Credit Cards For Less Than Perfect Credit

Debt Settlement Industry Warns Against Non-Professionals Tackling Debt Settlement

July 28, 2009 – 7:13 am

Ridiculous! That was our first thought when reading the title of this press release from TASC (The Association of Settlement Companies), an organization that “serves to protect consumers through an organization seal that represents best practices and standards of reputable companies”.

The press release was TASC’s response to an ABC News Report that was aired on July 20, which purportedly shared some “success” stories in which consumers were able to negotiate and settle their credit card debt without the assistance of a debt settlement company.

A snip-it from the press release:

TASC, which seeks to protect consumers, does not want those struggling with similar unsecured debt to be misled into thinking that the method of debt settlement presented in the report is typical, practical or, in many cases, successful.

“We are always on the side of success, but generally it’s actually quite difficult for individuals to settle debt with multiple creditors since each creditor is only interested in collecting the individual debt owed to them,” Chris Kesterson, President of TASC, said. “We want the consumers to come out of this process in better financial shape, not worse.”

Certainly makes you wonder exactly how desperate this organization is to justify their existence. While there is a place for their services for certain individuals (read this blog post to learn how to select a debt settlement company if you are one of these individuals) the creditinfocenter.com website has been advocating to readers for years that this is a process that you can do yourself for little or no money.

In fact, the current economic times seem to be improving the odds that you will be successful with debt negotiation and settlement offers. A recent article in msn.money, aptly titled “Credit Card Issuers Ready to Deal”, reports that banks are negotiating with debtors on a more frequent basis, and in some cases, they’re willing to take substantially less than what is owed. The rate of charge-offs in the banking industry is on track to more than double from the 2.1% recorded in 2008, with expectations that it will reach 5.2% by year’s end.

Frankly, it seems like the ideal time to throw your hat into the debt settlement or negotiation ring if you find yourself unable to handle your credit card debt. Particularly if your hardship is due to unemployment, or other verifiable “justifiable” means, your creditors just may be willing to work out a deal that is win-win for each of you. It is certainly worth a try –  don’t you agree, readers?

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Higher Education Passing on Credit Card Fees

July 27, 2009 – 3:02 pm

With students increasingly turning to plastic to pay rising college costs, public and private colleges and universities across the country are passing on the cost of using credit to their students. Tuition being paid with plastic will now incur a fee of up to 2.75%. In the spring of 2009, Northwestern University began accepting credit cards to cover undergraduate tuition and tacked on the 2.75% fee. The University of Illinois and Harper College in Rolling Meadows, IL, also charge a fee to students paying with credit cards.

Universally accepted at businesses around the globe at no additional cost, credit cards have been one way students make ends meet. Almost one third of students charged tuition last year, up from 24 percent in 2004, according to a study by student loan giant Sallie Mae.

According to a Nilson Report, merchants and institutions pay an average of 2% to process each credit card transaction. Colleges and universities have traditionally paid this fee. But that is changing: In 2007, 26% of colleges charged a credit card payment fee, either directly or through a third party, up from 14%in 2003, according to surveys by the National Association of College and University Business Officers.

The move will ultimately drive up the already skyrocketing cost of college by hundreds or even thousands of dollars and hits those who are unable to pay off their balances particularly hard. Nearly four out of five college students carry a balance each month and face finance charges. The fee to students is being described as the price of convenience and is paid to the vendor and not the educational institution. Doug Beckmann, Senior Associate Vice Preside for Business and Finance at University of Illinois said charging the fee is “the only way U. of I. could afford to accept credit cards for tuition.”

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Debt Consolidation Loans For Bad Credit: Do They Exist?

July 27, 2009 – 2:43 pm

You might still see plenty of ads for them, but bad credit consolidation loans are next to impossible to actually get. If something is as hard to come by as these loans, do they even still exist? The commercials may still be airing due to bulk advertising buys and the websites advertising these consolidation loans for people with bad credit are still out there, but none of this means that you can actually get a loan.

The global economic downturn has made it a lot harder to get loans of any sort – the disappearance of these once ubiquitous consolidation loans is one of the results of the downturn. Lenders are just not as open about who they lend to and why anymore. The mess we find ourselves in now is partially due to extending loans to people with weak credit histories and low or no verifiable income.

While it seemed to work for a while, the snowball affect took place and now just about everyone is suffering because of it. Now, lenders are a lot more strict with who they will give loans to. Even those with great credit scores are having time obtaining credit, so what would make anyone believe that those with bad credit will have it any easier?

Does this mean that there are no options for someone deep in debt with bad credit? It certainly does not. In times like these, the best course of action is to simply pay off the debts using your monthly earnings. Those who owe a lot of money may find this almost impossible. If you are someone that has over ten thousand dollars in unsecured debt, such as credit cards, then you can turn to a debt settlement program. The debt settlement program is designed to help those who owe a lot and cannot afford to pay it all back.

Debt settlement programs take care of the important work such as negotiating with your creditors to drop late fees, interest charges and sometimes even a significant portion of the principal! These new, lower debts are then paid off and marked as such in your credit report.

This means that you will no longer have to pay the monthly payments with the high interest rates. It also means that you are finally able to truly begin to work on rebuilding your credit rating.

But how do you know whom to trust? When looking into different debt settlement programs you want to make sure that you are dealing with a company that is one that can be trusted. It is important to make sure that they have satisfied customers that they have already helped and that they are not in any legal trouble throughout the court systems.

After doing your due diligence, you’ll know who to turn to when you need help. You’ll be able to finally pay off your debts and get back into good financial standing.

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Credit Score Includes All of This

July 27, 2009 – 1:23 am

If you are sincerely interested in improving your FICO credit score, bankruptcy MUST be avoided! Bankruptcy is more negative than late payments or collection accounts.

Your credit report includes a lot of information about your credit behavior and financial situation. This information exceeds the purpose of the credit score and gives a lender a wider idea of how risky is dealing with you as a borrower. However, the credit score gives them a first glance and is especially useful if there is not much time to analyze the rest of the details.

Where Does the Information Come From

All the information contained on your credit report is reported by creditors, banks, and financial and commercial institutions that have done business with you at any time. Your credit score is calculated based on some of all of this information and no external info is used. All the variables that are included in the credit score formula are based on your credit report.

Static and Dynamic Information

For starters, the credit score includes both a static and dynamic analysis of your credit and financial situation. Part of the score shows your current debt situation and part of it shows the evolution of it. Thus, your payment history will affect your credit score and your current overall debt will also affect your credit score.

Because outstanding debt may taint a FICO score, try to pay-off balances on both revolving credit cards as well as other financial accounts. For the sake of appearances and the credit score, target bankcard debt to 60 percent with 30 percent towards installment debt.

Consequently a bad credit score can show because you currently have too much debt or because you’ve missed payments or paid late before. The opposite is also true, since your credit score reflects your present and past, if your current situation shows a high debt but you had excellent credit behavior before, your credit score won’t be that bad. The inclusion of both present and past of your credit history contributes to curb bad and good credit modifiers so as to give an objective outlook of your credit stance.

Information Included

As regards to credit history, the information that is taken into account in your credit score is: late payments, missed payments, bankruptcies, defaults, liens, judgments, disclosures, etc. All of these are reported by your creditors and the importance of each one is different: a late payment will make your credit score drop a bit, while a bankruptcy will actually ruin it.

When it comes to debt, the information included is: Loans, credit card balances, lines of credit, agreements on your bank accounts, etc. Even when you don’t owe money, when considering loan approval, lenders will take a line of credit, credit card limit or bank account agreement exactly as a loan. Thus, the key to improve this factor is: “if you don’t use it and don’t plan to use it, then, close it.”

Finally, other information that affects your credit score is: credit pulls with the purpose of considering loan applications, loan declines, length of credit history, store cards, etc.

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Relief in Sight – Default Rates Projected to Fall

July 25, 2009 – 6:07 am

Lenders have seen the largest number of credit card defaults since 1983 and increases in the triple-digits of charge-offs since 2007. But according to regulatory filings by the major credit card lenders, defaults and delinquencies are falling and could be lower than estimated in the second half of the year; the first sign that default rates have reached their peak. According to Bernstein Research, the average 30-day delinquency rate decreased in May to 1.57% from 1.71% the month before. It was the second month in a row that 30-day delinquency rates declined. And with American Express predicting improvement in the second half of the year, there may be a glimmer of hope about consumer credit.

• Capital One Financial Corp. announced a modest rise in annualized net charge-offs in June, much smaller increase than was expected. Delinquent accounts of 30 days or more saw a modest drop to 4.77% in June from 4.9% in May.
• American Express announced delinquent accounts of at least 30 days declined from 4.7% in May to 4.4% in June. Although American Express charge-off rates grew to 10% from 8.5%, it was below the projected rate of between 10.5 and 11%. “Assuming delinquency and bankruptcy trends continue to be below previously expected levels, the company believes that it is highly likely” that write-offs for the third and fourth quarters on U.S. cards “will be better than previously forecasted,” the company said.
• JPMorgan Chase, the largest issuer of credit cards in the U.S., saw a 0.32% decrease of delinquent accounts from  from 8.36% in May to 8.04% in June. Charge-offs fell to 9.9% from 10% in May.
• At Discover Financial, default loans fell from 8.91% in May to 8.75% in June.
• Capital One saw a lower percentage of defaulted loans of 9.41 compared to May’s 9.73.

Analysts believe that the somewhat favorable indicators may be seasonal and remain concerned about credit card charges. One factor that continues to be of concern for a recovery of the financial sector of the U.S. economy, is unemployment, which rose to a 26 year high of 9.5% in June. At the same time, the decrease in May delinquencies could be due to consumers taking advantage of one-time economic stimulus benefits, such as income tax cuts, to pay down debt. The credit card industry does not forcast profitability unil 2011..

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