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Starting Over after your Bankruptcy: What you can do to Help Begin Repairing your Credit

Credit Repair

First things first: we all know that bankruptcy can severely damage your credit score. Luckily, however, it doesn’t have to be a life-long sentence!

You can begin rebuilding your credit rating almost immediately after you file for bankruptcy, provided you have recognized your credit mistakes in the past and have learned from them. A good place to start is consumer credit counseling classes. These classes can help you properly manage your monthly finances and budget, and can also teach you ways in which you can responsibly handle your debts and rebuild your credit rating.

Secured Credit Cards

A great first step is to apply for a secured credit card. A secured credit card essentially means that you send the credit card company a certain amount of money that they hold in a separate account. The amount you send generally matches your credit limit. For example, if you have a credit card with a $500 credit limit you would have to send the credit card company $500 to secure the card.

If you pay the bill on time, your $500 remains in your account. If, however, you fail to pay the credit card bill, the credit card company simply takes the money out of your account to settle the debt. The credit card company will then likely cancel your account, so it is well worth your time to remain responsible when dealing with a secured credit card.

It is also important to remember that a secured credit card can affect your credit rating, so always pay your balance in full every month so that you can begin rebuilding your credit rating.

Unsecured Credit Cards

Another option may be a credit card with a low credit limit. Many people can successfully get credit cards while still in bankruptcy, but it is important to remember that these cards often come with high fees and equally high interest rates. In other words, pay off your balance in full each month to avoid paying astronomical interest rates and to begin building a positive credit history.

A bankruptcy is certainly going to blemish your credit score, but you can begin working toward a brighter credit future if you act now!

The ABCs of Credit Card Ownership

Introduction

With credit card ownership comes a certain degree of responsibility. After all, your credit is on the line.

Making the decision to own a credit card and pay the monthly bill on time, without fail, is a decision which should not be taken lightly. A credit card can be a tremendous convenience, and it can certainly be a practical way to pay monthly expenses without dealing with cash and checks. However, it can also become overwhelming if you don’t approach credit card ownership with financial common sense.

With that said, there are the ABCs of credit card ownership that you should keep in mind should you decide to own a credit card:

• Always pay your bill – no exceptions! Treat your credit card bill just like you would you mortgage or car payment, as neglecting to do this could seriously impact your credit rating. One of the simplest ways to make sure your credit card bill is paid on time is to immediately pay it when you receive the bill. If you make a point to do this every month, then you won’t ever be caught in a situation where the credit card bill simply slipped your mind.
• Be aware of the credit card’s terms and fees. Many credit card owners fail to investigate all of the fees and terms associated with their credit card, and then are shocked to discover additional expenses each month. Remember: it is your responsibility to read and understand all of the fine print associated with your credit card.
• Consider credit card reward programs when choosing your credit card. Many of today’s credit cards include reward programs that offer great incentives on everything from hotels to airfare. Your job is to sort through the different types of credit cards and find the one that is best suited for you. For example, if you are a business traveler, you may want to consider a credit card that offers rewards in the form of free hotel stays. Of course, you should also take the credit card’s interest rate and associated fees in mind when choosing a reward credit card, but it is certainly worth your time to explore your options when considering which credit card is right for you.

When is the Right Time for your First Credit Card?

ATM Choosing Credit Card

If you are a young adult looking to venture into the world of credit cards, then you may want to consider both the advantages and disadvantages of having a credit card. More importantly, you should consider whether a credit card is right for you at this point in your life.

You are bound to see credit card companies set up throughout any college campus. Pushing credit cards to college students with little income and loads of college debt may seem like an irresponsible thing to do, but this practice is played out time and time again.

The bottom line is that it is essentially your responsibility – not the credit card company’s – to determine if a credit card is right for you.

For many college students and young adults, money is tight and bills are high. From college tuition to books and related expenses, there is typically not much money left over at the end of any given month. Credit cards at this time may seem like a convenience, but in reality they are far more likely to be abused because of the ease at which young adults can make purchases, even if they don’t have any cash.

A credit card for a young adult may be the perfect way to begin building credit; yet for some, it may also be the time to make irresponsible credit choices that can affect their ability to obtain loans and even jobs in the future.

The decision to apply for a credit card as a young adult may be difficult, as many young adults are more than capable of handling the responsibility of a credit card, while others are not. As an adult, it is up to you to make the decision whether a credit card is right for you and if you are prepared to handle the responsibility of paying another bill each month.

Before applying for a credit card, consider:

• The costs and fees associated with the credit card
• The APR of the credit card
• Your monthly income
• Your monthly obligations and bills

In the end, having a credit card can be a wonderful option allowing you to better manage your money, track spending habbits and build credit. However, these advantages only come to fruition if you take care in money management.

Five Times You Should Avoid Using Your Credit Card

Credit Card Debt Credit Score

There is a time to use credit cards and a time to know when NOT to use credit cards. The responsible use of credit cards can help build your credit history and improve your credit score so that you are eligible to receive great interest rates on everything from car loans to mortgages.

However, the improper or irresponsible use of credit cards can damage your credit score and hurt your chances to obtain everything from car loans to jobs.

Always avoid using your credit card to:

1. 1. Pay other Credit Cards - Using one credit card to pay another credit card is the quickest way to disaster. If you use credit cards to pay your other credit cards’ monthly payments you are simply digging yourself into a hole and delaying the inevitable. If you find yourself in the situation where you simply do not have the cash to pay your credit card payments each month it may be time to contact an accredited consumer credit counseling service.
2. 2. Purchase Items you cannot Realistically Afford to Pay off Each Month – The quickest way to get yourself in over your head is to purchase things that you know you are not able to pay off each month. We have been conditioned to be an instant gratification society, although this may be the reason why there are millions of Americans in credit card debt. Simply put: if you can’t afford a flat-screen television, do not buy it!
3. 3. Purchase Items you Wouldn’t Pay Cash for (to shop impulsively) - Many consumers are much more likely to purchase items with their credit card that they normally would not pay cash for. So, the next time you make a credit card purchase, take a moment to consider whether you would pay cash for this item. If not, put it back!
4. 4. Get Cash - Cash advances are, by far, the most expensive purchases you can make. Cash advances usually come with much higher interest rates than credit card purchases, so think twice before taking out a cash advance!
5. 5. Act Irresponsibly – Unless you are prepared to pay your credit card bill on time, each and every month, and to use it only in a responsible manner, then it is best to avoid using a credit card altogether.

Warning Signs of Credit Card Problems Leading to Increased Debt

Credit Card Debt News

For many of us, we simply don’t realize (or don’t want to recognize) we have a problem with credit card debt until we begin to receive constant phone calls from creditors asking for money.

The truth is that most of us are given warning signals far in advance of creditor phone calls, but we simply ignore them. So, the question is: when does credit card debt become more than a nuisance? When does it start to interfere with our lives and threaten our credit rating?

If you have concerns about your credit card debt, you may want to ask yourself the following questions:

• * Am I only able to pay the minimum monthly payment on my credit card?
• * Am I using my credit card to pay other bills, such as utility bills, car payments and other credit cards?
• * Am I taking out cash advances against my credit card to make ends meet?
• * Do I frequently make purchases on my credit card that I know I cannot realistically pay off?
• * Do I use credit cards to live beyond my means or to maintain a certain lifestyle?
• * Have I applied for a new credit card because my current one is maxed out?
• * Am I making monthly household purchases on my credit card because I don’t have the cash to cover them?
• * Am I ever late on my credit card payments?
• * Am I ever unable to pay the minimum monthly payment on my credit card?

If you answered “yes” to even one or two of the above questions, then you may be headed toward financial trouble.

One of the best things you can do when credit card debt seems overwhelming or out of control is to contact an accredited consumer credit counseling service in your area, as they can often work with your creditors to reduce your interest rates or find ways to consolidate or pay off your credit card debt.

Best of all, they can often provide you with the resources necessary to get yourself out of credit card debt and to handle your credit more responsibly so that you can move forward without the burden of credit card debt.

How to Protect yourself when Using an ATM

ATM

Automatic Teller Machines, better known as ATMs, are a convenient, practical way to get quick cash. ATMs enable us to withdraw money at any time of the day or night, regardless of whether our bank is open or even nearby.

However, along with the convenience comes certain risks that we all need to be aware of when using an ATM. It is important to understand how to use an ATM safely as to protect ourselves and our money:

• * Avoid using an ATM during the night. Plan ahead and only use an ATM machine during daylight hours, if possible.
• * If you do have to use an ATM during the nighttime hours, choose one that is well lit and located in a heavily traveled area.
• * Avoid using ATMs that are unfamiliar or are not in heavily traveled areas.
• * Always choose an ATM that is monitored with security cameras.
• * Always check your surroundings before getting out of your vehicle to use an ATM.
• * Keep your doors locked and all other windows rolled up when using a drive-up ATM machine.
• * If possible, bring a companion along when you use an ATM machine.
• * If the ATM looks different or unfamiliar, do not use it, as thieves may attach card readers to ATMs in an attempt to gain users’ personal ATM card information.
• * Do not approach an ATM machine if there is someone else using it. Instead, stay in your vehicle until the area is clear.
• * Do not keep your ATM pin code with your ATM card.
• * Do not choose an obvious pin code for your ATM card.
• * Always keep your ATM receipts and use them to check your monthly ATM statement for errors or discrepancies.
• * Get your ATM card ready before you approach the ATM machine. Many victims are caught off guard when a thief approaches them while they are fumbling for their card.
• * Never count your cash at the ATM. Instead, take your card, cash and receipt and head directly to your vehicle.
• * If at any time you feel uncomfortable during your ATM transaction, cancel the transaction and leave immediately. Remember: it is always best to listen to your gut when in a potentially dangerous situation.

Five Reasons to Have a Credit Card

Choosing Credit Card Credit Card Rewards Credit Score Introduction

Contrary to popular belief, credit cards are not our enemy. In fact, they can be extremely beneficial to us in many ways. Of course, handling our credit responsibly is of the utmost importance, so it is vital that we become educated on how to responsibly use credit cards before we get in over our heads in credit card debt.

If you are prepared to handle your credit card debt in a responsible manner, then you should understand the many ways in which credit cards can help you and your credit.

You should have a credit card to:

1. Build your Credit Score - In order to have good credit, you must first have credit! A good credit score typically shows credit in different areas; namely, installment loans and credit cards. Creditors are unlikely to approve you for larger loans such as cars and homes if you have not proven your credit worthiness. And a credit card is the way to show this!
2. Build your Credit History – Just like building your credit score, a creditor simply can’t consider you a good credit risk if you don’t first establish a strong credit history. A great way to establish your credit history is to charge several purchases each month and pay off those purchases in full at every billing cycle.
3. Protect your Investments - Many credit card companies offer purchase protection, which can be extremely valuable if you use your credit card to make large purchases. Each credit card company has different policies regarding purchase protection, but most cover the cost of replacement in case of theft or damage.
4. Take Advantage of Reward Programs – Many of today’s credit cards come with perks in the form of reward programs. From free airfare and free hotel stays to cash-back programs and discounted vacations, reward programs offer fabulous rewards for simply using your credit card for purchases.
5. Protect yourself in Case of an Emergency - A credit card can quickly become your best friend if you find yourself in an emergency situation without cash. A credit card may allow you to replace a broken furnace; it may allow you to purchase last-minute airfare; or it may enable you to have your car repaired. Whatever the reason, a credit card may prove to be extremely useful for those moments in your life when you need financial help.

The Many Ways in Which Consumers will be Protected Under the New Credit Card Reform Bill

News

The new credit card reform bill, which was recently signed by President Obama and set to go into effect in July 2010, was created in an attempt to reign in credit card companies that many say have simply not played by the rules.

For many of us who have worked to maintain our credit, the new credit card bill promises to protect us from unscrupulous activities commonly played out through credit card companies. For those with poor credit and less-than-stellar credit histories, the credit card reform bill will not provide as much protection.

The new credit card reform bill has many, different aspects, some of which can become quite confusing at first glance. However, it’s in our best interest to educate ourselves on these new laws and to make sure that we are adequately protected against questionable practices.

• Credit card companies will no longer be able to raise rates on your credit card if you are late on any other type of installment loan or utility bill. Called universal default, this practice had many credit card consumers screaming foul. So, if you missed the deadline for your gas bill, you can rest assured knowing that your credit card company cannot penalize you and raise your credit card interest rate.
• Credit card companies cannot charge you finance charges if you pay your bill in full. Called double cycle billing, many credit card companies would add finance charges to a customer’s next billing cycle, even if the balance was paid off in full.
• Credit card companies can only institute a credit rate hike if you fail to pay your bill on time or if the credit card has a variable interest rate.
• Credit card companies must provide customers with reasonable due dates; in other words, they must provide consumers with at least 21 days to pay their bills.
• Credit card companies must provide consumers with fair payment allocation. In other words, payment made to your credit card must be applied to higher interest rate charges first.
• Credit card companies will not be able to charge outrageous over-the-limit fees. In addition, card holders will be able to choose whether to pay over-the-limit fees or simply be declined if they exceed their credit limit.
• Credit card companies must provide clear, easy-to-read terms and conditions to their customers so that consumers can make the most informed decisions regarding their credit.

Credit card Insurance – The Basics

Card Security

Nearly every credit card holder has been asked to take out additional credit insurance. Most of us simply decline this insurance, but is it really in our best interest not to carry insurance with our credit cards?

Although credit insurance varies between credit card companies, the majority of credit insurance plans involve protecting you and your credit in case of unemployment, disability or death. The credit card company essentially continues to pay your credit card bill every month until you are able to start paying again.

If you lose your job tomorrow, or become disabled, will you have the money to continue paying your credit card? If not, you can quickly fall behind on your credit card payments and just as quickly ruin your credit. Are you willing to take that chance?

In addition, if you die tomorrow, will your spouse have the funds to pay off your credit card debt? The last thing many of us want to do is leave our loved ones the responsibility of paying for our debts.

The credit insurance offered by many credit card companies is usually referred to as credit life insurance, credit property insurance, credit disability insurance and involuntary unemployment credit insurance.

Credit life insurance – This consists of life insurance that is designed to pay off your credit card balance in the event of your death. The lender is the beneficiary of your policy; in other words, the life insurance policy is automatically paid to the credit card company. Some credit life insurance policies have a fixed value, while others will not.

Credit disability insurance  – Another popular option which is often sold with credit life insurance, is designed to pay your monthly credit card payments for a fixed period of time and while you continue to prove your medical disability. It is important to remember, however, that most credit disability insurance policies will not pay your bill forever and will not pay off the balance of your credit card.

Involuntary unemployment credit insurance – Similar to disability insurance, as the credit card company pays your minimum credit card payment every month until either (a) you become employed once again, or (b) the policy ends. Just like disability credit insurance, involuntary unemployment credit insurance has a fixed time frame.

Credit property insurance - This  is a bit different than other types of credit card insurance, as it is designed to pay off your credit card debt for items that were destroyed in certain situations, such as a fire or earthquake. For example, if you purchased a new, flat screen television on your credit card and it was then destroyed during a fire, your credit property insurance policy would pay off that debt.

For most credit card holders, it makes sense to purchase credit card insurance, unless of course the costs outweigh the benefits. For example, many consumers already hold life insurance policies that would cover their credit card debt, and some consumers already have disability policies that would cover their living expenses while disabled.

If you are considering credit life insurance, remember to read the terms and conditions of the policy carefully and to weigh both the advantages and disadvantages of the policy before committing to any type of insurance policy.

Beware of Credit Card Scams

Credit Repair

You lost your job, you fell behind on your credit card payments and your credit has plummeted now to the point where you can’t get approved for a car loan. Then, almost out of nowhere, you get a letter, or a phone call or an email from a company claiming to fix your credit score – overnight!

Unfortunately, this scenario has been played out all too often all over the United States, particularly over the last couple years.

If this type of offer sounds tempting, imagine what an individual with poor credit must think. Unfortunately, there are many scammers hoping that this kind of promise sounds just too good to pass up.

Too Good to be True?

The credit crisis of the last, two years has left the door wide open for scammers looking to take advantage of consumers who find themselves in financial trouble. In other words, these types of “fix your credit overnight” companies are downright bogus, and even illegal!

They work by making promises of a quick credit fix, and often charge hundreds, if not thousands, of dollars to do it. And the only thing the consumer is left with is an empty bank account and still-poor credit.

There is no Substitute for Hard Work

Although it may sound enticing to hire the services of a company that promises to instantly repair your credit, the reality is that it just can’t happen. There is absolutely nothing a company can do (legally) that can change a poor credit score into a picture-perfect one.

Although this may be hard to hear, there is so substitute for working hard to repair your credit. It will take some time to accomplish, but it is possible to repair your credit by paying your bills and taking care of delinquent or past due accounts.

Consider Credit Counseling Service

For those consumers in credit trouble, there are many not-for-profit credit counseling companies that can help you repair your credit by working with your creditors to set up reasonable payment plans and by reducing or eliminating charges and fees.

There is a big difference between a credit repair scam and a credit counseling service, however. It is therefore important to research the credit counseling company beforehand and to carefully read all of the terms of the agreement.

Beware of a company that contacts you and promises to repair your credit for a fee! A credit counseling service will never ask for upfront fees to work with you. They will also be accredited and will likely be licensed in the state in which they are operating.

Scammers, on the other hand, will often not have a permanent address, and many of them will operate out of the country to avoid prosecution.

If your credit is poor and you are struggling to pay your bills and maintain your credit rating, then it may be time to contact the services of a credit counseling agency. Always remain aware and vigilant, however, of any company offering the “too good to be true,” as this is often the case!

Don’t let desperation and despair get the best of you – credit scammers are counting on it! Instead, remain level headed and educated and work towards the ultimate goal of repairing your credit.