Everyday Fixes for Credit Scores

Credit. Credit. Credit. Do you ever get tired of people talking about credit or asking for your credit score? Companies used to have IOUs and you would pay them back when you could. Credit has become an ugly monster in the world of finance. It has destroyed lives, caused suicide, caused health issues such as high blood pressure, depression, fear, anxiety and hopelessness. Is this the effect that credit card companies had in mind when they created credit in the 1950s? I don’t think so but greed has caused them to operate as a mafia.

Some owners, customer service representatives and collection agencies have no remorse, no feelings, and refuse to provide good customer service to help clients who are willing to pay back debt owed. Sometimes you feel as though you committed a crime based on how potential employers, current employers or companies treat you when they look at your credit score or when you owe a company money.

Credit is one of the most important aspects of your financial life. It is easy to create a credit history but can be hard to maintain. One you have bad credit it can take years to recover and establish good credit again. Here are 13 everyday tips on how to raise your credit score.

1. Pay bills on time
2. Get current on late payments
3. Pay more than the minimum monthly payment – pay multiple times per month
4. Pay late accounts in 3 installments
5. Re-age accounts
6. Get paid delinquent (negative) accounts removed from your credit report
7. Ask for a settlement or setup payment bills for late accounts
8. Ask a company not to report a late payment on your credit report if it is less than 90 days late
9. Open a secured credit card or a department store credit card to establish credit history or increase your credit score
10. Avoid cash advances, payday loans and home equity loans to pay down debt
11. Don’t open new accounts often
12. Don’t close old accounts that are 2 or more years old, this will lower your credit score
13. Keep credit card balances at 20% or less of the credit limit

Consumers Can Now Get Free Credit Score

Effective July 21, 2011, the Federal Trade Commission consumers can now receive free credit scores if they apply for a loan or credit and are denied as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Previously consumers could receive a free copy of their credit report but in some cases it is hard for consumers to determine if they had good or bad credit.

Loan providers and companies that offer credit must provide details of the credit score and why the consumer was denied. Bad credit and low credit scores mean consumers will get higher interest rates, possibly pay upfront fees and have less than favorable credit or loan terms. The credit score will include the factors that impacted the consumers’ credit score such as late payments or maxed out credit cards.

Under this new law, banks can no longer keep their in-house credit scoring models secret and must share these with consumers who are denied credit. The new law does not apply to telecommunication and insurance companies.

Allowing consumers to receive credit score will give them the ability to quickly see if they have good or bad credit and create a plan to increase their credit score.

Not all consumers can receive a free credit score. If you were approved for loan with less than favorable terms or if your loan or credit application is rejected you can get a copy of your credit score. If you have good credit you may not get a copy of your credit score. Here are 7 tips to increase your credit score:

1. Get current. Pay delinquent accounts such as judgments, tax liens, foreclosures, repossessions and collection accounts first. Then pay all other late accounts such as medical bills.
2. Pay down debt. Keep balances at 10-20% or less of the credit limit. Having credit cards with balances of 30% or more of the limit decreases your credit score.
3. Pay on time. Pay bills at least 7-10 days before the due date to avoid late fees and penalties.
4. New accounts. Opening more than one new account per year will lower your credit score.
5. Avoid closing accounts. Closing accounts that have been open for 2 years or more can decrease your credit score.
6. Negotiate. Setup payment plans to pay down debt if you cannot pay the full amount owed. Stick to the agreement until the account is paid in full.
7. Avoid risky solutions. Avoid filing for bankruptcy. Use bankruptcy, debt consolidation, credit repair counseling or debt settlement as a last resort. These are reported on your credit report and lower your credit score.

10 Financial Tips for Sexy Consumers

Being sexy can be summarized in 3 main areas: attitude, confidence and image. Attitude relates to your views on life, usually an optimistic person who can take criticism well and always remains positive. Confidence is how you feel about yourself no matter what someone else says about you or does to you. Image is the physical appearance of a person, their smile, their teeth, their hair, their walk, their laugh, their face, their body, how they dress, how they smell.

According to a study by ING 61% of the men that participated in the survey feel that women who are frugal are smart and sexy. Cash is king and having a savings account makes you more attractive and appealing. When you are in debt and have bad credit it is hard to focus on anything else and if you do, you can’t give it your all because of your financial problems especially when it comes to relationships.  Saving is smart. Investing is smarter. Good credit is smart and sexy. Saving the environment is sexy. Saving is sexy. Here are 10 financial tips for sexy consumers.

1.     Being debt free is fantastic. Save money on interest by paying more than the minimum monthly credit card or loan payment which helps pay your balance down faster so you can get out of debt. Keep debt balances at than 10% of your monthly income.

2.     Pay down debt as fast as twista rhymes. Pay ½ the balance with the 1^st paycheck then pay the remaining balance with the 2^nd paycheck or pay the minimum monthly payment when you get the bill, then each week pay as much as you can toward the balance.

3.     Act like a celebrity and go green. Help save the environment by filing your taxes electronically and get your refund in 2 weeks from the date of filing. Use tax preparation software like Turbo Tax or Tax Cut to help with the tax filing process.

4.     Stay cozy and keep money in your pocket. Do an annual check on your heating system. Insulate your attic. Automate thermostat settings and use the lowest setting. Seal drafts and cover floors to retain heat. Open blinds during the day to let heat in.

5.     Social media can be your enemy. Many debt collectors and some state taxing authorities are searching for consumers on social media networks who owe debt. If you owe debt, hide your profile from public access or just be responsible and pay your debt.

6.     Plan for the unexpected. Create an emergency savings fund to cover all of your monthly bills and expenses for 9-12 months. Create a backup plan if some financial crisis occurs and you need extra money. Have a plan A, B, C and D.

7.     Shop like the rich. Set a budget and find bargains online, use coupons or shop at holiday sales. Mix and match basic pieces with fashionable accessories such as belts, earrings, bracelets, shoes and purses. Buy knockoff pieces for extra style. Shop at discount stores and outlets for name brand pieces for less.

8.     Cut back. See what areas you can reduce spending by creating a balanced budget to stay out of debt. Thirty-five percent should go towards housing, 15% towards debt, 25% towards transportation, 10% towards savings, and 15% towards other expenses.

9.     Plan for the future. Open a retirement account and save at least 10% towards your retirement each month. You will need 60-80% of your pre-retirement salary for a minimum of 20 years to have enough money during retirement or at least $1,000,000. 

10.  Don’t be a question mark.  Know your net worth (assets - liabilities). Verify your net worth annually. Know how much you earn, how much you owe and how many assets you have. Use the figure as a baseline to increase your net worth on a yearly basis. 

Bankruptcy May Not Help Homeowners

Many homeowners believe that filing bankruptcy will help save their home and prevent them from going further into debt. Unfortunately, filing for bankruptcy if you are a homeowner is not as easy as you think. Approval for bankruptcy depends on your salary and the family size. Income limits are based on the state you live in www.justice.gov/ust/eo/bapcpa/20101101/bci_data/median_income_table.htm.

However, if have a higher income you can still file. You must provide proof that you are unable to pay your bills and have sought additional help in the past. You must provide documentation such as: tax returns, paystubs, bank statements, mortgage statement or rental lease agreements, detailed list of monthly expenses including, a list of all debt, amount owed, interest rates, canceled checks and credit card statements, retirement accounts, business income and debt, and child support. Be honest when providing documentation. If you decline to provide all the requested documentation required by the Trustee your bankruptcy filing may be dismissed. Do not include you SSN on any documentation provided. Mistakes in your documentation can cause delay or a dismissal. If you do meet the income requirements there are additional criteria you have to meet such as:

• You must take a credit counseling class prior to filing for bankruptcy.
• If you have enough income to pay some of the debt you may be considered for a Chapter 13 bankruptcy.

Here are 11 tips to consider before filing for bankruptcy:

• Bankruptcy fees when filing on your own cost approximately $300 when filing for chapter 7 (most debt cleared) or chapter 13 (repayment plan for 3-5 years). Bankruptcy filing fees when using a bankruptcy attorney can range from $1,000 - $4,000.

• Look for real estate investors in your city by doing a search on google “name of your city or state real estate investors”, i.e. “maryland real estate investors”, etc.

• Do not make any large purchases before filing for bankruptcy because this will decrease your chances of being approved.

• Don’t file Chapter 7 bankruptcy if your income exceeds your expenses.

• Don’t transfer credit card balances.

• Don’t make payments on any debt.

• Don’t file your tax return if you expect to get a large refund.

• Don’t cash out any retirement plans or 401k’s because this money is exempt from bankruptcy.

• Don’t take out any loans or open any new credit accounts.

• Disclose any judgments, collection accounts, and tax liens.

• Don’t bank where you owe money. Close the account and open a new at another bank. If you wish to continue doing business with the bank take all the money out of your account as soon as your direct deposit is posted to your account. If not, this will increase your chances of having your bank account garnished.

The following debt is not included in Chapter 7 bankruptcy: taxes and tax liens, student loans, child support and alimony, debts for fines or penalties to governmental agencies, debts for judgments in wrongful death or personal injury lawsuits, and condominium or townhome association fees. The following debt not included in Chapter 13 bankruptcy: some taxes, student loans, child support and alimony, debts for fines or penalties to governmental agencies, debts for judgments in wrongful death or personal injury lawsuits, debts incurred after filing your case.

Items that are exempt from bankruptcy:

• $16,500 in equity in your home

• $2,575 in equity in your car

• $425 per item in any household items up to a total of $8,625

• $1,625 in job-related expenses, books, etc.

• $850 in any property, plus part of the unused exemption in your home, up to $8,075

• Social security, unemployment, VA benefits, welfare, and pensions

Should Christians Be in Debt

Did you ever wonder why a negative item has to stay on your credit report for 7 years? No one was able to give an answer other than what is stated in the Fair Credit Reporting Act (FCRA). I always wondered what the answer was myself but was never satisfied just knowing that someone decided to use the magic number 7. Upon research I found out why creditors, banks and other companies you do business with keep an item on your credit report for 7 years.

Deuteronomy 15:1

[The Year for Canceling Debts] At the end of every seven years you must cancel debts.

Negative items on your credit report are the result of not paying a debt. The recession had a long-lasting effect on Americans. Many Americans still have not changed their spending habits. Many people are allowing fear to cause them to make hasty decisions. Don’t let fear cause you to make a decision you will regret in the future. If something sounds too good to be true or requires you to pay money to receive a service that usually is free - don’t pay for it. You can’t have faith and be fearful.
Isaiah 41:13

For I am the Lord, your God, who takes hold of your right hand and says to you, Do not fear; I will help you.

If you owe debt you should pay it off. It will maintain your relationship with your creditors, stop harassing creditor calls, increase your credit score and reduce stress. It will also help you to align yourself with God. You can’t focus on the things of God when you are stressed out about your finances and being in debt. To pay back debt and stay out of debt you have to change the way you think about money. Money is a tool that can either be used to generate debt or to generate wealth. Taken from the bible:

Proverbs 13:22

A good man leaveth an inheritance to his children's children, and the wealth of the sinner is paid up for the just.

Think outside the box and think of creative and unique ways for getting out of debt. Thinking out the box will require great commitment, determination and sacrifice. One way to think about the box to get out of debt and stay out of debt is the follow the Voluntary Simplicity movement which states that you don’t buy anything new other than basic necessities such as food and clothing. Shelter is a basic necessity but doesn’t mean you should buy a home you really can’t afford or a home that has more rooms than you will use. It means examining every aspect of your life to determine what is most important and eliminating everything else.

Many entrepreneurs started their businesses by living below their means or spending less than they earned. They understood the importance of sacrifice which allowed them achieve their goals. Here are 8 ways to get out of debt.

1. Tithe. Once you align yourself financially with God by tithing, you will find it easier to get out of debt and plan for retirement as referenced in Malachi 3:8.

2. Pay in full. Pay the balance in full each month prior to the due date or as soon as you receive the bill which helps to avoid paying finance charges.

3. Pay more than once. You can send in payments multiple times a month. You can pay half of the bill balance with 1st paycheck of the month then pay the remaining balance with 2nd paycheck of the month. Pay weekly instead of monthly. Pay the minimum monthly payment the first week after you get the bill, and then each week pay as much as you can toward the monthly balance and repeat every month. You can also pay as much as you can when you get the bill, and then pay more towards the bill when you get extra money.

4. Avoid late fees. Pay your bills on time. If you are unable to make a payment, contact the creditor right away to setup a payment plan or make other arrangements. Contact your local post office to find out how long it takes your payment to arrive by mail.

5. Negotiate. Contact the company to negotiate a lower interest rate, get fees waived or change terms if your account is in good standing.

6. Pay more than minimum. If pay the minimum monthly payment you will end up paying 2 to 3 times the cost of the item you purchased due to finance charges that accrue on the balance. Send more than the minimum monthly payment each month. If your finance charges are less than your minimum monthly payment your balance will go down faster.

7. Spend less than you earn. Buy needs vs. wants, control your spending, don't buy in excess or more than you need, keep debt (excluding mortgage or rent) at 15% or less of your total monthly income (after taxes). Reduce expenses by bringing your lunch to work, taking public transportation, shopping at wholesale stores and downsizing. Delay buying the things you want until you have the money to purchase them.

8. Pay with cash. Use credit cards for emergencies only. Use cash to pay for purchases.

10 Ways to Search for a Secured Credit Card

1. APR – can have a standard or introductory rate. Can range from 7.90% to 49.9%, average ranges from 9.72% to 22%.

2. Annual fees - average fee is $40 per year

3. Minimum deposit – average deposit required is $300

4. Maximum deposit - amount deposited may depend on consumers annual income and line of credit desired, average is $10,000

5. Red Flags - look for low interest rates and fees, beware of scams, reporting to the credit bureaus – Experian, Equifax, and TransUnion, deposits, avoid cards with high fees and high interest rates, avoid cards that use your security deposit, income and age restrictions, if the card has a grace period, ask if the card is reported as a secured credit card on your credit report – this may affect future approvals for credit

6. Requirements – requires a savings or checking account with the bank, credit limit is 50-100% of the deposit, for savings accounts the limit can range from $300 to thousands of dollars, money is deposited into a savings account or CD, offer same features as an unsecured credit card

7. Earn interest – if it is a bank card they may pay interest on your deposit, the interest rate varies from 2 to 6.17%, if you deposit more than the minimum or are required to make a high deposit - it is to your advantage to ensure you earn interest on the money

8. Deposit Refund – if application is denied, refund is used to pay outstanding balance and any money left over is mailed to the consumer, may be charged penalty for early cancellation

9. Additional fees – application fee, processing fee, annual fee, finance charge, the application fee may be non-refundable depending on the company, cash advance fees, over-the-limit fees, non-sufficient fund fees, accessing account information, exceeding maximum number of transactions per month

10. Conversion – the account is not touched unless you make a late payment, after making payments on time for at least a year you may be able to qualify for an unsecured credit card, ask if your card can be converted to a unsecured credit card, account may be closed by bank if the account is seriously delinquent

How to Repair Your Credit

You credit is one of the most important aspects of your life and can help you or hurt you during the course of your life. Credit affects many aspects of your life such as applying for a job, applying for a home or apartment, or applying for a personal loan or credit. Some people have been fired from jobs or have not been considered for job vacancies because of their bad credit. If you have bad credit it is never too late to fix it and improve your financial situation. Here are 10 tips to help repair your credit.

1. Order your credit report. Get current on late bills and dispute errors. Dispute errors online or by mail. Provide supporting documentation.
2. Get current. Pay late accounts such as judgments, tax liens, foreclosures, repossessions and collection accounts first. Then pay all other late accounts.
3. Pay down debt. Keep balances at 20% or less of the credit limit. Having credit cards with balances of 50% or more of the limit decreases your credit score.
4. Pay on time. Pay bills at least 7-10 days before the due date to avoid late fees and penalties.
5. New accounts. Opening more than one new account per year will lower your credit score.
6. Avoid closing accounts. Closing accounts that have been open for 2 years or more can decrease your credit score.
7. Negotiate. Setup payment plans to pay down debt if you cannot pay the full amount owed. Stick to the agreement until the account is paid in full.
8. Establish Credit. Open a department store credit card. They usually have the highest interest rates but provide easier approval than bank credit cards. Buy something small and pay the balance in full each month. You can also open a secured credit card account. Ensure the account is reported on your credit report. Get a card with low fees and a low interest rate.
9. Avoid risky solutions. Avoid filing for bankruptcy. Use bankruptcy, debt consolidation, credit repair counseling or debt settlement as a last resort. These are reported on your credit report and lower your credit score.
10. Financial Crisis. If you are currently unable to pay your debts due to unemployment or financial problems request a financial hardship. You can request a reduced monthly payment and reduced interest rate for a period of one year but you must provide supporting documentation.

How to Get Into Debt

According to the National Endowment for Financial Education Americans are saving less than they were 2009 are have recently started spending more. According to the Federal Reserve of Boston, the average unpaid credit card balance was $3,389. Approximately 56% of consumers carried an unpaid balance in the past 12 months in 2010. Many Americans have gone into debt and have not been able to save money because of financial crises such as unemployment, salary reduction of sickness. However, others have gone into debt simply because they do not know how to manage their money.

Money habits are usually inherited from parents or family members. If you were not taught how to manage your money while growing up or did not see good example of money managing, chances are you will have bad credit at least once in your Iifetime. Here are some ways to get in debt which increases your chances experiencing a financial crisis and having bad credit.

1. Commit a Crime
2. Spend more than you have
3. Use credit cards for everyday purchases
4. Save less than 20% of your total monthly income
5. Have little or no retirement savings
6. Paying more than 30% of your total monthly income towards debt excluding mortgage or rent
7. Making poor financial decisions
8. Not getting professional financial advice
9. Succumbing to peer pressure or impulse shopping
10. Making excuses for bad behavior or spending habits
11. Blaming others for your bad habits
12. Leasing a car
13. Upgrading a large purchase (car, home, etc.)
14. Having excess (50 pairs of shoes, multiple purse in the same color, clothing or purses that cost more than $50 each)
15. Co-signing for a loan
16. Loaning money to friends and family often
17. Gambling
18. Buying rent-to-own furniture
19. Paying bills late
20. Throwing away receipts and not balancing your checkbook
21. Not verifying your monthly financial statements
22. Repeating the same financial mistakes
23. Buy things you don’t need

You Can Run But You Can't Hide From Your Debt

With the advancements in technology many debt collectors and some state taxing authorities are searching for consumers on the internet use social media networks such as Myspace, Facebook, Twitter, Linkedin and other sites to find unsuspecting consumers to pay debts. This seems unethical and illegal but it is legal.

According to the Fair Debt Practices Collection Act, debt collectors can contact your family and friends to find your location or get other personal information such as your address, email address or phone number. If you posted your contact information including your current employers on your social media profile you may soon be getting emails or phone calls from your debt collectors. What if a debt collector contacted someone who is listed as a friend on your social media profile?

If you love to use social media networks and are in debt you increase your chances of debt collectors finding you. The IRS has not confirmed whether they use social media networks to find those who owe back taxes but I suspect they do. The good news is that tax agents cannot friend a consumer who owes back taxes on a social media site but that probably doesn’t stop all tax collectors from doing it. Here are some ways you can be found on the internet:

1. Motor vehicle records
2. Employment records
3. Tax records
4. Bank records
5. Public inquiries at local businesses such as groceries stories, barbershops, church meetings, social and civic meetings, etc.
6. Internet search engines
7. Chat rooms and forums

If you owe debt and have not been contacted yet or have not paid your debt, contact the debt collector immediately to setup a payment plan or request a financial hardship and follow-up with a letter confirming the agreement. It is better in the long run if you contact them before they contact you.

Are You Paying the Right Creditor

It can be very difficult trying to make payments on a collection account because a collection agency holds a collection account for a few months, it they are unsuccessful in collecting on the debt owed the account is forwarded to another collection agency. This process continues until the account is paid or legal action is taken against the consumer.

Many consumers don't realize that once a delinquent account is reported to a collection agency a consumer has a short amount of time to pay the bill. This is because collection accounts are put on a nationwide registry and each collection agency in the country gets notified of a collection account. However, only one collection agency has a legal right to collect money on a delinquent account.

Collection agencies don't want you to know that as a consumer you have a legal right to question the validity of a collection agency which is called debt validation. Many consumers have paid money on delinquent accounts to a particular company only to find out that the company did not legally have a right to collect money on that account. As a result the consumer still owed the money on the delinquent account. Here are 7 ways to validate a debt and ensure you are paying the right creditor:

1. Request the creditor, collection agency or attorney to provide documentation that the company is authorized to collect on the debt. Ensure the name and address of the collection agency appears on the documentation which should be on company letterhead.

2. Ask for proof of the total amount of the debt including payment history from with the original creditor and status of the account. Verify the documentation against your own records.

3. Request the collection agency to provide the original contract or other documentation showing the agreement you made with the original creditor including the name and address of the original creditor.

4. Ask the creditor to provide a copy of their business license to prove they are licensed in their state to collect money on delinquent accounts. However this varies from state to state.

5. If the creditor use profanity, harasses you, is rude or threatens you inform the collection agency that they are subject to the Fair Credit Reporting Act (FCRA), they might argue and say they are not but they are considered debt collectors and are covered under the act.

6. If the creditor cannot verify the debt they cannot collect any money owed on your account and is not allowed to contact you about the debt. They also cannot report the account on your credit report.

7. A creditor may respond to your debt validation letter by sending you a summons to appear in court. This is a scare tactic and is illegal. A creditor has to validate the debt before they can file suit against you.