My friend Arthena of Flat Lick Kentucky sent this article to me. I thought that everyone should have a chance to read it. I normally don't use other peoples' material, but this is just full of useful information.
The credit crisis seems so theoretical and far away -- until the bank starts messing with your credit card. Many consumers are finding the first place they’re seeing tangible evidence of the crisis is when credit card issuers cancel their accounts or lower their limits -- sometimes even below their current balance. Here are some tips from the experts on what’s ahead and what strategy you may want to play during this credit card crackdown.
Use It or Lose It
One of the quickest ways banks can shed risk on their books is to eliminate all the dead wood customers –- the ones that haven't charged anything in years. If you want to keep the line of credit open, use the card periodically."What were seeing happening in some cases is that people have a credit card that has a $10,000 credit line and hasn't been used for several years. They kept it just for emergencies," says Carol Kaplan, spokeswoman for the American Bankers Association. "Those people just may get a letter in the mail saying their account is closed for inactivity," she says. "Banks want to limit their risk."Keep in mind that closing cards could hurt your credit score. That’s because credit reporting agencies put a lot of emphasis on what is called your "utilization ratio." It is essentially your total debt as a percentage of all your available credit. If you lower your available credit by closing cards, your utilization rate can actually look higher, hurting your credit score
Watch for Lower Credit Limits
Another way Kaplan says banks are limiting risk is by lowering customers’ credit limits. If you've kept a high balance but left a little cushion under your limit, that cushion may have vanished. You don’t want to get hit with fees for going over your limit. And experts say a credit limit reduction can lower your credit score by 30 to 40 pointsThe banks will tell you about lowering your available credit, but they just might send the news in one of those envelopes marked, "Important Information About Your Account.” If you aren’t going to actually read those letters, you have to keep track of your credit ceiling either by checking online or by reading your credit card statement carefully.
Watch for Limit Lowered Below Your Current Balance
Issuers may lower the limit below your current balance, which means you’ll have to pay up. Scary, but true. Banks can and do cut customer's credit limits below the current balance, says Kaplan. If it happens, you'll have to pay off your balance above the limit or face late fees, she says. "If you've got a $10,000 limit and a line of $9,000, you could get a lower limit of $7,000."Keep in mind that a lower limit could hurt your credit score since, just like when cards are canceled, the lower amount of available credit can make your “utilization ratio,” which is tracked by credit reporting agencies, look higher (that’s bad if you want more credit).
Rates Could Go Down If You Have Good Credit
Even though there's all this talk about tighter credit, interest rates have actually come down. The average variable rate is now 11.4%, down from 14% a year ago, says Greg McBride, senior financial analyst at Bankrate.com. "If you see your card issuer has been dragging their feet on reducing your rate over the last year, it's time to shop around," he says
More on Shopping Around
It may be harder to qualify for the very best rates. "Those low rate offers are out there, but issuers are much pickier about who gets them," McBride says.Adds the Banker's Association's Kaplan, "You might see less offers.” And, even when you do get them, "Just because you got the offer doesn't mean you'll get the card,” she says.McBride recommends comparing offers online. Banks are looking for customers online because postal rates have gotten more expensive. "Reaching prospective customers online is where the growth is," he says.
The Market for Reward Cards Is Still Strong
People who pay off their credit cards every month can still get ridiculous rewards. You might think those no-balance folks would be less attractive to issuers, because they're not paying the high interest rates everyone else is. But, you're forgetting that credit card companies also make money off an interchange fee -- typically between 1% and 3% of a purchase -- that the store has to kick back to them.The latest trend in reward cards are those that give out special points for everyday kind of purchases, says Bankrate.com's McBride. Those cards incentivize consumers to use their cards for every little purchase.
If You Want More Credit ...
If you want more credit, act like you don't need it. Banks consider someone who carries a balance to be a higher risk than someone who pays it off each month. So if you want the bank to trust you more, give them back their money. Don't carry a balance -- which, of course, you shouldn't do anyway because it'll cost you a fortune in interest payments."Somebody who is carrying a credit card balance is buying something they couldn't afford to pay cash for," says McBride at Bankrate.com. "Revolving a $5,000 balance is a lot different from someone who pays $5,000 off month after month." People who pay off their credit cards every month are using them as a convenience -- or as way to soak the banks for some kind of reward.
Get Another Card for Emergencies?
Should you get another credit line for emergencies? No financial expert is going to tell you that the smart thing to do is to go get another credit card. They're worried you'll be tempted to use it. But it's a reasonable impulse to want to have more credit available in case of an emergency. Just be aware that even if you get a new credit line, the bank could always pull it back. Whatever you do, don't think that because credit is going to be drying up that you should actually spend all your available credit. "Do you need to go and grab borrowed money before gates shut? No, that's not smart financial planning," says fee-only financial planner Al Zdenek. He also urges investors to calm down. The bailout package has not yet begun to work through the system, but eventually it will and credit will loosen again."The banks will be turning the taps back on," Zdenek says. "For as bad as the credit freeze situation is now, it's not a permanent situation."
Store Credit Cards Will Be Harder to Get
The reason banks have been getting jittery -- aside from the fact they're having a hard time borrowing money -- is that their customers are having a hard time paying their bills because of rising unemployment and the slowing economy.The American Bankers Association reported in October that for the second quarter personal loan delinquencies rose from 2.55 percent to 2.67 percent. According to the New York Post, store credit cards are facing delinquency rates rumored to be as high as 10 percent. The Post says Target expects to write off 9.86 percent of store credit card sales in August. When delinquencies go up, that means either lending standards or rates are likely to rise soon. Store credit cards could soon be tougher to obtain in the future than bank credit cards
Check Credit Report for Errors
If you think you may need more credit in the next few months, check your credit report for errors. Even if you don’t need more credit now, it is smart to check your credit report to make sure it is accurate every six months. There may be an error in the report (for example if credit reporting agencies mistakenly merge someone else’s file with yours), or you could be a victim of identity theft and not even know it.
Don't Get Another Card If ...Don’t get another credit card if you plan to buy a house or car in the next year; it may lower your credit score. Applications for additional credit cards will be included on your credit report and such inquiries can hurt your credit score, making it harder to get a mortgage or car loan. To improve your credit score, "Make sure you're not late on any payments. Reduce your total debt load," says Kaplan."The best thing you can do is pay down the credit you do have,” she says. “That will make you look like a stronger candidate to a bank in the event you do need a loan.
Be sure to Visit:
http://www.bettercreditnetwork.com/
Tuesday, October 21, 2008
Monday, October 13, 2008
So Much to Say
There is so much to be said about Credit...
I am going to spend time explaining all about Debt, Credit and Money (or lack of it). I am hoping that it will help someone along the way, because there is so much confusing information out there and so many mean people that just don't care. I feel strongly that this is what has caused alot of the economic problems in this country. I really don't know much about blogs, but I'm going to learn so that I can finally voice my opinion to anyone who will listen.
First of All
Let me tell you a little bit about my life and what has happened to me in the past that has led me to this point. I have worked since I was 13 years old, and I'm almost 50 now. I have had several unfortunate mishaps that I will explain that has led me to the world of Credit and Debt. I bought my first house at the age of 17 then on to my second one at the age of 28. I bought that house on land contract, with 2 attorneys, and a clear title. Well, let me tell you what a nightmare that was: I made $1200 a month payments through a real estate company for 2 years and I had done several thousand dollars in repairs and updates on the home. After all of my efforts I received a letter from the county court system asking me to vacate the property. I made several calls, the first one to the bank that held the original mortgage, only to find out that the people that I bought the house from went through a divorce and stopped making the payments to the bank, keeping the money that I had paid them. The bank foreclosed on them, leaving me homeless with 3 children and alot less money. So I learned the housing do's and don'ts the hard way. Not to mention that they put this on my credit report as an foreclosure. I ended up researching all of this and found out that they were including me because I had an interest in this home. I quickly learned how to deal with Credit Reporting Agencies.
Then I was at work doing my job as a 21 year truck driver(18 wheeler) a few years later, when the next tragedy fell on me. I was permanatly injured in an accident involving another truck. This accident caused me to loose my 21 year career that I loved so much. You can only imagine the amount of debt that I was in at that time. Without going into alot of personal details, I'll tell you that my doctor bills were very high with no insurance of my own, I had to sue Workers' Comp for them. But I had debt like charge cards, payments, and the real American Dream. Man, was I screwed. I truly thought that all was lost for me until one day I got up and dusted myself off and starting working with my head and not my hands.
I want anyone reading this to understand that they can fix their credit and fix their debt. I plan on making this my mission; helping others to learn from my mistakes and my reasearch.
There are so many rules and so much information out there but I am going to try to put as much out on this blog as I can, or anyone can contact me and I'll try to help them or I'll find someone who can if I can't. I am not an attorney, therefore I cannot give legal advice, but I can give legal information.
Second of All
Dedication and Discipline are the key to surviving debt. Time and Persistance is the key to Credit. Once you find out the rules, you'll learn how to play the game. The Federal Trade Commission has all of the rules that govern and dictate standards. Once you have gotten familar with the rules then you can play their game against them. Before you set out to make changes you should know what is on your credit report. There are many ways to get one for free, but, anyone trying to repair their credit, should join a credit monitoring place. This allows you to have access 24/7/365 to your information. You can view Credit Monitoring at my website: BetterCreditNetwork.com. This is probably the most important aspect of Credit Repair. Once you enroll, you need to check for errors: Name, Address, SS#, Date of Birth, Employer, and Creditors. If you have a printer, print a copy that you can write on and make changes and notes. Then you'll have to call them to make changes to your name or personal information. Then you proceed to the Creditors: Remember the old saying "Deny Deny Deny" well the same applies here "Dispute, Dispute, Dispute" Whenever you dispute something on your report they have to send it to the creditor for verification, then the creditor has 45 days to verify it and return it to the reporting agency. If for any reason they miss the deadline or they can't find your file, they have to delete it from your report. Just imagine that you owe Sears about $7000 and they call you through a collection agency all the time. One day after years of this torment you decide to dispute it, and they don't respond within 45 days, the reporting agency will take it off instantly, Whala! You just saved $7000. Now don't get confused, legally you still owe this money, and they have 7 years to try to collect it. There are limitations to that law as well, depending on what state you live in. Any time that you get confused, such as when they file a judgement against you for the money plus fees, it is a good idea to seek legal counsel. The worst thing you can do is nothing! Depending on the amount of debt, sometimes it is a good idea to get debt counseling from an expert. Remember those creditors can be ruthless, they don't care about you or your present condition. Once you get your creditors and your credit report cleaned up, it is time to start rebuilding a new credit history. Which leads to :
Third
I have always said that companies target the unfortunate. And just to prove my point: If you are just starting out or starting over, you will pay more. If you go to the store in town that is the least expensive you'll see that the prices may be cheaper but the package sizes are smaller or they are a generic brand and usually doesn't taste as good. Once you figure this out you start shopping at a different store and spending a little more but getting better quality. Same rule apply here. It is a simple process to get your credit back, but it takes time sometimes. First, there are credit card companies that realize that there are people starting out or starting over. Anyone can get Credit, it may not be the perfect card or exactly what you want, but it will get you started. Sometimes you'll have to pay a fee or higher APR's. For example: You may get approved for a $300 limit and before you ever use the card you owe $180-200. If you make your payments on time every time, they will recognize this and raise your limit. If you continue to maintain your standings they may lower your APR.
Another way to start out is to get a secured credit card that reports your data to the credit reporting agencies. In time, other creditors see this and start offering you credit without being secured. If you only use your new credit for needed items instead of wanted items you'll notice a difference in the way you pay it back. So use self discipline and before you know it, you'll have a higher credit score and more credit.
Last but not Least
I sure hope that I helped someone! But like everyting else in life, there is more... I will update and put more information on this blog periodocally. In the meantime, I have 2 websites available for more information and products:
http://www.bettercreditnetwork.com/
http://www.thecreditcardmarket.com/
I am going to spend time explaining all about Debt, Credit and Money (or lack of it). I am hoping that it will help someone along the way, because there is so much confusing information out there and so many mean people that just don't care. I feel strongly that this is what has caused alot of the economic problems in this country. I really don't know much about blogs, but I'm going to learn so that I can finally voice my opinion to anyone who will listen.
First of All
Let me tell you a little bit about my life and what has happened to me in the past that has led me to this point. I have worked since I was 13 years old, and I'm almost 50 now. I have had several unfortunate mishaps that I will explain that has led me to the world of Credit and Debt. I bought my first house at the age of 17 then on to my second one at the age of 28. I bought that house on land contract, with 2 attorneys, and a clear title. Well, let me tell you what a nightmare that was: I made $1200 a month payments through a real estate company for 2 years and I had done several thousand dollars in repairs and updates on the home. After all of my efforts I received a letter from the county court system asking me to vacate the property. I made several calls, the first one to the bank that held the original mortgage, only to find out that the people that I bought the house from went through a divorce and stopped making the payments to the bank, keeping the money that I had paid them. The bank foreclosed on them, leaving me homeless with 3 children and alot less money. So I learned the housing do's and don'ts the hard way. Not to mention that they put this on my credit report as an foreclosure. I ended up researching all of this and found out that they were including me because I had an interest in this home. I quickly learned how to deal with Credit Reporting Agencies.
Then I was at work doing my job as a 21 year truck driver(18 wheeler) a few years later, when the next tragedy fell on me. I was permanatly injured in an accident involving another truck. This accident caused me to loose my 21 year career that I loved so much. You can only imagine the amount of debt that I was in at that time. Without going into alot of personal details, I'll tell you that my doctor bills were very high with no insurance of my own, I had to sue Workers' Comp for them. But I had debt like charge cards, payments, and the real American Dream. Man, was I screwed. I truly thought that all was lost for me until one day I got up and dusted myself off and starting working with my head and not my hands.
I want anyone reading this to understand that they can fix their credit and fix their debt. I plan on making this my mission; helping others to learn from my mistakes and my reasearch.
There are so many rules and so much information out there but I am going to try to put as much out on this blog as I can, or anyone can contact me and I'll try to help them or I'll find someone who can if I can't. I am not an attorney, therefore I cannot give legal advice, but I can give legal information.
Second of All
Dedication and Discipline are the key to surviving debt. Time and Persistance is the key to Credit. Once you find out the rules, you'll learn how to play the game. The Federal Trade Commission has all of the rules that govern and dictate standards. Once you have gotten familar with the rules then you can play their game against them. Before you set out to make changes you should know what is on your credit report. There are many ways to get one for free, but, anyone trying to repair their credit, should join a credit monitoring place. This allows you to have access 24/7/365 to your information. You can view Credit Monitoring at my website: BetterCreditNetwork.com. This is probably the most important aspect of Credit Repair. Once you enroll, you need to check for errors: Name, Address, SS#, Date of Birth, Employer, and Creditors. If you have a printer, print a copy that you can write on and make changes and notes. Then you'll have to call them to make changes to your name or personal information. Then you proceed to the Creditors: Remember the old saying "Deny Deny Deny" well the same applies here "Dispute, Dispute, Dispute" Whenever you dispute something on your report they have to send it to the creditor for verification, then the creditor has 45 days to verify it and return it to the reporting agency. If for any reason they miss the deadline or they can't find your file, they have to delete it from your report. Just imagine that you owe Sears about $7000 and they call you through a collection agency all the time. One day after years of this torment you decide to dispute it, and they don't respond within 45 days, the reporting agency will take it off instantly, Whala! You just saved $7000. Now don't get confused, legally you still owe this money, and they have 7 years to try to collect it. There are limitations to that law as well, depending on what state you live in. Any time that you get confused, such as when they file a judgement against you for the money plus fees, it is a good idea to seek legal counsel. The worst thing you can do is nothing! Depending on the amount of debt, sometimes it is a good idea to get debt counseling from an expert. Remember those creditors can be ruthless, they don't care about you or your present condition. Once you get your creditors and your credit report cleaned up, it is time to start rebuilding a new credit history. Which leads to :
Third
I have always said that companies target the unfortunate. And just to prove my point: If you are just starting out or starting over, you will pay more. If you go to the store in town that is the least expensive you'll see that the prices may be cheaper but the package sizes are smaller or they are a generic brand and usually doesn't taste as good. Once you figure this out you start shopping at a different store and spending a little more but getting better quality. Same rule apply here. It is a simple process to get your credit back, but it takes time sometimes. First, there are credit card companies that realize that there are people starting out or starting over. Anyone can get Credit, it may not be the perfect card or exactly what you want, but it will get you started. Sometimes you'll have to pay a fee or higher APR's. For example: You may get approved for a $300 limit and before you ever use the card you owe $180-200. If you make your payments on time every time, they will recognize this and raise your limit. If you continue to maintain your standings they may lower your APR.
Another way to start out is to get a secured credit card that reports your data to the credit reporting agencies. In time, other creditors see this and start offering you credit without being secured. If you only use your new credit for needed items instead of wanted items you'll notice a difference in the way you pay it back. So use self discipline and before you know it, you'll have a higher credit score and more credit.
Last but not Least
I sure hope that I helped someone! But like everyting else in life, there is more... I will update and put more information on this blog periodocally. In the meantime, I have 2 websites available for more information and products:
http://www.bettercreditnetwork.com/
http://www.thecreditcardmarket.com/
Subscribe to:
Posts (Atom)
