Monday, March 30, 2009

8 Quick Ways to Increase Your Credit Score

Many people have received bad credit ratings due to the recession. Bad credit can prevent you from getting hired for a job, getting a promotion, or getting approved for a loan or credit card. However, here are 8 quick ways to increase your credit score to improve your financial situation:

1. Order your credit report and credit score from the 3 major credit bureaus, Experian, Equifax and TransUnion. You can order your credit reports and credit score online at or by phone at 877-322-8228.

2. If you find any errors on your credit report dispute the information online for a quicker turnaround time usually within 2 weeks.

3. Pay off collection accounts, judgments, and tax liens as soon as possible. Each account paid can increase your credit score by 20-25 points.

4. Once you pay a delinquent debt ask the company to remove it from your credit report. They may say no but it is worth a try.

5. If applying for a mortgage loan, know what your middle credit score is, i.e. if you Equifax score is 620, your TransUnion score is 650 and your Equifax score is 635, your middle score would be 635 and develop a plan to increase that credit score if you are trying to get approved for a mortgage.

6. If you have been 30 days or more late on a credit card bill get current. Getting current on your credit card bills can increase your credit score by 20-30 points.

7. Make sure your account balances are reported accurately on your credit report. Your account balances may not report the most recent balance and can lower your credit score because account information may be reported once every 2 to 6 months.

8. If your credit card balance is 30% or more over the credit card limit send your payment so that it arrives 5 to 7 days before the due date. This will ensure the most recent balance is updated to the credit bureaus each month.

Friday, March 27, 2009

Disadvantages of Filing for Bankruptcy

Last year over 1 million Americans filed for personal bankruptcy. Due to the revised Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, you must attend counseling sessions prior to your bankruptcy being approved. Bankruptcy filers must show proof that there is no other alternative but to file for bankruptcy. The filer's income is compared to the median income in the filer's state of residence. If the filer's income is above the median and is able to pay at least a minimal amount per month to creditors, the filer cannot file for bankruptcy.

The filer's personal finances are also reviewed including living expenses. The Act only allows filing of Chapter 13 bankruptcy once every two years and filing of Chapter 7 bankruptcy once every eight years. The filer must live in their state for 720 days prior to filing for bankruptcy.

The disadvantages of filing for bankruptcy are:
1. You no longer have control over your finances – a trustee is appointed to oversee your finances

2. You now have bad credit

3. If will be difficult to get approved for a loan or credit card

4. If you own a house or are paying off a house, your title may be transferred your trustee and the property may be sold to pay your creditors

5. It will be harder to rent an apartment, house, etc.

6. You must get the permission of the Federal Court or your assigned trustee to travel overseas

7. If may be harder to get hired for a job

8. Chapter 7 bankruptcy stays on your credit report for 10 years

9. Chapter 13 bankruptcy stays on your credit report for 7 years

Bankruptcy should be a last resort. Contact a professional credit counseling agency or certified financial planner to help you develop a plan to pay off your debt to prevent filing for bankruptcy.

Tuesday, March 24, 2009

Reasons for Being Denied Credit

Many people who previously had average or good credit now have bad credit due to the recession, illness, job layoffs and just being unable to make their mortgage payments. Restoring your credit can be a tedious task. It takes lots of hard work and is the reason why you may have been denied credit. Your credit report can at times seem like a maze.

One of the major factors in understanding your credit report and your credit score is the reason codes listed on your credit report. Some reason codes that may appear on your credit report are:

1. Length of credit history – this means how long you have had credit, either a loan or credit card

2. Too many inquiries – this means you have had more than 1 company pull your credit report within the last 12-24 months and this lowers your credit score

3. Too many new account – this means that you are considered a risk because you opened more than 1 new account within the last 12-24 months which also lowers your credit score

4. Account balances too high – this means that your credit cards are maxed out of the balance on your credit cards are above 30-50% of the credit card limit

5. Number of revolving and installment accounts – you need to have a mix of revolving (credit cards, line of credit) and installment accounts (student loan, car loan, mortgage, etc.)

6. Recent delinquency – you had one or more account that were recently paid late

Your credit score consists of the following: your payment history which accounts for 35% of your credit score, the amounts owed which accounts for 30% of your credit score, the length of your credit history which accounts for 15% of your credit score, new credit which accounts for 10% of your credit score, and the types of credit used which accounts for 10% of your credit score.

If you disagree with any of the information or explanations on your credit report or credit score contact the credit bureau reporting it to dispute the information and ask for a listing of the accounts that caused your score to be low.

Saturday, March 21, 2009

Financial Predictions Update

In October 2008, I made a few predictions, let see how many of them came true.

1. Gas prices will fail below $2.50 by election day and rise again after the election - true, gas prices fell below $2.00

2. Housing prices will continue to fall through the middle of 2009 - true, since 2006 home prices across the country have fallen by 12.4%. However, in a few states sales are rising slightly but overall sales are still declining.

3. The Federal Reserve will reduce interest rates at least once more by the end of the year - true, the Federal Reserve cut interest rates 10 times in the past 15 months

4. Americans will continue to fight back and express their concerns about high gas prices, health care, and the war in Iraq - true, health care costs are still high, gas prices are around $2.00 a gallon, and the troops are still in Iraq.

5. In the coming weeks more Americans will voice their support for one candidate or the other - true

6. More laws will be passed in favor of same sex couples - true

7. The war in Iraq will continue until 2010 - true

8. Brittany Spears will get married again - not true, she has been seen with several men but hasn't tied the knot yet

9. The number of jobless claims will continue to rise through the end of 2008 - true, over 2 million Americans are unemployed and another 2 million are expected to lose their jobs by mid-2009

10. Mortgage companies and other financial institutions will begin to place calls requesting a payment from customers in good standing who usually make payments on time but make a payment after the due date - true

11. Halloween, Black Friday and Christmas sales will be less than expected - true, sales in 2008 were lower than expected

12. Many small business will file bankruptcy or go out of business by the end of 2008 - true

13. More scandals and fraud cases will be exposed to Americans by the end of 2009 - true, this is ongoing

14. The current financial crisis will end in 2010 - true

Tuesday, March 17, 2009

Live Below Your Means

Americans are living above their means, drowning in debt and the problem is getting worse. Many Americans spend their entire paycheck the same day or within a week of being paid. Many Americans live above their means, are in debt and have no savings. Here are 5 ways to stop living paycheck to paycheck:

1. Direct Deposit. Cashing checks at a check-cashing store costs on average 1% to 5% the amount of the check. Use direct deposit for free and save yourself some money.

2. Education. Further your education or take training classes to expand your skills at your current job. This will put you in a better position to get a promotion at work or salary increase. That money can be used to create a savings account, plan for retirement or pay down debts.

3. Budget. Stop using your credit cards and pay for everything with cash. If you don't have enough money to pay for expenses create a budget for yourself to determine your total monthly expenses and total monthly income and reduce your expenses (i.e. cable, cell phone, internet, etc.). Shop at discount stores, use coupons or carpool to find extra money which can be used to pay down debt.

4. Savings. You should have enough money saved to pay at least 3 to 6 months worth of bills. Open a high interest online savings account such as or Then develop long-term savings goals such as planning for retirement or homeownership.

5. Seek Help. Talk to friends, relatives or neighbors who have gone through similar situations. Go to the library to research various ways to reduce expenses. Many groceries stores teach classes on how to shop on a budget.

If you want to stop living paycheck to paycheck you have to change your thinking and see yourself being debt free.

Saturday, March 14, 2009

Decoupled Debit Cards

Decoupled debit cards are where one institution issues a debit card that can be linked to any bank account and used for purchases and ATM withdrawals just like debit card consumers get from their bank when they open a checking account. The company pays a fees plus any interchange income.

1. Can charge rewards to combat the decoupled credit card.

2. Can get features such as free checking, free cards and transaction payout (reward), go online to view cash rewards accruals.

3. Can earn points on debit card purchases for having additional bank products such as money market accounts, CDs, loans, lines of credit, etc.

4. Combines the ACH industry and the payment networks such as Visa, NYCE, etc.

5. The intermediate service provider can capture the interchange income from the card transaction which would previously go to the consumer's financial institution.

6. It helps the consumer because they can use debit cards more frequently, reduce use of credit cards and no longer have to worry about fees associated with using a credit card.

1. It will hurt the financial institutions by eliminating income from banks that rely heavily on charges such as insufficient funds, etc.

2. Deprives credit unions of transaction fees but who will still have to pay ACH fees.

3. Targeted to 18 to 34 year olds who are generally are more internet savvy and may not be concerned about their relationship with their bank.

4. The transaction is performed and settled online over the branded payment networks between the merchant and the intermediate sevice provider but is settled with the consumer's financial institution using the offline ACH network.

5. Can increase risk to the consumer such as account validation which was not a risk in the previous transaction system.

Be cautious when using decoupled debit cards and be sure to pick the card that is right for you.

Wednesday, March 11, 2009

Are You to Blame for This Mess

For several months Wall Street employees and consumers have pointed the finger at many people who they feel should be responsible for the recession and financial crisis the country is experiencing. Some consumers believe President Bush is to blame, some feel Alan Greenspan is to blame, some feel Wall Street bankers, loan officers and mortgage companies are to blame and some feel consumers are to blame. No matter who messed up the economy, it is time to fix it and we can't wait for the government to fix it, we have be accountable for our actions and start with ourselves to help minimize the impact of the recession and future financial crises.

If any of the following conditions apply to you, start today to develop a plan to improve your financial life and your knowledge about the banking industry, housing industry and personal finance.

1. You got approved for a mortgage but had a gut feeling that something was wrong but didn't say anything about it.

2. You got approved for a mortgage and knew you couldn’t afford it but hoped that you would be able to work overtime or get some extra income to make the monthly payments.

3. Assumed you would not lose your job.

4. Assumed you would not get sick.

5. Assumed you would not experience loss of a family member.

6. Assumed the mortgage industry professionals were your friends and would be honest with you about everything regarding your mortgage application and mortgage loan paperwork and the process.

7. Were unaware of your housing rights as a consumer.

8. Lived paycheck to paycheck, day by day and did not worry about the future.

9. Did not have health, life or disability insurance.

10. Did not understand basic housing industry terms such as balloon, arm, and interest only.

Unfortunately the housing industry failure has taught all consumers that the only way to survive a crisis is to plan for the future, to live below your means, to save and to properly manage your finances.

To ensure that you do not become a victim again follow these 7 steps:
1. Read. Before signing a mortgage or loan application read the application in its entirety. Ask questions and write down the answers. Take the application home with you and read it in its entirety several more times. Jot down any additional questions you may have and contact the mortgage professional to get your questions answered. Do research at a library or on the internet about how to buy a home and the mortgage application process.

2. Say no to Bad Credit Companies. Do business with a reputable company. Search to see if a company has had any complaints filed with the past 2 or 3 years with the Better Business Bureau or FTC. Ask family, friends, co-workers or relatives if they have done business with the company. Be sure the company is licensed to do business in your state.

3. Don’t fall for gimmicks or false information. Verify everything told to you regarding your mortgage application. Hire a real estate attorney if necessary to review the mortgage application with you prior to signing it.

4. Slow down. Take your time and don't let the settlement company, your realtor or the seller of the home rush you into signing the mortgage application and/or settlement paperwork. Once you sign the paperwork you are bound by law to go forward with the loan unless the paperwork provides a rescind clause that allows you to cancel the loan within 3 days from the date of your signature.

5. Plan. Plan for your future by creating an emergency fund to cover all of your monthly bills and household expenses for at least 6-9 months.

6. Insurance. Get insured and get at least basic health, life and disability insurance to protect you if you become ill or are unable to work.

7. Track. Track your spending and live below your means. Your total monthly bills should be no more than 28% of your net income. Your total monthly debt should be no more than 15% of your net income. Your total housing expenses including mortgage payment should be no more than 35% of your total net monthly income.

Following these tips will ensure that you do not become a victim of predatory lending, that you properly manage your money and that you are prepared for the unexpected.

Sunday, March 08, 2009

Don't Get Suckered into Paying Someone Else's Debt

When a financial crisis occurs many people often become victims of scams and get taken advantage of because they don't know their rights and allow fear to cause them to make bad decisions. Companies take advantage of many consumers by using guilt and fear. Don't take responsibility for a debt you do not owe because once you do; you are bound to that debt and will have to pay it.

Many companies are desperate for business and are looking for someone, anyone to pay back an old debt. Companies are now reaching out to relatives and friends of the deceased to try to recoup money for delinquent debts.

Based on the Fair Debt Practices Collection Act by law you are not required to pay a debt that does not belong to you unless your name is on the account as a joint account holder or authorized user. A creditor can only contact you for payment for a debt of a deceased spouse or parent who had an estate or any assets worth value, i.e. an inheritance, a banking account, boat, car, home, stocks, bonds, or other assets. The money owed to the creditor is paid by the estate after any money owed to the government is paid first.

To protect yourself in that situation, get the caller's name, title, name of the company they are calling from and what they said. Tell the caller you will contact your attorney and then contact them if it is determined that money is owed to them.

If you have any bank accounts or other accounts that are in the name of your deceased spouse or parent's name put them in your name to prevent creditors from garnishing those accounts.

If you feel you are being harassed tell the company to stop contacting you by phone and notify you in writing. Learn about your rights as a consumer at

Thursday, March 05, 2009

6 Ways to Pay Down Debt

The recession is a new experience for some and a previous experience for others. Some have learned there lessons and changed their spending habits for the better. Others still have not learned their lessons and are hoping the "money angel" will fall down on them and help to get them out of the mess they are in.

This is a time of great stress and fear. Many people make rash decisions without thinking things through. This also applies to paying down debt. If you owe debt and have the money to pay it off or reduce the debt owed do so.

Now is the best time to negotiate with creditors and others you owe debt to. Here are 6 ways to pay down debt faster.

1. Pay balance in full each month prior to the due date or as soon as you receive the bill which helps to avoid paying finance charges. Beware of companies who may move your due date around to prevent you from paying your bill on time in hopes of being able to charge a late fee.

2. Pay half of the balance with 1st paycheck of the month then pay the remaining balance with 2nd paycheck of the month

3. Pay weekly instead of monthly. Pay the minimum monthly payment the first week after you get the bill, and then each week pay as much as you can toward the monthly balance. Repeat this every month.

4. Pay as much as you can when you get the bill, and then pay more towards the bill when you get extra money.

5. Set up automatic payments from your checking account the day you receive your paycheck or the day after you receive your paycheck

6. Can the Customer Service Department to find out if there is a certain hour and minute you need to make your payment by.

These six steps to ensure that you get out of debt faster, increase your credit score, reduce stress, stop harassing phone calls from creditors and lead you on your way to financial freedom and a debt free life.

Monday, March 02, 2009

The Recession - A Great Time for Discounts

Many Americans are struggling to make ends meet due to recession. Many Americans are changing their spending habits and finding ways to save money, pay down debt and just live from one day to the next. The way companies do business has changed due to the recession.

Due to the recession there has been positive change in the way companies view their customers. Companies are may have been doing this previously but are really making an effort to:

1. Show customers how much they value their business
2. Offer discounts, incentives or waive fees
3. Provide sympathy or mini-counseling to customers to encourage them to keep their accounts open
4. Frequently thank customers for their business in various ways

It is unfortunate that it took a recession for some businesses to start providing top quality customer service. For so long customers have been frustrated by the lack of customer service they receive.

According to Empire Research Team, a typical business hears from only about 4% of its dissatisfied customers - 96% just go away, and 91% will never come back. Most customers just go away because they believe their complaints will not do any good, not worth the trouble or personal stress, or don't know where or to whom to complain. Fifty-six – seventy percent of the customers who complain to you will do business with you again if you resolve their problem.

If they feel you acted quickly and to their satisfaction, up to 96% will do business with you again, and they will probably refer other people to you. A dissatisfied customer will tell 9-15 people about the problem experienced and approximately 13% of your dissatisfied customers will tell more than 20 people about their problem. It costs five to six times as much to get a new (first time) customer as it does to keep a current one. It takes 12positive service incidents to make up for one negative incident.

Consumers can take advantage of this opportunity during the recession by asking for discounts or specials. Here are 6 ways to ask for discounts with companies you currently do business with:

1. For creditors, ask for the cancellation department. Tell them you are happy with the service you have received but are unable to afford the interest rate you are paying. Ask that the interest rate by lowered to an amount you can afford, at least 30-50% of what you are currently paying, i.e. if you current interest rate is 24%, ask for an interest rate of 12%.

2. For utility companies, ask if they offer any specials or discounts for customers.

3. If have a bundled package (you pay for multiple services with the same company), ask about additional discounts they may offer. If you don't currently get a bundled package ask for one to save money.

4. If you cable companies, ask if they offer any specials or discounts. Tell them you are happy with their service but cannot afford to pay the monthly bill, especially if any fee on your monthly bill has increased in the past 6 months. Tell them you found a cheaper offer with a competitor and would like to cancel your service.

5. For insurance companies, if you have not received any moving violations in the past 3 years and have a pretty decent credit score remind them of that. Tell them you feel that you are paying too much for your rate. Quote a price from a competitor and tell them you are considering switching to another company and then began negotiating.

6. For banks, if you have bounced at least once check call your bank and let them know you are currently experiencing a financial crisis. Tell them that you are happy with the service you are receiving. Ask them if they can waive the overdraft fee or fees (if you bounced more than one check). Thank them for any fees that they waive. In the future if you know a check will bounce contact your bank right away and ask them about any options or programs available for customers who have bounced checks, i.e. overdraft protection, etc.

When you call a business' customer service department, always be polite and courteous, this goes a long way.