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No matter what your credit is, we can offer you financing and help you restablish good credit.
How do I establish credit?
Start small. This is a good way you can show yourself and others that you can manage money responsibly. From there, you should be able to qualify for a low-limit credit card which, if you make timely payments, can lead to higher credit limits and a more established credit history.
How old do I need to be to start building credit?
The typical ages at which one can apply for credit are 18 or 21. This age varies according to state law. To establish credit you might have to apply for a secured credit card or have a responsible party cosign (i.e., take responsibility) for your credit. For more advice and information on how to establish and maintain good credit visit the Jump$tart Coalition.
Bear in mind, at any age it takes time and effort to build a solid credit history. Fair, Isaac and Company (FICO) gives the following guidelines:
"In order for a FICO® score to be calculated on your credit report, the report must contain at least one account which has been open for six months or greater. In addition, the report must contain at least one account that has been updated in the past six months. This ensures that there is enough information and enough recent information in your report on which to base a score."
How much debt should I have?
Common wisdom says that your non-mortgage monthly installment payments (e.g., credit card, car, student loan payments) should not total more than 20% of your monthly take-home pay. In other words, if your paychecks come out to $1,000 a month, your total payments shouldn't be more than $200. If you plan on qualifying for a home or making some other major purchase in the near future, you will probably want to further reduce your monthly payments.
Do credit cards hurt or help credit score?
The answer depends on how you use your credit cards. If used wisely and in moderation, credit cards can help you build a solid credit history. Make regular payments and keep your monthly balance well below your credit limit in the months when you can't pay in full. Try to reduce the number of credit cards you use to avoid confusion and potential missed payments. Discontinue credit cards you aren't using. Watch your statement closely to protect against ID fraud. If you follow these guidelines, credit cards can be a great convenience and a boost to your credit standing.
How do I maintain good credit?
Live by a realistic budget. Let your budget be your guide to spending, not your credit limit. Make timely payments at or above your minimum required payment. Don't overextend yourself. Maintain steady employment. Keep close track of your expenditures and your bills to guard against credit fraud.
How can I improve my credit?
If you plan on making a major purchase on credit, order a copy of your credit report beforehand and review it for negative entries that might need to be resolved.
Only time and solid credit performance can improve a negative credit rating. Here are some recommendations that can help you improve your credit rating:
Make sure you pay off your debts promptly and reliably.
If you have trouble controlling spending, look into a consolidation loan from your bank. Then you can save your credit cards for emergencies.
Set and stick to a budget that helps you keep your debt at a manageable level.
Ensure your credit reports are accurate by regularly checking them and rectifying discrepancies with the credit reporting agencies.
If you're having trouble qualifying for credit, consider a secured credit card. These cards use collateral to alleviate risk for the lender.
How do I avoid large debt?
The key is to live within your means. Track your spending and see what expenses you might be able to cut back on. Look for sales or coupons to help you save wherever possible. A lot of overspending is due to laziness. If you have trouble with credit cards, cut them up until you can reduce you credit card debt to a manageable level. For most people, a little debt is necessary but keep it as low as possible. Lowering debt is one of the best keys to financial security.
For more information and to request a free brochure entitled How to Be Credit visit the AFSA Education Foundation.
If I have credit problems, is there someplace that I can go for assistance?
Avoid "credit repair" clinics that charge you money with the promise of giving you a "fresh start." Only time and proper credit use will improve your credit record. However, you can get free, or very inexpensive, help from respected credit counseling organizations such as Amerix or Consumer Credit Counseling Services [(800) 251-2227].
If you cosign a loan or authorize someone to charge to your credit cards, you are still responsible for the debt. Even if your friend or relative promises to pay you back, the debt is still your responsibility and failure to pay will affect your credit rating.
No matter what your credit is, we can extend you financing and if you pay on time, over time this will help your credit score.
Only time and proper use of credit can improve your credit standing. If you feel there is incorrect information in your credit report that is hurting your credit rating, contact the credit bureau directly.
I was turned down for a loan, what should I do?
You should ask the creditor for the main reason(s) you were declined and the credit bureau that supplied the credit report. If you feel that these reasons are unfounded, you should request a copy of your credit report from the credit bureau (typically Equifax, Experian, or Trans Union). You may want to ask a responsible friend or relative to cosign for the loan (remember, you can't build your own credit on a cosigned loan). Also, as each creditor has its own criteria for accepting or declining credit, you may consider approaching a different creditor to see if you can qualify under different terms. Otherwise, make a plan to rectify your credit standing and put off your purchase for a while.
Where can I get a copy of my credit report?
You can order a copy of your credit report from one of the three national credit-reporting agencies: Experian, Equifax, or Trans Union. You may be able to get a free copy of your report if you have been denied credit within the past 30 days. Otherwise, each agency sets its own retrieval fee.
Can I share my spouse’s credit rating?
You and your spouse each have your own personal credit rating. If you apply jointly for a credit card or loan, creditors may consider both credit ratings in evaluating the risk of lending you money. For this reason, you should establish your own credit, based on your own credit records and earnings. Your own credit means a separate account or loan in your own name, not a joint account with your spouse or a duplicate card on his/her account. If you are widowed or divorced and feel that it is hurting your ability to get credit in your name, you have certain protections under the law. For more information visit the Federal Reserve Board.
How should I determine what I can afford when buying a vehicle?
You should assess your income and expenses to determine how much you can afford. Make sure you take into account all monthly payments and expenses including rent or mortgage payments, utilities, and insurance, as well as variable expenses such as food, clothing, credit card payments, and recreation. Whatever money is left over should be used to determine what kind of monthly payment you can afford. Also, be sure to get an insurance quote on the vehicle you're considering and include that in your estimation.
How can I reduce the cost of the monthly payment?
You can save more money with a larger down payment, which will typically help to lower your monthly payment. You can also consider trading in your current vehicle in place of or in addition to your down payment. Also, leasing plans will generally carry lower monthly payments - check with your auto financing provider for more details. For more information and to request a free brochure entitled Keys to Vehicle Leasing visit the AFSA Education Foundation.
Should I finance or lease a vehicle?
There's no right or wrong answer. You need to determine what better fits your needs. Generally, leases are better for those who drive 15,000 or fewer miles per year, take excellent care of their vehicles, and want a new car every 2-4 years. Leases also enable you to get a bigger, better-equipped car than you could afford to purchase, and you only have to pay for the portion of the car's life that you use. Financing is ideal for those who drive a lot of miles, put their vehicles to heavy or rough use, and want to build equity through ownership of a vehicle. Financing also gives you the freedom to treat your car as you please: sell, customize, trade, etc. As for maintenance and operating costs, there's no difference at all. For more information and to request a free brochure entitled Keys to Vehicle Leasing visit the AFSA Education Foundation.
What can I do if I can’t make a payment?
Notify your creditor immediately and explain your situation. In some cases, you may be able to arrange alternate payment plans at a different interest rate. If you wait until you miss a payment it could negatively affect your credit record, which is much harder to rectify.
