Also, ask them how to transfer your joint debt to the name of the [...]]]> It’s important to remember that credit grantors have different policies when it comes to divorced couples and joint accounts. Be sure to contact each of your creditors individually to discuss whether you or your ex-spouse will have ongoing liability for the accounts.

Also, ask them how to transfer your joint debt to the name of the person who will be responsible (usually, this means signing an agreement with the credit grantor to release one of you from liability). The creditors may not agree right away. In fact, they have every right to defer a decision until you prove you can handle the payments alone. Nevertheless, this is a smart step to take to protect yourself from new liability and start reestablishing credit as an individual.

If your spouse runs up large amounts of debt, close whatever accounts you have to prevent future charges as soon as possible. Then inform all creditors, in writing, that you are not responsible for these debts after a certain date. Be sure to keep a copy for your records, and consider sending the original letter via certified mail. While this may not prevent creditors from trying to collect, it does show that you at least attempted to act responsibly. Remember, even if your name is taken off an account, and even if the account is closed to prevent future charges, you might still have legal responsibility to pay existing balances. While this may seem unfair since it was your ex who did the spending, it’s perfectly legal. That’s why it’s important to close your joint accounts as soon as you can.

If you have a good credit history, open new accounts in your individual name. If your joint accounts have balances, obtain individual consolidation loans. Use the individual loans to pay off your joint accounts, then close the joint accounts. You’ll each be solely responsible for paying off your individual loans – and you’ll be safe from having your ex negatively affecting your credit.

1. Paying bills late: One of the biggest factors in [...]]]> Because so much depends on your credit record and credit score, you should be aware of the pitfalls that can tarnish your financial reputation. That’s why FDIC Consumer News has compiled this list of common mistakes that can significantly affect your credit history and credit score.

1. Paying bills late: One of the biggest factors in the determination of your credit score is your past payment history. While one or two late payments on your mortgage, credit card or other important obligations over a long period of time may not significantly damage your credit record, if at all, making a habit of this can count against you.

Solution: Consistently pay your bills on time because this indicates you’re a responsible money manager and likely to take your future commitments (such as a loan) seriously. Be especially careful with payments in the months before you apply for a loan, because lenders put more emphasis on your recent payment history.

2. Not paying the minimum amount required: “If you don’t make at least the minimum payment on your credit card or other bills, your creditors will eventually report your account as past due, and that’s a bad mark on your credit history,” says Janet Kincaid, a Senior Consumer Affairs Officer with the FDIC. “Not only that, but paying less than the minimum can result in late fees and additional interest charges, which can add up quickly.”

Solution: Make the minimum payment to avoid negative reports. Pay more than the minimum to reduce interest charges and improve you credit score.

3. Keeping debt levels too high: Potential creditors will be concerned if there are indications you already owe a lot of money on credit cards and other obligations because additional debt could stretch your ability to repay. One way creditors evaluate whether to approve a loan or charge a higher interest rate (which is done to compensate for higher risk) is to look at how much you owe compared to your income. Creditors also consider how much of your credit card limit you typically use. If you are “maxing out” your credit cards or otherwise keeping a high balance in relation to your credit limit, a lender could question your ability to make payments on additional debt.

Solution: Different lenders and credit scoring services may use different calculations when evaluating you—for example, some may include your monthly mortgage payment in their debt-to-income ratio, others may not. So, in general, try to keep your debt level low. How? Don’t spend more than you can afford. Don’t max out or charge near the limit on your credit card. Also, if possible, try to pay off that credit card balance each month. Follow this strategy and you’ll build a good credit history, reduce debts and save on interest payments, too.

4. Owning too many credit cards: You may not think twice about offers to “sign up today” for a credit card to receive a percentage off your first purchase, get a free T-shirt or to have no payments for six months. Depending on your personal situation, these promotions may be good deals. But beware. “If you open a number of credit accounts with retailers just to get the discounts or freebies, these seemingly harmless accounts may linger in your credit file and end up costing you money the next time you get a loan or insurance,” warns David Lafleur, an FDIC Policy Analyst on consumer matters. Here’s why.

If you have a stack of credit cards and department store cards—even if you rarely use them or don’t carry a balance on them—each card represents money that you could borrow. According to the Kincaid, “A potential creditor will look at each card and its $10,000 or $20,000 credit limit and say, ‘We don’t know when or if you’ll access this amount, but if you do, that means you’ll have less money available to repay any new obligation’.” The result could be that, if you apply for a mortgage, a car loan or some other important loan, you may qualify for only a smaller loan amount or perhaps face increased costs or fees.

Also, when you apply to a bank for a credit card or a loan, it will look at the “inquiries” section of your credit report to find out if you’ve recently applied for loans elsewhere. Several such inquiries on your credit report could indicate to a lender that you may be having financial troubles or that you could be on the verge of getting too deeply in debt. These inquiries remain on your credit report for two years and can be a factor in your credit score.

Solution: Don’t own or apply for credit cards you really don’t need. Two or three general-purpose cards and a few (if any) cards issued by stores or oil companies probably are enough for the average family. Cancel and cut up the rest. If necessary, transfer any balances from these cards onto the few you plan to keep. Also important: “Notify the card issuer in writing that you want the account closed at your request, and with no balance remaining, and save a copy for your files,” says Kincaid. “This letter can be very valuable if, as it sometimes happens, the account is inaccurately reported as still open and available, or if it’s shown as being closed by the card issuer, which is considered a negative in the credit world.”

Note: Under some credit scoring systems, canceling credit cards can lower your credit score, not raise it. For example, canceling cards you’ve owned for many years could lower your credit score because those older cards can establish a long history of responsible credit use. Even so, we still generally favor the idea of canceling cards you rarely or never use, for reasons already mentioned, plus others (including the fact that you’ll have fewer cards that can be lost to a thief, and you are more likely to notice problems with cards you use regularly). As one possible strategy, Kincaid suggests this: “Review all the cards you have. Keep only the cards you’ve had for a long time and handled well by always paying on time.”

5. Not periodically checking on your credit report: Many people never or rarely look at their credit report until they apply for a loan or they have been denied a loan or other request based on information in their report. Among the concerns: Inaccurate or missing information in your credit report could raise your borrowing costs or cause delays when you’re in a rush to make a major purchase, such as a home.

Solution: Many experts say you should review your credit report from all three major credit bureaus about once a year, but especially before you apply for a home loan or seek some other benefit where your credit report could affect the outcome.  If you find an error in your credit report, write to the credit bureau that prepared it and provide copies of relevant documentation. If the matter isn’t resolved to your satisfaction, contact the Federal Trade Commission for general information about your rights.

6. Not using your full legal name in bank accounts, credit applications and other documents that become part of your credit history: “This may seem like a minor issue but it can be important in terms of the accuracy of your credit report,” says Joni Creamean, an FDIC Senior Consumer Affairs Specialist. Here’s why.

Credit bureaus obtain data from a variety of sources, not all of which include a person’s full name, Social Security number or other identifying factors. As a result, aspects of someone else’s credit history—perhaps late payments, loan defaults or other serious problems—could be reported on your credit report and could reduce your credit score. Some situations are more likely than others to create mix-ups, Creamean explains. “It’s not uncommon for a child and a parent with the similar names to show up on each other’s credit report,” she says.

Solution: Always use your full legal name when opening a bank account or applying for a loan or other benefit, such as a job or lease. Never leave off a Junior, Senior or similar designation, and never use a nickname. Or, at the very least, be consistent by always using the same name when you fill out these kinds of applications or documents. Following this advice doesn’t guarantee that someone else’s credit history won’t appear on your credit report, but it will reduce the potential for a mistake.

7. Not alerting current or potential creditors if you’ve moved or changed names: Suppose you move and don’t notify your existing creditors. If your monthly credit card statement and other bills don’t reach you at your new address, you may miss a payment or two, and that tardiness can be reported on your credit report (not to mention the penalties or interest charges from your card issuer). Or, if you change names because of a marriage or divorce, and you apply for a loan without informing the potential creditor about your previous name, the credit bureau’s report may show only your recent financial record under your current name. “If you don’t inform your creditors of your name change, your credit record may not reflect your previous hard work at maintaining a good credit history,” says Kincaid.

Kincaid also says that if your name or address doesn’t match what’s being reported by the credit bureau or other creditors, “this can prompt a red flag about a potential fraudulent account, and if nothing else, it can slow down your loan application.”

Solution: Call each of your creditors to notify them of a name or address change, and keep a record of who you spoke to and when. Also, follow up with a letter to the appropriate department and mailing address. Some creditors may require specific documentation, such as a marriage license or divorce decree, in cases of a name change. “But even if the creditor doesn’t require written notification,” Kincaid says, “it may be in your best interest to provide it in writing to protect your rights and document that you made timely notification.”

1. Missing Payment

Your [...]]]> Credit scores are the financial measurement to determine your financial creditworthiness. Lenders like banks and credit card companies use these credit scores to know your financial ability. Thus is important to maintain your good credit scores. Let review the 3 top credit mistakes which you may make and harm your credit scores:

1. Missing Payment

Your credit score is count based on your credit history and how you have managed your current and pass credit obligations. Many lenders will use this piece of information to predict your future miss payment probability and it is important factor to approve or reject any of your loan application. There are three ways that missing payments will hurt your credit scores. They are:

• How Frequent are Your Late Payments? – Sometimes you may make your payment late due your busy schedule. But if you do it frequently, it may hurt your credit score seriously. Don’t make the late payment as your habit; maintain your good credit behavior with your timely payment.
• How Recent is Your Late Payments? – The scoring model are designed to predict how you are going to pay your bills in the subsequent 24 months; your recent late payment records especially with the last 2 years weight a lot in your credit scoring. If you have lot of late payment records in your past 2 years, it is predicted that you will likely to miss more payment in the next 2 years. As such, your score will suffer.
• How Severe is Your Late Payments? – The severity of your late payment also plays a big part in your credit scores. The 90 days late payment hurt your credit score more if compare to 14 days late payment. If you are too busy to make your payment on time, don’t late by too late because give a great negative impact on your credit scores.

2. “Settle” with your lenders on your debt Settling your debt with your creditors with less than the amount you owe them will create negative information called “deficiency balance” in your credit report. This may happen when you have unbearable debt and you are getting a debt consolidation service to negotiate with your lenders to outcome an agreement to settle your debt with some reduced amount. You may happy that you didn’t have to pay the full amount. However, the lender will report that remaining amount as “deficiency balance” to the credit bureaus as a negative item. A deficiency balance is considered just as negatively by credit scoring models as any other severe late payments. In your debt consolidation process, if you can arrange a deal with your lender so that they will NOT report the deficiency balance then that will be your best course of action; if not, your credit will suffer for 7 years.

3. Over Utilization of Your Available Credit Card Limits

Your credit scores can be affected with your high balance on your credit card. .” Over utilization is the practice of running up balances too close to your credit card limits. For example, if you have a Visa card with a credit limit of $10,000 and a $5,000 balance you have a utilization percentage of 50% because you are using 50% of your credit limit. The higher the utilization percentage the fewer points you will earn for your credit scores. If paying your cards off every month is unrealistic then try your best to keep that percentage as low as possible to maintain your good credit scores.

Try to best to avoid the above credit mistakes to have a good credit score in your credit report. Cornie Herring is the Author from StudyKiosk.com. “StudyKiosk-Credit Basics” is an informational website on credit basics and debt consolidation.

Article Source: Article Directory at http://www.ArticleSphere.com

Your FICO ® credit score is used to evaluate your creditworthiness by giving you a certain amount of points based on the [...]]]> A credit score is a mathematical model consisting of numerous variables used to estimate one’s credit risk. The most commonly used model is called FICO ® (named after its creator, the Fair Isaac Company).

Your FICO ® credit score is used to evaluate your creditworthiness by giving you a certain amount of points based on the information contained in your credit report and your debt-to-income ratio. The highest score a person can receive is 850; the lowest is 300, but generally, a score of 720 or higher means your credit is considered to be good (but it could be improved). A score below 660 means that you might have trouble obtaining credit or you will definitely have to pay a higher interest rate for the financing you do receive.

It should be noted that not every single lender uses the FICO ® model; however, the models they use are very similar to it. Also, lenders vary in what is important to them in terms of loan approval. One lender might place more weight on payment history, while another places more weight on income.

Typical Credit Score Composition:

Past payment history – 35%
Outstanding debt – 30%
Length of credit history – 15%
Recent credit applications – 10%
Types of credit and loans you have – 10%

Total – 100%

Do You Know What Your Credit Score Is?

If your FICO credit score is 750 or above, you are considered to be an excellent credit risk and should not have a problem obtaining credit and will likely be offered financing at the lowest available rate. Your goal should be to obtain a 750 or higher FICO credit score so that you can save thousands on mortgage and car loans and credit cards. ]]> http://www.yourcreditreport.ca/credit_blog/2007/01/what-is-a-fico-credit-score/feed/ 0 http://www.yourcreditreport.ca/credit_blog/2006/12/do-not-hide-from-your-creditors/ http://www.yourcreditreport.ca/credit_blog/2006/12/do-not-hide-from-your-creditors/#comments Fri, 15 Dec 2006 19:31:34 +0000 info http://www.yourcreditreport.ca/credit_blog/?p=15 Although credit is essential for living a regular life these days, many people do not take it seriously enough until it is too late. Many of us do not payback credit card bills on time and a lot of people allow their loans to go in to default.

Things like that and many others are reported [...]]]> Although credit is essential for living a regular life these days, many people do not take it seriously enough until it is too late. Many of us do not payback credit card bills on time and a lot of people allow their loans to go in to default.

Things like that and many others are reported by creditors to the credit bureaus. This is then added to your credit history and your credit score is created accordingly. When your credit begins to drop it is hard to get it back up, because it often means denying yourself many of the things you take for granted.

That is why a lot of people experience credit problems and get buried deeper and deeper in debt. Many of the negative items can stay on your record for as long as seven years before being removed.

Bad credit has many consequences, such as being denied renting or buying a car, apartment, mortgage will be very hard to get or you will not be able to shop online. Because of situations like these you should think about starting a credit repair as soon as you can.

One of the first things you should do in case that you are late in payments to your creditors is to contact them. Do not hide from them. Lots of people do just that, thinking that somehow their debts are going to disappear. Some are even ashamed or embarrassed.

But the fact is it can happen to anyone of us. Do not look at it short term, put your self in your creditors place and think about it. I am sure that at least once in your life someone has owed you some money. How did you feel about it, did you feel better if that person called you and said “sorry do not have the money right now, I will pay you back in a week” or if that person did not call you or returned your calls.

When you start your credit repair think about it as long term process of trying to patch up and re-establish a good relations with creditors again. Contact your creditors as soon as you see first sign of trouble.

The key to your credit repair is in your credit history, and your credit history depends on whether you are reported to credit bureaus by your creditors for not paying back debts.

You will be surprised to know that in many cases a creditor will be interested in discussing and arranging an alternate payment plans. Your creditors have no interest in pushing you further down, since in could mean that they will never get their money back, because you could be pushed as far as filling for bankruptcy.

So instead of that, your creditor will most likely be open to discussing another payment plan, one that is more realistic and easier for you to stick with. Because of this it is really important that you contact your creditors and try to come up with a payment plan agreeable to both you and the creditors.

Do not get carried away when proposing a new payment plan, do not take in to account anything you can not count on 100%.

When a new plan is agreed upon it is essential that you make every single payment on time. Not sticking with this new payment plan is the worst thing you can do to your credit. Looking at it with creditors eyes, it will seem that you have been buying time.

Always be aware that their decision whether to report you to the credit bureaus or not is going to have a tremendous, long term impact on your credit score. Because of that try to do everything in your power to avoid that and try to convince the creditors that you are going to make regular, on time payments from now on.

Contacting the creditors early in your credit repair process and arranging a realistic payment plan with them is one of the most important steps on your way to repairing your credit.

Most card issuers charge interest from the day a charge is posted to your account [...]]]> 1. Interest Backdating

Most card issuers charge interest from the day a charge is posted to your account if you don¹t pay in full monthly. But, some charge interest from the date of purchase, days before they have even paid the store on your behalf!

REMEDY: Find another card issuer, or always pay your bill in full by the due date.

2. Two-Cycle Billing

Issuers which use this method of calculating interest, charge two months worth of interest for the first month you failed to pay off your total balance in full. This issue arises only when you switch from paying in full to carrying a balance from month to month.

REMEDY: Switch issuers or always pay your balance in full.

3. The Right To Setoff

If you have money on deposit at a bank, and also have your credit card there, you may have signed an agreement when you opened the deposit account which permits the bank to take those funds if you become delinquent on your credit card.

REMEDY: Bank at separate institutions, or avoid delinquencies.

4. Fees Are Negotiable

You may be paying up to $50 a year or more as an annual fee on your credit card. You may also be subject to finance charges of over 18%.

REMEDY: If you are a good customer, the bank may be willing to drop the annual fee, and reduce the interest rate 9 you only have to ask! Otherwise, you can switch issuers to a lower- priced card.

5. Interest Rate Hikes Are Retroactive

If you sign up for a credit card with a low “teaser” rate, such as 7.9%, when the low rate period expires, your existing balance will likely be subject to the regular and substantially higher interest rate.

REMEDY: Pay in full before the rate increase or close the account.

6. Shortened Due Dates

Most card issuers offer a 25 day grace period in which to pay for new purchases without incurring finance charges. Some banks have shortened the grace period to 20 days9 but only for customers who pay in full monthly.

REMEDY: Ask to go back to 25 days.