Daily Archives: June 10, 2014

Five tips to help chart a path toward financial success

10 Tuesday Jun 2014

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(BPT) – A strong credit profile can help you qualify for credit at the lowest rates possible. Yet, consumers often wait until they need credit to think about their credit situation. In fact, 62 percent of people have not reviewed their report in the past year, according to a recent National Foundation for Credit Counseling survey.

Understanding how to build credit and how to use it responsibly helps consumers make decisions that lead to financial success. And making responsible decisions that can help you chart a path toward a successful financial future is easier when you’re well informed. Free tools from sources such as the American Bankers Association, National Foundation for Credit Counseling and Wells Fargo’s free, online Hands on Banking program can help consumers of all ages increase their credit know-how. These five tips can help you take control of your finances, manage your money and build a stronger credit history.

Five steps to strong credit

1. Check your credit report: Once a year, consumers can request a free credit report from each of the three major credit reporting agencies – Equifax, Experian and Transunion – at AnnualCreditReport.com or call 877-322-8228. Review the reports carefully and correct any errors.

2. Understand the factors that affect your credit: Whether you are new to credit or have been using credit for some time, your credit score gives lenders a snapshot of your credit risk. By understanding what impacts your score, you may be able to improve it.

3. Raise your credit score: Managing your credit responsibly over time is one of the best ways to build, maintain, and improve your credit score. Five key criteria are generally used to calculate a consumer’s credit score:

  • Payment history: Information about whether you’ve made on-time payments has the most impact on your score.
  • Credit accounts: A balanced mix of different types of credit can help improve your score.
  • Credit usage: Owing a lot or being near your credit limit on multiple accounts negatively impacts your score.
  •  Length of credit history: Reviewers check to see if you can responsibly manage credit accounts over time.
  • Credit applications: Opening multiple new credit accounts may represent a greater risk for lenders.

4. Create and monitor your budget: A budget gives you more control over your finances and helps you eliminate unnecessary expenses.

5. Know what lenders look for. When consumers apply for a loan, lenders assess their credit risk based on a number of factors, often called the Five Cs of Credit:

  • Credit history. Have you established credit and is your credit score high enough to qualify you?
  • Capacity. Is your income sufficient?
  • Collateral. Does the collateral you’re borrowing against have enough value?
  • Capital. Do you have assets set aside as another source for repayment?
  • Conditions. Does the current economy or purpose for the credit make it a risk?

Wells Fargo offers a variety of free tools designed to help individuals at any life stage learn ways to manage their finances more responsibly. For more information and resources about how to use credit sensibly to achieve financial goals, visit http://www.wellsfargo.com/creditsmart.

Courtesy of BPT

College graduates: Six financial survival tips for the working world

10 Tuesday Jun 2014

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Six%20financial%20survival%20tipsIf you are a recent college graduate, there is much to be optimistic about as you leave campus and head out into the real world. No one ever says life on your own will be easy, but post-graduate financial bliss can be a reality. These six tips from Thrivent Financial offer a starting point for recent graduates who are ready to put their education to work for a secure financial future.

Get real about your paycheck

 

Compared to the minimum wage jobs you survived on through college, the annual earnings at your first post-graduate job may give you dollar-sign eyes. Don’t be fooled though; after taxes, benefits, living expenses and student loan payments, your remaining monthly spending money could amount to less than half of your gross income. Being realistic about your paycheck doesn’t mean you can’t have any fun, though. That new car may have to wait a while, but with smart budgeting you can still enjoy the finer things in life with a clear conscience.   

 
Your credit score matters

 
Thought you were done worrying about test scores? Think again. Whether you want to get an apartment, mortgage, car or a new job, your credit score says a lot about you and can make or break these important investments. Free credit reports are available at http://www.annualcreditreport.com, and for a small fee you can also obtain your credit score. Examine your report regularly for accuracy, and pay off any existing credit card debt as soon as possible. Credit card interest is wasted money, and outstanding debt can hurt your credit score. 

 
Take care of yourself first

 
After expenses and taxes, your paycheck may look too slim for comfort, but protecting your assets, health and income is worth the additional cost. If you have an apartment, renter’s insurance is a relatively inexpensive way to protect your possessions. Health insurance is also a must, whether you get it through your employer or stay on your parents’ plan. Your paycheck is worth protecting, too. Disability income insurance is not just for those with physically demanding jobs, as most beneficiaries are on disability from illness, not injury. Preparation for the unexpected comes at a small price considering the costs associated with the alternative.

 
Save for the fun stuff

 
Again, being responsible with your finances doesn’t mean you can’t have any fun. You have worked hard to start your career, and deserve to reward yourself. The best way to spend smartly is simply to spend less than you have. Diligent saving allows for the occasional splurge without having to feel guilty or anxious about your decision to spend. Consider directly depositing a certain amount from your paycheck into a savings account for a “fun fund.” 
Save for the grown-up stuff, too.

 
Your parents’ nagging may start to quiet now that you’ve graduated, but their retirement planning advice is worth listening to. Start investing now, you won’t regret it. As you barely scratch the surface of your career, retirement seems a long way off, but successful investors understand that the longer your assets remain invested, the greater their potential for growth. The cash you forfeit now will pale in comparison to the amount you’ll end up getting back at the end of your career if you start as early as possible. 

 
Don’t pass up free money

 
Many employers offer pretax savings through their retirement accounts. Because your retirement contributions come out before taxes, your taxable income is decreased, saving you money. For example, a $100 contribution from your earnings to a pretax retirement account would reduce your paycheck by only $75 if you’re in the 25 percent tax bracket. If your employer matches a percentage of your retirement contributions, it is wise to contribute the maximum amount of their match so as not to pass up on “free money.”

 
Money is just one of many aspects of adulthood that college graduates must meet head-on to start living independently. Personal finance may seem daunting, but don’t be discouraged. The above-mentioned tips boil down to common sense: spend less than you earn, stay protected through proper insurance, maintain good credit and save for the short and long-term, and you will be off to a great financial start in the next chapter of your life.

Courtesy of BPT