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If there are old merchant cards and other credit cards taking up space in your wallet, you may be tempted to close those accounts, since you don't use them anymore. However, that would be a bad move for your credit score. Even though you're not using them, those old credit cards are helping your credit score in a number of ways.

To better illustrate how and why those unused credit cards help, it's good to know how your credit score is calculated. Here's the breakdown on how credit scores are calculated:

Payment history: 35 percent
Amount of money owed: 30 percent
Length of credit history: 15 percent
New credit requests: 10 percent
Types of credit used: 10 percent

Those are the factors that go into determining your credit scores and the weight that each factor has in relation to the others. Now let's examine why closing inactive credit card accounts lowers your credit score.

The value of old credit
Those old, inactive credit cards you're thinking about closing are actually helping your credit score because length of your credit history is worth about one-sixth of your overall score. Not only should you leave them open and keep them helping your credit score, you might even want to use them occasionally so the issuer doesn't close the account for you.

Amount of money owed vs. credit limit
There's a term for this that lenders and credit bureaus like to use: debt-to-credit ratio. Your current credit balances, when viewed as a percentage of total credit, are 30 percent of your total credit score. Therefore, even though you're not using those credit cards, the credit limit on each of them is actually helping you lower your debt-to-credit ratio, which is a sign of responsible credit behavior. Keep those accounts active and working for you by using them occasionally.

Types of credit used
Although it's only 10 percent of the total credit score, every little bit helps. Those old credit cards are contributing to the different types of credit accounts in your credit history. Most people have several different credit cards or revolving credit accounts, and hanging on to your old ones is one way to cater to the credit-score formulas used by the credit bureaus.

Any one of the reasons listed above is a good reason to maintain those old credit accounts. However, when taken together and backed up with the facts, they're even more compelling. Even if you only use cards every now and then, credit and charge cards from merchants are important facets of your credit score and credit history. If you keep cards active, they may even save you money via better interest rates. Understanding the factors that affect your credit score and checking your free credit score annually, can put you one step closer to financial freedom.

Courtesy of ARAcontent

Do you have bad credit? If so, it's unlikely to get around the fact that it's going to impact more than just your ability to get credit cards. Your credit history offers potential employers, banks and even auto insurance companies a snapshot of how safe or risky you are to employ, rent to or insure.

In fact, did you know your credit history is probably one of the most important factors taken into consideration by insurance companies when they offer you a car insurance policy?. This thorough record of all your financial data is analyzed and used to determine an insurance score, which is used to predict the level of future insurance claims you may have.

Your credit history contains information that has proven effective in predicting insurance losses, including:

* Your payment history: Have you made late payments or missed a payment?

* Length of credit history: How long have you been using credit?

* Your current balance on each account compared to your highest balance: For example, if you had high credit card balances before, are they lower now?

* Number of credit accounts: How many accounts do you have? This may include credit card accounts or installment loans.

* Credit inquiries: How often have lenders made inquiries into your credit report? This does not include "soft inquiries," such as when a company reviews your credit report to make a promotional offer. (Credit inquiries are not used in all states.)

* Bankruptcies, foreclosures and other collection activity (Bankruptcy information is not used in all states.)

If you have bad credit, now you know why car insurance is so expensive. But the good news is that if you take steps to repair the damage to your credit report, and manage to avoid getting tickets or having accidents while you're doing so, it won't be long before your rates go down.

Courtesy of ARAcontent

(ARA) - A serious long-term illness or disability can have a devastating, often irreversible, affect on a family's financial well-being. In fact, health care expenses are among the most common cause of bankruptcies, according to findings published in the "American Journal of Medicine" last year.

Most people are not financially prepared to have their employment interrupted, even briefly. For example, studies find more than 60 percent of workers live paycheck to paycheck. The U.S. Department of Commerce reports that the personal savings rate in March was just 2.7 percent of after-tax income.

So, what can you do to ease the financial risks if you are one of the millions who must stop working each year because of a serious health condition?

"First, have hope, because there are things you can do to take control," says Paul Gada, personal finance director for the Allsup Disability Life Planning Center. Allsup is a nationwide provider of Social Security Disability Insurance (SSDI) representation and Medicare plan selection services.

According to Gada, seeking help is essential. "Many people are afraid and overwhelmed. Asking for help is a sign of strength and being your own best advocate can help you feel more in control."

Among the first steps people with serious health conditions or their caregivers should take quickly are:

* Create a financial plan. The plan should focus on establishing a budget and making certain you are spending down your assets in the least harmful way. Generally, this means using your savings or other resources before withdrawing from retirement accounts that could trigger a penalty or using high interest-rate credit, which could have you paying off interest for years.

Unfortunately, approximately 15 percent of people awaiting SSDI report raiding their retirement savings. Additionally, 17 percent are relying on their credit cards and 7 percent on home equity lines of credit to meet financial needs until they receive their SSDI benefits, according to the Allsup Disability Finance online poll. The poll was conducted online this spring with 138 respondents.

* Contact your mortgage company or landlord. As part of this, identify housing assistance programs. For example, the U.S. Department of Housing and Urban Development (HUD) has programs to assist with mortgage modifications, as well as rental assistance that can lower housing costs drastically. However, there are waiting lists, so it's important to sign up as soon as possible.

"People are often reluctant to reach out to their mortgage company or their landlord, they start missing payments, and the foreclosure or eviction process starts before they finally explain the situation," says Gada. "By that time, it may be too late."

* Seek assistance with utilities, food and other necessities. Conserve your resources by finding assistance to help you cope. Hundreds of federal, local and private resources are available in most communities. These can range from neighborhood food pantries to federally funded programs, such as Low Income Home Energy Assistance Program (LIHEAP). Local phone companies provide reduced-rate support for home phone service. Associations such as the American Cancer Society and the National Family Caregiver Association also offer guidance.

Many more people indicate they are considering assistance than are actually securing this assistance, according to an Allsup poll. They may not understand how to apply or they may not meet the income thresholds initially, but could later on as they spend down their assets.

"It can be overwhelming and people too often give up," explains Gada, adding that Allsup offers links to many of these resources from its website.

* Secure health care coverage. Continuing medical treatment is vital. Among the options are COBRA through your former employer, a spouse's plan or other private coverage, such as through the health insurance exchanges being established as part of the health care legislation enacted earlier this year. Compare plans closely to make sure you are getting the coverage needed and that you understand the costs. Additionally, if you must take expensive prescription drugs, check if the pharmaceutical company offers a prescription-drug assistance program.

* Pursue income sources, including SSDI. If you have paid into the Social Security Disability Insurance program, you may be eligible for benefits. If you are eligible, it's essential to apply quickly as it can take up to two years or more to be approved. Gada advises seeking help with your SSDI application to speed the process. For example, people with disabilities represented by Allsup are significantly more likely to receive SSDI benefits at the initial level.

"It's heartbreaking to hear of people with serious illnesses and disabilities unable to work and struggling month after month to pay for food or medical costs until they're financially wiped out," says Gada. "It shouldn't be that way. There are steps people can take, but they need to ask for help and know how to get it."

More information on financial assistance is available at www.Allsup.com or (800) 279-4357.

Courtesy of ARAcontent

(ARA) - Caring for your family is something you do every day of your life. But there might come a time when you won't be available.

Mortgage life insurance is a life insurance product designed to help your survivors pay your mortgage after you pass away.

Unlike general life insurance policies that provide a specific benefit amount to a beneficiary of your choice -- with the funds being used however the recipient sees fit -- mortgage life insurance is specifically designed to pay for your mortgage and only your mortgage. The benefit amount is paid directly to the mortgage lender, and since it is designed to pay the mortgage, it changes over time as the amount owed decreases. The mortgage life insurance policy also ends when the mortgage is paid off, if the purchaser of the policy is still living.

Whether or not you need a mortgage life insurance policy depends a lot on your other expenses and what other life insurance products you may already own. Usually when purchasing life insurance, people factor into the total death benefit amount the cost of a mortgage. If you are worried that too much of the life insurance payout will have to be used by your family to pay off the mortgage - leaving them with less money to cover other expenses - then mortgage life insurance may be right for you.

Have a plan
Most life insurance experts agree that taking a comprehensive look at your overall financial needs - including your mortgage - and determining what your family would require to survive without your income, and then purchasing adequate life insurance accordingly is the better route. Visit LifeInsurance.org and look at the Life Insurance Overview section for details on how to determine how much life insurance you need, and the options available to you.

Terminal illness coverage
One additional advantage of mortgage life insurance is it often will pay off the mortgage not only upon the death of the insured, but also in the case of a diagnosis of terminal illness. For many of these policies, if you are told that you are going to die within the next six months to a year - the mortgage life insurer will most likely pay off your mortgage. For what little solace it may offer you and your family, at least you will not have to worry about mortgage payments.

Courtesy of ARAcontent

Are you among the millions of Americans planning a summer road trip? If so, you may be traveling to your destination by car instead of airplane to save money. But road trips can become stressful if you are on a tight budget. Here are some helpful tips for keeping costs under control:

1. Shop around for free auto insurance quotes online - When you're getting ready for a road trip, it is the perfect time to shop online for auto insurance.

2. Know where to find cheap gas ahead of time - As you are planning your route for the day, consult a website like www.GasBuddy.com to find the best gas prices.

3. Pack light - For every 100 pounds of excess weight in your car, fuel efficiency can decrease by 1 to 2 percent. That may not seem like much, but it adds up in the long run, especially if you'll be taking a long trip.

4. Book hotels ahead of time and look for "extras" - Instead of just checking into the first hotel you find along your route when you start getting tired, book rooms ahead of time so you can take advantage of discounts and perks. Many hotels now offer free continental breakfast and parking, as well as free access to wireless and other amenities.

5. Bring along a cooler filled with snacks and meals on-the-go - Instead of stopping at a rest stop for mediocre, over-priced meals, pack your lunch and enjoy a peaceful picnic at a park or rest stop. If you plan on eating out, visit www.Restaurant.com/offer/Allstate where you can buy $25 gift certificates to local restaurants for only $10, courtesy of Allstate Insurance. The company can also provide you with an auto insurance quote.

Courtesy of ARAcontent