Even the debts that stand late at 30 days or more have been declining each month. It is good news as the default data is an indicator of how defaults will play out in the future. Card payers seem to be eliminating balances racked up during the holiday shopping season for all major credit card providers across the board.

For Bank of America, the news is much different than it was in August 2009 when the bank had to write off 14.53% annualized of its consumer credit card debt. It also appears the card holders are getting more focused on eliminating credit card balances consistently. With the lowest default rates the bank has seen in three years, there is hope for US consumers staying on top of revolving debt. The national average of credit card balances has also dropped from $799.7 billion in December 2010 to $795.5 billion in February. Those statistics are similar to the numbers in the fall of 2004.

Customer Defaults Decline Again for Bank of America (NYSE: BAC) was created by and is property of American Consumer News.

Citigroup is working in association with the Calvert Foundation and Opportunity Finance Network to help cover financing of both businesses and community development. The Calvert Foundation is a non-profit that manages money totalling more than $200 million that came from thousands of different investors. Opportunity Finance Network has also brough in more than $23.5 billion in financing since 2008.

Citigroup is set to provide $199 million in capital for small businesses using a combination of loans and equity. The other two grous will bring $1 millions to complete the balance. Vikram Pandit, Citigroups Chief Executive stated that small businesses, community service organizations, and other groups do not have the sufficuent access to the credit they need to keep growing.

The Communities at Work Fund will serve low income areas hand have been working for over 30 years to create economic opportunities in underserved communities by providing financing. They will provide financing to both for profit and nonprofit  Community Development Financial Institution (CDFI) Loan Funds that will then lend to local low-income communities businesses. The Fund will help maintain and grow businesses, drive new job creation and contribute to the economic recovery of communities can not secure financing by traditional financial institutions. To date, the loans have assisted more nearly 50,000 small businesses by loaning out a total of $15.9 billion. CDFI Loan Funds net charge-offs were lower than FDIC insured instituitons in both 2008 and 2009.

Andrew Ditton, Co-Head of Citi Community Capital stated “Citi is delighted to partner with Calvert Foundation and Opportunity Finance Network to deliver new liquidity for CDFIs. They are leaders in the field of community development finance with a proven expertise in responsible and profitable lending to those communities most in need of capital.”

As lending requirements have become much stricter, many entreprenuers can no longer survive in a community business. Once the businesses begin to fail, the community as a whole suffers. Citigroup is looking to strengthen both the businesses, their owners, and the communities in which they live.

Citigroup (NYSE: C) Ready to Lend To Small Biz was created by and is property of American Consumer News.

Managers and coworkers may also be using these sites to determine “problem” workers. In these hard economic times you have to defend yourself from every possible angle, especially when it comes to your credit and livelihood.

If you blog, or post on Facebook, or “tweet” about how hard you were hit in the economy, or how hard bills are to pay, you may be damaging your potential credit. Lenders will determine you’re a high risk and decide not to lend you money. It’s been found that banks are accessing Facebook profiles, and actually reading posts and blogs about people having trouble paying bills. If you’re seen as a high risk borrower, you’ll have higher interest rates than someone with good credit – or it’s very possible that the lender will turn you down for credit completely.

Managers and coworkers may also be on your “friends” list. The significance is that you may be fired for posting negative things about your job on these social networking sites. Most jobs now require you to sign a kind of privacy clause that prevents you from saying anything sensitive to your job on any social site. This is because competitors could use this information against your job; or because it looks poorly on the business to potential consumers who may be reading what you write. To avoid losing your job because you accidentally let secrets slip, or because you bad mouthed a co worker or manager, be smart and don’t use your social networking site to complain about your job.

If you are a manager or owner of a business you should also think about using your social networking site. It’s nice to have one as a business owner because it’s like having a free website with no maintenance, that can be exposed to millions. However, your competitors are using them too, so just keep mum about any problems you are having, as the expression goes, don’t give ammo to your competitors.

In this economy it’s important to consider every aspect that may threaten your livelihood. Too much hangs on what you say on your social networking sites. Avoid blogging about bills, or co workers and managers and rest assured you are safer. Another tip is to keep whatever you say about your work life or financial life as broad as possible, and keep everything anonymous. Keep your social networking sites, play games and chat, just keep in mind that people that affect your financial future may be listening too.

Are Social Networking Sites Hurting Your Credit? was created by and is property of American Consumer News.

There are signs that some are taking extreme measures to change their lifestyle in order to live simply, better and away from the effects of the economic ‘storm’ in which we find ourselves.  You can classify these people as ‘survivalists’ because they have made changes in their living that promote the very term.  But they have not always had this philosophy and indeed do not necessarily embrace all of the tenets of a ‘survivalist’ mentality which includes a hate for government and a hoarding of guns, etc.

One of the traits of this group is that there is commonality in what they once were and have given up in making these changes.  There is a general withdrawing from mainstream living that includes these moves.

Shunning of a Credit Lifestyle. Most of these people are tired of being pawns in the game of credit and debt and have opted to remove themselves from that system.  Not that they do not believe in paying back their debts, but rather, they are trying to reduce their reliance upon credit, debt and the mindset of ‘keeping up with the Joneses.’
Their mentality is that they are doing what they have to in order to survive.  And, along the way are finding that it is a better lifestyle that what they had before.  There is less stress and easier living.

Simplifying their living arrangements. Some have taken the approach of moving away from the cities and towns and to more rural locales which affords them the opportunity to get closer to nature and benefit from its many offerings in such exploits as hunting and fishing.  You will find that they are good at things like cutting their own wood for their fireplaces and stoves which heat their houses.

Their utility bills are cut to the bare minimum. Their reliance on vehicles has dropped so that not only do they use them in more of a utilitarian fashion, they also go from multiple vehicles down to just one.

Growing their own food.  Gardens and related food activities such as canning have become important to them.  Having animals that produce food for them is important as well.

Reviving self-reliance practices. Among these people you will find a growing trend towards sewing their own clothes, and shopping at local thrift shops.  They learn very early where to buy things that are cheap and even start bartering with other people instead of paying cash.

All of this is acceptable as long as you do not shun responsibility and commitments that you made in the past.  People who try to remove themselves from the system will find that this is a difficult thing to do.  Their credit score will drop dramatically and their history will become blotched with actions and items that raise red flags.  So the advice is that if they plan to try to get back in at some point, it will be a difficult situation from which to recover.
Reducing stress and increasing self-reliance are good things, but you do not have to take extreme actions in order to embrace and practice those activities.

Extreme Measures in Tough Economic Times was created by and is property of American Consumer News.

 But can a person live without credit?

Credit cards are convenient but not one of life’s necessities, despite what you may think. It takes a lot of commitment to do it though but in the long run, it can change your life and the way you manage your money. Therefore, it is more likely you will get out of debt and stay out of debt. Shopping for anything is one of the biggest challenges. For people who are choosing to live without credit cards or for those people who have no choice and can not get a credit card, shopping with cash is the alternative. It makes sense to spend only what you have and manage your money to perfection in order to get rid of the need for credit. When you go shopping, it is important to remember to ask yourself “Do I really need this or do I simply want this?” Forcing yourself into thinking about your every buying decision you make, will forced you to be more accountable for your cash. It can also help you learn to wait for what you want. You will learn to wait for the great sales and discounts that will eventually come along in order to afford the item in line with your budget.

There are other ways to keep credit out of your life.

Buy A Used Car – The ads may lead us to believe that unless we have a top of the line automobile, we aren’t living the life we deserve. Not true. It makes more sense to purchase a car that is reliable and still has a lot of life left than it does to purchase a new vehicle on credit and shell out thousands in interest payments through financing. Saving cash with a goal of buying outright can be a huge inspiration and an excellent lesson on money management.

Buying A Home – While it may not be possible for many people to buy a house outright with cash, there are some things you can do to ensure you only borrow the amount of money that is absolutely necessary. The first thing you can do is save up the maximum amount of cash possible for the longest possible amount of time in order to put down a sizeable chunk of money toward a down payment. The more money you put down on a home, the less you need to finance. When you do take out the mortgage on the remaining amount, take it out for a shorter period of time and put extra money towards the principle amount each month to pay off your home as quickly as possible. If you do not have other debts to pay down, it will much easier to have the extra cash for the supplementary payments.

Going To School – Many kids going off to college just take for granted their tuition will be taken care of through student loans but many more are left uneducated about what happens 4 years later, when the loans come due and you have to pay them off for the next 15-20 years, with or without a job. Students going off to college and their parents should consider other alternatives to student lending. Kids still in high school should stay knowledgeable about the number of grants and scholarships available for school. They need to understand that their hard work now will pay off in the future. There are also many programs in schools of higher education that offer tuition reimbursement through work/study programs. Grabbing a part time job to work through college is also a good way to afford books and spending money without relying on credit and getting into debt will still a teenager.

Is it Possible to Live a Life with No Credit? was created by and is property of American Consumer News.

There are several ways to assess the reliability of an online loan provider. What you may think doesn’t matter may be the little things you should really be paying attention to and looking at carefully. Here are a few tips for checking out the lenders on the web.

Company Standing

With the convenience of the internet, a quick search can reveal reviews and critiques by fellow consumers who have done business with the company previously. In addition to hearing feedback from strangers, you can also check with family, friends, and the Better Business Bureau to see if anyone has complaints about company service.

Company Website

While it may be a pop-up advertisement that caught your attention in the first place, you definitely don’t want to be inundated with pop-ups while reviewing the website. Make sure that the pages of the company site load quickly and efficiently and that the information content makes sense to you and is complete. Be wary if there are a lot of error messages with page loads or if written information seems incomplete.

Company Privacy

Obviously there will be plenty of your personal information disclosed during a loan application. Check out the privacy policy on the website. A huge red flag should be thrown if there isn’t one on the site. If there is a policy posted, review it for content and sensibility.

Company Profile

Check out the About Us or Profile page of the company on the website. Look for the company history, mission statement, and staff profiles. Not all companies will have the same information but there should be some information that provides you with background information. If not, you have to wonder what the company is hiding and why they are not sharing more about themselves when they expect you to tell them everything about yourself.

Company Application

Many online lenders offer you an initial form or application to complete in order to gauge approval potential. If you feel uncomfortable with the information being asked of you, you probably should trust your gut instincts and look for other loan alternatives.

Company Offers

If you have solicited information from other companies, it is important you read all of the fine print, including the fees, interest rates, and terms. This should be one of the most important pieces of information for making a decision. Compare at least 3 company offers before making a decision. Do not just go with the first company that gives you an approval or you could end up in a financial nightmare.

Company Communications

Once you have made a decision to move forward with the loan process, pay attention to how the company representatives treat you. If it is not easy to reach the company staff or you find it difficult to deal with the employees, you should consider moving on to a different company. After all, you will have to deal with these people for a long period of time and it is your money and personal finances that are affected by the loan so you must take control of the situation.

How to Thoroughly Check Lenders on the Web was created by and is property of American Consumer News.

Here are 5 simple tips to keeping your finances straight and get the most out of your cash.

Write What You Spend – Many people are impacted by a visual and if you truly want to understand where your money is going or how you can get better at saving it, you should start tracking it. Commit to tracking your every penny for a solid month. Then sit with your spouse and analyze the results. Little notebooks can easily fit into your pocket or purse and cost some change at a dollar store. This will help give you a reality check on how to cut spending and how much you can start saving.

Avoid the Green-Eyed Monster – Society often tends to be obsesses with other people’s income, job titles, and other financial successes. Personally acknowledging the priorities in your own life and the successes you have already achieved can help reduce the need to “keep up with the Jones’” and allow to you be content with your own successes and not envious of others. Also remember that you can’t always judge a book by a fancy cover.

Observe Your Own Purchasing Habits – Any trip to the store should afford you the opportunity to observe your own spending habits as well as change your thinking about spending. If you are an impulse shopper, prepare yourself each time before entering the store and always bring a list of items you need, rather than fill your cart with wants. If you tend to hit the mall to deal with boredom or other life frustrations, opt to take a walk in the park to clear your head.

Transition from Credit to Debit – If you have a history of not being able to pay off your credit card balances each month, stop using credit and switch over to debit cards that withdrawn money directly from your bank account. Debit cards will not hold a balance over your head and you can only spend what you have or face the consequences of overdraft fees and other penalties.

Focus on Debt then Save – You’ll find it to be near impossible to start saving money when you still owe on debts.  Start by understanding how much you owe and make a plan to pay off the debt before concentrating on your plans for saving.

5 Money Tips for Financial Smarts was created by and is property of American Consumer News.

For several months a lot of the major mortgage lenders stopped providing some of the worst offenders in the sub-prime mortgage loan market. Very few companies were offering option payment loans, 50 year mortgages, and interest only loans with a massive balloon payment at the end of the term. It seemed that the mortgage market had returned to sound statistics and reasoning as to whether or not to originate a loan, but as the real estate market decline very few people were buying homes and thus very few people were taking out mortgages. The volume of mortgages that the real estate industry has seen has shrunk dramatically, leading some mortgage companies to desperate measures to originate new loans.

Many of the mortgage companies which were hit the hardest by the collapse of the sub-prime lending market are now offering the same types of loans which got them into that mess in the first place because they’re so desperate to generate any type of new mortgages they can. Countrywide Home Loans is sending out mailers with offers for a $511,000 jumbo mortgage to refinance or remortgage your home. According to the LA Times, aI I number of other mortgage companies are sending out flyers for option payment loans, which are loans in which the customer is not even required to pay off the interest each year! If you’re in brittian, consider a buy to let mortgage.

Just because these loans are becoming available again does not mean you have any business taking them out. You might get initially a low payment for the first few months, but after that the rate will adjust upward and you’ll be paying much more in the long run. Stick to a conventional 15 or 30 year fixed mortgage, pay your payments each month, and you won’t have any surprises along the way.

Lenders Still Making the Same Mistakes Which Caused the Sub-Prime Mortgage Mess was created by and is property of American Consumer News.

A charged-off debt occurs when money is owned to a company by an individual and goes past due.  After the company tries to collect a debt repeatedly but fails to secure the repayment, the company will then “write off” the debt, which is considered to be income for the company and therefore an asset.. When the company decides to write off the debt, they will reduce the total amount of profit for the company and lower company taxes.

The charge-off is reported to the credit agencies and ultimately will make it harder for a consumer who has charged-off accounts to get other loans or secure credit in the future. A charged-off debt will remain on a credit report for up to 7 years and the consumer is still bound to pay the amount in full. However, once a debt goes into a charged-off status, penalties, interest, and other fees can increase significantly, making it even more difficult to repay the original loan or payment amount.

Generally the terms of what happens when an account is placed in charged off status can be found in the tiny print on the initial contract signed in order to get the loan or the line of credit. Even after the status of the loan has been changed to a charge-off, the original agreement and terms still apply and are the responsibility of the consumer. When the consumer decides to work through the charged-off debt, they will need to find out what the statute of limitation is on the original debt based on the state in which they live and understand the type of debt they have. The statute of limitations is usually between a 3-6 year timeline and after that period expires, the consumer is not longer required by law to repay the money. By signing any additional agreements, making a payment, or by simply validating the debt, could restart the statute of limitations timeline, lengthening the time period the consumer is still legally required to pay the debt.

Be forewarned, even if the debt is passed the time of the statute of limitations, a debt collector can still legally pursue the consumer for repayment and the original lender can still attach interest and penalties onto the total amount of the original loan. Depending on the applicable laws, creditors can attempt to garnish your wages, place a lien on your assets, or take other measures to recover the money owned.

Consumers, who decide to make payment arrangements or agree to pay a certain amount of money if the company will agree to consider the amount payment in full, must get any agreements put in writing by the company. Negotiating directly with the original lender may produce better results than working with a debt collector, who usually makes money based on the amount collected. If the debt is negotiated and considered to be paid in full, the negative mark will still remain on the consumer’s credit report. In some cases, the lender may be willing to remove the account from a credit report if paid in full. Only the original lender can initiate this action. A debt collection agency can not, despite what they may claim.

Responsibilities of Paying a Charged-Off Debt was created by and is property of American Consumer News.

 THE BASICS

1)      Your credit report is just that…a report of your credit or the money you owe(d).  It does not list utilities or cell phones since you pay those on a month-to-month basis.  It does not merge with your spouses’ credit, but if you have joint accounts with your spouse (or any other co-signer), those accounts will show up on both of your reports…and only in that instance will negatives and positives affect both reports.

2)      If you have a debt that is sold (a.k.a. sent) to a collection agency, that collection agency is going to post a claim of debt on your credit report, which negatively dings your credit score.  If you do not pay off that claim, the collection agency will sell it to a second collection agency and your credit score will be dinged again.  This can happen again and again, each time bringing your score down drastically. 

3)      When the first creditor sells the debt, they do not remove their claim from your report.  It is not their responsibility to do so; it is yours.  You do this by creating a “dispute” with each of the credit agencies asking for a correction.  When you’ve made your dispute, the credit agency contacts the creditor and the creditor has 30 days to deny or verify your claim.  If they do not respond at all, the credit agency will decide in your favor and the item you dispute will be changed or removed from your credit report forever.  If it gets put back on later, you can show the reporting agencies that they removed it, and they will remove it again. 

 STEP-BY-STEP CLEANING INSTRUCTIONS

Step 1:  Pull a 3-in-1 Credit Report with FICO Scores.  Although it is true that you can get your credit report for free every 12 months at websites like FreeCreditReport.com, FICO scores are usually not included and you need to know your scores to know if your score has really improved.  Therefore, it is an excellent idea to pay the extra charge and purchase the FICO scores for all three reports.  It is also a good idea to pay to have the 3-in-1 Credit Report pulled directly from one of the credit reporting agencies’ websites, as you will be able to make disputes online directly for two of the companies.  (Transunion is especially easy to make disputes with.) 

Step 2:  Read Your Report Carefully.  Your credit report is divided into four sections.  The first section includes your personal information like name, address, and place of employment.  The second section is a list of all items hurting your score (such as late payments, accounts sent to collections and collection agencies).  The third section is a list of all credit accounts in good standing.  The fourth section is a list of all inquiries made in the last 24 months. 

Step 3:  Print Out Your Report.  Once you have your credit report on the screen, print it out.  You are going to want to highlight things and make notes, and it’s easier to do this on a paper copy that you can reference later. 

Step 4:  Highlight EVERY Late Payment.  With a Yellow Highlighter, highlight all of the accounts that claim you paid 30, 60, 90 or 120+ days late. 

Step 5:  Highlight EVERY Collection Agency. 

Step 6:  Highlight EVERY Charged-Off Account. 

Step 7:  Begin Your Dispute:  Now that you have highlighted all the negative items on your credit report, you are ready to begin your dispute.  (Disputing online is easiest at Transunion’s or Equifax’s website.  You can also do this by phone…all of the information will be listed on their websites). 

Step 8:  Say, “This Account was Never Late.”  Dispute all items that are 30 days late (or more) by simply stating, “This account was never late.”  By doing so, you will be able to turn negatives into positives without deleting your credit history.  Many times, a creditor will not bother disputing such a simple claim, and it will changed automatically if they don’t respond.  (Remember to reference the account number listed and the creditors name when doing this by mail or phone.) 

Step 9:  Say, “This account is not mine.”  You want to do this for EVERY collection agency you highlighted AND every account that says it was “charged off.”  This way, you can have many of these companies removed and bring your score up quickly.  For companies that still do have your account, they will dispute your dispute and you can then deal with them as outlined in Part 2 of this Series.  (Again, reference the credit account number and the creditor from your report.) 

Step 10:  Submit Your Claim and Wait.  Once you have disputed the negative items on your credit report, the reporting agencies will begin an “investigation.”  Creditors have 30 days to respond to any disputes you made, and if they do not respond, the negative items will be changed or removed from your report.  Often, if you have paid off your balance and are in good standing with a creditor, a disputed creditor will not bother to contest the dispute you are making, thus automatically deciding the dispute in your favor.  The ones that do respond are the ones you may have to deal with over the phone or in writing.

Step 11:  Review and Retry.  Once the 30-day investigation period is over, the credit reporting agencies will send the investigation results to you by snail mail or email.  A new temporary section will appear on your report that lists each individual decision and it will only be visible to you (not to anyone you try to get credit with later).  If some of the items you disputed were not removed, consider disputing them again in a few months.  In the meantime, do a little extra legwork to ensure success on your next dispute. 

BETWEEN DISPUTES – THE LEGWORK

Step 12:  Make contact with creditors and collection agencies.  Let them know what you are trying to do and see if they will cooperate.  Ask them to make a note in your account verifying whatever your claim will be on your next dispute.  (You can dispute these items without making contact, but you have a better chance of improving your report if you can get them on your side ahead of time.)

Step 13:  Change Your Dispute Reasoning.  If you do not believe the same dispute you made in the first go-round will work in the second attempt, change the reason you are making your new disputes.  For example, creditors that were not removed can be re-disputed with “paid as agreed upon.”  If it is not disputed the second time, the item will be changed from a negative to a positive, thereby increasing your score. 

Although this may seem like a lot of work, it actually takes less then one hour to do for most people.  Also, it is a good idea to do this at least once a year to make sure that your credit report only lists the items you want it to have.  If you do not do this regularly, you are going into the credit game blind and you will deserve the bad score you get.

Also, check out the first two articles of this series (Manipulate Your Credit and Get Out of Debt Fast) to really increase your score fast in 30 days.   

RAISE YOUR CREDIT SCORE 200 POINTS IN 30 DAYS: Part 3 – Clean Your Credit Report was created by and is property of American Consumer News.

1. Are your credit accounts current? If your accounts are not current now, then you are not making enough money to make your mortgage. Get those balances current before applying for a credit card.
   
2. Have all of your balances been paid on time within the last 12 months? Paying on time for 12 straight months will make you an “A-Paper” borrower, something lenders consider just as important as your score. If you are an “A-Paper” borrower, you will get bumped up to the better end of loans you credit score will qualify you for. Therefore, go 12 months with timely payments to give you that extra boost regardless of your score.
3. Do you have a lot of negatives on your credit report? Negatives are usually late payments, balances over their limits, and items charged off for collections. You can “dispute” these items on your credit report and have them removed, which will make you look more attractive in the application process and raise your score at the same time. (Plus it only takes 30 days to do.)
4. How many times have you applied for credit in the last three to six months? Too many credit inquiries lowers your score and says you are trying to get yourself into a heap of debt. Try to make it through three to six months without applying for new credit before applying for a home loan.
5. How much money do you have to pay towards other credit on a monthly basis? A creditor will figure your mortgage at approximately 50% of what you make. This number varies depending on the lender. Your credit report totals all of your payments right up front. If you are paying more then 50% towards credit cards and other loans, then you will most likely be rejected for a mortgage. Ask your creditors to lower your interest rates so that the total monthly payments on your credit report will go down. Also, try to pay down as much of your credit balances as possible so that you can get a higher pre-approved mortgage amount.
6. How much longer will you be paying your car loan? If you have a car loan, and you only have one year’s worth of payments left, mortgage lenders will usually not take that debt into account when calculating your potential mortgage amount. Therefore, if you have more then one year of payments left, pay it down to one year in order to get a higher mortgage.

Remember, knowledge is power. A pre-approval letter is knowledge and it gives you bargaining power when it comes to home loans. By cleaning your credit before applying for a mortgage, you can bargain for the best loans and make the toughest home offers. Do these things before applying for a loan, and soon you will own the home of your dreams.

What Mortgage Lenders Look For was created by and is property of American Consumer News.

MAKE A GAME PLAN

Whether you are dealing with good debt or debt that is weighing heavily on your shoulders, it is important to have a game plan when working towards paying it off. No matter where you stand with your credit, your plan needs to consist of starting with the smallest balance and paying that off first.

1. Consolidate your debt as much as possible. Although many people would suggest getting a consolidation loan, it is not always an option if you actually owe a lot of money. Here are two options that can actually be more beneficial.

a. Tap Into Your Home’s Equity: If you have a Home Equity Line of Credit (HELOC) or are able to refinance a home, then this is going to be your best bet for getting out of debt fast. You see, when you get a HELOC or refinance your mortgage and take cash out, you are using the equity in your home to pay off your credit. This is beneficial because a) your interest rate can be as low as 5% saving you a lot more money then leaving balances on a credit card, b) your payments will be approximately 70% less then what they would be if leaving them on a credit card and c) the interest you pay toward a home loan will be tax deductible (whereas credit interest is not) and that tax deduction can save you even more money every year you have it. As an added bonus, transferring balances to your home equity will raise your credit score when it frees up your debt ratio on your credit cards.

b. Get a good deal on a balance transfer: If a refinance is not in your stars, then look to the credit that you do have. Call up your credit cards and ask them for deals on balance transfers. Many times, by simply asking, you can get 0% interest for a minimum of six months, or as little as 3% for the life of the debt. While you’re at it, ask if they will lower your interest rates as well. More often then not, they have no problem lowering interest rates, but you have to ask for it.

2. Start with the smallest balance first. Being able to pay even one card off can feel like a life changing event. Whatever balances you have not consolidated, begin with the smallest balance first. Even though it may not have the smallest interest rate, it is still best to get at least one card paid off. This gives you the option to request another balance transfer and transfer your balances again when the original deals expire.

3. rinse and repeat. That’s just my way of saying…keep going. Consolidate the balances you can, and then pay off the smallest balances right away. Keep asking for lower interest rates, and keep pressing your luck.

4. do try and keep your nose clean. While it may seem tempting to go out and keep charging up a storm, if you truly want to get out debt, you need to spend as little as possible during this period. Whatever you do charge on your cards, pay it all off each month plus whatever extra you can spare. By using the cards instead of your checking account, then paying everything in your checking towards your credit card, you create a good payment history on your credit reports and you lessen the likelihood of bouncing any checks.

THE TRUTH ABOUT DEBT COLLECTORS

Although every state’s laws and rights regarding Consumer Debt differ, all collection agencies have fewer rights when collecting debt then the original company you owed the money too. Not only do they have fewer rights thanks to the FTC, but they also have purchased you debt for as little as $0.10 for every dollar you owed. That means if you owed $1,000, they probably bought the debt for $100. Anything you pay over that is pure profit for them, and they make that profit by harassing and scaring you into paying. Do not let them intimidate you. You are the one with the gold; therefore you are the one that makes the rules. So, here is exactly how to deal with debt collectors so that you can settle for as little as 30% of what you owe.

Here are some other things to know before you settle:

A) A debt collector wants you to pay them NOW, and they will lie to you to make that happen.

B) A debt collector cannot take you to court unless they are located in the same state. This is the rule for the majority of states, and you can find out your exact rights at your local District Attorney’s office.

C) If you don’t wish to speak with a debt collector, simply send them a “Cease and Desist.” If they ignore it and depending on the state, you could have a case against them for harassment if they continue to call you.

D) Credit card debt is unsecured debt, meaning they cannot try to repossess any of your possessions. However, homes, cars and secured credit cards can be repossessed as these are secured loans.

E) Other then mentioned here, the only time a collector can garnish wages is if they have taken you to court and won.

F) They cannot ruin your credit “forever.” Any negatives a debt collector puts on your account is only there for seven years (give or take a year). After seven years, it will drop off and your credit score will go up…unless you have it removed immediately. (I will go over how to do this final step next week.)

THE GAME PLAN FOR DEBT COLLECTORS

1. FIND OUT WHO HAS YOUR ACCOUNT. Check your credit reports and call your credit companies to find out who now owns your account. By making the first step and call them, they will deal with you more respectfully.
2. ASK THEM HOW MUCH THEY ARE WILLING TO SETTLE FOR. Do not be the first to make an offer. The collection agency bought your account for pennies on the dollar and they already know the lowest possible profitable settlement, which could be as little as 30% of your original debt. Let them make an offer as it will likely be much less then you may offer.
3. OFFER THREE MONTHLY PAYMENTS. No company is legally allowed to take more then three postdated checks for an agreed upon amount. If you can get them to settle, they will try to make it an amount you can afford with three monthly payments. Play hardball. See how low you can get them before you give them any bank account information.
4. DEMAND THEY PUT IT IN WRITING. If you do not get the settlement in writing, the collection agency may take your money and sell your account to another collection agency. If you get no proof that your account was settled, you will have to start the process all over again. Be sure to demand this and be insistent. If they tell you they cannot, tell them you will not pay them until you receive it and demand that they at least email it to you (as email provides a digital signature and timestamp).
5. ONCE THE ACCOUNT IS PAID IN FULL, MOVE ONTO THE NEXT CREDITOR. Generally, a creditor will keep your account approximately 90 days before selling it to another collection agency. At least by selling it to someone else, they can make back the money they spent to buy the debt. Therefore, don’t feel you have to call all of your debt collectors at once. Start with the smallest amounts first, and then work your way to the next one. By the end of the year, you can easily pay off four accounts one after the other.

If you follow these steps to clean up your credit, the negative items will fall off your credit report completely in 6 to 8 years depending on the credit agency. However, you can dispute negatives on your credit report and get them removed within 30 days. Next week’s final article (“Cleaning Your Report”) will go over how to do this step by step.

RAISE YOUR CREDIT SCORE 200 POINTS IN 30 DAYS: Part 2 – Get Out of Debt Fast was created by and is property of American Consumer News.

HOW THEIVES GET YOUR IDENTITY

According to the Post Office’s brochure, Identity Thieves gain access to your personal information through:

1. “Dumpster Diving” – Going through your trash.
2. “Skimming” – Storing your credit card number in a special storage device when processing your card.
3. “Phishing” – Pretending to be a financial institution and sending scam alerts to get your personal information.
4. “Changing Your Address” – Completing a change of address form to get your mail and personal statements.
5. Stealing – Taking your purse, wallet, mail, pre-approved credit card offers, new checks, personnel files from work, or tax information.

TIPS RECOMMENDED BY USPS

1. SHRED FINANCIAL DOCUMENTS – Any paperwork with personal information should be tossed through a shredder before making it to your “dumpster.”
2. NEVER CLICK ON LINKS IN UNSOLICITED EMAILS. Since “phishing” is becoming a common problem, use up-to-date firewalls, an anti-spam service, anti-spyware, and anti-virus software to protect your home computer. Plus, never click on links in emails. Instead, open a new window and go to the website address you know to enter information. (Fake Paypal emails are becoming more common in getting people’s information, so be extra wary when dealing with these.). You might also want to avoid email archiving in the event that someone hacks into your account, but good anti-spam software is a must..
3. DON’T USE OBVIOUS PASSWORDS like your birth date, mother’s maiden name, or the last four digits of your Social Security number.
4. DON’T GIVE OUT PERSONAL INFORMATION whether over the phone, through the mail, or over the Internet unless you know who you are dealing with.
5. PROTECT YOUR SOCIAL SECURITY NUMBER – Never carry your social security number in your wallet or write your social security number on a check.
6. KEEP YOUR PERSONAL INFO IN A SECURE PLACE – This is especially important with roommates, outside help, or if having work done in your home.
7. BE ALERT TO BILLS THAT DO NOT ARRIVE WHEN THEY SHOULD. If they do not arrive, they may have been routed somewhere else.
8. BE PROACTIVE ABOUT UNEXPECTED CREDIT CARDS OR ACCOUNT STATEMENTS. If an account or credit card arrives that you did not open, someone else did. Call that company immediately and have it closed.
9. BE ALERT FOR CREDIT BEING DENIED UNEXPECTEDLY. Credit is often denied for a variety of reasons, one of which is when too much credit is opened in a short period of time. Being denied credit may mean that someone else has already opened accounts in your name.
10. RESPOND IMMEDIATELY TO CALLS OR LETTERS ABOUT PURCHASES YOU NEVER MADE. Credit card companies create a profile of their clients detailing out the most common places a customer shops and the items that they frequently buy. If something is purchased that does not suit your profile, they will contact you for verification. Respond to the notice right away to head off potential theft and damage to your credit.
11. CHECK YOUR CREDIT REPORT. Any credit opened in your name will show up on your credit report. By staying on top of this, you will be able to stop identity theft before too much damage occurs.
12. REGULARLY REVIEW YOUR FINANCIAL STATEMENTS. You want to look for any and all charges that you did not make, especially since consumers usually have only 30 days to dispute items they did not authorize.
13. CLOSE ANY ACCOUNTS THAT HAVE BEEN TAMPERED WITH OR ESTABLISHED FRAUDULENTLY. It’s better to get a new card with a new number and close the old card since this alone may stop a thief in possession of your information.

OTHER GOOD TIPS:

14. GO PAPERLESS: You can receive many of your bills through your bank account instead of having them mailed. By requesting this free benefit, you keep account numbers and personal information private, you are able to save hardcopies directly to your hard drive, and you are able to find that information quickly and easily when needed (like when applying for a mortgage).
15. STORE YOUR FINANCIAL AND PERSONAL INFORMATION IN A STORAGE BOX BY YEAR (not including social security numbers) – This is especially important when dealing with taxes since the IRS can demand to see evidential proof of deductions for as long as eleven years after you file. By keeping it in a storage box, you can set the box on fire when the time period is up while never having to worry about being unable to provide demanded evidence.
16. NEVER RESPOND TO EMAILS – Emails are now commonly used to steal or “phish” information out of consumers by making the email look as if it came directly from a financial institution. If you respond to the email, you encourage them to continue trying to get personal info from you. Simply add them to your Spam list to keep that email address from contacting you in the future, and visit the addresses you know if you are concerned the notice is valid.
17. WHEN CONTACTED BY AN INSTITUTION BY PHONE, TELL THEM YOU WILL CALL THEM RIGHT BACK – Let them give you their name and number, but do not call that number back. Instead, call the number on the back of your card and ask to speak to a representative about your account. Let them know that you were contacted and ask them to verify any problems. All account managers have access to the same information, so they will be able to see if there is a problem with your account or not.
18. OPT OUT OF PREAPPROVED CREDIT OFFERS – Although I do not personally believe that people can get credit through pre-approved credit card applications without your social security information, it never hurts to opt-out of credit card offers. By doing so, you lessen the amount of mail that comes to your mailbox, and you will still be able to apply for credit online. Check out the FTC’s Consumer Alert webpage to see all the ways you can opt out.
19. GET A LOCKING MAILBOX – This is especially a good idea for anyone in a nice area. The nicer the area you live in, the more ideal a target you would make to an identity thief. Obviously, living in a nice area (no matter how safe you think it is), the more money you make and the more a thief assumes they can steal.
20. COPY ALL OF YOUR CREDIT CARDS AND SAVE IN A FILE AT HOME – By having a copy of the card front and back in a locked filing cabinet or other safe place, you will be able to quickly and easily contact your creditors should your purse or wallet ever be stolen.
21. CARRY ONLY ONE OR TWO CARDS AT A TIME – Lock away all the other cards in a safe place and carry as few cards as possible. This way, if someone ever gets into your wallet or purse, you will notice immediately if a card is stolen and be able to report it right away.

If you do believe that your identity has been stolen, don’t let yourself be a victim. Contact the Federal Trade Commission (FTC) to let them know that you believe your identity has been stolen since this will help law enforcement across the country in your investigation. Also contact the three credit reporting agencies so they can put extra security on your credit and make all new credit have to be approved by you first. Lastly, file a police report even if you do not know who stole your card. By doing so, you will be able to get the debt wiped out by creditors and protect your good credit.

21 Ways to Stop Identity Theft was created by and is property of American Consumer News.

To understand how your credit is rated, you have to know the credit formula and how to apply it to daily decisions. When you understand the credit formula, you will be able to manipulate your current credit whenever you want in order to maintain the best possible credit score. The pie chart below shows you exactly what percentages make up your credit report.

PAYMENT HISTORY (35% OF YOUR SCORE)

30-Day Fix # 1: Bring all of your accounts current

Since 35% of your score is based on payment history, having late accounts currently on your report will hurt your score drastically. Although there is no exact number on how much this can bring your score up, it does calculate a larger part of your score in total, and I have read that being current can increase your score as much as 60 points instantly.

30-Day Fix # 2: Pay all of your accounts within 30 days of the due date.

Most people believe that paying bills late hurts your credit. The truth is…Paying your bills more then 30 days late hurts your credit. The difference is the 30-day grace period that comes with every credit account. If you pay within 30 days of the due date, it will not be reported as late to the credit agencies. This does not mean that you will not have to pay a late fee to your creditor, but it does mean that paying late will not hurt your score unless you are “really late.” Plus, it does not matter how much you pay as long as you pay the minimum required.

DEBT RATIO (30% of Your Score)

30-Day Fix # 3: Pay down your “Revolving Credit” balances

The largest part of a Credit Score is NOT based upon how much money you owe compared to your income. Income is not a factor when calculating your score. Instead, credit reporting agencies look at how much money a consumer owes divided by the amount of available credit, which is your Debt Ratio. The magic Debt Ratio is to owe 35% of what you can spend (or $35 owed for every $100). However, this 35% usually only calculates open “revolving credit accounts.” Home mortgages and car loans do not bring down your credit score; they improve it instead. It’s the accounts that you spend and pay off quickly that affect your score the most. So, by paying your credit card and credit line balances down to 35%, you will bring your score up drastically.

30-Day Fix # 4: Raise your credit limits

Again, Debt Ratio is how much you can owe divided by how much you can spend. Therefore, if you cannot pay down your balances, try going up instead. To be specific, ask your creditors to raise your limits. It will incur a credit inquiry, which can temporarily lower your score in 30 days, but it will also lower your debt ratio increasing your score even more.

CREDIT HISTORY (15% of Your Score)

30-day Fix # 5: Put your paid-off credit cards away

When you are not using a credit card, you should NEVER close the account. Without open credit accounts, creditors do not know how you pay your bills or if you are a viable risk. Since your payment history makes up 15% of your credit score, you want to keep these paid-off accounts open because they will continue to report you to the agencies, although they are now reporting you as “On-Time” and “excellent with credit.” So, having open accounts with zero balances HELPS your credit and shows that you have a credit history. If you have problems with credit, these unused cards will counteract the negatives and will help keep your score afloat. If you close them, the good credit history associated with those cards will soon disappear from your report and affect your score accordingly.

NEW CREDIT (10% of Your Score)

30-Day Fix # 6: Try not to apply for credit unless absolutely necessary.

Having a high credit score does NOT guarantee that Creditors will open accounts for you. Many times, they look at how many credit inquiries you have had within a three to six-month period and how many new accounts you opened recently and make their decision based solely on these two factors. To a creditor, too many inquiries and too many new accounts means you are trying to drive yourself into debt, and therefore, you will not pay them back. Plus, each time you do apply for credit, an inquiry goes on one of your reports and can temporarily lower your credit score as much as 5 points per inquiry. At the same time, credit inquiries fall off your reports after two years. So, by going as long as possible before applying for credit again, you are having inquiries fall off your report (making your score go up) and having fewer inquiries in a short period of time (making you a more viable risk).

TYPES OF CREDIT (10% of Your Score)

30-Day Fix # 7: Get a loan

Having too much of one kind of credit can hurt you because creditors want to know you can handle a wide variety of credit. On-time payments to cars, houses, and credit cards make you appear responsible and credit-savvy. If you don’t own one already, consider buying a house, condo or mobile home. A home loan will not only increase your net worth, but it gives you buying power later on. Creditors LOVE homeowners, and home loans for owner-occupied properties are fairly easy to acquire. However, if a home is not in the stars for you anytime soon, consider financing a car or business instead. A different kind of loan can help bring your score up.

Now, in case you have not figured it out, I am not suggesting that constantly monitoring your credit to make sure it is always “excellent” is the best solution for anyone. In actuality, credit can and should be used wisely to help you invest and grow your net worth. Borrowing against your credit can bring your score down, but if you know that you are about to make a large purchase, you can shift your money and funds back into place and bring your score up for any 30-day period before an application. By doing this…by manipulating the funds you have…you will always be able to qualify for more credit when you want too. Keep that in mind when you read the second article on dealing with collectors and also keep it in mind when applying for new credit.

RAISE YOUR CREDIT SCORE 200 POINTS IN 30 DAYS: Part 1 – Manipulate Your Credit was created by and is property of American Consumer News.

To protect yourself from identity theft and credit card fraud, you need to implement the following strategies and always consider those cards to be at risk. This second article in it’s four-part series goes over seven things you can do to help stop credit card fraud:

1. Fill out your own credit applications. This is especially important for SBOs (Small Business Owners). Too many times, SBOs trust their bookkeepers to fill out all their credit applications. They naively hand over their social security numbers and business ID numbers because they trust their employees not to steal from them. Although some of these numbers a bookkeeper does need to know when handling your bookkeeping, your social security number and corporation number should be kept under wraps. Once they have this information, they can fill out any number of applications without your knowledge and easily forge your signature. A new creditor will not know if your signature is a forgery. Therefore, if you must have a bookkeeper fill out your information, have them fill out everything EXCEPT for your social security number, and other business related numbers, and sign all the applications yourself. By doing so, you lessen the chance of new credit being opened in your name (or your company’s).
2. Pull your credit report every few months. Even if you keep your ID numbers to yourself, you should still check your credit and business credit reports every three months. By doing so, you will see if there are any new accounts that should not be opened, and you can have them shut down immediately. You can also report to the credit agencies that no other accounts can be opened without speaking to you first.
3. Write “Check ID” on the back of the card. Many people make the mistake of never signing their credit cards. They assume that not signing their cards prevents embezzlers from forging their signatures. In actuality, by not signing your cards, someone else CAN sign them in your place. Retailers are often trained to only match signatures on receipts to signatures on cards. If the signatures appear to be the same, they do not need to ask for ID. By writing the words “Check ID” on the back of your card, any theft that occurs with that card is not your fault or responsibility. It becomes the fault of the store that failed to ask for your ID, thus giving you more rights should you need to pursue reimbursement in a court of law.
4. Use PO #’s with Employee Initials. If you cannot help but give out cards to employees to make business purchases for your company, make sure to encourage the use of Purchase Order numbers (PO #s). Many business cards will prompt retailers to ask for PO #s, which will show up on the receipt and your credit card statement. By having the employee list the PO # as the first two initials of their name, and the year, month and day of the purchase, you will know exactly who made the purchase and when by simply looking at the PO number. Not only is it easier to track and verify which employees made what purchases, but it assigns responsibility and accountability for every purchase thus reducing the risk that an employee will steal from you and be able to blame it on someone else. (An example would be EB70214 for a purchase I might make on Valentine’s Day of 2007. Be sure to include the year to avoid duplicate PO #s year after year.)
5. Check your Credit Card Statements: This is incredibly important for anyone, whether business owner or credit consumer. By looking over statements, you will catch any fraudulent charges instantly. Most credit companies only allow you to dispute fraudulent items within 30 days of receipt of statements. By not looking over the statement immediately, you are giving up your disputing rights and may get stuck with any fraudulent charges that have occurred in your name. So go over these statements carefully and contact your creditor immediately if anything is on there that should not be.
6. Keep your credit cards locked away. Just like locking away your checks, you should always lock away your credit cards. By doing so, you greatly reduce the chance that anyone can get hold of your cards and make unauthorized purchases. However, you still need to look at the statements for these cards since people can memorize or save credit card numbers and make purchases online without identity verification.

These ideas are simple, but effective in stopping credit card theft. Although many people would say to also shred credit card applications, this really does not protect you since applications can now be filled out online. Only by protecting your important ID numbers and watching statements can you add Identity Theft off before it causes too much damage.

Check back next week for the third article in this series about Ghosts in your company. Believe it or not, they do exist in the business world. Also, check out Part 1 of this series regarding how to protect your checking account.

Protect Your Small Business from Embezzling Bookkeepers Part 2: Credit Cards and Identity Theft was created by and is property of American Consumer News.

Already being in debt and then being taken for a ride by some fly-by-counselor would be utterly devastating to both you and your financial situation. It is essential you do your homework before you commit to any credit counseling company. The first step is to check out the US Department of Justice website. They provide a list of companies who are approved to assist client with their debt. All counselors who are on the approved list must be non-profit organizations and are subjected to criminal background checks. They must also comply with governmental training and experience guidelines in order to be placed on the list. Included in the governmental guidelines is a company’s requirement to be bonded, or carry insurance in the event a company employee causes you to lose money because of their own mistakes or criminal intentions.

When contacting a credit counselor for an initial consultation, keep your ears open for some red-flag warning signals during their pitch. Any company who tries to force you into committing to a payment plan outright should be a warning. Legitimate counselors should want to help you explore all of your options, including the option to reduce your debt on your own by altering your budget. A counselor’s goal should be to initially go over every detail of you finances and then help you decide which method would work best for you. Imagine someone forcing you into declaring bankruptcy, when in reality all you had to do was simply adjust your budget.

Counselors who charge upfront fees that seem ridiculously high should be more-carefully evaluated. Many companies will require a monthly processing fee ($25 is average) and some charge a nominal set-up fee to get you started. A good way to reveal a dubious company is if you state you can not afford the fees and they immediately turn you away. The dishonest companies will also require a large sum payment in order to move forward with the company. On average, any company you deal with who has a fee over $50 on a monthly, administrative basis, should be considered and researched carefully.

For a list of reputable, approved counseling companies, visit the US Department of Justice at http://www.usdoj.gov/ust/eo/bapcpa/ccde/index.htm.

Fed up with scraping the pennies together at the end of the month? It’s time to get impartial debt advice from professionals in debt management to help you get out of debt through an IVA, a consolidation loan or another debt solution tailored to your money needs.

CHECKING OUT COUNSELORS OF CREDIT was created by and is property of American Consumer News.

Check and Correct Errors on Your Credit Report – Most studies show that 1 out of every 3 Americans have mistakes on their credit reports that are significant enough to cause us to not qualify for the best interest rates available to us. Head on over to AnnualCreditReport.com and check your three credit reports for free to make sure everything on them is accurate and correct! If there are any errors, dispute them and get them corrected.

Reduce Your Consumer Debt – If you have credit cards or other consumer debt, pay down on them! This will lower your debt utilization ratio and improve your overall credit score.

Don’t Open New Accounts – Six months before you apply for a mortgage, don’t sign up for any new credit cards or other accounts. Credit inquiries and opening new accounts will lower your credit score by anywhere from 10 to 50 points.

Pay Your Bills On Time – It seems simple, yet many people don’t keep good track of their finances and make a payment late every once and a while. Even a few late payments will significantly lower your credit score and prevent you from qualifying for an optimal mortgage. Make sure to pay each payment early or on time each and every month!

Don’t Close Paid Off Accounts – A common misconception about credit scores is that if you pay off an account and close it, your credit score will go up. People think that if they have large credit lines with no balance that the bank will think they could potentially just go out and borrow a bunch of money and be in a much worse situation. It would make sense that having a bunch of credit available to you would damage your score, but quite the opposite is true. If you have a large amount of credit available to you, but don’t use it, you will have a much lower debt utilization ratio and have a higher score.

Don’t think that you’re stuck with whatever mobile home loans the bank will offer you now. Take active steps to improve your credit score so that you can get a better loan from the bank.

Looking to Buy a Home? 5 Tips to Improve Your Credit Score to Get a Better Mortgage was created by and is property of American Consumer News.