Archive for May 2010

What About All The New Debt Relief Companies?

Debt relief is big business because many people are in financial trouble these days. Stinking economy, delinquent mortgages, credit card debt at all time highs, all provide opportunities for the scammers to jump in make some money and move on.

It only takes a few bad apples to spoil it for everyone else. So beware and do a little research before signing a contract with any debt relief company.  

You should stay away from companies where their web site that is newer than a few months old.  To check the age of the web site go to any domain registry service (for quick checks I use whois.com). Type in the web site domain name, scroll down and it will show you when it was created.  

Credit Report 3 1 – The Key to Better Rates: Improve Your Credit Score

Whether you accept the idea or not, your credit score and credit report are key elements when applying for new loans, or credit cards. Your credit score is computed using the information found on your credit report 3 1. Once you have debt under control, it’s time to tackle the credit rating/scoring game. 

Credit scores were created to assist banks and businesses to help make financial decisions about you. A mathematical calculation is used based on your credit report data.  The end result is a numerical rating. FICO scores vary from a low of 300 to a high of 850. Lenders consider a score of 760 and above as ideal.   

Credit Utilization – What is it?

Credit utilization is simply your total balances divided by total credit limits: 

Revolving Debt Balances / Credit Limits = credit utilization 

This calculation is how creditors determine your revolving credit utilization. The credit utilization percentage tells them how much of your available credit you are currently using. You want this number to as low as it can be. 

Why is this important? 

Approximately 30% of your FICO credit score is based on amount of debt. The higher your credit utilization percentage, the lower your score will be. 

What you can do: 

How to use pre paid cards

Pre paid cards are funded from using money from your checking or saving accounts, i.e. you have to deposit money into the account before you can use the card.  Consequently, these cards do not report to the major credit bureaus and, generally speaking, there is no impact on your credit history. 

If you have ever been turned down for a credit card then you may want to consider using a pre paid card, (or secured card). These cards can be used in place of credit cards for things such as making hotel, airline reservations etc. 

Debt Settlement Companies and The Better Internet Bureau. WHAT?

I have seen a few “Debt Settlement” web sites that display a “Better Internet Bureau” Icon.  What exactly is that?  Well if you click the icon nothing happens. After doing a little more digging I found that an internet marketing company seems to be the one that came up with the idea as a way of promoting web sites. 

The icon looks a lot like the Better Business Bureau icon.  Are these debt settlement sites trying to deceive potential clients?  At this point I don’t see any real value in this service. Correct me if I am wrong.