Mark Lima

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Getting the Bank to Open Their Purse Strings

by Mark Lima on July 9, 2010

No one likes being denied a loan because of their credit score. In fact, it’s downright embarrassing in some cases. The good news is that, if a creditor denies you, they will send you a letter than tells you the reasons you’ve been denied. If they have denied you because of your credit score, you are then allowed to get a copy of your credit report for free. (Of course, you’re always able to get a free credit report once per year via the Annual Credit Report website, as well.)

Here are some tips and tricks you can follow in order to try to get the bank to loosen up a bit, improve your credit score, and get access to the credit you want and need:

  • Check your credit report for errors. If there are any errors, you have a right to see them corrected. Follow the procedures set out by the credit reporting agencies to correct errors, and you’ll see your credit score start to rise. The credit reporting bureau is required by law to investigate your claim within 30 days. If they do fix an error, you can request that the correction be sent to any company that’s asked for your report recently.
  • Pay your bills on time. The single most important contributor to your credit score is how you pay your bills. If you pay late or not at all, your score will drop.
  • Pay down your debt. One of the most important factors in your credit score is the ratio of debt to available credit. If your credit cards are all maxed out, it will negatively affect your credit score. You need to utilize less than about 30 percent of your overall credit.
  • Consider a secured credit card. A secured card can create a positive mark on a credit report that’s otherwise not so good, and have an upward pull on your credit score.
  • Pay attention to your credit card statements. Watch for unauthorized charges. If you become the victim of identity theft, you don’t want it to have to negatively impact your credit score.

Categories: Advice

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The Twin Imperatives for Improving Your Credit Score

by Mark Lima on June 30, 2010

If you want to be able to buy a house, a car or get approved for a department store credit card, you need to have a decent credit score. Knowing what your credit score is can help you know what to expect when it comes to interest rates for those kinds of transactions. And, if you’re like most folks, you’re interested in knowing what you can do in order to improve your credit score.

Improving your credit score really isn’t all that complex. That doesn’t mean it isn’t difficult, of course. Improving your credit score really comes from following two basic principles.

Imperative #1: Pay your bills, on time, every time.

The most important factor in your credit score, which makes up around a third of the score, is how you pay your bills. Pay every bill on time, every time. Missing even a single payment can drop your credit score as much as 100 points, especially if you don’t have much credit to begin with.

This sounds easier than it is. Sometimes, you don’t have enough money. Sometimes, you just forget. But if you want to improve your credit score, the most important thing you can do is just to pay your bills.

This might require getting an extra job to make ends meet. It might require setting up reminders with your bank, or using automatic debits to make your bill payments automatically. Whatever it takes, you need to pay those bills on time.

Imperative #2: Use your available credit sparingly.

The next most important thing that the credit agencies look at when computing your credit score is the ratio of credit to utilization. If your credit cards are maxed out, you’re going to have a lower credit score. Ideally, you’ll use somewhere between 10 and 30 percent of your total credit.

This means paying off your credit cards regularly. It means that, if you make a purchase that maxes out your credit card, you need to send in a payment the very next day. Being able to keep that ratio down means not using your credit.

There are, of course, other issues that impact your credit score, such as how many credit accounts you have, and how long they’ve been open. However, if you can follow these two principles you’ll be far ahead of the game, and well on your way to improving your credit score.

Photo via deneyterrio

Categories: Credit Score

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42 Personal Stories of Credit Card Debt Hell

by Mark Lima on June 29, 2010

It may start out as a very small indulgence. The sale is unbeatable and money won’t be a problem at the end of the week because it’s payday. But the credit card bill doesn’t get paid off.  Or, perhaps it’s a true necessity. A medical emergency, car repair or house problem that needs to be taken care of so it’s put on the credit card. It may even be due to a sudden drop in income, savings are used up and the credit card is a last resort for making ends meet.

Whatever the starting point, the end result is massive debt. It is a self-feeding debt that continues to grow. These stories highlight the debilitating debt spiral. They also provide glimpses of hope and victory as people have started taking charge of their finances and building a credit card debt free future.

  1. Master Your Card :Are you a credit Card junkie?  Are you hooked on credit?
  2. Mother Jones: Credit card companies unwilling to help customers when victims of fraud.
  3. A Day Late and a Dollar Short: Paid off over $23,000 worth of credit card debt in just 18 months. This blog helps others to rid themselves of debt
  4. Ask Mr. Credit Card: Interview with a student drowning in $15,000 of credit card debt.
  5. Smart Balance Transfers: Credit card horror stories part 37.
  6. Get out of debt: Only making minimum payments and drowning in debt. This individual went bankrupt after economy tanked in 1990 and his real estate company failed and has worked back to financial freedom.
  7. Credit bloggers: The nightmare of co-signing a credit card.
  8. WiseBread: How debt fools people.
  9. New Credit Rules: Credit card horror stories.
  10. Americans for fairness in lending: Credit card horror stories from around the country.
  11. Fun Times Guide: Store credit cards and how they can hurt you. They offer rewards upfront but can hurt you in the end.
  12. Finance and fat: Follow the financial journey of an individual $265K in debt.
  13. Get rich slowly: Drowning in debt resorting to payday loans and paying bills late.
  14. The amateur financier: Confession time, credit car debt, lost job and the bills started mounting.
  15. Blogging Away Debt: When we finally decided to shape up our financial life in February of 2006, our credit card debt was over $37,000. How can someone let their debt get that high?
  16. Women 24 : Drowning in debt article and comments.
  17. The Simple dollar: In over her head in credit card debt and personal loan to tune of $60,000 and growing.
  18. Frugal Dad: $80,000 in credit card debt, wondering where to start?
  19. Maxed Out Generation: This blog explores the human side of debt, what the credit industry doesn’t want us to know, and strategies for survival.
  20. Personal Finance by the Book: Personal Finance by the Book: When this couple married they had an average income and $21,500 in debt.
  21. Learning Curve: a love hate relationship with credit cards
  22. Rich Credit Debt Loan:The average American household has $8,000 in credit card debt.
  23. Youth Success NYC: Maxed out and shopped until she dropped into debt. Her debt problems started when she went to college and got her first credit card.
  24. McClatchy: College students’ credit-card debt spurs concerns. 24 percent have used their cards to help pay tuition.
  25. Salon:Big fat unpaid credit card debt, $500 a month to keep up minimum payments.
  26. Stop payday predators: the vicious cycle of taking cash advances from major credit cards to try and pay off payday loans.
  27. Card Ratings: Student credit cards a recipe for disaster.
  28. Clearpoint Credit Counseling Solutions: Credit card problems affect the well educated with good incomes.
  29. Budgets are Sexy: Check your credit card statements to make sure no unauthorized charges.
  30. Bundle: His credit card spending was out of control. At $5000 and climbing.
  31. Legal Helpers: 10 bad habits that lead to financial disaster
  32. Dollars & Sense:Credit card debt a disaster waiting to happen
  33. Live Cheap: Debt is a monthly payment trap.
  34. Debt Free Adventure: How much the interest on their debt was costing this couple monthly and why they got mad at debt.
  35. Inside Higher Ed: Long distance Mom drowning in credit card debt after medical emergency
  36. Debt Kid: Digging out from under $300,000 in debt.
  37. Money Stance: Follow his progress as he digs out from under half a million dollars in total debt.
  38. Rather Be Shopping: How she got out of credit card debt up to her eyeballs.
  39. Opposing views: College students drowning in credit card debt
  40. Liberty Consumer Services: He remembers his first credit card purchase, but he doesn’t recall when things got out of control. Soon he had two or three Visa cards, several catalog and department store cards, and a gas card. They were all maxed.
  41. The Debt Hawk: During undergrad and law school, he put emergencies onto my shiny new credit card and racked up $20,000 in debt.
  42. Young Money Talks: Credit card companies exposed as they charge large fees to students already struggling to pay off $20,000 balance.

Categories: Credit Score

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How to Completely Destroy Your Credit Score

by Mark Lima on June 15, 2010

OK, so life is good. You’ve finally reached the point where you want to be. You’ve got a good job, a decent car, and a girlfriend who hasn’t tossed you out on your sorry ass. You’re even looking at buying a house, which is a big step for a dude like you. You’ve got a credit score, and it’s actually not too bad, hovering right around 700 or so.

Still, there’s this self-destructive side to you that you’ve had ever since you decided to call that big kid a sissy in Kindergarten. No matter what, you’re determined that things won’t go well for too long. You’re planning on a week-long bender during which you manage to get fired from your job, get caught cheating on your girlfriend and spend at least one night in jail.

Still, none of that will, by itself, screw up your credit score. If you want to completely destroy your credit score, here are some things you need to do:

  • Max out your credit cards. One of the factors in determining your credit score is how much of your credit you’re actually using. If all of your revolving credit (credit cards) are at their limit, it tells the credit reporting agencies that you’re pretty much living on the edge.
  • Don’t pay your bills. It sound simple, and you probably want to still pay your rent so that you don’t get kicked out. But there are plenty of other bills you can just simply ignore if you want to destroy your credit score. You’re best bet is to let those bills go so long that they go to collections.
  • Apply for lots of credit. Now, applying for a bunch of department store credit cards or other types of credit won’t hurt your score too much, but if you do it a bunch it can lower your overall score at least a little bit. And here, every point counts.
  • Make less money. Technically, your credit score doesn’t factor in your income. However, when you apply for credit of any sort the creditor is going to look at your income versus your debt. Make less money if you want more rejection.
  • Don’t bother checking your credit report. Your credit report might have errors that you can have corrected, and these can damage your credit score. Don’t bother.

Categories: Credit Score

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