Discover Debt Freedom!

The lending industry has changed dramatically in the last twenty years. Previously when you wanted a loan, the loan officer would look at you as a person and see how much money you make, what debts do you have and what expenses you have to determine if you would be able to pay the loan back. Now of days it’s been figured into a science and your ability to repay a loan has been reduced to a number. Yes, it’s your credit score, and you should get a free credit check on the internet today if you haven’t already done so.

A lot of people focus too much on their credit score. They know that they will get better loans and have a few options that other people do not in the financial world. When you don’t borrow a whole lot of money if any, it becomes much less of an issue. Even if you could care less what your credit score is, you should still look at your credit reports at least once a year otherwise you could find yourself in some hot water.

The U.S. Public Interest Research Group did a study did a study of credit reports, and what they found was shocking. 29% of people had serious errors on their credit report that could result in the denial of credit. Another 41% had some sort of incorrect person information, and 20% were missing major items that demonstrate the credit worthiness of a consumer. Overall the survey found that 70% of people had some sort of mistakes. Statistically, your credit report has an error on it. If your credit report is wrong, there’s a chance your credit score could be much lower, making it so you get much less desirable loans and could make it so that the next time you want to rent an apartment, that you could be denied from doing so. The only way to get these mistakes fixed is to get a free credit check on the internet or the phone and clean up those mistakes.

If your identity has been stolen and someone is fraudulently opening accounts in your name, the easiest way to find them out is by pulling your credit report. The sooner you find out about an instance of identity theft, the better. If you catch them early, you’ll have to do a lot less leg work to clean up the mess that the identity thief creates.

There are a lot of good reasons to check your credit report, especially since it doesn’t cost anything. If you want to get a free credit report on the internet, the only one you should go to is annualcreditreport.com. This is the one sponsored by the three major bureaus and doesn’t come with any strings attached. A lot of sites offering free credit reports will enroll you in some service and make you cancel it to not be charged a fee. With Annual Credit Report, there are no fees, and no surprises. You can check your credit report once a year with Annual Credit Report and should do so each year.

Be sure to get your free credit check each year, otherwise you could find yourself applying for a mortgage only to be denied because of some egregious error and be stuck in some sort of sub-prime loan, or worse yet, have your identity stolen without you even knowing about it until some collector calls you asking why you don’t pay your bills.

The idea of a credit card is a peculiar notion that has only come about in the last fifty years. Instead of paying for purchases with wealth that we already have, we are now borrowing money for every day purchases, even things as quick trip to McDonalds or a bottle of pop from a vending machine. Debt has become a societal norm and it’s here to stay. There’s nothing inherently wrong with debt, however when debt is misused, it can become a major financial nightmare. Credit cards are one of the most abused and misused financial products on the market. Here are ten facts that the credit card companies would prefer that you didn’t know.

1. Universal Default Provisions – Even if you are making your payments as agreed with one credit card, but happen to be late on another payment or if your credit score happens to go down a bit, the credit card company could jump your interest rate by upwards of an additional 20%. You could be paying around 14% for a decent credit card, but if another bank thinks you missed a payment on an entirely different loan, your rate could jump upwards of 35%!

2. Very Few Pay Their Cards Off – According to PBS Frontline, there are 35 million Americans who only pay the minimum payment on their credit cards. These people could be paying for their everyday purchases and associated finance charges for decades before paying it off. By federal law, the banks only have to require you to make a minimum payment which takes care of all the fees per the month and one percent of the principal balance. Paying this minimum amount will cause many Americans to pay three or four times what they should have for a product

3. There’s No Maximum Interest Rate – Credit card companies specifically state in just about every card holder agreement that they can change your rate as they please and without notice. Most major banks reside in states that have no usury rate either, so in theory they could charge you whatever rate they pleased without telling you and it would be entirely legal to do so.

4. Credit Card Debt Correlates to Bankruptcy – When people file bankruptcy, more often than not they have extremely high credit card balances which are just beating them up financially. They get into some sort of mess and charge everything to their credit cards, making the problem worse. There is a statistical correlation between having high credit-card debt and filing bankruptcy. The Motley Fool states that 1,300,000 credit card users filed bankruptcy in 2005.

5. Late Payment Fiascos – In 1996, the Supreme Court made a ruling which eliminated restrictions on late fees that could be charged to consumers. Now at most major credit card companies if they even think that your payment is late by an hour, they will charge you a fee of $30, $40, or at some places even $50. Some major banks have even been accused of intentionally not depositing checks which came in on time, and then charging their customers undo late-fees.

6. American’s Are Up To Their Eyeballs in Credit Card Debt – According to the Motley fool, Americans have borrowed a total of $1,700,000,000,000 in consumer debt. Statistically, the average American carries $8,562 in credit card debt, and there was a total of $50,000,000,000 charged in finance charges annually.

7. Most Rewards Programs Aren’t Worth It – A lot of banks try to lure consumers into getting credit cards with rewards programs that are supposed to give consumers an incentive to use their credit card. However the money used to give out the rewards doesn’t come from thin air. Consumers are paying for their own rewards through finance charges and membership fees whether they are realizing it or not. With one of Wells Fargo’s rewards programs, you have to spend $5000 a year just to break even with the rewards program membership fee.

8. Credit Cards Only Serve One Purpose – If you haven’t figured it out yet, the credit card exist for one reason and one reason only—to put you into more debt. No one wants to have huge amounts of debt, so why make use of a tool that’s only purpose is to get you into debt? The best way to get out of credit card debt is to never get into it in the first place.

9. Statistically You Spend More With Credit – A Dunn and Bradstreet study stated that if you pay with a credit card, you will statistically spend 12%-18% more on your purchases as opposed to paying with cash. When you pay cash, you feel the money leaving you and it hurts; with credit cards that’s not the case. If you use a credit card, you will spend more money whether you realize it or not.

10. You Can’t Outsmart the Credit Card Industry – Credit card companies spend millions of dollars each year figuring out consumer habits and behaviors so that they can separate you from your money. They know how people act and how people think, and statistically will make money off of you. A lot of people think they are getting rich of the credit card industry through rewards points and arbitrage games, but the reality is that they’re not making much at all and are adding all sorts of risk into their life. Credit card companies can easily absorb these cost, because knows that statistically they will make much more money from people than they lose to a couple of people here and there not making the industry any money.