Learn how to have call control when debt collectors call you

A call from a debt collector especially when you are already undergoing financial stress can leave you depressed. Executives hired by a debt collector are trained to use whatever tactics they can to get the money back. They will call you and ask sharp questions to lead you into a feeling of embarrassment and misery. If you manage to persist and ask questions back to the executive, he will give a brief answer and maintain the call control. Debt collectors focus on various aspects such as developing anxiety by threatening about litigation and financial washout, providing various offers of assistance; humiliating by reviewing financial accounts, etc. to get their money back. They do this by asking a number of different questions in different ways.

Well, the first reaction to such a call is immediate shift to arrogance and abuse, but you must control these reactions. Instead, be confident and professional. Asking questions is the key that a debt collector’s executive uses to gain call control and you can do the same. Here’s the process: the debt collector’s executive will start by giving his introduction and company name, and follow up with a question. You have to pause here and ask for the executive’s name again. Tell the executive to spell that out for you. After you have the information, ask for the company name and tell the executive to spell that out as well. By this time, an inexperienced executive is most likely to become anxious. Now, focus on ending the call as early as possible. Ask them about the outstanding debts, the original creditor and contact information. When the executive discloses this information, say that you will verify the facts and get back to the company as soon as possible and hang up. The debt collector’s executive will note down your information and move to the next person. This way you will stick to the norms, refrain from abuse and handle the call professionally.

If you have any further questions, please post them in the comments section below.

Money Matters

Improving credit history before applying for a mortgage loan

Mortgage providers always check your payment history through credit bureaus before passing the loan. Therefore, I always advise my clients to clean up the account from not one but all three bureaus to make the loan approval easier and quicker.

The first step in improving your credit records is to get a copy of credit reports from all credit bureaus. You are entitled for one free annual report from all three credit bureaus. Some mortgage providers do give out loans by checking credit score from a single credit bureau, but those are adjustable mortgages.

Once you have the credit report with you, it becomes easy to spot and eliminate the negative items from the report. You can adopt two ways to remove negative items:

Through phone call:
You can call up your credit bureaus and ask them to remove the negative item from your credit report. Of course, be prepared to hear No as a first answer. Stay calm and do not get agitated when the customer care representative keeps giving a negative answer. Emphasize consistently on having the items removed from your credit report and ask for the supervisor if necessary. Most importantly, note down the details of the conversation such as the date, time, person you spoke to and the conversation you had.

You must ask the credit bureau to send a letter, which states that the bureau is correcting the negative information from the credit report. The letter is your evidence in case there is a delay or the company forgets to remove the negative item. With the letter in your hand, you can confront the credit bureaus and they will remove the negative item from your credit. Additionally, the letter will help mortgage provider confirm that proposed changes are in pipeline and your credit report will improve soon.

Through a letter:
If the phone call doesn’t work, you may want to dispute your case by sending a letter directly to the credit bureaus. The letter should include name, phone numbers, signature, social security number, address, disputed items, and account numbers. Inform your credit bureau that you are disputing the item. Ensure that you have a receipt back from the credit card issuer stating that they have received your letter.

Source: http://www.free-credit-report-360.com

Plastic card swipe could cost you additional fees in future

Do you know who really pays for processing every time you swipe that plastic card? Well, it is the merchant and the processing costs are paid as interchange fee to the merchant’s own bank, the customer’s bank, and computer network that processes the transaction. Banks earned over USD 48 billion in interchange fees in 2008, which is more than the total revenues from fees on checking or saving accounts.

Merchants and credit card issuers have tie regarding interchange fees. Merchants find it unfair to give away a part of revenues to the credit card issuer and desire a change in the system. They find themselves in tight situation because if they do not provide the facility of using a Visa or Mastercard, they are most likely to make their customers unhappy. On the hand, credit card companies argue that the interchange fees simply cannot be waived off; somebody will have to pay for it. According to a recent report by the Government Accountability Office (GAO), the payment could ultimately land in the lap of consumers in the form of increased fees in other areas.

The government is evaluating various options to regulate interchange fees and draw a fair line between credit card issuers and merchants. Considering 2008 figures, if the government intervenes and reduces the interchange fees from 2.1% to 0.60%, it could save $34.3 billion annually for consumers as well as merchants. However, with the Credit CARD Act to be fully effective soon, the reduction seems less likely to occur. The credit card issuers are already finding their business in jeopardy and reducing the interchange fees could hit their revenues.

Government officials have said that retailers are pushing the agencies that regulate financial services to find a legislative solution. The GAO report suggests increase in transparency for consumers OR granting the ability to merchants to negotiate on rates directly with the credit card issuers could resolve the issue. But, even if the interchange fees are lowered it may eventually pass on to consumers.

http://www.free-credit-report-360.com

How should consumers prepare for the CARD ACT

I’ve been noticing for quite some time that the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD) Act is making a significant difference in the way credit card issuers carry out their businesses. The Act is likely to come into play from February 2010 unless the government decides an earlier effective date. Credit card issuers, unhappy with the limitations imposed by the government, are making changes such as increasing rates, adding annual fees, decreasing rewards, slashing credit limits and imposing a tight guideline which makes it difficult for customers to access credit. But, how should you adapt to changing conditions? I have suggested simple ways which can help you align yourself with the pace of the credit card issuers.

Rising interest rates
Credit card issuers have progressively raised interest rates in the last few months due to the forthcoming regulations. However, rising interest rates won’t be as easy for them since February 2010. According to the new legislation to be effective from Feb 2010, credit card issuers will not be able to increase interest rates for customers with interest rates on existing balances (except for increases associated with index movement), in hardships, whose promotional period is yet to expire, or late payment. They must provide customers with 45-day prior notice if at all they plan to increase the interest rate.

How should you deal with the challenge: Carefully read the fine print sent by your credit card issuer. Always remember that you can move out of the deal if you do not wish accept the terms set by the issuer. All you have to do is pay off the debt with the old interest rate and cancel the card.

Decreasing credit limits
Many customers have experienced a decrease in the credit limit despite having a good credit history in the last six months. Credit card companies’ reason lost business due to the high unemployment rates for slashing the credit limits.

How should you deal with the challenge: Again, read the monthly statement sent by your credit card issuer carefully. If you notice your credit limit axed and you have balance in other accounts, see that the ratio of available credit is not greater than 25 percent. If it is, you might want to pay off some of the balances as keeping them may lead to drop in the credit scores.

Increasing Fees
Credit card customers are seeing various types of fees added to the accounts in response to tightening regulations. Annual fees, which were unheard of since the last few years has made its way back again to the customer’s accounts. Customers who are not using their credit cards according to the credit card issuer’s expectations are facing the pinch of annual fees or inactivity fees. The only obligation that a credit card issuer has in regards to this law is that it has to give a 45-day prior notice to the customers before imposing any fees.

How should you deal with the challenge: Restating the rule again, check the fine print sent by your credit card issuers so that you don’t miss out any of the fee increases. If at all there any cards that you are not using and if you have a good credit history, cancel them. It is better to decrease your score by few points than to pay annual fees for the cards you don’t use.

Changing reward programs
Reward programs are taking a hard hit because of the losses faced by the credit card issuers in the past couple of years. The 5 percent cashback reward announcement offered by many issuers has dropped to 3 percent. And, the companies that are offering the 5 percent reward programs have strings attached.

How should you deal with the challenge: This is more of a choice than a challenge. If you wish to accept a reward program for a fee, ensure that the fee balances with the reward. If not, the offer is bin worthy.

In conclusion, read carefully whatever the credit card sends you to have a better control over your credit situation. If you would like to share additional ways that consumers can protect themselves from changes imposed by companies, please feel free to drop a line.

http://www.free-credit-report-360.com

Documentation and recordkeeping crucial for the credit repair process

Yesterday wasn’t a very great for me as I had a tough time returning the damaged t-shirt to a local cloth store. The vendor wouldn’t take the thing back without a receipt no matter how much I tried. Finally, I got through when the manager came in and told the cashier that he knew me. A small thing as a receipt can cause such a lot of chaos. The first positive thing that came to my mind after the incident was “Thank goodness, it wasn’t a car.” Trust me, credit cards can land you in a worse situation and there won’t be a manager to bail you out.

Receipts and bills may seem cumbersome to carry and keep a track of but they can play a crucial role when you are fighting your case in the court. To make your case strong during the credit repair process you can use these documentation tips:

• Avoid filling up their online form on the credit card issuer’s website. Instead, send a physical mail to make sure that the records are well kept.

• Remember that your credit card issuer has only 30 days to remove the negative item from your credit report. After 30 days if you file a case in the court, you will lose unless you have proper evidence that you have submitted the request for your negative item. If that happens, the negative item will not go away from your credit report.

• Many times credit card holders have to be prepared to send dispute letters number of times to make sure that the negative item is removed from their account. But, to re-dispute the case, a different reason is essential. Noting down the details including dates, documents and reasons is important to put your case forward in future.

• Documentation plays an essential role when your credit card issuer violates the Fair Credit Reporting Act or Fair Debt Collection Practices Act and you have to report the case.

• If you are writing to the collection agency to stop making phone calls, send a written letter and collect a signed receipt so that later on the company cannot dispute.

• If you have come on agreement terms with the collection agency, have the records in a written format along with a copy.

Lastly, keeping the documented records is fine but you must organize it carefully. You can use different envelopes or have the material sorted alphabet wise in the folder. If you have any suggestions on document keeping, please post them via comment.

http://www.free-credit-report-360.com

Credit card issuers to feel the pinch

Wait and Watch’ will be the new mantra for credit card issuers as Fitch forecasts a gloomy future. Fitch, a ratings agency, confirmed that the near future of the credit card issuers will remain challenged because of high unemployment rates, bankruptcies and other losses. The ratings agency predicts that credit card issuers such as American Express (AXP), Capital One (COF) and Discover (DFS), which are not diversified into other areas will take a harder knock.

According to Fitch, top six credit card issuers posted relatively flat revenues in the third quarter but yearly revenues fell by 13.5%. The loss rates decreased as the pace of delinquencies lowered but the rating agency says the losses have greater chances of trickling into the next year. Credit card performance will be hampered primarily because of the high employment rates, which hovered at 10% last month.

The ratings agency stated that the Credit CARD Act could have a long-term impact on the profitability of the credit card issuers. The legislation, designed to protect the rights of consumers, is likely to pressurize credit card issuers to hike interest rates. Furthermore, credit card availability will experience a decline as credit card issuers stiffen the underwriting standards and decrease the credit lines, Fitch stated.

The profitability outlook of the credit card issuers will be decided by the legislation and the credit card issuer’s response to the regulation. Thus, consumers as well as credit card issuers alike will have tov follow the ‘wait and watch’ mantra to know the outcome.

http://www.free-credit-report-360.com

How do you know that you are sinking into credit card debt?

To explain the matter more precisely, I’ll give you a real life example. One of my clients Mr. Miller from Boston, Massachusetts sent me a mail showing how his credit card issuers screwed him. He had 13 credit cards – 3 Visa, 3 Mastercard, 2 American Express, 2 gas cards and 3 store cards. Out of all 13 cards, at least 7 of them had balance. He used up maximum credit from two of the cards. He used to pay minimum monthly payment for each card and let the debt pile up thinking that the cycle would never stop. He ended up in a situation wherein he would have to pay minimum monthly payments for the next 25 years to pay of all his debt. And, that too without incurring a dime of additional debt.

What got him into this? Well, let’s go further. His first alarming incident was when he went to purchase a high-end plasma TV with a surround system for $8000. He gave his American Express card to the vendor and it was rejected. He immediately called up his credit card company to know the reason for refusal. Imagine what he must have felt when he realized that his interest rate was hiked to 28.2% from 11% and credit limit slashed to $2000 from $12000! Actually, when the company checked Mr. Miller’s credit, they found that his debt to income ratio had declined significantly. He realized that he was in deep trouble and had to act fast.

I suggested him to pay off the debt by giving higher monthly payments and requesting the credit card issuer to lower the interest rate. It took him about five years to pay off all the debt and now he just owns one credit card and makes all his monthly payments in full.

You can check out whether you are headed for trouble with these 7
danger signs:

Danger sign 1
You are paying only minimum monthly payment on the balance

Danger sign 2
You are making late payments

Danger sign 3
Two or more of your credit cards have been maxed out

Danger sign 4
You pay for smaller items with credit card instead of cash

Danger sign 5
Over 15% of your income goes in managing credit card debts

Danger sign 6
Credit card companies calling you repeatedly for payments

Danger 7
You skip payments to have cash in the wallet

If you can identify yourself with two or more of this danger signs, time is ripe that you become aware of your credit situation and act wisely.

http://www.free-credit-report-360.com

What to look for when signing up for a new credit card

So, finally decided to get a new credit card ha? Well, it is quite normal to catch the worried look when going through piles of credit card offers. Some credit cards offer deals that are too good to be true while some of them may barely meet your expectations. The devil is in the details. Compare the credit card offers on various parameters to choose the one that works best for you. Here’s a list of criteria that you must consider before selecting a credit card:

Interest Rates
Credit card offers boast of lucrative introductory terms such as 0% interest rates for the first six months but you need to check carefully. The 0% may turn into something huge, which could drag you into deeper debt. You must select the credit card that has the lowest interest rate and minimum strings attached. Also, if the interest rate is low, check whether the rate is fixed or variable. Prefer a fixed rate to a variable one as the variable rate may change without any prior notification.

Fees
Credit card issuers have borne stupendous losses in the past year, which they are adamant to recover. So, when you choose your credit card, find out the annual fees, late payment fees, and over limit fees. Other fees such balance transfer fees or account closure fees can dent your finances when you plan to get another card. Therefore, you must carefully consider such type of fees.

Credit limit
Credit limit is the third most important thing that you need to look at when evaluating a credit card offer. The card with a higher credit limit can help you increase your credit score but you must watch out in case you have the temptation of overspending. Take the credit card that offers you with a credit limit that you require.

Interest free provision details
Credit card companies may shower you with interest free grace periods and late payments but examine the fine print. If you are not sure about any policy related to the offer, call up the customer care department and ask for the details.

Thus, always be cautious and carefully look at the details when selecting your credit card. They can work as a tool to raise your credit and act as a great utility if you use them wisely.

http://www.free-credit-report-360.com

Credit Union Card or Bank Credit Card – which one is a better choice?

One of our subscribers posted this query on our website recently. Personally, I own four credit cards out of which one belongs to a credit union. From the experience that I’ve had so far, I can guarantee that the credit union card is much better than all the bank credit cards (planning to chuck them out soon). Well, it’s not only me who is saying this but there are reports that have frozen this fact.

According to a report published by Pew Charitable Trusts, median advertised interest rates of credit unions were significantly lower than bank rates. Interest rates of 12 major credit unions in July 2009 were in the range of approximately 9-13 %, about 20% lower than the bank rates. In addition, the penalties imposed by credit unions were more lenient compared to banks. The late fees and over limit fees averaged at about $20 for credit unions while for banks it was much higher.
The only occasion where both had similar features was in terms of flexibility given to the consumers. Both credit unions and banks have added terms and conditions which allow them to increase the rates or impose fees at anytime, of course, with a prior notice. The credit unions were swifter in making the ‘change’ suggested by Federal authority and gave up the ‘unfair practices’ faster than banks. About 50 % of the credit unions did not include any penalty rates while the majority of credit unions that did, complied with the standards set by the Federal authority.

Not only this, credit union cards offer more liquidity than the bank credit cards. Credit unions have issued credit card to consumers having low credit scores, which the banks refused. Furthermore, their default policies are much better and they are willing to work with customers unlike banks.

Therefore, I would definitely recommend a credit union card compared to a bank credit card. Why should you be slapped with 29% interest rate when you can have the same for less. If the banks consider you less important, you are left with no choice but to switch over.

http://www.free-credit-report-360.com

Credit cards you should stay away from

While credit cards can be a great utility, overusing them can cause more damage than benefit. From the bunch of years I’ve spent monitoring the credit card industry, I can give you a thumb rule. Never take a credit card unless you are SURE of what it offers. You must be aware of introductory rates, annual fees, interest rate, late payment charges, and related expenses before signing up for a credit card. Apart from the conditions, here’s a list of few cards that you must avoid:

Prepaid Cards
People that have a poor credit score can get such type of a credit card when they give cash deposit as collateral. Because of accepting cash deposit as a lending condition, credit card issuers that offer prepaid or secured credit cards charge consumers with high fees. You may realize after buying a prepaid card that a higher proportion of the monthly payment is going in fees or towards the interest and not lowering your principal balance. Therefore, it is good to stay away from prepaid cards.

Store credit cards
Whenever you go to store, the person at the counter tries to sell you a store card that suggests ‘heavy’ discount on the next purchase. While the offer may be tempting, it is good to know the interest rates in advance. Generally, store credit cards have high interest rates, which may drag you into higher costs than originally promised savings. Select store credit cards only when
- You have read the terms and conditions
- You are fine with the high interest rates
- You are confident that you will be able make monthly payments on time
- You know the late payment structure, etc.

Credit cards that do not share records with credit rating agencies
The importance of reporting your credit card activity to the credit bureaus cannot be overstated. If the credit card issuer does not send your information to the credit bureaus, your credit score is unlikely to improve despite paying regular payments. And, if your credit score does not improve, there are remote chances that your credit worthiness will meliorate. So, in order to drive lender’s attention to your rising credit score, you must select only those credit cards that share your records with credit bureaus.

In conclusion, as a consumer you must carefully select your credit card to avoid bad experience in future. Careful selection will also keep you up with the changing financial scenario as well as maximize your rewards.

http://www.free-credit-report-360.com