12 Things That Will Never Affect Your Credit Score

by Guest on February 17, 2011

financial-tipsYour credit score is important. You’ve heard it a thousand times, from your parents, financial advisors, TV advertisements, and seemingly everyone in between. They are, of course, correct. Your credit score impacts how much you will pay for a credit card, mortgage, or any number of loans. Many things affect your credit score, but there are also numerous factors that play no role in how this all-important number is computed. Here are twelve things that you don’t need to worry about when it comes to establishing a good credit score.

Anything not in your credit report - There is a wide range of information in your credit report, including payment history, level of indebtedness, length of credit history, and types of credit used. Your credit score won’t take into account anything outside of the credit report.

Know Your Rights with Debt Collectors

by Odysseas Papadimitriou on February 11, 2011

illegalDebt collectors make their money by successfully getting you to pay your debt, often with threats that are not even allowed by law. If you find yourself in a situation where debt collectors are hounding you, it’s important to know the rules that govern their conduct in order to deal with them effectively.

The Fair Debt Collection Practices Act determines the rules for many kinds of collections efforts including dishonored checks, rent, medical bills, utility bills, insurance bills and claims, student loans, credit cards, condo fees, attorney’s fees, judgments, and other personal debts.

How and When to Dispute Credit

by Guest on February 8, 2011

improve-bad-creditKnowing when and how to dispute accounts on your credit report can make a huge difference in getting inaccurate information removed from your credit profile. Despite some promises to the contrary that you might come across, dispute letters are not the be-all-end-all of the credit repair process. There is no special formula to writing a carefully-worded argument that will convince the credit bureaus to drop your bad credit history as soon as they receive it.

Yet this myth continues to persist, so I thought I’d take the time to set the record straight on disputing your bad credit history. The trick to writing dispute letters that work is that there is no trick; it’s about knowing how and when to use them.

Don't Learn Your Credit Card Lesson the Hard Way

by John Kiernan on February 4, 2011

credit-lessonI received an e-mail just the other day from a nice woman living in Milwaukee, Wisconsin (Go Pack!) who wanted advice about efficiently improving credit standing. You see, her son was a senior in college and had opened a 0% APR credit card because he thought it sounded too good to pass up. He then proceeded to rack up charges which he could not pay for. However, instead of telling his parents about his credit card debt and asking for help, he just ignored the situation, hoping it would go away. After all, he was just a kid and could probably say “I’m sorry, I didn’t know any better,” and all would be forgiven, right? Well, that seemed to be the case for a couple weeks until more and more letters started coming from his issuer using words like “past due” and “account suspended.”

At this point, the young man (whom we’ll call Sean) finally consulted his parents. “What should I do?” he wondered. They told him that he needed to become current on his bill in order to avoid falling deeper into delinquency and incurring more significant credit score damage. Since Sean didn’t have much money of his own, his parents loaned him the cash, effectively closing the account, under the condition that he find a job at school so that he could pay them back.

What You Need to Know About Debt’s Statute of Limitations

by John Kiernan on February 2, 2011

Statute of Limitations for DebtWhile many of us might think that the term “statute of limitations” is only relevant to criminal prosecution and TV shows like Law and Order – Special Victims Unit, it’s actually quite important to personal finance matters as well.

In general, a statute of limitations is how long something remains relevant under the law. While it certainly can be used to describe the amount of time following a crime that someone can be prosecuted for committing it, the term may also be used in the context of a lawsuit to recoup credit card debt, for example.

We’re Not Out of the Woods Yet; Credit Card Debt is Actually Still Rising

by John Kiernan on December 10, 2010

debtComing out of the Great Recession, the last thing anyone wants is for financial history to repeat itself. However, when it comes to consumer debt, that is exactly what’s happening. Many people think that overall credit card debt is decreasing just because consumers paid down over $43 billion in debt during the first quarter of 2010. However, this is merely a reflection of what occurred in the same quarter last year. Numbers from the second and third quarters of 2010 show that—like in 2009—consumer debt is actually rising and is on track to wipe out most of the reduction observed in Q1.

According to the Q3 2010 Credit Card Debt Study conducted by CardHub.com, consumer credit card debt increased by almost $6.5 billion in the third quarter of 2010 alone.

Credit Card Applications: After Three, Think Security

by John Kiernan on November 23, 2010

New Credit CardsI recently got a call from a college friend who wanted advice on how to get approved for the best credit card possible . He said he had applied and applied but for some reason had still not been given use of a single card. What should he do differently, he wondered, when applying for cards in the future?

My advice to him: immediately stop applying and open a secured credit card because it provides both guaranteed approval and a safe way to rebuild credit.

Five Ways You Can Turn Your Debt-inspired Frown Upside Down

by Odysseas Papadimitriou on November 19, 2010

5 waysOften, the holiday season—with its emphasis on gift giving—serves as an unwelcome reminder of any financial problems people may have. While this notion might seem depressing, it should actually be viewed as an opportunity. Instead of getting bummed about your situation, simply take the reminder as impetus to remedy your financial woes. The lowering of credit card debt, for one, can be approached and ultimately achieved through the consideration of five simple steps.

Step 1 – Evaluate your necessities
Approach your lifestyle with an exceedingly critical eye, and you will most likely discover that you spend money on things that you can certainly live without, though you might initially believe this to be impossible. You shouldn’t waste money on things like cable TV packages, cell phone data plans, dinners out or fancy vacations. Instead, fund only your means of subsistence—things like food, housing and health insurance—and use your savings to pay down your debt. While this step is the most obvious way to lower your debt, it is also by far the hardest to execute because it is often difficult to part with luxuries you have grown accustomed to.

‘Money is Not Easy, but It’s Simple’

by Kimberly Cole on September 2, 2010

financial-happinessIn an uncertain economy, securing your financial future may seem harder and more important than ever. As anyone who has struggled with their finances knows, there is no magic formula to solving your financial woes. I recently spoke to Laura Rowley, Yahoo! Finance personal finance expert, who says that everything to do with money ultimately comes down to trade-offs.

“If you’re trying to get a handle on your finances, keep in mind that you’re paying for the things you buy with your life’s energy,” Rowley said. If you want a $500 Prada handbag, for example, how long and how hard do you have to work in order to get it?

Good News for Consumers with Defaulted Credit Card Debt

by Guest on July 14, 2010

debtThis guest post was written by Bob Brooks, host of the Prudent Money Radio Show and President of Prudent Money Financial Services. For more information please visit www.prudentmoney.com.

About a year ago, I wrote that things might really start to change in the process of how credit card companies go after consumers who have defaulted on their accounts.

2010 Starts with an Alarming Debt Trend

by Odysseas Papadimitriou on June 18, 2010

swiping-credit-cardThe storyline in recent months has been that we are in better financial shape than we were this time last year. While that may be true by some measures, CardHub.com released the Q1 2010 Credit Card Debt Study this week, which revealed that consumers are on track to end up with more debt at the end of 2010 than 2009, despite positive signals in the economy.

The CardHub.com study focused on consumer debt data from the Federal Reserve’s G19 report in conjunction with quarterly charge off data to determine how much of the decline in consumer credit card debt is actually due to consumers paying down their debt versus bad debt being written off. The study also made projections on how much debt consumers will accumulate in subsequent quarters of 2010.

What should you do if you cannot pay your taxes in full?

by Guest on April 7, 2010

irs-installment-agreementThis guest post was written by Manny Davis. Manny is President of Back Taxes Help, LLC, a tax resolution firm that helps businesses and taxpayers pay back taxes. Visit BackTaxesHelp.com for more information on various IRS tax settlement solutions.

Every year millions of Americans find themselves with back taxes or tax bills they cannot afford to pay all at once. Whatever the cause, the IRS is willing to work with taxpayers and offers a variety of Installment Agreements (IRS Payment Plans), depending on the total amount they owe. An IRS Installment Agreement (IA) will allow you as a taxpayer to pay off your taxes through monthly payments that can last anywhere from three to five years depending on the amount you owe.

Anti-Scam Advice from the ConsumerMan

by Lynn B. Johnson on February 2, 2010

scamI had a fascinating conversation with Mr. Herb Weisbaum, AKA the MSNBC.com ConsumerMan, about the scams we should all be aware of. It was an eye-opening conversation, one that I hope will save you a lot of pain and anguish.

Surprisingly, your credit card account is not on the scammers’ most-wanted list. “Con artists are trying not to use credit cards [in their scams] because the charges can be reversed,” Weisbaum said.

We Are All Doing More With Less - Except for our Goverment

by Odysseas Papadimitriou on January 23, 2010

wasteful-spendingMore and more American families these days are learning to live within their means.  They’re making trade offs about what they want, what they need, and what they can afford.  They’re trying, during these hard times, to make their dollar stretch as far as possible.  You’ll notice that what they aren’t doing, or at least not in great multitudes, is borrowing against their future so as to maintain their lifestyles.  Sure, the draw to live as one has become accustomed is strong, and likewise, the ability to buy on credit is still a possibility.  Were there no repercussions, were it simply a case of someone saying, “here take this, no strings attached,” we wouldn’t need to make sacrifices so that we can live within our means.  However, when we know that there will be repercussions for our spending, that the credit card bill will come or that the bank will want their money back, we also know that we are going to have to do more with less.

Note, this is not a post about family budgets, but a post about national budgets.  America, like America’s households, needs to learn to get more done on less money.  Just as with those households, it is easy for the country to buy on credit, on the assumption that we can repay at some later date… far too easy in fact.  Very little will stand in the way of our nation going deeper into debt, but just as with a normal household, someone has to eventually pay the bill.  That money is not given to us—it comes with repercussions.  Our President seems to be operating in the same mode as his predecessor:  putting our nation into deeper and deeper debt so as to pay for all the projects that he wants to start or maintain.  Congress raised the federal deficit cap in February of 09, they raised it again this month, and are poised to raise it again next month as part of a larger economic bill, currently before the Senate.  Simply raising the amount of debt the federal government allows itself to accrue is easy enough to do.

Business As Usual For Congress

by Brian Johnson on January 20, 2010

CongressOn January 14th, Congress voted to increase the federal deficit cap to $12.4 trillion having  raised it from $12.1 trillion February of last year.  The bill was a concession by Democrats who had planned an attempt to increase the federal deficit cap by $2 trillion in order to prevent having to call another vote before next year’s midterm elections.  Already, Democrats are pushing to increase the deficit cap again by mid-February to prevent the U.S. government from spending more than it is allowed and therefore default on certain obligations.  Because the government tax revenues simply cannot cover the rate of government spending, both the national debt and the interest on that debt continue to grow.  For most Americans, this is cause for concern.

Not for Congress though.  The increase to the deficit cap follows on the heels of  last year’s huge omnibus spending bill signed into law on December 16, 2009 which earmarked $446.8 billion for special projects and increased federal spending by 10 to 12%.  Its the kind of thing that can only make it into legislation in December when lawmakers are in rush to make it to the holiday recess and haven’t had the time to give proper vetting to the measures on the table.  It was a holiday surprise for the average tax-payer and a gift to the numerous special interest groups that, sadly, have influence on our lawmakers.  We may recall that it was just such an omnibus spending bill that legalized Credit Default Swaps.  In 2009, despite the fact that the federal government had reached the limit of money that it could borrow, the omnibus spending bill wrapped together 6 different lesser spending bills and had provisions for over 6,000 back home projects for the lawmakers who sponsored it.

Is the Switch from Fixed to Variable APR a Big Deal?

by Lynn B. Johnson on November 27, 2009

fixed-variable-aprIf you haven’t received a notice from your credit card company that your rates are increasing, well, you probably don’t have a credit card. What some people are missing among the fine print is that many cards are changing their rate structure from a fixed rate to a variable one. So, what’s the difference, why is this happening, and is this a big deal?

According to the OCC, a fixed-rate credit card  means that the Annual Percentage Rate on the account “is not tied to an index that may change periodically.” Variable rates are generally tied to an index rate, such as the Prime Rate.

The Bulls Are Wrong About Our Economic Recovery

by Odysseas Papadimitriou on September 10, 2009

RecessionThe bulls are pointing to the end of a recession and a robust recovery ahead for the American economy.  Their optimism is based on a definition of the recession, in economic terms.  For economists, a recession ends when the economy ends its negative growth.   These terms, however, are theoretical.  In practice, a robust recovery must parallel a robust recovery at the American household level, which is unlikely to happen for a number of reasons: 

  • The Unemployment rate:  We hear a good deal of optimism coming from economists concerning the fact that the unemployment rate is slowing, but we ought to remember that it isn’t actually going down, but continues to rise.  According to the Associated Press, we are at the worst unemployment crisis since 1983 and economists are predicting the unemployment rate to peak above 10% by the middle of next year. 
  • State Deficits:  We are suffering huge deficits at the state level which the Federal Stimulus package can not correct.  This means additional job losses for state employees.
  • Unemployment Insurance:  Not only is America facing a dangerously high unemployment rate, but the unemployment level in this country has been high for so long that benefits are now running out.  We are in a situation far worse than simply having people who are out of work; they are out of work, have few prospects for new jobs, and are receiving no income.
  • Continuing Bank Failures:  Despite the federal government’s intervention, we continue to see banks fail.  The number of banks on the FDIC’s “Problem List” (banks in danger of failing) has gone from 305 to 416 at the end of June ’09.  Some analysts are afraid that the FDIC will go into the red by the end of this year.
  • Continuing Credit Crunch:  In these uncertain times, credit markets continue to be very tight.  Because of the continuing failure of the nation’s banks, regulators and bank executive remain cautious, which means less credit availability.  Companies who need to deal with debts that are coming to maturity are likely to find less opportunity to refinance.  As a result, we can expect more corporate bankruptcies and more job losses.   

Many economists are calling for more stimulus money by the federal government, but it is clear that what the country really needs is smarter spending.  We desperately need to make investments with government funds that will deliver strong returns on the nation’s money, and thus, we believe that the federal government ought to invest in new technologies that will turn America’s trade deficits into strong surpluses. It is precisely for that reason that this is the right time for a ‘Manhattan Project’ on energy independence.

New & Innovative Credit Card Debt Center from CardHub.com

by Alexandra McDougald on July 27, 2009

credit-card-debtAccording to the Federal Reserve, the credit card charge-off rate for the first quarter of 2009 jumped over 80% to a record 7.51% – meaning that the balance on roughly 1 out of every 13 credit cards is in default.  Additionally, in May, the number of bankruptcy filings reached 6,020 a day, which represents a 33% increase from a year earlier.  To address the concerns of the multitude of consumers facing these challenges, CardHub.com, the leading and most robust online credit card marketplace, today announced the addition of a Credit Card Debt Center to its site.  Launched in July 2008, Card Hub continues to revolutionize the consumer selection process for products and services in the personal finance space.

The Credit Card Debt Center includes two key features: Debt Help that provides consumers with customized debt management advice and Debt Education that offers an in depth understanding of the pros and cons of various debt solution options.  Highlights of these features include:

Unconventional Budget-Slashing Tips

by Lynn B. Johnson on June 27, 2009

Recession Survival GuideCampbell Norwood has written a book that will be of great interest to our Wallet Blog “Deals” readers. Titled Recession $urvival Guide: Low-Cost and No-Cost Strategies to Spend Less, Save More!, her book is full of low- and no-cost opportunities for stretching one’s household budget.

“I wrote the Recession $urvival Guide from the perspective of knowing that there are a lot of families in our area, and around the US, who have never dealt with economic recession. They’re scrambling, embarrassed, and don’t know what to do,” Norwood said. “My goal is that readers will be empowered to make no-cost and low-cost changes.”

Help for Federal Student Loans, starting July 1

by Brian Johnson on May 20, 2009

Help for College StudentsCollege, the key to a better paying career, is not without its financial burden.  The price of tuition around the country is going up.  Plummeting stocks have hurt university portfolios as well as the portfolios of alumni and professors.  Because of this, American universities are receiving fewer contributions from private sources even as they continue to pay for tenured senior professors who, having lost their nest-egg, are stalling their retirement.  Public universities face these dilemmas as well as a dwindling slice of the state budget that funds them.

Of course, students still need to go to school during these hard times, but the rising price of tuition and the absence of job opportunities for graduates just entering the work force has made the once viable option of student loans less and less attractive as there is little guarantee that a job will be waiting after graduation.  Today’s graduating senior can expect to acquire $22,000 in student loans by the time they graduate and have no guarantee of entering into a career just out of school that will help them to pay off this debt.

Obama's Cost Cutting: A drop in the ocean

by Brian Johnson on April 21, 2009

Drop in the oceanPresident Obama has asked his cabinet to cut 100 million dollars of government spending by finding ways to make government more efficient.  His hope is that by finding 100 million dollars worth of waste, he will help to restore taxpayer faith in their government’s attempts to keep the economy healthy.

The subject of government spending is a hot topic here at Wallet Blog.  We are in agreement with the President’s basic philosophy that the government needs to spend money to get us out of this recession—it’s about the only thing that helped the United States get out of the Great Depression.  The system needs money and that money has to come from somewhere.  If regular citizens are unable to stimulate the economy, then the government must intervene.  To this end, we support, generally, President Obama’s decisions to inject cash into the system so as to support fiscal growth and to create job opportunities in a period of rampant unemployment.

We're All In This Together…Except For Bondholders

by Odysseas Papadimitriou on April 8, 2009

Boat WavingAs more and more big name companies become insolvent, taxpayers and shareholders in these companies are losing money.  Bondholders, on the other hand, are not feeling the hit and are actually making money out of bailed out companies.  Given the size of America’s economic problems and the ways in which these problems seem to affect all of us, it makes no sense that bondholders aren’t feeling the effect as well.

A bondholder is essentially someone who has loaned money to a company.  When a company needs cash, it either issues stock to shareholders or takes out loans.  Thus far, if the stock goes down, investors take the hit.  If the company requires government bailout, taxpayers must pay for the company.  However, even when a company is on the brink of total collapse, and must be brought under federal regulation to keep it from failing, that company is still expected to pay off its debt at the rate set at the time of the loan.  So long as the company has not gone bankrupt, it must still repay its creditors, including its bondholders.

We Need a New Manhattan Project

by Odysseas Papadimitriou on April 2, 2009

Manhattan ProjectAs we discussed, in our previous post “Stimulus Plan Misses A Golden Opportunity“, the Obama administration spending bill concentrates on mending America, whereas it should be concentrating on getting America set to make a strong return to the world market after the recession.  In this post we’re building off of that idea and making some suggestions about how the government spending should be used to support America as a global economic leader.

President Obama is now in a position with his spending bill to invigorate the economy, just as Presidents have done in the past.  What we should remember is that when the American government has, historically, spent money to revive the economy, its most notable successes were not related to improvement or repair, but to innovation.  A concentration on the development of new technologies has always signaled eras of prosperity for America.

Stimulus Plan Misses a Golden Opportunity

by Brian Johnson on April 1, 2009

Golden OpportunityThe Obama administration’s stimulus plan is commendable for its size, its urgency, and its impact.  At Wallet Blog, we believe that it will be a powerful force in getting us out of the recession.  We do not, however, agree with the areas and projects to which the money is being funneled because the concentration is not on innovation.  The competitiveness of our country comes down to how much the world wants to buy from us, rather than how much we want to buy from the rest of the world, and the stimulus plan does not concentrate on the development of new products.

Instead, the areas of spending are aimed at areas like increasing the quality of America’s roads and bridges, providing incentives for the weatherizing of homes, and providing tax cuts. All of these improvements are good in the plan’s short term goal of ending the recession, but they do nothing towards making the rest of the world want to buy things from us.  Part of the reason we are in a recession is America’s inability to sell new products in the international marketplace. 

Money, TV Shows, & Entertainment

by Brian Johnson on March 30, 2009

CassandraMoney shows should not treat finance as entertainment by turning the buying of stocks into a joke or by turning a discussion of serious economic situations into an occasion for groundless argument.  These shows discuss issues directly involved in the managing of people’s money, pensions, savings, and 401ks. The networks that produce these shows, then, have a moral responsibility to treat the subject matter with the seriousness that it requires. 

To fulfill this obligation, the networks should do two things.  First, the network should only invite experts to discuss financial topics.  Participation should be limited to those who have actually worked in the field that they will be discussing.  All too often, financial reporters who have little or no work experience in a particular field are invited to comment on very serious economic issues and their presence drowns out the founded insights of real experts who should be listened to.  Second, the networks should see themselves as obliged to foster a healthy debate founded on factual evidence and cogent argument, and not gut feeling.  The moral obligation of these networks should be a constant pursuit of the truth.

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