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Ways To Improve Your Credit Score

March 4th, 2009    Subscribe To Our Feed

The value of your credit score is important as it is used for things such as determining if an institution will loan you money and the interest rate you will be charged.. The current state of the economy has caused some people to be hard-hit and as a result there has been a ripple effect leading to some damage to credit ratings. As bad as that can be, it’s not hopeless as it is possible to improve your credit score. Read on to find simple steps you can take with little effort and no cost, to improve up your score.

First, it is important to make all your payments on time as late payments have a negative affect on your score. If you find it difficult to pay your bills on time, you may find it helpful to set up an automated payment system so that monthly bills are automatically withdrawn from a checking account. This ensures they are paid in a timely fashion. For those wishing to make this process even easier, there are services that will pay your bills on your behalf. These companies will then issue a monthly bill that includes the amount of the debt they have covered for you plus a modest surcharge. This will eliminate any problems with missing monthly payments and you will be on your way to improving your credit score.

Second, making multiple payments a month can improve a credit rating. This is because the added frequency of payments will show up on your credit report. Obviously, the more payments that you make the better your credit rating will be. In a way, increasing the frequency and volume of your payments is a form of “legitimate cheating”.

To improve your credit score it is critical to limit the number of credit card applications made. Every time you apply for a card it is marked on your credit report. This can lead to the lowering of a credit score when too many cards are applied for a short period of time. In addition, if you are turned down for a number of credit cards in a relatively short period of time, you will definitely see an adverse rating on your score.

Also, keep the balances on your credit cards low. Your credit score is affected by the amount of credit you have available. So if your cards are maxed out, your score will suffer. It might even be wise to keep one card with a zero balance, not using it at all. This will reflect positively on your overall rating since it shows you are not borrowing all the credit available to you.

Ultimately, getting a handle on your credit score involves getting information on how a score is derived, what your score is and then managing it. The sooner you take the proper steps to improve your score, the sooner you will see the results.

What Bill Should I Pay First?

January 22nd, 2009    Subscribe To Our Feed

What bill should be the first bill you pay each month? The “bill” should be the one to yourself. So many people say that they will start saving as soon as the credit cards are paid off or all the debt is gone. But guess what? Studies show that if you wait your likelihood of ever getting started is small. It seems our spending always expands to the level of our income.

So - pay yourself first. The recommendation is that you save 10% of your net pay. If you cannot start that big then try even 2% or 3%. The key is to make it automatic. Have the amount you are saving deducted from your paycheck or from your checking account into a savings account. This is one separate account or maybe several if you are saving for multiple goals. Make it difficult to access this money. Do not have an ATM card for this account. Use a bank that is out of town or across town from where you normally do your banking. Or use an Internet bank such as IngDirect or EmigrantBank.

Accumulate an emergency fund so that you do not have to run to your credit cards every time a crisis arises. Start saving for a special vacation or for retirement. Start saving for your child’s education. Be serious about not touching the money unless you really have to or have reached your goal. A sale at your favorite store, a dinner out or a new gadget being introduced are not emergencies.

If you are starting with less than 10% of your net pay then set goals to gradually increase the percentage. Agree to increase the amount once a quarter or once a year until you have reached the 10%. Or really become a saver and reach for 15% or 20% of net income. If you are late in starting retirement savings this level is almost a necessity.

Don’t wait. Start now. Just as we increase our spending when we have additional income we decrease our spending when less income becomes available. Just be sure that you are decreasing your spending and not just increasing your debt by trying to maintain the same spending pattern. The key is to make it automatic so you cannot get sidetracked. Are you not more important than the telephone bill or the electric bill? Put yourself first.

Get Control Of Your Credit Card Debt

October 28th, 2008    Subscribe To Our Feed

Everyone has some credit card “fear” right now. With the shaky economy, the holidays fast approaching, pressing needs such as home repairs or medical bills, chances are you may be faced with a credit card (or two or three) that is close to being “maxed out”. Wondering if you will ever get this card paid back to a flexible and comfortable minimum amount is a real life “fear”. This article will give some advice on how to get control and limit your credit card debt.

First, realizing there is a problem is paramount. That is not as simple as it sounds as many people simply charge and charge and charge and want to confront the debt later. Well, this is later…now is the time to put a stop to this hole in your finances and get control of the credit cards in your wallet. Do not make the mistake of pushing the problem under the rug and thinking it will go away. It will not.

Next, make a list of all your cards and the amounts due and the dates due for each card as well as the interest rate on each card. Then put the list in order as far as the highest interest rate with the lowest balances. This list is going to be your first accomplishment in the road to credit card financial responsibility.

Now pick out one, two or three cards that you feel you should work on based on the lowest balances and highest interest rate. Take the number of cards, the minimum payments and the first due date of the card. The first due date is your target date. What is going to happen is, you will take the minimum balances and add another payment to this amount. Double the payments that are due in other words. If it is affordable to take three cards at once and make double the payments, that is fine. If not, then take the number of cards that are affordable and double the payments by the first due date that is your target date.

And, by the way, make sure that you are not fooling yourself in what can be afforded to put towards these credit card payments. There are very few things in your life that is as important as getting these credit cards under control. Maybe you should pack a lunch, combine trips out, put off purchasing that new skirt or outfit, do not buy that new purse, say “NO” to events that put you in a financial bind, and, in general, find ways to save a little more money to put towards paying off these debts. Making small sacrifices really does feel wonderful when the debt goes down and control of your spending and your debt is restored.

Go through the list of cards this way and make double the payments by saving in other areas of your life. It will not be easy. Take a month and write down every penny that is spent, the amount and the item being purchased. There will be many areas that can be cut back on and put that money towards paying off your credit cards.

The idea is to pay down the cards that are costing you the most in regards to interest rate. You will be more enthusiastic about saving money to put towards the debt when you see positive results this way. You can even chose cards that have the smaller balances if you feel you need that positive reinforcement of seeing the accounts becoming “paid off” faster.

Of course, clearly the cards must not be used for any additional purchases. Simply act like you do not own a credit card for a short time. You cannot spend your way out of this debt and you must stop the spending so that the payback procedures can work. Pay cash and remember how it felt before you had credit cards; it is really a great feeling.

Remember, even a small amount adds up when you are paying off your principle and not your interest. Think of it this way: Your minimum monthly payment is your “interest” and your extra payment is your “paydown amount”. You will soon be wanting to add more to that paydown amount as you see the balances dwindle. You will also realize that the effort is worth it as the cards start showing a more positive balance. It makes breathing a lot easier once the debt is under control and within being paid off. It soon becomes a fun game to find more money to apply to the debt as you see the results of your paydown efforts. Debt alleviation makes a person feel in control and more likely to keep debt within reason in the future.

4 Money-Saving Tips

August 6th, 2008    Subscribe To Our Feed

Amid the challenges of mounting credit card debt, finding ways to cut-back or save are things you always want to have your eyes open for. Here are four tips that may be of value to you.

1. ALTERNATIVES – Look for alternative solutions before you spend. Often there are generic brands of the products you want (yes it may mean giving up the designer brand, but at least it will be paid for!) Search the net for home remedies rather than purchasing individual products for each household challenge you face. Ask your local pharmacists for alternatives to expensive medications and treatments, or once again search the net for some. Many places offer discounts for package deals, like fitness centers and things like family haircuts. Visit your local library instead of buying a book and/or buying or renting a movie. Books from there will read just as well.

2. COUPONS – I know many of your reading this are turning green right now – but coupons can save you lots of money. These are not just for food! Check online, in print media and in your postal and email boxes for money saving coupons to use with your next computer, software, bookstore, office supply store or any store purchase. Enjoy a social life, too. Head to the fitness center, take your spouse out to eat and get your pet groomed – all with coupons. Plan ahead and keep them in a drawer or specially marked container. Purge them monthly or quarterly as many have expiration dates. Trade them with friends, neighbors, co-workers, etc. You may be the one starting it, but others will enjoy the benefits as well.

3. INCENTIVES – Many credit cards, restaurants, movie theaters, stores and other places offer incentive programs. Find one or more that fit into your purchasing plans and earn things like free air travel miles, movies, gasoline, meals. Some even offer a percentage back in the form of a check or gift certificates in exchange for your participating in their program. Keep up with the times, too. If your child is grown, no need to use your Toys-R-Use Visa and get back certificates for toys any longer. Call the bank and see which other programs they have, ask your friends which ones they use, surf the Internet for new offers - and switch.

4. ATTITUDE – Don’t focus on what you “don’t have.” Instead, focus on what you “do have.” Make lemonade out of those lemons; recycle what you can, reuse what you can, donate what you can. No need to have “new” things all the time, or even part of the time. Be happy with what you have now and make it work for you! Head to the library for free help in thousands in books that can show you step by step how to get exactly what you want.

So the next time you’re heading out the door to do some shopping, take a minute to determine what you absolutely need to buy and can’t find an alternative for, what you could buy cheaper if you used a coupon and what you could simply borrow rather than buy. By not spending you’re giving yourself a raise!

Credit Card Debt and Debt Collectors

June 8th, 2008    Subscribe To Our Feed

As more and more people are finding themselves in a truckload of debt that they cannot cover, more and more are going through the unpleasant experience of dealing with debt collectors.

You may already be screening your calls and feel your blood pressure rising as you realize it’s them – again, not to mention how embarrassing it can be when they try and find you at your place of employment.

Who Are the Debt Collectors

Debt collectors can be employed by the companies themselves, people on contract to the companies or people employed by an actual collection agency. For many, they are paid on a commission basis, based on the amounts they collect. So while not every debt collector is unsympathetic and berating, many come off as aggressive as they are determined to collect their fees. So, it’s quite understandable while those who are already in a desperate state to fear encounters with such individuals.

Allowable Collector Actions

Debt collectors are allowed to contact you by in person, by mail, by telegram, by fax and by phone; at home or at work - unless they know your employer would disapprove. They may also not contact you before 8 a.m. or after 9 p.m. unless you have agreed to the contact at that time.

If you have an attorney they must contact him or her. They may then contact other people to find out your telephone number, work place or address, but in most cases they are only allowed to contact them once and they are not allowed to inform them that you owe money.

Stop Contact Request

Whether or not you actually owe a debt you can write a letter to the collector telling them to stop contact. From then, they may contact you only once to inform you that they will make no further contact or to tell you what action may be taken against you.

Stopping contact will not clear the debt. If you do not believe you owe the debt make that clear in your letter.

Your Rights

The FTC (Federal Trade Commission) has a Fair Debt Collection policy to protect consumers. As in anything knowing your rights is essential. Most collectors function on the assumption that you don’t know the law, so making it evident that you do will put off even the most determined collectors.

What Collectors Can’t Do

Debt collectors are NOT allowed to harass, abuse or oppress you or other individuals on your behalf. This includes the use of obscene language, threats of violence or repeated calling in an effort to annoy.

They cannot imply legal action, including seizing property or garnishing wages unless they are legally allowed and intend to do so.

They are not allowed to misrepresent themselves as government agents, attorneys or representing a credit bureau if they are not. They cannot imply they are sending legal documents if they aren’t or that you’ve committed a crime, if you haven’t.

You can find out more about your rights from the FTC. If you want to report an agent you can do so by contacting the FTC or your Attorney General.

Be Proactive

If you find yourself in the position of being late on payments, contact the credit card companies before your account hits the collection department to start working out a plan. If you however are already being contacted by debt collectors, educate yourself so that you can hold your own when in discussions.

Credit Card Debt Statistics

May 21st, 2008    Subscribe To Our Feed

Years ago my grandfather was relaying how he was having trouble sleeping. Trying to empathize with him, I said that there were nights that I had trouble sleeping as well. He then made a simple statement that I’ve recalled a number of times. He said, ‘Just knowing that you can’t sleep doesn’t do anything to help me sleep better.’ What does that have to do with credit card debt statistics? If you’re currently bogged down by credit card debt, finding statistics that prove that others are in the same boat isn’t going to change your situation. On the other hand, looking for success stories of how other’s turned their financial standings around could be more productive. However, if you are just plain interested in finding stats on credit card debt, there are a few ways to gather them.

Places to Find Stats

Depending on the specific type of stats that you’re looking for you may dictate where you need to look for the information. Both credit management services and money management service companies provide statistics showing the level of debt people are at, and offer ways to combat it.

Credit Card Companies

You can also contact the credit card companies directly to request the numbers you’re looking for. Some of them have stats out on their sites and some even have information on managing debt.

Sites on the Internet

On the net check out ‘money’ related sites as many have statistical information beyond credit card debt that may be interesting and useful as well. If you’re from the US or a country with similar consumer spending habits, sites like the Federal Reserve (federalreserve.gov), MSN Money (moneycentral.msn.com), myfico.com, carddata.com, cardtrak.com, creditcards.com… and so on.

You’re Input

If you have a favorite site for gathering credit card debt statistics, please post a comment for the benefit of others looking for such sites.

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