.

Can You Use a Credit Card for Mortgage Loan Fees?

noreply@blogger.com (Credit Guru) — Thu, 03 Sep 2009 12:28:00 +0000

Yes, under the new Fannie Mae guidelines effective September 1, you can. In fact, you can go into credit card debt for up to 2% of the value of your new mortgage loan.

Borrowers are still not allowed to use credit card proceeds for the down payment, but may use them for certain costs paid outside of closing and early in the application process. This would include lock-in fees, origination fees, commitment fees, credit report fees, and appraisal fees.

This may sound good on the surface, but is it? It may not be smart, and in today's climate of shrinking credit card limits, it might not even be possible for most people.

Charging an amount of this size requires two things: A very high FICO score going in, and very high credit limits on your credit cards.

We've been told for years that in order to keep credit scores high, we should not use more than 30% of the available balance on any one credit card. If you plan to charge 2% of the value of a $200,000 home loan, you'd be adding $4,000 to your credit card balance. That means your limit has to be more than $13,334.00 - with no other charges on the card, of course.

If you begin the loan process with a FICO score that's "on the edge" of score limits to obtain the best rates, using your credit card for these purchases could lower it that one or two points to drop you into a higher interest rate bracket.

And if you use the card early in the process it could get worse...

We've been seeing consumers across the country suddenly hit with credit card limits below their outstanding balance - especially if they have just made a large purchase or gotten a cash advance. This practice will be outlawed in February, but right now you might charge that $4,000 in costs against a $14,000 credit limit - then find that your credit limit has been reduced to $3,000. That will really hurt your FICO scores.

Consider carefully before using a credit card for loan costs.

This change also means more work for your mortgage broker. In order to use a credit card for these fees, the lender must verify that the borrower has sufficient liquid funds to cover the charges, in addition to other funds needed for closing. Or, the lender can re-calculate the credit card payment to account for the new charges, then use the updated payment to re-calculate the qualify loan ratio.

Author:Marte Cliff
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Are Credit Cards necessary?

noreply@blogger.com (Credit Guru) — Mon, 31 Aug 2009 16:42:00 +0000

A credit card is one of those double edged swords. In the realm of credit you need one or two cards to maintain healthy credit scores. With the current FICO model, it is paramount that you have a minimum of one credit card reporting to your personal credit report. When it comes to getting a mortgage loan, the banks usually like to see 3 trade lines reporting good activity with 3 different creditors for the last 12 to 24 months. You can see how no credit cards or credit could affect your ability to get a loan.

The reason to have credit is to show creditors you have the ability to pay back your debts borrowed. When it comes to calculating your credit scores, it’s real simple. How much credit do you have? How long have you had it? How much credit is charged vs. limit of credit line? What is your credit history? With all of this being said, a credit card is a must to maintain healthy credit.

There however is a downside to the matter. Once you have a credit card you must be responsible with that card. It’s very easy to charge too much on credit card and get yourself in trouble. Credit Cards are not designed to buy what you cannot afford to pay off in a couple of months. When charging on a credit card, you should never charge more than you can afford to pay off that particular month. When you find yourself charging more than you can pay off that particular month, at that point you are heading down a risky road. The fees and interest on a card are high, and can get out of control once you have charged close to the limit a credit card company has extended to you. This is where most get in trouble real quick. With the FICO score model, you don’t want to charge more than 20% of the allowed credit limit.

Credit Scores decreased – When you have charged up the credit limit that was extended to you, the credit card company and FICO model consider you a higher risk. Two situations can result from this. You credit score can be lowered, along with your credit cards fee’s going up. You can see how credit cards are a necessary evil and how responsibility is a must. This is the whole basis by which creditors judge your ability to pay them back so in a nut shell credit cards are necessary, but they come with responsibility as well.

So with all of this being said, get your credit card today……..

CreditScoreQuick.com your resource for credit.

Checking Accounts - What kind do you need?

noreply@blogger.com (Credit Guru) — Wed, 26 Aug 2009 02:24:00 +0000

Before you choose a checking account, check to see what kinds your bank of choice offers, and the fees associated with them.

Banks do want your business, and many still offer gifts as an incentive to open an account with a sizeable deposit. Others offer gifts if you promise to use their online services to pay bills. But don't let the gifts make your decision. Check services and fees first.

A basic checking account is fine for most people. But look out - they don't pay interest and they may charge you if you write more than a set number of checks per month or impose a fee if your account balance dips below a certain dollar figure.

Free checking generally means you can write all the checks you want and let your balance fall to a dollar without paying fees. But you'll pay hefty fees if you have an overdraft. You may also pay fees for other services such as check cashing, account inquiries, and debit card purchases.

Interest-bearing accounts usually require a minimum balance to open and require you to maintain a minimum balance. If you dip below that balance, the fees could far outweigh the low interest rate you'll get in return. This account is usually not worth the trouble.

Express checking accounts are geared toward students and others who don't want to spend a lot of time on transactions. Most business is conducted on line or by telephone or ATM. Most charge a fee if you decide to visit the bank and speak with a live teller.

Senior and Student Checking Accounts give special treatment to students and those over 55 years of age. Benefits include free checking, free cashiers and travelers checks, and even discounts on such things as prescriptions and travel expenses.

Money Market Checking Accounts are for people who can maintain high balances and who will need to write only a few checks each month. It pays more interest than basic checking or savings accounts while keeping funds easily accessible.

Business Checking is the most expensive, with fees per item deposited and per check written.

Before deciding which checking account you need, examine your own habits. For most a free checking account is the best choice - and of course seniors and students should take advantage of the special treatment banks offer to them.

But if you have sizeable reserves and want to have them instantly available, an interest bearing account or Money Market Account could be the right choice for you.

Other fees you should watch for are:

Abandoned account fees - if you let an account lay dormant for 3 to 5 years, the bank will hand your money over to the state - but not before deducting a sizeable fee.

Account maintenance fees - some banks charge a monthly fee no matter what.

ATM fees - You could pay on both ends for use of an ATM not associated with your bank. That $100 withdrawal could easily end up costing $106 - $110!

Debit Card Purchases - Have been without additional cost, but a growing number of banks are imposing fees for each purchase. Saying "credit" instead of "debit" at the check-out counter might transfer the fee from you to the retailer.

Check printing - Most banks charge for printing, but a few accounts do offer free checks. Sometimes checks through the bank are far more expensive than those you could order on line.

Counter checks - if you run out of checks and have to get a few from a teller to tide you over, most banks won't charge, but some will.

Bounced deposits - If you deposit a check and it bounces, your bank may impose a fee.

Author: Mike Clover

CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

If Your Bank Fails, What About Your Accounts?

noreply@blogger.com (Credit Guru) — Tue, 25 Aug 2009 01:12:00 +0000

You've no doubt been told about the crash in 1929 - when the banks closed and depositors were just out of luck. Back then there was no FDIC to insure your deposits, but now there is, so the threat is not so dire.

Still, FDIC only insures up to $250,000, so if you have more, you should spread your accounts between different banks.

Hopefully we'll never have another widespread crash. What consumers deal with now is one bank failing. In that instance, one of three things should happen:
• Another bank takes over the complete institution
• The bank's insured deposits are transferred, but loans and uninsured deposits ae left to the FDIC
• The FDIC takes over until a buyer can be found

You've read about the JP Morgan takeover of Washington Mutual - no branches closed and the acquiring bank merely took over. Much the same happened when Bank of America acquired Countrywide.

Here's how some of your services could be affected if your bank fails:

• ATM's - Transactions should go through, but posting may be delayed. Keep careful records of what you've done.
• Automatic payments - should be made on time, but do check rather than assume
• Checks - All should be normal. If the new bank plans to make changes to your account, they should contact you.
• Insured deposits - the acquiring bank will take these and continue with the same interest rate you were receiving.
• Uninsured deposits - NOT a good idea! The acquiring bank may take them or may not. Right now the ratio is about 50-50, so don't take chances.
• Brokered Deposits - also can be risky. Talk with your broker to make sure your deposits are not in the same bank with your other accounts - thus pushing you over the $250,000 insured limit.
• Dormant accounts - Use your accounts regularly, as accounts not used for 18 months will be turned over to your State.
• IRA's - These are ensured and will be turned over in their entirety.
• Loans - Loans may be acquired or held by the FDIC while a new buyer is found. This is done on a case by case basis. If you're in the midst of a construction loan, you will probably be able to continue with scheduled draws.
• Online banking - Banks that fail close on a Friday, and the new bank or FDIC officially takes over on Monday morning. Online banking would not be available over the week-end.
• Overdraft lines of credit - should not be affected and will be taken over by the new bank.
• Night deposit boxes will still accept deposits for posting on Monday.

Unless you have uninsured accounts or dormant accounts, the biggest disruption in your banking services will be the inability to do business over the week-end. Banks usually open on Saturday will be closed and on line services unavailable.

Author: Mike Clover
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Students Should Apply for Credit Cards Now

noreply@blogger.com (Credit Guru) — Fri, 21 Aug 2009 01:49:00 +0000

If you're headed off to college this fall you should not be anxious to get into debt, but you should be getting a credit card or two before February.

That's when the new credit card regulations come into effect, and once they do, only those students with a job or a co-signer will have access to new credit cards.

Why should you care?

Because now is the time for you to begin building credit to use after graduation, and wise use of a credit card will help accomplish that goal.

If you're just starting school, or already a student, do the research and find a card with the best rates and terms. Don't just respond to any solicitation that might come in the mail. Instead, compare the offerings.

Look for a card with no annual fee and ask for a credit line that's large enough to allow for occasional use of the card without exceeding 30% of available credit. Stay away from the "fee harvester" cards - those are the ones that charge an application fee, an annual fee, a fee for each use, a fee for non-use, a fee for paying the bill on line, and many others.

If that's the only kind you can get, try instead to find the co-signer so you can be eligible for a better card.

As long as you're doing research, look for a card that gives rewards for the purchases you're likely to make. Some cards offer rewards for eating out while others reward you for renting movies, buying CD's, or even buying your textbooks. If you're going to be flying home for holidays, you might want to consider a travel rewards card.

Building your credit now by making small purchases and paying the balance in full each month will pay dividends after graduation. When your credit scores are high you'll find it easier to get a loan for such necessities as a car, and you'll have an easier time renting an apartment or home. Also, unless the rules change to prevent employers from checking credit, you'll have an advantage when job hunting. You'll even pay less for insurance.

Another way to begin building your credit score is to be added as a user on someone else's credit card. That is, of course, if their credit is good and they pay that card on time, every time. This practice, called piggybacking, was disallowed for a time, but is once again in use.

You don't have to actually carry or use the card - you only need to be named as a user. So if you have a relative with outstanding credit, ask them to add you to one of their credit card accounts.

Author:Marte Cliff
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

If You Opt-out of a Credit Card Rate Increase...

noreply@blogger.com (Credit Guru) — Fri, 14 Aug 2009 23:09:00 +0000

We all know that if you opt-out of a credit card rate increase, that's the end of using that card. They'll close your account - or at least close the part that allows you to use it again.

The account will remain open for receiving payments, and it will remain on your credit report - showing both the credit line and the balance owed at the time of each month's statement.

But what then?

If you're at a rate of say, 8.9% and they notify you of an increase to 16.9%, you can opt-out and keep paying 8.9% until your balance is paid in full.

Or can you?

As it turns out, the answer is no. You mustn't assume that your rate will remain at 8.9% just because you took this action.

Your credit card issuer can come back in a few months and raise the rate again. They need only give you 15 day's written notice of the change before it goes into effect. Considering possible delays in mail time, consumers taking vacations or working away from home, and a variety of other factors, you might not even know about the latest change until it's too late to prevent it.

That is, if you read the mail at all. Since most people assume that they've done what they needed to do and their rate is set until the balance is paid, they don't read that notice and thus don't even know that they need to action in time to avoid a rate increase.

Under the new Credit Card Accountability, Responsibility and Disclosure Act that will go into effect in February 2010, the card issuers won't be allowed to apply a rate increase
for "any reason or no reason" as they can now.

The only time they'll be able to raise rates is

1. If your account is 60 days past due
2. If you've signed up for a variable rate tied to an index and the index changes
3. When a promotional period expires

When it comes to dealing with credit cards, February 2010 can't come too soon for most of us. In the meantime, do read every piece of mail you receive from your credit card issuer.

Not only could it tell of a rate increase, it could give notice of a drop in your credit line that could cause you trouble. Should you inadvertently use a card whose line has been lowered you could find yourself looking at over-limit fees or an embarrassing denial of credit at a retailer's.

Author:Marte Cliff
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Behavior Scores Affect Your Credit Card Limits

noreply@blogger.com (Credit Guru) — Thu, 13 Aug 2009 02:08:00 +0000

Behavior scores aren't just for grammar school children any more. In fact, if you have ever used a credit card, there's a behavior score on you somewhere. There's also a fraud score, based on the same information.

You may have been thankful when you got a call from a credit card issuer asking if you were the one to make a recent purchase. And that's good - if a thief steals your credit card and tries to buy a new stereo system for several thousand dollars, you want him stopped.

The reason they called is because the purchase was not consistent with your usual credit card use, and that sent up a red flag. That means that your credit card companies are watching what you spend from month to month. The fraud score alerts them that buying expensive electronic equipment is not your normal behavior.

Behavior scores are calculated to evaluate the risk you pose to the credit card issuer.

If you go along from month to month, paying each balance in full, that becomes your normal behavior. If you suddenly start carrying a balance, and that balance starts growing as you begin paying only the minimum each month, your card issuer begins to wonder what's going on in your life.

Further, if you use your card primarily for purchases at upscale boutiques, concert halls, and night clubs, that becomes your norm. If you suddenly begin buying clothing at Wal Mart or charging groceries, it sends up a big red flag.

That change in behavior could signal a change in circumstances, such as a job loss that could eventually render you unable to make your payments.

What will the card issuer do about it? In most cases, your credit limit will be decreased and your interest rate will increase. That means your minimum payment will also increase, so if you've been having a hard time and the payment is difficult to meet, you'll now have a larger payment.

Your card issuer will also look at your behavior scores to decide if they want to reissue the card when it expires. If your behavior has changed drastically, they may decide that they don't want to extend any more credit to you.

On the other hand, if you're a good risk but aren't generating profit, they'll use your behavior scores to decide if they should drop your account or do something to encourage more use. Then you could begin receiving notices of a credit line increase, promotional interest rates, and convenience checks.

Author:Marte Cliff
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Poor Credit Reports Still a Barrier to Employment

noreply@blogger.com (Credit Guru) — Tue, 11 Aug 2009 12:41:00 +0000

Now that the market is flooded with more job seekers than there are jobs, employers are using credit reports as a way to eliminate some applicants.

At one time credit checks were only required for government jobs or positions that could involve handling significant sums of money. Now, according to a 2004 survey, more than 40% of all employers use credit checks. This is up from 25% in 1998, and it's likely to be higher today. As the pool of job seekers gets larger, more employers may have turned to this method to thin down the applicants.

Some believe that employers are using this method as a thinly veiled manner of discrimination - calling it "proxy discrimination" Employers claim that it is merely due diligence on their part. If a person has poor credit it could signify poor judgment, unreliability, and a greater threat of on-the-job theft.

In reality, people are being turned down for jobs that have nothing to do with handling money. Job counselors argue that poor credit does not diminish a person's skills.

Whatever the reason, using credit checks against potential hires creates a lose-lose situation. Those who have been jobless the longest are the ones most likely to have gotten behind on payments. They won't be able to improve their credit scores without a job, and can't get a job without good credit scores.

Federal law requires potential employers to get permission before obtaining a credit report on a potential employee, so those faced with diminished credit scores might want to check policies before making a fruitless application.

The good news, at least for the jobless in some States, is that lawmakers are starting to recognize the problem and take action.

In Washington, under a law that took effect in 2007, the applicant's credit history must be substantially related to the position. Last month Hawaiian lawmakers approved a similar measure. Hawaii also restricts employers from checking credit prior to making a job offer. Meanwhile, in California Governor Schwartzenegger vetoed a similar law.

Lawmakers in Michigan and Ohio have not taken action yet, but have proposed prohibiting employers from using credit history against a job applicant. At this rate, it could be a long time before all employers are prohibited from using poor credit scores as a way to deny jobs, but at least they're moving in the right direction.

On a Federal level, the Equal employment Opportunity Commission is likely to issue guidelines on the proper use of credit checks. The bad news is that they're merely guidelines. Employers aren't required to comply.

Author:Marte Cliff
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Creditors Object to Identity Theft "Red Flag Rules"

noreply@blogger.com (Credit Guru) — Sat, 08 Aug 2009 16:27:00 +0000

Identity theft is a growing business, and it results in losses for both consumers and creditors. Why, then, are banks and other credit issuers resistant to implementing the rules?

Apparently the cost and bother of compliance is more expensive than the losses they might incur if they extended credit to identity thieves. Resistance has been so great that enforcement of the rule, which was originally issued in November 2007, has now been delayed three times. The new deadline for compliance is November 1, 2009.

Under the Red Flag Rules, any entity that extends credit will be required to develop and implement written identity theft prevention and detection programs to protect consumers from identity theft.

Who objects most strongly? One of the strongest opponents is the American Medical Association. Under the new law, the FTC classifies physician practices are "creditors" when they accept insurance and bill patients after services are provided or if they allow patients to set up payment plans after services have been provided. Thus, they will be required to comply with the Red Flag Rules.

The AMA wants physicians to be excluded from the law, stating that they should not be classified as "creditors" and that compliance will place too great a burden on medical practitioners. However, lawmakers are particularly concerned with "medical identity theft."

Using someone else's identity to obtain medical services under an insurance policy is fraud, and the resultant fictitious medical records placed in a victim's name could be medically dangerous.

Banks and other creditors also object. Some are already planning ways to override the process.

What's the problem? Smaller businesses may not have the manpower to comply and will need to hire third-party companies to ensure red flag rule compliance. This will be an ongoing financial burden. Banking associations are calling the rules "excessive and overly burdensome."

Perhaps they're right, because the law does list 26 red flag triggers that must be monitored. These include obvious red flags such as a fraud alert or a freeze on a credit report, or inconsistent addresses from one document to another.

Other red flags will require more care. For instance, credit issuers will be expected to conduct careful scrutiny of identification cards to detect alteration or forgery. Others, such as a change in spending patterns, use of the same address or phone number by multiple applicants, or duplicate social security numbers, will require research. Another red flag that creditors will be expected to notice is a lack of correlation between Social Security number ranges and dates of birth. Hopefully there's a handy chart somewhere to make that quick and easy.

If all credit issuing entities come into compliance with these rules, identity thieves are going to have to come up with new ways of doing business. And of course, they will.

Author: Mike Clover
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Mortgage Fixes and Your Credit Scores

noreply@blogger.com (Credit Guru) — Thu, 06 Aug 2009 01:55:00 +0000

When a consumer is desperate to get out from under a huge mortgage payment, he or she may consider many options. Each has a different effect on credit scores.

The choices include:
• Letting the house go to foreclosure
• Signing a deed-in-lieu of foreclosure
• Bankruptcy
• A short sale
• A refinance, or
• A loan modification.

A foreclosure and a deed-in-lieu of foreclosure both have a significant impact on your credit scores, but taken by themselves are not as damaging as a bankruptcy.

If all of your other accounts are current, the foreclosure is a serious blot on your credit report, but is just one blot. And, while it will stay on your credit report for 7 years, your scores can begin to improve in about two years if you are steadfast in keeping all your other accounts current.

A deed-in-lieu of foreclosure is the same - you're just spared the time and cost of the foreclosure process. In both cases, the lender may obtain a judgment against you for the deficiency - the difference between your loan amount and the price the home sells for after foreclosure. This judgment is another serious hit to your credit scores.

A bankruptcy may allow you to keep your home, but since it means you are defaulting or wiping out many other accounts, it can affect your credit score even more negatively than a foreclosure. A bankruptcy may remain on your credit report for ten years.

Short sales may or may not impact your credit scores - it all depends upon how the lender reports the transaction to the credit bureaus.

In many cases, it is reported just like a foreclosure - It can be reported as a "settled debt," which will damage your scores. However, in some instances, and if you ask for the concession as part of the short sale negotiation, lenders will report it as "paid in full."

If you do ask for the concession, be sure to have the bank's commitment in writing. You should also ask for a written agreement saying that the short sale represents a "total satisfaction of debt." Otherwise, they can come back later and ask you to pay the deficiency.

Refinance or loan modifications don't hurt your scores. In fact, they may improve your scores because your monthly debt to income ratio will go down. Of course, that improvement will be wiped out if payments on the new or modified loan are not made on time.

Author: Mike Clover
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Mortgage Loan Servicers in Conflict of Interest

noreply@blogger.com (Credit Guru) — Tue, 04 Aug 2009 02:20:00 +0000

You hear a lot of talk about the Making Home Affordable plan pushed through by the Obama administration, but you don't meet too many people who have had success in getting their mortgage loans adjusted.

Why? It's not lack of money. This is a $75 billion program designed to prevent foreclosures and give relief to troubled homeowners whose incomes have plummeted in recent months.

The answer lies in conflict of interest. Mortgage companies that service loans are paid $1,000 from the Federal Government when they modify a loan. Then they are paid an additional $1,000 per year for the next three years. Treasury officials believed that these payments would be enough incentive to loan servicers to assure their cooperation, but it isn't so.

Mortgage loan servicers collect a percentage of the value of every loan they service - year in and year out. Then, when a loan goes into default, they begin collecting fees, beginning with late charges which can equal 6% of the monthly payment. When the loan finally gets to the foreclosure stage, they get to collect even more.

According to a New York Times report, Owen Financial reported that almost 12% of it's 2007 income came from fees paid by borrowers.

The good news for homeowners struggling to get back on track after missing a few payments is that loan servicers don't seem to be in a hurry to push those loans as far as foreclosure. The longer they stay on the books, the more dollars keep coming in. Thus, while the number of mortgage loans showing 90 days late nearly doubled from June of 2008 to June of 2009, the number that transferred ownership to a bank declined by almost 1/3.

It seems almost as if the loan servicers are using these delinquent loans as a sort of interest-bearing savings account, because once a mortgage loan does go to foreclosure the revenues become even higher.

Management fees charged to investors for taking control of the property, getting it ready for resale, and handling the sale can be extremely lucrative. In addition, they are able to funnel orders for insurance policies, appraisals, title searches, and legal filings to companies that they own.

Some mortgage servicing companies have established their own Title companies, just because of the huge profits involved. They are allowed to charge for title work when the home is transferred to the lender, then when it is transferred to the new buyer, and finally they are able to sell the Title Insurance to the new buyer.

The Federal Government may want loans modified to help troubled homeowners. The Mortgage Loan Servicers may have a completely different agenda.

Author: Mike Clover
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Don't Get Caught in a Rate-Reduction Scam

noreply@blogger.com (Credit Guru) — Tue, 28 Jul 2009 20:00:00 +0000

If you're paying high interest on credit card balances, you could be a target for the "Rate-reduction" scam artists. These are the folks who call and promise to get your credit card interest rates lowered - for a fee, of course.

One of the most prevalent goes by the name "Easy Financial," and they've been actively marketing their program to unsuspecting consumers.

The calls may come from a live person, or could be automated, but the message is the same. For a payment of $600 to $1,500 - on your credit card - they promise to negotiate with your credit card companies and get your rate reduced.

Unless a consumer is carrying huge debt, the amount paid for the "service" will not be recouped through the rate reduction, making this scam even worse. At any rate, it's money paid now, rather than over time. And to add insult to injury, you'll pay interest on it.

In truth, they will either advise you to transfer your balance to a different card with a lower rate, or will simply make the same phone call to your card issuer that you could make yourself. In fact, they'll get the phone number from you by asking you to read the customer service number from the back of the card.

Then they'll set up a conference call with you and your card issuer, and they will simply ask for the reduction. There is no negotiation. And this is something that any consumer can do without any help from a third party.

While they do promise a money back guarantee, the "money back" has not been forthcoming, and the Better Business Bureau has been hearing from unhappy consumers. Few complaints have been resolved.

Section 5 of the Federal Trade Commission Act prohibits unfair and deceptive practices, and this practice does appear to be both unfair and deceptive. In addition, this company may be violating the Telemarketing Sales Rule and the Do Not Call list.

Authorities are warning consumers NOT to give any information to these callers. If you hand over your credit card information, they're free to charge your account, even if you haven't agreed to their services. This is just another form of identity theft.

If you've already fallen prey to one of these callers and have not received the promised rate reductions, call your credit card issuer and dispute the charge. Be sure to follow up in writing.

You can also report the scam to the Better Business Bureau, the Federal Trade Commission, and the Federal Communications Commission.

Author: Mike Clover
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Should You Let Someone Assume Your Mortgage Loan?

noreply@blogger.com (Credit Guru) — Mon, 27 Jul 2009 22:35:00 +0000

Assumable loans used to be common, but most are not legally assumable today.

Some FHA loans are assumable if they're several years old, and VA loans originated before March 1, 1988 are generally assumable without approval from either the VA or the lender.

Different loans carry different fine print, but many homeowners have found themselves in trouble when the person who assumed their loan didn't make the payments. Although they no longer had title, they did still have the financial obligation.

This can happen when people are well-meaning but get into trouble, or can be the result of a scam. Homeowners should think twice about signing over the deed to someone who offers to take over their payments and pay them their equity when they refinance. In a scam known as "Deed theft," these new "buyers" get their own loan, which may include cash out, and simply walk away. The sellers have no legal claim because they have signed over the deed.

One very real concern in deeding property to someone and letting them take over payments is that newer mortgage loans usually contain a "due on sale" clause. The lender can call the loan due and payable, and it doesn't matter that you've signed over the deed. It's still your name on the financial obligation. If the lender calls the loan and neither of you is in a position to pay it off, the house could be subject to foreclosure.

Generally, if all payments are made on time, the lender won't object - but that's not a guarantee. Both you and your buyers could face difficulties if the loan is called.

A safer way to transfer ownership and get out from under a hefty loan payment is to enter into a lease-purchase agreement. Under this plan the owner keeps title to the house, the buyer makes payments, and a pre-set portion of that payment is applied to the down payment when the new buyer is able to secure a loan.

This arrangement can and should be done through a third-party, such as an escrow agency. The third party keeps records of all payments and can even forward the mortgage payment to the lender.

The contract between buyer and seller should contain safety measures for each, spelling out what will occur should the buyer cease to make payments. Under certain circumstances, the seller could be expected to reimburse the buyer for repairs and improvements to the property.

For the safety of all concerned, competent legal advice should be sought before entering into such an agreement. The actual contract should be drawn by a real estate attorney.

Author:Marte Cliff
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Variable Rates to Mark Credit Cards of the Future

noreply@blogger.com (Credit Guru) — Thu, 23 Jul 2009 13:04:00 +0000

You knew that when credit card issuers were given rules to follow, they'd find some new way to increase profits. Issuing cards with variable rates is one of those ways.

At least 4 of our major credit card banking giants have already switched part of their accounts to variable rates, and more are expected to follow. Variable rates are generally offered at a set margin over and above the U.S. Prime Rate, which will allow card issuers to float their rates up and down in keeping with prime.

Surprisingly, we learned that about 66% of all credit cards are already on a variable rate schedule, with that number expected to reach 75%.

What does this mean to you as a consumer? It means that your credit card issuer will be free to step around the new rules and raise your interest rates with no notice. Under the new laws, the old "rule" that required 15 days' notice was changed to 45 days. But because it's tied to Prime, a variable rate can change at any time without notice.

The new law that changed notice time from 15 to 45 days is scheduled to go into effect on August 20, along with a provision that restricts interest rate increases during the first year of card ownership. That provision also goes out the window when the card is offered at a variable rate.

The only exception is if you get in on a Promotional Rate. Those still come under a rule that says promotional rates must last for at least 6 months.

Read all the fine print in offers, and look for cards that still offer fixed rate options. Some will, because they'll see it as a marketing tool to set them apart from the competition.

Financial analysts expect interest rates across the board to continue on their upward spiral. Your credit card issuer may give you 45 days' notice instead of 15, but if you carry a large balance and do not have the means to pay it off or move it within the 45 days, you'll still be stuck with the high interest.

The best advice they give is to pay down accounts as fast as you can, before your interest rates rise, causing the bulk of your payment to go to interest rather than principal reduction.

The Administration may want people to spend more in order to "stimulate" the economy, but the best individual course of action right now is to spend less and pay off debt.

Author:Marte Cliff
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

A Scary Credit Card Scam

noreply@blogger.com (Credit Guru) — Wed, 22 Jul 2009 21:11:00 +0000

You know about the safeguards that credit card issuers try to implement to keep unauthorized people from using your cards. Well, now some smart identity thieves have figured a couple of ways around them.

The first deals with actually stealing your cards from your mailbox before you ever see them. Card issuers thought they could eliminate the danger for you by requiring you to call from your home phone to activate your cards.

That worked until a new website came along that enables you to place a call from any phone and make it appear to be coming from a different number. All a thief has to do once your card is in his possession is check the local phone directory for your number.

So if you're expecting a new card in the mail and it doesn't arrive, do call your credit card issuer to see if it has been activated.

A second scam is done over the telephone. The thief already has your credit card numbers, your address, and your phone number. All he's missing is that 3-digit code from the back of the card.

The person who calls will give their name and state that they are from the Security and Fraud department at your card issuer's company, calling because they've noticed unusual spending and wanting to verify that you did indeed make some recent purchases.

You may have gotten such a call in the past when you've used your card in an unusual manner or in a different location from usual. Some card issuers do call to check that the card is being used by an authorized person.

This call, however, is a classic "phishing" scheme. The caller will identify the bank that issued your card and ask if you made a certain purchase or purchases. Of course you'll say no, because there was no such purchase. They'll then tell you they're starting a fraud investigation and that they'll credit your account and send verification to your address. They'll state your address and all you'll do is verify.

Then comes the theft. The caller will say that he or she needs to verify that the card is in your possession, and will ask you to read the security numbers from the back. When you do, the caller will say "Yes, that's correct." It all sounds very legitimate.

This is just one version. In other versions of the scam, the caller will ask for the expiration date on the card, your billing address, or even your social security number.

The thing to remember is NOT to give out any personal information to anyone who calls you. If you're worried that some unusual activity did take place, hang up and place a call to the credit card company yourself. Don't use a number that the caller gave you - go on line to get it or call information for the number.

Author:Marte Cliff
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Right Now a Good Time for a Mortgage Loan

noreply@blogger.com (Credit Guru) — Tue, 21 Jul 2009 02:43:00 +0000

Rates are down and the mortgage market has loosened up a bit lately, so if you can qualify, now is a good time to buy a home or refinance. The catch is that qualifying for that loan is much more difficult than it was a year or two ago.

First, you need good credit and a down payment. Lenders (and the Federal Government) have figured out that people are more likely to work to keep their loans current when they have something to lose, so the days of "zero down" are gone.

FHA loans require 3.5% down and non-FHA loans require 10%. The good news is that if you qualify for a mortgage insured by the Federal Housing Administration (FHA) that down payment money can come from a family member, an employer, or a charitable organization as a gift.

"Gift" is the operative word here and you must be able to document the fact that you won't be expected to repay the money. You need a letter that clearly states that the money is a gift. Also, be sure to keep documentation when you deposit the money in your account.

Next is your FICO score. Check your own credit report before you approach a lender and see if there are items you can "clean up" in advance. If you have any late payments, get them up to date. Then pay off or pay down any outstanding debt. Be sure to check for errors on your credit report and have them corrected.

Gathering your paperwork is the next step. Today's lenders want to know everything and they want it documented. So gather up your bank statements, your W-2 wage and tax statements, and your pay stubs. If you're currently renting, take your rent receipts. If part of your income comes from overtime, take documentation showing that the overtime is a normal part of your income, not a "once-in-a-while" occurrence.

If you receive income from Social Security or Disability, take copies of your award letters.

If you want to refinance, equity will be the key. Lenders no longer want to lend 100% of the value, although if financial troubles are your reason for refinance, you may qualify for help under the Making Home Affordable plan.

In some cases you can refinance, and in others you can work out a loan modification, which changes the terms of your mortgage so you can afford the payments.

Before you consider a refinance, sit down with a mortgage lender and go over the numbers carefully. A typical refinance costs $3,000 to $5,000, so the reduction in interest rate must justify that expenditure. Usually, if you plan to sell within 5 years, you're better off sticking with your current loan.

Author:Marte Cliff
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Phase One of the Credit Card Act Takes Effect August 20

noreply@blogger.com (Credit Guru) — Mon, 20 Jul 2009 20:41:00 +0000

Consumers and the media have been talking about provisions of the new Credit CARD Act of 2009 since some time last winter. After much worry and debate over whether it would make it through Congress, it was finally signed into law by President Obama on May 22.

Because banks insisted that it would take months for them to change their methods of billing, advertising, and marketing, most provisions won't go into effect until February 2010. However, one small section of the bill will become effective on August 20.

Lawmakers felt that this section of the bill needed to be on a fast track in order to help families who are struggling to pay credit card debt.

Knowing that they had no time to lose, many credit card issuers have responded by raising interest rates and slashing credit lines at a fast pace to get it done before the changes become law. The banks who followed this path have come under fire from lawmakers and others who see the interest rate hikes as a "money grab" by the banks.

The banks defend themselves by saying they're just reacting to the bad economy and the increased risk they face by giving credit to people who may already be struggling.

The result: Families who were struggling to pay $150 per month on a credit card balance are faced with a higher interest rate and a higher minimum payment. Now they can struggle even harder to pay $200 per month while not making any more progress at paying the principal balance.

Will this move result in more profits for the banks, or will the grab for higher profits result in more charge-offs as consumers "give up" on trying to keep up with ever-increasing payments? Are the banks contributing to a worsening of the "bad economy?"

The three provisions that will become effective in August won't stop the card issuers from raising rates or slashing credit lines, but they will give consumers advance notice. They are:
1. Replace 15 days written notice with 45 days written notice of interest rate increases and other significant changes to a consumer's account.
2. Inform consumers that they have a right to NOT accept the higher interest. They may instead cancel their accounts - and apparently will be allowed to pay off balances at previous rates. Right now this option is offered by some card issuers, but is not a law.
3. Mailing monthly statements to consumers 21 days prior to the due date - allowing time for consumers to receive the statement, pay it, and mail back the payment in time for it to arrive by the due date. This provision should at least help consumers avoid paying late fees.

Author: Mike Clover
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Credit Card Issuer's Losses May be Slowing - or Not

noreply@blogger.com (Credit Guru) — Mon, 20 Jul 2009 20:39:00 +0000

Analysts are cautiously optimistic over predictions that credit card issuers have seen the "peak" in delinquencies and charge-offs.

While there has been a slight drop in delinquencies on loans that are as much as 6 months' overdue, there is a rise in loans overdue by only one or two months. Since charge-offs occur after a loan has been in default for 6 months or more, analysts are seeing the new wave of 30-60 day late payments as a sign of new charge-offs to come.

They are guessing that the lull in charge-offs was a seasonal reaction to consumers receiving income tax refunds and using them to keep balances current. Now that the tax refund money has been used and unemployment is still rising, more delinquencies and defaults could be in the offing.

Apparently this is a phenomenon to be expected, even in years when the economy is not failing. Banks generally see a few month's of declines in delinquencies during tax-return season, and then an increase in delinquencies in June.

In other words, consumers are trying to meet their obligations - even when it means using the coveted tax refund to pay a creditor they may not be able to pay the next month.

The state of the economy is making it impossible for many consumers to keep up - especially those consumers who are among the 9.5% of the job seeking population who have lost employment. Unemployment benefits simply don't stretch to cover all the expenses that a regular paycheck covered.

Charge-offs at U.S. banks offering credit cards have almost tripled in the past 30 months - partially as a reaction to the high unemployment rate. Unfortunately, more job losses are expected in the coming months.

Charge-offs are expected to reach 10% - 14% this summer, putting a definite dent in profits made by major credit card issuers.

Since everything in the economy affects everything else, one must wonder if the credit card issuer's aggressive tactics to ensure their own profits has played a significant role in their subsequent losses. By dramatically increasing card holder's interest rates, slashing their credit lines, and acting in a manner that many consumers describe as "bad faith," card issuers may be directly responsible for those card holders' inability and lack of desire to keep their accounts current.

When a monthly minimum payment suddenly jumps by $100 or more, and the card holder has already been struggling to meet the lower payment, it stands to reason that he or she might choose that time to simply "give up."

Ironically, many of the major banks are the direct cause of rising unemployment numbers. Along with other changes, their discontinuation of sub-prime lending led directly to thousands of their employees joining the ranks of the jobless.

Author: Mike Clover
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

The New Credit Card Laws: Help or Hurt?

noreply@blogger.com (Credit Guru) — Sun, 19 Jul 2009 18:38:00 +0000

Credit card issuers say the new laws will hurt consumers across the board. Consumer advocates say they won't. Who will be proven correct remains to be seen.

We do know that credit card issuers will attempt to regain their profit positions by making consumer-unfriendly changes. They're already making changes quickly in an attempt to secure their positions before the new laws take effect. They've been raising interest rates and slashing credit lines ever since the talk of the new rules began. They've also been closing accounts left and right - sometimes even for consumers who have always paid on time.

In the months prior to the law being signed, bank industry lobbyists began issuing warnings about the dire consequences to consumers if banks were limited in their practices. Now bankers are still warning that regulations will harm consumers.

Until now, card issuers have reaped huge rewards from penalty fees, as well as interest rates. Under the new laws, many of those penalty fees will be eliminated. Thus, they are contemplating adding some new fees and changing policies that were not addressed by the lawmakers.

One of those policy changes may be a return to the annual fee - especially for those card holders who pay their bill in full each month. When they use their cards, the only revenue comes from the retailer, and banks want more than that. Thus they may be charged a fee for the privilege of using the card.

Other moves that Credit card issuers have suggested in their warnings:

• Less rewarding rewards - A scaling back on cash-back incentives and other rewards.

• No more grace period - Interest will begin to accrue from the day you use the card, rather than from the statement date. This will allow card issuers to earn interest from those card holders who pay their bills in full each month.

• Variable rate interest on all accounts. No longer will it be safe to purchase a high-ticket item knowing that your interest will only be 9 or 10%. Unless you purchased during a promotion governed by the new laws, your rate could change at any time.

• Rate hikes across the board. The rates offered to banks' "best customers" will go up along with everyone else's.

• Dumping riskier consumers. We've already seen a move away from banks offering secured cards and high-interest / low credit line accounts. Now that the "fee harvester" cards will be severely restricted in fees they can charge, these may disappear altogether.

Author: Mike Clover
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

CREDIT REPAIR ? Q & A

noreply@blogger.com (Credit Guru) — Sat, 18 Jul 2009 19:38:00 +0000

Q:

Hi Mike,

I just read over your guide to credit repair. I read it after the fact, but thankfully I followed everything you stated in your site on credit repair. My husband and I rent a home, which has just been offered for us to purchase. Our landlord is upside down on her mortgage and the price of the home is too good to pass up, considering where we live. We live in the Bay Area and the home price is about $250K. There are amazing deals right now with all the short sales and foreclosures. So, my immediate reaction was excitement and then realized that our credit was so bad, I didn't think it could happen.

So I took on the task of cleaning up our credit reports. We each had 7 negative items on our reports. My husband's FICO score was 577 and then when I got him a high fee credit card it dropped to 560. My credit score was 527. So I made it my full time job to clean it all up. I bought a binder and dividers. Each divider represented a different collection agency. I wrote down in each section the collection agency, the amount owed, the date of last activity to see how old it was for leverage and a few other miscellaneous items. I then began calling. I paid many of them immediately and some I extended out a little bit, as we still need money to live on. We still need to pay our regular bills. I finally got to the two largest accounts which were over $1000.00. I was able to get a loan from my father, negotiated a settlement with one of the collection agencies but the other was very stubborn. I just needed it off my credit report or at least paid, so I decided to pay it. We get a security deposit back when we buy the home, which will go to pay off my father for lending me the money. I started this credit repair three weeks ago and as of August 14th, 2009, our credit reports will be all cleaned up with nothing outstanding. Oh, I left a couple accounts alone because they are over six years old and my lender said they weren't going to focus on that. They were just too old and too small.

I checked on Credit Karma, which provides TransUnion's credit score for free. My husband's credit score went from 560 to 601 in two weeks. This was exciting. I also disputed a couple items and when I did, noticed some of the collection agencies had deleted items, despite saying they wouldn't. I was quite excited about this.

Our lender said he will re-run our credit reports in 30 days to see what they look like. Our goal is to have the home by November 15th, so we can take advantage of Obama's tax incentive of $8,000.00. It is the middle of July right now and I am done. I wanted to tell you that you can have success and it can happen in less than a year if you persevere. Granted, most of our collections were not large amounts, but enough of them lowered our FICO score. Mine ha gone from 527 to 537. I do have a MasterCard which is also high fee based. I got it almost two years ago and have never been late on it. They continue to raise my limit. My problem was that I hovered around the high limit, which doesn't look good on your credit. I have decided not to use the card anymore. I have brought the card down from a $750 limit to $630.00. I am working towards a zero balance or close to it. I have set up online payments for the next few weeks of $50 per month to lower the balance on the card. I know this will help my scores.

I just want to know, is there anything else I can do right now? I do write letters to the collection agency, along with proof that the debt has been paid, via my online bank statement. I request them to notify the credit bureaus and to delete the item from my report. I'm aware they don't have to, but I still try. I then write a letter to each of the three credit bureaus disputing the entry. I attach proof of payment and ask them to delete the entry. I know they must contact the collection agency to see if the debt is valid. However, this may be so much work that they just refuse to do it since they have my money. I'm just trying to be pro-active in all of this.

I finally see a light at the end of the tunnel. I truly believe that we will be buying this house now and the November 15th deadline is clearly going to happen for us. If you have any feedback, that would be great.

Sincerely yours,

Robyn K.

A:
Hi Robyn,
I am glad you did what our site recommends. Most people think that there is some credit repair miracle out there, and find out quickly its takes what we teach, along with what you have done yourself to make progress. I always recommend to everyone to make sure you have good credit reporting on your credit report. You will typically need a couple of credit cards and maybe an installment loan. Make sure you don’t close out any good credit cards. This will lower your credit scores. You should never close out good credit. If anything you should charge small amounts on your cards and pay them off every month. Its sounds to me the only thing you might be lacking is more credit. You can access all of this through our site. We provide credit cards and loans that will help improve you scores overtime. Also pull your credit report regularly and make sure that the collection companies are reporting your settlements on your collections to the credit bureaus. This is a common problem, you pay off the collection and they don’t update with the bureaus.

In regards to asking the bureaus to delete a debt that was recently paid, I personally believe your time could be better spent. A collection will stay on your credit report for 7 years from collection date. Normally a credit bureau will not remove a paid collection if it’s within that time frame.

Keep up the good work and I hope you get your Dream home in the Bay area……

Mike Clover
CreditScoreQuick.com

Little-known Ways to Boost Your Credit Scores

noreply@blogger.com (Credit Guru) — Thu, 16 Jul 2009 03:00:00 +0000

You've read all the basic advice on how to raise your credit scores - they include actions such as: pay off outstanding debt, use your credit cards sparingly, and pay all your bills on time.

If your scores are low right now and income isn't coming very fast you may think there's not much you can do about it, since you don't have the money to pay off outstanding debt. But that's not so. Even if you aren't able to make ends meet right now, you can manage your money in ways that will be less damaging to your credit scores.

Maybe your situation is such that you simply can't pay all your credit card bills any more. Pay one of them. Stay absolutely faithful and on time with just one account - preferably the oldest one. Also pay your utility bills on time. They used to report only delinquent accounts, but more of them are now reporting "paid as agreed" accounts.

Avoid finance companies. Doing business with them looks bad on your credit report. So if you can manage it, pay them off and then don't go back. Avoid Pay Day Loan stores - they'll suck you into a never ending spiral of debt. Resist the temptation to apply for an in-store credit card. Some experts say applying for one of those cards can reduce your score by up to 20 points.

Prioritize: Pay the most important debts first, and pay them on time. Your house, your car, your utilities, and your credit cards.

If your credit scores are suffering because you refused to pay an account in dispute, or if you had a temporary credit problem due to illness or other personal setback, add that information to your credit file. Simply write a letter to each credit bureau that is reporting the negative information, and explain the reason. You have a right to do this under section 611(b) of the Fair Credit Reporting Act. Ask that the information be added to your file exactly as you have written it, then ask for a copy of the updated report.

Not all creditors look at your report entries, so not all will read your note, but some do.

Take care in composing the letter, and don't write it at all if there isn't a very valid reason for your delinquencies. Experts disagree over the benefit of such a note, and while some believe it will help, others believe it could be harmful to your credit scores.

This will stay on your report for 2 or 3 years before being deleted and will be seen by anyone who accesses your report. Thus, don't use foul language or name-calling - simply state the facts as you see them.

Author: Mike Clover
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Where to fax credit dispute to equifax ?

noreply@blogger.com (Credit Guru) — Mon, 13 Jul 2009 22:06:00 +0000

Q:
Where to fax credit dispute to equifax? There are so many factors to consider. Would you be kind enough as to give me some pointers as what to look for or avoid? Please point me in the right direction.
Thank you so much. yours truly, Paul

A:
Hi Paul I will point you to our "how to dispute" article that tells you everything you need to know.
go here.

Mike Clover
CreditScoreQuick.com

On Vacation, Should You Carry Debit Cards or Credit Cards?

noreply@blogger.com (Credit Guru) — Mon, 13 Jul 2009 21:43:00 +0000

Credit cards seem to be the safest alternative when you're going to be away from home, although you will need some cash, and thus might want to take your debit card.

If carrying large sums of cash makes you nervous, your debit card will allow you carry only enough cash for a day or two, because you can make periodic withdrawals from your checking account. But be careful with that debit card!

Of course you should also be careful with your credit cards - carrying only one and leaving the others locked in the hotel safe or in-room safe. But debit cards carry additional risks.

For safety's sake, plan ahead so you know where to find legitimate ATM machines. Savvy crooks have figured out how to install phony ATM machines in high-traffic tourist spots, and using one could result in identity theft and an empty bank account. If your hotel has an ATM machine, it is probably legitimate, as are those in airports and banks.

Rather than carry the card for multiple withdrawals throughout the day, plan ahead and make as few withdrawals as possible. This not only helps ensure safety, it cuts down on those $2-$5 ATM fees.

As with your credit cards, let the bank know ahead of time that you'll be on vacation. Otherwise they could freeze your account, thinking incorrectly that charges made away from home are the result of a theft.

Theft can be more serious with a debit card than a credit card, so if your card had indeed been stolen, you'd be thankful for their interference.

Unless you report the loss to your bank within 2 business days, you could be liable for up to $500 in unauthorized withdrawals. If you report within the 2 days, your liability drops to $50. BUT, while you're disputing the withdrawals and waiting for the funds to be returned, your bank account is just as empty.

This could have serious consequences if the money for your day to day expenses, such as a house payment, car payment, and utility bills disappears overnight.

Disputing charges is also more difficult with a debit card than a credit card. Say you're on vacation and see a beautiful painting, so you buy it and arrange to have it shipped home. If it never arrives, having the charge removed from your credit card is reasonably easy. But once the money has been taken from your bank account, getting it returned is not.

Author: Mike Clover
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Cash Back Credit Cards are Not all Created Equal

noreply@blogger.com (Credit Guru) — Sun, 12 Jul 2009 01:49:00 +0000

Getting cash back from a credit card is like getting free money - or is it?

It turns out that the words "cash back" are not enough to assure that you will actually get cash back from your purchases. It all depends upon the credit card and the fine print in your agreements.

Some cards charge an annual fee for the privilege of getting cash back. In order for you to know if it makes sense you need to determine how much you'll spend in a given year.
For instance, if your cash rebate is 2% of your purchases and the annual fee is $35, you'll need to charge $1,750 per year just to break even.

Some cards offer a tiered cash back plan - wherein their percentage goes up at intervals as they spend more. So it might start at 1% and go up as high as 5%. Again, you need to look at how much you typically spend per year.

Next, unless you can and will pay your balance in full each month, look at the interest rate. If you're paying 29% interest that 2% doesn't count for much.

After annual fees and interest rates, check to see if your rewards have an expiration date. Some cards will only rebate your cash back after you've reached a specific threshold - say $100. If you don't reach that by the end of a set period of time, your rewards will dissolve into nothingness.

Low caps are another trap. Some cards limit the amount you can earn, no matter how much you spend. If you use your card for business and run large sums of money through it every year, check to see that you'll be rewarded for all of your purchases, not just the first few months' worth.

Merchant restrictions can also limit the value of your cash back credit cards. The advertisement may say that you get 2% back on all grocery purchases but when it comes time for a rebate, disallow the groceries you bought at Wal Mart or Whole Foods because they don't consider those stores as "grocery stores."

If the card offers cash back on fast food, read to see which stores are included and excluded. You may find that your favorite fast food place is not on the list of approved establishments.

If it offers money back on gasoline, see if it will honor gasoline purchased at the neighborhood quick stop that just happens to have 2 pumps outside.

Reading the fine print is tedious and time-consuming. Sometimes it requires a magnifying glass. But if you want to get real value from any kind of rewards card, and not spend your time fuming because you didn't get what you expected, you must read the fine print.

Author:Marte Cliff
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Students, Begin Building Credit Scores Before You Need Them

noreply@blogger.com (Credit Guru) — Sun, 12 Jul 2009 01:38:00 +0000

College years are not a time of financial involvement for most students, and credit scores are far from their minds.

They may have student loans for tuition, but most are concentrating on education rather than home ownership or cars. Most students who pay their own way are avoiding extra debt because they simply don't have the time to hold down a job that will return enough to pay a lot of bills.

But... they should still work at establishing credit, because they'll need it when they leave school and enter the working world. Unless they're staying at home for a while, the first thing they'll need is a place to live - and landlords now want to see good credit reports.

Next, depending upon where they live, they'll need a car to take them to that new job. Without good credit scores, they'll pay high interest for that car.

Thus, every student should have at least one credit card. Unless they have some bad credit history, they should be able to get at least a low limit, high interest card. If not, they can get a co-signer, piggyback on a parent's good credit, or get a secured credit card.

As with everything, students should read the fine print before making application for any card.

Those with little or no credit are often prey for companies promoting "Fee Harvester" cards. These come with a low credit limit, and so many fees that the cardholder is in debt for almost the full balance before using the card even once. Shy away from cards that charge annual fees, set-up fees, transaction fees, statement fees, and inactivity fees.

Right now, card issuers can and do charge as much as 78% of the credit limit in fees. Under the Credit Cardholder's Bill of Rights, they'll be restricted to charging 25% of the credit limit - which is still excessive. They also charge interest rates that top the charts. So read the fine print - all of it!

When piggybacking - where the student is simply added to another person's credit card account - students should choose wisely. Everything about that other person's use of that card will go on the student's credit report. So if they maintain balances over 50% or make late payments, the effect of piggybacking can be negative.

Secured cards are another option for students who have trouble getting a "regular" card. By depositing money in a savings account that's used for collateral, there's no danger of being harmed by someone else's credit mishap. Again, be sure to read the fine print for fees, and always, always, always make the payments on time.

Author:Marte Cliff
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.