How to Avoid Bad Credit

Debt collectors routinely try to collect on debts that they know would not be enforceable in court. They may even try to get you to restart the debt by making a partial payment or by transferring the old debt to a new credit card. But, in a lawsuit settlement with one of the biggest debt collectors, the FTC lets the debt collection industry know that collecting on expired, or time-barred debts, is not ok.

The FTC sued Asset Acceptance, a company who might be listed on your credit report, following allegations that the company violated several rules including: telling consumers they owed debt that the collector may not have been able to prove, failing to tell consumers that their debts were past the statute of limitations, and failing to tell consumers that a partial payment would extend the statute of limitations.

In addition to a civil penalty of $2.5 million, Asset Acceptance has agreed to inform consumers when their debts are too old to be legally enforceable and to let consumers know that a partial payment would essentially restart the statute of limitations on that account. Asset Acceptance also has to inform consumers when they’ve placed a negative account on the consumer’s credit report.

While a judge hasn’t signed off the terms of the settlement, they set a precedent for what the FTC expects of the collection industry. The agency has also released a new publication, “Time-Barred Debts: Understanding Your Rights When It Comes to Old Debts,” to help consumers better understand what to do about old debts.

You may know that the statute of limitations varies by states. It’s generally between Read more…

Though only five years old, Mint.com has quickly established itself as a highly recognized personal finance management web-service. For the uninitiated, Mint.com has been listed by Time Magazine as a top-50 website for the last three consecutive years and is the winner of the Webby Award for Excellence on the Internet for Best Financial Service in 2009, 2010, and 2011, beating out financial news giants CNNMoney, NY Times Dealbook, Nerdwallet and Yahoo! Finance.

Mint.com allows its users to aggregate their banking accounts, investments, insurance policies, IRAs and mortgages into its management system which automatically provides up-to-date categorization, support and tools for budgeting analysis and bill reminder services. Their services are essential for those wanting to take control of their financial lives and improve their credit scores. Best of all, Mint.com is completely free.

The site was conceived by Aaron Patzer in 2006 after quitting his day job as a software architect to develop a method for analyzing numerous financial documents with high accuracy. After gaining the interest of First Round Capital, Mint.com received the seed capital to further develop their concept. Patzer’s ideas ambitions became so popular that grabbed the attention of Intuit, a financial software company and maker of Quicken, which extended an offer to purchase Mint.com for $170 million in late 2009.

CreditRepair.org was granted an opportunity to gain some insight into the company from Aaron Forth, Inuit’s Vice President and General Manager of Personal Finance Group. Read more…

Relocating is stressful regardless of whether you’re moving across the country or just across the city. Things are bound to get mixed up and in the relocation process, you could make some mistakes that hurt your credit score. These are some things you can do to avoid credit-damaging mistakes when you’re moving.

Set your bills to be paid automatically. If your bank has the capability, you can put your credit card bills on autopay for a few months until you get situated. Your credit card payment is due on the same date every month, so you can look at any recent billing statement to see which day your creditors need to be paid. Automatic payment ensures the creditors get your payment even if you forget. Payment history is 35% of your credit score, so do what you can to ensure your payments arrive on time.

Change your address. There are two ways to be sure your credit card statements follow you to your new address. First, you can contact your credit card issuers and let them know to change your address in their system. The second way is to forward your mail with the U.S. Postal Service. You can do this online or by dropping a change of address form in the mail. Once forwarding is set up, the post office may notify your creditors of your new address saving you a step in confirming your address. Note that mail forwarding typically only lasts a year.

There’s another good reason to change your address – to be sure your credit card statements don’t land in Read more…

A New York woman applied for a store credit card only to be denied the credit. The woman was surprised by the denial and subsequently ordered her credit report to investigate any credit problems that may have triggered the denial.

What Rita Katz uncovered was a mistake on her credit report that was causing havoc in her financial life. One of the major credit reporting bureaus has listed Katz as deceased. Once Katz realized the mistake, she consulted an attorney to correct the information in the credit report. However, several months later, her credit applications were still not being accepted. Katz even reported that the letters notifying her of being deceased were actually addressed to her.

This is a perfect example of how credit card mistakes can bring down a credit score and cause Read more…

There are many consumers who have less-than-perfect credit scores these days thanks to the many economic problems facing Americans. However, experts are appealing to those that have been able to maintain their good credit profile not to share their good financial status with others in need.

Since credit scores are used by nearly every industry today, financial experts warn consumers about taking on financial obligations for others because you have a better credit score. This includes becoming a co-signor on a mortgage, car loan, or even a rental application. When you act as a co-signor on someone else’s financial transactions, you are putting yourself in the position of not only having to repay the obligation but also ruining your own good credit standing should the other person default.

More often people who have good credit are asked by loved ones to help them financially. While it is certainly up to you to decide to lend someone cash, it is never wise to lend them your credit status. Those who have maintained low credit scores likely Read more…

Out-of-pocket medical expenses are growing every year. Even people with health insurance find themselves with uncovered medical expenses that must be paid out-of-pocket. If you can’t afford to pay out of pocket for big-ticket medical services, the doctor’s office may get you to sign up for a payment plan. The credit cards are certainly a win for credit card companies who are always looking for a way to make more profits and a win for doctors and hospitals that want to avoid the cost of pursuing payments.

Unfortunately, the cards aren’t that great of an option for consumers who may end up paying double digit interest rates for medical services. What’s worse is that too often, the service providers who pitch the cards don’t clearly let patients know that they’re signing up for a credit card and not a simple repayment plan.

Michigan Attorney General’s office, for example, has received 40 complaints about Read more…

Consumer groups are paying more attention to the senior set when it comes to solicitations for financial services including investments, collection agencies, and credit repair companies. There have been increasing complaints that senior citizens are at greater risk for being scammed out of their cash for services they get convinced they need.

The elderly are more likely to take calls from telephone solicitors typically because the have the time to do so. Unfortunately, those who are promoting credit repair or financial services and those who are trying to collect debts that may or may not be legitimate can often force older people into something they don’t Read more…

Late payments go through several stages. In the beginning, the consequences are mild, there’s very little impact to your credit. As you get become more delinquent on your payments, your credit is affected more, your balance grows and it’s harder to get caught up. Understanding the stages of a late payment may make you want to work harder to keep your payments on time.

Less than 30 days late

If you’ve only missed your due date by a few days, you’re still less than 30 days late. Your credit card issuer will charge a late fee (which may not show up until your next bill), but at this point, nothing goes on your credit report. Send your payment before your next due date and the credit bureaus will never know you were late.

30-89 days late

Once you’re 30 days late, however, the credit card issuer will update your credit report to show that your payment was late. If you catch up on your payments, your account status will go back to current, but the old late payment still remains. On the other hand, if you miss your payment again, making you 60 days late, your credit card issuer can charge the maximum late fee of $35. After that, your interest rate increases to the default rate.

90 to 180 days late

Between 90 and 180 days late, the late notices continue to be Read more…

Since the credit crunch, more people have decided to use debit cards instead of credit cards for their purchases. On one hand, using debit cards can be smarter since the transactions come straight from your checking account – you don’t have to repay a credit card balance. But, there may be some drawbacks to using your debit card; your credit score could be affected.

What Affects Your Credit Score

Using a debit card in itself isn’t going to affect your credit score. Your checking account activity isn’t normally listed on your credit report. Even overdrafts don’t appear on your credit report unless the account gets closed and you never pay back the delinquent balance. Of course, that’s a stretch. You need your checking account so you’ll probably clear up any overdrafts quickly and your credit score won’t get hurt in that way.

What does happen when you choose your debit card for purchases is that your credit card gets neglected. After your credit card is inactive for several months, the credit scoring calculation ignores that account on your credit report. If this account has a good amount of available credit, your credit utilization could go up and your credit score will drop. Fortunately, all you have to do to reactive your credit card is use it. Once your account becomes active again, the credit scoring calculation will once again include that account in your credit score.

Credit card issuers don’t like inactive credit card accounts. In fact, your credit card issuer could close your account if it remains dormant for several months. A closed credit card would affect your account in the same way as an inactive account. The difference is Read more…

When the economy suffers a downtown, your credit, unfortunately, may suffer too. But this may be the worst possible time to have a bad credit score. If you find yourself back on the job market, you’ll often need to have good credit to land a job and keep paying your bills. In a recession or tough economy, take necessary precautions to keep your credit intact.

Build an emergency fund.

If you’re actively paying off debt by sending lump sum payments every month, you may want to scale back on those payments for a few months while you save up an emergency fund. An emergency fund can help keep you afloat for a few weeks or months if you suffer a pay cut or get laid off. But, if you’re really close to paying off your credit cards – like a couple of months – it’s okay to knock out those credit card bills. Then, once you’re done start up your emergency fund.

Call a credit counseling agency.

After suffering a job loss, you may not be able to afford your credit card payments. Get in touch with a credit counseling agency immediately. They can work with your creditors to lower your interest rate and minimum payment. Your credit card billing statement will have the number to a credit counseling agency. Otherwise, you can visit the National Foundation for Credit Counseling’s website, NFCC.org.

Get a forbearance or deferment on your loans.

When you can’t afford your loan payments, Read more…