Personal bankruptcy refers to the debt management tool which is generally considered the last resort because of its long-term and far-reaching affect on [...]]]>

The financial world is definitely experiencing ups and downs. Hence, there are inevitable financial circumstances that many people are faced with which is resulting more and more in personal bankruptcy.

Personal bankruptcy refers to the debt management tool which is generally considered the last resort because of its long-term and far-reaching affect on your personal finances. In fact, when you arrive at the decision that you are bankrupt, this record stays in your credit score for as long as seven years. However, since you already have a compromised credit report and rating (otherwise you wouldn’t be declaring bankruptcy), it is imminent that you will experience a great number of future financial consequences.

There are, however, other components you need to know about personal bankruptcy that are equally salient and gives major effects on your finances and credit standings. These are the two kinds of personal bankruptcy that most often affects credit report.Reorganization

When you declare that you are financially broke, there are still certain properties and assets that you tend to keep due to value. This includes your house or car and otherwise there is a great possibility that you would lose these precious investments should you not decide to protect them. Reorganization allows you to pay off your mortgage or default in approximately three to five years. This is the other option you could persue when you are bankrupt rather than surrendering properties. This is a legal option and is also known as chapter 13 bankruptcy.

Straight Bankruptcy

This type refers to the liquidation of all assets which are generally not exempt property that may include basic household furnishings or work-related tools. In this case, some of the properties you owned will be sorted out and sold by an official appointed by the court or it could be turned over to creditors. This is known as chapter 7 and you can only file this once every six years.

The Imminent Effects

People who file for bankruptcy are bound to experience innumerable difficulties in terms of their finances in a given period while the mark remains on their credit score. First and foremost, it would be extremely difficult to get and be approved for any other type of credit. Most creditors or lenders require submission of credit report as a basis of your eligibility and once they see that you have recent bankruptcy records, rest assured you have the lowest chances to get approved for a credit or loan. There are some options, such a secured credit card which allow for a glimmer of hope of re-establishing ones credit once released from bankruptcy.

Bankruptcy also affects your capacity and credibility to buy a house in the future. Applying for home mortgage is extremely difficult because of the tedious requirements and criteria, which are getting increasingly more difficult for everyone. Mortgage providers will consider you a liability more than an asset especially if you have previous records of being financially broke and this will clearly show in your credit report. You may also find difficulty in getting a life insurance, finding employment and the lingering stigma is likewise inevitable.

Being bankrupt is an extremely tough situation. Speaking persosnallu, one simply needs to remain diligent and strong when going through bankruptcy and emerging from the other end of being released. The bringht side is that you are given a fresh start to make amends and rebuild your credit history.

Without even realizing that they are doing anything wrong, millions of Americans each year inadvertently sink their credit scores by a significant amount just by applying for credit cards and loans.

While filling [...]]]> One of the most common and detrimental errors that consumers make in regard to their credit score may also be the most innocent mistake of all.

Without even realizing that they are doing anything wrong, millions of Americans each year inadvertently sink their credit scores by a significant amount just by applying for credit cards and loans.

While filling out credit card or loan applications may seem harmless enough, it involves having a bank, lender, or merchant “run your credit” or check your credit report to ensure that you are worthy of having credit extended to you. But just by doing so, those who check your credit may also be influencing your all-importantcredit score in an adverse way that could result in your being denied credit in the future.

Many unsuspecting people, for example, apply for department store charge cards each and every time a clerk offers those along with an attractive discount at the point of purchase.

Walk into any busy shopping mall during a major holiday weekend, for instance, and the chances are pretty high that someone will ask you to sign up for a retail credit card during a special store promotion. If you agree to fill out the application they’ll give you a free gift – like an umbrella, a toaster, or a tee-shirt. Or they may offer you a 10 or 20 percent discount on your first purchase.Perhaps you’re traveling, and as you walk through the airport someone offers you a new frequent flier card. All you have to do is sign up for it and they’ll give you enough bonus reward points to take a free trip. Passengers even encounter this kind of offer while flying, because flight attendants will sometimes hand out frequent flier credit card applications while en route to a destination.

Sign up and get a free trip, a gift, or a discount, they explain. Plus the offers sound rather attractive and usually make good financial sense – at least on the surface. They run your application through a computer – which checks your credit history or score – and if you have good credit you are almost instantly approved and you walk away with a bonus gift or perk.

That probably makes you feel more confident about your ability to borrow, and it should. But it makes lenders more wary and skeptical. While that may seem ironic or downright unfair, it’s a fact of life – and one that you should be aware of if you are interested in preserving and protecting your credit score.

Here’s why that is – and how applying for credit cards or loans can be bad for your credit score:

• Credit reporting agencies calculate credit scores based on a variety of factors that are meant to help predict how risky it might be to lend you money. These are translated into a mathematical ranking system.
• The banks and other financial services institutions who are their clients rely on these scores to help them decide who is credit-worthy. If you have great credit you can get loans easily and at preferential discount rates. A low score, on the other hand, makes it harder – if not virtually impossible – to get a reasonably priced loan.
• Applying for credit frequently – unless it is done within a relatively short timeframe – is one of the consumer behaviors that appears risky to banks and to credit reporting agencies.
• They assume that if you are filling out lots of credit applications all year ‘round that it means that you are having trouble getting a loan, and the more applications you fill out the more desperate you appear to be.
• So each time a company checks your credit report because you have applied for a loan or a credit card, that event is noticed and documented.
• People in the credit industry refer to it as a “hard hit,” and a pattern of frequent hard hits over an extended period of time will add up to an injury in the form of a lowered credit score.

But that does not mean that you should never apply for a loan or a credit card. Credit is a really useful resource, and loans can really come in handy when you need to make a special purchase or otherwise manage your finances with some additional cash on hand. It just means that now that you understand how the system works you should keep that in mind and avoid the practice of unnecessarily filling out applications.

• The first step is to gain as much knowledge and information as you can about how the credit industry operates.
• Take advantage of free consumer education resources at sites like Quizzle.com, where you can track your credit history and credit score for free (without a negative impact on your score). They’ll also help you monitor your credit and have tools that offer you protection from identify theft and other nefarious attempts to use your credit unlawfully.
• Instead of applying for credit cards or loans on a frequent basis, for instance, spend more time comparing those financial products to pick the one that’s most attractive for you. That way you can just apply for loans that you really want.
• The same goes for credit cards or department store charge cards. Control the impulse to apply every time someone offers you a discount or perk, and instead only apply when you really need a loan or card.
• Plus, only do it then after you’ve conducted an investigation to find out who has the best deal in town – or the most valuable rewards and bonus perks.

This strategy will protect your credit so that when you do decide to apply for a loan or a credit card you’ll have cleaner credit report and a higher credit score. Those qualifications ensure a smoother credit application process and a more successful outcome to get you the most affordable loans.

• If you have a disputed item on your report, contact the party in question yourself, then the credit bureau. This shows that you have been trying to get the matter resolved.

• [...]]]> Here are some tips for keeping up with your credit record, provided by Steven Katz, spokesman for Chicago-based TransUnion and its TrueCredit.com Web site:

• If you have a disputed item on your report, contact the party in question yourself, then the credit bureau. This shows that you have been trying to get the matter resolved.

• Most people don’t know they are entitled to one free credit report every 12 months from each of the three big companies that do credit checks. You can ask for another report for the same bureau 12 months after getting the prior one. All provide a report, but not a rating. For that you have to pay a small fee, typically about $8.

• Katz suggests you check your report more than once a year, which can be done by staggering the reports from each service. The firms offer packages for a monthly fee that allow access to all reports and scores.

• Check to see if everything on the report looks familiar and that your name and address are listed correctly.

• Make sure the inquiries into your credit appear accurate (from places you have applied for credit or companies with which you have credit).

• For disputes, register your complaint online or by phone. For TransUnion you can talk to a representative by calling (800) 916-8800.

• Katz noted the following things can impact your credit rating:

1. Making late payments.

2. Keeping credit card balances more than 35 percent of the credit limit set for the card.

3. Excessive “hard” inquiries into your credit (such as getting too much instant credit while Christmas shopping by filling out on-the-spot applications at malls).

4. Closing longer-held credit cards than newer ones, which eliminates an established payment history from your record.

5. Above all, Katz said to “manage your credit like your health. It’s better to look now and deal with what might be, than to put off addressing potential problems.”

Does this affect your credit rating [...]]]> What are inquiries?
When you apply for credit (credit card, personal loan, etc.), the creditor or lender checks your credit report to verify that you qualify for the credit or loan you are applying for. This “inquiry” is then reported to the credit bureaus and shows up on your credit report.

Does this affect your credit rating or score?

Yes, it does. Although only a few points are deducted from your score for each inquiry, having multiple inquiries may drop your score to a lower bracket, forcing a higher interest rate. You may not even qualify for the loan or line of credit at all.

Will requesting your credit report generate an inquiry?
This is a common misconception and is totally false. You should view your report at least once a month. Doing so will not generate any inquiries.

What if you did not authorize an inquiry, can you dispute it?
Yes. If you did not authorize any of the inquiries on your credit report you can and should dispute them. To dispute inquiries obtain your credit report, then make a copy of your credit report, highlighting the inquiries in dispute. Finally, send the copy of your highlighted inquiries along with a letter demanding the inquiries be deleted from your credit report to the credit bureau.

Is it worth it?
The next time you are out shopping and the salesperson asks you, “Would you like to apply for our credit line and receive 15% off your purchase?” Ask yourself, “Is it worth it?”

If you have had a few “unfortunate” financial things happen to you in [...]]]> We’re all concerned from time to time about what our credit reports might be saying about our financial history. Is it helping or hindering our credit applications? Most people have no idea what type of information a credit report actually contains about us.

If you have had a few “unfortunate” financial things happen to you in the past, they will almost certainly have found their way into you credit report. It pays to know what details are being kept about you, so that you can minimize any future damage, and maybe even start to repair some of the damage already done. Here is a quick run down on what type of information the reporting agencies hold about us all.

Identification and employment history:
Your full name, date of birth, insurance number, place of employer, and probably your spouse’s name are recorded. The report also may provide information about your recent employment history, any property ownership you might have, your approximate income, and any previous addresses that you might have lived at.

Your Payment history:
This is the most important section. It will have a detailed listing of your charge accounts with various creditor providers, showing how much credit has been extended and whether you’ve paid up on time or not. Any instances where you have defaulted on payments will be highlighted. This is where any occasions where you’ve been slow in paying are likely to “come back to haunt you”.

Any Credit Inquiry history:
Consumer reporting companies keep a record of all requests from individuals or businesses for your credit history over the preceding year, or in the case of employment related inquiries, for the past two years. A long list of credit applications that have been turned down is a major “red flag” for future credit providers. If you are refused credit from one application, it suddenly becomes much harder to get credit with any ensuing applications.

Public record information about you:
Any matters of public record, usually court related, such as bankruptcies will almost certainly be in your report. You can’t hide from anything that reaches the courts.

Consumer reporting companies sell the information in your report to creditors, insurers, employers, and other businesses with a genuine reason for using it, such as assessing your applications for extending credit, insurance, employment, or a rental lease.

Summary:
Having a good clean credit report means it will be easier for you to get loans, and at lower interest rates. Lower interest rates translate directly into lower loan repayments, therefore more money left in your pocket at the end of the month.

Being vigilant in protecting your credit rating from the very beginning is something that will certainly return you considerable dividends in the long term.

Once a notation is made on your report, it doesn’t drop off for [...]]]> Your credit report is an ongoing look at your personal information and how you manage your finances. Data is typically submitted to a credit reporting agency by your creditors, by the court system or from other public records, and by debt collection agencies.

Once a notation is made on your report, it doesn’t drop off for awhile. That’s not a problem for positive entries, but negative comments by your creditors can affect your buying power for several years. If the comments are accurate, they can stay on your report for seven years. Bankruptcies can remain on your report for ten.

Personal Information on Your Credit Report
These items are not used to evaluate your credit history. They are gathered from information you give to your creditors.

* Full name and variations of it (such as maiden names)
* Social security number
* Birth date
* Current and previous addresses
* Current and past places of employment
* Driver’s license number and state where issued

Public Records and Collection Accounts
Data is collected from the court system and from debt collection agencies.

* Liens and judgements
* Bankruptcies
* Foreclosures
* Wage attachments
* Accounts in collection

Your Credit History & Current Obligations
Reported by your creditors.

* Dates accounts were opened
* Types of accounts (revolving, installment loan, mortgage)
* Account balances and credit limits
* Payment history for each account, including late payments
* Unpaid child support and overdrawn checking accounts can also be listed

Credit Inquiries

* Inquiries made when you are seeking new credit; too many inquiries in a short time are viewed negatively
* Inquiries made for promotional mailings, by your current creditors, and by yourself for informational purposes; these inquiries are not viewed negatively

Your Credit Score
Your credit score is a number that’s generated by analyzing your entire credit profile. Scores range from 340 to 850. The higher your score, the less risk a lender assumes you will be.

Credit Reporting Agencies

There are three major credit reporting agencies in the United States. Creditors submit your payment history and personal information to these agencies.

* Equifax
* Experian
* TransUnion

Each agency operates independently of the other two, so records often differ. Corrections and updates to your file must be sent to each credit reporting agency, because they do not share information.