If you could pluck a $5 bill out of the air each month and apply it to your credit card debt, would you do it? It doesn’t sound like much, but it does add up over time. And anyway, $5 is $5 – I’m sure you’d bend over and pick it up if you saw it laying on a deserted sidewalk.

If you’re making payments on credit card debt, you can pick up that $5, or possibly more, by making one simple change in the way you pay your bills.

Some look at a credit card bill, check the due date, and plan to pay it on that date. Some even go on line and schedule the payment for that date. The thinking is “Why should I give them my money ahead of time?”

Savings is the reason why.

If instead of waiting for the due date, you check your accounts on line and make the payment the day the statement is issued, you’ll save money.

The day your statement is issued, the interest for the previous month is added. From that point you pay daily interest on your previous balance, plus last month’s interest.

Say you have a $10,000 balance at 18% interest. When the statement comes out the new balance will be $10,150. Now you begin paying daily interest on that new balance. Your interest, per day, will be $5.075.

If instead, you make your minimum payment of $350 on the day the statement comes out, you’ll bring your balance down to $9,800. That will cost you $4.90 per day.

Over the course of a month, that 17.5 cents per day adds up to $5.25. This is extra money you’ve paid against your debt without taking anything extra from your bank account.

If you’re paying a higher interest rate, or paying on a higher balance the savings are even greater.

Making additional payments during the month, even if they’re small, can also help you pay off that credit card debt faster. So if you happen to work an hour overtime or you find some great coupons and save on your regular grocery purchases, plunk that extra money down on your credit card debt the day it goes into your bank account. Most card issuers will accept on line payments in any amount during the month, and most will let you make a payment once per day.

Author: Mike Clover
CreditScoreQuick.com

When you apply for credit and get turned down because of errors on your report, complaining about it won’t help. And it won’t get you the credit you seek unless and until you take the necessary steps to correct the errors.

You are not the one who reports your financial life to the credit bureaus – your creditors do that. But you are the one responsible if the information is not accurate.

Until recently, that was a problem. You didn’t get to see your credit report until you paid money up front for a mortgage lender or car dealership to order it. At that point, it was too late do anything about it in time to “Make the deal” you were working on.

Now that you have easy access to your own credit report – and getting it is FREE, you can take steps to correct errors well before you need to use your credit.

The odds are strong that your credit report contains errors right now. Industry experts recently revealed that approximately 70% of all credit reports contain some kind of error. Odds are, that error will not work in your favor.

So what can you do about it?

First, it’s important to correct all credit errors quickly. This isn’t one of those tasks you should put off until next week, and even a small error could bring down your scores. It could also be the red flag signaling identity theft, so the sooner you catch it, the less hassle you’ll be in for later.

Seeing that someone has reported your address incorrectly is nothing to ignore!

Write a separate letter to each credit bureau that is reporting the error. Explain in detail and include a photocopy of the report with the incorrect information highlighted.

Errors can come in many forms. Some are typographical errors or errors in math. Some signal a more serious problem, such as an unauthorized charge on your account, a charge for merchandise you returned or that was never delivered, or an incorrect price for something you did order.

The credit bureaus will investigate based on your report, and will get back to you within about 30 days. If they find that the information is correct, but you disagree, file a statement for your report telling why. This information will be given to future creditors.

Along with keeping a close eye on your credit report, you should also watch your credit card statements for any unauthorized or unknown charges. If you don’t recognize an item on a credit card bill, call right away to learn what it was – since reporting names don’t always match merchant names you’ll recognize. If you still don’t recognize it, then take action. In this case, start with the card issuer. Call for advice, and follow their instructions.

CreditScoreQuick.com

While experts say that at least 50 different kinds of scores are compiled and kept about each of us, the one we hear about most is our “Credit score.” The most popular is the FICO score – the one used by mortgage lenders to decide if you can buy a house, and if so, at what rate of interest.

That score is made up of 5 parts, each with a different degree of importance. In order, they are:

1. 35%- Your Bill Paying History
2. 30%- The credit available to you vs. how much of it you use
3. 15%- How long you’ve had credit
4. 10%- The variety of credit you carry
5. 10%- The number of “hard inquiries” from creditors

Bill Paying History
It’s not surprising that would be creditors put a lot of emphasis on how you pay your bills. High-scoring individuals always pay on time, as agreed. Low scores in this category are the result of late payments, accounts going to collection, foreclosures, and bankruptcy.

The good news is that under the new FICO scoring model, an occasional late payment won’t carry the weight it once did. The people who analyze these figures have come to realize that even the most responsible person can have a late payment when there’s some other kind of crisis in their life – or when the mail is slow.

Credit Available vs. Credit Used
This one is a fine balance – experts say it’s good to have plenty of credit and use only about 10% of it – 30% at the most. Others point out that historically speaking, those with plenty of credit tend to use it.

What really hurts is using your available credit to the maximum – and even using it to the maximum on one credit card while others carry no balance at all.

It is important to use at least some of your credit on a consistent basis, because that demonstrates your ability to use credit well. No use equals no history, and that hurts.

Length of time that you’ve had credit –
Using credit well over a long period of time gives you high marks – especially if you’ve had credit with the same issuer over that of time. This one makes it tough on young people just starting out.

The Mix of Credit
This part of the scoring formula assumes that using a variety of credit well shows that you know how to handle money. So having a mortgage, a car loan, and credit cards is better for your score than having just one kind of experience with credit use.

Inquiries on your Credit Report
Multiple inquiries on your credit report are particularly harmful if you’ve recently had credit problems such as late payments, or a bill sent to collections.

Credit issuers assume that if you’re making application for new credit, you may be looking for a “life preserver” with which to pay other debts.

Credit card issuers looking for new customers routinely order “soft inquiries” on citizens who have not requested credit. Unlike “hard inquiries,” these inquiries in to your credit report have no effect on your credit scores.

They’re simply out there “fishing” for people with good credit so they can send offers to apply for their credit card. These offers will include low introductory rates, rewards, and even gifts for making application.

Companies with which you already have credit will go looking to see if your credit is still superior before they send you cash advance checks with letters suggesting that you really do need a vacation or a new wardrobe.

They also fish for people with poor credit and credit problems, so they can offer a different kind of credit card.

They know that most of us need a credit card at one time or another – when shopping on line, for instance. So they’ll send an offer for a card with a low credit limit, a huge annual fee and a staggering interest rate.

Some of these are the “fee harvester” cards whose gouging techniques have now been reined in by the Credit Cardholder’s Bill of Rights of 2009. At the present time, the initial fees charged to gain a $250 credit limit can reach upwards of $175!

When the new law goes into effect, they’ll be limited to charging 25% of the card’s credit limit in fees during the first year.

You trigger some of this snooping…

Often, those who aren’t sure about their credit scores will allow a car dealer or a furniture store to check their credit report – just to see if they can extend credit to them. This is a poor idea, as it triggers a “hard inquiry.”

“Hard inquiries” do have an effect on your credit score, so you should not use this method to learn your scores, and instead should take care not to give out your personal information until you’re sure you want to ask for credit from a particular merchant.

Your credit report will show the inquiry – it won’t show if you were turned down for credit or simply decided to keep shopping because that merchant didn’t have exactly what you were looking for, or because you couldn’t agree on the price of a car.

There’s no longer a reason not to know your own credit scores before you go shopping. You can get your credit report with scores, right here, for FREE. Do it today.

Q:

Two years ago the answer would have been yes. Consumers were advised to contact their credit card issuers as often as twice yearly to request cuts in their interest rates.

Now it might not be such a good idea.

Unless you absolutely can’t meet the minimum payment with your current interest rate, it might be best to lay low.

Because of the changes that credit card companies have been imposing on even their most creditworthy customers, your credit scores may have come down. Unless you check your credit report regularly, you might not even know that your once “excellent” rating now only looks “good.”

Because any time you ask for a change in terms the card issuer will pull your credit report, asking could backfire. They’ll also ask for additional information such as your employment history, monthly income, etc. If your income has come down due to the economic crisis, or if you’ve changed jobs, it could combine with a lower credit score to work against you.

Your request for a reduction could result in an increase instead – along with a reduction in your credit limit. Then the inquiry on your credit could bring your scores down another notch, which could trigger adverse actions from other credit card issuers.

This is a snowball that is gaining both speed and size, so it’s time for consumers to be very careful.

If you’re having trouble but feel confident that you will manage to stay afloat with your current minimum payments, you shouldn’t draw any attention to your account. Don’t let on to the credit card issuers if your income has dropped – and don’t ask for a change that will cause them to examine your current financial status.

If you truly can’t meet the minimum payments, that’s different. In that case you should ask for assistance.

Credit card issuers don’t want another charge-off. They want to keep you in a position to keep paying, so they are in many cases willing to work with you toward a solution. In fact, in 2008, they gave some kind of debt relief to approximately 2.7 million cardholders. That relief came in the form of a settlement, temporary forbearance, debt consolidation, a payment plan, or an interest rate reduction.

Interestingly, had the credit card issuers not taken such an aggressive stance in trying to boost their profits, many credit card holders might not have had a problem. In a study by Synergistics last January, two-thirds of consumers who received a change in terms reported that they had trouble making minimum payments as a result.

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

While most creditors do report to the credit bureaus when a bill is charged-off, you may get a free pass if you’ve had a utility bill charged off.

Something most of us don’t realize is that credit bureaus charge a fee to take in data. That’s right – you pay a fee for your credit report with FICO scores when you apply for credit, but they also collect from the companies who supply the information.

That being the case, many utilities don’t want to pay the fee, so they don’t report. You may find the same thing to be true with local businesses where you hold accounts.

If you aren’t sure, get a copy of your free credit report and check to see if the charged-off account is listed.

If it is, then yes, it is hurting your credit scores. But if it happened more than 2 years ago, it still may not prevent you from getting a mortgage or other credit, especially if you have since repaid the debt.

In fact, you may be able to negotiate with the utility company to remove the item from your credit report in exchange for payment in full. If so, get their commitment in writing before sending the payment.

If they refuse, it’s still to your benefit to repay the debt. Lenders look at your credit scores, but they also look at the credit report itself. If your report shows that you’ve paid the debt and have had good payment history since then, it may not hurt your chances of getting new credit.

Remember that negative information stays on your credit report for 7 years, but its impact on your credit lessens with each year that you show good payment history.

While you’re working to restore your credit after a problem, do be sure to pay all your accounts on time and as agreed. Work hard to keep your credit usage below 30% of the credit available to you, and check your credit report often to assure that it doesn’t contain mistakes. If you do find mistakes, take action to correct them immediately.

If you’re working on building credit in order to purchase a home, don’t make any large purchases such as a car or a house full of furniture within the few months prior to your application for a mortgage. And, since lenders are now returning to the “old rules,” don’t decide to change employment unless the new job is a move up in the same line of work. This is not the time to switch from a secretarial work to truck driving or to strike out as a freelancer.

Author: Mike Clover
CreditScoreQuick.com

Rent parties were first documented in Harlem in the 1920′s – and they’re making a comeback all over New York as citizens struggle to meet rent payments.

Young adults, accustomed to good paychecks and moderately affluent lifestyles, were used to spending week-end evenings socializing at dance clubs, concerts, cocktail lounges, and bars.

Now their incomes have shrunk due to layoffs and the reduction in consumer spending. Commission sales people who once brought home nearly $2,000 per week from their jobs at upscale clothing stores are now lucky to see $500. Those who relied on tips are seeing their incomes plummet as consumers order less expensive meals – and thus tip less.

In response to these reduced circumstances, they’re inviting their friends to party in their homes – and charging them to get in the door.

The cover charges vary with what is offered. If the party-giver supplies the booze and food, or brings in some live music, the fee is higher. Others charge a minimum, and tell their guests that it’s strictly BYOB (bring your own bottle).

Typically, party-givers reap between $250 and $400 for their evening’s efforts – but some parties bring in much more.

For their friends, the “evening out” with a cover charge of $5, $10, or $15 is far less expensive than “hitting the bars” where they may also pay a cover charge, and one drink can cost upwards of $5. They also get to socialize with the crowd they know.

Organizing a rent party takes some special skill – and charm. Not everyone has the nerve to ask friends to help pay the rent, even though most friends are more than willing – unless they’re in the same boat.

The New York Times interviewed one party giver who sent out invitations entitled “Rob’s Help Me Make My Rent Recession Extravaganza.” The tag line on his invitation said: “because if I can’t pay, on your couch I’ll stay.”

Not everyone gives parties for themselves – sometimes it becomes a collaborative effort to help a friend in trouble. One such party, featuring entertainment by well known hip-hop artists who donated their talents, brought in over $2,000.

This trend toward friends helping friends seems like a good sign in a society that has become known for self-centeredness.

One young entrepreneur is talking of turning this movement into a TV show, or opening a club where membership dues would create a party-based insurance against eviction.

Credit card companies have been marketing aggressively to college-age consumers, and President Obama would like to rein in their practices.

Today’s average undergraduate student now carries over $3,000 in credit card debt – the highest it’s been since researchers started tracking data in 1998.

Since this much debt – without the benefit of large credit lines plus a long history of prompt payment – can bring credit scores down, new graduates are beginning their “financial lives” with a handicap. This debt, added to school loans, means that college graduates may be beginning their careers without the ability to purchase a car or rent an apartment. Since potential employers also check credit, the debt even adds to the challenge of landing that first job.

Credit card companies targeting college students not only rent lists from the schools and market through the mail, they enter into agreements allowing them to set up tables in areas where students congregate. In order to lure these students into filling out applications “right now,” they offer everything from cash, to teddy bears, to CD’s, to free pizza.

What they don’t offer – or encourage – is time for those students to study the fine print on their offers. Most, if not all, come with annual fees, so the student is in debt before he or she buys the first concert ticket or CD. They may offer low introductory rates – but don’t prominently reveal the rates that will come into effect once that introductory period ends.

Congress is now considering legislation that will “clean up” many deceptive practices in the credit card industry. One of those provisions will make it harder for card issuers to extend credit to anyone under the age of 21.

In response, the American Bankers Association, and others, joined in sending a letter to Congress – warning that the new regulations will force them into raising fees and interest rates to a wide range of consumers and small businesses. In other words, if they cannot charge young people rates that were once considered “usury,” they’ll have to make up the lack of revenue by collecting more from everyone.

While we all should read the fine print before entering into any agreement, President Obama may have been correct when he was quoted as saying that “People have been deceived into paying extraordinarily high rates that they wouldn’t have paid if they knew what they were getting themselves into.”

If the new regulations make it through Congress, those deceptive practices will come to an end. However, at last report, lawmakers were in favor of allowing credit card companies more than a year to make the changes.

Q:
My bankruptcy was discharged two years ago, I never missed any of my payments during that time on my bills, I bought a home a year ago this month and pay all of my bills on time if not early and still my credit scores have not changed from the 650s,
what does it take to move these scores?
I do not think a bankruptcy should keep your score low if in every other area you are doing well, that only makes people wonder why they are trying so hard to improve and it does not work!
The bank felt my reasoning was good enough to give me a mortgage which I have
honored and paid on time faithfully as well as all of my other bills.
I bought a new car two years ago and have never missed a payment.

Can someone please explain this to me?

Thank you

Kerry

A:
Hello Kerry,
Its sound like you are doing everything you can to make sure your credit is in good standing. I am assuming you filed Chapter 13 bankruptcy and paid your trustee on-time. It also sounds like you have got a couple of other lines of credit reporting on your credit report in good standing. The one thing I have not heard is that you have some credit cards. When your credit score is determined, a mix of credit is part of that process. This accounts for 10% of your overall credit score. If you don’t have any credit cards, I recommend you apply for a couple. This will give you credit score a boost. This is probably the one reason for your credit score staying stagnant. Also since you have a bankruptcy history this will affect your credit score as well. This is considered a risk to the overall credit picture. Once you have a couple of credit cards this should boost your credit score. Remember a Chapter 13 Bankruptcy is on your credit report for 7 years from file date. A chapter 7 is on your credit report for 10 years from file date. These two types of derogatory credit histories will affect your overall credit score until they are gone.

Mike Clover
CreditScoreQuick.com