If you ever fall in debt, then you will quickly see that it is a non ending cycle that perpetuates even more debt. Also being in debt from one source can cause you to fall in debt with another source. All of this will be accentuated with unpaid bills, bounced checks, increasing finance rates and lowering of your credit score. According to a recent survey, here are some areas in which Americans seem to have accumulated debt:

- House Mortgage Payments
- Monthly Car Loan Payments
- Credit Card payments
- Unpaid Utility Bills which may have piled up
- Unpaid Medical Bills
- Bounced Checks
- Unpaid Store Bills

As you can see there are varieties of different kinds of debt that can accumulate. However, having a debt in one area will soon spread to another area like a forest fire. So if you feel that your debt is spinning out of control, then you will have to implement some steps before the problem gets worse. As a general rule, if any two of the following conditions hold true, then you should definitely seek a debt consolidation loan before it’s too late.

a) Your credit card debt is over 70% or more of your credit card total limit.
b) Your utility bills have not been paid for two consecutive months.
c) Your car loan payment is due for two months or more
d) You get more than one bounced check every month
e) You have other outstanding debts for which collectors have begun calling you

If you are experiencing some of the symptoms above, then you should definitely seek some sort of a debt consolidation loan immediately. There are mainly two types of debt consolidation loans. The most common form is a secured loan. In this type of a loan, you have to give a security (an equity) to the bank as guarantee against your loan. Usually in most cases, this security can be a second mortgage on your house. If you have finished your mortgage and if you own your house free and clear then you can always get a house loan as a debt consolidation loan. In any case, since the collateral is secured in this loan, the interest rates will be lower than usual and also this way you can get a long term loan like 10 to 20 years.

However, if you don’t have a security to put up or if you are only looking for a short term loan to consolidate your debt, then you can always get an unsecured debt consolidation loan. These loans in general have higher interest rates and the terms of payment will be much shorter in duration compared to secured loan. However, they can be a serious option when you are in debt. It is relatively easy to find these loans as you can even go online to look for debt consolidation loans. You can also go to your local bank for help.

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Trying to keep a good credit paying history is becoming harder and harder to do in today’s financially challenging and changing environment. With prices constantly rising and the dark cloud of a recession looming over the economy it’s no wonder that many credit challenged people (single and with families) are feeling desperate in their attempt to stay afloat in a sea of credit disillusion.

For many people the credit crunch came as a result of trying to maintain a roof over their heads, food on the table for their family, gasoline in their automobiles and the electricity and water running. As a result, payments to financial obligations such as credit cards fell behind and this doesn’t even take into consideration if you suffered a downsizing at your job, got sick and missed work, went through a messy divorce or had a mortgage whose payment suddenly went sky high due to the adjustable rate you initially signed up for when you first bought your home.

The sad reality is, if you miss one payment on any of your financial obligations then any company that has previously extended you credit feels that they have the right to bump your current interest rate up significantly regardless if you were making payments on time to them or not. Naturally, this concern has gone all the way up our congressional chain as many people struggle to maintain their credit and wonder aloud if there is a way to legally wipeout late payment history on their credit report.

Fortunately there is a back door policy that allows financial institutions such as credit card companies that provide an open end debt to have the prior paying history removed or erased from a credit report. Although it sounds mysterious and ominous, it is not illegal and it actually works to the benefits of the company. This tactic is called re-aging or curing a credit card history. Naturally, there are some stipulations to this program but basically these are the guidelines or rules to how it works:

1 – You must make a minimum of three payments of your past due balance and you can only perform this action once a year of three times every five years.

2 – You must express some form of communication with your creditor and ask about their re-aging policy or their curing policy. It does help your case if you were a good customer and fell on hard times due to getting laid off from your job, went through a divorce, got sick and missed work or some other form of uncontrollable event or occurrence. If these actions have taken place then in many cases your credit company will remove the late payments from your credit report or history.

More than likely your mortgage company doesn’t know about this, in fact very few people actually know or understand this opportunity that exist to get you back on the fast track to financial solvency. Unfortunately if your credit history shows a habit of always making late payments then you can forget about trying to apply and use this program.

In today’s current fiscal and financial crisis with so many people falling behind on their payments and with extended credit for most of their major purchases this opportunity on how to legally wipeout late payment history on your credit report truly is a golden ticket to ease your financial crisis. I would recommend that before pursuing this policy you spend some additional time performing research on the Internet. Once you feel comfortable and knowledgeable about the subject then you can contact your credit provider companies and ask for some help.

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Airline miles and frequent flyer credit cards can be a great way to save money on vacations and airline tickets. As with most products, knowing the differences between the products that are available is the key to making sure you get your best deal. The first thing to know is that there are two classifications of “Airline” credit cards. Most people are unaware of the differences between the two types of cards so I thought I would make things a little clearer.

The first thing you need to know about airline credit cards is that they are horrible credit cards unless you intend to use them specifically for the purpose of airline travel. Most of them have annual fees and higher interest rates than credit cards that are available. If you are the type of person that will even occasionally carry a balance on their card this class of card is not for you. The interest rate that you pay coupled with the annual fee will probably negate your gains in airline miles. This being said, let’s look at the first type of airline cards.

Frequent Flyer Credit Cards – These cards are sponsored by a specific airline. The credit cards are co-branded with a major bank like American Express or Bank of America. These are the original frequent flyer cards that hit the market. These cards are perfect for those people who are “brand loyal” or otherwise compelled to use one airline by work or airport location. These cards will allow you to establish frequent flyer accounts that actually have cash values.

The downside is that these cards do not allow you to shop fares because the miles will not accumulate on other airlines. These cards usually have the higher annual fee when compared to airline miles credit cards and has the higher of the interest rates between the two classes. I presume the higher rate is because of the extra expense to the issuer for the co-branding. Of coarse I could be wrong; I am due for my first mistake this year. The next type of airline credit card is airline miles credit cards.

Airline Miles Credit Cards – This class of card is usually sponsored by credit card companies or banks don’t have an affiliation with a specific airline. This class of airline card has its pros and cons as well. The best feature among airline miles credit cards is the ability to use them on multiple airlines. These cards usually reward the user with “points’ as opposed to miles like frequent flyer credit cards do. These points can then be converted to airline miles or other travel related perks. Unlike frequent flyer cards the card holder has the choice to apply these points to hotels, restaurants, retail stores as well as airline miles.

Savvy shoppers with good credit can also find better rates and no annual fees on some airline miles credit cards. One of the best cards in this class is hands down the Capital One® No Hassle Miles(SM) Rewards card. It doesn’t have an annual fee and its interest rate is tolerable should you have to carry a balance. The down-side of the airline air miles credit cards are the “gotchas.”

These are the little things in the fine print that can zap your air miles or cost you money. Read the guidelines carefully. For instance some cards will totally erase your air miles earned in a reporting period is you are more than 3 days late on your payment. Even though this is within the credit card issuer’s grace period there is a separate rule for the air miles benefit. So, make sure you read the fine print to make sure the card meets your lifestyle and spending habits.

The best way to get the most of the perks on both classes of cards these cards is to charge and pay back around $1000 each month. One example is that my wife and I just found out that our mortgage company allows people to pay with American Express. Just using our air miles card to pay our mortgage each month we will earn one free ticket per year! Just remember what I said at the beginning. Unless you are using air mile credit cards for the specific purpose to earn air miles they are probably not a good idea.

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If you have no credit scores due to being new to the credit arena or you have just been a cash person all your life there is hope for you. There is one sure way to get the credit score calculated in about 4 to 5 months. In this article I will talk about how to establish good credit scores for a healthy credit report.

Secured Credit Cards

A lot of people don’t know this but secured credit cards are the quickest way to establish credit. The reason for this is you give the bank money to secure credit that reports to all 3 credit bureaus. Typically you need about two cards to get the ball rolling. After 4 to 5 months of reporting “bam” you have credit scores. Typically creditors like to see 3 lines of credit reporting for a minimum of 12 months with good payment history. With this type of activity on your credit report, reporting to Experian, TransUnions and Equifax is one of the recipes for success. You will not achieve credit scores if you can not get someone to extend credit to you. That is the secret behind applying for a secured credit card to start the road to establishing this wonderful three digit life altering number.

Buy a house

Once you have about 12 months of rental history, with paying your utilities, and your secured credit cards on-time you will be able to buy a house. Of course you need to qualify for a loan with your current income. Getting a house is not as hard as one might think. If you have a two year work history and have 3 lines of credit like I mentioned earlier you can buy a home. Typically the type of loan you will qualify for is FHA. This is a great first time buyers program. Buying a house will help you get a mix of credit reporting on your credit report. This is around 10% of your overall score. When creditors extend credit to you they like to see that you own a home as opposed to renting.

Keep Credit Card Balances low

Once you have got secured credit cards reporting on your credit report make sure you keep the balances below 30% of a your secure credit amount. Example: Secured Amount: $300.00 Balance at 30%: $90.00

This will keep your scores where they need to be once you establish them. After about 6 to 12 months you can request a limit increase. This is another sure way to increase your credit scores.

Get a car loan

Getting a car is actually easier than getting just about any other credit. There are all types of lenders out there willing to loan you money on a car loan. You might try getting a loan for a car to establish credit as well. Most car lenders report the note to all 3 credit bureaus. This is another way to get your scores rolling as well. Make sure it’s not some small tote the note establishment that does not report to the bureaus. Make sure the loan is reported to all 3 credit bureaus.

Conclusion: If you follow this advice you will be well in your way to establishing your credit scores. If you are unsure if you have scores get a copy of your free credit score report today.

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Credit scores are designed to measure the risk of default by taking into account various factors in a person’s financial history. Credit scoring is often used in determining prices for auto and homeowner insurance as well. Lenders, such as banks and credit card companies, use credit scores to evaluate the potential risk posed by lending money to consumers and to mitigate losses due to bad debt. Using credit scores, lenders determine who qualifies for a loan, at what interest rate, and to what credit limits. In the United States, a credit score is a number that is based on a statistical analysis of a person’s credit report, and is used to represent the creditworthiness of that person-the likelihood that the person will pay his or her debts.

In the case of insurance companies, the likelihood that the person will pay his or her debts directly correlates with their likelihood of filing a claim against their insurance policy. People with lower credit scores have a greater history of filing claims according to an overwhelming amount of research and statistics done over the past 15 years or so. The theory is that when times are tough smaller less relevant claims are now getting submitted to the insurance company, also claims are padded to look bigger so people can get a little extra cash from their company.

A credit score is primarily based on credit report information, typically from the three major credit bureaus. Although the Fair Isaac Corporation develops these credit score versions for the different agencies (known as FICO scores), they are different numbers, and are periodically updated to reflect current consumer loan repayment rates. Recently, some of the agencies that generate credit scores have also been generating more specialized insurance scores, which insurance companies then use to rate the quality of potential customers as I mentioned before.

Understanding your credit score is the first step to improving it and making it work in your favor instead of against you. With an improved credit score, lower expenses,proper asset and identity protection, and maybe some extra income on the side, you can eliminate your debt completely in a few years (not a joke) and live a less stressful life. Here are some tips on improving your credit score relatively quickly:

Payment History - Your monthly bills consist of expenses and debt. The debt is loans such as credit cards, car payments, mortgages, etc. You must make sure your debt is paid on time every month. Any history of late payments (including missed payments and derogatory payment statuses) is a negative factor. No reported history of payments on any account is also negative because lenders cannot tell whether you paid on time or were late. Some cases of late payments are worse than others. If you have not been late with any payments recently, lenders may think you are responsible and do not (or will no longer) miss payments. Lenders realize that many people occasionally pay late. Therefore, being late with a single payment is typically not as harmful as being late with two or more consecutive payments. Similarly, being late on many accounts is typically worse than being late on one. Also, lenders may view late payments as a more serious problem if you have collection accounts or negative public records such as bankruptcies or court judgments. These types of credit records indicate a pattern of credit problems.

Debt To Credit Limit Ratio - Having accounts with a high credit limit or loan amount is a positive factor, because it indicates to a lender that other lenders have trusted you with a lot of credit in the past. On the other hand, having accounts with low credit limits or loan amounts is a negative factor. It may suggest that your credit reports contained information that was of concern to lenders at the time they determined your credit limits or loan amounts. Finally, having no accounts with a reported credit limit or loan amount is a negative factor because lenders cannot evaluate how much other lenders have trusted you with credit so far. It might be beneficial to close the lower limit accounts and ask for higher limits on your preferred accounts.

Activity - Having accounts listed in your credit reports is a positive factor because the payment history of these accounts shows lenders how well you pay your bills. Therefore, having too few accounts or too few open accounts may be considered negative. However, having too many accounts or adding new accounts too quickly may also be considered negative because lenders worry that you are spending (or preparing to spend) beyond your means, even if you have never been late with any payments. Note that closing accounts will not change this. Also, if you do not currently have credit, getting your first few credit cards may be difficult and may involve high fees, high interest rates, and low credit limits. Note that accounts from personal finance companies (which specialize in lending to people with credit problems) may be considered negative.

Revolving Credit Balances - High balances are a negative factor because lenders worry that you are living beyond your means and may not be able to repay them. This is particularly true for credit cards. For installment loans such as mortgages and auto loans, lenders often use the proportion of the loan that is still unpaid to judge your ability to take on new debt. If very little of your installment loan balances have been repaid, lenders may not give you more credit that could add to your debt. In general, lenders evaluate how much you owe (your debt) in relation to how much you earn (your income). However, no matter how high your income, having a lot of debt may lower your credit scores because lenders know that adverse changes in your employment and life events such as divorce or illness may make it hard to pay your bills. Low balances, on the other hand, are a positive factor because lenders do not stand to lose as much if you become unable to repay them. However, not using your credit accounts may be considered a negative factor, because it does not provide lenders with information about how you typically use credit and repay your debts.

Applying For Credit - Applying for credit many times within a short period can lower your credit scores. When you apply for any type of credit (such as an auto loan, credit card, department store card, or mortgage), the lender considering your credit application checks your credit history. This is recorded in your credit reports as a “hard inquiry.” Although inquiries are an unavoidable result of applying for credit, lenders dislike seeing many inquiries within a short period (such as 6 months). This is because they cannot tell whether you are “shopping” for the best offer or if you are desperately trying to get credit because of financial trouble. Therefore, try to limit your comparison to a small number of lenders when “shopping” for the best offer.

In summary, it is quite easy to improve your credit score by 30-50 points in just a three month period. This could be difference between paying 25% more or less on your car insurance, or getting a credit card or mortgage with rates of 3-5% higher or lower. These little differences will most definitely affect your ability to get ahead of the game. People that pay more for insurances and have higher interest rates on their loans will never become debt free or get out from under it all.

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