IAPDA - Arbitrain Training Systems - Debt Arbitration Career Training

How to Choose a Debt Settlement Company, by Alan Barnes

noreply@blogger.com (administrator) — Thu, 15 May 2008 18:19:00 +0000

As consumer debt continues to spiral out of control, debt relief is fast becoming a major concern for many American's. In 1999, American's made $1.1 Trillion worth of credit card purchases. In 2001, American credit card debt hovered around $690 billion. Unfortunately, in today's unstable economic conditions, many American's are being forced to turn to credit cards as a way to extend their income. Consumer debt is at an all-time high and American's need to know what they can do to get out of debt. Often, consumers are seeking the services of professional debt settlement companies to help regain control of their finances. However, prior to making such an important decision, it is important to fully understand who you are doing business with.

The most important thing you can do when making the decision get help with your debt related problems is to be an informed consumer. It is absolutely critical to do your research. Do not rush into things; this can cause more harm that good. Prior to signing on with any Debt Settlement company, make sure you ask the following questions and consider their responses:

* How much does the service cost? When choosing a solution for debt relief, it's important to make sure the program is something that's affordable and realistic within your monthly budget. If you can't afford the program and join anyway, you're are just causing more long-term financial problems for yourself; however, if you are able to meet the monthly financial requirements of the program, Debt Settlement is a great form of debt relief for unwanted credit card debt. Most people don't realize that Debt Settlement is the quickest and least expensive form of debt relief outside of bankruptcy.

* Does the Debt Settlement Company you are considering report to any of the three major credit bureaus about your enrollment in their program? Traditionally, debt settlement companies do not report to credit bureaus; however, I have heard of a few that do. Creditors will normally elect to report derogatory information on your credit report, but the debt settlement company you do business with should not.

* Does the company offer any type of service guarantee? If so, what is the guarantee? If a company can not get settlement on your debt, you should never have to pay a fee, or the fee should be fully refunded. Additionally, steer clear of any debt settlement company that promises a quick fix to your debt related problems or tells you that debt settlement will not have a negative effect on your credit. Upon enrolling in a debt settlement program, your credit score will probably get worse before it gets better. This is a minor price to pay for being given a substantial debt settlement and not having to file for bankruptcy! However, it is important to realize that if you want to maintain a "good credit rating", you have to pay you bills on time; anything else will cause your credit score will suffer.

* Does the debt settlement company you are considering have IAPDA certified debt arbitrators? IAPDA certified debt arbitrators possess a solid understanding of the laws governing the Debt Settlement industry and fully understand your current financial situation.

* Does the debt settlement company you are considering offer any type of bankruptcy assistance should debt settlement not work out for you? For example, some debt settlement companies will offer a refund of some of the program costs to help pay for a bankruptcy attorney of your choice. Of course, the funds would have to be paid to a licensed attorney and not directly back to you. Again, a company that does this will most likely have your best interest in mind.

* Does the debt settlement company you are considering belong to the local Chamber of Commerce? If so, is the Chamber an accredited member of the Chamber of Commerce of the Unites States? This type of affiliation will help ensure that the company is conducting business in a proper manner.

* Is the debt settlement company you are considering a member of the Better Business Bureau? If they do not advertise this, you can always inquire with the BBB first. The BBB is a great way to determine if the company has a list of prior complaints. Any company with more than a few complaints per year is a company that you do not want to do business with.

Alan Barnes IAPDA Certified Debt Arbitrator
President and CEO of Debt Regret
http://www.debtregret.com

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Uniform Debt-Management Services Act (UDMSA) - Summary

noreply@blogger.com (administrator) — Wed, 14 May 2008 16:50:00 +0000

Consumer debt counseling and management (settlement) services have been available to individuals with serious debt and credit problems going back to the 1950's. There are generally two kinds of services that have been available. Some of these services have provided counseling coupled with assisting debtors in establishing programs to pay off debts over an extended time. Others have provided consolidation and management services, in which agreements are reached with creditors to settle on a percentage of debt. Most of these services have collected a periodic amount from the debtors from which payment to creditors has been made. The general objective of these services has been debt satisfaction without resort to bankruptcy.

The history of debt counseling and management services is somewhat checkered. There have been numerous abuses and efforts to counter abuses statutorily in many states. Debt counseling and management services have been criticized in the past for their efforts to steer debtors away from bankruptcy when it may have been more advantageous and less costly for some debtors to file bankruptcy. State legistlators have struggled to find legistlative solutions but the industry remains unregulated in most states. One of the continuing controversies in many states is whether for profit services should be allowed even if regulated.

However, federal bankruptcy reform effective in 2005 has changed the perspective on such services. For an individual to file for Chapter 7 bankruptcy, that individual will in most cases have to show that consumer debt counseling/management has been sought and attempted. This shifts a highly significant burden upon private services to perform honestly and effectively. Because the new bankruptcy rules are federal and apply in every state, regulating the counseling and management services in every state must be uniform in character for the new bankruptcy rules to be effective and for consumers to be protected.

In 2005, just in time for consideration in the state legislatures, the Uniform Law Commissioners promulgated the Uniform Debt-Management Services Act (UDMSA). It provides the states with a comprehensive act governing these services that will mean national administration of debt counseling and management in a fair and effective way.

UDMSA may be divided into three basic parts: registration of services, service-debtor agreements and enforcement. Each part contributes to the comprehensive quality of the Uniform Act.

Registration

No service may enter into an agreement with any debtor in a state without registering as a consumer debt-management service in that state. Registration requires submission of detailed information concerning the service, including its financial condition, the identity of principals, locations at which service will be offered, form for agreements with debtors and business history in other jurisdictions. To register, a service must have an effective insurance policy against fraud, dishonesty, theft and the like in an amount no less than $250,000.00. It must also provide a security bond of a minimum of $50,000.00 which has the state administrator as a beneficiary. If a registration substantially duplicates one in another state, the service may offer proof of registration in that other state to satisfy the registration requirements in a state. A satisfactory application will result in a certificate to do business from the administrator. A yearly renewal is required.

Agreements

In order to enter into agreements with debtors, there is a disclosure requirement respecting fees and services to be offered, and the risks and benefits of entering into such a contract. The service must offer counseling services from a certified counselor and a plan must be created in consultation by the counselor for debt-management service to commence. The contents of the agreements and fees that may be charged are set by the statute. There is a penalty-free three-day right of rescission on the part of the debtor. The debtor may cancel the agreement also after 30 days, but may be subject to fees if that occurs. The service may terminate the agreement if required payments are delinquent for at least 60 days.

Any payments for creditors received from a debtor must be kept in a trust account that may not be used to hold any other funds of the service. There are strict accounting requirements and periodic reporting requirements respecting funds held.

Enforcement

The Act prohibits specific acts on the part of a service including: misappropriation of funds in trust; settlement for more than 50% of a debt with a creditor without a debtor’s consent; gifts or premiums to enter into an agreement; and representation that settlement has occurred without certification from a creditor. Enforcement of the Uniform Act occurs at two levels, the administrator and the individual level. The administrator has investigative powers, power to order an individual to cease and desist; power to assess a civil penalty up to $10,000.00, and the power to bring a civil action. An individual may bring a civil action for compensatory damages, including triple damages if a service obtains payments not authorized in the Uniform Act, and may seek punitive damages and attorney’s fees. A service has a good faith mistake defense against liability. The statute of limitations pertaining to an action by the administrator is four years, and two years for a private right of action.

Banks as regulated entities under other law are not subject to the Uniform Act, as are other kinds of activities that are incidental to other functions performed. For example, a title insurer that provides bill-paying service that is incidental to title insurance is not subject to it.

UDMSA provides comprehensive regulation of debt counseling and debt settlement services. It becomes an essential part of the law of creditor and debtor as bankruptcy reform enacted by Congress in 2005 takes effect.

Visit Uniform Debt-Management Services Act (UDMSA) official website
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Debt Settlement and You

noreply@blogger.com (administrator) — Mon, 21 Jan 2008 17:25:00 +0000

Debt settlement is one of those things that many people will have to face at one point or another. Many people are wrapped up in a debt that is at once overwhelming and frightening. It has long been known that we get used to our problems, define ourselves by them on an inner level, and yet, somewhere, know we must let them go.

Considering Debt Settlement is the first step in a long but extremely gratifying journey toward betterment, it is wise to find an escape route from debt as soon as possible. Though it is difficult to face and do something about, the motion forward, into the freedoms that being debt free will bring, is worth that initial shock. Even if the process is a slow one, doing something, anything, is better than doing nothing. Debt settlement is a way out.

Debt Settlement and You
Though it often seems odd to relate something as tangible as money with something so esoteric as happiness, it is a worth while connection. We always hear that money doesn't equal happiness, that in the end, how you live is more important than what is in your wallet, that you cannot define yourself by your bank account, etc.

Maybe money doesn't equal happiness, but debt most certainly equals depression, for some people. How you live is more important than money, but how you care for your money is a direct sign of how you live. You cannot define yourself by your bank account, but you can define yourself by your organization, the care you put into everything you do, and the devotion you have to make your life simpler. Taking care of yourself is a priority, and being a good steward of your money is part of that effort.

Needing Debt Settlement
A solid financial clean up is in order for those who have allowed their debt to get out of hand and take over their lives. Without acknowledging that your debt is a problem, and that perhaps you need a debt settlement plan, there will be no room for forward motion into better living. As scary as it is to face one's debt, having a great amount of ignored debt is a lot scarier.

The feelings that arise from the heavy burden of debt are feelings that do not push one forward into a world of peace and kindness and sensibility. Instead, the build up of debt adds chaos to the background of one's life and, until it is cleared, or at the very least chipped away at, the underlying pressure and turmoil that debt creates will not be loosened.

Accepting Debt Settlement as an Option
The first step in debt settlement, as with most any problem that rests heavily upon anyone's shoulders, is to accept that you need help--seek it out. Feel empowered that you are going to take control of your finances, no matter how slowly it happens. Every slight motion brings you closer to a more satisfied you in the future. Look at yourself and let yourself know that you care, that you want better, and that you will strive to make yourself proud.

Getting rid of debt, in the end, will be a point in your life you look back on as a milestone. Later on, down the road, you will wonder why you didn't face your debt sooner, and question why you were so afraid. You will smile at your old self but beam at your new self. It is important to remember that you have time to get to this future, but beginning the process now will reveal it sooner.

Interested in a career in professional Debt Settlement?
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Keeping Track to Repair and Build Credit

noreply@blogger.com (administrator) — Thu, 11 Oct 2007 21:36:00 +0000

Keeping track of your spending and diverting a budget plan is often a better solution for repairing credit and building your rating. If you file for bankruptcy of debt consolidation you are only adding more headaches to an already bad situation.

Bankruptcy goes on your credit report for more than ten years in most cases. When lenders see that you have filed bankruptcy they often stop you at the door. Debt consolidation loans add additional expenses to your bills.

Most debt consolidation loans include high interest rates, and payments to creditors that are insufficient and often keep you on needles and pins while your bills are paid. Therefore, the best solution for repairing your credit and building your rating is to save money.

First, you might want to invest in software programs that have tools for budgeting and saving. The small investment could save you headaches by allowing you to use tools. Keeping a record of your expenditures will start with a monthly budgeting scheme. If you are using software programs it is easier to budget, but if you choose to go on your own, you can set up a form.

The form will have a header Daily Spending for the week of --------------. You will add in each day of the week, how much it cost you each day to survive, and the total of the week once the week has ended. It is wise to make several copies so that you can monitor your spending over the next few months.

Since Sunday is considered the first day of a starting week, it is always wise to start on a Sunday recording your budgets. Be sure that you record all your spending, as well as money saved, earned, taxes, fees for banking, and so on. At each week when your bills are due try spending as much as possible on your bills, only allowing x amount of dollars to survive the following week.

For example, if you have a phone bill of $113, a water bill of the amount $79, lights $89, gas $99 and you have the amount of $375 paid to you, you know that you can't pay the full amount of the bills to survive. Therefore, you will need to set up a budget to meet the demands put on you.

It is wise to cut back. If you have cable or satellite TV, you might want to disconnect until you get your bills caught up. You can always rent movies for a low fee each month online, or get a movie or two once every week for entertainment, however, if you can do without entertainment altogether until your bills are paid, how much better to repair your credit.

Your credit is more important to your future than any single movie, unless you are making millions from the movie. Radio music is often free, as well as other entertainments. Try to find something that doesn't cost until your bills are paid, then you can restore your life.

You might even want to create a form that estimates your monthly installments as well as your expenses for survival. On the monthly form you will list your gross pay, bonuses, pensions, retirements, child support, and so on.

Finally, you will calculate your monthly receives and deduct them by the amount you owe, leaving enough funds available for your survival. While you are calculating your expenses be sure that you find ways to cut back on areas of your spending.

This will help you to find a way to alter your spending habits, yet survive each month. After you have saved for a few months you will see that you have more money to spend toward your credit repair.

Cut backs should include groceries, personal care, medical, pet expenses, gifts, vacations, and so on. Keeping track of your records can help you to repair your credit rating and score as well as help you to rebuild your credit.

If you have a low paying job you might want to find a job that pays better wages. You might even want to take a part-time job to compliment your full-time job. There is always a solution for building credit or else repairing what is already lost.

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How you can stop creditor harassment

noreply@blogger.com (administrator) — Wed, 18 Apr 2007 17:53:00 +0000

People who feel hopelessly pressured by credit card debt should know that they have options to stop creditor harassment. Creditors are often persistent to the point of constant phone calls at all hours of the day. They often make threats which create unbearable frustration and stress for the debtor. Solutions include knowledge of debt collection regulations, filing bankruptcy, or using a debt settlement service.

The Fair Debt Collection Practices Act places limits on debt collection. It covers personal, family, and household debts. Collectors are allowed to make contact with debtors in person or by telephone, mail, telegram, or fax. If a debtor writes a letter requesting that contact be stopped, collectors must cease contact except to notify of a specific action. They must contact through the debtor's attorney if they have retained one. Collectors may not tell other associates of the debtor about money owed.

Debt settlement services are a valuable option. They relieve the stress of overwhelming debt by offering a manageable payment plan. As soon as a debtor enrolls, creditors and collectors receive immediate notice to stop contact. Usually, harassment ceases within a month, with two months being the maximum. Programs are in place to monitor the situation until all debts are paid. A customer representative is assigned to each account to handle all problems and concerns. They may ask debtors to keep a written record of any contacts with creditors in order to bring harassment to a halt.

Bankruptcy is considered a last resort. It will stop creditor harassment but at the same time, create other problems. Negative effects, such as inability to obtain credit or secure fair interest rates, can last for at least seven years. Many debtors regret their decision to file for bankruptcy. Feelings of guilt and failure are common. Expert advice is extremely important before making this life-altering decision.

Find out more about a career in Debt Settlement
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Options for dealing with problem debt

noreply@blogger.com (administrator) — Mon, 02 Apr 2007 15:42:00 +0000

There are four alternatives to solving debt problems, and while we believe that a "Debt Arbitration Program" is the best solution for most consumers, we want to educate each and every person strggling with debt on the alternatives and let them make the choice that is best for their solution.

-Credit Counseling
-Debt Consolidation
-Bankruptcy
-Credit Card Monthly Payment

-Credit Counseling -
The main problem with Consumer Credit Counseling organizations is that they are secretly working for your creditors! This may seem unbelievable, but it is true - and it is why you end up paying about three times more money to pay off your debts in Credit Counseling than in a "Debt Arbitration Program." Most Consumer Credit Counseling firm's claim non-profit status and pretend to be independent. But in fact, these non-profits are funded and supported by the very people you owe money to; - the credit card companies. That is why Consumer Credit Counseling companies do not negotiate your debts down. They merely try to come up with a plan to make sure you keep paying your credit card bills every single month. They want to force consumers to pay as much money as possible to your creditors. Sure, they may help lower your interest rate a few points, or eliminate a late payment or two, but the credit card companies are happy to do this when they know you are going to keep making payments that a debt arbitrator could have negotiated away for pennies on the dollar.

Additionally, since you are repaying 100% of your debt balance plus interest charges (even after they are reduced by Consumer Credit Counseling), you could be in a Consumer Credit Counseling program for 5 years! Compare that to 2-3 years in a debt settlement program.
In a "Debt Settlement Program" you can be out of debt twice as fast and for about 1/3rd of what you'd be paying in a Credit Counseling. Debt Management Program-
Why not become debt free as soon as possible, as opposed to being stuck in a consumer credit counseling program for several more years. Once you learn about the alternatives, the decision becomes easy for our clients to choose a Debt Reduction Program.
Furthermore, most Consumer Credit Counseling companies require you to make all of your payments to them and then they pay off your creditors. Recently, a state Attorney General sued one of the largest Consumer Credit Counseling firms because they were not actually passing on all the money they get to the credit card companies, they were keeping it themselves! In fact, the IRS has recently stopped granting non-profit status to credit counseling firms.

Debt Settlement firms receive no payments from your creditors, so their incentives are aligned with yours. They make money when you save money and the only money you send them is for their fees, if and only if they save you money.

-Debt Consolidation-
Unfortunately, a Debt Consolidation Loan is one of the most common solutions people think of when they fall into financial difficulties. This is a problem because most people who get a debt consolidation loan find themselves in much deeper financial trouble than they were in to begin with.
Debt consolidation loans transfer debt from one place to another. While this may sound good, since many times it can be appear to lower your monthly payments, a debt consolidation loan will not reduce the amount you owe. We have yet to find someone who has solved their debt problems by borrowing more money through debt consolidation.
You will still pay back 100% of the debt consolidation loan, plus interest. The interest rate is sometimes lower than before, but this is because debt consolidation loans are usually secured loans that cannot be lowered or negotiated. Once you sign up for a debt consolidation loan, you have just gone from an unsecured debt to a secured debt and have put your personal assets (e.g. your car or home) at risk. At that point if you can't pay your bills your creditors can come and take your personal property - thus creating a bigger problem than you had to begin with.
We think the best solution is to deal with financial problems through debt reduction, not debt consolidation. This way you are dealing directly with the problem, not temporarily avoiding debt problems.

-Bankruptcy-
Bankruptcy is a way to potentially get out of your debts. Unfortunately, it leaves a long lasting scar, and comes at a high price - financially, emotionally, and socially. It is a long and painful process and the repercussions can last for over a decade.
The financial impact is severe; a bankruptcy will stay on your credit report for 10 years. Every time you apply for credit, whether it is a home, a car, a lease, or insurance, you will be impacted. The long-term effect of higher rates many times greatly outweighs the shorter-term impact of filing bankruptcy.
Additionally, most people do not realize that bankruptcy can stay on their court records for over 20 years - which means it can follow someone for the rest of their life. If you apply for a job, a loan, rent an apartment, or even insurance your bankruptcy filing is easily uncovered.
Lastly, we have yet to find someone who is proud of filing bankruptcy. Most people will do anything to avoid filing bankruptcy
Bankruptcy is not an easy or even quick fix. It is a very serious decision with serious consequences. If you are considering bankruptcy, you should consider contacting a lawyer to discuss this option.

A "Debt Arbitration Program" is a great alternative to bankruptcy. Your credit rating is protected from bankruptcy and your debts are reduced. Best of all, your creditors accept the settlement amounts as payments in full, making you debt free without having to suffer the long-term financial, emotional, and social impacts of a bankruptcy. Many people are ecstatic to find an alternative to bankruptcy that still solves their debt problems.

-Credit Card Monthly Payment-
Unfortunately, millions of Americans who are struggling with their debts continue to just barely make their monthly payments. Most of these people just keep doing whatever they can to continue making minimum payments for the rest of their lives. If you are facing severe financial hardship, this is a no win situation. If you are only meeting your minimum payments, you are paying almost entirely interest charges; not paying down your debts.
This means that if you owe $10,000 today, it will cost you more than $20,000 over the next 20-30 years before you are debt free. And if you can't keep making their minimum payments, the creditors will begin harassing you. If you don't find help, you could end up with judgments and garnished wages as well as liens against your property.

A Debt Reduction Program allows you to minimize creditor calls, avoid bankruptcy, avoid new debt and come to an agreement with creditors on your terms, not theirs.

Learn more about a career in Professional Debt Arbitration.
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What can Debt Arbitration do for You?

noreply@blogger.com (administrator) — Fri, 30 Mar 2007 13:36:00 +0000

It seems that everywhere you look these days, debt arbitration/settlement companies are advertising. New debt management companies seem to open each day and in some cities debt arbitration/settlement companies outnumber lawyers and every other profession for space.

You may have wondered yourself what debt management companies do and what they can do to help you. Quite simply, debt arbitration/settlement companies, which are also called debt management companies, are companies that will call your creditors in order to arrange settlement and partial payment of your debts.

Debt management companies work because they have negotiating experience and because most creditors would rather get some of the money owed to them rather then have someone declare bankruptcy. If your debts are considerable, debt arbitration/settlement can help you get control of your finances and can help you avoid bankruptcy by making it possible for you to pay off what you owe.

Debt arbitration/settlement can help to stop harassing telephone calls from collection agencies and creditors, it can really help you if you are struggling with debt. To get the best benefits, however, you need to find a reputable company.

With so many debt arbitration/settlement companies going into business, you need to research carefully. Before contacting a company, you should have a realistic idea of what debt management can do for you. If you have small loans, debt management will not make much of a difference. If you are on the verge of bankruptcy, debt management may also not help you, as no company will magically make your debt disappear.

In fact, debt arbitration/settlement companies will do a complete debt analysis of your situation and will only work with you if you can pay off all or most of your debts. Debt management companies also do not provide loans for you to pay off your debts. They will be able to help you if you have lots of late fees, can pay off part of your loans, and need some negotiations to get more time to pay off your debts.

Before contacting a debt management company, you should always check to see how long they have been in business and a good debt management company will make all its fees and policies clear up-front and will not charge you a fee for an initial consultation. A reputable debt management company will also have a list of satisfied customers who have been helped by the company. Be sure to read what services are offered before signing any agreements with a debt arbitration/settlement company.
Learn more about a career in Professional Debt Arbitration.
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Calculating Credit Card Interest

noreply@blogger.com (administrator) — Thu, 15 Mar 2007 17:09:00 +0000

Almost every American 18 an older has a credit card and some even younger. The first credit card ever issued was by Franklin National Bank back in 1951 and who would of thought that it would become such a staple in society? Now having a good credit rating is imperative to getting the most out of your money because everyone borrows. That's how the United States is built; Just look at the government budget.

Determining the credit card payment each month
Each month the credit card bill shows the minimum payment, the interest rate, days in billing cycle, the charges and the interest. These components are all you need to determine a particular months payment:

Take your beginning balance each day and add any new advances, charges and subtract any credits and payments. Then all of the daily balances in the billing cycle are divided by the total number of days in the billing cycle. This determines what is called the "Average Daily Balance." Then the finance charge is determined by multiplying the daily periodic rate (interest rate divided by 365) by the number of days in the billing cycle and then multiplied by the "Average Daily Balance." This determines the finance charge each month.

Let's take a sample first month's payment for a credit card with a 30 day billing cycle, assuming no purchases were made with an interest rate 5.75%.

The principal balance is $76,500.

30 (days in billing cycle)

76,500 x 30 = $2,295,000 -

2,295,000 / 30 = $76,500 (Average daily balance)

5.75% / 365 = 0.1575 (Daily periodic rate)

.01575 x 30 x $76,500 = $361.46

$361.46 is the financing added to the current balance: $76,500 + $361.46 = $76,861.46

It is difficult to determine the exact amount of the payment when many purchases are made through the month. Still you can get in the ball park.

The importance of paying down credit card balances
Knowing how credit card interest is calculated can make a big difference on how you pay it off. Rather than paying your credit card bill once a month, pay as early and often as you can every month. This way you'll reduce the average daily balance and thus the amount interest charged. If you are paying off larger amounts of debt, the difference can be huge as making the minimum payment will assure you years of billing cycles. So pay extra and pay often: For a credit card balance of $8,000 with 10% interest payment and with a $100 minimum payment, it would take a little over 43 years to pay it off. Not to mention the interest paid would be around $13,300. So you borrow $8,000 you pay $21,300.

Note, that many home equity loans and equity lines of credit determine interest in a similar fashion. So pay those cards off!

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4 Steps to Establishing a Good Credit History

noreply@blogger.com (administrator) — Thu, 01 Mar 2007 21:24:00 +0000

As a consumer you've learned the importance of establishing a good credit rating with your lenders. Whether you are shopping for a new home or auto, or searching for the best deals on insurance, your credit worthiness will be judged by your credit rating or credit score.

A bad credit history or bad credit habits will place "black marks" on your credit profile. These include things such as late payments, having an account assigned to a collection agency, and of course bankruptcy.

Establishing good credit habits and therefore a good credit rating will improve your credit worthiness. This will be reflected in potential lenders offering you substantially lower interest rates and better deals on credit offers.

Here are 4 tips to help you create a shining credit profile:

1) Pay Your Bills On Time

Lenders only have your past payment history on which to decide the type of credit risk you present to them. How you pay off your debts now indicates to them how you will pay off future debts.

2) Don't Carry Too Many or Too Few Credit Cards

How much is too much ? How little is too little ? Many credit experts and financial planners suggest two to four credit cards is just the right mix.

3) Pay At Least The Minimum Due

Always pay at least the minimum due payment, but never less. And remember, just paying the minimum payment means it will take you years and years to pay off that credit card.

Example: Paying off a $2,000 credit payment at 18% APR with a minimum monthly payment of 2% ($40 dollars or less) will take you 30 years to pay off the amount plus interest.

4) Review Your Credit Report Regularly

Monitor your credit report from all three major credit bureaus - Experian, TransUnion, and Equifax - on a regular basis. Check your credit profile at least annually. Review it carefully and make sure that any past mistakes or disputes have been corrected.

Also, if you notice an account listed that you know that you have not personally opened, contact that creditor and the credit bureaus immediately. This could be a sign that you've had your identity stolen. Request to have a fraud alert placed on your profile and account to protect yourself and your credit. Identity theft is the fastest growing consumer crime in America, with an estimated 1 million people victimized each year.

Establish good credit habits early in life and reap the benefits that your good credit rating will provide you for the rest of your financial future.

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Why debt reduction is so vital for your financial health

noreply@blogger.com (administrator) — Tue, 13 Feb 2007 21:17:00 +0000

Why debt reduction is vital for your financial health

Living with debt is never a good idea if you want to make long-term financial plans. Every cent you use to service debt is money that could have been invested in your future. Investment is extremely important, and can lead to a more comfortable and secure retirement. Just as smart investment can lead to a more secure future, mismanaging your money and incurring debts can lead to financial difficulty down the track. Poor money management can prevent you from taking advantage of many different kinds of financial opportunities, and may effect your credit report.

Debt affects your ability to save and invest for the future.

Every time you make a repayment on a loan or pay off the balance of your credit card, you are spending money that could have been more usefully invested in other ways, such as building that nest egg for the future. Reducing your total amount of debt is vital for your long-term financial health.

At the moment, wealth accumulation may seem like an unattainable goal. However, you need to make sure that you have money to live comfortably during retirement. Constantly using money to pay off your debts will ultimately have a significant impact on your ability to build the kind of future you deserve.

For example, if you spend $500 each and every month servicing debt (which is a conservative estimate based on the rising level of consumer debt in America), you may find it extremely difficult to save money. The sooner you are able to begin investing and putting that $500 to better use, the more secure your future financial situation will be.

Debt affects your credit rating and your future ability to obtain credit.

Mismanaging your debts, failing to make scheduled repayments or making late payments on a regular basis can have a significant impact on your future ability to obtain credit. If you do not service your debts responsibly, your bank or financial institution can contact a credit reporting agency and request that your failure to make a repayment be noted on your credit report. Having an impaired credit report means that other lenders may be more reluctant to give you credit.

An impaired credit report will affect all your future credit applications. Each time you apply for credit, such as a mortgage, a car loan, a credit card or an overdraft, your credit history will be checked and you may be refused because you are deemed a credit risk. A credit default can remain on your credit report for 5 years, while a serious credit infringement can remain on your credit report for 7 years.

If you have a seriously impaired credit report, you will probably have difficulty purchasing a home or moving into a rental property. Lenders and credit providers in America rely on your credit report to determine whether you are a credit risk. If you have had difficulty repaying debts in the past, lenders will be far more cautious and may refuse your application for credit. It is extremely important to manage your debts responsibly and tackle problems at an early stage before they get out of hand. Debt can have a way of building up if left unchecked.

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Your Credit Report, A little Improvement Can Go A Long Way

noreply@blogger.com (administrator) — Tue, 06 Feb 2007 21:22:00 +0000

You may think you have a marvelous credit report, be cautious of the mistake factor. Just as you receive mail with your name and address misspelled, your credit report can have errors just like anything else. Whether it is someone's typing over site, out of date info or even mistaken identity, errors go on more regularly than we all can imagine.

According to the FTC, both the credit reporting agency and the establishment that provided the information to the credit reporting agency have duties for correcting wrong or incomplete information in your credit report.

While checking your credit report, if you locate incorrect information on your credit report, without hesitation notify the CRA in writing directly:

1. Tell the Credit reporting agency what information you believe is incorrect on your credit file. Send copies, never originals of documents that support your position.

2. Be sure to providing your entire name and address, your letter should clearly describe each entry in your credit report that you question. Tell the facts and why you are challenging the information. Sending a copy of your credit report with the items that are not correct highlighted can be help full.

3. Although you may imagine your grounds for writing is self explanatory, be certain to ask that the over site be fixed.

4. Send off your correspondence by certified mail, return receipt requested so you can document when the credit reporting agency received your letter. Be sure your letter is dated, and never forget to keep copies of everything you send.

Credit reporting agency must look into the item(s) in question, generally within 30 days unless they assume your dispute is trivial. They also must send on all relevant data you send them to the company that gave them the information for your credit report.

After the establishment receives notification of a dispute from the credit Bureau, it must review and go over all relevant information rendered and report the final result back to the credit reporting agency.

If the company finds the disputed information to be wrong, it must advise all nationwide credit reporting agency so that they can change this information in your credit file.

Disputed information that just can't be affirmed must be erased from your credit file.

Inaccurate information must be fixed by the credit reporting agency.

Incomplete information must be corrected by the credit bureau.

Any item that belong only to another person must be erased by the CRA.

NOTE: Credit repair can be long and unexciting, the significance of being well-informed of your rights can't be emphasized enough so be sure you take time to digest this information.

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The True Cost of your Credit

noreply@blogger.com (administrator) — Wed, 31 Jan 2007 17:52:00 +0000

The current house price boom has perhaps passed its peak as I write this, but that doesn't stop the mortgage companies from offering yet more new and tempting products that look like good deals for a consumer. But be warned - The standard mortgage, running over 25 years is set like that for a reason! When you see companies offering '40 year mortgages' or 'low start' mortgages, or perhaps even 'interest only' mortgages, you should understand these shiny new products may have a nasty sting ion their credit tail!

Perhaps the ultimate expression of lending absurdity is Japan, where at the peak of their last boom, 'Grandfather - Father - Son' mortgages were common. These committed unborn future generations to mortgage payments incurred by their predecessors (a situation thankfully illegal in most parts of the world!). Could it ever happen here? Probably not, but the extension of 'standard' mortgage terms on lower interest rates are not actually a good thing for the ordinary Joe, even though they are touted as being 'more affordable', and should be viewed with deep distrust, simply because it means YOU WILL PAY MORE over the life of the loan. Don't believe me? Try working out the math, instead of simply looking at the monthly repayment figure.

Using the good old loan calculator we can see that a standard $100,000 loan at 5% over 25 years will cost you over $175,000. That's a big $75k in interest. What about the same loan over 40 years at 4%? That's cheaper, right? WRONG! You'll pay over $200,000 over the period - an extra $25k or so! And if interest rates stay at 5%, add another $30k to make $55k of extra costs for you!

A repayment mortgage will suffer an additional penalty on a longer loan - the amount of capital you pay off each month is adjusted to take account of the fact that it now runs over 40 years, not 25, and this means you build up equity in your property far slower than in a shorter loan.

So what's the advice? If you can't afford a house on a 'traditional' setup, rent. The price will undoubtedly come back into line with wages at some point. If you already have a mortgage, overpay when you can - the difference over the years can amount to TENS of thousands of dollars!

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15 important credit card terms to consider before applying for a credit card!!

noreply@blogger.com (administrator) — Tue, 09 Jan 2007 17:57:00 +0000

A credit card is a form of borrowing that often involves charges. Credit terms and conditions affect your overall cost. So it's wise to compare terms and fees before you agree to open a credit or charge card account. The following are some important terms to consider that generally must be disclosed in credit card applications or in solicitations that require no application. You also may want to ask about these terms when you're shopping for a card.

If you don't understand the language, credit card offers and statements could lead you to deep debt -- or at least furious frustration. For the big scoop on the fine print, here's what these frequently used credit card terms mean.

1.Average daily balance -- This is the method by which most credit cards calculate your payment due. An average daily balance is determined by adding each day's balance and then dividing that total by the number of days in a billing cycle. The average daily balance is then multiplied by a card's monthly periodic rate, which is calculated by dividing the annual percentage rate by 12. A card with an annual rate of 18 percent would have a monthly periodic rate of 1.5 percent. If that card had a $500 average daily balance it would yield a monthly finance charge of $7.50.

2.APR(Annual percentage rate) -- A yearly rate of interest that includes fees and costs paid to acquire the loan. Lenders are required by law to disclose the APR. The rate is calculated in a standard way, taking the average compound interest rate over the term of the loan, so borrowers can compare loans.

3.Balance transfer -- The process of moving an unpaid credit card debt from one issuer to another. Card issuers sometimes offer teaser rates to encourage balance transfers coming in and balance-transfer fees to discourage them from going out.

4.Cash-advance fee -- A charge by the bank for using credit cards to obtain cash. This fee can be stated in terms of a flat per-transaction fee or a percentage of the amount of the cash advance. For example, the fee may be expressed as follows: "2%/$10". This means that the cash advance fee will be the greater of 2 percent of the cash advance amount or $10.

The banks may limit the amount that can be charged to a specific dollar amount. Depending on the bank issuing the card, the cash advance fee may be deducted directly from the cash advance at the time the money is received or it may be posted to your bill as of the day you received the advance. The cost of a cash advance is also higher because there generally is no grace period. Interest accrues from the moment the money is withdrawn.

5.Card holder agreement -- The written statement that gives the terms and conditions of a credit card account. The cardholder agreement is required by Federal Reserve regulations. It must include the Annual Percentage Rate, the monthly minimum payment formula, annual fee if applicable, and the cardholder's rights in billing disputes. Changes in the cardholder agreement may be made, with written advance notice, at any time by the issuer. Rules for imposing changes vary from state to state, but the rules that apply are those of the home state of the issuing bank, not the home state of the cardholder.

6.Finance charge -- The charge for using a credit card, comprised of interest costs and other fees.

7.Floor -- The minimum rate possible on a variable-rate loan or line of credit, after any initial introductory rate period. For example, on a credit card with the Prime rate as its index, no matter how low the Prime rate drops, the rate on the line may never decrease below the stated rate floor.

8.Free Period -- Also called a "grace period," a free period lets you avoid finance charges by paying your balance in full before the due date. Knowing whether a card gives you a free period is especially important if you plan to pay your account in full each month. Without a free period, the card issuer may impose a finance charge from the date you use your card or from the date each transaction is posted to your account. If your card includes a free period, the issuer must mail your bill at least 14 days before the due date so you'll have enough time to pay.

9.Minimum payment -- The minimum amount a cardholder can pay to keep the account from going into default. Some card issuers will set a high minimum if they are uncertain of the cardholder's ability to pay. Most card issuers require a minimum payment of two percent of the outstanding balance.

10.Over-the-limit fee -- A fee charged for exceeding the credit limit on the card.

11.Periodic rate -- The interest rate described in relation to a specific amount of time. The monthly periodic rate, for example, is the cost of credit per month; the daily periodic rate is the cost of credit per day.

12.Pre-approved -- A credit card offer with "pre-approved" only means that a potential customer has passed a preliminary credit-information screening. A credit card company can spurn the customers it invited with "pre-approved" junk mail if it doesn't like the applicant's credit rating.

13.Secured card -- A credit card that a cardholder secures with a savings deposit to ensure payment of the outstanding balance if the cardholder defaults on payments. It is used by people new to credit, or people trying to rebuild their poor credit ratings.

14.Teaser rate -- Often called the introductory rate, it is the below-market interest rate offered to entice customers to switch credit cards or lenders.

15.Variable interest rate -- Percentage that a borrower pays for the use of money, and which moves up or down periodically based on changes in other interest rates.

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Save on your insurance by improving your credit score.

noreply@blogger.com (administrator) — Tue, 19 Dec 2006 19:11:00 +0000

Did you know that you could make sure to get the best rates on your auto and homeowners insurance simply by having a good credit score. Additionally a great credit score will allow you to get the best interest rates on your credit cards, car loans and even your home mortgage. With interest rates as low and as favorable as they current are why shouldn't you take advantage of them?

What to do - Probably the most important first step you can take would be to order your credit report in order to view its accuracy and check for any glaring errors that could cause you problems or lower your credit score. A good credit score generally speaking is above 750. There are 3 companies that offer credit reports. TransUnion, Equifax and Experian. There is a slight cost however a new law allows consumers the right to one free credit report every year. As of this writing only consumers on the West Coast can enjoy this benefit. Mid-west states can start receiving their free credit reports around the 1st of March 2005. For those of you that live in the South expect to be able to order your free report starting 1 June 2005 and if you're on the East Coast you'll unfortunately have to wait until the beginning of September 2005 in order to claim your free report.

Please don't take this lightly - your credit score is very important to your financial success in life. Even if you have managed to avoid making late payments or over drawing on your current credit limits you can still be in harms way. Recent reports have suggested that almost 79% of credit reports contain an error of some kind. The really bad news is that 25% of these errors are harmful enough to where they could cause some serious issues in your attempts to receive credit, better rates and lower your insurance premiums. Additional recommendations include the obvious such as continuing to make payments on time combined with an outstanding long-term credit history and low credit usage. You can use this to your advantage by keeping your oldest credit cards debt free. Also ask for credit limit increase every once in a while. However make every attempt to avoid signing up for new credit cards or other forms of credit unless absolutely necessary.

If you do find out that your credit report does indeed contain errors promptly contact the credit bureau that issued you the credit and dispute the errors. If the bureau is unable to verify that the errors are indeed correct within a 30-day time frame they must remove the erroneous information from your report.

Taking the simple precaution of verifying your credit score could result in a substantial deduction on all of your insurance premiums and could significantly improve your rates for a new home or car loan.

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Your Rights Under The Equal Credit Opportunity Act

noreply@blogger.com (administrator) — Wed, 13 Dec 2006 21:13:00 +0000

It wasn't all that long ago that lenders blatantly discriminated when it came to approving credit for women and minority groups. Women were actually asked personal and demeaning questions like, how many children do you plan to have in the future or are you on birth control?

Despite the fact that they were entering the workforce in record numbers, single women were often required to get a cosigner or denied credit altogether. Members of minority groups were denied credit as well, even though they were fully qualified.

Today thanks to the Equal Credit Opportunity Act, millions of consumers from all walks of life are given and equal chance to obtain and use credit to finance educations, buy or remodel homes or get small business loans.

The Equal Credit Opportunity Act, which was passed by congress in 1973 first banned discrimination in credit access on the basis of sex or marital status and was later amended to include race, religion, national origin and age. Of course, this doesn't mean all consumers who apply for credit get it. Factors such as income, expenses, debt and credit history are considerations for credit worthiness.

But the law protects you when you deal with any creditor who regularly extends credit, including banks, small loan and finance companies, retail and department stores, credit card companies, and credit unions. Anyone involved in granting credit, such as real estate brokers who arrange financing, is covered by the law. Businesses applying for credit also are protected by the law.

When You Apply For Credit, A Creditor May Not.

Discourage you from applying for credit because of your sex, marital status, age, race, national origin, or because you receive public assistance income.

Ask you to reveal your sex, race, national origin, or religion. A creditor may ask you to voluntarily disclose this information, except for religion if you're applying for a real estate loan. This information helps federal agencies enforce anti discrimination laws. You may be asked about your residence or immigration status.

Ask if you're widowed or divorced. When permitted to ask marital status, a creditor may only use the terms: married, unmarried, or separated.

Ask about your marital status if you're applying for a separate, unsecured account. A creditor may ask you to provide this information if you live in community property states, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, and Washington. A creditor in any state may ask for this information if you apply for a joint credit account or one secured by property.

Request information about your spouse, except when your spouse is applying for credit with you. Note: your spouse will be allowed to use the credit account. You are relying on your spouse's income or on alimony or child support income from a former spouse; or if you reside in a community property state.

Inquire about your plans for having or raising children.

Ask if you receive alimony, child support, or separate maintenance payments, unless you're first told that, you don't have to provide this information if you won't rely on these payments to get credit. A creditor may ask if you have to pay alimony, child support, or separate maintenance payments.

A Special Note To Women

A good credit history, a record of how you paid past bills often is necessary to get credit. Unfortunately, this hurts many married, separated, divorced, and widowed women. There are two common reasons women don't have credit histories in their own names: they lost their credit histories when they married and changed their names, or creditors reported accounts shared by married couples in the husband's name only.

If you're married, divorced, separated, or widowed, contact the credit bureaus to make sure all relevant information is in a file under your own name.

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Which Credit Bureau Should I Use To Check My Credit Report?

noreply@blogger.com (administrator) — Mon, 11 Dec 2006 21:13:00 +0000

There are three main credit bureaus in the United States; Equifax, Experian and Trans Union. Each bureau collects your personal and financial information which is then sold to lenders such as banks, credit unions, credit card companies, mortgage and auto loan lenders. Your credit report is the product of this collected information. Lending and credit companies use your credit information to determine if they will approve you or not and at what interest rate you will pay.

Many people are recognizing the importance of checking their own credit report to verify its accuracy and to make sure that they know where they stand in the credit world. Until they begin the process to obtain a copy of their credit report, some people do not realize that they actually have three credit reports instead of just one. The three main credit bureaus keep separate credit records from one another and produce their own credit reports. Instead of the credit bureaus working together and sharing information among themselves like some people may think, they are actually competitors. That is why the information provided on one credit report will more than likely be different from the information provided on the credit report from another credit bureau. Therefore, it is recommended to check your credit report from all three credit bureaus in order to see the complete picture.

There are a couple of options to checking all three of your credit reports. You can contact each of the credit bureaus individually to request a copy. Or you can go through one of the many companies that provide a 3-in-1 credit report like Credit Report Credit Score. You can visit them at http://www.credit-report-credit-score.com . Obtaining a 3-in-1 credit report is usually more convenient and user friendly to the consumer compared to requesting individual copies.

Verifying the data on all three of your credit reports is the only way to know that the information that potential lenders and creditors are evaluating you on is correct. When considering you for a loan, some lenders will pull your credit report from only one or two of the credit bureaus while other lenders will pull your credit report from all three. It is always a good idea to check your credit reports BEFORE applying for your next big purchase. Covering your bases beforehand can often times save you a lot of time and hassle during the application process.

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The Secret Of Credit Reports

noreply@blogger.com (administrator) — Thu, 07 Dec 2006 21:49:00 +0000

Creditors, bill collectors and bankers have one thing in common: they know about your credit history and have access to your credit report. For anyone who has ever wanted to buy a car or a house, your credit score impacts whether you will be approved for a loan and at what interest rate you'll be offered.

A credit report exists so that financial institutions can rank your' trustworthiness' to pay back the loan. In a world of billions, it becomes impossible to just take someone's 'word' for it. Instead, companies such as Equifax, Trans Union and Experian receive merchant information detailing your activity.

A standard credit report contains a list of every form of credit line you could have opened, including in some areas your utility bills. They list the name of the institution, the full amount borrowed, the payment, how often the payment is due, if payment is up to date and an arbitrary score assigned by that system as far as number of months paid and on time. Then using a formula, the credit agency tabulates all of these numbers and rates you with a final score.

When any company or individual requests a copy of your credit report, they are required to obtain your consent. However, agencies polling to offer you a credit card can also create a 'hit' on your credit report. Every single time your report is accessed by anyone for any reason, it adds an information line to your report.

Because you may receive a line of credit and it can take up to 90 days or more before it actually appears on the credit report, the number of hits to your report is also factored into your score.

So, imagine if you were offered 10 pre-approved credit cards via the mail, each one of those companies likely created a 'hit' on your credit report. If you shred them and toss them into the trash, it can take four to six weeks for those hits to no longer affect your score. While their effect is minimal, figure how many free offers for credit you get every week. It really begins to add up.

In the end, a credit score vouches for your reliability in paying your debts. It means that you are a good 'risk' and the company is less likely to lose money on you. With the list of those asking for your credit score growing, credit checks are becoming a regular function in opening a bank account, renting an apartment and applying for a job. Some employers require a good credit score as well as a good work history on your resume to hire you into their companies.

No matter the reasoning, sound or otherwise, behind asking for your permission to pull a credit report, it is an invasion of privacy and it calls into question even the most honest and reliable individuals. Clerical, human and computer errors can all cause inaccuracies. All it takes is one misreport by a company to create backlash in your credit scores. Combine human error with robbery (such as identity theft) the matter becomes especially serious.

You can repair the damage to your credit report through prevention, contact and persistence. Always pay your bills on time, report any issues with payment immediately to the company and avoid your bills being sent to a collection agency.

Contacting a credit agency to report an error on your report can take 14 to 21 days to be straightened out. By law, if you dispute a line on your credit report, they are required to contact the reporting company. If the company does not respond within a certain time frame, the error must be removed.

But errors cost time and money. Some agencies do not react quickly, despite the law, and it can take frequent contacts to repair inaccuracies. Some credit agencies are becoming more and more Internet savvy and this allows the end user to contact them via a website or email rather than posting a ground letter.

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Student credit cards: Basic guide

noreply@blogger.com (administrator) — Wed, 06 Dec 2006 21:12:00 +0000

Many students start becoming consumers of credit when they get their first student credit card in college. Student credit cards can give them a highly convenient way of making purchases; however this is also a time of great responsibility as they start their first endeavor into money management.

You need to be careful when using your student credit card. This is the time you start building your credit report which will come into play when you start needing money to buy a house or a car. It is very easy to misuse credit in college. Usually it is very expensive being a college student nowadays and it can be hard to keep track of bills and pay them on time.

However a student credit card can also be very convenient. It can teach you better money management skills. If you work hard you can start building a solid credit score. Students can also avoid carrying around cash. Many student credit cards offer protection incase the card gets stolen or lost.

There is much choice for students when it comes to selecting a card. The first thing when choosing a student credit card is to find one with a low APR.

Many student credit cards will even allow you to accumulate points from your purchases which you can redeem for DVDs, books, CDs and other cool rewards.

If you misuse your student credit card and keep making late payments, you will be under a huge debt burden when you graduate and need to buy a home or a car. Student credit cards are not a student loan. Consider them as high interest loans which you should pay off immediately.

On the other hand by properly managing your payments, you can have a good credit score when you graduate. If you make your payments on time, you can also avoid the interest charges. Be careful of the late fees on your student credit card.

Student credit cards generally have low interest rates but they might have a smaller maximum credit limit.

If you are a college student, you may have received a lot of student credit card offers through the mail. Credit card companies want you to get hooked on their card early in life, so that you remain their loyal customer in the future.

Online applications have made it very convenient to apply for a student credit card. In addition the Internet can let you shop around from a wider selection of cards right from your home. Usually it is a secure way to apply if the online site has a secure server.

You can qualify for a student credit card if you are at least 18 years of age.

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The Top 5 Secrets to Managing Your Credit Cards-So They Won't Manage You

noreply@blogger.com (administrator) — Mon, 27 Nov 2006 21:22:00 +0000

You've probably never heard of Frank X. McNamara, but he revolutionized the way you shop on a daily basis.

One evening in 1949, McNamara-head of the Hamilton Credit Corporation in New York City-was dining out with two business associates. Their topic of discussion: one of McNamara's clients, who was defaulting on a loan because he had shared his gasoline and department-store credit cards with some friends in need. Unfortunately, the friends didn't have the money to pay back what they had borrowed, so the good samaritan was now facing his own financial demise.

As the meal ended, McNamara reached for his wallet so he could pick up the check. To his horror, he realized he had left it at home-and was forced to call his wife so she could bring him the cash he needed to settle the tab.

This fateful meal led to an invention that has transformed how the world handles money to this very day: the credit card. While previously available gasoline and department-store credit cards allowed users to make purchases at a single location, McNamara's personal plight-and that of his well-meaning client-prompted him to create a credit card that could be used in multiple venues. The Diners Club card was born. In its first year, 200,000 consumers signed up for one.

The rest is history. After carefully observing Diners Club's success, American Express and Bank Americard (soon to be renamed VISA) followed suit. Thank McNamara the next time you pay with plastic.

But has McNamara's novel concept become more of a curse than a blessing in your life? Are your credit cards managing you-and is your debt spiraling out of control?

Here are 5 ways to tame the credit card beast.

1. Know Your Limits
If you have a tendency to overspend, limit your extravagances by relying on paper currency instead of plastic. Set spending limits before you leave the house, whether you're shopping for groceries or heading to the mall to buy a new pair of shoes. If you find yourself reaching for your credit cards, freeze-and don't move an inch until you can answer the following questions:

. Why am I breaking my own rule?

. Am I being self-destructive with my financial health?

. Do I really need this item, or is my ability to say "charge it!" clouding my good judgment?

2. Learn from McNamara's Client
As McNamara's client learned the hard way, loaning your credit cards to even those closest to you is a surefire way to accrue debt. You are giving your spouse, children, other relatives and/or friends carte blanche to spend up a storm-and you are the one who is legally obligated to pay the bills that will find their way into your mailbox at the end of the month. Be extremely selective when passing the plastic to anyone who can run up a bill-and fail to pay you back.

3. Show Interest in Interest
Surveys consistently show that most people make only the required minimum payment on their credit card bills each month, leaving them with an outstanding balance that continues to climb. Not only do additional purchases add up, but you are continually paying interest on your existing and new balances-a sometimes considerable fee that has catapulted many consumers into life-altering debt.

Today, the average American family, for example, owes approximately $8,000 on its credit cards-and the credit card companies could not be more pleased. If 115 million families owed you money-on which you earn finance charges and late fees every month-you would be positively giddy, too.

Let's say you have an outstanding balance of $2,000 on a single credit card. Your annual interest rate is 9%, and your credit card company requires you to make a minimum $30 payment each month. Assuming you do not miss any payments (which would cause your interest rate to rise, as well as add late fees as high as $40 per month), it would take you 204 months to pay off this balance if you make only the minimum $30 payment each month-and by then, you will have paid an extra $1,028.43 in interest. This is how debt begins: A $2,000 charge winds up costing you $3,028.43.

4. Switch Cards
If you are still paying an annual fee on your credit card, it's time to make the switch to a card that is not only free, but rewards you for using it.

Assuming you have good credit and can secure a new card, explore your options. Banks offer cards that award cash-back bonuses, airline miles, gasoline rebates and other perks each time you use them. If you can manage your credit appropriately, keep pace with payments and pay your bills on time, you may as well reap the benefits of your spending habits.

5. Read Your Statements-Carefully
Some consumers pay their credit card bills without carefully reviewing their statements. This is one of the most serious mistakes you can make-especially in an age of identity theft, when someone can use your card to make purchases in your name.

Always keep your credit card receipts, and check them against the bill when it arrives each month. Make sure every charge is accurate, and notify your credit card company immediately if there are any charges you did not make. The company can reverse the charge if it is a simple error-or if someone has used your card without authorization. In the latter case, ask the company to cancel the card, review any additional purchases made since that date and issue a new card with enhanced security features, such as a personal identification number (PIN), to be entered each time the card is used.

In addition, check due dates on credit card bills. You may be used to paying your bill by the 20th of each month, but credit card companies have been shortening the length of time consumers have to pay their balances. Very often, there is no notification of a policy change-or the fine print is buried somewhere on your statement. Note the payment due date each month, and try to pay the full amount to avoid accruing interest or late fees.

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Bad Credit Mortgage Loans - Can You Get Approved?

noreply@blogger.com (administrator) — Thu, 23 Nov 2006 17:41:00 +0000

A few years ago, if you had a bankruptcy or a foreclosure on your credit report, you could forget about trying to get a mortgage loan. If you were lucky enough to find someone who would finance you, your interest rate would be through the roof and plan on putting 10-20% down.
But today, this is not the case. There are many programs available today to help people who have recently suffered a bankruptcy or foreclosure to get a mortgage loan or mortgage refinance loan.
There are two things to do if you are in this situation:
1. Get yourself a free copy of your credit report from all 3 major credit bureaus, look over everything, do you see any mistakes? Make sure everything included in your bankruptcy or foreclosure reports accurately on your credit report. Make sure those accounts involved in a bankruptcy or foreclosure are not showing something else like collection or charge-off.. That could make your score much lower than it needs to be. If you have a bankruptcy or foreclosure, you want everything involved to say so, so it is all under 1 circumstance, instead of many. You can dispute all errors on your credit report online nowadays. It takes about 15 minutes. You can do it right on the website of Equifax, TransUnion or Experian.
2. Once you have checked your credit reports, apply only to places that submit your application to many lenders. Every time your credit report is pulled, it will knock your credit score down a little. If you apply to a mortgage service that will submit your application to many lenders, then you only have one credit inquiry and can receive offers from up to 4 lenders per application.
Frequently asked questions are:
1. Will I have to make a large down payment? Not necessarily. If you can get your credit score above a 600, you should easily be able to get 100% financing, even if it has been less than two years since your bankruptcy or foreclosure. If your score is above a 580, you might still be able to qualify for 100% financing.
2. What kind of interest rate can I expect? Depending on your credit score and whether you have any down payment or not, I have heard of situations with a credit score as low as 585 with no down payment and an interest rate as low as 7.25%. That was quoted in March of 2005.
3. Can I get cash out? On a purchase, not likely. On a refinance, depending on your amount of equity, that is very possible.
There are many lenders now, who specialize in bad credit mortgage loans. These are the best lenders to start with.

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Are You Paying Sneaky Interest Charges On Your Credit Cards?

noreply@blogger.com (administrator) — Tue, 21 Nov 2006 21:21:00 +0000

Are you one of the many credit card holders who signed up for a credit account with an 8.9% interest rate and then later had your interest rate inflated to 27.4%? Have you read the fine print in your latest statement? Do you know that a little clause in the fine print of the credit card terms and agreements, called the "Universal Default Clause" may mean that you're paying a higher interest rate than when you applied for the credit card? What does this sneaky little clause mean to you?

If your credit score goes down or one of your other credit qualifications changes, then your interest rate increases, sometimes more than 10 points. This doesn't mean only new charges you make to this particular credit card account: the higher rate gets charged to the entire balance. Yes, you get charged more on items you purchased beforehand, while believing that your interest rate would remain the same.

Credit grantors periodically review their customers' credit reports. About half of all credit card companies take advantage of you if you're perceived as a high-risk borrower. The fine print in your account statement may include the universal default penalty, which allows your credit card company to increase your interest rate if they discover these conditions:

1. You have just one late payment on any credit account. They don't care if you've never made a late payment to that particular company.

2. You go over your credit limit on any account. Even if you unknowingly charge a small amount over the credit limit (which many credit card issuers let you do without notice), your interest rate can be raised.

3. Your credit score drops. Just one late payment can hurt your credit score. Experian reports that people with no late or missed payments in the last year enjoyed an average credit score of 759; consumers with one or more late payments in the past year dealt with an average score of 598.

4. You charge up too much on one account or many credit cards. If you charge up your credit card near the limit, or even charge up some of your credit cards over the preferred proportional amounts owed, you could pay extra interest. The amount owed on a credit line compared to the available credit is termed the proportional amount owed. Owing less than ten percent of the available balance gives you the best possible rating. On the other hand, owing over $4,500 on an account with a limit of $5,000 lowers your score considerably, especially if you have too many credit cards and other loans with high balances compared to available balances.

5. You open new accounts or your charge activities indicate a high debt-to-income ratio. Opening new credit lines, especially consumer finance accounts, lowers your credit score and adds notations like "Too many consumer accounts" to your credit report. If your credit card issuer sees that you've made many new charges on existing accounts and believes that you're getting in over your head, they may raise your interest rate. Even if this is a temporary situation, like new home owners who make many purchases in a single month, the companies take advantage of the unsuspecting credit card holder.

If they find any of the above conditions listed on your latest credit report, your credit card account that started with a low interest rate can jump to interest rates as high as 29.99%, Check your credit card statements closely; look to see if your creditor raised your interest rates. If you find that you're paying more than you agreed to, call your creditor and ask the reason. Once you determine the cause, you can work on your credit issue. After you've fixed the problem, call back and ask for a reduction in your interest rate.

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Pay Day Loans - Are They A Crime?

noreply@blogger.com (administrator) — Thu, 09 Nov 2006 22:27:00 +0000

No, but the Consumer Federation of America calls pay day loans legal loan sharking.

It Is A Fee, Not Excessive Interest. Pay day loans are legal in most states because they are charging you a fee, not an excessive interest rate. Excessive interest rates are illegal in most states.

Outrageous Credit. Pay day loans are an outrageous form of credit. For example, let's say you write a personal check for $115 to get $100 for up to 14 days. The $15 fee equates to a 391% annual percentage rate (APR). This APR keeps going up if you extend the "loan" week after week.

Bad Debt vs. Bounced Check. Worst yet, if you are not able to honor your check it is not a bad debt, it's a bad check with the associated non-sufficient fund (NSF) fees from your bank. Then to top it off, your local district attorney's office may get involve acting as a collection agency for the bad check you wrote.

What Are The Alternatives To Pay Day Loans?

Loan Shark? "I just need enough cash to tide me over until payday." Please resist the pay day loan. The pay day loan offer is preying upon your unfortunate circumstances, be it innocent or through your poor choices. Before taking out a pay day loan, ask yourself would you consider going to a loan shark with high interest and the unhappy consequences of not paying them back.

Friends, Family, Community? What can you do? If your unfortunate circumstances are innocent, consider going to your family, friends, church, community organizations or alternative forms of credit for help. If you are making poor choices in regard to money and the options above are not working, here are some options:

Budget Yourself Before Your Creditors take Your Good Name. Do you have expensive habits that you cannot afford? If times are tight, look where you cut expenses. For example, if you have all the premium stations on cable and you are getting can food for your family at the food bank, what should you do?

Increase Your Income to Match Your Life Style. Look at your job situation. Can you get a raise, get a new job, get a second job, or supplement your income?

Change Your Life Style. If you have an excessive life style, such as drugs or living beyond your means, seek help as things are only going to get worst. Consider a roommate or moving in with relatives. Seek guidance from your church, community organizations, and Government organizations. Your situation may look bleak, but it is not unique. Many people are and have been in your situation, and they changed their lives with just a little help from others.

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Comprehending a Credit Report

noreply@blogger.com (administrator) — Wed, 08 Nov 2006 18:04:00 +0000

Obtaining a credit report is an excellent way to begin taking control of your financial future. It's recommended that you review your credit report once a year, not only to be aware of your standing with creditors but to also keep abreast of errors and fraud. However, once your report arrives you may have trouble making sense of it. How are you to read and understand a credit report?

There are three major credit reporting agencies that issue credit bureau reports; Experian, TransUnion and Equifax. It is recommended that you obtain reports from all 3 credit report agencies as they most likely contain varying information since creditors subscribe to agencies on a purely voluntary basis. The credit reports provided by each of the different bureaus may present somewhat differently but generally speaking the information will be broken down in much the same way.

There are four main parts to the credit report: personal profile, credit history, public records and inquires. Check each section carefully for any errors. Note any errors you may discover on a separate piece of paper as you read over your report.

Personal Profile

At the top of the credit report you will find all your basic information such as your full name, current and previous addresses and employers, social security number, and date of birth. Your spouse's name may also appear if applicable. In addition, you may notice several variations of your name listed. This can occur when creditors record the information incorrectly. These discrepancies are usually left on your credit report. It is important however, to ensure that your address is correct. An incorrect address could alert you to a possible identity theft.

Credit History

The next section is your credit history. This provides you with an itemized list of your current active, past closed accounts and their balances or arrears. Listed first is the name of the creditor and your account number for each bill--sometimes the account numbers may appear partially obscured for security purposes. These debts could include real estate mortgages, credit cards, car loans, or medical bills.

There will be a column for identifying the nature of the account; Joint, Individual, Undesignated, Authorized User, Terminated, Maker, Co-signer or Shared. There will also be a notation of the date when the account was opened, number of months the account payment history has been reported and date of last activity. The report will show your high credit limit or the maximum you are allowed to borrow, if applicable. There is a column for Terms which indicates the number of instalments or monthly payments remaining on the account.

The next few columns will show the balance remaining on the account, any past due amounts and the status of the accounts. There are two types of accounts; instalment and revolving. An Instalment account means that there are fixed payments and a specific ending date, such as with a car loan. A revolving account is one with no fixed ending date as with credit card debts. Creditors like to see few revolving debts.

The credit report will indicate the different types of accounts and also may assign it a numerical ratings system. You may see such symbols as R1, R2, R3 or I1, I2, I3.The R or I indicates Revolving or Instalment and the numbers indicate the payment history of the account as follows;

* 0- account hasn't been used yet

* 1- paid as agreed

* 2- 30 plus days past due

* 3- 60 plus days past due

* 4- 90 plus days past due

* 5- 120 plus days past due

* 7- Collection account or bankruptcy

* 8- Repossession or foreclosure

* 9- Charged off or bad debt

The credit report will also show a record of any debts that have been turned over to a collection agency. It will show the date the collection was reported, the name of the company handling the collections and the company or lender that the loan was originally issued with and the balance remaining on the account.

Public Records

These are reports obtained from local, state and federal courts. They will indicate records of bankruptcies, tax liens and monetary judgments. Overdue child support records may also be shown. These public records will remain part of your credit history for seven to ten years and reflect negatively on your total credit score.

Inquiry Section

This section reveals any parties that have obtained a copy of your credit report over the last two years. There are generally two types of inquires, hard and soft. A hard inquiry is one initiated by you, whenever you apply for a loan or fill out a credit application. A soft inquiry comes in three forms; companies that wish to offer you promotional applications for credit, current creditors that are monitoring your account or credit bureau inquires requested by you, the consumer. These soft inquires do not show up on credit reports that businesses receive, only on copies provided to you. Although many lenders will view too many inquiries on your report as negative, it is important to note that two or more 'hard' inquires within a 14 day period count as just one inquiry.

Credit Score

The credit report can also reveal your credit score. A credit rating scores is a means of calculating an individual's credit risk to determine how likely they would be to make good on a loan. The score is a three digit number ranging between 300 and 850. The higher your score, the better it reflects on you as a borrower. A good credit rating score will enable you to negotiate for better interest rates.

Disputes

What if you should find an error on your credit report? Once you have discovered an error, contact the credit bureau that issued the credit report and state in writing what you found to be inaccurate. You will find the contact information listed at the top of your credit report.

The credit reporting companies must reinvestigate the claim within 30 days. They will then contact the party that submitted the item and attempt to resolve the dispute as quickly as possible. Remember, you have the right under the Fair Credit Reporting Act to dispute any inaccurate or fraudulent information that may appear on your credit report, and should do so in a timely fashion.

Once you learn to read and understand a credit report, you are moving towards a more secure financial future. Obtain your report today!

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Are You A Credit Risk? No? Are You Sure?

noreply@blogger.com (administrator) — Tue, 07 Nov 2006 18:06:00 +0000

You may not find out how bad your credit really is until you apply for a mortgage. Then you will quickly realize that the low interest rates everybody raves about these days, the rates that are a big part of the rising prices of real estate across America, don't apply to everyone. To be specific, they don't apply to you! If you have bad credit, you are not going to receive the same low interest rates on your home loan that your neighbor with good credit will.

Why not, you may ask. Well, here's the thing. If your credit score is poor, banks and other financial institutions consider you to be a risky business partner. In order to lend you money, they have to insure themselves against the risk that you may default on payments. They do this by offering you a higher interest rate so their end of the deal looks a bit sweeter. For you, though, it means higher monthly payments and that you can afford to borrow less money than if your credit was better.

If you don't even know if you're considered a credit risk or not, don't you think it's time you found out? This is one of the smartest moves you can make, business wise, as it affects not only your mortgage but the interest rates you get on your credit cards, car payments and virtually every financial agreement you enter into.

Checking your credit score

When banks and others want to ascertain what kind of credit risk you may pose, they will consult your FICO score before doing anything. The FICO is like a report card of your credit. Your FICO score is a three digit number ranging from 300-850. You actually have three separate FICO scores, one for each credit bureau - Equifax, Experian, and TransUnion. These may not show the same score, since not every creditor reports to all three credit bureaus.

In order to make sure you see the same thing that your eventual creditors are seeing, order all three of your fico scores. Study them carefully. You look at the total score, naturally, but you also want to scrutinize the details carefully. Maybe that rent check last year that you sent in one week too late was never registered properly. This will definitely affect your overall score.

If you do find any errors in the reports, make sure to contact those responsible for that specific record and ask them to correct the entry. If you are lucky, a couple of phone calls will make a real difference in your credit score!

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Choosing the credit card that is right for you.

noreply@blogger.com (administrator) — Wed, 01 Nov 2006 19:23:00 +0000

Choosing the card that is right for you.

Credit cards represent an important part of our financial lives. Having the right credit cards is essential and will make a big difference to your finances. Before choosing the right credit card you must shop around for one.

First make an idea on what credit cards are available on the market from the numerous offers that are always coming to your mailbox. Yet, don't relay too much on them as they can be confusing and sometimes misleading. After that try to establish what features of the credit card are the most important for you. The perfect card for you should provide the right combination of fees, rates and benefits. The next step would be to compare various credit cards and decide which one you will finally choose.

Nowadays, Internet can be of big help to you when shopping for a credit card. First of all, almost all financial companies that offer credit cards have websites. This can save you the trouble of wasting your time to personally visit them all. All you need to do is visit them all from the comfort of your own home and see what offer fits best to your needs. Some of these websites have a great feature that lets you compare several credit cards side by side. And when you see all the figures at once it is easier to decide which card to select.

When you go shopping for a credit card you must think first about how you will use your future card: you'll pay your monthly bill in full, you'll carry over a balance from month to month or you'll use your card to get cash advances. Depending on your needs you'll have to be careful what APR (annual percentage rate) the credit card has. Also, you should already know that a single credit card has several APRs; be sure to check all of them. Another thing to check is how the finance charge is calculated because each company calculates it differently and you'll want to choose the one that offers more advantages to you. Some credit cards even have a minimum finance charge, meaning it will charge you the minimum even if the calculated amount of your finance charge is less. You'll have to carefully weight all of this information and than decide which credit card is right for you.

The fees charged by a credit card should also be taken in consideration when selecting a credit card. Most credit cards charge several fees like: annual fee, cash advance fee, late payment fee, balance transfer fee, etc. This is probably the most important consideration. If you plan to pay the bill in full every month select a credit card with no annual fee. If you usually use the cash advance feature check what credit card has the lowest cash advance fee. Or pick the credit card that has the lowest interest rate if you expect to carry a balance.

Even though the features mentioned above are the most important to consider when shopping for a credit card, there are also other features that are not of such great importance but at the end they will make a difference. For example, some credit cards are accepted in more places than others. When choosing a card you have to make sure that it is accepted at the types of places where you will want to use it. The benefits received with a card can also make a difference. Some companies offer various benefits for some credit cards, like: rebates on the purchases you make, discounts on travel, various gifts and discounts, etc. When selecting such a credit card, make sure that the benefits are those you'll use and that the other aspects of the card do not offset the benefits.

The most important thing to remember when shopping for a credit card is to take your time and carefully evaluate all the features of the card and after that decide which card is right for you and meets all you needs.

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