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Credit Card Debt Laws That You Should Be Aware Of

admin — Wed, 29 Jul 2009 13:14:42 +0000

Credit card debt is a common problem these days. With the falling economy many people are having problems paying off their credit cards. These same people would like to be credit card debt free.

This is not always possible and before you get into trouble with your credit cards, you may want to learn the most common credit card debt laws so that you know what your rights and responsibilities are. This will help you keep your credit rating while still paying off your debts.

You should be familiar with a few of the Fair Debt Collection Laws in case you do happen to fall in trouble and have to start dealing with debt collectors. You do have rights even if you do owe a debt. Debt collectors have to follow certain laws. These have to be followed anytime an attempt to collect a debt is made.

This is one of most importance under the credit card debt laws that identity and their purpose of calling must be established. The mini Miranda should also be given when they call. This mini Miranda simply will state that “The phone calls are an attempt to collect a debt and that any information obtained will be used for this purpose.” Then they will state the debt as well as the amount owed by you. Payment arrangements can be worked out in many cases.

You will also be ready for these calls because the collector must send you information with a mini-Miranda and information about the debt beforehand. You are allowed thirty days to respond to this notification. You have two options; you may dispute the debt or work out an arrangement with the company to pay for the debt. If you choose to dispute the debt you have to submit your claim in writing within thirty days.

Credit card debt laws do state that not responding within the allowed thirty day period, you are not disputing the fact that you owe this debt and acknowledge you owe it. By ignoring the letters, phone calls will start to come in from which ever collection agency the original contract holder chooses to use.

Don’t Charge It – Use Cash

admin — Fri, 24 Jul 2009 16:05:30 +0000

The society of today is built on plastic – the “charge and go” kind. It makes you wonder what people did before credit cards were invented! With those plastic wonders has come a mountain of debt. If this applies to you, to keep that debt from growing any larger consider giving your plastic the boot and use cash instead.

When you apply for a credit card be sure you read carefully the terms and conditions. You might start out with an amazing rate. But don’t miss or payment or make a late payment. You might find that they double or even triple that rate of interest. Purchases made on a credit card that has interest rates nearing 30% are going to cost you a small fortune down the road.

Credit cards are a way of establishing credit. Purchasing items and making payments on time lets potential credit lenders know that you are an acceptable risk for them. Good credit helps people to qualify for low interest loans on houses, cars, and furniture.

But that good credit standing can quickly change if you begin to charge more on those credit cards than you can possibly pay back. Interest is tacked on each month that the credit card carries a balance. It may be only a few dollars now, but let the balance linger for a few months and you will see the difference.

It may seem easy to buy everything on credit. But if you are buying things that will no longer have when it comes time to pay for the purchase what sense does that make. How ridiculous if you charged a meal on your credit card three months ago and you are still paying on it, plus interest. That food has been long gone and you are still in debt because of it.

An emergency card is good to have. It is very useful when the unexpected happens and there is no disposable cash to take care of it. So it is not necessary to ban all credit card use.

So pick the one with the lowest interest rate, pay the others off and cut them up. Close your accounts and don’t let the credit card companies talk you out of it. They are the only ones that stand to gain from you having multiple credit cards and mountains of credit card debt.

Before there was plastic, people used to pay with cash. Remember cash? If people didn’t have enough money, they waited until they did. We all could take a page from their book. People are too comfortable carrying around a boatload of debt.

No Credit Check Credit Card

admin — Wed, 22 Jul 2009 16:09:49 +0000

With the amount of debt going down but delinquencies going up, it is safe to say that many Americans are in over their head when it comes to their finances. If this is the case, a no credit check credit card may help the consumer who is starting the process of rebuilding.

While many desperately look for ways to make a significant dent in the money they owe, many find it virtually impossible and because of that, find themselves in bankruptcy, or with accounts in collection or even worse, a court judgment against them.

When this happens, your scores plummet and as a result, qualifying for any loan becomes much more difficult. There are a few options for those that have made mistakes with their finances. One of those is a no credit check credit card. These come in two forms: prepaid and secured.

The concept behind a prepaid account is quite simple. Since there is no money loaned, there is no need to check your past. You will receive a card in the mail that looks exactly like a major Visa. It can be used anywhere you see the logo displayed.

Whatever you first deposit is equal to your spending limit. You can’t carry a balance which means there is never interest or over the limit fees. You can fund it by direct deposit or by bank transfer or sending a check. Direct deposit is the preferred way since it doesn’t come with any fees.

Most of us know of unsecured accounts. This means that a bank is loaning you the money with terms that require you to pay it back.

A secured account is the opposite. This is often no credit check and this requires you to make a deposit in a separate account before you are issued a card. What you have to do is open an account with the issuing bank and keep a balance in the account at all times.

The amount of money that you keep in your newly opened account is equal to the limit. If you want more buying power, you can deposit more in your account.

One reason to get this is because it will report to the three major bureaus. Simply by paying your monthly bill on time you will create a record of positive payment history.

This is very important when your score is being calculated. Experts claim this piece of information accounts for up to 40% of your credit score.

Bad Credit Visa

admin — Tue, 21 Jul 2009 12:08:51 +0000

If you speak to more than a few people in your world, you will hear stories of how they have found themselves in financial trouble. It may have been trying to live beyond their income level but it could have also been job loss, illness, or some other catastrophic event.

If you are one of the unfortunate, then rebuilding your financial history has become a priority. You might be asking this question: “The reason my history is ruined is because of credit cards so why would I apply for another to fix it?”

While that is a legitimate question, the answer is may be simple: In order to rebuild your history you often have to start with small steps and create some positive marks before bigger loans are available. If you are looking to get a bad credit Visa, you will probably be approved for a secured card.

These require you to have a balance in a special account held by the issuing bank. The balance in that account is equal to the limit on your card.

These accounts have perks to help you. First, all it will report your positive payment history to the three major reporting agencies. Next, many offer educational articles, podcasts, and seminars to teach you how to better manage your money.

Another card that is often used are prepaid. These allow you to directly deposit money and use your card to make purchases.

This will give you the purchasing power to; reserve airline tickets, rent a car or book travel lodgings. Having access to a major credit card makes the act of paying or reserving a product or service much easier.

To find the right choice for you, do as much comparison shopping as you can. There is no absence of prepaid accounts without an annual fee but if you look at a secured or unsecured account, the fees may be quite high.

In addition many of the sub prime lenders have stopped lending. This is primarily due to the credit crisis.

How to Recognize a Credit Repair Scam

admin — Sat, 18 Jul 2009 13:04:42 +0000

You see the advertisements in newspapers, on TV, and on the Internet. You hear them on the radio. You get ads in the mail, and maybe even cold calls offering credit repair services. They always make the same claims:

“Credit problems? Not a problem!”

“We can easily remove all your bankruptcies, tax liens, judgments and bad loans from your credit file for ever!”

We can legally erase all your bad credit – 100% guaranteed.

Get a new credit file overnight – all legal.

It is not too good to believe these claims: they are very often signs of a credit repair scam. Some professionals even state they have never seen a legitimate credit repair company trying to make those claims. The fact is there is often not a quick fix for credit and creditworthiness. You can actually improve your credit report legitimately, but it takes some time, a conscious effort, and also sticking to a personal debt repayment plan.

Warning signals that should alert you on a Credit Repair Scam

Many times, firms target uninformed victims who have bad or no credit histories with promises to clean up their credit report so they can get a car loan, a home mortgage, insurance, or even a job once they pay them a fee for the service. The truth is, these firms cant deliver an improved credit report for you using the tactics they promote. No one is allowed to legally remove accurate, but fatal information from somebody’s credit report. So after you gave them over thousands of dollars in fees, you are often left with the same credit report and they have your good money.

If you analyze a credit repair offer, here is how to tell if the organization or firm behind it is criminal:

The service company does not tell you your rights and what you can do for yourself for free.
The company insists that you refrain from getting into communication with any of the three major national credit reporting companies directly yourself.
The company tries to offer to create a brand new or false credit identity – and then get a completely new credit report – by applying for an EIN number, so that you use that instead of your old and “damaged” Social Security number.
The organization wants you to pay for credit repair services before they provide you any services. Under what is called the the Credit Repair Organizations Act, companies that are offering to repair credit, cannot require you to hand over the money, until they have completely delivered the services they have advertised.

How Credit Inquires Hurt Your Score!

admin — Tue, 14 Jul 2009 12:09:33 +0000

Credit inquires are a key component of your overall credit rating. Understanding how they impact your score is an important step to achieving a top score.

Knowing that credit inquires impact your score is just the beginning. It is important to understand which inquires have the potential to lower your score. Also, who can pull your credit and for what reasons?

Fortunately, no one can pull your credit just because they want to! For example, your best friend cant pull your credit to see if you really paid cash for your new car! Legitimate reasons for pulling credit include:

To grant credit
Collection of a Debt
Underwrite Insurance
A Job Offer
Licensing through Government Agency
Certain Business Transactions

Even though all of these are legitimate reasons to pull credit, not all of these inquiries will lower your credit score. Only inquires made when you apply for credit will impact your score. These inquires are called hard inquiries.

Soft inquiries, such as when you apply for a license or a new job, do not lower your credit score. It is also important to note that you may pull your own credit as many times as you would like without hurting your credit ranking.

It is difficult to determine exactly how hard inquires with impact your score. About 10% of your credit score falls under a category called new credit. Inquires are part of this. How much impact each inquiry will have depends on the overall information and depth of your credit file.

What is important to understand is that too many inquiries will cause a sharp decrease in your credit score because you appear to be desperately in need of funds. From a lenders perspective, they also get nervous when they see too many inquiries because they have no way of knowing how many accounts you’ve opened. This makes it very difficult for them to calculate your debt to income ratio with confidence.

What about shopping around for a car or home loan? How can you be a smart consumer and try to find the best rate without tanking your credit score?

There as a time when you couldn’t shop around without destroying your credit score. The good news is that that isn’t the case any more.

Under the new laws, mortgage and car inquires made within 14 days of each other are treated as a single inquiry. (Some lenders extend this out to 45 days.) Also, a buffer is in place so all mortgage and auto inquires within 30 days of scoring are ignored. The key point to remember is if you are going to shop around, be quick about it!

Through understanding credit inquiries, you can increase your credit score and qualify for the home of your dreams!

How Do People End Up In Bad Credit?

admin — Tue, 14 Jul 2009 10:37:42 +0000

It is no surprise that people are in debt with credit so readily available. Credit has ruined this country as so many people charge beyond their means. Credit cards offer a way to get it now, there is no need to wait until you can afford it, and you simply pay for it later.

Credit card debt is the number one reason for debt and bankruptcy. It is amazing the high interest rates the companies give their clients. You are never able to pay the debt off with the low monthly payments they require.

The debt to income ratio is the largest reason for poor credit. Your credit rating is destroyed by large credit card balances. These balances show lenders you are spending more than you make and will not be willing to lend you anymore money. Even with low monthly payments the lenders only look at the balances owed on the accounts and this is extremely hurtful to your chances of obtaining a new loan. You become stuck in the debt with no way to pay it off and with appearing to spend more than you earn there are little options for assistance.

Just by paying the minimum payment required you will never see a reduction in your debt. The options you have are few. You may have never missed a payment and always pay on time but in reality your credit rating is still being damaged by the large balances that you owe. Your debt to income ratio is a large portion of what makes up your credit score.

Debt consolidation services are an option that many people look at for help. The services bring promises of debt elimination and repaired credit ratings as well as peace of mind.

A debt counselor will mainly be concerned with your high interest debts. You will be given a plan to attack the debt with techniques to reduce or eliminate the high interest you are paying.

The most popular option is a debt consolidation loan that offers low interest payments to absorb all your high interest debt. You will actually be able to pay your debt off with this type of loan. With the original high interest loans there would be no way to ever pay them off. The design of the debt consolidation loan is to combine all loans in to one and allow you to pay a lower interest; this makes it capable to pay the debt off much quicker.

Your goal becomes reachable as you begin to notice the debt decrease. One strategy for eliminating the debt faster is to make extra payments. By making a bi-weekly payment instead of a monthly one you are able to make two extra payments a year without any affects to your budget. This strategy reduces the length of the loan as well as the amount of interest you pay. The purpose of the debt consolidation loan is to get you back on track, allow you to see the light at the end of the tunnel and to allow you to breathe easy once again with the debt removed from your shoulders.