4 Ways to Improve Your Credit History

In order to get any type of loan, you need to have a good credit report and score. Sometimes things don’t go as planned and our credit history gets damaged or negatively altered because of it. If you want to start improving your credit history, this list provides a few ways to start this process.

Just remember that credit doesn’t improve overnight. It takes years of smart, responsible, consistent patterns. This list won’t magically make your credit score perfect but it will get you on the right track to financial stability.

Review Credit Report

Request your credit report from all three major credit bureaus. By law, these companies are required to provide one free credit report each year. Examine it for any errors. If you find an error on your credit report, dispute it, because it helps improve your credit score and may resolve a major issue.

Additionally, use the credit report to look at your credit patterns, because this helps you figure out what areas to tackle first.

Develop a Plan

Decide what areas are causing the most issues for your credit. Maybe you make all your payments but just have too many accounts open. Maybe you only have one account open but you originally thought your spouse was paying for it. Once you know the biggest problems on your credit report, you can start to think of realistic ways to handle these issues.

If you have too many accounts open, pay them all down. Then hide the rest of your cards, and only accumulate a new balance on one or two credit cards. If your spouse lack of payments is an issue, discuss with him how you both can contribute to lower the unpaid bill.

Pay Down Bills

Start by reviewing every one of your credit card and loan accounts. Look at what accounts have the highest interest rates, and then pay those down first. Next, work on reducing the accounts with the highest unpaid balance. Work your way through all of your late or unpaid accounts until you have paid off everything. Depending on your financial stability, this process may take a few months or a few years.

The best way to start seeing major improvement on your credit score is to develop a pattern of consistent payments, especially on accounts with high interest rates. Also pay off accounts that have already been sent to collection agencies. Just make sure to get a written agreement as proof of payments.

Do not close your accounts once you pay them off; closing accounts hurts your credit report. Therefore, just leave fully paid accounts untouched and open.

Become Financially Healthy

Pay all your bills on time. If you might miss a payment, immediately call the credit or loan company to negotiate a different payment date, a smaller minimum payment, or discuss waiving late fees. Nevertheless remember that any unpaid or late payment goes on your credit report, so avoid it at all costs.

Don’t use your improved credit score to open new accounts. Instead only open new accounts when necessary, and aim to get secured credit cards. These cards will help you build up your credit and encourage responsible money management. Additionally, work on spending less by using Groupon discount codes when making purchases at your favorites stores like Famous Footwear.

If you think you might need more help stabilizing your finances and credit, seek a professional financial adviser.

Do You Need a Car in San Francisco?

One of the biggest challenges to living in a large city is driving. Traffic congestion, parking, accidents, the list goes on. None of these challenges compare to trying to get where you need to be, on time, when you are considering the urban sprawl around you. If you are thinking about relocating to the Bay Area, you may be wondering if you need a car in San Francisco? The answer may surprise you.

Do You Need a Car in San Francisco?

Surprisingly, San Francisco is one of the few large urban areas where you do not really need a car unless you intend to travel outside of the city on a regular basis. San Francisco is often considered one of the most walkable cities in the United States. Many of the critical areas of the city can be easily reached on foot. If you live in an outlying area there is MUNI, BART, carshare, and zipcar to get you where you need to go.

Public Transportation

Everyone has heard horror stories about public transportation…smelly people, stains of dubious origin, characters to be watched. That doesn’t even take into account late buses, distances from bus stops to your actual destination, etc. The denizens of San Francisco adamantly deny that these are true challenges with their city’s public transport. In fact, many people have taken to Yelp to make sure that visitors and relocatees alike understand the quality of public transportion within the city. Here is a quick link to a few of those comments:  http://www.yelp.com/topic/san-francisco-living-without-a-car-in-san-francisco

If You Do Need a Car in SF…

If you do decide you need a car, we can help you get it financed. We help people arrange financing on a daily basis, even if their credit isn’t ideal. For more information, check out our San Francisco section.

Fully-Autonomous Nissan Leaf Completes Maiden Journey!

Does the idea of sharing the road with a car operating itself intimidate you? According to Nissan, the auto manufacturer recently highway tested their autonomous vehicle publicly in Japan. The Nissan “Leaf” took it maiden voyage and successfully navigated an expressway southwest of Tokyo. The Leaf relies upon an Autonomous Drive system for steering, braking and accelerating. This drive system covers most aspect of highway driving, thus enabling the Leaf an ability to follow cars while maintaining a safe distance, change lanes and merge into oncoming traffic on highways. Nissan contends that such vehicles will be in their lineup by the year 2020 in an effort to reduce fuel consumption, accidents and traffic congestion. Nissan intends for the technology to be a part-time system to ensure it is not limited to just their expensive models. The drive system’s purpose would be to take control over the vehicle during emergencies or standard freeway travel.

How Much Should You Spend on Your First Car?

There is no set amount that you should spend on your first car, but there are certain factors that you should consider before buying.

How Do You Plan to Finance Your Purchase?

The biggest decision you have to make is how you’re going to pay for this purchase:  cash or a loan? A loan will cost you more in the end, since you’ll have to pay your bank or lender interest, but it will also help you establish some good credit history, provided you make all of your payments on time. Cash, on the other hand, will save you hundreds of dollars, in that you won’t pay any interest, but it can be tough to come with sufficient funds to purchase a car that won’t leave you stranded on the side of the road somewhere. Let’s take a look at each mode of financing.

Loan Criteria

Lenders use a set of criteria when they are determining whether or not to approve a car loan. Many of those criteria should go into your thought process when you are deciding how much to spend on your first car, even if you intend to pay cash for it. Here are the basic criteria lenders consider.

  • Loan to value (LTV)…between 85 and 115 percent.
  • Age of vehicle…less than 8 years old.
  • Term of loan…36 to 72 months.
  • Miles on vehicle…under 100,000
  • Down payment…at least 10 percent or $1,000.
  • Time on job…two years.
  • Time at residence…again, two years.
  • Monthly income before taxes…depends on lender, usually $1,400 minimum.
  • Credit score/profile…540 or above. Should have four paid as agreed lines of credit, one being an installment loan with twelve on-time payments of $150 or more.
  • Total debt to income including new payment…most lenders look for less than 36 percent, but some specialty lenders may stretch that to 45 percent.

How Much to Spend if You Finance?

You do not want to commit more than fifteen percent of your monthly net (after tax) income to payments for a car loan/s. If you do, you may find it difficult to pay for other car related expenses like insurance, maintenance, or fuel.

An easy way to find out how much you can afford is make payments to your savings account. It works like this. Determine what kind of car you want, what year, etc. Look up the retail value on kbb.com or nadaguides.com. You can then take that amount over to our calculator that will give you an approximate payment for the retail value of the car you want. With that payment amount in hand, start putting that amount into your savings account on the day you would like your car payment due. After doing that for six months without needing to withdraw any of the cash, you will know that you can afford the payment and have built a nice down payment in the process. If you think you must pay cash for a car because you have bad credit or no credit, you are most likely mistaken. There are many lenders who may be willing to offer you a loan even if other lenders have turned you down.

How Much to Spend if You Pay Cash?

If you do not want to take on a loan, you can use the same process to build up your cash. Look at your current income and expenses. If you can, start putting at least $200 a month into savings. Once you have at least $1,000 saved, start looking for a car. Some personal finance experts advise spending as little as 10% of your gross annual income on a car. This is a great strategy if this will buy you a decently reliable vehicle, given your income. If your income is pretty low, you may end up going as high as 25-30% of your income, so as to afford a vehicle with fewer miles under its belt.

To conclude, if you’re buying your first car, your finances are apt to be a fairly precarious position. It is best to spend as little as you possibly can, while still obtaining a car you can depend on. Your first car should not be anything fancy or luxurious–you haven’t earned that yet. If you value your financial future, it should be utilitarian transportation that won’t leave you stranded.