Data Facts Blog


Spending Mistakes Smart People Make Over the Holidays

empty-pocketDecember is a time for families and friends to come together over the holidays. However, the last month of the year can also be a big budget buster that can leave you broke and in debt if you aren’t careful.

We have created a breakdown of mistakes smart people make over the holidays that result in January being hard to bear.  Avoiding these actions can help you make certain you roll into January with some money left in your pocket and your credit score intact.

The “I’ll pay it off next month” blunder.  Perhaps the best thing you can do for yourself is to set a budget for the holidays, and pay for those plans with cash. Using a credit card for holiday purchases sets you up to overspend. Paying for gifts you bought in December all the way through April is nobody’s idea of fun. Not to mention the negative affect those credit card charges could have on your credit score.

The “I’ll know it when I see it” shopping plan. Scour sales papers BEFORE your shopping trip to get an idea of the items you will be buying, and the cost. Shopping without a plan is like going into the grocery store hungry; it sets you up to overspend on impulse items.

The “it’s a bargain” trap. Don’t fall for the deep discount prices and one-day only ads. These ploys can break your budget and rack up lots of credit card charges. If the item wasn’t on your list and included in your budget, don’t buy it.

The “open a credit card today” ambush. Sure, an extra 10 or 15% off for simply opening a store credit card sounds great. However, don’t be taken in by this offer. A new credit card will show up as an inquiry on your credit report, and will give you the urge to use it lavishly. Just say no.

Now, those are goofs that deal with shopping. However, other activities can be budget breakers during the holiday season.

The “this dress makes me look skinny” argument. While we all like a new outfit, do you really need that new dress, new purse, or new cufflinks for your holiday party? Do you really not already own an outfit you can wear? Make sure you don’t overspend on clothing for the holidays that will end up only being worn once.

The “eat, drink, and be merry” boo-boo. Holidays inspire quality time with friends and family. However, expensive meals and overindulging in alcohol can tank your budget. Plan ahead for nights out, and suggest less expensive venues if your budget is tight.

Being aware of these holiday budget saboteurs is the first step to success. By avoiding these mistakes, you can keep your bank account and credit score high! Don’t let money mistakes over the holidays turn HO HO HO into NO NO NO!

~~Susan McCullah is the Product Development Director for Data Facts, a 23 year old Memphis-based company.  Data Facts provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.

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Credit Score Success from Scratch; a Simple Recipe

A high credit score is like a homemade meal; it takes time, patience, and cannot be whipped up instantly.  Let’s look at the recipe to build a great credit score from scratch:

First, you need to have the ingredient of credit. People who don’t have any credit are not showing the credit scoring model their financial management skills.  A credit card, home loan, or car note is a main ingredient in the credit score recipe.  Remember: you are not required to carry a credit card balance. Using a credit card will help build your credit even if you pay it in full every month.

Second, make sure you pay a lot of attention. Pay those credit obligations on time, because timely payment is the single most important aspect of building a good credit score.  You can gain lots of points by having a good history of on time payment, and, conversely, you can spoil your credit score with just a few missed or late payment patterns.

Third, keep those credit card balances low. Credit card balances are like salt, less is more.  The credit scoring model looks at your credit card balance in relation to your credit limit (this is called a credit utilization ratio). The lower the ratio, the more positively it affects your credit score. Make sure to never charge over 30% of your total credit limit, because you don’t want to get penalized.

Fourth, keep those old credit cards open and use them every now and then. You will get points for a long, lengthy credit history.

Fifth, don’t add too many ingredients all at once. If you don’t have any credit and are just starting out, don’t open too many credit cards too fast. One line of credit every year or so will work out great.

Sixth, remember to have more than one ingredient, if possible. The scoring model likes to see that a person can manage a mix of credit. Having installment loans (mortgage or car) and revolving loans (credit cards) will give a boost to your score.

Seventh, keep an eye on it. Check your credit report at least once a year and examine it carefully.  Make sure there aren’t any errors (such as creditors that you don’t recognize, late payments or collections reporting incorrectly, etc). This happens all the time, and the sooner you catch it, the better off you will be. Dispute any incorrect information to get it removed.

Attaining a great credit score takes a little time, self discipline, and attention. However, putting in the effort will assure that you can get the best deals on mortgage, auto, and credit card rates. Following the recipe we just laid out is a great start to help you cook up a great credit score!

~~Susan McCullah is the Product Development Director for Data Facts, a 23 year old Memphis-based company.  Data Facts provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.

Credit Score Health: Common Conditions that can Tank your Score

Posted in Budget,Credit Score,FICO,Uncategorized by datafactssolutions on October 31, 2011
Tags: , , ,

A credit score is a measurement to determine your credit worthiness, and we should all strive to keep ours as HIGH as possible. This means managing our payments, watching our credit card balances, and not frivolously applying for new credit.
However, certain seemingly innocent actions can result in credit score decreases. Do you recognize yourself as having any of these “conditions”?
The “I gotta have it-ache”. A new fishing rod, a great pair of heels, a beach vacation. We all have the budget breaking Achilles heel. While splurging every now and then won’t be detrimental, a habit of treating yourself to everything that catches your eye can damage your credit score. Overspending can result in maxed out credit cards, which can lower your credit score (remember, credit utilization accounts for 30% of your score). Another result of over-extending can be not being able to pay your bills on time. If you begin paying bills late, your credit score will definitely pay the price.
The “I’ll worry about it tomorrow-itis”. Procrastinating on making a budget or delaying facing your mounting bills is a sure fire way to sink your credit score. A few missed payments along with a few bad purchases can cause a mess that will take you months (or YEARS) to recover from.
The “I can’t miss a deal-phobia”. 20% off if you open a credit card! Ends today! If either of these speaks to you, this may be a problem. Department stores often offer discounts for opening a new credit card, and these show up on your credit report as an inquiry. Too many of these can have a very negative effect on your credit score.
The “It will work itself out-flu”. Collection calls, liens, lates, OH MY! These are credit score tankers and they need to be dealt with thisveryminute! There is a chance that they are erroneous, and could be removed from your credit report with a little effort on your part. Letting them linger on your credit report will send you straight out of 700 and 800land into 600 or 500ville. And nobody wants to live there.
The best remedies to get and keep a high credit score?
Think about your purchases. Being impulsive with money is going to lead you down a debt-ridden path. If the object of your desire costs more than 1% of your monthly income, think about it for at least 24 hours and figure out how you are going to pay for it.
Always keep your budget on your mind. Write out a monthly budget so that you know how much extra money you can spend every month. This will keep you making your payments on time and your debt manageable.
Just say no to marketing. Don’t be swayed to buy something or open credit lines you don’t need because of a great sale or discount. If you weren’t looking for it before you walked into the store, chances are you can live without it, no matter how great the ‘deal’. Your financial future is more important than saving a few bucks.
Keep your head out of the sand. Big credit problems such as collections and liens will not vanish by themselves. Make sure you are checking your credit report regularly. Never assume that creditors will realize they have made a mistake and then take steps to correct it on their own. Jump in and get any erroneous information handled immediately.
     The health of your credit score depends largely on your ability to control your impulses when shopping. Keeping a handle on spending and seeing your big financial picture will help keep your credit score healthy and in top form.

~~Susan McCullah is the Product Development Director for Data Facts, a 22 year old Memphis-based company that provides mortgage product solutions to lenders nationwide.