The Importance of Understanding Your Credit Report and Credit Score
May 14, 2012
There are many good reasons why you should understand what is on your credit report and what your current credit score is. For example, if you are trying to rent an apartment there are credit checks that are performed on possible tenants by the landlord. If you have bad credit or a lot of late payments, you may not be able to rent an apartment or house. Your credit report and credit score are also very important factors when you are trying to obtain a mortgage to purchase a property. Lenders will look very closely at both of those aspects to determine your pre-approval purchase price and interest rates.
Another important reason to fully understanding your credit report and credit score is because of today’s cell phone contracts. Cell phone companies like Verizon or AT&T usually check your credit before you can sign up for their service. They, like many other companies that perform a service, want to ensure that you will be able to pay your bills on-time every month.
Credit card agreement changes, such as Annual Percentage Rates, are another reason why you need to know your credit score and comprehend what’s on your credit report. Those who issue credit to you, for example credit card companies or lenders, will definitely run a few credit checks. If your credit score is low and you don’t have the best credit history, then you are looked upon as being high risk and they may alter the terms of your agreement or give you higher interest rates. Car insurance is another area where credit scores are checked. If they see that your credit score is low, they may also look at you as being high risk and can raise your premiums.
It’s important to note that by understanding your credit report, you can catch any reporting mistakes that have been made–mistakes that can be quite costly financially and can ruin your credit reputation. Mistakes in this area have been increasing as of lately and they are usually rather easy to fix. Free copies of your credit reports can be found on several online websites like www.annualcreditreport.com.
In addition, you can also learn from your credit report how much you can afford; especially when shopping for a home. When you are looking to purchase a property and will be obtaining a loan from a mortgage lender, they will look at your credit report and credit score to determine your pre-approval price or your “purchasing power”.
Also, your credit score may be much higher than you anticipated and that can be a wonderful feeling. But if it’s not so good, you might be able to take some steps towards improving it. Some financial experts suggest checking your credit report regularly, every 3-6 months, and if you find things on the report that are unclear or wrong; you should work quickly towards clearing up the problem.
Keep in mind, if you find that you have a low credit score, you will have to pay higher credit card interest rates, loan interest rates, and it can also lessen the likelihood of obtaining a school loan, renting an apartment, acquiring a new job position, or even having certain medical procedures performed.
If you just started having problems with your credit or if you’ve had problems with your credit in the past, a credit counseling agency can be of great help. Advantage CCS offers a Credit Report Review service that will help you grasp a better understanding of your credit report and credit score. The certified credit counselors may also be able to provide some action steps and suggestions on ways to improve your credit score. However, be careful of non-accredited agencies that say they can immediately take care of any problems you have with credit and instantly raise your credit score. There is no fast fix when it comes to your credit and if it sounds too good to be true, it probably is.
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How to Handle Student Loan Debt Collectors
May 9, 2012
When you default on a student loan, the government will usually hire debt collection agencies to collect on these loans. It’s not quite as straightforward as you might like to think, to try and get this loan to just disappear. The collection agencies are sometimes known to twist their words around to get what they want, while leaving you confused and hanging. Everyone needs to be aware of their rights and how to handle these debt collectors. Knowing this information will help you avoid many of the pitfalls associated with dealing with these companies.
Thanks to the Fair Debt Collection Practices Act (FDCPA), a Federal loan collector’s word is bound by the law. Anything they say should be taken literally, and at face value. However, always be careful when they say things that seem too good to be true, their words might be contorted to the point that you don’t understand their true intentions. Debt collectors are NOT allowed to make false claims, such as their ability to seize your house or to have you arrested. You should know that if a collector does happen to make false claims then you have the right to speak with the FDCPA and let them know of the issue. The FDCPA was set up to eliminate abusive practices in the collection of debts and to provide consumers with an avenue for disputing and obtaining validation of debt information.
Your loan from the government is a private debt that nobody can legally disclose any information on regarding the loan. This means they are prohibited from disclosing any information to 3rd parties or to immediate family members that relates to your loan, such as the amount owed. If you are represented by an attorney, then debt collectors are not allowed to have communication with you. Everything they have to say has to go through your attorney first. If you don’t have an attorney but still do not want any communication at your place of work, you can request it and they must comply. Simply submit a “Cease Communication Request” and reference it to your place of work and the collectors will have to acknowledge it.
Always know that you have the right to keep your life harassment free. Harassment includes but is not limited to: the use of profane language, any threats of violence, refusal to tell you who they are or if they call repeatedly several times in a single day. You have the right then to turn them in and put a stop to it. While the government does want the debt to be repaid, they wouldn’t have someone harass you over it. There are isolated incidents where this has happened as well, but it’s usually worked out well for the person who was harassed, thanks to the U.S. Consumer Financial Protection Bureau that was created in 2010.
With this information, you can know all of your rights and negotiate your debt in a reasonable fashion. Just remember that you aren’t allowed to be harassed, and if you are than you have the right to prosecute. You also have the right to privacy, so if they share your debt information with your employer or any 3rd party, then you can prosecute them. Last but not least, always make sure to take what a debt collector tells you as literal. If you have the ability to record the phone conversation, you should do that. They can be pretty clever in the way they word their sentences to get you in trouble, and most of them work on a commission basis or even receive bonuses for getting someone to agree and sign papers.
If this is all way too much for you to handle, then try to find a lawyer you can trust and who is reasonably priced. All communication and information has to go through them, and it will make your life a lot easier. You should reach out for help at the first sign of trouble when dealing with debt. The more you try to ignore it or pretend that it’s not a big deal, the worst it will get. The best course of action is to face it head on and work really hard to fix the situation. You’ll thank yourself in the end for being so diligent.
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Pros and Cons of Prepaid Debit Cards
May 8, 2012
Debit cards have become a commodity as many consumers choose to carry less cash and stick to carrying plastic instead. Prepaid debit cards are popular for many individuals because of the convenience of having a debit card but knowing they cannot overdraw from their checking account with it. Before running out to sign up for a prepaid debit card, it is important to understand the benefits and drawbacks of owning one.
Pros:
One of the biggest benefits in signing up for a prepaid debit card is that there is no credit check involved. This is especially beneficial to people with bad or poor credit. A person worried about overdrawing money from a checking account can be confident in knowing that once the money is spent on a prepaid debit card, any further transaction would be declined. This allows an individual to miss out on incurring any fees due to an overdrawn account. Overdraft fees for most banks average around $35.00 per overdraft charge. If you’re just purchasing a coffee and overdraw on your checking account that coffee could wind up costing you around $37.00
Prepaid debit cards also have another great benefit because it is not always safe to carry cash on hand all the time. Using a prepaid debit card is the same concept as paying for something with cash. If the prepaid debit card is lost or stolen, someone cannot use it without knowing the pin number for the card. The fix is as simple as ordering a new card because the money is still available in the account.
Cons:
So far, it sounds like having a prepaid debit card can be a great thing, but there are some negatives to owning a prepaid debit card. A huge drawback to a prepaid debit card is the fees associated with the card. Almost all prepaid debit cards have fees for activation, monthly service charge fees, and ATM withdrawal or transaction fees. This can cause a person to incur some hefty cost that would not otherwise be associated with a regular bank checking account debit card.
Most people who sign up for a prepaid debit card do so because of their credit problems. Unfortunately, having a prepaid debit card does not help with your credit score or credit history. Credit reporting agencies do not include prepaid debit cards when calculating your score. These prepaid debit cards will not help a person who is trying to rebuild their credit.
Do Some Research and Find out what is Right for You:
Regardless of a person’s needs for a debit card, knowing exactly how a prepaid debit card works is very important before obtaining one. Some people benefit greatly by having a prepaid debit card. Others would be disadvantaged to using a prepaid card over a regular bank debit card that’s linked to their checking account. Weighing your personal options will be the best plan. Remember to do some research before you decide which option is the best fit for you. There are many prepaid debit card companies out there, make sure you are getting the best one with the lowest fees, if that’s the kind of card you are looking for.
If you have a prepaid debit card instead of a regular bank debit card, we’d love to hear your feedback and reviews on it. Tell us why you love your prepaid debit card or why you don’t love it and if you want to get rid of it. We like hearing from our online community and your input is valuable to our readers. Thank you!
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How many points does your credit score drop if you’re late on a payment?
May 2, 2012
This is one question that has been asked time and time again. When hardships and struggles get in the way, a late payment is bound to happen. So how many points will your credit score drop if you happen to miss one payment? Well, that number depends on a few different factors. We will try to give you some insight into the credit-scoring system but it is difficult because credit scores are calculated using a long-secret formula created by FICO.
Some light has been shed on the mysteries of just how our credit scores are affected by different things. FICO has disclosed how certain things like late payments, debt settlement (not to be confused with debt consolidation), a foreclosure and/or a bankruptcy could affect your credit score.
Let’s take a look at how FICO might calculate the hit your credit score would take for a 30 day late payment on your mortgage. We will use three credit scores of 670, 720 and 780 as our examples. Keep in mind that a 670 score is considered average while a 780 score is considered to be excellent.
These examples are as follows:
• People with an average credit score of 670 could see their score drop down to around 520 or 530 after a 30-day late payment. That could be a possible drop of 150 points.
• Consumers with a score of 720 could see that score drop down to 580 or 590 after a 30-day late payment. That’s a possible drop of 140 points.
• People with a credit score of 780 could see their score drop as low as 620 after a 30-day late payment. That’s a possible drop of 160 points!
You might be surprised when you find out that the person with the higher credit score (780) is likely to take a much bigger hit on their score for everything from a single late payment to a bankruptcy. However, no two consumers are alike so the point deductions will vary, even between two people who have the same exact score of 780. The FICO point system takes into account any indication that you’re in over your head. Things like late payments and maxed out credit card limits are considered warning flags, meaning that you might be headed for financial trouble.
If you have a low credit score, it’s important to work hard to try and raise it. Credit scores have become increasingly important if you need or want to borrow money, obtain a car loan or purchase a home. Credit scores can also affect your ability to do simple things like buy a cell phone or how much you’ll pay for insurance. Applying for a new job could also be hampered by a low credit score. There are many employers who will look at your credit score before deciding whether or not to offer you the job.
Try to keep your payments on time, even if you can only make the minimum payment. If you are unable to make your minimum payments on time, are struggling with debt or possibly facing a foreclosure, get professional help immediately. You can contact the certified counselors at Advantage CCS for reliable and reputable help when exploring your debt relief options.
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April 30th is National Honesty Day – Be honest about your financial situation!
April 30, 2012
Today is National Honesty Day and not many people are aware of that. One of the top Twitter Trends for today was #NationalHonestyDay. Here in the United States, National Honesty Day was invented to celebrate the truthfulness of a pair of past presidents. You may have heard of them, George Washington and Abraham Lincoln. Good old Honest Abe could teach us a thing or two about being honest and truthful.
One of the many numerous things people lie about is their personal financial situation. Nobody wants to go telling everyone they know that they are in debt. Even family members are more often than not left out in the dark. Let’s change all of that, starting today!
Debt can be hard to handle and even harder to talk about. You can’t keep burying your head in the sand and just hope it goes away. Pick yourself up and face it head on. Reach out to friends or family members and ask them for their help or advice. You never know, they could have been in your shoes before and tell you about what worked for them.
Discussing your debt with someone else can be really helpful and therapeutic. You can shed off your anxiety and worries to some extent by being open and honest about your situation. Remember, that communication is the key in any relationship. Remain open to your spouse or significant other about any financial matters.
When you know that debt is a problem, it’s a good idea to discuss your debt worries and fears with someone else and remember to be honest. The most significant and important thing you can do is to get professional debt relief advice from a reputable debt counseling agency. Certified counselors will listen to your story thoroughly and help you deal with your situation while using their professional guidance. They can help you create a realistic budget and a new spending plan. The counselors can also offer options such as a debt management program or bankruptcy if need be.
So when you are getting ready to tell a lie today (even a little white lie), think about National Honesty Day and don’t let that lie slip out. If we could all be honest every day of the year, there would probably be a lot less drama and stress in our lives. Take that weight off of your shoulders and tell someone about your situation.
Advantage CCS is always here to listen and to help you. We’ve helped thousands of people, from all walks of life, get out of debt and become free from that burden. The Agency enlightens and assists consumers each year through free, confidential credit counseling, debt management programs and various community education workshops. Reach out to us today and we will listen!
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