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Archive for May, 2010

Four Steps For Making Credit Report Corrections

Written by Toi Williams on May 31st, 2010 | Filed under: credit score

Experts estimate that as many as 25% of people with credit histories have errors on their credit report.  Incorrect information on your credit report can cause a number of different problems, including causing the person to be turned down for a loan, home, or job or requiring the person to pay higher interest payments on loans.  Ensuring that the information on your credit report is correct and fixing mistakes that have been added to the report is not as difficult as you may think and can be accomplished in several simple steps.

1. Review Your Credit Report Regularly

The easiest way to identify incorrect information on your credit report is to review your credit reports regularly so that you know what information should be in your credit report and what information should not be included.  The federal government has mandated that every person is entitled to receive one free credit report from each of the three major credit bureaus each year so that you can see what information has been added to the report.  Identifying mistakes quickly will make it much easier to correct the information.

2. Contact The Credit Bureau

If incorrect information is found on your credit report, the next step is to contact the credit bureau to let them know about the mistakes that you have found.  The credit reporting bureaus are required by law to investigate any allegations of incorrect information on a credit report and if the information is determined to be incorrect, it must be removed from the credit report completely.  It is very important to remember to be polite and courteous to the representative at the credit reporting bureau because you are asking them to help you correct the issue.

3. Keep Careful Records

Once you have contacted the credit reporting bureau about incorrect information in your credit report, it is very important to keep careful records of all interactions that you have regarding the incorrect information until the information is corrected or deleted from your credit report.  Every contact that is made should be logged and include information such as when the contact was made, who you spoke with, and what solution was presented to you.  These records will come in handy if you ever need to involve a third party, like a lawyer, in the process to get the information in your credit report corrected.

4. Verify That The Information Has Been Corrected

Do not make the mistake of assuming that the information in your credit report has been corrected just because you have contact the credit reporting bureau and alerted them to the mistakes that were made.  In some cases, information is lost or cannot be verified, stalling the process of correcting the information in your credit report until the credit reporting bureau has received additional information.  It is important to keep making contact and reviewing your credit report until you are sure that the incorrect information has been removed.

Home Refinancing With A Poor Credit Score

Written by Toi Williams on May 30th, 2010 | Filed under: loans

A burst housing bubble has made refinancing a home much more difficult, especially you have a poor credit score.  Many of the options that were previously available are not longer viewed as a smart investment by lenders and they will not lend to people that they view as a significant risk.  Even though lending is more restrictive today than it has been at any time in the past decade, there are still refinancing options available for individuals with a poor credit score.

Accepting A Higher Interest Rate

Having a poor credit score does not immediately disqualify a person from refinancing their home because there are many different factors that a lender will look at when they are making the determination to refinance the home.  If many of the other factors reviewed are favorable, then the lender may decide to allow the refinancing if a higher than usual interest rate is applied to the loan.  Although the higher interest rate will add significant cost to the total amount paid for the refinancing, it may be worth the cost to the borrower for the ability to refinance the home.

Using A Co-Signer

Another option that can be used by individuals with a poor credit score is using a co-signer to increase the chances that the lender will accept the application for refinancing the home.  The co-signer will also be held responsible if the loan ever goes into default, so it is very important that you do not ruin the credit score of someone who trusted you enough to be your co-signer by making late payments or missing payments entirely.  Many people have been able to access refinancing that they never would have qualified for otherwise by having a trusted individuals co-sign for the loan.

Providing A Quick Boost To Your Credit Score

There are a number of different factors that go into the calculation of a credit score and although many of these factors can not be changed quickly because they are calculated over an extended time period, there is one factor that you can use to provide a quick boost to your credit score.  One of the calculations that are taken into account for a credit score is the percentage of your available credit you are using, with lower percentages equaling a higher credit score.  By paying down or paying off existing debts, you can significantly reduce the amount of your available credit that you are using which may allow you to raise your credit score enough to qualify for refinancing or a lower interest rate on the loan.

Things To Know Before Applying For A Credit Card

Written by Toi Williams on May 29th, 2010 | Filed under: credit cards

Now that the economy is experiencing a tentative recovery, people are once again being flooded with offers to apply for credit cards from various creditors.  Although some of the rules governing credit cards have changed recently, there are still traps for the unwary written into many credit card agreements.  By knowing the general information that applies to most credit cards, you can avoid the actions that cause most of the issues associated with credit card use.

Credit Card Purchases Cost More

One thing that many people do not understand is that purchases made with a credit card will almost always cost you more than if you would have paid for the purchase with cash.  This is because you are still paying the full price of the item as well as the finance fees and interest charges required by the creditor for borrowing the money to make the purchase.  These fees will continue to accumulate as long as the purchase cost remains on the credit card, so the longer you take to pay off the credit card, the more it will end up costing you.

In order to minimize the amount of money that you are spending in fees to the creditor, it is best to limit your purchases with the credit card to major purchases and emergency situations.  This allows you to have the flexibility to pay for an expensive purchase over time or handle a financial crisis quickly.  For all other purchases, it will be best to wait until you have the cash available to buy the things you desire.

The Interest Rate Is Not Fixed

Many people who sign up for credit cards do not realize that the interest rate that they begin with is not always the interest rate they will end up with.  Although current credit card laws have reduced the creditors’ ability to hike your interest rate at a whim, there are still plenty of legal reasons why a lender can increase the interest rate of a credit card dramatically.  In some cases, the lower interest rate is an introductory interest rate that expires after a specified period of time.  In other cases, the increased interest rate is the result of a late or missed payment.  An increase in the interest rate for the credit card can cost you hundreds of additional dollars each year.

Important Information Is In The Terms And Conditions Of The Agreement

The biggest mistake you can make when it comes to credit cards is to ignore the terms and conditions included in the credit card agreement.  All of the important information about interest rates, penalty fees, and payment requirements are included in the terms and conditions and applying for the credit card indicates that you agree with the information included in the terms and conditions of the agreement and agree to be bound by them.  Before signing up for any credit card, you should read the terms and conditions carefully to ensure that you know exactly what you are getting into.

The Four Rules Of Debt Freedom

Written by Toi Williams on May 27th, 2010 | Filed under: debt relief

Debt freedom is a scary proposition for some people because they have been taught by society and the others around them that the only way that they can have the things that they desire is to go into debt to obtain them.  Nothing is farther from the truth, but this is the common belief among many people today.  In fact, the rules for getting out of and staying out of debt are very simple and can be broken down into four main rules.

Rule 1 – Spend Less Money Than What You Are Making

This rule should be common sense to most people but in the days of easy credit and low interest rates, many people became addicted to spending above their means.  If you continuously spend less money than you are bringing home in your paycheck, you will have less of a need to put items on credit, where you will be charged high interest rates, and will be able to handle financial emergencies as they come along.  Spending less than you earn each month should be the goal of every person that is interested in getting out of debt.

Rule 2 – Avoid High Interest Debt

High interest debt is one of the biggest ways to waste tons of money for no gain.  Interest payments are just payments for the ability to borrow money from a creditor and provide nothing to the person that is paying the interest payments.  Most high interest debt is credit card debt, where the creditor can charge 20% or more in interest, while short term bank loans generally have a much lower interest rate.  In order to save more of your money from going from your pocket into the coffers of a large banking institution to pay their executive’s multi-million dollar salaries, stay away from high interest debt at all costs.

Rule 3 – Protect Your Possessions

A large expense for many people is replacing lost or damaged items that they believe they need for a comfortable life.  If you do not take care of your possessions, you will find that they need to be replaced more often, which means you will need to spend more money to keep your current lifestyle.  Simple tasks, like making sure you get your vehicle’s oil changes done on time or turning off the television when you leave the room for long periods of time, will save you a great deal of money in repairs and replacement costs.

Rule 4 – Do What You Can For Yourself

Paying someone to do simple tasks will cost you much more than you would have spent doing the same task yourself.  From making coffee to fixing lunch to making minor repairs to the home, you will spend two or three times as much asking someone else to accomplish the task than it would take in money, time, and effort to do it yourself.  Although some larger tasks that require specialized tools and expert knowledge would be better left to the professionals, there are many things that you can learn how to do on your own that could save you hundreds of dollars each year.

Simple Solutions To Save On Transportation Expenses

Written by Toi Williams on May 24th, 2010 | Filed under: saving

Transportation is very important to our way of life, but can become expensive when more attention is paid to where you are going over how you are going to get there.  There are many different ways to save money on transportation to local areas and far away destinations and using these solutions can result in hundreds of dollars in savings each year.

Purchasing A Car? Buy Used.

Many people know that a new car loses a considerable portion of its value once it has been purchased and driven off of the lot, but they do not know that a new car loses most of its value in the first few years.  Savvy shoppers allow others to absorb this loss and choose to purchase used cars that are several years old.  A used car that is less than 5 years old has depreciated in value but is still new enough to possess many of the latest security and electronic features, meaning you can get much more car for significantly less money.

Explore Public Transportation

Public transportation is a good way to get to one place to another for a fraction of the amount that it would take each person to drive individually.  Most cities have public buses, subways, and streetcars that run on a regular schedule and arrive at most points around the city.  Even individuals that own cars can save money by using public transportation for trips that do not require special considerations, such as transporting a large amount of items or traveling to a place where public transportation is not easily accessible. 

Consolidate Trips

Instead of running each of your errands at different times on different days, you should consolidate all of your errands into a single run on a single day.  That way, you are not wasting gas by returning to your home after every trip.  You will save even more if you carefully plan your errands so that you are not retracing parts of your route.  Even though the errands will take longer to run on that day, you will be saving time, gas, and wear on your car by consolidating all of your errands into a single trip.

Choose Non-Peak Times To Travel

Transportation will always cost you more if you are traveling at a peak time, including if you are driving a car or flying on a plane.  Tickets for certain types of transportation during peak times can be more than twice as much as for travel during non-peak times.  Drivers that choose to use traffic congested roads and highways during peak travel times will find themselves wasting both time and gas idling in traffic waiting for their turn to go.

Budget Buster: Eating Out

Written by Toi Williams on May 23rd, 2010 | Filed under: saving

Many people do not realize that eating out at restaurants and purchasing fast food on a regular basis is one of the biggest money wasters in our culture today.  People choose these methods of obtaining the food that they eat because our society has been conditioned more towards paying for convenience than towards taking the time to do things for themselves.  In order to save a great deal of money on your food purchases, here are some simple tips that you can use to make eating in more palatable than eating out.

Learn How To Cook

Many individuals between the ages of 18 and 35 do not have a strong grasp of cooking techniques because they were raised in an era when it was very fashionable to eat out during many meals.  During their lifetimes, the average number of fast food restaurants and restaurants in a given area has more than tripled, giving rushed individuals plenty of choices of what to pick up for lunch or dinner, but also charging much more than what it would cost for the person to create a similar meal at home.  Learning how to cook using cookbooks or cooking websites on the internet is fun and entertaining while saving you hundreds of dollars each year in food costs.

Experiment And Try New Foods

One of the joys of cooking your own food is that you can modify the recipe that you are using to better suit your own tastes.  Experimenting with and trying new foods is one of the best ways to find out which flavors you really enjoy and which flavors you can do without in your dishes.  Many grocery stores have a wide variety of different ingredients to choose from and there are millions of different recipes available that can show you the best ways to use the ingredients.

Cooking Shortcuts Are Very Useful

One reason why many people do not cook for themselves very often is the amount of time and energy that it takes to prepare some dishes.  There are many different techniques that can be used to shorten the amount of time that meal preparation takes or the amount of labor involved in creating the meal.  For example, using a crockpot instead of the oven to cook your meal allows you to add all of the ingredients into the crockpot early in the day and slowly cooks those ingredients using an even heating source over the course of the day to be ready at mealtime that evening.  Another often used shortcut is preparing and freezing several meals over the weekend to be thawed and reheated during the week days.

Quick Tips For Resisting Retail Marketing

Written by Toi Williams on May 21st, 2010 | Filed under: mindset

One of the reasons that so many retail stores are making such high profits is that they are very good at convincing the average consumer to purchase items that they really do not need.  From convincing consumers that the brand name is better to offering deals to entice consumers into buying more than one of a product, retail marketing is designed to separate you from as much of your money as possible.  Learning how to resist these marketing techniques can save you from hundreds of dollars of unnecessary purchases each year.

Only Buy What You Came To Buy
Many stores depend on impulse purchases to double or even triple the total amount that you spend on each visit to their location.  From stacking attractive items at the end of aisles to locating particular products at the front of checkout lanes, stores have many little techniques that they use to make putting that additional item in your cart seem very attractive.  A simple way to resist this marketing technique is to make a list of the items that you intend to purchase at that store before you go and stick to that list while in the store so that you only purchase the items that you initially intended to purchase.

Avoid Signing Up For Store Credit Cards
One of the most common marketing methods used to get individuals to sign up for store credit cards is offering an attractive deal, such as a discount of a certain percentage off the total price of that day’s purchase or a percentage of the amount spent on the credit card returned as a cash back reward.  What many people do not realize is that retailers and credit card companies are not in the business of losing money and that store credit card will cost you much more in interest and fees than you will ever save using the credit card.  It is better to pay with cash or with a debit card and avoid having to pay interest on the purchase.

Introductory Interest Rate Expirations Can Be Costly
Some businesses offer financing for large purchases, such as appliances and furniture, with a 0% interest rate for a specific period of time, allowing the consumer to pay off the purchase without having to pay interest on the balance.  This is a great deal – as long as the items are paid off before the introductory interest rate expires.  If the introductory interest rate expires before the balance has been paid off, then the consumer is responsible for paying all of the interest that would have accrued if the item was financed at the interest rate now being charged to the account, which could add hundreds of dollars to the price eventually paid for the purchase.  It is best to just pay for a purchase outright if you have the money available, but if you choose to take advantage of one of these 0% interest deals, be sure that you can pay off the purchase before the introductory interest rate expires.

Becoming Debt Free Through Positive Thinking?

Written by Toi Williams on May 15th, 2010 | Filed under: debt relief

Many people across the nation are finding that they owe lenders and credit card companies massive amounts of money that they are having great difficulty paying back.  After months or years of trying to pay down these debts and seeing little result, some of these people begin to despair that becoming debt free is impossible and they will be paying on these debts for the rest of their lives.  It is possible to become debt free, but only if you are serious about taking the steps necessary to reduce and eventually eliminate your debt.

Think Positive

Eliminating debt will take hard work and determination to complete the entire process and you are much less likely to stick with the program all the way to the end if you are not enthusiastic about the results of what you are accomplishing.  People that continuously whine and moan about not having the money to spend on the things that they want during the debt elimination process are the ones that typically drop the debt elimination program that they have been following and find themselves in a dire financial situation after a couple of years.  You have to want to get out of debt to be able to actually get out of debt.

Stay The Course

Getting started with the debt elimination process is the most difficult part of the entire process.  Once you have followed the program for a while, you will begin to see the results that you are anticipating, in the form of lower balances and decreased payment requirements.  You must stay the course until these results begin to become apparent and resist becoming discouraged because the process isn’t moving as quickly as you would like it too be moving.  Remember, it didn’t take a couple of weeks for you to get yourself into the situation that you are in and it will take more than a couple of weeks to correct the situation.

Embrace The Results

Realizing that the debt load that you have hanging over your head has been steadily decreasing is one of the best feelings in the world.  Take pride in what you have accomplished, whether it is taking the time to make a budget to follow or paying off one of your credit cards.  You should be proud of taking the steps needed to release yourself from overwhelming debt and every accomplishment should be cheered with a mental celebration.

The Quickest Ways To Get Into Financial Trouble

Written by Toi Williams on May 14th, 2010 | Filed under: mindset

It is much easier to get into financial trouble than many people would think, with minor actions causing major trouble for a large number of people.  There are some actions that will take you down the path of financial devastation much more quickly than others and avoiding these actions is the best way to reduce your risk of amassing insurmountable debt.  Although some of these actions may be hard habits to break, it is important to avoid these items so that you can keep your debt at a manageable level.

Forgetting To Check Credit History

Not checking your credit history is one of the fastest ways to get into financial trouble because many financial issues can be solved quickly if they are discovered quickly.  Many people credit the fact that they check their credit history annually with the early discovery of identity theft and fraudulent accounts being opened in their name.  The government has mandated that one free credit report from each of the credit rating agencies be made available to everyone that wishes to view their credit report.

Opening Credit Cards For Discounts Or Rewards

Numerous companies across the nation are issuing credit cards and offering attractive deals to entice consumers to sign up for the cards, including offering store discounts for using the card or reward points for certain types of purchases.  What many people fail to realize is that the interest rate that they are paying for placing a balance on the credit card is much higher than the rewards they will be earning for making those purchases.  Although the rewards being offered may be appealing at first glance, it will almost always be cheaper to save your money and purchase any items that you desire with cash instead of reward points.

Neglecting To Create A Budget

It is impossible to manage your money if you do not know where your money is going each month.  Planning out how much of your paycheck you will be spending and how much you will be saving will help you meet your financial goals more quickly and help you identify spending issues before they become major financial problems.  If you are serious about managing your money and building a secure financial future, you must create a budget and stick with it as much as possible.

What Are The Biggest Benefits Of Paying Down Credit Card Debt?

Written by Toi Williams on May 9th, 2010 | Filed under: credit cards

With nearly every business now accepting credit cards, the temptation to overuse can be overwhelming. But having this high interest debt is a large burden to carry around. One of the most important investments you can make for your future is to pay down your high interest credit card debt as quickly as possible.  Many experts agree that this is the best way to spend money that is not going towards immediate necessities and utility bills.  Paying down your high interest credit card debt is one of the best returns on your money that you can get because of the many benefits associated with the elimination of this expensive type of financial obligation.

Reduced Interest Payments

One of the most beneficial benefits of paying down your high interest credit card debt is the reduction in the amount of interest that you are paying to borrow the cost of the items you have placed on your credit card.  In most cases, credit card interest rates will be the highest interest rates that a person is paying over all of their financial obligations which means that the person is paying the credit card company more to borrow their money than they are paying any other source and getting virtually nothing in return because they still have to pay back the balance as well.

Credit card interest rates are applied to the total balance on the credit card, so having a lower balance means that you will be paying less in interest charges each month.  Paying less in interest means that if you continue paying the same amount each month, more of your money is going towards paying down the actual charges on the credit card, eventually leading to the credit card being paid off.

Lower Monthly Payments

The minimum payment required by the credit card agreement is based on a percentage of the total balance on the credit card, which means that as the balance on the credit card decreases the minimum payment due will decrease as well.  Although you should try your best to continue paying the same amount each month so that you can bring down the balance of the credit card faster, in the event that an unexpected financial issue occurs the credit card payment will not be as much of a burden on your finances and it will be easier for you to pay the minimum payment.

Increased Credit Score

One of the calculations that is used to compute your credit score is the percentage of your credit that you are using compared to the total amount of credit you have available.  The highest credit scores go to the people that are using less than 30% of their total available credit and each percentage point over this margin can result in a linear reduction in your credit score.  Keeping balances on your credit cards low results in a higher credit score which increased your chances of obtaining additional credit if needed and qualifies you for a lower interest rate on many different types of credit products.