Before you apply for financing for any purpose, it is always a good idea to take a look at your credit.  If you have any late payments on your credit report, you can improve your chances of being approved for a loan by attempting to remove those items from your credit before applying.  You will also improve your chances of getting a good interest rate, since rates are higher for people who have bad credit.

Although reputable credit repair agencies exist, there is nothing these companies can do for you that you can’t do yourself without paying a huge fee.  In addition, there are some companies that are not reputable at all.  These companies may say they can get you a completely new credit report.  However, attempting to obtain credit using one of these reports is fraud, and will get you into a lot more trouble than just having bad credit.

Fortunately, the law allows you to dispute erroneous data on your credit report, so you do have a legal way to try to get the negative items removed from your report.  The downside is, of course, that the credit reporting agency only has to remove the data if it cannot obtain verification from the creditor.  This means that if the negative information contained in your credit report is correct, you may not be able to get it removed.  A credit attorney can help you through the process of disputing errors if you are not comfortable doing it yourself.

It’s a good idea to plan well in advance if you are going to need financing in the future because it can sometimes take months to get erroneous material removed from your credit report.  Even if you have no intention of applying for a loan anytime soon, you can benefit from being proactive about keeping tabs on your credit report because you will be ready to apply if something comes up unexpectedly and you end up needing financing for an unplanned purchase.

Some Things to Keep in Mind When Applying for Credit

Don’t apply for the same loan from multiple sources.  For example, if you are applying for a loan to purchase a vehicle, decide on a lender first, and then apply.  Otherwise, you will end up having inquiries for multiple loans on your credit report.  This makes it look like you are going crazy buying things, and your credit score will drop.

Never max out your credit cards.  You should always leave a significant portion of your balance unused.  When your credit cards get close to their limit, it gives the appearance that you have no control over your spending.

Last but not least, start making all of your payments on time from here on out.  Even if your credit is really bad, it will improve as you start making on-time payments.  As time goes by, the late payments in your past credit history will be weighted less heavily when determining your eligibility for financing when lenders see that your spending and payment habits have changed.

There is usually enormous shopping throughout the holiday season. Since at this time everyone is spending more than they can afford, Americans end up accumulating thousands in debts they have no means of paying. That should be reason enough why you should not use the credit card that you have for holiday shopping. If however that is not enough, there are other reasons that will help you get to that decision.

1. You will become more indebted to the credit card companies.

Holiday shopping will only add to the debt problems that you already have. Don’t say that since you are already in debt that a little more shopping will not do any more harm. Added debt will lead to higher interest amount and a little more time to repay your debt. This inevitably affects the plans that you have and other purchases you wanted to make.

2. You spend more that the person paying cash.

The credit card user will on average spent more money shopping that those who use money since they never have the warning that those using real money has of telling them that they have no money and can’t possibly afford what they want to get. You should therefore just do away with the credit card and go shopping with money.

3. You pay more for the items you buy.

The biggest setback to the advantage of the credit card that you are allowed to pay latter for the items that you buy today is that any of those amounts that you allow to go unpaid for more than a month will accrue interest. This interest will raise the cost of the gifts way above their actual selling price. It is even worse for the person already in debt since they are ni\o allowed this grace period. The interest will start accumulating immediately.

4. You will be starved of money by New Year.

What credit card shopping will inevitably do to you is get you in debts that will put you to debt and give you a bad start to the year. These debts can run all the way to march when the holidays are long forgotten. By not using the credit card, you get the best gift of the New Year, that of not starting it while in debt.

5. Risk of credit card fraud.

At this time of the year, everyone is dishing out their credit cards and credit card thieves are on the lookout for any cards that they can snatch or even get the credit card number. Leave the card at home to prevent it being stolen while you shop.

6. Risk of spending more than you can pay.

Most people get absorbed in the holiday spirit and shop without budgeting and before they know it, the debt is already too huge for them to repay.

A no fee balance transfer can be a good option for people who need to reduce their debts.  Since you won’t have to pay the normal interest rate during the introductory period on the new card, you can work toward paying off the balance during the low interest period.  Some cards even offer 0% interest during the introductory period, which means that 100% of your payment will be applied to the credit card balance.

If you’re wondering what the catch is, you’re right to be suspicious.  In fact, 88% of the banks that allow balance transfers charge a fee for doing so.  This balance transfer fee can reduce or eliminate the benefit obtained by transferring your balance to a card with a lower interest rate.  However, instead of searching for the 12% of credit card issuing banks that don’t charge fees on balance transfers, try giving your local credit union a call to see if they offer a no fee balance transfer.  Only 25% of credit unions charge a fee for this service.

The typical fee charged for a balance transfer is around 4%.  Always read the credit card terms carefully before entering into a balance transfer transaction to make sure that you understand what fees, if any, will be charged.  This applies whether you are going through a credit union, bank, or other credit card company.  If you can find a deal where you can transfer your balance to a card with a 0% introductory rate without paying a balance transfer fee, you will be able to make some real progress toward paying down your credit card debt before the interest rate rises to its normal level.

Here is an example of the progress you can make using this strategy to pay down your debt.  If you owe $8,000 on your credit cards and transfer that balance to a card with a six-month 0% introductory rate and no transfer fee, at $200 per month, you can pay $1,200 of the balance by the end of the six-month introductory period, leaving you with a new balance of $6,800.

If you had left that balance on the original credit card, you would still owe much more at the end of six months.  The actual amount depends on the interest rate of the original card.  If your APR was 15%, and you paid the same $200 per month, approximately $100 of that would be applied toward the principal.  So, during the same time period, you would reduce your debt by $600 instead of $1,200.

Adding one more variable into the mix, suppose you find a 0% interest card but there is a 4% transfer fee.  The transfer fee would be $320, but you would be able to pay down your debt an extra $600 during the introductory period, so it is still worthwhile to make the transfer.  You’ll have to do a little math with the actual interest rates and fees involved in the transaction you are considering in order to determine whether you will come out ahead by transferring your credit card balances.