Dealing With Credit and Debt

Given the current global economic situation I thought it might be useful to share my thoughts experiences surrounding personal credit and debt. Money always looms large in the lives of families and individuals; we could always have a bigger house, nicer car, the children could be at better schools, or perhaps it would simply be nice to eat out more than once a month. This endless pressure to acquire has turned money into an abstraction. In my opinion, in today’s secular society it has replaced religion for many, and become a yardstick by which we measure others and ourselves. I will be looking at two areas. Firstly, how the way we handle debt and credit is often linked to how we approach the rest of our lives, and the potential consequences of this. Secondly, how if we open our eyes and see money as a kind of living organism that should work for us and not against us, we can begin to live more contentedly in today’s pervasive consumer culture.

Of course, it is possible to trace consumerism back at least two hundred years, but the debt culture as we know it really began in the nineteen eighties. The effective defeat of the unions and the selling off of council houses combined with private share ownership, made the majority feel that they had a stake in capitalism. The fact that this was largely an illusion is not relevant here. The City and its ethos were perceived as a microcosm of UK PLC. To quote Mrs Thatcher, there is no such thing as society, only individuals.’ Whether you gained or lost by this was largely determined by geography. Whatever way you look at it we were all deeply affected by this raising up of money as a kind of icon. We have been on that path ever since. The sixties had peace and love, the eighties had the accumulation of cash and possessions. This cash and credit culture is governed by the law of diminishing returns, but is so embedded in our culture it is almost impossible to see. The current levels of personal bankruptcy show how money has become an end in itself; who would bankrupt himself or herself for a car or a holiday? These bankrupts are not spending their money on food and clothing. It is as if the money is in control of the person, it has become almost spiritual in its influence.

I would suggest embracing the abstract nature of money, see it for what it is; the fallout from a ubiquitous cash culture that only has the power you grant it. I think this is something future generations will understand instinctively, for us it has to be learned. You cannot make a Faustian pact with your bank and credit cards and expect to be happy even before the Devil arrives to claim his prize. To live within your means is to live a balanced life, and can only be positive.

We need money and credit to live in the modern world, but it is not naive to place it in its proper perspective. It is the acquired art of discovering the difference between what you need and what you want that makes for a balanced life. What you need should be obvious to you, what you want is for you to decide.

The Importance of Credit Protection Services

Identity theft is on the rise. It used to be something that we only hear about in the movies. That is no longer the case. Each year thousands of Americans fall prey to identity thieves and those that commit credit fraud. If you still think that there is no chance that it would ever happen to you then you are wrong.

For all you know it may already be happening to you. There are innumerable examples of individuals who were blissfully clueless that they are already victims of credit fraud until it was too late.

One of the best ways to protect ourselves is to practice caution: Don’t be as careless as to who and where you are giving out private information. Don’t be lured by the idea of pre-approved credit cards or loans because criminals sometimes use them as mediums to get personal data from you and use it to set up false accounts.

Remember that the best way of protecting ourselves against identity theft is by extreme caution. The trouble is, most of the time – no matter how cautious we are, few things still fall through the crack and important information land in the hands of individuals with malicious intents.

Another more practical and more proactive way is to secure the services of a credit protection agency. This is where a reliable credit protection service provider comes in. Such an agency will help track your credit movement for you; they will inform you if any unauthorized charges have been made or if someone other than yourself is attempting to set up an account in your name.

It works by notifying your bank, credit providers, credit bureau, and you as their client by making real time alerts when a suspicious or unauthorized change in your accounts happen. Also they can detect when a false account is being made using your personal data like your Name, Address, SSS number or Phone numbers.

Depending on the credit protection service, you may be allowed to check your credit status via the internet. This makes it easier for you, especially if you are away on trips and you need to check your credit status. Credit Protection Service providers do not share information with a third party if you yourself do not allow it.

Even people with bad credit need to avail of the services provided by a credit protection agency. You need this to ensure that no one is taking advantage of your account when you are trying to raise your credit rating. It is important to note that a Credit Protection Service does not help you raise your credit rating nor does it affect it in any negative way.

Protecting yourself from identity theft and credit fraud has never been more important, it is absolutely necessary to keep your guard up and prevent identity theft and fraud before it happens.

Which Type of Credit Do I Choose?

Lots of us face this question if we’re in the position to access new credit, and that is what type of credit do you choose? There are several different types of credit extended in numerous ways. For instance there are charge cards which usually don’t set a limit BUT require payment in full every 30 days. Next you have your simple credit cards, where a limit is set and you’re allowed to pay that back in minimum payments if you so choose BUT you also pay lots more interest over time. There are some credit cards that offer 0% interest for your first 12-18 months so it’s best to know what to do. Then of course there is the mortgage for your home or personal line of credit. This type of credit or loan usually comes with origination fees along with interest that is paid back to the lender over time. Depending on what your current credit situation is these fees mentioned above could be higher or lower or irrelevant altogether.

Let’s discuss the Charge Card and Credit Card scenario. First off a charge card will allow you to spend what you need to on purchases. When the lender for a charge card issues credit typically there is no set limit, however they do closely monitor you’re spending to minimize their risk of loss. You do need to pay the credit used back at the end of every month in order to eliminate late fees or closure of the account. Credit cards play a different role. This type of   credit  issued by a  bank  or private lender has a set limit after signup. Meaning the lender will look at your credit score and decide how much they are willing to allow you to use before they feel you’re too high of a risk. Some of these credit cards start out low but can quickly have limits raised over time by showing excellent payment history. Remember you can roll this type of credit month to month as long as you don’t miss your monthly payments. Keep in mind you NEVER want to use more than 30% of your available credit. When this happens 2 key things happen:

1) Your credit score drops no doubt about it.

2) Your now looked at as high risk to lenders by using too much credit.

It certainly is a cat and mouse game on knowing how much credit to ask for and how much credit to use – believe me I know. It can be tough. You don’t want to fall into these categories it can be hard to dig out once you do.

Finally let’s talk about the personal loan or line of credit. I have seen this type of credit become what most folks go after; I assume they just heard something and don’t really get it. When deciding what type of extended credit you need the first question asked should be what do I need the line of credit for? There are a few distinct differences you need to be aware of. If you’re doing a home remodel or need to fix some landscaping or build a garage, do you know what type of credit you need to get? A line or credit will have origination fees, interest rates, additional fees and a set term(s) for repayment. This will be true for a credit card except you can get interest free credit lines for up to 24 months in some cases. You can also get a lower interest rate depending on your credit score. Also your ability to show lenders you can pay back the debt with no stress will certainly play well for your case.

Whatever road you travel in life it’s important to be informed. It’s important to do the research and fully understand the situation you’re getting into. I included in this, we all want things yesterday and rush into situations. When we look back we all understand it could’ve been better for us had we took a little more time and did a little more research. That’s okay. Doing nothing gets nothing. Don’t expect life to just present you the answers to your questions, you need to find them yourself. Don’t think you won’t understand or can’t know. We all have the ability to find out. I hope you find your answers. Don’t give up. Only a small percent make it because only a small percent put forth the effort. It’s not science its common sense.

All the Best-

Solutions to Fix My Credit Rating

A lot of people are unaware of the fact that they can fix their credit rating themselves and the truth of matter is that no one shares the information openly. The reason is that there are to many people making money from the situation but I will show you how you can get your credit on track by doing it yourself.

The key to getting your credit rating on track is understanding the different negatives on your credit report and how to approach each one. You may have collection accounts on your report, which simply means that the original creditor sold the account to a third party, this company now has the right to try and collect payment from you.

These third party collectors purchase the debt for a fraction of what you owe and try and collect as much as of the original amount as possible. By law, collection accounts can stay on your report for only seven years after which time they need to come off.

If you have collection accounts on your report and they have not reached the seven year mark, then you can try negotiating with the collection company a lesser amount in exchange for them deleting it from your report.

This is a great way to clean up collection accounts on your report. Another way to start improving your credit rating is to begin to rebuild new credit. The formula used to calculate good credit includes new accounts that are in good standing. You need a couple of these accounts on your report to show that you are a good credit risk.

The best way to do this even if you have bad credit is to start with a secure credit card as well as cards that are designed to help you rebuild your credit. There are a number of these cards out there and I can show you how to get approved for them.

Credit Is A Powerful Tool

Your credit score is the biggest tool you will ever have when it comes to your finances. No matter how much money you have in the   bank , if you have bad  credit , it will cost you thousands of dollars if you plan to make a big purchase. It may even be the determining factor to whether you can make that purchase or not. If your  credit  score is too low,  banks  will not lend you money. Good credit on the other hand, can aid you in making all of those purchases you dream of.

If you pay your bills on time consistently month after month, you will have good credit. Let me say that again, paying your bills on time every month will give you good credit. Good  credit  is the key to getting the  banks  to loan you the money you need for big dollar purchases.

If you have poor credit and would like to build credit in order to make a big purchase in the future, there are a two things that will speed up the process.

Check your credit report for errors.

This should be done each and every year to ensure everything is correct. You may get a free credit report at annualcreditreport. You will have the choice to get all three of the major credit bureau reports or just one. The best option here is to just take one of them for now, so that if there are no errors you can check with the other two credit bureaus later in the year. Many people do not realize that this is an option for them. It is a great way to check your credit report every four months for free. If there are errors in this credit report, it is most likely that there are errors on the other two credit bureau reports as well. Go ahead and order the other two and submit your corrections to them. Detailed information about how to contact them can be found on their site. If everything looks correct, you can come back and choose one of the other credit bureaus in about 4 months to check it again. If you don’t know your credit score (FICO), go ahead and pay the fee to see what it is. This will help you when measuring your progress in the months to come

Start paying your bills on time.

No matter how you have paid your bills in the past, start making it a top priority to get them paid on time. Look over your bills due regularly to make sure you haven’t missed one. Get a pocket calendar and write down the due dates and minimum payment amounts for a quick and easy reference. Paying your bills on time is the first step in having good credit. One late payment will send you right back to where you started, with poor credit. After a few months of paying your bills on time, you will start to receive offers for credit. Ignore these as better offers will come if you do. You don’t want to tap yourself out on credit limits just because you can.

The two steps above are just the first steps in fixing poor credit, but are necessary if you want to have the advantages that comes along with good credit.

Four Basic Types of Credit

When people think about credit, they generally only think about loans. However there are four basic types of credit you should know about. These include service credit, loans, installment credit and credit cards.

Service loans are those associated with services like electric, cable, water, gas, telephone and the like. For some of these you have to pay a deposit, especially if you have bad credit. Having good credit can sometimes eliminate the deposit completely because the companies lending the service have confidence in your ability to pay.

Loans are types of credit that lend us cash. The loans can be for small things or little things. Loans can be secured or unsecured. Secured means you put up some collateral to support the loan if you default. Most times these types of loans are given through banks.

Installment loans are types of credit that means you pay for something over time. You usually agree to make a down payment and sign a contract as to the amount you will pay each month. Payments are usually equal for the months during the term of the loan, which can vary. The item that you purchase is the security behind the loan. If you default, the item that you purchase is by default the lenders.

Credit cards are on of the most popular and most convenient types of credit. They are given by various types of businesses and are usually backed by a bank. You may have credit cards from retail stores, banks, or other businesses such as a gasoline company.

Whichever type of credit you use, the main thing to remember is that each has its drawbacks and benefits. You should use all of them wisely and make your payments on time to avoid any negative consequences.

9 Ways To Outsmart An Identity Thief

Identity theft statistics are shocking, to say the least. And it’s not going to get better any time soon. But there is no need for you to become a statistic. Here is what you can do to avoid identity theft.

1. If your mail box doesn’t have a lock yet, put one on.

If you had any official letters missing recently from your mail box, the chances are somebody has stolen them to find out things about you, and possibly assume your identity. If it didn’t happen to you yet, count yourself lucky and put the lock on the mail box anyway.

2. Consider renting a PO Box at your local post office. Use it as a postal address for most or all mail. This will be particularly useful when you go away for a few days, or if there is no one home for most of the day.

3. Invest in a good paper shredder, preferably a cross-cut type.

You should never just tear up important documents. But what may not be so obvious is that the pre-filled offers you get from banks, credit card companies, insurance companies and the like, also contain sensitive details about you that would be of interest to identity thieves. Shred all of these before throwing them out.

4. Never give any financial details over the phone, unless you initiated the call.

The most common scenario: Someone calls you pretending to be from a local charity. You agree to donate a small amount to a “good cause”. Not suspecting anything, you give them the credit card details over the phone and the rest, as they say, is history. Next time you get your credit card statement, it will be full of unauthorized transactions.

Do you give them credit card numbers over the phone? Never! Either ask them to send you some leaflets in the mail, or get their phone number so you can verify they are who they say they are, before donating any money.

Another scenario: Someone calls you “from a local bank”. All they want to do is verify your financial details. Again, I don’t care what they tell you, don’t do it. Ask them to leave their name and contact number so you can call them back. Next, get your local bank’s phone number from a phone book and give the bank a call (don’t use the number they gave you, as the thieves maybe just waiting on the other end). Ask people at the bank if someone was trying to contact you. You may find out they know nothing about it! The fact is, your bank already has all the details they need about you, in the vast majority of cases.

5. A fake “charity worker” knocking on your door? He or she may even have an authentic-looking id. What do you do? Well, if you give them some small change, then this is all you’ve lost. But if you donate the money using your credit card, you just became a victim of identity fraud.

Of course, many times a real charity worker will be knocking on your door. What do you do if you really want to help? Ask them to leave a leaflet with you, so you may read it when the time is a bit more convenient. Or ask them for a phone number and the charity name so you can call them. If it turns out to be genuine, you can always send them the money later.

6. Consider changing your phone number to a silent number. This will considerably minimise the number of calls you get from both tele marketers and identity thieves. There are other advantages to having a silent number as well. Generally a silent number tends to increase your privacy.

7. Never store you PIN numbers or passwords near you plastic cards or account details.

Yes, I know. You want to keep your PIN number close to your plastic card, just in case you forget it. You may even disguise it as another number. Guess what. If a thief gets hold of your wallet, they will try any numbers they can find in it, to steal the money from your plastic card account. It’s true, after a few unsuccessful attempts the account is usually locked. But even that would inconvenience you, to say the least. And why risk losing your hard-earned money?

8. Don’t use credit cards in restaurants or other places where your credit card can be taken away from your sight for even a minute. Before you know it, your card could be scanned and used by thieves to buy all sorts of goods, particularly via telephone shopping, mail order, and online shopping.

9. And finally, there is a huge and growing subject of Internet identity theft. You can read our article on Internet identity theft at

We obviously didn’t cover everything here. But hopefully this article opened your eyes to some easy, common-sense, ways to prevent someone from stealing your identity and/or your money.

Will it guarantee that you never fall a victim? No, but it will go a long way towards making a life of a thief very difficult. Usually, if you make life difficult for them they will move on to an easier target.

There is one more thing you should seriously consider. Checking your credit report regularly. It’s not uncommon for an identity thief to apply for a loan, or a credit card, under your name. Of course, they have no intention of ever paying it back. All other issues aside, this will affect your credit rating and borrowing capacity for years, unless you clean it up quickly.

There are inexpensive services available that will monitor your credit files all year round and notify you the minute anything in your credit file changes. Or you may prefer to check your credit report yourself every few months.

Oh, and those shocking statistics I mentioned earlier? According to recent studies, up to 7,000,000 people became a victim of identity theft in the past 12 months. That’s more than 19,000 people a day. Don’t become a statistic! Do something about it today.

Obtaining a Credit Card Processing Account – The Process

A merchant should be prepared to accept different types of payments for credit card processing. The method of obtaining a merchant account can be daunting and a bit confusing. In this article you will gain insight to this process so that you will have more of an understanding on how it all works from start to finish. Learning about this process will ensure a smooth and rapid experience with your approval and set-up as this can take days to several months. This usually depends on merchant response and diligence.

First research and make a final decision as to what merchant service company to work with as the business and the processor will work hand in hand during the application stages. Now, be sure to fill out the application in its entirety. It is important not to leave any blanks if it doesn’t apply just simply write in N/A for non-applicable. There may be an application fee or sometimes called a processing fee. This fee absorbs the cost to process an application for approval. It takes a lot of effort and time for reviews, follow up and several departments to come to an approval and in some cases time and time again. The merchant processor goes through several channels on the merchant’s behalf. By paying this fee initially gives the merchant a vested interest in the account process and a paid status confirms this to the processor and the bank to move forward.

The bank will require back up documentation that must be consistent with the merchant application. Some items that they review are bank statements, tax returns, financials, processing statements, a business plan and advertising materials. The documentation should be scanned in and emailed in effort to be sure that all credentials are received clear and concise. Faxing documents sometimes is acceptable, however most of the time it doesn’t come in clearly as needed to decipher for the banks. Do not cross out or send partial copies. The banks will reject such papers as incomplete.

With paperwork requests all is time-sensitive as documents may be determined irrelevant to the bank if they are not considered current. Current is usually within the very last three months. This is also with the application date can expire and they may ask for a new one if too much time has gone by without the proper paperwork needed to proceed and the cycle may need to be refreshed all over again. It is very important that the merchant understand this.

Another thing the banks look at is the foundation of the company. They review several things when determining that and may have several requests such as; adjusting terms and disclosures, customer service, memberships and revolving charges and altering the business website. This is all in effort to better your business so you will want to follow specific instruction and be steadfast about it as this may determine rates and approval or not.

Also, if a merchant application result comes back as a denial the merchant will be asked to resubmit as the processor will want to then attempt to route that merchant with another bank for another attempt at an approval and this can be a cycle until a final approval and agreement of the terms can be reached. If a business is a special circumstance (i.e. business has negative credit, new business without established history, considered a high risk company, etc.) then the merchant should expect to go through this approval series as is common practice.

If the merchant is working with an experienced agent and the   credit  card processing company has several  banking  relationships they should have a very high approval rating. In this case they are able to match your application to several banks that will ultimately result in an approval for the merchant account. This processor may even be set up internationally in helping them achieve approval to accept credit cards overseas. This can greatly amplify business profit.

In addition, it is important to factor in a merchant account package and how this can increase your revenues substantially. This means being able to accept credit and debit cards in any way imaginable. The merchant can accept transaction types via telephone, the internet, through a pin pad, virtual terminal and payment gateways as well as having a back up merchant account. All of these things are beneficial in reaching significant success in business.

Yes, there are several fees and charges involved in the luxury of being able to accept credit cards. Visa and MasterCard have built this into there programs so that they benefit greatly from the process. In essence, it allows for a purchase to transpire with an approval of the funds, then processing it into another’s account handling the credit and debit to each account by means of electronic transfer. Not to mention, the managing of returns, refunds and charge backs. This goes through many electronic transfers to clear thus there are fees the merchant is required to pay. These fees are usually a very low percentage compared to the profits the merchant earns by being able to process payments electronically.

To summarize; research, apply, pay processing fees, be thorough, be timely and efficient, confirm the receipt of documentation and that the merchant is meeting the banks criteria in all areas of their business. Always work closely with a merchant provider as they act somewhat as a merchant account financial planner. This person will be sure to get the very best rates, support the merchant and act as a liaison between the merchant and the  bank , setting a business up properly with a combination of merchant services for a specific business type and get the merchant up and running with  credit  card processing as quickly as the  bank  allows.

Using Prepaid Credit Cards Can Make Traveling Overseas More Comfortable

People going overseas on vacation break are more and more being advised to use a prepaid credit card for their vacation expenses. This is because by credit card abroad comes with added paybacks, counting extra safety, expediency and their number of uses in a crisis. On the other hand, some prepaid cards present you the chances to put up your credit score that has made them very fashionable.

Additionally, nowadays tourists are conscious that if they do take a prepaid credit card with them on their vacation break, they will be competent to make use of in most tourists’ places. Traveler’s cheques still remain demanding, though they do not move on the way to with some of the supplementary benefits seen with travel prepaid cards. Get big amounts of hard cash is noticeably even less advantageous because it is hard to prove how much you had and how much should it find stolen.

There are assortments of these prepaid cards that have been designed particularly for use overseas, and it is imperative that you regard as your entity requirements and conditions when you weigh against travel cards since some charge commission on purchases overseas. However, luckily, some don’t. Since traveling will take you to one or more destinations for a few days, you have to cautiously arrange the things that you will carry with you.

It is made-up to be a relaxing doings, whether you do it for commerce or vacation, and if your preparation does not turn up, or you fail to remember something, then it can be more traumatic than the work you have left at the back, or it can just be a catastrophe. The single thing you will have to regard as while roaming is your everyday expenditure. For certain, you should be on familiar terms with that this is not precisely the most excellent time in our cost-cutting measure. This, nevertheless, should not hamper you from enjoying the striking sites or taking on a venture.

Also, some prepaid credit cards for traveling will present zero percentage interest on shopping made overseas, if they are made inside a set amount of time from the time while account opening, and some card’s even presents tragedy protection should the most terrible come about when out of the country, which acts as a good match to your travel insurance. This can consist of services such as very quick card replacement and emergency hard cash advances.

How 13 Common Actions Can Affect Your Credit Score

We are all aware of how the credit crisis and recession has caused damage to some important nation economic indicators including home prices, stock market indexes and retail sales. They have also affected a lot of people’s credit score as well. This is due to layoffs, reduced credit lights and much tighter credit standards. All of this has caused consumers to take advantage of loan-modification programs and lenders to be more willing to negotiate problematic debt. In the mean time, FICO has also introduced a new scoring method which is known as FICO 08. This new scoring method can raise or lower your credit score by as much as 50 points.

Here is what you need to know about how today’s credit events can either help or harm your credit score. Some of these things may even surprise you, which is why it is important to know how to protect your credit rating in today’s economy.

Your Credit Limit Is Reduced By Your Card Issuer

This will not affect your credit as much as you might fear. In fact, studies have shown that there was little to no impact on credit scores for this. These same studies have actually shown that the median score for these people actually rose a few points. So, while you don’t have to worry about this too much, you will want to pay attention to it next time.

Rate Hikes Cause You to Close Your Credit Card

This can hurt you somewhat if you have a large credit line and a low balance because the scoring model no longer includes the vast, unused credit that you had from this account. However, if you still have a sizable balance on this account, the negative effect will be smaller. For this reason you should keep your account open and only use it sparingly, especially if this is your oldest account. The reason behind this is the fact that the scoring model only knows your earliest credit experience. So, since these closed accounts will eventually be dropped from your report, the length of your credit history isn’t going to be apparent and you could be hurt by this.

Paying Down or Paying Off Credit Balances

This is one of the most effective ways in which to improve your credit rating because it will help your score by reducing your total credit use. It is important to make sure that you don’t do away with all of your credit though because it is still important to show some activity. If you are trying to improve your credit score, then make sure to pay off your balance as soon as possible. You also need to remember that there can be a lag between the time when a lender cashes your check and when they report your payment to the credit bureau.

Getting a Mortgage Modification or Short-Selling Your Home

This will probably negatively affect your credit score but it depends upon how the lender reports the transaction. If you have a modified loan agreement, then your lender will agree to accept a lower amount of money than what you had originally agreed to repay. More than likely this will not damage your credit report if you already have other bad marks on your credit report. If this is your only issue and you get it marked as “paid as agreed,” then the scoring model will never even know about it. However, if a loan modification or short sale is reported as “partial payment,” “deferred payment” or “not paid as agreed,” then your credit score may suffer a lot of damage even if this is the only thing wrong. For this reason, you should always know for sure how this will be reported before entering into the special payment plan. Of course, if you really need the help, you should take the deal even if it will hurt your credit score because the impact this has will eventually fade.

Being Rejected For a Loan Several Times

This is only a small negative since the scoring model doesn’t know if you have been denied credit. All it will see is the prospective lender’s inquiries. However, if there are too many inquiries, this will be seen as risky credit-seeking behavior unless you are loan shopping and all inquiries are made within 14 to 30 days as these will be considered as just one inquiry. Nevertheless it is still a good idea to apply for credit so that you will know what the loan officer’s credit standards are as well as what your prospects for approval are. If it is questionable whether you will qualify, then you should find a more lenient lender to apply with instead.

Having a Sub Prime or Adjustable-Rate Mortgage on Your Credit Report

This won’t affect your score in any way because the underwriting terms of the loan, or anything that may expose you as a big risk, will not be given to the credit bureaus. They also won’t be figured into your FICO score. Nevertheless, you will want to continue making your mortgage payments. If at all possible, it would be a good idea to refinance to an adjustable rate mortgage and take advantage of the lower rates that are currently available on fixed loans.

Get Debt Relief from a Credit Counselor

Entering into a “partial payment agreement” with a debt relief firm will negatively affect your credit score since it will be reported to the credit bureaus. So, if you are struggling with your finances, try to get them back on track just as soon as possible. While your credit will take a hit at first here, it will gradually improve as you demonstrate that you are a responsible borrower. This is something that a credit counselor will be able to help you with. They can set up a five year repayment plan, with favorable terms, for you. Whenever you choose to go this route, make sure that you stick with a reputable, nonprofit agency that employs counselors who are both trained and certified. Make sure that the counselors are also members of either the Association of Independent Consumer Credit Counseling Agencies or the National Foundation for Credit Counseling. You will also want to check on the agency’s standing with the Better Business Bureau.

Get a “Goodwill Correction” From a Lender

This is a positive thing since FICO doesn’t track any changes on your credit file. Therefore, if a creditor removes a negative item today, the scoring model will never know that it ever existed. So, it will never hurt to ask a lender to remove something that is negative from your credit report. You should definitely try it if it is the only black mark on your otherwise great credit report and you have a longstanding relationship with that creditor. Studies actually show that 50% of those who ask for a goodwill correction will actually get it. Since this is something that you can do for yourself, it can be done for free.

Paying Your Loans While Falling Behind On Other Bills

This will hurt your credit score because the FICO model doesn’t weigh the different types of delinquency any differently from one another. Here it is important to understand that even those bills that aren’t generally reported to the credit bureau may eventually show up on your credit report if it is sent to a collection agency. For this reason, you should never blow off any creditors. Instead, once you find that you are unable to manage all of your bills, make sure that you call the creditor before you are late so that you can make payment arrangements with them.

Adding an Explanation to Your Credit Report as to Why You’ve Defaulted

This will not have any impact whatsoever on your credit score since lenders don’t even bother looking at the special comments field on a person’s credit report. Since this information can’t be coded, the FICO 08 won’t look at this either. Even if your file gets flagged, the FICO model won’t adjust your score. However, if you happen to become a victim of identity theft, make sure that you immediately place a security freeze on your credit report with all three credit bureaus. You will also need to file a police report and then begin the process of removing any fraudulent information from your credit report.

Becoming an “Authorized User” On another Person’s Credit Card

If this is a scam, then there is no benefit. However if you are legitimately authorized to use your spouse’s account, there is some benefit. This is important to understand because the old FICO scoring model couldn’t tell the difference here. Thus you would get points for a good credit history regardless as to whether or not it was actually a scam. FICO 08 can discern this though so you don’t want to misrepresent your credit profile.

Singing Up For A Loan That Will Make Your Payments While Unemployed

This isn’t negative. In fact, it may actually be positive because loans that are covered by credit insurance aren’t reported to the credit bureaus. For this reason, the FICO scoring model isn’t going to penalize you as long as the safeguard kicks in and your bill gets paid on time. It will actually only see “paid on time,” which is a plus. So, if credit insurance makes you feel better, go for it as long as you don’t have to pay any extra for it. Just make sure that you read the fine print in order to be sure that the loopholes won’t give you a false sense of security.

Not Returning a Public Library Book Several Years Ago

This isn’t an issue because FICO 08 doesn’t even look at any collection items that are under $100. It is also more forgiving of any isolated, minor delinquencies that you may have. Nevertheless, you should still do your best to always return your library books on time.