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480-502-5554 |
The CARD Act includes a provision that requires creditors to include on their statements how long it would take to pay off the debt if making only the minimum payment, including the interest that will be accrued. It also has to include what the payment should be if one would pay off the debt in three years, including interest, and then how much would be saved in interest if it’s paid off sooner.
“A lot of people think the math is wrong. They don’t realize it will take two decades to pay (the balance) off if they only pay the minimum,” said John Ulzheimer, president of consumer education for Credit.com in an article on Yahoo Finance. “That box was a clear win out of the CARD Act.”
That information may be quite a shock to many people, but it may push people into a greater awareness of their finances and how to manage them. You can get an even clearer financial picture if you combine this information from all of your credit cards. Also look at the balance, interest rate, due date, and minimum payment for each card.
Once you can see the whole picture, you’ll probably want to start paying your cards down to avoid spending that extra amount on interest. Look at the option of paying off the card with the highest interest first. Can you transfer some of the balance to a card with a lower interest rate? If so, be sure to look at what the balance transfer fee is and calculate that against the interest you’d be paying. If you come out ahead, go ahead and do it.
You might also want to look at paying off your lowest balance first. It will reduce the number of cards you have to keep track of, make you feel like you’re accomplishing something and allow you to put the amount of that payment toward a higher interest card.
If you find it overwhelming, or think it seems impossible to pay off what you owe, you might want to contact Mick Bernard a fully trained and certified credit expert. Trained counselors know the “loopholes” and hidden secrets to FICO and how to get further than dispute letters will get you. They know how to help you raise your credit score, and settle collections and debts.
As a result of the credit crisis and recovery act initiatives we’re seeing some of the lowest interest rates in history. Although interest rates have been low at other times but the recent bubble bursts has created a very unique situation. As the economy naturally began to flatten out, prices across several market sectors in have been lowered a great deal as well. Borrowing to finance a new business, a home, a new car, or just about anything else is just about as “inexpensive” as ever, but does this make now the perfect time to take out new loans and more debt?
Credit industry experts have warned that although today’s current economic conditions may make it tempting to finance new purchases, it is important to remember to avoid the same mistakes many Americans have made in the past. Now may be the time to continue to save more, pay down debt, and work on repairing your credit score instead.
Job growth prospects remain slim. If you haven’t already lost your job, there is still always a possibility that you may lose yours and be left without one for a long period of time, like millions of other Americans. With your current job, you may be capable of taking advantage of the current market by taking on new loans, but if a job loss arises, you may become behind in payments or even have to default on your loan, badly damaging your credit. If you’re currently unemployed already, there is a good possibility that taking on new debt will not be worth it.
In addition, obtaining credit can be much harder today. If your credit score is less than excellent, you may not qualify for a new loan as you would have easily qualified in the past. Even those who are looking to refinance a home now will generally need at least 20% in equity in the home as well as stable income.
If you do decide to take on a new loan to take advantage of today’s climate, make sure you will be able to maintain good credit. If you do need to borrow now, but your credit score is leaving you with less than the best interest rates, talk to Mick Bernard, in order to work towards obtaining the best possible rates.
Most Americans think they know the majority there is to know about credit cards and the credit industry. When it comes to credit cards, however, there are actually several common falsehoods that have actually been passed from card holding generation to generation. Here we’ll discuss some very common beliefs and practices when it comes to using a credit card – and believe it or not, many of them are purely based on myth. If you get caught up in some of them, you’re credit score could actually suffer for it.
Firstly, many Americans believe credit card accounts aren’t open until activated. We receive a card in the mail that has a sticker with a toll free number on the back. Most of us think that this card is not part of our credit report or credit ratio until we decide to pick up the phone, dial the number, and give the okay to activate the card. No so, say credit industry experts! As soon as you apply for the card, your credit reports are pulled and the account almost immediately shows up as active on your credit report. Simply applying for a credit card can even damage your credit score.
Another common belief among consumers is that if credit card bills are paid in full and on time, there is no need to worry about the credit cards effect on your credit score. Credit ratio basics prove this belief to be a myth, one that blissful unawareness of can hurt your credit score.
Remember that paying your balance on time and in full is great for your finances, stress level, and even prevents large dings to your credit score but there is another part of the equation you must remember. Even if you’re doing both of these things, you still may be using too much of your credit limit. Your debt to credit ratio which consists of your total credit limit (across all cards) and how much of that credit you use makes a difference within your FICO score. When you hear “be wary of maxing out your cards” even if you pay on time, this is why. When in question about why you have a low credit score/bad credit or how to repair your credit, contact Credit Strategies at 480-502-5554.
Credit Strategies
480-502-5554 * www.911CreditPro.com * Mick@911CreditPro.com
Debit vs. Credit
Is there Really a Difference?
Plastic, plastic, plastic…with a VISA or Master Card logo, aren’t they really all the same? Absolutely not! Credit cards and debit cards can be used in the same way with most merchants; however they are very different. Credit cards use a line of credit issued by a bank and debit cards are connected to your checking accounts.
There are many advantages and disadvantages for both credit cards and debit cards. You need to understand the differences for both cards to determine which type of card is best for you. You may decide to use both a credit and debit card for different types of purchases. Think about using credit cards for large ticket items and items for which you want more protection and use debit cards as you would use cash. Credit cards can get you into trouble if you spend beyond your means, which also impacts your credit. Debit cards can get you into problems if you spend more than is in your account.
Credit Cards
A credit card is like a promise to pay back your card lender at a later date. You have a closing date for your account and are sent a bill that you pay within 22 days. Since you do not pay immediately for your purchases, you have the use of the money until you are billed; this is called a “float.” You then have two choices, pay the amount in full or carry a balance. If you carry a balance, you must pay interest. Credit cards are accepted at most businesses worldwide.
Credit Cards can be used without a PIN number. Therefore, the card number can easily be stolen and used for online purchases without the actual card. You have more protection with a credit card for fraud and errors. When you dispute a charge, the card issuer removes the amount until the investigation is completed.
Credit cards are reported to the Credit Reporting Agencies and can help build your credit history. This can raise your credit scores as long as you pay on time and keep your balances low.
Debit Cards
A debit card is like cash and is linked to your checking account. The purchase amount can be taken out of your account immediately or up to a few days. It is important to know how much you have in your account and keep track of your spending by recording each purchase. Overdraft fees are charged for insufficient funds for both debits and checks. A PIN number will give you protection and is required at ATMs.
Incorrect withdrawals are not refunded until after the bank investigates which can take a day to a couple weeks. With a debit card, you have a short time frame to inform the bank of disputes for coverage. After 7 days, most banks are not required to cover the cost of the dispute(s).
Debit cards are not reported to the Credit Reporting Agencies.
Click here for a Credit Card vs. Debit Card Advantages/Disadvantages list
Myth #20 “The More Money You Make, The Higher Your Credit Score”
Fact: The money you make has no impact on your credit score. Credit scoring models do not take your income or wages as a factor in your credit scores. You are not to be discriminated based on your income or wages.
Many people have beliefs about their credit reports that are just not true. In fact, there are just too many credit report myths floating around and on the internet that are simply not true. One of the most prevalent areas of misconception is what is and what is not reporting on your credit reports.
Your income does not report on your credit report, at least it hasn’t since 1990 when the bureaus went through the exercise to purge it. As long as you keep all of your financial obligations paid, the amount of money you make is not relevant to your credit reports and scores. You could have an 850 score and be unemployed.
To explore 5-Key Strategies to Maximize Your Credit Score, click here.
Call Credit Strategies Today at
480-502-5554
Legal Disclaimer:
The advice provided is for informational purposes only. It is not
to be used as legal counsel or legal advice.
Myth #19 – My Credit Profile is Merged with my Spouses When I Get Married
FACT: Credit profiles are never merged
Credit, credit reports and credit scores usually are not the first things couples are concerned about when they decide to get married. However, it’s always a good idea to discuss your past credit history beforehand. Less than perfect credit can impact future joint purchases and is an important factor towards finances.
When you get married, here are some misconceptions about credit reports:
Credit reports do not merge together
Credit reports are not erased once married
Credit scores do not change because of marriage
Your credit reports are always maintained at the individual consumer levels. Your credit report is usually located using your first and last name, address and social security number. Only loans and credit cards applied for jointly will appear on both spouses credit reports. Individual accounts will not be on a spouse’s credit report. If either person includes the other as an authorized user on their credit card, this will be reported on both credit reports.
After you marry, your individual credit file is not deleted. Your credit report should be updated to reflect the new name (if applicable) and the combination of names that you have used when you applied for credit. Your names will be shown in the AKA (Also Known As) section of your report. For example if Mary Jane Smith is now married to John Jones, she could have AKA such as Mary J. Smith, Mary Smith, Mary J. Smith, Mary S. Jones, etc.
Your credit score doesn’t change as a result of your marriage. Your credit score can change based on your payment and purchasing behavior, opening new accounts, etc. In addition, your credit score can decrease if your spouse adds you to an existing account if the account is maxed-out or has a bad payment history. Your score could improve if you are added as an authorized user on an account that has good credit history. Opening a joint account could impact your score by adding another new account to your credit reports. Applying for new credit will also cause the creditor to check your credit, resulting in a new credit inquiry which could negatively impact your credit score as well.
Whenever you apply for a loan jointly such as a new car or mortgage, both credit reports are reviewed by the lender to make the credit decision. If one spouse has less than perfect credit, this can impact the interest rate you pay, amount of down payment and whether you qualify for the loan.
When deciding to get married, discussing each other’s credit history may not be the first thing couples want to do; however, it should be discussed so there are no surprises down the road.
Call Credit Strategies Today at
480-502-5554
Legal Disclaimer:
The advice provided is for informational purposes only. It is not
to be used as legal counsel or legal advice.
Myth #18 “UnpaidStudent Loans Disappear After 7 Years.”
FACT: Past due student loans will not fall off your credit report after 7 years. For those who have not taken their student loans obligations seriously, they are now paying the price. Under most conditions, student loans are not forgiven and cannot be included in a bankruptcy. These loans can also stay on credit reports much longer than normal default debt.
Think Twice Before Applying for Your Student Loans
Students are emerging from college mired in debt that cripples their ability to pay bills once they graduate. Student loan debt, if not prepared for carefully, can limit a graduate’s ability to accept their dream job if it is accompanied by a low salary. Parents and students should sit down at the beginning of college and do research into future earnings in the student’s ideal job field. A good site to check out is: www.Payscale.com.
Some experts advise that your (or your child’s) TOTAL student loan debt should not exceed what your student can expect to make in their first year out of school. However, be sure to take into account unpaid internships, low starting salaries, volunteer experiences and possible unemployment when planning this far ahead.
Remember, starting 6 months after graduation, the student loan bills begin to arrive.
The Health Care and Education Reconciliation Act of 2010 went into effect on July 2, 2010. This newer Act made changes to federal student loan financing and paying them back, but doesn’t apply to loans prior to that date. There is a provision in the income-based repayment plan that applies to those with government student loans. If your total student loan debt is the same or greater than your annual salary, you may pay less than 15% of your income. If you are earning below 150% of the poverty line, you will pay nothing until your finances improve.
Surprisingly federal funding for financial aid has increased in recent years. We were surprised to see how beneficial filling out the FAFSA was for us when our daughter was accepted to college. Federal aid does require the FAFSA form, which can be time consuming and complicated to fill out. Many of our friends told us not to bother as it was a waste of time. We chose to listen to the college Financial Aid Department and logged onto www.FAFSA.gov. It was a time-consuming effort to complete but the few additional hours ended up paying off substantially. A few months later, we received a letter from the college stating she qualified for grants/scholarships which were not loans to be paid back but actual free money towards her tuition! In addition to this money, she received low-interest rate loans through the government. I encourage you to complete the FAFSA, it could be beneficial for your son or daughter.
For some student, student loans may be the only account on their credit reports. It is important to make sure you comply with the terms of this loan. Student loans are to be taken seriously and you should make every effort to pay them or contact the lender to make other payment arrangements.
Lenders have recourse if you default on student loans. The most common recourse is your tax refund. The IRS can take your federal income tax refund as well as your state income tax refund until the loan is paid.
Other means of lenders: paycheck garnishment, government and private lenders can sue you, you will not be eligible for federal loans such as FHA or VA loans until your loans are paid and eventually your social security benefits could be garnished. There is also no statute of limitations on the age of the student loan debt regarding repayment.
If you are in need of assistance with your credit and credit score, we offer a complimentary 15-minute telephone consultation simply by calling our office. We also offer an in-house comprehensive Credit Consultation where we will review and analyze your credit reports and assist you with a personalized action plan to maximize and manage your credit scores. You will leave with a new understanding of your credit profile and new path towards a higher credit score.
Call Credit Strategies Today at
480-502-5554
Legal Disclaimer:
The advice provided is for informational purposes only. It is not
to be used as legal counsel or legal advice.
Credit Card vs. Debit Card
Advantages/Disadvantages
CREDIT CARDS
ADVANTAGES
Better Protection
Reports to the Credit Reporting Agencies
Money Float
Defer Payment
Rewards
DISADVANTAGES
Easy to Use and Incur Debt
Lake Payments can Damage Your Credit
Pay Interest on Unpaid Debt
Easy to Use by Thieves
Debit Cards
ADVANTAGES
Pay as You Go/Stay Out of Debt
Easy to Budget
PIN Number for Protection
DISADVANTAGES
Less Protection for Errors or Disputes
Money Not Returned until Investigations Completed
Short Timeframe to Inform Bank of Disputes
Does Not Report to the CRA’s or Help Build Credit
Can Be Charged Excessive Overdraft Fees
PIN Number can be Stolen
Myth #17 “I’m not buying a home so I really don’t care about my credit
and credit score.”
FACT: Your credit score is used for much more than applying for a mortgage and credit card interest rates. A poor credit rating could even cost you a job or a promotion. Most of the 100 largest personal automobile and homeowner’s insurance companies use your credit information to underwrite new business. It can be used to decide to insure you and determine the rates charged. Many times it can be as much as 35-40% more.
Credit Tips for Living in the Real World
For those of us who are living in the real world, things happen. It is easy to confuse due dates, forget to mail a check or even come up short on funds. The important thing is to know what to do and how to manage those small mistakes before they sink your credit entirely.
Here are a few tips to manage your payment history:
1. If you are having a rough financial month and have to miss a payment, make payments on the largest accounts, like your mortgage first. Missing a $50 credit card payment will hurt you less in the long run than a missed mortgage payment or $500 car payment.
2. If you have made the rare late payment on an account in the past, call and ask them to remove the late payment as a courtesy for being a loyal or long-term customer. Be sure to point out your good history with the company and the recent on-time payments. Ask them to consider the late payment as an exception to the rule. If they say no, call back and try to get a different representative on the phone.
3. Check your credit report for any accounts that are marked “past due.” The more recent the late payments are, the more damage they can do to your credit score. When working your way through your credit report, this is a good place to start.
4. Be careful with collection accounts. Paying a collection account can often lower your credit score. For older collection accounts, many times creditors can no longer file a lawsuit against you to reclaim their money.
If you find yourself needing assistance with your credit, Credit Strategies offers a complimentary 15-minute telephone consultation simply by calling our office. We will review your credit report with you, identify what is causing your score to suffer and discuss strategies to increase your credit score. If you are interested in scheduling your complimentary credit consultation, give us a call today at 480-502-5554.
Legal Disclaimer:
The advice provided is for informational purposes only. It is not
to be used as legal counsel or legal advice.
