When people find themselves with bad credit the most common refrain they hear from friends, family and idiots on TV is “… first thing: cut up those credit cards!” That couldn’t be more wrong. Credit repair, like life, is often counterintuitive, and the role of credit cards in rehabilitating your credit scores couldn’t be more so. Let me walk you through a worst case scenario.
For our scenario lets assume you have horrible credit scores, sub- 500, with lots of write-offs and old, bad debt. The last thing you want to do is cancel any existing credit lines for two reasons. First, if you close them they will continue to report as a debt each month but they will not show any available credit and you need as much available credit showing as possible. Even a store credit with $289 owed with a $300 ceiling is better than $289 owed on a closed account. The second reason we don’t want to close any credit lines that are still viable is that with credit this bad you won’t be able to open any new accounts for a while so you’re best off working with what you have. Paying down that $289 debt to $149 will make a tremendous impact on your credit scores, probably pushing you above the “drop-dead” 500 credit score.
In a real worst case scenario you don’t even have one account active and clean enough to work with, thats when credit cards become a necessity if you want to rehab your credit within your lifetime. There are cards that will approve anyone with a valid social security number but the costs are high. A typical “worst case” card will offer guaranteed approval but your credit line will only be $300 and the fees to get the card will be upwards of $240, which is applied directly to the card. Thus you get a legitimate credit card that will report your good payment monthly to all three major credit bureaus but you will start out with a fat balance right away. The key is to now pay that down right away so that you are showing an available balance greater than half the maximum credit line of the card, in this case less than $149 owed on a card with a $300 limit. This may seem like a very predatory lending practise and it is, however you are not signing up for credit you are “buying” a credit booster. Simply paying this credit card balance off with on time payments will greatly improve credit scores within 3-6 months.
After you’ve had the “worst case scenario” card for 6 months, assuming you haven’t been late or defaulted on any new debts, you will no longer be a “worst case scenario”. You can now apply for a better card that will actually start with some credit. You usually need a job and one line of credit in good standing for 6 months to get a “step-up” card, that is where the “worst case scenario” card comes in. If you can transfer the balance from your first card to the new one that’s great but you don’t want to cancel the first one even if it seems silly to pay monthly and annual fees to keep a card you will never use. You will keep all of these cards until you have truly reestablished your good credit. This new card should have reasonable fees but you will still be paying $60 to $100 in set up fees and you will have an interest rate at the very high end. It doesn’t matter the interest rates because you aren’t supposed to use this card anyway, just let it bouy your credit.
After you’ve had both cards reporting good payment for about a year with low balances you will see an amazing improvement in your credit scores. The reason is because the formula the credit bureaus use to determine who deserves credit is based on who already has credit. The more unused credit you have the more credit lenders want to give you. At this point you should start replacing predatory cards with high annual fees with good cards with zero annual fees.
Building credit through “bad credit credit cards” is not the only way to improve your credit but it is one of the most important steps if you are really in a deep hole.
Posted in
Credit Cards at June 12th, 2010.
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If you are well acquainted with the debt business then you will have noticed that there is a very good trade in credit repair. A good credit rating is essential these days, not only for getting loans, but also for credit cards, renting and many other things. So with the amount of debt on credit cards and loans, there is no wonder that the credit repair industry is doing well. It can be very lucrative and there is defiantly money to be made if you own a credit repair business.
But if you are thinking that you could own a credit repair business, then you need to make sure that you know what the work is and that you will be able to help people. Credit ratings are very important to people and if you are not sure that you give a good service, then you need to learn exactly what is required and to make sure that you are able to do it before you start your business. You need to make sure that you have done all of the work so that you can help people. If you are not a professional then you need to do the right courses so that you know what you are doing.
If you own a credit repair business then you will, be giving people advice on how to make their credit better. You always need to make sure that you give good advice as the people that are asking for your help may well be in a very bad position. Often they will be trying to repair their credit so that they can apply for a loan on a car or a house. A lot of Landlords will also not rent to anybody that has bad credit. So you need to be both helpful and efficient so that they can get the best from you. If you do well for them then they may well recommend you to others that are having problems with their credit history and this can be a good way to build up your business.
If you are thinking that you should own a credit repair business then you need to make sure that you are in a good position to help your clients. That way you will have a good business that should be profitable and you will also help the people that need their credit to be repaired.
Posted in
Business Credit at May 29th, 2010.
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When you look around your neighborhoods, it’s hard to find any good news. Friends and neighbors may have lost their jobs or be on short-time. There are foreclosed properties on every street. Shops and businesses have been closing down with increasing frequency. These are the signs of a real recession where unemployment and poverty stalk the land. The cause of all this pain is not hard to find. We have all been living beyond our means. When the banks and credit card companies offered us more money to borrow, we just took it. Why bother to save when the value of our homes only goes up? Let’s plan for our retirement by borrowing cheap money and buying stocks and other more risky investments. No-one ever loses if they follow the advice of the credit rating agencies. Well, we know better now. What goes up can also come down. What is given a triple A rating can be junk tomorrow.
In the midst of all this chaos, the credit card operators have been cutting back on the borrowing limits. This has forced pain on us for two reasons. Firstly, finding the money to pay down our debts more quickly means redesigning the family budget. Sacrifices have to be made. Secondly, the way the credit score is calculated depends in part on the extent to which we use the credit cards we have. If the limits are reduced, we look like bad risks because the amount borrowed is closer to the limit. We have less money available to borrow and cut down on card usage so we can repay faster. Put the two together and the score falls. This is a direct criticism of the methods used to calculate the scores. It produces a fundamentally unfair result during a recession.
This would not be a problem if the credit score was only used by banks and credit card operators. But it’s also used by companies to help decide whether to employ you, by landlords deciding whether to rent to you and by insurance companies deciding whether you are a responsible person. National figures show more than half all insurance companies use credit scores as a key factor in deciding your premium rate. This is extraordinary. There is only one possible effect of being in debt when it comes to the way in which you drive. If you cannot afford to repair your vehicle, you drive defensively to reduce the risk of an accident.
Some states like California and Massachusetts have banned the use of credit score for this purpose, but they are a minority. They cite discrimination as a reason for the ban. The majority of the population without access to banking services and credit cards fall into minority racial groups. When they do not have a credit score, they are forced to pay a higher premium simply because of who they are, not how they drive. So, when you are looking for affordable cover, get the maximum possible number of car insurance quotes to find the best policies. If you live in a state which refuses the regulation of the car insurance market, contact your local government representatives and tell them how much pain you are suffering because of this unfair use of credit scores.
Posted in
Articles at May 23rd, 2010.
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In the current financial climate, many of us are looking for ways in which to reduce our debts and save money. If you’re looking for a new UK credit card and you have balances left to pay on other credit cards or store cards, you may want to consider applying for a credit card that allows balance transfers.
What is a Balance Transfer?
Making a credit card balance transfer means that you transfer your debts with other credit cards and store cards to your new credit card. You simply provide the details of your other credit cards and store cards to your new credit card provider, and the balances will be transferred to your new card.
The Benefits of Balance Transfers
The main benefit of a balance transfer is that it can save you money and therefore allow you to clear your debts in less time. In order to make the most of a balance transfer facility, you will need to look for a card that offers 0% balance transfers. This means that for a specified time, you won’t be paying interest on your transferred balance.
This doesn’t mean that your monthly payments will be cheaper, as you will have to pay at least the minimum monthly repayment set by your card provider. However, it does mean that your money will be going towards paying off your debt, rather than paying interest, so this will mean that you can pay your balance off quicker.
A second benefit of a credit card balance transfer is that, as you can transfer the balances from a number of credit cards and store cards to your new credit card, it can make it easier to keep track of your finances.
Balance Transfers – Things to Look For
Here are some hints and tips on what to look out for when choosing a credit card in order to transfer your balances from other cards:
· Make sure that you choose a card which offers a long 0% balance transfer period. Different providers offer different 0% interest periods on balance transfers, so compare them before applying for your new credit card.
· Check to see what fees you will be charged for transferring any balances to your new card. Most providers will charge a percentage of the transaction amount, so compare charges before choosing a credit card.
· Check to see what the annual percentage rate (APR) is on any card that you’re considering. When you have reached the end of your 0% interest period, you will need to pay the card’s standard APR on this balance, so make sure that it is competitive.
· Make sure that you can afford to pay at least the minimum monthly repayment each month, as if you pay your bill late, your credit card provider may cancel your 0% interest balance transfer arrangement. Check the terms and conditions applicable to any credit card before applying, as breaching them may also result in cancellation of the 0% interest deal.
· Make sure that you know the order in which your card provider will apply payments to your account. Most card providers will use the payments that you make to pay off your transferred balance first, so if you make any new purchases on your card, they could prove to be expensive. If you do intend to use your new card to buy things, look for one that offers a 0% interest on purchases period.
Posted in
Credit Cards at March 31st, 2010.
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If you are the one of the thousands people who can not hold your desire back to shop all the things you want, you have to learn to control your expenditure because you may have many kinds of the unexpected things that will perforce you to pay for some amount of money. So, how to control it in order you can save much your money for the other more useful things? With the Prepaid Debit Cards, you may be able to control your expenditure because you can not buy all the things that will not be useful for you.
So, with the prepaid card that you have from many kinds of companies, you may practice your self to save your money and use it for more useful and more important things. When you are going to buy abundant things, you have to think that you may not buy carelessly. Supported with the ChexSystems, you will be able to know how much the money you have spent for your daily necessary. Do not be surprised if sometimes you will find the bad credit reports of your credit cards. Perhaps you will be very confused how to repair and get the best solution for your problems.
And how to overcome the bad credit loans which is caused by the bad credit card reports is not difficult anymore because you may have many kinds of services from the websites which provide you the services about the loans. All you need about your loans problem will be served well and you will get the satisfaction soon. You may search all the information about the Bad Credit Loans services in the internet. There are many websites which will provide you the best facilities for that.
Posted in
Info at March 6th, 2010.
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