5 Ways To Avoid Credit Disaster

Credit is a part of life. Without credit, you cannot qualify for a house, a car, credit cards, or bank loans. You can't rent a car, or reserve a hotel without a credit card.

However, you don't have to have debt in order to have credit. Debt has become a frequently used word. It is defined as something that is owed; something that one person is bound to pay or perform for another. Credit is defined as trustworthiness. It is the time allowed for payment of goods or services obtained on trust.

When you make a credit payment late, or if the account falls into collection, the action can remain on your credit report for up to 7 years! Bankruptcies can be reported on your credit record for up to 10 years. Therefore, it is important that you prevent credit problems from happening.

Here are some ways to avoid credit disaster:

1. Set credit goals. When you set credit goals for yourself, you will have a better idea of what you are trying to accomplish financially. Credit goals will also help you create a strong financial future. In goal setting, you must establish both long-range goals and short-range goals. Setting short-range goals with credit should include establishing a good payment pattern and increasing your credit score.

A long-range credit goal could be a large purchase, such as a house, a business or specific investments. The more creditworthy you become, the more opportunities you will have to make money.

2. Control your spending. Credit and charge cards can easily get out of control. When you are using your credit card, the balance can accumulate quickly. A good habit to get into when using your credit card is to keep an index card in your wallet to write down every purchase you make. Once you reach the maximum amount you can comfortably pay when your credit card bill arrives, stop spending. By tracking your spending on your credit card, you will not have any surprises when you receive your bill in the mail.

3. Pay off your credit card balances in full each month. It is very tempting to pay just the minimum payment on your credit card statement. Usually the minimum balance of $20.00 looks more attractive than your actual balance. However, if you carry a balance on your credit cards, the balances and interest charges are going to continue to add up. You run a risk of finding yourself in a high amount of debt.

You should also make a plan to pay your home and automobile loans off as soon as possible. This can be accomplished by making extra payments each month.

4. Be on time with your bills. Making late payments will have a negative impact on your credit report. For example, you will have a hard time qualifying for a home loan if you have recent late payments on your mortgage. Late payments also have a serious effect on your credit score. According to Fair Isaac, (http://www.myfico.com), payment history makes up 35% of your credit score.

5. Educate yourself about the world of credit. One of the biggest financial problems society has is lack of education of credit and its uses. Familiarize yourself with your legal rights as a consumer. The Federal Trade Commission offers publications about consumer credit that you can request free of charge. Visit http://www.ftc.gov for more information.

Being responsible, trustworthy, debt free, and self-controlled in handling your finances will make your life much easier.

Deborah McNaughton is an author and credit expert. She is founder of Financial Victory Institute, which specializes in financial education. Deborah has programs to train individuals to become credit consultants and teach financial seminars. Visit http://www.financialvictory.com or call 714-993-1171.

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Credit Repair (Part 2) - Solving the Problem

It is possible to fix your bad credit, with time, patience and determination. The first step in repairing poor credit is fixing any problems you may have with money.

1) Get a credit reports on yourself and check out what is on them. To get yours free go to www.annualcreditreport.com. You are allowed by U.S. law to get a free copy from each of the three major credit companies once every 12 months.

2) Once you have your credit reports, check them for accuracy. If there are any errors or things you disagree with, you are entiltled by the Fair Credit Reporting Act law to dispute anything in the report that is not accurate. Write to the credit reporting company and explain what the problems are. They will then investigate the matter and let you know what happens. If they find the information is not accurate, they will fix that on your credit report.

Unfortunately you can't remove anything negative that is accurate information about you. Only time can do that. But adding more good information does help.

3) If your credit needs repair, start work on it now. Start paying off old unpaid debts and loans, starting with the smallest ones.

4) Start paying more than the minimum payment on your current credit card payments.

5) Do not get into any new debt. This is essential. Make it a priority to get out of debt. Cut up (or lock up) the credit cards, if they are a problem for you. Make it a commitment to become debt free.

6) Live within your means. Make a budget and live by it.

7) Start saving money. If you have poor credit, it is much easier to buy a home or a car with a cash down payment, than without one.

There are many sources of help available. Consumer Credit Counseling Service is one of the best for help repairing credit and getting debt under control. Their website is located at http://www.cccsintl.org. Consumer Credit Counseling Service provides budget counseling, educational programs, debt management assistance and housing counseling. There are also many local branches of this nonprofit organization, so check for one near your location.

There are many "for profit" organizations that will help you with debt consolidation loans, but beware! They often are very expensive. You can get free reliable help that you can trust from a non-profit organization like Consumer Credit Counseling Service instead of paying hundreds of dollars to one of them. Or, you can educate yourself and do it for free.

Some other good places to go online for more credit and financial advice are listed on my website at http://i-can-buy.com/resources.html


By Alexis Dey © 2006 Mohave Publishing. All rights reserved. http://MohavePublishing.com

For ideas on how to buy a house when you can't qualify for a home mortgage loan because of poor credit, look for the exclusive FREE e-book, "Buying a Home When You Have Bad Credit," which can found at http://I-can-buy.com. Read more on this article...

Credit Repair (Part 1) - Defining the Problem

Before you begin the process of repairing your credit, you first need to ask yourself why you are having credit problems? Poor credit is nothing to be ashamed of. It is far more common than you may realize. Often it may not even be your fault, like Gerald and Lisa.

They invested five years and all they money they saved to start a small sign company. Then one summer someone broke into their business office and stole all the computers and expensive sign-making equipment. Unfortunately they did not have any insurance to cover what was stolen, so they had to take out loans to replace the items so they could stay in business. It took them years to recover financially from that, leaving them with bad credit.

On the other hand, like Paul, some people make poor credit decisions. After Paul got his first card, shortly after graduating from college, he suddenly became flooded with offers for more credit, which he promptly took up. He wanted to show everyone that he was a success at his new career as a sales manager, so he filled up all his credit cards.

Then he began the juggling game of "robbing Peter to pay Paul," which only got him deeper in debt. He took out a consolidation loan to pay off all the cards and put the debts in one big payment, but the temptation of all the empty cards was too much for him and he filled them all back up again. He finally had to declare bankruptcy because he was so deeply in debt that it was beyond his ability to ever pay off.

So, take a good look at what is going on in your life. Why do you have credit problems? Are you in debt because of circumstances beyond your control or is it a chronic situation? Are you still getting deeper into debt or are you fixing the problem? There is no point in fixing your credit if you will just end up losing it.

If you find that you are getting too deep in debt, there are several things you can do right away to help the situation, before it gets out of your control.

* Contact the credit card companies and see if they will work with you to help lower the monthly payments.

* Talk to a nonprofit credit counseling company, like Consumer Credit Counseling Service at http://www.cccsintl.org. They provide budget counseling, educational programs, debt management assistance and housing counseling. They have branches in many location of the United States.

Beware of some "for profit" organizations that will help you with debt consolidation loans. Often they are very costly. Why go to them when you can get free reliable help from a respected non-profit organization like Consumer Credit Counseling Service?

There is no quick fix for credit problems, but with a little patience and determination, you can not only get it under control, but you can end up with great credit and the feelings of success and self-worth that go along with it. So take the first step and determine to get debt free today!


By Alexis Dey © 2006 Mohave Publishing. All rights reserved. http://MohavePublishing.com

For ideas on how to buy a house when you can't qualify for a home mortgage loan because of poor credit, look for the exclusive FREE e-book, "Buying a Home When You Have Bad Credit," which can found at http://I-can-buy.com. Read more on this article...

Escape the Credit Trap

Many people fall into the trap every day. They start to use their credit cards more and more, just a little bit at a time. One day they wake up deep in debt. The average American consumer has 9 credit cards and 52% of Americans owe over $5,000 on credit cards and/or installment financing plans. About 15% of creditors have their credit cards at over 80% of their credit limits. That can spell big trouble. If you are one of those who are maxed out on your credit cards or rapidly approaching it, you've got to do something about it, and soon.

The problem is many folks depend upon their credit cards and revolving charge accounts. They are using them for the convenience and, in many cases, to maintain a lifestyle they can ill afford to keep. If you are a convenience credit user who pays all, or most of their outstanding balance every month, you will have few problems. If, however, you find yourself getting deeper and deeper in debt every month, you must take action now. Failure to do so may mire you deep in a credit hole you may not be able to escape.

You have several options to help your credit picture, but the one thing you must do in order for any of them to work is control your spending. There will always be life's emergencies such as a big medical bill or unexpected car repair. These are mostly unavoidable. If, however, you have a pattern of spending up your credit balances every month just to maintain a lifestyle, you've got to stop now. Once you have your spending under control, you can examine your options.

One option is to get another job or source of income. You can work evenings or weekends. If you have special expertise in a certain area, you may be able to become a part time consultant. Some consulting work is very lucrative. You can also start a part time business, but in most cases this will take a bit of capital to get going. There are, however, many business that you can begin for just a little money, but these will still take time and effort if you are to be successful. You want to be careful that you don't begin a business with no plan and then find yourself even deeper in debt with very little additional income to show for it. If you do plan on starting a business to earn some additional income, do yourself a big favor. Do plenty of research to find the proper business and then do a good business plan. Revise the plan as necessary, but do your best to stick to it. Taking these steps will really help ensure your success.

For many people, who are just a little bit upside down in their cash flow every month, a great option can be a debt consolidation loan. If you own your home or other substantial real estate to use as collateral, there are many lenders who will give you a low interest loan to pay off your many different, high interest loans. This is beneficial in a few ways. The primary benefit is that you can substantially lower your total monthly payment by using a consolidation loan instead of having multiple credit cards.

In addition, it is much more convenient to replace many loans with one. It will involve much less time and paperwork to pay your bills every month. You will also be less likely to forget to pay one of your credit card bills. Missing, or being late on, a payment can begin what is known as the "credit card death spiral". Most creditors will raise your interest rate, charge a late fee, or both. In most cases, they will most likely hit you with both options. The interest rate will raise your minimum monthly payment. If you were right on the edge of being able to afford the minimum monthly payment, the increase can send you over that edge.

A consolidation loan can really help with your monthly finances. However, such a loan can also have a dark side. Because your home is usually the collateral that secures the loan, you can lose your home if you default. This is the reason it is vital to curb your excess spending. You must be able to consistently make the monthly payment on the consolidation loan.

Credit can be a great thing. It lets you buy a home, run a successful business, drive a nice car and have access to extra cash in emergencies. It can also suck you in and create a dependency. You can, like many Americans, become addicted to the added spending power it allows. If you are not careful, you can find out it was all an illusion, and you are now in trouble. Take control of your credit while you can. Before it's too late.
By Steve Faber

Steve writes about a multitude of business and finance topics. He has been a principal in several businesses both online and bricks n' mortar, including one that grossed over $1.5 million a year. See The Debt and Loan Consolidation Guide for more information about getting out of debt and staying that way.


Find out how you can own your own home, even if you have poor or no credit. Go to http://I-can-buy.com now to see our FREE ebook, "Buying a Home When You Have Bad Credit." Read more on this article...