Posts Tagged ‘Credit Report’

Looking at How a Secured Credit Card Works

July 21st, 2011



Secured credit cards are credit cards wherein, to obtain one you need to deposit cash as collateral. This collateral becomes the line of credit for your account. If you deposit $600 in your account, your credit limit is also $600 that means whatever amount you deposit in the account becomes your credit limit. By depositing more money in account and making payments on time, the bank will increase your credit or reward you for timely payments.

Advantage of secured credit cards is that, it offers an opportunity to people with little less than ideal credit, poor credit as well as bad credit, to improve their credit score and still enjoy the benefits of full-fledged credit cards. So, make sure to choose the secured credit card companies that report your credit report to credit bureaus.

Secured credit cards improve your credit by sending your account report to credit bureaus, thereby helping you to fix up your credit. If you make the credit payments on time, the companies will eventually turn your secured credit cards into unsecured credit cards, so that you soon start enjoying the maximum benefits.

Costs, Eligibility Requirements and APR:

When you apply for secured credit cards, you need to pay some common fees as in other credit cards such as application fees, annual fees as well as processing fees. However, you need to consider the credit card company for which you are applying, since different firms charge different fees. Do not apply for secured credit cards from companies that charge fees because most of the security deposit goes in fees.

To apply for secured credit cards, you need to furnish basic documents such as address proof, SSN (social security number), income proof, and age proof (minimum 18 years of age) and so on. Some companies, which provide such services, require that individuals open an account with them before applying for secured cards.

Credit card companies do not charge with APR (Annual Percentage Rate) on the sum you deposit. Therefore, you can deposit the paycheck directly in the account. Normal credit card companies charge with late fees, finance charges and high interest rates if you default your payments. However, in case of secured credit cards, companies deduct the credit amount from the deposit.

Improving the Credit Score:

Check the credit report by obtaining a copy from all the three credit report bureaus at least once in a year. Sometimes, credit reports have some mistakes such as the statement of loan, which you had already paid off. Such instances hamper your credit ratings.

This is particularly crucial when you apply for the loan amount. Most lenders do not approve the loan amount if a credit report states debt. It usually takes up to 3 months for a change to appear in your credit report. Hence, it is important to check your credit report before applying for loan and accordingly inform the bureaus so that they take immediate action.

Do not use secured credit cards or other cards for every purpose, maintain decent amounts in the bank account and pay all the due bills on time.

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Credit Card Charge-Off – What it is and How to Resolve It

November 28th, 2010



If you’ve been experiencing financial difficulty for several months there’s a good possibility that your creditors have been using threatening or intimidating terms, such as “legal action”, “charge-off”, or “next level of delinquency”. The most confusing and intimidating term is very likely “charge-off” because most consumers simply don’t know what this means or what exactly results from a charged-off credit card account.

Lenders will typically write off an account as a bad debt within six months (180 days) after it becomes delinquent; in other words, six months after the borrower stops paying. This write-off is reported to the credit bureaus as a “charge-off.” Many people erroneously think that a charge-off means they no longer have to pay their debt. But “charge-off” is really just an accounting term; it in no way relieves you of the legal obligation to pay the loan, and the lender or a collector can – and very likely will – still come after you.

Now that you know what a charge-off is, let’s focus on the affect it may have on your credit report. Unfortunately, if your account(s) is already delinquent and nearing a charged-off status, your credit score has already been compromised and is very likely much less-than-perfect. Obviously, not paying your bills is not a “positive” mark on your credit report; delinquencies, charge-offs and collections all can have a negative impact on your credit report.

Is a charge-off as bad as bill collectors would like you to believe it is? Not really. You see, all credit issues have the potential to be remedied. If the original creditor shows a charge-off with a balance still owed, you can boost your credit score by paying off the bill and getting the original creditor to report a zero balance to the major credit bureaus.

While it is best to avoid having an account charge off, I understand that sometimes this is simply impossible for individuals facing severe financial hardship. So, what should you do if one or more of your accounts has charged off? If you’re in a position to pay the debt in full, obviously this would be the best solution. If, however, you’re unable to do so there’s a very good chance that your creditor will accept less than the full balance as payment in full (either via a lump sum payment or installments) through debt settlement. After the account has been paid through a negotiated settlement, your creditor will report that the account has a zero balance to the credit bureaus.

In summary, facing one or more charge-offs is simply not the end of the world; at some point you will be able to resolve your various accounts with your creditors. If you find yourself in this situation I encourage you to properly research and learn more about your options.

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Mortgage Forbearance

July 12th, 2010



What is mortgage forbearance?

Mortgage forbearance can be issued by the lender to the borrower. This means that the borrower does not have to pay the mortgage payments for a few months. This is a better solution to avoid the home loan foreclosure. There are many people who do not want to talk to the lenders regarding their financial situation. If you are in a bad financial status, you can talk to the lender. You should make him understand that it is only a temporary situation and you will improve your status soon. You would be needed to sign an agreement with the lender. You can pay the debt after you have improved financially. People who lose their jobs due to the current recession may opt for this solution. This is the best available solution for such people. There are many people who do not want to inform the lenders about their situation. They become a defaulter soon and this leads to foreclosure.

Forbearance is also issued to the student loans. This has facilitated so many people to avoid problems due to missed payments. Missed payments will affect the credit report. This will affect you in the future. Credit report plays a very vital role in the approval process.

Will forbearance affect my credit report?

No. The forbearance will not affect the credit report. The loan under the forbearance will be reported as deferred and thus has no negative effects on the credit score. Some people might be confused on whether they should choose the loan modification or the forbearance. If you feel that your financial status will improve soon, the forbearance will be the best option for you.

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Revolving Account

January 22nd, 2010



A revolving account is an account where you are given a certain credit limit and you make monthly payments based on how much you borrowed that month. You can access all or some of your credit line whenever you choose. The difference between a revolving account and an installment account is that on an installment account you pay one set monthly payment every month until the debt is paid off. On a revolving account you can pay part or all of your balance monthly and the monthly payments change depending on your balance.

How Can It Affect My Credit Score?

When having an revolving account such as a credit card it is important to not use too much of your available limit. Most people in the credit business agree that using 30% of your credit line is the magic number. It shows lenders you can manage your credit line responsibly, of course you would need to pay your monthly payment s on time every month otherwise your score will go down drastically. As you can see having an revolving account can do wonders for your credit or destroy it. It all depends on how you handle it, for example owing $10,000 spaced out over a few cards looks better than having a $10,000 balance on one card with a $12,000 limit.

Credit is everything nowadays. It almost encompasses every part of a consumer’s life. Even if you have a high score it’s still important to monitor your credit report for errors. Remember the higher your score is the more it can fall! If you have inaccurate information on your credit report contact CreditLawGroup today at 1-800-508-0041. We provide low cost legal representation in disputing inaccuracies on your credit report as well as excellent customer service.

How we can help you

CreditLawGroup.com provides low cost legal representation in disputing inaccurate, incorrect or unverifiable information contained on credit reports from the three major credit bureaus, Equifax®, Experian® and TransUnion® and their affiliates. You can monitor your progress online, as well as speak to your Paralegal whenever needed by phone or email.  We have excellent customer service, and are always there to meet your needs! Speak to a credit repair analyst today! 

 

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