Credit Card Consolidation Program: What Is It?

In essence as the name suggests credit card consolidation is having all your credit cards with their balance rolled into one finance facility. In other words, you consolidate credit cards into one card or loan much like the debt consolidation plans we discussed previously. Consumers usually use credit card debt consolidation in order to either get a lower rate than the existing credit interest rate which they are paying on their credit cards or to fix in their existing credit card rate at a level at which they feel comfortable. In certain cases a credit card consolidation program can also be very useful if you are struggling to keep up with the minimum payments on various credit cards and would rather just make one larger repayment.

Credit Card Consolidation Help

There are a number of ways to consolidate credit cards. Some of the methods for credit card consolidation help are listed below:

• Principle Increase On Your Home Loan: In certain cases if you have unused or lazy equity in your owner occupied or investment property, you can get your mortgage provider or bank to do a principal increase for you. In this case they will revalue your property and will increase the mortgage loan amount based on the valuation. It is often best to extend the loan up to 80% of the property value in order to avoid any Loan Mortgage Insurance Implications (LMI). With the surplus drawn out funds, you can pay out your credit cards and successfully consolidate credit cards. In this credit card consolidation program, the new debt is just added to your existing home loan balance and your repayments increase slightly. This form of credit card debt consolidation is beneficial in the sense that it allows you to pay off your debt over the life of your loan and at a much lower interest rate.
• One Credit Card: If this is your chosen method of credit card debt consolidation, you must approach any one of your credit card companies and ask them to consolidate your other credit cards. Your existing credit card company, after assessing your application and if you are approved will increase your existing credit card limit. This will allow you to pay out all your other outstanding credit cards and thereby just have one credit card with a larger outstanding balance. However remember to understand the terms and conditions of the increase and also make sure that you are comfortable with the new rate of interest and the minimum payments of your credit card debt consolidation loan.
• Credit Card Consolidation Loan: Nowadays it has become very common for financial institutions to issue clients credit card consolidation loans. These loans are issued with the purpose of enabling consumers to pay off their credit card debts. These loans operate much the same as a personal loan. However consumer might want to note that the interest charged on these credit card consolidation loans is lower than that previously charged on your credit cards.
• Credit Card Consolidation Programs: In case you are unsure about what your course of action should be to consolidate credit cards, approach your bank or financial institution and talk to them about their credit card consolidation programs, if any. These credit card debt consolidation programs are designed to take into consideration your personal circumstances and create a credit card consolidation plan based on that. These programs help reduce your interest repayments and consequently pay off your credit cards.

As we have seen, credit card consolidation has its own advantages. However, prior to considering credit card consolidation it is advisable that clients seek financial advice and take into consideration their own circumstances.

References:

1. Knee Deep in Debt – Federal Trade Commission

Prepaid Virtual Credit Card: Definition

A prepaid virtual credit card, as the name suggests is virtual hence no real plastic card is issued. Most banks issue them. All you need to do is log on to your internet banking and apply for a virtual credit card and fill out the corresponding details. While applying select your limit based on the amount you are looking to shopping online. It is essential to remember that these internet credit cards usually expire within 24 hours and hence it is advisable to use them as soon as they are issued.

Once you have applied for the virtual prepaid card you will be issued with a 16 digit card number and a CVV2 number coupled with an expiry date. These cards are normally accepted at all online merchant stores who accept Visa or MasterCard.

Features of Virtual Bank Cards

Listed below are some of the features of virtual bank cards:

• Virtual credit cards usually have a fixed spending amount and this is directly proportional to the limit that you selected while applying for the same.
• An internet credit card usually has an expiration time of about 24 hours and they are usually issued with temporary PIN numbers.
• Consumers can use both debit and credit cards to create virtual prepaid cards from their bank accounts.
• If after usage, your virtual bank card has any balance left on it the amount is transferred back to your bank account.

Advantages Of Virtual Credit Card On Internet

• Protection Against Identity Theft: Virtual credit cards on internet are a great way to protect yourself against identity theft while purchasing goods online. Owing to the fact that these cards predetermined spending limits and set expiration dates it a safer way to purchase online and you can be rest assured that in the event of identity theft the amount lost will be refunded by your Credit Card Company or bank any way. This is usually listed in the terms and conditions of your contract.
• Immediate Availability: These virtual credit cards are almost immediately available for use. There is very little or no wait time between applying for the cards and being able to use it.
• No Impact On Your Credit Report: Virtual prepaid cards have absolutely no impact on your credit report unlike a real credit card and does not create massive credit card debt. These are also a good way to keep a check on your spending as they can be used over and can be refilled. Prepaid virtual credit cards offer the freedom of a credit card without the impact of a real credit card balance on your credit report.

Disadvantages Of Prepaid Virtual Credit Cards

• 24 Hour Expiry: The first distinct disadvantage of a virtual credit card is that they usually expire within 24 hours and hence it is advisable to use them as soon as they are issued.
• Spending Limit: Most banks while issuing prepaid virtual credit cards place spending limits on them. This is done to not only protect the consumer in case of fraud but to also protect the bank as in the event of fraud or identity theft the banks are liable to refund the customer.
• Delay In Dispatch Of Goods: Another drawback of virtual prepaid cards is that until the payment made by a virtual card does not clear or hit the merchant’s account he does not dispatch the goods. This could result in a delay in consumers getting their goods.

Virtual credit cards are beneficial for consumers afraid of identity theft or for sending online. Prepaid virtual credit cards are safer, easier and is hassle free with the added protection of indemnity in the event of fraud or identity theft, not to mention the advantage of not having any impact on your credit report.

Pay Off Credit Card Debts – Advantages

Paying off credit card debts definitely has its advantages, all of which together can contribute greatly towards improving your credit report

• Decreased Credit Card Debt:The biggest and most obvious advantage of paying off credit card debts is of course that it reduces your credit card debt  and reduced debt is a financial situation everyone wants to be in.
• Increase Your Spending Money: Making more credit card repayments, means only one thing, you have lesser money in your hand to spend. Paying off your credit card debt will ensure that your spending money in hand increases.
• Impetus To Your Credit Score: The lesser the debt you have the better the chances of improving your credit report. As you are aware, paying off your credit card debt proves that you have good payment history and also reduces your overall debt. This can greatly help boost your credit score.
• Better Serviceability For Future Loans: Paying off your credit card debt, will ensure that your serviceability (the ability to obtain credit) on future credit contracts improves. Lenders look at applicants with minimal debt favourably and hold clients with prompt and good repayment history in high regard.
• No More Interest Payments: When you buy something on your credit card, you are liable for an interest payment on the value of the item purchase. Regular credit card repayments is a good credit card debt solution and this will mean that you will now be able to purchase goods without having to pay extra in the form of interest.
• Surplus Funds For Investments: While a credit card account can be helpful to build good credit, by paying off credit card debts, you are not only increasing your spending money but will also have surplus funds to contribute towards investment accounts or retirement savings accounts.

Credit Card Debt Solution How Tos
Paying off credit card debts is a great solution and some of these credit card debt tips might help to get you started on your mission to pay off credit card debts.

1. Monitor your spending habits and ensure that you are only spending on what you need.
2. Switch to using more cash. Most consumers find it rather difficult to carry cash around, but when you are trying to pay off your credit card debt this can really help.
3. Calculate your payments and always ensure that you have sufficient monies in your account to cover the payment.
4. Create a budget for yourself and use any surplus funds that you might have towards paying off your credit card.
5. Freeze your credit cards. This means literally freeze them. Do not use your cards if you are trying to pay them off. You might even want to cut up your credit cards to ensure that you do not use them.
6. Try and consolidate your credit cards. Instead of having numerous credit cards with small balances, it might be better to just have one credit card with a larger balance. This will help you keep track of your payments and in turn you will be making one payment instead of many. This will also be particularly helpful when you are making increased contributions.

Based on the above facts consumers can conclude that paying off your credit card debt not only has a positive impact on your credit score but also means that you can use those surplus funds towards obtaining more desirable credit e.g. a mortgage. Consumers can also use these surplus funds towards retirement contributions or even towards starting a savings pattern or reducing other debt you might have.

Reference:

1. Tips for Paying Off Credit Card Debt – Credit.com

Pre Paid Credit Card – How Does It Work

A pre paid credit card is much like opening up a savings account and linking a debit card to it. In order to activate your prepaid credit card you will need to open up an account and deposit funds into it. Your prepaid credit card is linked to this account and you can use it just like any other normal credit card. Once you have exhausted the funds in the account, you will no longer be able to make transactions on your prepaid credit card until you deposit funds in the account again. This is ideal for individuals with poor credit histories owing to the fact that prepaid credit cards for bad credit consumers give you the freedom of a credit card without the attached liability. Consumers must remember that when they initially deposit money into their prepaid credit card accounts they are charged a deposit fee of around $5-$10. This is a recurring fee and is charged every time consumers deposit money into the account.

Difference Between Pre paid Credit Cards And Debit Cards

In essence there is no real difference between prepaid credit cards for bad credit consumers and debit cards so to speak. Neither of these cards affect your FICO score as they are directly linked to accounts which have funds in them. Pre paid credit cards just as debit can be used almost anywhere, except car rentals, where debit cards cannot be used. Another difference between the two cards is that prepaid credit cards charge you a deposit fee every time a deposit is made into the account, whereas debit cards do not.  Prepaid credit cards are for individuals with either a poor credit history or for those who do not wish to have a liability of a credit card but want all its features. Debit cards are more popular among teenagers and students, owing to its no liability factor and you only spend what you have.

Prepaid Credit Card For Consumers With Very Poor Credit – Advantages

Prepaid credit cards for consumers with very poor credit has its advantages.
•    Consumers can only spend what they have in their prepaid credit card account and once they have exhausted the funds, the prepaid credit card cannot be overdrawn.
•    Pre paid credit cards do not affect your FICO score in any way therefore avoiding the worry of a credit card balance affecting credit reports.
•    Prepaid cards are beneficial for customers who want to curtail their spending habits yet would like the features and freedom of having a credit card.

Pre Paid Credit Cards For Bad Credit Consumers – Disadvantages

While pre paid credit cards for bad credit consumers have their advantages, these prepaid cards have their drawbacks too.
•    Consumers are charged a deposit fee every time they deposit funds into the prepaid credit card account.
•    Certain online merchants do not accept prepaid credit cards as payment. This stems from the fact that they are unsure that the prepaid credit card will be able to cover the transaction.
•    Obtaining goods on prepaid credit cards via finance can be very difficult as instalments are deducted from credit cards at fixed intervals of time and retailers or merchants may not accept prepaid credit cards as a repayment options.
For bad credit and poor credit consumers looking for the freedom of a credit card but attempting to avoid the credit card debt, a prepaid credit card is a good option to use until you get your credit report back on track.

Reference:

1. What Are Prepaid Credit Cards – WiseGEEK

Credit Card Accounts To Build Good Credit

Having credit card accounts is not necessarily a bad idea if you use them wisely. To build good credit, you must have a credit history and often applicants with no history on their credit scoring report find it hard to get new credit or loans. For this reason, credit card balance can be useful and help to build good credit. Even if you are in the low income bracket, you might be able to get a low credit limit credit card. However, only apply for a new credit card account if you can afford the repayments or it will just end up damaging your credit scoring report.

Close Credit Card Accounts For Credit Card Balance Transfer?

If you have a credit card balance with Bank A and Bank B comes along and offers you better interest rates, it seems the only logical thing to do would be to close your credit card account with Bank A and transfer your credit card balance to Bank B’s credit card immediately. But before you do that, consider what that means for your credit scoring report.

When moving from one credit card account to another, if the credit line on both accounts is the same, your “debt percentage” stays the same. Your debt percentage is the amount of money you owe in proportion with your credit line. So if you have a $5000 credit line on your credit card account and have used $2500 of it, your debt percentage is 50%. Credit card balance transfer from one account to another with the same credit line does not decrease your debt percentage at all. If your new account has a lower credit line, this increases your debt percentage.

Leave Credit Card Accounts Open For High Credit Score

Transferring your credit card balance to a new account makes sense when you can save money on interest but do it the smart way. If your credit card account with Bank A has been open for 5 years and you have only just opened a new credit card account with Bank B; Bank A is a valuable asset on your credit scoring report. Even if you do not use the account, leave it open. This gives you a larger credit line (Bank A + Bank B) but since the amount of money you owe remains the same, your debt percentage decreases and this is a good way of maintaining a high credit score. If you close your account with Bank A, your well-established credit scoring report history is deleted and you start afresh and this will affect your high credit score.

Build Your Credit With New Credit Card Accounts

Each time you apply for new credit, your credit scoring report rating falls slightly however if used wisely, new credit card accounts can help to build your credit. Here are some tips:

• To build your credit score, your new credit card balance should decrease your debt percentage so think hard before applying.
• Only apply for credit card accounts that you can afford to repay and really need.
• Applying for  too much new credit and too often will negatively impact your credit scoring report and you definitely do not want that.
• Credit card balance transfers to new credit card accounts with lower interest rates will save you money but consider the implications on your credit scoring report and act accordingly.
• If you transfer your credit card balance to a new account, leave the unused old account open for a few years to maintain a high credit score on your credit scoring report. This will help build your credit rating until you have established a repayment history on your new account.

Internet is replete with information about rebuilding credit report and credit score, but the pity is that most of them are almost the same in a different way, and only few have something for you that can be really helpful to rebuild your credit report. If you are also looking for rebuilding your credit report, you must keep this fact in mind that establishing good credit record is easier than rebuilding it. But it is possible and you can achieve the desired results with better planning and thorough follow up.

Where to begin?

Your first step should be to know what your credit report really has right now and how can you get full awareness of its each and every aspect. So, you must request for a copy of your credit report and know about the factors that can be decisive for your financial life. It’s a well-known fact that some serious errors can exist in your credit report that can harm your credit score quite badly.

Credit report rebuilding and wrong information

If you find some error or wrong information in your credit report, your next step must be to dispute these errors with the credit bureaus. It can definitely lift your credit score if you succeed to remove these errors from your credit report.

Aside from knowing about the existing errors and wrong information, your credit report gives you an opportunity to have a close looks on its bad marks and know about your current credit scores. Thus, you can outline a strategy to build your credit report and get better credit score.

The biggest hurdle of the way

Bad credit serves as the greatest hurdle in your financial well-being and that’s why it is quite important to give a good amount of consideration to repair your credit. There are many credit repair programs available these days that claim to offer you best results within a month, but the ways they use to repair your credit, you can also use these by yourself and get some better results regarding building your credit with ease. So, you must consider before paying someone for the things that you can do yourself.

Few steps that you must consider

It is better if you do not submit any new application to any new credit card firm, as these sort of new applications often become the cause of needless inquires of your accounts and it can be quite damaging for your credit report.

It can be a better approach if you unlike many other do not tend to discard unused account and try to retain them instead. It can be a very effective step to build a reasonable credit and increase your credit score.

If you pay debt at time, have a good check on your spending and do not apply for more and more credit, these steps can be very helpful to rebuild your credit. You must also keep this fact in mind that rebuilding credit is a lot more difficult than establishing a good credit record.  So, you must try to establish a good credit record instead of looking for ways to rebuild or repair it.

Credit reports are sensitive financial matters withholding crucial personal informations required for specific goals achievement. With a good credit report that is high in FICO scores, a person can attain loan with minimum trouble, minimum time and minimum interest rates. He can also take home on rent on priority basis, purchase vehicles and property on installments, purchase insurance policies and get a job.

Getting so many benefits is possible through a good credit report, but if the credit report is bad with gray and red areas, then there are certain limitations in getting benefits. Once a person starts missing payments and become habitual of delaying them, ignoring notices from lenders and creditors, he puts himself in trouble. A more critical situation arrives when a creditor files a case against a debtor after several payment reminders and notices.

Judgement- A Verdict Against Debtor

Whilst seeking the case, when the verdict is given in favor of the creditor resulting in its appearance on a debtor’s credit report is known as a judgement. A judgement is sought by the creditors because it is an enforced way of demanding due payments. It can be recorded and put into action, recording it makes it a public record.

The next step from the creditor can be the demand of recovery of unpaid over dues. It will be the court’s next step to evaluate assets namely Discovery of assets. This is a highly disgracing situation when a debtor’s assets are put for Discovery, as the court can announce a sale of the debtor’s assets to recover the pending dues.

It is however a risky deal as the house ordered for liquidation may not earn as much as required to pay off the credits. Also the lender might not be in the position to realize full payment. This situation is not favorable at all, so it must be an utmost effort to avoid such a situation. After the passing of a judgement, it is then an obligation of the mortgage underwriter to review the whole situation to assess whether the situation has been a real one or a momentary slump that caused a crash to the debtor.

Leverage after Judgement

Apart from its crucial effects, there is leverage at this point too. If the creditor, after having the judgment in his favor, is satisfied by the payment schedule of the debtor, the debtor can earn a first position title amongst the buyers. Also, if the house is of much value, then the payment scheduled should be followed instead of letting it go.

Judgement and FICO Scores

The appearance of a judgement onto a credit report is devastating as it damages FICO scores to a great extent. Judgments can be of other kinds too other than mortgage matters, such as child support, credit card default, car repossession, and civil and small claims. They can stay onto a credit report for 7 years from the date the judgement is filed. The underwriter must see the case file with care and must consider all possibilities to settle down the matters.

You home owner will have to report the credit agencies directly, but some fees they may have to pay to participate in information submission to the credit agencies. That’s the biggest reason when people check their credit report, they find some information there but many are not included in your credit report.

There are many private landlords and small businesses that usually do not participate in this credit reporting mainly due to fees as well as the administration. At such times, you don’t have a lot of options. If you pay through your credit card, it doesn’t help building your rental payment credit. Similarly, when you pay using your credit card, it can send up your debt on loan ratio that can lower your credit score.

It is quite easier for your home owner to accept these rent payments through credit card just signing up a free paypal account, but it will not prove helpful to increase your credit score. Though it’s easy for you, it may cause some further issues to your home owner, as the cash you pay to your home owner often not reported as income in different taxes. If you pay your land owner through credit card, it means it will be reported as income on their taxes. You must talk your home owner and settle such an agreement as acceptable both of you and easily provide you an opportunity to report your rent payments to different credit agencies.

Though it’s not surprising at all if some errors are found in your credit report, you must keep one thing in mind that these errors usually affect your credit negatively and sometimes you need to be pro-active in order to keep a positive credit score. If you find some false information and want them to change on your credit report, you can draw up letters to delete information from your credit report. Usually you need to send out three letters to the three major credit agencies. A large number of people make the mistake and try to call these agencies, but most of the time it doesn’t prove effective.

Before writing up your letter, you need to determine what sort of mistakes are there on your credit report, highlight these mistakes and write up about these specific issues.

Current and previous address, date of birth, place of employment and social security number, list of your charge accounts, monthly payment schedule, payment history, credit accounts and public record items details are some information that included in your credit report. Inquiries are also included in your credit report.

If you have received a copy of your credit report, now it’s time to review it thoroughly and highlight if you find false or incorrect information in it. If you have found something incorrect or false in your report, you can contact the credit agencies and let them know about it. But as I have mentioned earlier that it’s better to write a letter to them and ask for correction in you credit report. These agencies investigate the issue and provide you with written results of the investigation aside from a free updated copy of your credit report.

You must also include supporting documents with your letter and never forget to keep copies of all submitted documents. It may prove quite helpful if you keep all the records of interaction between you and the credit agencies.

If there is some error in your credit report, the credit bureau would correct it, but it decides after completing investigation that the negative notation would remain in your report, you can file explanation to refute the claim.

If you have succeeded to clean up your report with this false information, now you need to start adding positive credit information. A secured credit card can be used to rebuild your credit. You need to deposit money into a savings account to serve as collateral to obtain a secured credit card. Similarly, you need to make your payments on time.

You can also take a small secured loan and pay it back on time and it will also prove very helpful to rebuild credit. Usually prompt payments on loans help to build a strong credit record.

Tip number one is to take your credit cards and hide them or better yet take a big pair of scissors and cut them up to avoid being tempted. One of the very worst things that you can possibly do if you have a low credit score is to keep adding to the debt that you have already accumulated, if you have very little self-control then don’t keep temptation around you destroy them or hide them.

Tips two is to make yourself aware of your own credit report, if you have a bad credit rating then it could be through no fault of your own but rather an error in the system. If this is the case then it can be rectified providing of course that you know about it, you can apply for a copy of your credit report from any of the three main credit bureaus.

Tip three is to take the bull by the horns and do everything in your power to clean up your credit report. Follow step three and obtain a copy of your report and check this for errors. If there are errors then these should be rectified immediately and will help to get you back in good favor.

Tip number four is to ensure that you bring your payment history up to date, your payment history accounts for around 35% of your total credit rating, so it is essential that you bring any outstanding or missed payments up to date.

Tip number five is to never make any more credit applications then you really need too, when repairing your credit rating this is essential. The chances are that if you apply for more credit whilst having a bad credit rating you will turned down anyway.

Tip six is to think twice before you close down accounts that don’t have an outstanding balance, always check before you do close them to ensure that this won’t have an adverse effect on your credit rating.

Tips seven is to talk with those that you owe money too, if you are seen to be making an effort after having got into difficulty, then this will go in your favor.

Tip eight is to make sure that you pay off all your debts that you currently owe, this can improve your credit rating drastically.

Tip nine is to make sure that you realize there is professional help available for those who are in serious debt and to make sure that you get the help if it is needed. Again if you are seen to be doing everything you can to make matters better then this will be in your favor.

Tip ten is to have patience when it comes to repairing your credit score and rating, it is easier to get a bad rating than it is to repair your rating but with patience and perseverance it can be done.