How To Get Out Of Debt Fast

Jul

Boosting Your Credit Score

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Helpful Tips To Boosting Your Credit Score

1. When you get your credit scores, make sure you also learn the highest and lowest scores possible, as well as the most important factors that influenced your scores. These factors can give you an idea of how you can improve your scores.

2. Review your credit reports for accuracy. Mistakes and omissions on your credit reports probably will affect your credit scores. If you spot an error, contact the credit reporting agency and the creditor whose information is wrong.

3. If you have questions or problems with your credit scores, contact the company that provided them to you.

4. Getting your own credit scores or credit reports won’t affect your scores, as long as you order them from one of the sources we list here.

Boosting Your Credit Scores

Your credit scores change when new information is reported by your creditors. So your scores will improve over time when you manage your credit responsibly.

Here are some general ways to improve your credit scores:

Keep balances low on credit cards. High debt levels can hurt your score.
Pay your bills on time. Delinquent payments and collections can really hurt your score.
Pay off debt rather than moving it between credit cards. The most effective way to improve your score in this area is to pay down your revolving credit.
Check your credit report regularly for accuracy and contact the creditor and credit reporting agency to correct any errors.
If you have missed payments, get current and stay current. The longer you pay your bills on time, the better your score.
Apply for and open new credit accounts only when you need them.

Boosting Your Credit Scores

Your credit scores change whenever new information is reported by your creditors. So your scores will improve or not over time as you manage your credit responsibly.

Here are some general ways to improve your credit scores:

Pay your bills on time. Delinquent payments and collections can really hurt your score.
Keep balances low on credit cards. High debt levels can hurt your score.
Pay off debt rather than moving it between credit cards. The most effective way to improve your score in this area is to pay down your revolving credit.
Apply for and open new credit accounts only when you need them.
Check your credit report regularly for accuracy and contact the creditor and credit reporting agency to correct any errors.
If you have missed payments, get current and stay current. The longer you pay your bills on time, the better your score.

Improving your credit scores can assist you to:

Lower your interest rates
Speed up credit approvals
Reduce deposits required by utilities
Get approved for apartments
Get better credit card, auto loan and mortgage offers.

This publication has been prepared by Consumer Federation of America and FICO, and was reviewed by the Federal Citizen Information Center. These materials may be reproduced for educational purposes only.

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Categories : Credit Score

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Jul

Components of Your FICO Credit Score

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Five Main Parts to Your FICO Credit Scores

Usually, credit scores analyze the available on your credit report. They use different formulas to work this out. Since FICO scores are frequently used, here is how these scores evaluate and score your credit report.

1. Your payment history – about 35% of a FICO score
This looks at how well you paid your credit accounts on time? Items such as late payments, bankruptcies, and other negative payment items can reduce your credit score. But a consistent record of prompt payments boosts your score.

2. How much you owe – about 30% of a FICO score
FICO scores look at the total amounts you owe on all your accounts, the total number of accounts with balances, and how much of your available credit you are using. The more you owe compared to your total credit limit, the lower your score will be.

3. Length of your credit history – about 15% of a FICO score
A longer credit history will alwaysincrease your score. However, you can get a higher score even with a short credit history if the rest of your credit report shows responsible credit management.

4. New credit – about 10% of a FICO score
If you have recently applied for or opened new credit accounts, your credit score will compare this fact against the rest of your credit history. FICO scores distinguish between a search for a single loan and a multiple search for many new credit lines, taking into the account the length of time over which inquiries occur. If you need a loan, do your rate shopping within a focused period of time, such as 30 days, to avoid lowering your FICO score unnecessarily.

5. Other factors – about 10% of a FICO score
Several minor factors also can influence your score. For example, having a mixed balance of credit types on your credit report – such as several credit cards, installment loans such as a mortgage or auto loan, and personal lines of credit – is normal for people with longer credit histories and can add slightly to their scores.

What’s NOT In Your Scores

By law, credit scores may take into consideration your race, color, national origin, religion, sex and marital status, or whether you receive government assistance or exercise any other consumer right under the federal Equal Credit Opportunity Act or the Fair Credit Reporting Act either.

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Jul

What is a Good Credit Score?

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What is a Good Credit Score?

When lenders talk about “your score,” they usually mean the FICO® score developed by Fair Isaac Corporation. It is today’s most commonly used scoring system. FICO scores range from 300-850, and most people score in the 600s and 700s (higher FICO scores are better). Lenders buy your FICO score from three national credit reporting agencies (also called credit bureaus): Equifax, Experian and TransUnion.

In the eyes of most lenders, FICO credit scores above 700 are very good and a sign of good financial health. FICO scores below 600 indicate high risk to lenders and could lead lenders to charge you much higher rates or turn down your credit application.

Not Just One Score

There are many types of credit scores. They are developed by independent companies, credit reporting agencies, and even some lenders. As a rule, the higher the score, the better.

Your credit score changes when your information changes at that credit reporting agency. This is good news! It means you can improve a poor score over time by improving how you handle credit.

Each credit reporting agency calculates your score and each score may be different because the credit history each agency has about you may be different. Lenders may make a credit card or auto loan decision based on a single agency’s score, although others such as mortgage lenders often will look at all three scores.

Some credit scores offered to consumers are just estimates and are different from the credit risk scores lenders actually use, although they may appear similar. Consumer reporting agencies and other companies sometimes use an estimated score to illustrate a consumer’s general level of credit risk. How might you tell whether a score is estimated? Ask the company if the score is used by most lenders. If it isn’t, it is likely to be an estimated score.

Many insurance companies use something similar when setting your insurance rates, called a “credit-based insurance score.” You may be able to improve your insurance score by improving how you handle credit, which in turn may lower your premium payments on auto or homeowners insurance.

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Categories : Credit Score

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Jul

Credit Score Critical For Your Financial Benefit

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Credit Scores Are Vital to Your Financial Health

A credit score is a number that helps lenders and others predict how likely you are to make your credit payments on time. Each score is based on the information then in your credit report.

Why Do Your Scores Matter?

Credit scores affect whether you can get credit and what you pay for credit cards, auto loans, mortgages and other kinds of credit. For most kinds of credit scores, higher scores mean you are more likely to be approved and pay a lower interest rate on new credit.

Want to rent an apartment? Without good scores, your apartment application may be turned down by the landlord. Your scores also may determine how big a deposit you will have to pay for telephone, electricity or natural gas service.

Lenders look at your scores all the time. They look at your scores when deciding, for example, whether to change your interest rate or credit limit on a credit card, or whether to send you an offer through the mail. Having good credit scores makes your financial dealings a lot easier and can save you money in lower interest rates. That’s why they are a vital part of your financial health.

Consider a couple who is looking to buy their first house.

Let’s say they want a thirty-year mortgage loan and their FICO credit scores are 720. They could qualify for a mortgage with a low 5.5 percent interest rate*. But if their scores are 580, they probably would pay 8.5 percent* or more — that’s at least 3 full percentage points more in interest. On a $100,000 mortgage loan, that 3 point difference will cost them $2,400 dollars a year, adding up to $72,000 dollars more over the loan’s 30-year lifetime. Your credit scores do matter.

*Interest rates are subject to change. These rates were offered by lenders in 2005.

What is a Good Credit Score?

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Jul

Debt Collector Problems

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Complaints about debt collectors continue to be the NUMBER ONE complaint that the FTC receives with almost 80,000 complaints documented in 2008.

If you’ve ever had the unpleasant experience of being contacted by a debt collector for credit card debt collection or any other type of collections, you will most likely recognize these common complaints:

Harassment by continuous and repeated phone calls – over 27,000 complaints!

Harassment by collectors using obscene, profane, or abusive language – over 10,000 complaints!

Threatening the consumer with wage garnishment, property seizure, job loss, or going to jail for non-payment of debt – almost 12,000 complaints!

Collectors threatening to use violence if payment not received –over 1,000 complaints!

The Federal Trade Commission acknowledges that many of these actions by the debt collectors violate the Fair Debt Collection Practices Act and are therefore illegal! The FTC also acknowledges that it most likely received complaints from only a small number of the people actually victimized by these illegal debt collection practices.

What does the FTC do about these complaints? Basically very little!

The Federal Trade Commission is proud to state in its annual report that in the last reporting year, it brought TWO actions against debt collectors. With 80,000 complaints, the FTC sued TWO collectors!

Obviously complaining to the FTC does NO GOOD!

You must protect yourself against illegal credit card debt collection practices. You must become informed regarding unsecured debt law, laws governing debt collectors, and your rights! You must know how to recognize and document illegal debt collector activity before it happens! You must have a plan for using the documented illegal debt collector activity against the debt collectors in place! Otherwise you will get the abuse and there will be little or nothing you can do about it and the debt collectors know this!

WE SHOW YOU WHAT TO DO!

Listed below are the things a debt collector cannot do according to the FDCPA:

1. Call you at work AFTER you have told him/her or any representative of that company not to do so (which our letter to the debt collector does).

2. Contact you before 8 AM or after 9 PM, in your time zone – not theirs.

3. Fax or send your employer an “Employment Verification” form.

4. Speak to anyone other than you, your attorney or your spouse about the debt. This includes neighbors, relatives and co-workers. * Exception – a collector may contact a third party only if they do not have your current phone number, address or place of employment and they can call only to request that information. They cannot speak about the debt with them. FYI, if your neighbor or family member receives an improper call from a debt collector, not only do you have a cause of action against the debt collector for violating your rights, but SO DOES THE PERSON WHO RECEIVED THE CALL!

5. Threaten violence.

6. Continue to contact you after receiving written communication from you stating you refuse to pay the debt or wish them to cease communication.

7. Cause your phone to ring repeatedly, whether the collector speaks to you or not.

8. Use profanity, racial slurs or foul language.

9. Claim to be associated with the US or any state agency. (Such as being a “police officer”.)

10. Call without disclosing their identity.

11. State that not paying a debt will result in arrest/imprisonment.

12. Claim to be an attorney if he/she is not.

13. State you have committed a crime because of nonpayment of an alleged debt.

14. State that not paying a debt will result in seizure, garnishment or attachment of property.

15. Threaten to or actually communicate false information to the credit reporting agencies

16. Use any name other than the true name of the collection agency.

17. Send any communication which does not express, “This is an attempt to collect a debt… communication is from a debt collector.”

18. Accept or request a postdated check for the purpose of threatening criminal prosecution (should the check not clear).

19. Withdraw funds from a bank account without your permission.

20. Deposit or threaten to deposit a postdated check prior to the date.

21. Cause any charges to be incurred such as collect calls.

22. Take or threaten to take or disable property.

23. Use any marking on the outside of a collection letter, which indicates it is from a debt collector.

24. Communicate via postcard.

25. Bring a lawsuit in a location other than where you live or where the contract was signed.

26. F ail to send a 30-day validation notice within 5 days of the initial communication.

27. Act in any way, which would be considered disrespectful or abusive.

28. Continue collection actions before validating the debt.

29. Use any untrue, deceptive or misleading representations in order to get you to pay the alleged debt.

Disclaimer: The information contained in this web site is for informational and educational purposes only. It is believed to be accurate at the time of creation. We are not attorneys. Nothing contained in this web site is to be construed as the offering or giving of legal advice or legal opinion. Should you require legal advice or legal opinion, please seek the counsel of a qualified licensed attorney in your state.

Technorati Tags: complain to FTC, consumer credit counseling service, credit card collection practices, dealing with ugly debt collectors, how to eliminate credit card debt, How to get out of debt fast, how to handle debt collectors, how to pay off credit card debt, illegal debt collector activity, laws governing debt collectors, Parkey Thompson, unsecured debt law

Categories : Credit Cards, Debt Free

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Jul

Credit Card Securitization

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Who owns your credit card debt?

Is it the bank that sends you your statements or is it possibly another entity entirely?

Securitization refers to the practice of bundling credit card receivables (mortgages are also heavily securitized which was a big contributor to the mortgage meltdown experienced in this country) into investment vehicles known as Master Trusts which are marketed to investors as asset backed securities.

Securitization allows credit card companies to pass the risk of default along to investors while increasing profitability.

Which simply means this, because the credit card company doesn’t actually own the money you owe, it can squeeze you for a higher rate without worrying about whether the higher payments may cause you to default (stop paying).

If you pay the higher rate, the bank makes more money!

If you can’t pay the higher rate, the bank doesn’t lose money, the investors do!

On November 10, 2008, USA Today ran an excellent article entitled Why Banks are Squeezing Credit Card Holders. The article can be found in the USA Today archives. Here’s a brief excerpt which talks about the securitization of credit card receivables and the effect of such securitization on the ability of the bank to squeeze consumers:

In recent years, banks have sharply raised interest rates and penalty fees on credit cards. As the economy tanks and banks’ mortgage-related losses balloon, some banks are stepping up such increases to boost revenue. Bearing the brunt are consumers for whom a jump in rates and fees can make it tougher to pay their bills at a time when household budgets already are being stretched.

A key driver behind this trend: securitization. From 2003 to 2007, seven of the largest issuers of credit cards packaged an increasing amount of card debt into securities and sold them off to investors, just as banks did with mortgages, a USA TODAY review of banking records found.

Selling off credit card debt has given banks a powerful incentive to raise card fees and penalties, according to interviews with dozens of industry analysts, academics and investment specialists.

Here’s why: When banks package and sell card debt, they pass along to investors some of the risk the debt will go bad. Yet, banks often get to pocket much of the profit from rate and fee increases on those accounts. Imposing higher fees on more accounts — without a comparable rise in risk — lets banks raise revenue and keep profits up, at customers’ expense.

Credit Card Securitization has been a “major impetus” for banks to expand penalty fees and rates in recent years, says Adam Levitin, a Georgetown University law professor and card expert. Banks “have little to lose if they squeeze too hard (if consumers default), but a lot to gain if they can extract additional payments” from card users, he says.

For further information on how credit card companies can raise your interest rate any time they want with no limit on how high it can go and also charge you outrageous fees as well, click here for How Credit Cards Trap Consumers.

Technorati Tags: banks raise revenue, consumer credit counseling service, credit card companies pass the risk of default, credit card company, Credit Card Securitization, how to eliminate credit card debt, How to get out of debt fast, how to pay off credit card debt, Parkey Thompson, you pay the higher rate

Categories : Credit Cards, Debt Free

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Jul

Why Credit Cards Are Designed To Trap You

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The entire world economy rests on the consumer. If he ever stops spending money he doesn’t have on things that he doesn’t need, we’re done for. – Bill Bonner, author and columnist on economics and money

This is what our money system is, if there were no debts in our money system, there wouldn’t be any money. – Marriner S. Eccles, former Chairman of the Federal Reserve Board

For the love of money is the root of all kinds of evil. – I Timothy 6:10 (New Living Translation)

YOU HAVE BEEN LIED TO!!!

You have been victimized by a system designed to get you in debt and keep you there because it is very profitable (for the banks) to do so!

In America, the national credit card debt now totals almost ONE TRILLION DOLLARS with the American average credit card debt now more than $10,000 per household.

Credit cards cost American consumers more than $90 BILLION DOLLARS a year in interest and fee charges!

For years you have been led to believe that the banking and credit system functions a certain way. You have been led to believe that the banks have “lent” you money because you demonstrated your “credit worthiness” and that your failure to pay or inability to pay is because you’ve overspent or over borrowed and that you and you alone are at fault.

You have been led to believe that the debt collectors are just doing their rightful job in harassing you for payment and that it is your obligation to figure out how to beg, borrow, or steal the money to pay them.

You are about to find out just how WRONG that picture is.

While the information presented here is readily and publicly available, it is not information of which most people have much knowledge.

That’s because the banks and credit card companies and debt collectors want to keep it that way!

They prefer an ignorant customer of whom they can continue to take advantage!

With the average credit card debt costing the average American family almost $2000 a year in interest charges alone, you can begin to see just how profitable the current system is for the credit card companies and banks!

What you are about to read may seem unbelievable but again this is very public information; it is simply not common knowledge.

for more info see

Securitization link

Technorati Tags: average credit card debt, consumer credit counseling service, credit card caompanies want, credit system functions, debt collectors, how to eliminate credit card debt, How to get out of debt fast, how to pay off credit card debt, Parkey Thompson

Categories : Credit Cards, Debt Free

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Jul

How Credit Cards Trap Consumers

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Are you trapped by a mountain of credit card debts with high interest rates and tough payments?

Are You Wondering how you got there?

You had some big help. Sure you used the credit cards, and you made the charges. But paying off credit card debt – even paying down credit card debt – becomes almost impossible because of the way credit cards are specifically designed to trap consumers like you in an ever increasing debt trap!

You need to know that credit cards differ from other kinds of financial transactions in the following ways:

Credit Card Companies Can Change Your Interest Rate at ANY TIME that they want to! And they DO!

Unlike regular loans which typically have fixed rates or at least variable rates with specified limits tied to some financial indicator, credit card companies can raise rates whenever they wish, for almost any reason.

In other words, they raise rates just because they want to and just because they can.

While you may believe that credit card companies can raise your rate only if you don’t pay on time, it’s just NOT TRUE. Buried deep in Terms and Conditions of your credit card is legal language that clearly states that the credit card company may raise your interest rate or change any of their terms and conditions, at any time they choose and for any reason they choose.

This has been terribly bad for those people who started into credit card debt thinking they were paying 4.6% or 9.5% or whatever the interest rate was at the time and now find themselves paying a whopping 14.5% or 19.5% or 24.5% or more. For instance a credit card customer with $20,000 in credit card debt who was paying an average of 7.5% and who is now paying an average of 22.5% is now paying an ADDITIONAL $3000 PER YEAR IN INTEREST CHARGES! Yes $3000 for nothing!

That’s an additional $250 per month in interest payments just to make the credit card company more money! No wonder credit card customers or should we say consumers, find paying off credit card debt almost impossible!

Simply because credit card companies could raise interest rates any time they wanted, they’ve been able to raise them on existing balances. Not so any more!

In May 2009, Congress passed the Credit Card Accountability Responsibility and Disclosure Act, whose main provisions took effect in February 2010. This act now limits the ability of credit card companies to raise interest rates on existing balances, although they can still charge high rates on new balances. While this law is a certainly good step in the right direction, however credit card companies had plenty of warning time prior to the start of this law to raise their interest rates on existing balances for many consumers and they did just that!

Which simply means this, if you are currently in trouble with credit card debt, the new law does not help you!

A second thing you need to know about credit cards is this:

There is NO LIMIT on HOW HIGH your INTEREST RATE

can go on a CREDIT CARD!

While most states have usury laws (laws that limit the interest rate a consumer can be charged in a financial transaction), those laws do not apply to the credit card companies.

Thanks to a Supreme Court decision dating from the 1970s as well as specific action and inaction of Congress, credit card companies are exempt from state usury laws.

That means the credit card company can charge you whatever interest rate it wants!

29.9% is not the limit. We’ve seen lots of people paying 35% to 39% and some over 40%. And now, there is one credit card which targets people who can’t get a regular credit card that carries an interest rate of 79.9%!!

A third way in which credit card companies trap consumers into ever increasing amounts of debt has to do with the fees they charge.

Credit Card companies are allowed to charge

OUTRAGEOUS and EXCESSIVE FEES!

Fees – late fees, over the limit fees, account fees, just because we can fees – account for approximately 1/3 of credit card companies profits. As credit card company profits are in excess of $30 BILLION DOLLARS, that mean over $10 BILLION DOLLARS of that is from fees!

Credit card companies love to charge fees! Former credit card company employees have testified under oath as to industry practices of deliberating not processing consumer’s checks when they arrive but deliberately holding them for a few days in order to generate a late fee for the account. Some employees reported even deliberately destroying consumer’s payments so that a late fee could be assessed on the account. And oftentimes adding the late fee would then cause the account to go over the limit so that an over the limit fee could also then be charged!

Or how about letting a small charge be approved on the account that puts the account over the limit so that a late fee can be assessed? At least this particular practice is now limited thanks to the Credit Card Accountability Responsibility and Disclosure Act.

But most fees charged by the credit card companies are still unregulated. And new fees are constantly being devised in order to better fleece the public.

Dr. Elizabeth Warren, Havard Law professor and expert on credit card industry abuses, tells the story of one credit card company that put an unexplained “just because we can” fee of $75 on millions of consumer accounts. Any consumer that called to question the fee was given a refund but millions of consumers either did not see the fee or simply assumed the fee was correct. The net result was an undeserved and unethical windfall of millions of dollars in profit for this particular credit card company. That story and a lot more is contained in her radio interview that’s linked at the bottom of this page.

Are you beginning to understand the absolute unfairness of credit cards and how people get trapped into unmanageable debt?

With the ability to raise rates at any time, with no legal limit on how high those rates can go, and the ability to charge outrageous and excessive fees, credit cards are very dangerous for consumers!

Credit card companies never intended for consumers to be paying off credit card debt or even paying down credit card debt!

Add in the loss of a job, illness, drop in income, and other such factors that millions of Americans are currently experiencing, and you begin to see why so many people are in trouble with credit card debt.

Now when these very same banks that are taking advantage of American consumers got into financial trouble, it was the very same American consumers who were forced to pay for the BAILOUTS OF THE BANKS!

Who will bailout the troubled consumer?

WE CAN HELP!

Contact Parkey Thompson a Dave Ramsey certified Counselor to provide debt counseling that really helps

Technorati Tags: consumer credit counseling service, Credit Card Accountability Responsibility and Disclosure Act, Credit Card Companies Can Change Your Interest Rate, How Credit Cards Trap Consumers, how to eliminate credit card debt, How to get out of debt fast, how to pay off credit card debt, limits the ability of credit card companies, Parkey Thompson, paying down credit card debt, paying off credit card debt

Categories : Credit Cards, Debt Free

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Jul

Common Credit Myths

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You have heard all the rumors…from neighbors, relatives or friends. There are a wide variety of these common credit myths floating around about what you should and shouldn’t do to manage your credit. We expose these urban legends to provide you with the truth about credit scores and credit reports:

Your score will drop if you check your credit - Fortunately, this one is definitely not true. Checking your own report and score is counted as a “soft inquiry” and doesn’t harm your credit at all. Only “hard inquiries” from a lender or creditor, made when you apply for credit, can bring your credit score down a few points. Worried about damaging your credit while shopping around for a loan? Multiple inquiries for the same purpose within a short amount of time (a few weeks) are grouped together into a less damaging period of inquiry.
Once you pay off a negative record, it is removed from your credit report – Negative records such as collection accounts, bankruptcies and late payments will remain on your credit reports for 7-10 years. Paying off the account before the end of the set term doesn’t remove it from your credit report, but will cause the account to be marked as “paid.” It is still a good idea to pay your debts, just be aware the major change in your report will come when the negative records expire.
Closing old accounts is a good idea – To close or not to close, that is the question. Many people advocate closing old and inactive accounts as a means of managing their credit. But they should think twice before closing the oldest account on their credit reports. Canceling old credit accounts can lower a credit score by making the credit history appear shorter. If you want to reduce your levels of available credit, ask for your credit limits to be lowered or close newer accounts instead.
Paying off a debt will add 50 points to your credit score – Your credit score is calculated using a complex algorithm that takes into account hundreds of factors and values. It is very hard to predict how many points you can gain by changing one factor. For a person with a high credit score, just one late payment can cause a significant drop. If a person has a low credit score, it may not cause a large drop at all. Just keep paying your bills on time, reducing your debts and removing negative inaccuracies from your credit report. Good financial behavior and time are the two most important factors for your credit score.
Being a co-signer doesn’t make you responsible for the account – When you open a joint account or co-sign on a loan, you are taking on legal responsibility for the account. Any activity on these shared accounts, good or bad, will show up on both people’s credit reports. If you co-sign for a friend’s auto loan and they don’t make the payments, your credit profile will be hurt by their actions and visa versa. The only way to stop this double reporting is to refinance the loan or to have the creditor officially remove you from the account.

Parkey Thompson is a Dave Ramsey Certified Counselor from Cumming in Georgia near Atlanta. As a Certified Debt Counselor Parkey has helped scores of people in personal financial coaching to turn their life around, and get them debt-free.

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Categories : Credit Score, Debt Free

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Jul

When To Close Old Accounts

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Closing old and unused credit accounts on your credit reports can help you avoid unnecessary fees and guard against identity theft. It can also cause your credit score to drop if you are not careful. Here are a few do’s and don’ts for closing those dormant accounts:

Do Close Old Accounts When…

Check your credit reports online to see the status of your accounts. Look for late payments, high balances and signs of identity theft. As a bonus, checking your credit report can save you some research time by providing you with contact information for each of your creditors.
Consider closing unused and idle accounts. These accounts could be charging you unnecessary fees and are often targets for identity thieves. Close the accounts with annual fees or the highest interest rates first.
Designate one card for regular use and try to pay the balance in-full each month. Reserve the other cards for emergencies only so that you are not tempted to overspend.
Keep four to six credit accounts open. This will keep your credit score and debt balances healthy. Signs of active and responsible credit use are viewed positively by creditors
Be aware that you can cancel accounts that have an active balance. You can ask your creditor to close the account to new charges and continue paying down the balance each month. This may be a good way for heavy credit users to prevent new spending while they are reducing their balances but watch out for hidden fees.

Don’t Close Old Accounts When…

Close the oldest account on your credit reports . This could cause your credit history to appear shorter and could harm your credit score.
Just throw away old cards and expect your accounts to close automatically. The safest way to close an account is to send a certified letter to the customer service department of the credit company. You should receive an account closing confirmation letter in 10 days.
You shouldn’t be pressured to cancel several accounts all at once. Gradually paying down and closing accounts may be the best plan if you are unsure about the impact on your credit score or the amount of debt you need to carry. If you want to cancel numerous credit accounts, spacing the closures over time will reduce the chance of attracting negative suspicion from potential creditors.
Don’t forget to check your credit reports for updates and errors after you close your credit accounts. Wait 30-60 days for the creditor to report the closed account and the credit reporting agencies to update your records. While the accounts and their payment histories will stay on your report for 7 or more years, they should be marked as “closed.”
Avoid over-consolidating balances onto one card. If your credit balances rise to above 35% of your available limits, you may see a drop in your credit score.

Technorati Tags: cause your credit score to drop, close an account, close old accounts, closing accounts affects credit score, closing unused accounts, consumer credit counseling service, don't close old accounts, expect your accounts to close automatically, how to eliminate credit card debt, How to get out of debt fast, how to pay off credit card debt, Parkey Thompson

Categories : Credit Score, Debt Free

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Boosting Your Credit Score

What is a Good Credit Score?

Credit Score Critical For Your Financial Benefit

Debt Collector Problems

Credit Card Securitization

Why Credit Cards Are Designed To Trap You

How Credit Cards Trap Consumers

Common Credit Myths

When To Close Old Accounts

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