We all need credit to survive in today’s society, it turns the wheels of our economy and, used properly, credit is a great asset. Most of us have loans, or other types of credit, which can be managed without difficulty.

But debt becomes a very real and serious problem when people cannot afford the repayments and, when used to excess it can create problems that spoil lives for years to come.

Falling unemployment, rising earning and low base rates have combined to encourage people to take on more debt. The UK National Association of Citizen’s Advice Bureaux (NACAB) says its centres have seen a 46% increase in the number of consumers with debt problem during the past five years.

A temporary lapse in financial good sense can leave a lasting impression on your creditworthiness. Loan defaults and County Court Judgements (CCJs) stay on the files of credit reference agencies for six years (unless you pay it off within the first month). Many find themselves in a Catch-22 situation.

They have sorted out their finances, but can’t get credit because of a past financial record. And until they get a credit card, they can’t build up a new ‘clean’ credit history.

Being turned down for a credit or store card can be embarrassing. Whilst being turned down for a mortgage can be devastating if you have saved hard and are desperate to buy a home.

The first thing a lender does when considering you for a credit card, loan or mortgage, is to check your file and the main reason for refusal is a poor credit rating. Credit information on millions of UK adults is stored by credit rating agencies and loan providers check out this information, which includes details of unpaid bills, CCJs and any previous applications for credit.

Lenders often operate credit-scoring systems to allocate points to the information on your file along with your application form, such as your age, job and whether you are a homeowner.

No matter what your credit or debt history, even if you are blacklisted by banks, you can often still borrow what you need, save what you can, and solve your money problem.

It is possible to repair your credit status without being evasive or by using the services or dodgy credit repair companies – which can charge anything up to £200 for doing nothing you can’t do yourself through credit reference agencies.

Don’t just go from lender to lender hoping to be accepted. Every time a check is made with credit reference agency it shows up on your file, leaving a trail of evidence showing you are being refused by others.

If you are refused credit, always ask why. It might be to do with their scoring procedures. Different lenders use different system, so you may find you can get a loan or credit elsewhere.

Continue reading this post…

So how can you go about getting out of the credit Catch 22 if you have adverse credit? Few credit-card providers are willing to take ‘risks’ with adverse credit history consumers applying for their products – and some of those that do then want to charge the people who can least afford it the highest rate of interest.

Fortunately for those who face such a prospect, there are some financial institutions prepared to consider taking on adverse credit history customers. But be absolutely upfront with them about your past problems to avoid wasting time.

There are also UK financial products sometimes referred to as a second mortgage or a second charge and, in the event of your defaulting on the loan, the lenders are repaid only after your original mortgage has been repaid to the lender, who has first-charge rights. This arrangement gives the lender increased security over a personal loan and often, a better interest rate can be achieved.

If you are already a homeowner with poor credit history, you can get a homeowner loan, which differs from a personal loan as it is secured against your property in the same way as your mortgage. You can use it for any purpose, such as buying a car or a holiday.

Many adverse credit companies will also provide car finance and a new car to those who have a bad credit rating. All they care about is your ability to pay the loan and because they cut out the middle man, you can find preferential rates.

If you have a poor credit history but also a homeowner, don’t despair. The fact that you own your home means you may be able to apply for an adverse credit secured loan.

As it is a high risk for the lender they will charge you higher rates of interest. So with a bad credit history, you will be unlikely to get an adverse credit loan with very cheap rate of interest.

There are firms who specialize in Adverse Credit loans for people who have no option but to take out adverse credit secured loans.

Be careful of adverse credit secured loans that seem too good to be true, as they might be just that. You will want to find a secured loan with the lowest rate of interest that stays cheap for the life of the repayments.

Some companies offer special incentives, gifts or extra low interest rates at the start of the adverse credit secured loan to get you signed up. Beware. You need a secured loan with the best rate interest that stays low until you have repaid the loan.

Continue reading this post…

If you’ve had a little bit of trouble financially lately, you’re not alone. And of course, this little bit of trouble might have affected your credit rating. If so, not to worry.

People obtain bad credit ratings for many reasons, and in half of the cases, it’s not their fault. For example, you could get a bad credit score simply because someone in the credit bureau made an error in entering the data. Or someone with the same name as yours defaulted on a loan and then registered that default under your name. Or else you moved to a new house and last month’s credit card bill got lost during the shuffle and you forgot to pay it. An expensive mistake, for sure, but an honest one. Failing to make minimum payments on a credit card consistently is definitely bad news, but forgetting once or twice to make a payment does not merit condemnation.

If you have a bad credit rating, this does not mean that your reputation or access to financial services is damaged forever. Indeed, you can fix this situation almost immediately, but you have to do some work to do that. However, if you are consistently behind on financial payments, or have other financial struggles that are “permanent,” this is not a quick fix situation and credit counseling may be the best bet for you.

Indeed, bad credit is so common that the US Trustee Program of the Department Of Justice has approved of credit counseling agencies so that they can help people with credit difficulties. Their web site is www.usdoj.gov/ust/eo/bapcpa/ccde/cc_approved.htm, and there are a list of credit counseling agencies available in your area that you can contact to help you.

Why Does Bad Credit Exist? In many cases, of course, the reasons you have bad credit are completely under your control. Among them are compulsive shopping, overspending, living beyond your means, et cetera. However, in many cases, you cannot control the reasons bad credit have happened to you, such as when personnel at the credit bureaus incorrectly enter your personal information. If you correct errors made in these types of situations, your credit rating will be restored quite easily and quickly.

There are other reasons why individuals have bad credit: being laid off the job – unfortunately, we live in an era of downsizing. Companies are slashing their budgets and trimming down staff numbers. When you are laid off unexpectedly, this can trigger off a string of events, some of which may affect your credit standing;

Another reason would be home foreclosures – this shouldn’t come as a surprise given the tremendous number of people who have lost their homes this year owing to rising interest rates. During the boom period of real estate, people felt encouraged to purchase houses at incredibly low rates and then when interest rates started to climb, many first time homeowners could not meet mortgage payments;

Another situation you might find yourself facing is divorce. In fact, credit counselors have said that this is a very common reason for a sudden bad credit rating. Because assets have to be divided up between former spouses, and because there are often alimony and child support payments to consider, income that was previously adequate suddenly doesn’t go as far as it used to.

Failing health can ruin a lot of credit ratings – people who fall ill unexpectedly or are suddenly suffering from a disability will not be able to continue working. We see here a domino effect: loss of health = loss of job = loss of earning potential = limited cash

Finally, the one situation that many Americans find themselves in that can be avoided is simply overstretching their own spending means by “borrowing” money from credit cards for frivolous or over-consumptive shopping. In today’s “plastic” society, many people have 1, 2, 3, 4 or more credit cards and have each maxed to the limit, so that even minimum payments are difficult to come by on their budgets, not to mention full payment of purchases made every month so they are truly living within their means.

Avoiding Bad Credit Here’s the golden rule on bad credit: before making any major purchases, request for a free copy of your credit report from Equifax or Trans Union. When you read something that you believe is false or inaccurate in the report, write a letter immediately and ask for proof or ask that the report be corrected immediately. Whatever you say to the credit bureau should be executed in writing. This is the only way you can show proof that you acted in good faith. Don’t wait for weeks before questioning your credit report.

If you want to repair your bad credit and restore and then maintain your healthy credit rating, you should:

Take stock of your financial situation – jot down all sources of your income and how you’re going to spend that income. Create a budget and stick to it. Discipline in spending works in your favor – banks are more predisposed to lending money to individuals who exhibit prudence;

Try to only spend less than 10% on “frivolous” expenses. Those things that you simply “want”, but don’t really “need”!

When you pay off debt, pay off the highest interest rate cards first. To do this, make the minimum payments on all of your other cards, then take the highest interest rate card and put all of your available “debt” cash toward that payment. Do this until you have paid off your highest interest rate card, then go on to the next. Make minimum payments on all of the lower interest rate cards, then take your highest interest rate card that still has a balance on it, and pay as much toward that as you can. You’ll soon see that you can be debt free very quickly, as long as you practice discipline and diligence.

Finally, the last way to make sure your credit rating will be restored is to pay your bills on time — all of them. Mortgage, utility, tax payments, and other bill payments made on time show creditors that you are prudent and diligent in your spending practices, which will reflect positively on your report. So if you’ve found yourself with bad credit, don’t worry. If you take some time to pay bills on time, pay off credit card debt as described above, and remain prudent in your spending, you’ll be back to good standing in very little time.

Continue reading this post…

If you’re credit isn’t the best in the world, you have a choice to make as to whether you want it to get better.

But before you make the choice to improve your bad credit, you need to stop feeling guilty about what has happened in the past. Maybe it wasn’t our fault. Maybe you had a medical situation; maybe someone charged up your credit cards without your knowing. What ever the situation is, you have to realize that was in the past and there is nothing you can do to change the past. That part of your history is over!

Your main issue now is to refocus, change your situation, make it the best that you can possibly make it. Look forward to a new start, new credit report, and a new chance.

The credit system, as it stands today, doesn’t give you the opportunity to defend yourself before peppering your credit file with all that past bad stuff, no matter what the reason, even if it’s not yours! You must prove to the system that the bad credit stuff is incorrect, invalid or otherwise erroneous before they will remove it. In other words, in the system’s eyes, you are GUILTY until proven INNOCENT.

Yes, maybe the bad credit is something that has happened to you, but so what? Why not change it? There are many ways to do this, to find out what it takes to turn that bad credit into good. Everyone deserves a second chance, do you feel you do as well?

I believe everyone deserves a second chance. I believe that you deserve a second chance, no matter what the previous circumstances were. Put those problems behind you now. It’s time to move on and re-establish a good credit file.

Continue reading this post…

The National Retail Federation announced last month that U.S. consumers plan to spend an average of $816.69 on holiday-related shopping for others and another $106.67 taking advantage of special promotions and discounts to treat themselves. This brings total planned holiday-related spending to $923.36.

Over the past 5 years the method of payment for holiday spending has shifted, according to the NRF. Cash use for purchases has fallen steadily over the past five years from 33 percent to 24 percent. There has also been a drop in check use from 13 percent to 6 percent. This year check use should fall to 0! Seriously, who uses checks anymore? The use of credit cards has fluctuated up and down between 27 percent 5 years ago and 31 percent last year. The big gainer in use has been the credit card’s plastic cousin, the debit/check card, increasing from 27 percent in 2002 to 39 percent last year.

It is clear that using a form of plastic is the direction consumers are headed, but not all plastic is created equal. Those using a debit/check card are putting themselves in unnecessary risk and loosing out on great security features that switching to one could give you.

There are several ways that credit cards offer security that no other form of payment can. For starters, you don’t risk losing your cash if you have your wallet or purse lifted while shopping.

Secondly, if you use a debit/check card for a purchase, the money is immediately taken from your account. That may be good for people who cannot budget well, but if there is a problem with the transaction, like a higher amount is taken out than you authorized, the money is gone and you’ll be without it until you can get it straighten out. With a credit card if a higher amount than you authorized is charged, the bank’s money is gone.

Thirdly is the reason for this article. If you are planning a significant purchase there is a definite advantage to paying for it with them over anything else.

Features vary from company to company and even from card to card, so check with your issuer for details of features available on your card. Odds are however, if you are carrying a VISA, MasterCard or an American Express card, you have some pretty great features available that don’t cost you a thing and most people don’t even know about, let alone cash in on. Currently Discover Card does not offer these services.

Extended warranty protection

Whether the name is Buyer’s Assurance Plan from American Express, Warranty Manager from Visa or the obvious Extended Warranty from MasterCard, the feature is the important part. Most personal cards, the terms are different for business cards, will automatically double the length of the original manufacturers warranty by up to one year if you charge the entire purchase price to your card. A 90-day warranty on a digital camera for example would become a 180-day warranty. The doubling effect would cover a product with a manufacturer’s warranty of one year for one additional year. Extensions do not go beyond one year.

There are some limitations. American Express won’t offer the extended warranty coverage for a product with an original manufacturer’s warranty of longer than five years. VISA says three years and MasterCard says one year. There are additional limitations when you purchase an extended warranty from the manufacturer or retailer.

As mentioned, this coverage extends to items purchased as gifts as well. Just be sure in all cases to keep your paperwork such as the original receipt, charge slip, your monthly statement, product serial number, and copy of the manufacturer’s warranty.

Satisfaction guaranteed

Have you ever purchased something electric, maybe a CD player or blender, and a week or two later you just don’t like it? Perhaps it functions funny or not as you originally thought. You tried returning it to the store, but the manager wasn’t interested because you were outside the store’s return policy. You may be able to take advantage of American Express Return Protection or MasterCard’s Satisfaction Coverage which says that if you are dissatisfied with a purchase within a certain time period, like 60 to 90 days, you may be eligible for a refund. This is particularly good for items like kitchen electrics or home electronics. This coverage can also be great for new items purchased on eBay or through the mail.

Accidental damage or theft protection

Most card holders can benefit from the safety and security offered through a purchase protection plan or as MasterCard calls it, Purchase Assurance Coverage. This plan will cover purchases made using the credit card against theft, loss, or accidental damage that occurs, typically within the first 90 days. It covers you in the event that you purchase an item using your credit card that becomes damaged on the way home or soon thereafter, becomes lost, or someone steals it. Obviously this is great if an item is stolen, but also useful if you have a broken item that the store won’t take back and the manufacturer won’t fix it because it insists it was your fault.

Repairs or refunds

In most situations, for each type of coverage, the credit card company will refund the amount of the purchase as shown on your store receipt or statement, back onto your account. There is almost always a maximum limit to how much money can be refunded under the insurance. In other cases they may decide to repair or replace the item. This of course, is at the discretion of the company. Also, they will not pay for shipping and handling, installation, tech support or any of the other ancillaries. There is nothing to sign up for and you don’t have to register to get coverage. It is automatic when you make the purchase with a credit card. Some companies however do offer a registration service to expedite future claims.

Read the fine print

All of the information contained here only scratches the surface. Naturally there is a lot of fine print. As you would expect, conditions and exclusions apply. The benefits also vary by issuer so be sure to check with the bank for specifics. In general, if you do qualify for a claim, you will find the benefits are quite generous. Call your credit card company and ask them to send you the detailed information about the programs available with your card, not just a list of the program names.

Continue reading this post…