Should You Apply for A Card with an Annual Fee?

When it comes time to get your first credit card, or perhaps get a new credit card, take time to sit down and make a list of everything about the cards that you're interested in.  The PROS and the CONS.  Depending on your credit level, the cards you're interested in, the rewards available (if any), and the fees attached to the credit cards, you can either save a bundle or end up paying an annual fee that simply doesn't make it worthwhile to get the credit card at all.  But, are there actually times when paying the annual fees on certain credit cards makes sense?  

Let's look at some of the reasons you might consider paying those annual fees:

You have a Limited Credit History:  If you're just starting out, it's not always easy to get a credit card in the first place.  Most of the top credit card companies reject your application right off the bat, others promise a certain amount of credit, but hit you with a hefty fee (up to half of the credit limit), and still others charge a higher than normal interest rate.  

Unfortunately, many of the credit cards that are marketed to customers with limited or no credit history also charge an annual fee. However, for these types of cards, you'll typically see an annual fee that's less than a $100, but when it costs you the $100 just to get a credit limit of $200-$300, it's very frustrating to say the least.  But, if your credit score is very low and you're serious about building it up, then this may be the best way to start, so don't discount these credit cards without considering whether it will work for your circumstances.  Sometimes, the end justifies the means.  

2. You Don’t Qualify for a No-Annual-Fee Card

What if you’ve established credit, but it’s not very good? You may not qualify for a mainline cash-back credit card with no annual fee. You may not even qualify for a basic no-annual-fee card designed for cardholders with average credit, like the Capital One Platinum card.

If that’s the case, begin with a fee-bearing secured credit card. With responsible use, it won’t be an indefinite condition, as the best secured credit cards offer a clear upgrade path — on the order of months, not years — for users who make payments on time and utilize credit appropriately.

3. You Plan to Capitalize on a 0% APR Purchase Promotion

Don’t apply for an annual-fee credit card solely to take advantage of a 0% APR purchase promotion. The leading low-APR credit cards with long 0% APR promotions usually don’t charge annual fees. Nor do no-annual-fee cash-back cards like the Capital One Quicksilver credit card, which has a 15-month 0% APR purchase promotion that pairs with unlimited 1.5% cash back on every purchase every day.

That said, a long 0% APR promotion can serve as a tiebreaker when one or more additional fee-favoring conditions are present. For instance, the Blue Cash Preferred® Card from American Express (read our American Express Blue Cash Preferred review) is a top choice for cardholders who spend heavily on gas and groceries. The 6% cash-back rate on grocery store spending, up to $6,000 in annual supermarket purchases, offsets the $95 annual fee several times over when fully exploited.

Blue Cash Preferred also has a 12-month 0% APR promotion on purchases. That comes in handy if you need to drop serious dough at the supermarket ahead of a big event, like Christmas or a graduation party, and don’t have the financial breathing room to pay off the entire purchase in a single month.

4. You Can Easily Clear Minimum Spending Requirements for Your Preferred Card’s Welcome Bonus

Many if not most annual-fee credit cards offer spending-based enticements to new cardholders — variously known as sign-up bonuses, early spend bonuses, welcome offers, and new card member offers, depending on the issuer.

Some enticements are very generous. For example, the Chase Sapphire Preferred card’s sign-up bonus promises 60,000 bonus points when you spend at least $4,000 on eligible purchases within three months of opening your account. That’s a $750 value when redeemed for bookings in the Chase Ultimate Reward travel portal. Sapphire Preferred’s $95 annual fee pales in comparison.

If you can exceed the minimum spending requirements for an annual-fee credit card’s new cardholder enticement without upending your budget, eating the annual fee for the first year or two may be worth it to you.

5. You Travel Frequently & Aren’t Brand-Loyal

Most premium general-purpose travel rewards credit cards carry annual fees. Some clock in around $100, a relatively modest level, but others rise north of $400.

For frequent travelers who aren’t loyal to a particular airline or hospitality brand, that kind of annual outlay can be worth it. When evaluating annual-fee travel cards, look for benefits such as:

  • Complimentary Airport Lounge Access. The most valuable airport lounge access deals aren’t limited to airline-branded lounges, like United Club or the Delta SkyMiles lounge. The Chase Sapphire Reserve® card (read our Chase Sapphire Reserve card review) and The Platinum Card® from American Express (read our Platinum Card from American Express review) both offer access to more than 1,000 airport lounges worldwide through complimentary memberships in Priority Pass Select and the Global Lounge Collection, respectively. With unsubsidized lounge admission typically running in the neighborhood of $60, the value adds up fast.
  • Annual Travel Credit. For frequent travelers too busy to visit airport lounges regularly, the annual travel credit delivers the best combination of value and convenience. Cards with annual travel credits automatically credit eligible purchases until you reach the annual spending cap. For instance, Chase Sapphire Reserve’s $300 credit offsets your first $300 in eligible travel purchases each year, effectively reducing the $450 annual fee to $150.
  • No Foreign Transaction Fees. Most premium credit cards waive foreign transaction fees. If you routinely travel outside the United States, don’t forget your card. You could reduce your net international spending by up to 3% — the standard foreign transaction fee on most cards.
  • Global Entry Application Fee Credit. You only need to reapply for Global Entry every four or five years. But a $20 to $25 annualized subsidy still isn’t bad when combined with more substantial benefits like airport lounge access or waived foreign transaction fees.
  • Car Rental Insurance. Most premium travel credit cards offer complimentary rental car insurance — usually collision and loss — when cardholders pay for the rental in full with the eligible card and decline the rental company’s offer of insurance. It only takes one unfortunate incident for this perk to pay off many times over. In the meantime, cardholders don’t have to worry about paying extra for rental company coverage that may or may not be adequate.

Man Traveler Waiting For His Flight Airport Airplane WindowMan Traveler Waiting For His Flight Airport Airplane Window

6. You Travel Frequently, Usually With the Same Brands

Brand-loyal travelers have different priorities than brand-agnostic travelers. Luckily for them, dozens of co-branded credit cards are happy to oblige.

The two most common types of co-branded cards are airline and hotel credit cards. Regardless of the annual fee, when choosing a co-branded card, pay attention to two things in particular:

The two most common types of co-branded cards are airline and hotel credit cards. Regardless of the annual fee, when choosing a co-branded card, pay attention to two things in particular:

  1. The size and reach of the brand as measured by property count for hotels and destinations served for airlines
  2. The number of partner brands, if any, that accept direct redemptions or transfers of the brand’s loyalty currency

Unless you already know you only plan to visit the same few destinations for the foreseeable future, those two metrics reveal how widely you can use your card and how likely you are to confine most of your travel spending to its ecosystem.

Beyond these, look for co-branded cards with the following perks.

  • Complimentary Airport Lounge Access. Co-branded cards generally restrict complimentary airport lounge access to branded lounges, such as the Delta SkyMiles Lounge for Amex’s Delta SkyMiles credit cardholders. However, some participate in multibrand lounge networks.
  • Complimentary Hotel Club Access. Though not as common, some hotel credit cards, like the World of Hyatt credit card, offer discounted or complimentary access to exclusive club or lounge areas at high-end properties. These facilities often feature complimentary food and beverages along with other perks of entry. And they frequently have stunning views.
  • Automatic Loyalty Status. Many hotel credit cards offer complimentary loyalty status, usually at a lower or middle loyalty tier. Status benefits often include perks like higher base point earning rates, complimentary room upgrades, and free breakfast, though the specific benefits vary by brand and property. Without a card, you must stay with the hospitality family at least 10 nights per year — and sometimes many more — or meet high minimum spending thresholds to qualify for the same status, so this perk can be invaluable. Some luxe general-purpose travel cards offer automatic loyalty status as well. The Platinum Card® from American Express promises automatic Marriott Bonvoy Gold Elite status and automatic Hilton Honors Gold status.
  • Accelerated Progress to Higher-Status Levels. Other co-branded cards accelerate cardholders’ progress toward status tiers. The American Express Delta Reserve card’s welcome offer includes a portion of Medallion qualification miles, the currency of Delta’s SkyMiles Medallion loyalty program, which they typically reserve for true road warriors.
  • Complimentary Award Travel. Complimentary travel is a common feature of premium co-branded credit cards. Some hotel cards offer one or more free nights each year to cardholders in good standing, a perk that by itself can more than offset a sub-$100 annual fee. Many offer additional spending-based opportunities to earn a free night or flight awards.

7. You Can Spend Heavily Enough to Offset the Annual Fee With Rewards

Frequently, moderate to heavy spenders can easily offset the annual fee with rewards on purchases they commonly make.

As an example, Chase Sapphire Preferred cardholders who spend more than $3,800 on dining and travel combined each year earn enough rewards to offset the $95 annual fee.

But the lift becomes heavier as the annual fee increases. Assuming a 5% return on travel spending and not factoring in its airline fee credit, you’d need to charge at least $11,000 in travel to your American Express Platinum card each year to break even.

8. The Card Has Generous Benefits Aligned With Your Lifestyle & Spending Patterns

This scenario usually overlaps with the preceding two, as these benefits are most often associated with premium co-branded and general-purpose travel credit cards. That doesn’t dent their potential value, though.

  • Partner Currency Transfers at Favorable Transfer Ratios. For cardholders with multiple travel loyalty memberships, the potential benefit of this value is difficult to overstate. The best general-purpose travel credit cards, including the Chase Sapphire Reserve® and Chase Sapphire Preferred® cards, set point transfer ratios at 1-to-1 — that is, cardholders may convert 1 point of card loyalty currency to 1 point or mile of partner currency. Since partner currency is usually worth more than card currency, the value of which rarely exceeds $0.015 per point, this is a fantastic way to boost rewards value without much effort.
  • Airline Fee Credit. A general-purpose travel card benefit — most notably of The Platinum Card® from American Express — airline fee credits are enticing for brand-loyal frequent travelers. Platinum’s $200 annual airline fee credit offsets incidental fees, such as baggage fees, charged by one airline of your choice. It effectively reduces the Platinum card’s $550 annual fee to $350 when fully exploited.
  • Hospitality Benefits. Premium co-branded and general-purpose cards alike frequently offer complimentary hospitality benefits — such as complimentary room upgrades and experiences — for guests of specific hospitality brands or collections. Amex Platinum’s Fine Hotels & Resorts benefits are worth an average of $550 per stay, according to American Express. Its Hotel Collection benefits include a complimentary $100 hotel credit to redeem for dining, spa, and resort charges.
  • Brand-Specific Credits. Some travel cards offer credits against purchases made with specific brands. Amex Platinum’s Uber credit, worth up to $200 per year, is particularly generous. Multiple Amex credit cards offer $10 per month in credits against purchases with Seamless and GrubHub, two popular food-delivery apps. Multiple Chase cards offer accelerated points or cash-back earnings on Lyft rides (through March 2022). And the Chase Sapphire Reserve® card offers up to $120 in DoorDash credits over two years (through 2021) plus a complimentary DoorDash DashPass subscription for a minimum of one year. These and similar promotions are more vulnerable to discontinuation than core benefits, so check with the issuer before applying.

9. The Issuer Offers a Clear Downgrade Option

If you decide a year or two into card membership that you’re not getting your money’s worth from your annual fee card, it’s nice to have the option to downgrade your card to a no-annual-fee alternative without closing the account. Closing it can reduce your total available revolving credit and increase your credit-utilization ratio — possibly to the detriment of your credit score.

If it’s not clear whether your preferred card offers a downgrade path, ask the issuer. They probably have a downgrade policy, even if it’s not clearly communicated on their website.

Final Word

Annual-fee credit cards almost always have more generous rewards programs and more valuable perks than comparable annual fee-free credit cards. The dichotomy between the generous fee-bearing Blue Cash Preferred® Card from American Express and the less generous fee-free Blue Cash Everyday® Card from American Express is just one example. Blue Cash Preferred earns double the rewards on grocery store spending and 50% more rewards on gas station spending.

If you’re able to capitalize on any of the scenarios described above to negate your fee-bearing card’s annual fee each year, that card is likely a superior alternative to any annual fee-free equivalent.

And that’s if you even have to pay the card’s annual fee each year. Your mileage may vary, but it’s an open secret that credit card issuers have the discretion to waive annual fees. The 10 or 15 minutes it takes to call your issuer and threaten to close your account can pay off handsomely.

Do you have any annual-fee credit cards? How do you offset those recurring charges and maximize your cards’ rewards and benefits?

Editorial Note: The editorial content on this page is not provided by any bank, credit card issuer, airline, or hotel chain, and has not been reviewed, approved, or otherwise endorsed by any of these entities. Opinions expressed here are the author's alone, not those of the bank, credit card issuer, airline, or hotel chain, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

New FICO Scoring Could Change Your Credit Score!

FICO’s new scoring model, which was announced this past week, will likely lower credit scores for those with a current credit score below 600, as it is based more on the past two years of payments, and it takes personal loans into account.  However, those who already have good credit scores, and who continue to whittle away at existing loans, make payments on time, and don’t acquire new balances, will likely see higher scores under the new model.

“We’ve unfortunately found ourselves in an era where it’s becoming commonplace to water down the breadth of information on credit reports,” Ulzheimer says, adding that tax liens, judgments, medical collections and medical debt have all been removed or delayed from some credit scoring models.

“All of this is great for consumers who have tax liens, judgments, and medical collections…but it’s not great for scoring models and their users,” Ulzheimer adds. But he notes the new scoring model is not “consumer unfriendly” either. “People with good credit are going to score higher with newer models. People who have elevated risk are going to score lower.”

Despite the changed scoring model, it may take a while for it to hit your credit report.  “Change comes slowly in credit monitoring,” says CreditCards.com’s industry analyst Ted Rossman. “Rather than getting too hung up on which model a particular lender is using, consumers should practice fundamental good habits such as paying their bills on time and keeping their debts low,” Rossman continues.

Of course, ultimately, which model is used will be decided by banks and other lenders.  FICO 9, released in August 2014, is still not used across the board.  Many lenders still use FICO 8, whick was released in 2009.  And still other lenders use VantageScore, which is produced by the credit bureaus Experian, Equifax and TransUnion.


The Best Time to Improve Your Credit?

Ever wonder when is the best time to work on your credit score?

Should you work on it around the first of the year when you’re looking at your budget, taxes, and spending for the previous year?  When you’re wishing you had enough money to take a vacation this summer?  Should you work on your credit when you’re in desperate need of a credit card so you can afford Christmas gifts?  How about when your car goes kaput and it’s past time to invest in another one?  Or when you want to buy the home of your dreams?

The truth is that there is no perfect time to start improving your credit score!

Why wait until a major expense looms and you’re scurrying around trying to find somewhere, anywhere to get the funds you need to get past the latest financial crisis?  Instead, why not start working on your credit score now, before you need good credit, before you’re forced to accept that higher interest rate mortgage, car loan, or credit card!

Let’s be perfectly honest here, the time is going to pass anyway, so why not work on your credit now?

Summer Vacation is Looming!

Summer is almost here! 

Are you planning a vacation?  Or are you still trying to figure out how you’ll afford to take even a small vacation?

You know, one of the easiest ways to save money (and be able to afford that vacation) is to cut expenses, and the easiest way to cut expenses is to cut something that you won’t miss.  Like credit card interest charges!   Think about it… you’re already spending the money, but if you were able to cut out that monthly interest, what would you miss?  The answer is absolutely nothing!  Not only would you have to do without something, but you’d have more money each month.  Money that you could save for that summer vacation!  Or use to pay off your credit card early, or use to buy something that you really need, or any one of a hundred other things!  Who wouldn’t want to save money that way?

Of course, if you’ve already paid your credit cards down, and you’re actually planning to use them to take your summer vacation, then that opens up even more possibilities.  Have you figured out which credit card you’ll use?  Have you looked at the interest rate you’ll pay?  Does it have travel rewards or cash back rewards?

Would you benefit by getting a different credit card that better suited your needs?

And, don’t forget your credit score! If your credit score has improved over the past few months, or years, depending on how often you review your credit cards, then you definitely need to make sure you’re carrying the right card before you ever leave the driveway this summer!

It’s October!

Well, it’s October, and you know what that means? Yes, your mailbox is likely filled with all sorts of offers… credit cards with no interest, catalogs with pre-approved lines of credit, and personal loan offers! Some of them look pretty tempting, don’t they? But, should you fill any of them out and return them? Should you complete the application online? Should you even consider the offers at all?

Honestly, yes and no to all of these questions. While the offers are definitely worth considering, you also need to do your research before applying for ANY credit card, catalog card, or personal loan.

First and foremost, check your credit score! Most of the mailers that you receive are based on the demographics of your state, city, town, or even your specific neighborhood, and not necessarily on your specific credit profile, so checking your credit first gives you the basic information that you need to start with before you even consider a single offer. If the offer is for a credit score that’s much higher than yours, you are likely to be rejected, which definitely hurts your credit score. And if the offer is for a credit score that’s much lower than yours, you will most certainly pay a higher interest rate, additional fees, and lose out on the perks that come with a credit card for better credit. So, start with your credit score.

Once you have your credit score in hand, you’re ready to move on to the next step. Consider each offer carefully! Remember, these are bulk rate mailers, and they’re not necessarily tailored to your specific needs, so what looks good at first may not compare to other options that you most likely have with other credit card, catalog, or personal loan vendors.

The best place to start is the individual credit vendor’s website. Are they legitimate? Are the terms that you see in your offer the same as you find online? Are they typically for individuals with credit scores in the same range as your credit score? Remember, these days, everything and anything is fair game to scammers out there trying to steal your money, your identity, or worse, and as such, you must consider everything and anything as suspect.

Once you’ve determined that the offer is legitimate, then it’s time to compare the offer in your hands to other offers that are out there. Are you getting the best interest rate? Are you getting the best rewards? Would you be paying fees? Is there a better option for you?

Unless you do the research, you can and you will lose out on the best credit card offers, and that will most certainly cost you more in the long run. So, do the research first, and then enjoy the benefits of those credit offers!

Here’s a good place to start:


Can’t Get Credit?

Getting credit when you have none can be extremely difficult, especially if you’ve had a serious financial setback that has resulted in a damaged credit score… How are you supposed to rebuild your credit score if no one will give you credit?  It seems like a vicious circle, but there are alternatives to conventional credit cards, and these alternatives are a great way to start getting your credit back on track!

Obviously, there are a couple of things that you absolutely have to do when you want to start improving your credit.  First, you’ll want to take a really good look at your credit report and do your best to correct any mistakes that you find.  These days, it’s as easy as filing a dispute online, answering a few questions, maybe emailing paperwork – and it doesn’t take nearly as long as it once did to correct these inaccuracies.  I’ve seen them corrected in as little as 30 days!

Another thing that’s vital to improving your credit score is to pay off as many of the derogatory marks on your credit report as you can.  Once you’ve paid them off, you can even request that they be completely removed from your credit report – this may or may not happen, but you should always try!

And finally, once you’ve done all that you can to correct the past, it’s time to start working on your future credit score by rebuilding your available credit and your payment history.  Now, as I mentioned at the beginning of this article, it can be difficult to get a conventional credit card right off, but there are a couple of really good alternatives to conventional credit cards, and these alternatives have been instrumental in helping millions of people improve their poor credit scores:

Apply for a secured credit card, like the Applied Bank® Secured Visa® Gold Preferred® Credit Card. Secured credit cards work a lot like conventional credit cards in that you will have available credit, you’ll be able to use it anywhere that you’d use a conventional credit card (online, hotels, car rental, airline tickets, etc.), and you’ll make payments on the purchases that you make, but the big difference is that you’ll have to put up a security deposit when you open the account.

Most secured credit cards have highly competitive interest rates, low to no annual fees, and many convert to conventional credit cards after a period of time.  All you have to do is choose the card that’s right for you! Just make sure that the secured credit card provider you choose reports your responsible use to the major credit bureaus, because that’s how a secured credit card helps you to improve your credit score!

Open a catalog shopping account such as a Fingerhut Credit Account issued by WebBank. Although it may surprise you, Fingerhut is actually one of the best catalog shopping companies out there. Not only have they been in business for decades, but they are known for working with those of us with less than perfect credit. In fact, most people get approved for a Fingerhut account in minutes, but in the event that you don’t? You may still qualify for a special fresh start program where you’d have to pay a nominal deposit on your first order before it’s shipped.

Either way, once you’re approved, you’ll love the selection of name brand merchandise, the competitive prices, and the low monthly payments!  And even better, you’ll love the effect that a Fingerhut Credit Account issued by WebBank can have on your credit score over time. (Fingerhut reports to the major credit bureaus too!)

Still think you can’t get credit? Don’t put it off any longer – start improving your credit score today!

Don’t Close That Credit Card Account!

You’ve finally paid off one of your credit cards…the balance is zero and you don’t plan to use it again.  Should you close the account so you won’t even be tempted to use it again?

While closing the account might seem like the smart thing to do at first, the truth is, you really need to think about it before you close ANY of your credit cards.  Why?  Closing an account will cause your total available credit to go down  and if your total available credit goes down, then your credit utilization percentage will likely go up, and this can cause your credit score to drop.  Leaving the account open with a zero balance gives you a 0% credit utilization rate on the credit card.  And this can balance out your overall credit utilization, helping you to keep it at or below the 30% that lenders look for when considering you for a loan of any kind.

And, as if that’s not enough, closing an account can also affect your payment history (another 35% of your score), especially if you’ve held the card for a long time (and you’ve kept your payments current).  Closing a card like this can take years of good payments off your credit history, making lenders think twice when they’re thinking about extending more credit to you.

So, what’s the best thing to do with those credit cards?

The truth is, if there’s no annual fee, no monthly “maintenance” fee, etc., attached to the credit card, it may be in your best interest to keep the credit card and use it once or twice a year just to keep the account (and payment history) current.  If you don’t feel comfortable keeping it in your wallet, simply put it away somewhere safe at home.  That way, you’ll have to think twice about using it impulsively!

The Best Way to Boost Your Credit Score

Looking for the best way to boost your credit score?

Maybe your credit score is less than perfect?  Maybe you’ve had a serious financial setback… lost your job, gotten a divorce, filed bankruptcy… The financial crisis has passed, and now you’re looking for the best way to get your credit back on track?

Believe it or not, one of the best ways to boost your credit score is to open a Fingerhut account!

Unlike most of those major credit card companies, Fingerhut will normally extend credit when no one else will.  In fact, almost everyone qualifies for up to $300 in available credit simply by entering your name and address and find out now.

How does a Fingerhut Credit Account help your credit?

A Fingerhut account helps your credit in two ways – the first and most obvious way is that you’ll have an open credit account with available credit.  Having available credit is a very important factor in your credit score… and keeping your balance at or below one third of your total available credit makes up about thirty percent of your credit score.  So, when you increase your available credit, you increase your credit score.

Secondly, Fingerhut reports your responsible credit usage to the major credit bureaus on a monthly basis.  This helps you to build or rebuild your payment history, and your payment history is another very important part of your overall credit score.  The longer your credit history and the more regular, on time payments that show up on your credit report, the more positive effect it will have on your credit score.

Still not convinced that a Fingerhut account is right for you?

If boosting your credit score isn’t enough to make you want to open a Fingerhut Credit Account right now, maybe the hundreds of thousands of competitively priced, name brand products available will sway your decision… that’s right, hundreds of thousands of competitively price, name brand products!  Everything from clothing to jewelry to electronics to furniture and appliances are available through Fingerhut!  Need a new wardrobe?  Fingerhut has it.  A new television?  Fingerhut has it.  New living room furniture?  Fingerhut has it!  That’s right, whatever you’re looking for, chances are you’ll find it at Fingerhut!

We’ll even give you a new promo code to get $25.00 off your first order!  Just enter NC698 when you check out to get your $25.00 off your first order of $100 or more!

Go ahead, what are you waiting for?  Open your Fingerhut Credit Account issued by WebBank  today!

Best Ways to Improve Your Credit Score

Looking for the best ways to improve your credit score?

Less than perfect credit?  Maybe you missed a couple of payments?  Maybe you’ve had a bankruptcy?  A foreclosure? Lost your job, got a divorce, or worse? In this day and age, it’s easy to understand why anyone might need a quick way to improve their credit score… when I first started trying to improve my credit score, it was in the mid 400’s, and that is a very poor credit score.  In the beginning, it seems hopeless to even try… you’re afraid that you’ll never be able to climb out of the credit pit that you’ve fallen into, and it’s very tempting to just give up and accept the fact that your credit score will never be good enough to get those low interest rates… never be good enough to get that new car, never be good enough to own a home… never even be good enough to have a decent credit card with a limit more than just a couple hundred dollars… Sounds pretty familiar, doesn’t it?

All is not lost!  There are so many ways to raise your credit score!  Simply by choosing the right credit options and putting for a little effort, you can improve even the worst credit score in a reasonably short period of time.

How do you improve your credit score?

Basically, the best way to raise your credit score in the shortest amount of time is to focus solely on those areas where your credit score has taken the worst hits.  Not sure of where that is?

First and foremost, you should know your current credit score AND you should have a current, detailed credit report on hand to review in depth so that you can determine the best places to make improvements, the best places to correct missing or inaccurate information, and even those areas where you really can’t do much more than to wait for them to drop off your credit report (typically seven to ten years).

These days there are lots of credit websites that promise you access to your credit report for free, but before you sign up, make sure that it is a reputable site that not only gives you your current credit score and your full credit report, but also offers credit monitoring, fraud protection, etc., for an additional monthly fee.  Although you may not necessarily use it at first, at some point, I highly recommend that you consider signing up for credit monitoring AND actually learning to use all of the features available to you!  The monthly fee is typically less than $30.00 which might seem like a lot, but in the long run, that monthly fee is nothing when compared to the improvements that you can make simply by being able to see all of your credit information in one place whenever you want updated information.  (Those free places only allow you to see a small amount of information on a monthly or even quarterly basis, and that is not enough information if you’re really serious about improving your credit.)

Once you really start working on your credit score, you will find that you want to check all three credit bureaus regularly because your score can be very different at each one, and when you dispute something at one credit bureau, you will have to dispute it at all three because they don’t share much, if any, information!

Once you’ve signed up, and have had the opportunity to really study the detailed information that is available within your credit report, then you can begin to improve it, first by reporting any inaccuracies (disputing is easy – you just submit it online!), and then by working on two other key items:

  1. Available Credit
  2. Payment History

These two simple components of your credit score are also the two easiest components to improve and they’re also two of the most important factors in the calculation of your credit score, so let’s start with what you can do to improve them!

The best ways to improve your available credit and your payment history!

One of the absolute best ways to improve your available credit when you don’t have a lot of cash is to simply to pick the right credit source, apply for an unsecured credit card, and then keep the majority of your available credit balance open on the card.  What if you can’t qualify for any credit cards?  Will a single $300.00 available credit balance be enough to really improve your score?  That depends.  If you have no credit history, having an open $300.00 line of available credit will certainly help your score.  But, if you’re actually trying to improve on a bad credit score, there’s a better way.

“Store” or “catalog” credit cards are the easiest credit cards to get, especially if you have bad credit – and yes, before you ask, some of those credit “cards” are better than the others when it comes to improving your credit score.  (Not only has this been my personal experience, but that of millions of other Americans, as well.)  So, what’s our recommendation for the best store/catalog credit card?

Fingerhut is the best store/catalog account to use for improving your credit score!

That’s right, Fingerhut.com is the best store/catalog account to use when you’re trying to improve your credit.  Why do we recommend Fingerhut?  Well, lets start with the features Fingerhut say that you can expect when you open a Fingerhut account:

Find out instantly if you’re pre-approved with a Fingerhut Credit Account issued by WebBank .

  • Build your Credit with Fingerhut!
  • Shop Great Brands.
  • With a WebBank/FingerHut Credit Account, buy favorite brands with low payments.*
  • Apply for Fingerhut Credit today. Fill out our easy online application.

Now, here are the benefits that Fingerhut doesn’t tell you about:

  • Fingerhut regularly reports the status of your account to at least one of the three major credit bureaus.  This status includes not only the balance due on your account and if your payments are made in a timely manner, but they also report your available credit, and that’s what we’re trying to improve.
  • Fingerhut regularly reviews your account to see if you are making your payments in a timely manner, how much you’ve paid, etc., and if your account is in good standing, they may offer you a credit line increase of a couple hundred to even several hundred dollars!  That’s right, it’s been my experience that Fingerhut will significantly raise your credit limit the more that you use the account to purchase items and as long as you make regular, timely payments.  And that significant credit limit can also significantly improve your credit score!
  • Fingerhut offers an interest rate on purchases that is often equal to, or even lower than, other store/catalog sites and even many credit cards.  Especially if your credit is less than perfect, you are likely paying as much as 33% and even as high as 39% interest on some credit cards – a typical Fingerhut account will be in the mid to slightly up 20’s when it comes to your interest rate.
  • Fingerhut does not charge a monthly or even an annual fee simply for having an account through WebBank.  Compare this with other store/catalog sites and most credit cards and you’ll see just what a benefit this is!
  • Fingerhut offers brand name merchandise at reasonably competitive prices.  Yes, you may sometimes pay a little more than you would at your local big box or discount department store, but you will also find that you will oftentimes pay less than at other catalog/store sites, and even at some of your local retailers.  Ordering is fast, easy, and your order is shipped promptly… right to your door!
  • Check out Fingerhut now to see how fantastic their site really is!

Still think you can’t improve your credit score?  

It’s far easier to improve your credit score once you actually get started.  My low credit score kept me from so many things… but once I really started studying my credit report, once I removed the inaccuracies, and once I made a real effort to improve my score, it didn’t take near as much time as I thought it would… and improving my score not only helped me to purchase a new car at a low interest rate, but two years ago, I bought my first house!

What are you waiting for?  Get started today!

Don’t Go Off the Credit Grid

Should You Go Off the Credit Grid?

These days, it seems everyone wants to go “off the grid.” Whether it’s off the power grid, off the debt grid, or off the credit grid… Yesterday, I actually read an article advising individuals to pay off all debt and strive for a credit score of ZERO. That’s right, ZERO.

What exactly would a credit score of zero really mean?

To be honest, I don’t believe that a credit score of zero is something that’s even remotely possible in this day and age, but let’s just say that it was. What would that really mean?

While it would mean that you have absolutely no debt, and would have had to have absolutely no debt for at least seven years at a minimum, a credit score of zero would mean that you have absolutely no borrowing power whatsoever. That’s right. NO CREDIT AT ALL. So, in the event that you actually needed credit, you would have no way to borrow any money.

No credit cards. No car payments. No mortgage. No credit history.


Does that even make any financial sense in this day and age? Not really. What makes more financial sense is to have no debt, but still have a great credit score, and enough credit available to you so that, if you need to borrow money, it’s there.

That’s why it’s more important to strive to maintain a good to excellent credit score rather than to strive to have no credit. And the best way to maintain your credit score is to monitor your credit carefully. Check your credit report, look for inaccuracies, and protect yourself against identity theft.

And, as much as you might like to go “off the credit grid,” it’s still very important to keep at least one, or even two, good credit cards and USE them occasionally to keep your credit lines open.