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Date December 25, 2010

Borrowers can avail free credit scores now

30Borrowers can feel elated with the first gift of the New Year. Starting the first day of 2011, borrowers will have the new right of seeing their credit scores for free. Credit scores are amongst the most important indicators of one’s creditworthiness and until recently they were quite concealed. The credit scores without any charge would be quite a welcome change. On the back of a new federal regulation, credit card issuers and creditors in general have to provide millions of applicants the logic that works behind the interest rates that are charged on the new credit cards or the loan. This rule will benefit all those consumers for whom the interest rates charged are slightly higher than the best rates offered to most other consumers.

The good part about this loan is that for the first time, they would have an opportunity legally to find out why the best possible terms weren’t available for them. The information which will help customers set things right the next time around will be available from now on.  Staying consistent with quite a few credit card reforms in the recent past, this rule change will especially help those consumers who want to look for themselves what is going wrong and thereby try to avoid these pitfalls in the future. This new regulation can be considered a belated result after the Fair and Accurate Credit Transactions Act that was passed in 2003.  This rule commands the creditors and lenders to provide the information related to the risk dependent pricing of interest rates along with a credit report of the consumer or disclosing the credit score of the consumer.

This risk based pricing points to the general convention until now of fixing interest rates based on the creditworthiness of the applicants with those having a bad credit history considered to be of greater risk. This risk based pricing notice is being seen as a tough demand and hence the general expectation is for a lot of lenders to provide the free FICO credit scores of the customers instead. The FICO score is the most popularly used method of measuring an individual’s creditworthiness. It also has a major impact on the decision made by lenders on what interest rate to approve for a given consumer. This score was completely hidden from customers a decade ago, who in turn found it quite difficult to turn things around in their favour.

Date May 15, 2009

How to Keep Your Credit Rating Up

How to Keep Your Credit Rating UpThe economic downturn has gotten the entire country in an uproar. Prices of basic goods are soaring, employment is going down, and interest rates are jumping from as low as 1.7% to as high as 25%. One thing that the economic collapse has proven is how important good credit rating is.

Banks have upped their interest rates to astronomical heights since the economic crisis began. They have also drastically lowered the credit limits for most credit holders. In most cases, those who have bad credit ratings come out worse off than those with good ratings. This is only logical, as banks place more trust on people with good credit and are more willing to give them some leeway. They are also more anxious to keep the business of people with good credit rating.

For those who are in heavy debt, getting out of it in this economy can be very difficult. Paying off high interest rates with very little extra cash and with a bad job market only worsens the problem. Fortunately, people with bad debt can get their interest rates adjusted to more reasonable levels. Again, those who have good credit ratings get off lighter than those who do not.

th-goodThe simplest way to get your credit score high is to make sure that you don’t have any debts in the first place. This means paying off your bills before the deadline. Usually, the more consistent you are at paying on time, the higher your score gets.

One of the biggest culprits in getting your credit score down is your credit card. Make sure to use it wisely. A good rule is to keep your balances low on all your credit cards. Keep in mind that the proportion between what you owe and what is available to you in your credit lines is what dictates your score. Another important issue related to this is closing unused credit cards. Unused credit cards mean unused credit available to you. If you close the card, you will lower your available credit, which will affect your credit score.

It is also not advisable to apply for too many credit cards. Although getting a lot of credit cards increase your available credit, which helps your credit score, you might be labeled as a risky borrower instead, which will lower your credit score.

In the event that you find it difficult to pay off your credit cards, make arrangements with your creditors for a lowered interest rate or some other plan to help you keep up with your payments as soon as you can.

It is important to remember that getting your credit score higher can take time. You will have to keep at it if you want your credit rating to improve.

Date May 11, 2009

Say No To Bankruptcy

701012_68282226According to industry experts, credit card debt is one of the leading financial problems that many Americans are facing today. The economic crisis that began last year has resulted in massive unemployment, rising interest rates and an ongoing economic instability which the U.S. government is still trying to contain. All of these things mean only one thing to the common American, they are now struggling to make ends meet and every “cash drain” has to be plugged. One of the biggest drain that most Americans have to deal with is credit card debt.

To put it bluntly, there is really only two ways that you can deal with credit card debt. You can pay it all up or you can declare bankruptcy. Of the two, the easiest way out would be declaring bankruptcy. It is also the most ruinous. True, declaring bankruptcy can lower your payment rates. It might even absolve you of it entirely. However, in the long run, it can hurt more than it can help. For instance, if you declare bankruptcy, you’ve tarnished your credit record permanently. So, every time you try to take out a loan, credit card companies will check your records and, more likely than not, you will get turned down.

Obviously, the best way to deal with credit card debt is to pay it. Of course, that is easier said than done, especially with the current economy. Dealing with it on your own can be daunting and confusing, to say the least. With the amount of fine print that credit companies put in their agreement forms, you can go blind just looking for how much your monthly interest rates should be. A good idea for those with credit card debt would be to go for credit counseling.

The people in credit counseling are people who have dedicated eight hours a day, five days a week to the task that everyone else is relegating to a few minutes every time the budget comes up, understanding the credit industry. Thus, when you go to them for help regarding your credit card debt, you can be sure that they know several solutions that can ease your credit card burden. Of course they won’t make your debt disappear. They will just make it easier to handle so that you won’t be losing three quarters of your monthly take home pay to credit card debt payments.

Credit counseling agencies will investigate every minute detail of your finances to find out how to help you. They will be looking into your credit history and it really helps if you have a good one. They will consider your monthly take home pay and compare it against your monthly debt payments. Depending on how you rate, they can negotiate a lower monthly rate for you with your credit company.

Date May 1, 2009

Common Sense Your Best Defense Against Identify Theft

It used to be that identity theft meant an unauthorized purchase on a credit card. But criminals have advanced identity-theftalongside technology and suddenly identity theft can involve a stolen Social Security number used for filing false medical claims or applying for mortgages. When you swipe your card at the ATM, gas pump, or in the RedBox for your next video rental, how do you know there isn’t a fake front added to the swiper – capturing your credit card number and pin?

You’ll know when you start getting the bills and experiencing the problems associated with identity theft. The Federal Trade Commission estimates nine million Americans are victims to identity theft annually, but the most extreme identity fraud cases are rare.

For the most part, fixing a case of identity theft will involve closing one credit card account or freezing your credit if you notice a problem. If you should become the victim of extreme identity theft – where a person becomes “you” in order to open new lines of credit or pay for their medical expenses – you can experience a very lengthy clean up process to repair your credit history. It can take months, sometimes even years, to repair credit histories and scores after such fraud takes place.

Security measures are constantly being improved for your credit card accounts, bank accounts and health care records – but you can’t rely on them to fully protect you from all fraud. You need to take some common sense steps to prevent identity theft.

Preventing the problem is easier than treating the problem. Review your monthly statements regularly from all of your financial accounts. If you see anything that looks suspicious, take action immediately. Most of the time you can stop identity theft in it’s tracks if you take action as soon as you see an unauthorized transaction – but if you aren’t reviewing your financial information monthly or even more often – chances are you’ll miss it until it becomes a huge problem.

Look at your credit reports to make sure there is no errors or omissions on your report. Follow steps to fixing any errors.

Shred bank statements and medical records before disposing to prevent garbage pickers from gaining access from your important information. Don’t carry your social security card in your wallet. Change online passwords frequently and don’t make them easy to guess.

Date April 29, 2009

Visa Commercials Promote Debit Cards

Visa has noticed the trend of increased debit card use during this recession. They’re running several TV ads that promote Visa debit cards for everything from buying pizza, going to an aquarium with your daughter on a Tuesday, and paying for products online.

On April 29th, Visa Inc. reported that their branded debit card total dollar volume of purchases surpassed credit card purchases for the first time during the last three months of 2008 – making the debit card transactions processed by Visa 50.4% of their total transaction volume in the same period.

It’s no mystery why consumers are turning to debit cards over credit these days. Consumers are becoming more conscious of their spending, and people don’t want to rack up any more credit bills if they can help it. Debit cards are popular over cash use, because American consumers have a preference for the convenience plastic provides – beginning in 2003, credit and debit card purchases bypassed cash and check purchases.

“A big group of consumers like the discipline that debit spending can bring them, and that is particularly relevant in this kind of environment,” said Tim Murphy.  Murphy looks after MasterCard Inc.’s main payment products.

Unlike credit cards, which allow consumers to charge more than they can afford to pay when the statement comes and carry the balance from month to month, debit cards only let you spend what you have in your checking account. A Nilson Report provides data for the increase of debit cards since 1987:

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Banks are helping to encourage debit card use through the offering of rewards programs. While debit card rewards programs are not as generous as most credit card programs – it’s still a good incentive that helps people choose debit over credit. Credit card use is expected to decline even more, as Americans continue to monitor and rein in their spending habits.

Date April 25, 2009

Canadians Looking to New Credit Card Rules, Too

Americans aren’t the only ones dealing with credit card problems. While President Obama met with executives from flagscard issuers including American Express Co. and Bank of America Corp. to review credit-card policies for fees and interest rate limits, the Canadian government Prime Minister Stephen Harper is responding to consumer groups and lawmakers who insist the banks should have lower rates, and more information for consumers for understanding how the credit cards work. Namely, consumers should know clearly what their interest rates are, and not be faced with interest rate increases for unknown reasons.

Finance Minister Jim Flaherty, will announce new rules for credit cards next week that will include regulations for issues that are unfair to consumers. Some of these changes will include a required 21 day grace period for all credit cards, which means that if the payment is sent within the 21 day window there is no interest accumulated. Currently, grace periods vary from one bank to the next. Banks and credit card companies will need to indicate clear interest rate change information – so that they’re unable to simply increase credit limits whenever they want.

“We have to make sure the system operates fairly, and everybody knows the rules,” Jim Flaherty said during an interview with Washington.

The Bank of Canada cut the overnight rate to a record low of .25% earlier this week, but most banks are charging almost 20% interest on unpaid bills which isn’t giving cardholders much needed relief from the interest-rate cuts.

Canadians, just like Americans, are living off credit cards more frequently than ever before. The neighbors to the north are also experiencing record numbers of people losing their jobs, and will be facing huge credit problems if the trends continue. Canadian bank credit card balances have increased from $41 billion from August of 2008 to $49.9 billion currently – which is an increase of almost 40% in a year’s time, according to a report by Deloitte.

According to Moody’s Investors Service, credit card losses rose to 3.1 percent of the average balances in the third quarter, which is the 7th consecutive period of increases. While still training the United States card losses of 6.6% of balances, the number is still too high.

Up to three parliamentary committees in Ottawa may be holding hearings on credit card and bank issues, with the committee reports being watched closely by Flaherty to determine whether additional governmental regulations will be needed.

Date April 22, 2009

New Study Shows Americans Fear Credit Fraud Most

While many Americans are struggling to survive during an economically trying time, many consumers may be credit-signsurprised to learn what they fear most. Beyond the concerns of war, acts of terrorism, and health crisis on the rise, it a legitimate fear of credit card fraud. Research conducted in early 2009 indicates that as many as 68% of the 1,000 respondents surveyed have a greater fear of being the victim of credit card fraud and having someone access their credit or financial information than of any other problem currently spotlighted in the world today.

As technologies develop and people are required to keep up with the times, credit fraud is a very real danger. So many consumers are already working to pay off their debts and improve their credit rating but at the same time, know they must continue to protect their information and not become a victim of fraud. Knowing that one breach of financial information can cause disastrous results for your own credit, consumers are stressed about staying diligent regarding their credit.

According to the company,Unisys Securities, that conducted the survey  found that “Adults in the U.S. are most likely to worry about fraudulent use of their credit and debit cards and identity theft. Americans are least concerned with their personal safety”. Younger Americans are less concerned about personal and financial safety and indicate they are most concerned with meeting their personal financial obligations. Older Americans (65+) are less concerned with online financial safety because it is likely less of that age category do not shop online or use the internet for other financial transactions. It is the middle-aged American’s who concern for credit card fraud is at the highest.

Fearing credit card fraud is a reasonable concern and consumers need to be aware of what security risks are implicated each time a credit card is used or financial information is supplied for services, such as a loan or other transaction.

Date April 20, 2009

More Focus on Financial Knowledge

With so many consumers struggling with debt these days, there seems to be a major increase in the amount of credit-card-scanorganizations that are working to improve the financial literacy of the country at large. April is dedicated to be Financial Literacy month, with National Credit Education week being observed April 20-26 so there are many launches of new educational programs to help with debt.

Research shows that many Americans are not fully prepared to deal with their own financial issues. Many of the new programs are targeted towards students who are already struggle to pay for their education while still struggling with debt. According to research done by Sallie Mae, the largest student loan provider, more that 84% of undergraduates have at least one credit card, with nearly have of all college students having 4 or more credit cards, each with a balance.

While consumer debt is on the rise, student debt is even more so and there are several program being established to help students prevent debt from taking over their lives as well as learn how to deal with debt they have already incurred.

Programs like Student Debt Alert was launched earlier this month. It promotes the improvement of student loan programs and educates students about Grant Aid. The American Bankers Association started the Teach Children to Save Campaign, which works with younger students in teaching them the importance of financial literacy, including advice on the importance of budgeting and depositing money into a savings account regularly.

Getting an early financial education is an important part of a student’s learning process and will serve young adults well in the future. For non-student consumers, there are websites like Ask Dr. Debt, which has been referred to as the “Dear Abby of Debt” and provides users with tools to help with credit card and debt questions. A database of frequently asked questions helps consumers seek answers to popular questions concerning debt. There are also calculators and other tools to provide help with personal financial management.