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Couples and Credit: What to Discuss

Credit Card Debt

For those who are married, getting married or involved in a serious and committed relationship, finances are an important part of your life together than should be considered and openly discussed. This includes credit. Few couples keep their finances separate, therefore, it is vital to be in the know and be in agreement on every aspect of money, debt and credit. This helps to avoid conflicts and confusion that could lead to a disruption or destruction of the relationship. Many break-ups occur over money. This is unfortunate and can often be avoided with open communication. Here are some important things that couples must discuss when it comes to credit.

Joint Accounts or Individual

While few couples maintain separate accounts, some do, for various reasons. It is important for those in long-term relationships to weigh the pros and cons of their individual situation to decide whether or not to combine accounts or keep them separate. Couples need to consider the ramifications of each decision and must have complete trust in each other for either situation to truly work.

How Often to Check Credit Scores and Activity

This one is pretty straightforward. For the most part, people will opt for checking on things annually. However, if there is suspicious activity or large purchases have been made, it might be a good idea to take a look more often, especially for those looking to build up their credit rating.

How Much Debt is Acceptable

Debt is an unavoidable part of life. However, couples need to discuss and set a limit on the amount of debt they are willing to carry at any given time. This could make the difference between financial stability and financial disaster. This should be based on income, expenses and ability to pay and should also take changes in income into consideration.

Then When, What and Why of Credit Card Usage

Couples should discuss and be in agreement on the specifics of using their credit card or cards. This plan should be made, with trust in mind, and both parties should adhere to it. Surprise debt can really hurt a relationship, and if harmony is what you’re going for, then a credit card usage agreement is vital.

Couples also need to discuss the opening of new credit lines prior to ever doing so, determining what is right for them and their situation. No spouse should open a new line of credit without consulting the other spouse, as the financial situation affects both of you, as well as your children. If one spouse winds up in credit trouble, it can affect the other spouse, thanks to community debt.

You will need to decide which of you will manage which accounts and create a plan of action for financial and credit disasters. If you follow these simple steps and have these conversations, your relationship with each other and your money could remain much tighter than without having discussed these things.

Destroying Credit Cards the Right Way: Optimizing Protection from Identity Theft and Fraud

Identity Theft

If you have a credit card that you no longer plan to use, you probably want to destroy it. However, you will want to do it correctly, taking precautionary measures to protect your identity and your credit rating.

The first step you  should take is to contact the credit card company and ensure that the account is closed or canceled. Some people fail to do this and those who do remember need to know that it can take some time for the request to be processed. In the meantime, the card might still be able to be processed, incurring more debt for you, often at a higher interest rate, was your cause for canceling due to a change in terms and conditions. Follow these tips to ensure that your credit card is properly destroyed and you are protected. Don;t just toss it into the trash!

Scissors

It’s a tried and true method, but you do not want to cut that card just any old way. It is easy for a thief to piece cards back together and get the information they need. In this day and age, thieves can easily ruin your good name with online and telephone purchase, without ever having shown the card to a merchant.

Cut your card into tiny pieces. Be sure to cut through the numbers, cross cut, cut through the signature and make it next to impossible for anyone to piece it back together or to want to go to the effort.

Shred It

A document shredder that is designed for credit cards and cds, as well as paper can effectively do the job too. These cut the cars both vertically and horizontally, into teeny pieces, ensuring no one can get their hands on your information.

Erase the Magnetic Strip and Microchip

These are the information centers of your card. Cutting them is a great idea, but take it one step further for added protection. Before you begin to destroy the card itself, take a few extra seconds to run a strong magnet over the strip. In fact, do it a couple of times, just to be sure!

Bag It

Even though the card is destroyed, bag it separately from the rest of your trash. You may wish to double bag it and then put it in the bottom of your outgoing trash. While thieves do tend to dumpster dive, they are not likely to dig through a lot of messy stuff (like your kitchen refuse) or grab for things that are not readily identifiable. If they do find it, they have little chance of using it anyway.

Recycling

Recycling is a commendable practice to add to your lifestyle. However, tossing both your credit cards and important papers into the recycling bin without having first destroyed them is not a smart idea. These things are sorted by human beings. This means your info can be seen, and face it, there is no way for you to know who is honest and who is not. If recycling is your choice, destroy it, bag it and then toss it in the bin.

Flame Broiled

If you are worried that none of the above methods can really afford you foolproof protection, burn your credit card. Yes, it’s going to smell and it will make a mess. However, a flame broiled card is a sure way to keep your identity and your good credit safe.

The Progress Card by Capital One: Helping Consumers Rebuild their Credit

Credit Card Debt

Although there are many credit card companies that are trying to distance themselves from those consumers with bad credit, there is one card that is specifically designed for credit card customers that have a less-then-stellar credit rating.

Capital One recently introduced the Progress Card, which will be available around Christmas. This card features no interest rate and incentives for paying on time.

Like any other card designed for individuals with bad credit, the interest rate is quite shocking. In fact, it may start as high as 34.9 percent. However, most individuals have few options when it comes to rebuilding their credit or being approved for a credit card.

Incentives to do Better

It is important to note that, although the Progress Card has a super-high interest rate, credit card customers can work toward lowering their interest rate, simply by paying their bills on time and paying more than the minimum payment.

For example, if you pay your bills on time for six months, and pay at least the minimum payment during that time, you will be eligible to have the interest rate reduced by five percent. As you continue to pay your minimum payment, on time, you can expect to see a five percent increase every six months. Pay on time for 18 months and that 34.9 percent interest rate is now down to 19.9 percent.

Capital One may also offer consumers an increase in their credit limit by their fourth statement if they display responsible card usage.

Working Towards a Better Credit Rating

The Progress Card, true to its name, enables individuals with bad credit to make progress and work toward a better credit rating. This card provides consumers with the tool necessary to begin building a positive credit history and credit rating.

For many individuals that have been adversely affected by the economy, the credit card crisis and the near-collapse of the housing market, this card could have not come at a better time.

Perhaps more credit card companies can take a lesson from Capital One and discover that many otherwise-responsible consumers need a second chance at rebuilding their credit and rebuilding their lives.

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.

Common Questions about your Credit Report

Credit Score

We all know that we must stay on top of our credit to maintain a strong FICO score, but how many of us actually do just that?

Your ability to obtain a mortgage, purchase a car or secure a credit card all relies on your credit rating. It is therefore of the utmost importance that you order a copy of your credit report.

Luckily, under the nationwide Fair Credit Reporting Act (FCRA), which is protected by the Federal Trade Commission (FTC), you are entitled to a free copy of your credit report from all three of the consumer reporting agencies – Equifax, TransUnion and Experian – once a year.

Now that you are armed with this information, you can begin the process of reviewing your credit report.

Q: What type of information appears on my credit report?

A: Your credit report should contain your personal information, such as your name, your address and your source of income, as well as all sources of credit. It will also report any bankruptcies, arrests or cases in which you were sued.

Q: What is a typical credit report comprised of?

A: The four sections of a standard credit report include: your personal, or identifying, information; your credit history; public records; and inquiries.

Q: What are public records?

A: Public records include such things as bankruptcies and law suits.

Q: What are inquiries?

A: Every time you apply for credit of any kind, it is typically recorded as an inquiry. Excessive inquiries do not look very good in the eyes of a creditor; therefore, too many inquiries can lower your credit score.

Q: Do I need to look at my credit report through all three credit reporting agencies, or is the information the same?

A: Each credit reporting agency has their own set of information, as well as their own credit rating for you, so it is important to review your credit report through all three credit reporting agencies.

Q: Who uses the information on my credit report?

A: The three credit reporting agencies – Equifax, TransUnion and Experian – sell this information to creditors, insurers and even your employer. They then use this information to determine your eligibility for credit cards, insurance and employment, among many other things.

Q: What if I find a mistake on my credit report?

A: If you find a mistake or an inaccuracy, you must immediately contact the credit reporting agency and file a report. It is then the credit reporting agency’s duty to research the problem and correct it, if needed.

How to Begin the Process of Rebuilding your Credit Rating

Credit Repair

If you have a damaged credit score from past problems or indiscretions, don’t despair. There are ways in which you can work to rebuild your credit rating so that you can look forward to a more positive financial future. Below are initial tips that will get your credit on the road to a positive credit score.

1. Order a copy of your credit report. Hiding from your credit problems will not make them go away. Therefore, ordering a copy of your credit report from all three credit reporting agencies is an excellent, first step in taking accountability for your past credit mistakes. It is also the best way to simply see where you are and to leave no credit blunders left unturned, so to speak.
2. Call your creditors. There is no better way to address your credit problems than to simply contact your creditors. Most creditors will be more than happy to work with you to find easier repayment terms so that you can begin righting your credit wrongs.
3. Pay off your existing debt to lower your debt-to-income ratio. Repairing your credit is an important step, but lowering your debt-to-income ratio is also important. It is therefore extremely important to develop a game plan to pay off your existing debt, and to stick to it!
4. Do not apply for any new credit. Instead of incurring more debt, avoid taking out any new credit cards, personal loans or auto loans during this time. Instead, focus all your attention on your existing debt and how you can pay it off.
5. Don’t ignore other types of monthly bills. It’s often the bills we don’t think about that have the biggest impact on our credit scores. Water bills, electric bills, phone bills and gas bills are just some of the monthly bills we all pay. But many of use fail to recognize that not paying these bills in full or on time can have an adverse effect on our credit. Bottom line: don’t forget about even the smallest of debts when it comes to rebuilding your credit score!
6. Find ways to increase your payments. One of the best ways to improve your credit is to reduce your debt. And a great way to make a greater impact on your debt is with larger, monthly payments. Don’t think you have extra money each month? Make a budget and stick to it! You may be surprised to find that your monthly “incidentals” are preventing you from paying off your debt!