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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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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Secrets To Get Low Interest Rate Credit Card From Current Provider

July 24, 2009 – 6:31 pm

You probably have heard many times that to get the best credit card, you need to do intensive research. It could be done online or offline. However, the thing is that you should not settle for one prospect provider or accept what seems to be an attractive offer. By taking time to do research, you will save regrets after seeing that there are more favourable offer compared to what you accepted.

One of the primary considerations in choosing credit card is its low interest rate. It could be an introductory offer or it could be a seasonal offer. If you accept the offer taking into account other benefits of the card, then you need to stick to it as card hopping from one provider to another may ruin your credit score. But what if you saw that other providers are offering low interest rate credit card while you are tied up with higher interest in your current provider? Can you do something to lower the interest rate?

The answer is yes. With strong competition from various credit card companies, you as a customer become valuable to a company. So if others are offering low rates, it is possible that your company will also offer you low interest rate credit card as well. You can also ask or negotiate if your credit card company is not offering it.

You should have a good payment record. There is no better sign for the providers to give you low interest than when they see that you have been consistently paying your dues and fees.
You have favourable rapport with the provider. This does not mean that you should always be pleasing to the company even if you have to complain, or that you should comply with every bill even if it is questionable. This simply means that if you established a good relationship with your insurance provider and aims at working for the best of both parties, then you will be mostly likely to be granted with low interest rates.

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Is it Possible to Find a Good Debt Settlement Company?

July 23, 2009 – 7:25 am

Perhaps we’ve asked an impossible question –  are there even any good ones out there TO be found? Isn’t the entire premise of the creditinfocenter.com website to educate and teach individuals that they can pursue credit repair, debt settlement and other credit and debt-related actions effectively on their own?

Although we are strong advocates of avoiding the use of  debt settlement companies, we also recognize that not everybody has the time, or desire to take on the task of tackling debt settlement negotiations with their creditors. So the next best step is to find a company that is trustworthy, knowledgeable, honest, and reliable.

Finding a good debt settlement company isn’t easy. There are so many companies out there babbling about how great they are, how you can settle your debts for pennies on the dollar –  they all start to look alike after a while. Ads on TV, the radio, in newspapers – their jingles are likely plastered in your brain. But how in the world can the average person tell the good ones from the bad ones?

The answer is, to “interview them”. Much like you would interview a potential caregiver for your child with appropriate questions to assess their skills and knowledge, it is crucial that you ask a potential debt settlement company relevant questions to determine their level of expertise (or lack thereof). Here is a list of questions that you should always ask!

How much experience do you have? In this industry, if a company hasn’t been around for at least 3 years, stay away from them!

Are you a member of TASC? The Association of Settlement Companies is the most prominent trade association for the industry, and has a fairly strict code of ethics. Any company you choose should be a member. Additionally, review the company’s record with the Better Business Bureau as well as their state Attorney General or Commissioner of Banking.

How are your fees structured? Settlement companies charge significant fees, but there are two basic approaches. One approach involves collecting a flat fee based on your total debt amount, and the fees are often collected up front even if no settlements are completed. Another option the settlement company may offer is to base their fee on the amount of debt reduction they can negotiate. Fees should ultimately be based on performance and total debt reduction achieved, not debt amount. Furthermore, if employees are paid on a commission basis, run away!

If I decide to cancel, what is your refund policy? You should be provided AT LEAST a 30 day period to cancel with a full refund of any up-front fees.

How long will it take to get results? If they promise immediate results, or indicate it will be more than a year before progress is made, both are red flags. Some settlement activity should occur well within the initial 12 months of the process.

What happens to my credit score? If they tell you that it won’t be affected negatively, they are being dishonest. Your score is highly based on repayment of debt, and the debt settlement process usually involves a period of non-payment to the creditor while negotiating and collecting payments into a third party account. Expect your score to be reduced initially.

Where will my payments be sent? The answer should always be to a third party escrow company and held in a FDIC insured trust account.

Will there be any tax implications from the debt settlement process? In many cases  a  consumer will be responsible for taxes on the forgiven debt. If the forgiven debt totals $600 or more, you will generally owe income taxes on the amount forgiven, substantially reducing the total savings from debt settlement. If the company tells you otherwise, run away!

When you are at your lowest point and feel there is no other way out, you may hear a commercial that says you can be “debt free in a matter of months”. It is easy to fall prey to these companies when you are in a vulnerable state, and feel you have few options. Use the information above to help screen and choose a company wisely if this is the route you choose to pursue. For further information on debt settlement companies, consult the The National Foundation for Credit Counseling (NFCC).

Readers, if you have any experiences with debt settlement companies that you would care to share, please do so with a comment?

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