can actually lower your already bad credit score.

So knowing your score before you actually apply will give you an idea whether lenders will approve you. It will also allows you to apply for credit with confidence. That’s why is important to use a free credit service.

Additionally, checking your credit score and credit report on a regular basis will help you identify what is on your credit report. Outstanding debts and a history of late payments can directly impact your credit score.

You can get your credit report for free by logging on AnnualCreditReport.com from each of the three credit bureaus. But these credit reports do not give you a credit score. Moreover, you get these reports only once every year.

While there are several options, Chase Credit Journey is just another option. It’s never a bad idea to have several options to choose from.

In other words, it’s better to get your score from more than one source. However, there are some limitations to using Chase Credit Journey.

Chase Credit Journey Limitations

One of the limitations Chase Credit Journey has is that it only uses one of the three major credit bureaus, which is Experian. When you get your score from only one credit bureau, you might not see the whole picture.

So, your credit score might not be entirely accurate.

For example, let’s say you transfer a credit card balance to a new credit card. If Transunion and Equifax are the only credit bureaus that recorded the card was closed during the transfer, you credit score might drop, because Experian recorded you opened a new card.

Another disadvantage of Chase Credit Journey is that the VantageScore’s scoring model is not the industry standard. Most companies use FICO scores to decide whether to approve or decline you for a loan or credit.

And while VantageScore and FICO scores range from 300 to 850, the two models use different criteria in coming up with your credit score. In other words, each model weighs the factors differently in calculating your credit score.

So your Chase Credit Journey credit score might be different than a FICO score. So, if you are ready to apply for a loan, find out which actual credit score your lender will use to improve your chance of approval.

The Bottom Line

Chase Credit Journey provides free credit scores and reports from Experian. The scores are updated weekly. The free credit score is based on the VantageScore 3.0 model.

However, while VantageScore’s system is accurate, it is not what most companies use. But one important thing about Chase Credit Journey is that it one other free tool that allows you stay proactive and monitor your credit on a regular basis. In turn, it allows you to know your score before applying for credit.

Speak with the Right Financial Advisor

You can talk to a financial advisor who can review your finances and help you reach your goals (whether it is making more money, paying off debt, investing, buying a house, planning for retirement, saving, etc). Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.

The post Chase Credit Journey: Check Your Credit Score For Free appeared first on GrowthRapidly.

Source: growthrapidly.com

Money-Saving Hacks to Implement Now

Redo your monthly budget (and stick to it)

You can do plenty of things to improve your budget, and it's not all about pain and suffering, as many would have you believe. Everyone has a few things they overspend on. The challenge lies in identifying those particular items and weeding them out. A good place to begin is with restaurant spending, grocery bills, and impulse buying. A wise general philosophy is to assign a destination for every dollar you earn and place that category on your budget. Try cutting restaurant expenditures in half, reducing impulse buys at convenience stores, and shopping for groceries just once each week to regulate what goes toward food items.

Refinance your education debt

If you have any education debt still hanging around after all these years, refinancing student loans through a private lender is a way to lessen your monthly expenses. Not only can you get a longer repayment period, but have the chance to snag a favorable interest rate. But the clincher for money-saving enthusiasts is that your monthly payments can instantly go way down. That means extra cash for whatever you want. Use the excess to fatten savings or IRA accounts, or pay off high-interest credit card debt.

Install a programmable thermostat

For less than $20, it's possible to chop at least three percent off your utility bills and perhaps much more than that. 

Programmable thermostats are easy to install. You don't need special tools or advanced skills. Be sensible about summer and winter settings and you'll see a difference in your electric bill almost immediately, especially during the hottest months of the year. Don't forget to program the device to go into low-use mode while you're away for long weekends or longer vacations.

Join a shopping club

Although shopping clubs come with annual membership fees, the savings on groceries, household items, and gasoline usually offset them within a month or two of actively using the membership. That leaves the other months of the year for you to save money on household necessities. 

For people who drive a lot, shopping clubs with on-site gas stations offer one of the best deals going. Not only do the clubs offer gasoline for about 10 cents off the regular price, but some also offer free car washes and coupons for repair work at participating shops. Although shopping clubs are a win for most anyone, a family of three or more can log thousands per year in savings.

Refinance your home or car

If you have owned your home or car long enough to ride the interest rate waves, you likely qualify for a refinancing agreement. This strategy is excellent for consumers who have better credit now than when they made the original purchase. 

Young couples are perfectly positioned to refinance a home after several years of making payments on it. Likewise, anyone who still owes on a vehicle and can get a lower interest rate should look into a car or truck refi. Not only can you get additional months to pay off the obligation, but with a lower rate, you stand to save a nice chunk of money.

Take bagged lunches to work

One of the oldest, more reliable ways to instantly cut personal expenses is to prepare and take your own lunch to work each day. Not only do you save money by not eating out or buying lunch in the company cafeteria, but you also have added control over what you eat. That means you're doing a favor for your wallet and your health at the same time. 

Don't fall into the rut of eating at your desk. Consider taking your bagged meal outside and enjoying the scenery, taking a walk after eating, or joining friends in the cafeteria to socialize. 

Use public transportation as often as possible

If you live on or near a bus or light-rail route, do the logistical planning necessary to travel to work at least a few times each week by public transit instead of by car. 

Unless you reside in a small town, chances are you have access to buses and trains for commuting purposes. Once you get into a habit of using the public transit system, consider buying a one-month or annual pass, which can represent a major discount on one-time fare prices. Public transportation can take a bit longer to get you to your destination, but it's easy enough to make use of the time reading, catching up on work, or just relaxing.

Use credit cards wisely

If you use credit cards to make purchases you can't afford, you're headed for trouble. But if you use your plastic wisely, you can reap real benefits.

If you have a good credit rating, you'll likely qualify for cashback cards that give a percentage of your money back on some or all of your purchases. You can use that cash to pay for a portion of your monthly credit card bill. You could also let your cashback savings accumulate and use it to pay for larger purchases in the future.

Just make sure not to outspend your monthly budget so you're able to pay your credit card balance off in full each month. Keeping a balance on your cards is counterproductive because you'll also be paying interest fees.

Source: quickanddirtytips.com

Money-Saving Hacks to Beat the System

Money-Saving Hacks to Beat the SystemDavid Pogue is one of the world's bestselling how-to authors with over 3 million books in print. He has 120 titles in the Missing Manual series, a collection of funny computer books, and he wrote or co-wrote seven books in the "for Dummies" series.

David is a former New York Times columnist, the tech critic for Yahoo Finance, and he writes a monthly column for Scientific American. He's worked in TV as the host of science shows on PBS's "NOVA" and as a correspondent for "CBS Sunday Morning" since 2002. He's the recipient of prestigious awards like multiple Emmys, Webbys, and a Loeb for journalism.

In this interview. we talk about his most recent title Pogue’s Basics: Money – Essential Tips and Shortcuts (That No One Bothers to Tell You) About Beating the System. It covers 150 simple tips and tricks to stop leaving money on the table every day. You can pick up a copy on Amazon, Barnes & Noble, IndieBound, or Booksamillion.

[Listen to the interview using the audio player in the upper right sidebar of this page or on iTunes, Stitcher, and Spotify]

Free Resource: Laura's Recommended Tools—use them to earn more, save more, and accomplish more with your money!

You should never buy anything but refurbished computers. – David Pogue

I had a great time chatting with David about some of my favorite money-saving tips from the book. Here are some of the topics we discuss:

  • The right way to purchase computers and laptops
  • Whether you should pay for extended product warranties
  • Tips to save money on insurance
  • How to get free money from Amazon programs
  • Places to turn unused gift cards into cash at sites like CardCash or Cardpool
  • How to leverage credit cards for cash back

No matter how much or little money you have, you'll take away easy tips and shortcuts to outsmart retailers, leverage savings programs, and keep more of your hard-earned money!

Get More Money Girl!

Want to know the best financial and productivity tools that I use and recommend to save time and money? Click here to check out 40+ tools I recommend!

To connect on social media, you’ll find Money Girl on Facebook, Twitter, and Google+. Also, if you’re not already subscribed to the Money Girl podcast on iTunes or the Stitcher app, both are free and make sure that you’ll get each new weekly episode as soon as it’s published on the web. The show is also on the Spotify mobile app!

Click here to subscribe to the weekly Money Girl audio podcast—it’s FREE!

There’s a huge archive of past articles and podcasts if you type in what you want to learn about in the search bar at the top of the page. Here are all the many places you can connect with me, learn more about personal finance, and ask your money question:

  • Dominate Your Dollars – Laura's private Facebook Group
  • Money Girl on Facebook
  • Twitter
  • Google+
  • Pinterest
  • Money Girl podcast on iTunes (it’s free to subscribe!)
  • Money Girl on the Stitcher app (also free to subscribe!)
  • Email: LauraDAdams.com/contact

Click here to sign up for the free Money Girl Newsletter!

Download FREE chapters of Money Girl’s Smart Moves to Grow Rich

To learn about how to get out of debt, save money, and build wealth, get a copy of my award-winning book Money Girl’s Smart Moves to Grow Rich. It tells you what you need to know about money without bogging you down with what you don’t. It’s available at your favorite bookstore as a paperback or e-book. Click here to download 2 FREE book chapters now!

Hands Taking Out Money image courtesy of Shutterstock

Source: quickanddirtytips.com

Guide to Small Business Startup Loans

Man working on a puzzle

It takes money to make money and virtually any small business will require some startup capital to get up and running. While the personal savings of the founders is likely the most common source of startup funding, many startups also employ loans to provide seed capital. New enterprises with no established credit cannot get loans as easily from many sources, but startup loans are available for entrepreneurs who know where to look. Here are some of those places to look, plus ways to supplement loans. For help with loans and any other financial questions you have, consider working with a financial advisor.

Startup Loans: Preparing to Borrow

Before starting to look for a startup loan, the primary question for the entrepreneur is how much he or she needs to borrow. The size of the loan is a key factor in determining where funding is likely to be available. Some sources will only fund very small loans, for example, while others will only deal with borrowers seeking sizable amounts.

The founder’s personal credit history is another important element. Because the business has no previous history of operating, paying bills or borrowing money and paying it back, the likelihood of any loan is likely to hinge on the founder’s credit score. The founder is also likely to have to personally guarantee the loan, so the amount and size of personal financial resources is another factor.

Business documents that may be needed to apply include a business plan, financial projections and a description of how funds will be used.

Startup Loan Types

There are a number of ways to obtain startup loans. Here are several of them.

Personal loan – A personal loan is another way to get seed money. Using a personal loan to fund a startup could be a good idea for business owners who have good credit and don’t require a lot of money to bootstrap their operation. However, personal loans tend to carry a higher interest rate than business loans and the amount banks are willing to lend may not be enough.

Loans from friends and family – This can work for an entrepreneur who has access to well-heeled relatives and comrades. Friends and family are not likely to be as demanding as other sources of loans when it comes to credit scores. However, if a startup is unable to repay a loan from a friend or relative, the result can be a damaged relationship as well as a failed business.

Venture capitalists – While these people typically take equity positions in startups their investments are often structured as loans. Venture capitalists can provide more money than friends and family. However, they often take an active hand in managing their investments so founders may need to be ready to surrender considerable control.

SBA loan applicationGovernment-backed startup loans – These are available through programs administered by the U.S. Department of Commerce’s Small Business Administration (SBA) as well as, to a lesser degree, the Interior, Agriculture and Treasury departments. Borrowers apply for these through affiliated private financial institutions, including banks. LenderMatch is a tool startup businesses use to find these affiliated private financial institutions. Government-guaranteed loans charge lower interest rates and are easier to qualify for than non-guaranteed bank loans.

Bank loans – These are the most popular form of business funding, and they offer attractive interest rates and bankers don’t try to take control as venture investors might. However, banks are reluctant to lend to new businesses without a track record. Using a bank to finance a startup generally means taking out a personal loan, which means the owner will need a good personal credit score and be ready to put up collateral to secure approval.

Credit cards – Using credit cards to fund a new business is easy, quick and requires little paperwork. However, interest rates and penalties are high and the amount of money that can be raised is limited.

Self-funding – Rather than simply putting money into the business that he or she owns, the founder can structure the cash infusion as a loan that the business will pay back. One potential benefit of this is that interest paid to the owner for the loan can be deducted from future profits, reducing the business’s tax burden.

Alternatives to Startup Loans

Crowdfunding – This lets entrepreneurs use social media to reach large numbers of private individuals, borrowing small amounts from each to reach the critical mass required to get a new business up and running. As with friends and family, credit history isn’t likely to be a big concern. However, crowdfunding works best with businesses that have a new product that requires funding to complete design and begin production.

Nonprofits and community organizations – These groups engage in microfinancing. Getting a grant from one of these groups an option for a startup that requires a small amount, from a few hundred to a few tens of thousands of dollars. If you need more, one of the other channels is likely to be a better bet.

The Bottom Line

Green plant growing out of a jar of coinsStartup businesses seeking financing have a number of options for getting a loan. While it is often difficult for a brand-new company to get a conventional business bank loan, friends and family, venture investors, government-backed loan programs, crowdfunding, microloans and credit cards may provide solutions. The size of the loan amount and the personal credit history and financial assets of the founder are likely to be important in determining which financing channel is most appropriate.

Tips on Funding a Startup

  • If you are searching for a way to fund a business startup, consider working with an experienced financial advisor. Finding the right financial advisor who fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in five minutes. If you’re ready to be matched with local advisors who will help you achieve your financial goals, get started now.
  • One way to minimize the challenge of getting startup funding is to take a “lean startup” approach. That approach could be especially helpful to baby boomers, who are “aging out” of their careers and living longer than earlier generations but still need (or want) an income. Learn how many of them are turning their retirement into business opportunities.

Photo credit: ©iStock.com/Andrii Yalanskyi, ©iStock.com/teekid, ©iStock.com/Thithawat_s

The post Guide to Small Business Startup Loans appeared first on SmartAsset Blog.

Source: smartasset.com

How Equipment Financing for Businesses Works

Three forklifts at a warehouseFinancing the purchase of essential equipment lets businesses preserve cash for working capital, hiring staff, expanding marketing efforts or other purposes. Equipment financing can be done with term loans, SBA-backed loans, lines of credit and credit cards. Equipment loans are generally easier to get than other forms of financing and may require no down payment, since the loan will be secured by the equipment being purchased. If you’re not sure which option to take, consider talking to a financial advisor experienced in this area.

Many sorts of businesses use financing to acquire a variety of equipment types. Construction companies finance the purchase of bulldozers and cranes, restaurants finance refrigerators and ovens, fitness centers finance workout machines and computers to run their offices, to name a few.

Loans may be any amount up to the value of the equipment, with 100% loan-to-value financing, although 20% down payments could be required. Interest rates range from under 5% to more than 30%, with repayment terms extending 10 years or more, up to the useful life of the equipment. Approval for an equipment financing request often depends on the business credit score, size of the down payment and the existence of a business plan documenting cash flow projections adequate to repay the borrowed sum

Types of Equipment Financing

Businesses obtain equipment financing from a number of sources, including traditional banks large and small, online lenders, SBA-affiliated lenders and credit cards.

Term loans. Local and national banks and online lenders make equipment loans of one to 10 years in length for up to 100% of the equipment value, at interest rates ranging from 4% to 25%. Banks favor loans to established businesses with good credit scores and well-documented repayment plans. Online lenders have more flexible guidelines but also may charge higher rates and fees.

Small Business Administration 504 loans. These government-guaranteed loans are made by nonprofit Certified Development Company (CDC) lenders certified by the SBA. Known as 504 loans, they can only be for up to 40% of the cost of acquiring fixed assets, and require 10% down by the borrower, with a private lender providing the remaining 40%.

Lines of credit. Revolving lines of credit arranged through banks or online lenders can be set up in advance and used to purchase equipment as needed. Borrowers only pay for funds they have actually borrowed through the line of credit, and monthly payments may vary with changes in the balance owed. Lines of credit usually don’t require collateral or down payments but have higher interest rates than loans.

Credit cards. Business credit cards are easy to get as long as a business has a good credit score and some operating history. The application process is simple and funds are available immediately upon approval. Some other loans may take days or weeks before funding. However, the amount that can be tapped with a credit card is limited and rates and fees are higher than alternatives.

Equipment Leasing

Commercial refrigeratorBusinesses that lack the credit score, operating history or down payment needed to qualify for a loan or other purchase financing can acquire equipment by leasing it. Leasing requires no down payment and approval is much easier to get than when requesting a loan. Monthly lease payments may be less than a loan payment would be, freeing up additional cash. And when the lease term is up, the business can return the equipment without owing any more.

The downside of leasing is that it ultimately can cost more than buying. While monthly lease payments could be lower than loan payments, the total of lease payments may be more than the amount of all the loan payments. Also, while there is no down payment, the business won’t own the equipment at the end of the lease.

The Bottom Line

Mobile craneEquipment financing gives businesses access to essential machinery, fixtures, furniture and other assets without the need to devote large sums of cash to outright purchase. Equipment loans are available from a variety of sources, including government-guaranteed loans, and are generally easier to get than other forms of financing. Be sure to avoid taking out equipment loans with terms that exceed the useful life of the asset. Otherwise, you risk being on the hook to make payments on a piece of equipment that has already been retired or scrapped. With this in mind, leasing may be a better option than buying for equipment that quickly becomes obsolete.

Tips for Small Businesses   

  • Before signing a loan or arranging for another way to finance an equipment purchase, consider talking it over with an experienced financial advisor. Finding the right financial advisor who fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in five minutes. If you’re ready to be matched with local advisors who will help you achieve your financial goals, get started now.
  • How you finance equipment can affect your taxes. Tax rules for independent contractors differ from what a traditional employee experiences, but they’re not overly complicated. Getting familiar with the basics can make filing your taxes as an independent contractor easier to navigate.

Photo credit: ©iStock.com/Weerasaksaeku, ©iStock.com/zaemiel, ©iStock.com/ewg3D

The post How Equipment Financing for Businesses Works appeared first on SmartAsset Blog.

Source: smartasset.com

Paying Off Debt to Buy a House

A brown brick house at sunset

When you buy a house, a big part of a lender’s decision whether to approve your mortgage rests on whether or not you can afford it.If you have a lot of debt, the monthly payments on those obligations chip away at the total amount you can pay each month on a mortgage.

But that doesn’t mean it’s impossible to buy a house if you’re in debt. It’s just a bit more challenging. If you want to stop paying rent and enter the exciting world of homeownership, here’s how you can pay off debt to buy a house.

1. Calculate Your Debt to Income Ratio

Your debt-to-income ratio, often called DTI ratio, is a measurement that compares the amount of debt you have to your income. It helps determine how much you can actually afford when it comes to mortgage payments.

How Much Debt Can You Have and Still Qualify for a Mortgage?

Most lenders won’t approve you if your DTI is higher than around 43%.

For example, let’s say you make $52,000 a year. This means your gross income each month is around $4,333. If half your paycheck is devoted to paying off debts, then about $2,166 of your income goes towards paying off your various debts.

By these numbers, your DTI would be 50%. The bank would probably not approve you for a mortgage since your DTI is higher than the maximum 43%. To fix this problem, you can do one of two things: start making more money and/or lower your monthly recurring debt payments.

2. Find Ways to Decrease Your Debt

Consolidate Loans

Qualifying for a mortgage partially depends on what part of your monthly gross income is paid towards the minimum amount due on recurring bills. These might include credit card bills, student loan payments, car loans and other payments. Consolidating can be a way to reduce that amount.

What does consolidating mean? Consider an example where you have five credit card payments each month. Consolidating them means that instead of making five separate payments to individual lenders, you make onepayment each month.

If your credit is good enough, you may be able to get a consolidation loan with better terms. That means your one consolidated payment may be lower than the five payments combined. You can consolidate student loans, too, and get the same potential benefits.

After you’ve consolidated, you can re-calculate your DTI ratio. If it’s lower, you may fall below the DTI threshold required to be approved for a mortgage.

Pay Off or Pay Down Some Debt

If you make an effort to pay off or pay down some of your existing debt, this can help decrease your DTI ratio and make your financial picture look more favorable to lenders. It may be best to concentrate on paying off recurring debts, such as credit cards, to help your chances.

Is It Best to Pay Off Debt Before Buying a House?

There’s no one right answer to this question. It can depend on your mortgage lender. Your mortgage lender may want you to pay off debt before making a down payment while others may be okay with your DTI and want a larger down payment. If you’re under the 43% DTI and have a good credit history, you might consider working with a mortgage lender to find out what your options are.

Credit Repair

If any debts listed on your credit report aren’t yours, this could be hurting your overall financial health. Make sure to closely examine the details of your credit report and make sure the accounts listed are actually ones you’re responsible for. If you do notice errors on your credit report, you can work to repair your credit by disputing the entries.

3. Find Ways to Increase Your Income

One of the ways to make your DTI more favorable is to increase your income. You can usually do this by either getting a better paying job or by getting a second job if you have the means. If you’re married and are applying for a mortgage with your joint income, perhaps your spouse can get a job to help increase their income. One drawback to this solution is that it’s a long-term solution and not a short-term one. Getting a new job, whether primary or secondary, takes time and effort.

4. Consider Making a Down Payment

Contrary to popular belief, a 20% down payment on a home isn’t required in many cases. FHA loans, for instance, only require 3.5% down, and some mortgage lenders may only ask for 5% down on a conventional loan.

However, keep in mind that the more you put down upfront, the less your monthly payments are and the lower your interest rate is likely to be. If you can put more money down, it makes the mortgage more affordable. If you’re hovering at the higher end of an acceptable DTI ratio, that may make a difference.

Looking at the Big Picture

When you’re ready to buy a house, it’s important to consider your level of debt, how much money you have coming in and your job security. If you’re able to consolidate your debt and get lower monthly payments as a result, your job is well-paying and seems secure and your credit is excellent, you can probably buy a home even if you have other debts.

Assess the Risks

Remember that just because you might qualify for a home loan doesn’t mean you should buy a house. Stretching your limits to meet that 43% DTI ratio can be risky unless you foresee your income continuing to rise oryou know any debt obligations you have are set to be paid off in the future.

Can Paying Off Debt Hurt My Credit Score?

Most of the time, paying off debt has a neutral or positive impact to your credit score. First, you decrease your credit utilization, which accounts for 30% of your credit score. A lower credit utilization can bring up your score. Second, you show the lender that you have the means to pay off debts, which can be a positive factor in whether you’re approved.

However, in a few cases, paying off debt could lower your score. If you pay off old accounts, you could change the age of your credit. How old your accounts are play a role in your score. You could also reduce your credit mix, which also factors into your score.

Neither of these factors plays as large a role as credit utilization, though. And if your mortgage company wants to see you with less outstanding debt, a tiny and temporary hit to your credit score may be worth getting approved for a loan.

To find out more about your credit score and where you stand with financial health, sign up for a free Credit Report Card today. You’ll get feedback about the five major areas that impact your score and how you can improve them before applying for a mortgage.

The post Paying Off Debt to Buy a House appeared first on Credit.com.

Source: credit.com

Should You Transfer Balances to No-Interest Credit Cards Multiple Times?

Karen, our editor at Quick and Dirty Tips, has a friend named Heather who listens to the Money Girl podcast and has a money question. She thought it would be a great podcast topic and sent it to me. 

Heather says:

I had a financial crisis and ended up with a $2,500 balance on my new credit card, which had a no-interest promotion for 18 months when I got it. That promotional rate is going to expire in a couple of months. I have good credit, and I keep getting offers from other card companies for zero-interest balance transfer promotions. Would it be a good idea to apply for another card and transfer my balance so I don't have to pay any interest? Are there any downsides that I should watch out for?

Thanks, Karen and Heather! That's a terrific question. I'm sure many podcast listeners and readers also wonder if it's a good idea to transfer a balance multiple times. 

This article will explain balance transfer credit cards, how they make paying off high-interest debt easier, and tips to handle them the right way. You'll learn some pros and cons of doing multiple balance transfers and mistakes to avoid.

What is a balance transfer credit card or offer?

A balance transfer credit card is also known as a no-interest or zero-interest credit card. It's a card feature that includes an offer for you to transfer balances from other accounts and save money for a limited period.

You typically pay an annual percentage rate (APR) of 0% during a promotional period ranging from 6 to 18 months. In general, you'll need good credit to qualify for the best transfer deals.

Every transfer offer is different because it depends on the issuer and your financial situation; however, the longer the promotional period, the better. You don't accrue one penny of interest until the promotion expires.

However, you typically must pay a one-time transfer fee in the range of 2% to 5%. For example, if you transfer $1,000 to a card with a 2% transfer fee, you'll be charged $20, which increases your debt to $1,020. So, choose a transfer card with the lowest transfer fee and no annual fee, when possible.

When you get approved for a new balance transfer card, you get a credit limit, just like you do with other credit cards. You can only transfer amounts up to that limit. 

Missing a payment means your sweet 0% APR could end and that you could get charged a default APR as high as 29.99%!

You can use a transfer card for just about any type of debt, such as credit cards, auto loans, and personal loans. The issuer may give you the option to have funds deposited into your bank account so that you can send it to the creditor of your choice. Or you might be asked to complete an online form indicating who to pay, the account number, and the amount so that the transfer card company can pay it on your behalf.

Once the transfer is complete, the debt balance moves over to your transfer card account, and any transfer fee gets added. But even though no interest accrues to your account, you must still make monthly minimum payments throughout the promotional period.

Missing a payment means your sweet 0% APR could end and that you could get charged a default APR as high as 29.99%! That could easily wipe out any benefits you hoped to gain by doing a balance transfer in the first place.

How does a balance transfer affect your credit?

A common question about balance transfers is how they affect your credit. One of the most significant factors in your credit scores is your credit utilization ratio. It's the amount of debt you owe on revolving accounts (such as credit cards and lines of credit) compared to your available credit limits. 

For example, if you have $2,000 on a credit card and $8,000 in available credit, you're using one-quarter of your limit and have a 25% credit utilization ratio. This ratio gets calculated for each of your revolving accounts and as a total on all of them.  

Getting a new balance transfer credit card (or an additional limit on an existing card) instantly raises your available credit, while your debt level remains the same. That causes your credit utilization ratio to plummet, boosting your scores.

I recommend using no more than 20% of your available credit to build or maintain optimal credit scores. Having a low utilization shows that you can use credit responsibly without maxing out your accounts.

Getting a new balance transfer credit card (or an additional limit on an existing card) instantly raises your available credit, while your debt level remains the same. That causes your credit utilization ratio to plummet, boosting your scores.

Likewise, the opposite is true when you close a credit card or a line of credit. So, if you transfer a card balance and close the old account, it reduces your available credit, which spikes your utilization ratio and causes your credit scores to drop. 

Only cancel a paid-off card if you're prepared to see your credit scores take a dip.

So, only cancel a paid-off card if you're prepared to see your scores take a dip. A better decision may be to file away a card or use it sparingly for purchases you pay off in full each month.

Another factor that plays a small role in your credit scores is the number of recent inquiries for new credit. Applying for a new transfer card typically causes a slight, short-term dip in your credit. Having a temporary ding on your credit usually isn't a problem, unless you have plans to finance a big purchase, such as a house or car, within the next six months.

The takeaway is that if you don't close a credit card after transferring a balance to a new account, and you don't apply for other new credit accounts around the same time, the net effect should raise your credit scores, not hurt them.

RELATED: When to Cancel a Credit Card? 10 Dos and Don’ts to Follow

When is using a balance transfer credit card a good idea?

I've done many zero-interest balance transfers because they save money when used correctly. It's a good strategy if you can pay off the balance before the offer's expiration date. 

Let's say you're having a good year and expect to receive a bonus within a few months that you can use to pay off a credit card balance. Instead of waiting for the bonus to hit your bank account, you could use a no-interest transfer card. That will cut the amount of interest you must pay during the card's promotional period.

When should you do multiple balance transfers?

But what if you're like Heather and won't pay off a no-interest promotional offer before it ends? Carrying a balance after the promotion means your interest rate goes back up to the standard rate, which could be higher than what you paid before the transfer. So, doing another transfer to defer interest for an additional promotional period can make sense. 

If you make a second or third balance transfer but aren't making any progress toward paying down your debt, it can become a shell game.

However, it may only be possible if you're like Heather and have good credit to qualify. Balance transfer cards and promotions are typically only offered to consumers with good or excellent credit.

If you make a second or third balance transfer but aren't making any progress toward paying down your debt, it can become a shell game. And don't forget about the transfer fee you typically must pay that gets added to your outstanding balance. While avoiding interest is a good move, creating a solid plan to pay down your debt is even better.

If you have a goal to pay off your card balance and find reasonable transfer offers, there's no harm in using a balance transfer to cut interest while you regroup. 

Advantages of doing a balance transfer

Here are several advantages of using a balance transfer credit card.

  • Reducing your interest. That's the point of transferring debt, so you save money for a limited period, even after paying a transfer fee.
  • Paying off debt faster. If you put the extra savings from doing a transfer toward your balance, you can eliminate it more quickly.
  • Boosting your credit. This is a nice side effect if you open a new balance transfer card and instantly have more available credit in your name, which lowers your credit utilization ratio.

Disadvantages of doing a balance transfer

Here are some cons for doing a balance transfer. 

  • Paying a fee. It's standard with most cards, which charge in the range of 2% to 5% per transfer.
  • Paying higher interest. When the promotion ends, your rate will vary by issuer and your financial situation, but it could spike dramatically. 
  • Giving up student loan benefits. This is a downside if you're considering using a transfer card to pay off federal student loans that come with repayment or forgiveness options. Once the debt gets transferred to a credit card, the loan benefits, including a tax deduction on interest, no longer apply. 

Tips for using a balance transfer credit card wisely

The best way to use a balance transfer is to have a realistic plan to pay off the balance before the promotion expires.

The best way to use a balance transfer is to have a realistic plan to pay off the balance before the promotion expires. Or be sure that the interest rate will be reasonable after the promotion ends.

Shifting a high-interest debt to a no-interest transfer account is a smart way to save money. It doesn't make your debt disappear, but it does make it less expensive for a period.

If you can save money during the promotional period, despite any balance transfer fees, you'll come out ahead. And if you plow your savings back into your balance, instead of spending it, you'll get out of debt faster than you thought possible.

Source: quickanddirtytips.com

International travel: Is it time to dust off the passport?

I’ve been laying low the last five months, my passport safely tucked into my desk drawer awaiting the world’s re-opening.

Like you, I’ve missed travel. Especially as summer winds down, and the sun sets a few minutes later every night, I’ve found myself daydreaming of returning to the proverbial road.

Sure, I’ve been road tripping, camping and entertaining myself domestically as far as my imagination can take me over these months. But there’s nothing that feeds my soul quite like crossing a border.

While most borders across the world are still closed to U.S. passport holders, I’ve not only started to seriously think about when an international trip might be right for me, but I also did something a little crazy this week.

I booked a trip to Mexico for September.

Check out all the answers from our credit card experts.

Ask Stephanie a question.

What is and isn’t possible

Let’s be honest, Mexico was never high on my list of places to travel for 2020. Before COVID-19, my wandering sights were set on exploring much more exotic destinations this year like Uzbekistan, Guyana and the Apulia region of Italy, from which my family migrated.

In a world without a pandemic, my autumn travel plan was to spend late September in the Marquesas islands of French Polynesia, celebrating a big 50th birthday of one of my dearest friends and fellow points collectors.

As things have begun to slowly open up over the last months, my friend and I have had a million conversations discussing if there might be somewhere other than a Zoom birthday party where we could safely celebrate half a century. As you might remember, I have high expectations for celebrating milestone birthdays.

As we’ve contemplated if it’s safe and smart to actually think about international birthday travel right now, we set a few guidelines on our planning:

  • Places far away where we wouldn’t want to get stuck are off limits.
  • Any plans we make have to be fully cancelable.
  • There must be sunshine and water at the destination.
  • We must be able to pay with points.
  • Destinations with a 14-day arrival quarantine won’t work.
  • The Caribbean isn’t an option (if your birthday falls in the middle of an extremely active hurricane season).

With the big birthday getting closer each week, I’ve been paying more attention to possibilities as well as all the deals that keep filling up my inbox. Then, when Hyatt announced their new Work from Hyatt deal this week, it got me thinking: let’s plan a trip to Cabo.

See related: Can we safely return to sleeping in hotels?

How we’ll get there

From Portland, Oregon (my COVID-19 home base), Cabo San Lucas, Mexico, is an easy flight. There is plenty of sun and a lot of options to plan a refundable trip on points.

A large percentage of Cabo’s resorts have reopened since June, both requiring mask-wearing in public areas and limiting occupancy to 30%. And while the ban for land crossings at the Mexico-U.S. border has been extended to Sept. 21, air travel between the two countries is not (and has never been) restricted.

The birthday trip is still a month away – and in 2020, almost anything could happen in the next four weeks – but here’s what we’ve got planned:

  • One beautiful week looking at the Pacific Ocean from an oceanfront room at The Cape (a Thompson Hotel).
  • Flights to and from Portland’s PDX to Cabo San Lucas’ SJD (one way on American Airlines miles and one way on Alaska Airlines, using a cash credit from a different trip canceled due to coronavirus).

We picked The Cape because it’s a small boutique resort known for its secluded location, ocean views and amazing copper-plated freestanding tubs in the majority of its rooms. (OK, this wasn’t actually a deciding factor, but I do get very excited about a room with a good bath tub since resort spas are still closed.).

While not a Hyatt property, Thompson Hotels is an independent brand affiliated with Hyatt, meaning you can use your World of Hyatt points for a stay in a smaller, upscale property.

At 25,000 points per night, the five-night reservation came to a total of 125,000 points earned on my World of Hyatt Credit Card. In non-pandemic times I would likely consider that to be a ton of points for a single trip to Mexico, but since I haven’t used a Hyatt point in months (besides for one quick hotel experiment) and because it’s a big birthday celebration, it seems a reasonable redemption. The reservation is also refundable up to 24 hours before arrival.

American, Alaska, Delta, Southwest and United are all currently operating flights into SJD. From Portland’s PDX, I found a good redemption via Phoenix (PHX) on American for 17,500 points and $31 in taxes. As an American Airlines Executive Platinum elite member, I can cancel this award ticket at any time without penalty or fee, so booking it now was pretty risk-free.

Taxes flying out of Mexico back to the U.S. are considerably higher (to the tune of $100-plus), so on this end I opted to book a paid Alaska Airlines flight via San Jose using the balance from this year’s travel refunds. Alaska Airlines has also extended its travel waiver, allowing you to cancel any ticket booked before Sept. 8 for a full credit. Again, I felt like I had nothing to lose.

See related: How to change your travel plans when you booked with rewards

Final thoughts

Am I certain it will be safe to travel to Cabo San Lucas in September? I honestly have no idea. I have, however, future-proofed my plan from the outset, and I know that even if Icho ose to cancel this big birthday booking the day before, I have very little to lose.

I’ll be keeping my eyes on the news in Cabo and make a final decision if I feel comfortable to travel closer to departure. For now, I’m excited to at least have a plan to use my passport again and hope for some September sunshine and horizons.

Source: creditcards.com