In these perilous financial times, more and more people around the world are living a life sustained almost entirely with their credit cards. North Americans eat, sleep and breath credit cards and rack up enormous debts while they’re at it. Now is the time to learn how to get out of debt fast using the tips from this free report.

Download Zach Parker’s ‘Debt Reduction Success’ here.

Technorati Tags: Credit Card Debt, debt management, debt reduction

Is it ok if your spouse has all of the credit cards in their name? A reader, Jim, had this question:

I am married and I used to be the primary card holder on our accounts. Over the years, we have found it easier to have my wife be the primary card holder as she is the one who pays the bills, handles credit card issues, etc.

Am I hurting my credit by not having a card with me as the primary account holder? Should I open one card in my name? Thanks, Jim

Thanks for your question Jim.

Yes, you are hurting your credit score by only having accounts with her as the primary card holder. FICO has been flip-flopping back and forth on the issue of whether or not authorized users count where your credit score is concerned.

The best thing you can do if you want to raise your own credit score is to open up at least one, if not two revolving credit accounts. Charge a very small amount to them each month and pay it off.

The idea is basically just to get a couple of cards that report to all three credit bureaus, make very small purchases and pay the cards in full each month. This will raise your credit score over time, and you will avoid paying any interest as long as you pay the balance in full on time. It’s like raising your credit score for free as long as the card doesn’t have any annual fees.

You could always get a gas card that offers cash back, or gas rewards. Or a travel reward card that gives you airline miles. It is one more thing to manage, but it is always smart to make sure that your personal credit score is as high as it can be. If you aren’t the primary card holder, then your credit score will not go up.

Two or three credit lines (total) are the suggested guidelines for raising your credit score, but they do not all need to be credit cards. If you have your name on the mortgage and auto loan, then one credit account in your name is probably enough.

Once you get your credit card, wait a month or two and check your credit report. You will want to do this to make sure that your credit card is reporting to the credit bureaus as agreed. If the card isn’t reporting positive monthly payment, then it isn’t doing you any good.

You are entitled to one free copy of your credit reports each year. Do wait a couple of months before checking everything though, because it may take that long for the credit bureaus to update your credit records.

Also, make sure that you check all three credit reports, not just one of them. when you are ready you can do this by visiting AnnualCreditReport.com. That’s the only place to get truly free credit reports from all three credit bureaus.

Thanks for your question!

When is the best time to negotiate with your creditors?

Should you try to negotiate your debt with your credit card company, or wait until they sell it to a collection agency? A reader, Vicki, had this question:

I was reading this site and giving me good information regarding do it yourself credit settlement with credit card company regarding payment plan.

Do it need to wait for a collection agency or i can call them now to a collection department, sorry just into a financial crisis and its too over-whelming.

I will try to do it myself so i dont have to pay to much fee to other company which charge 15% fee of what i owe. I was just thinking that i might as well pay that fee to credit card as my payment. that i think make sense to me.

Thanks, Vicki

Thanks for your question Vicki!

You should go ahead and negotiate with your credit card company. Do not wait until they sell your debt to a collection agency.

If you wait until they sell your debt it will seriously damage your credit score. If you negotiate with your credit card company now, they can still help you reduce your interest rate or lower your payments, and it will not damage your credit as badly.

As long as you are talking to someone in the collections department of your credit card company, they can negotiate with you just like a collection agency can.

The only possible exception is if you want to do a debt settlement for a drastically reduced amount of your total debt. If that’s the case, then usually a collection agency, not your credit card company, is your best bet.

If you can afford to make any sort of payments, then deal with your credit card company first. That is always going to be the best thing to do.

Thanks for your question!

Have a question for us? Leave a comment below!

Thanks also to these carnivals for featuring our articles this week:

• The Eleventh Edition ~ Book Review Blog Carnival @ Linus’ Blanket.
• Carnival of debt reduction @ Green Panda Treehouse
• Carnival of Everything Money #2 @ The Penny Daily
• millionaire mind and making money online @ Millionaire Blog
• The Money Hacks Carnival at One Million Bucks
• Road to financial independence @ One Family’s Blog

Technorati Tags: Credit Card Debt, FICO score

My husband and I are looking to purchase a new home – honestly, i know we can afford the payments, they are not that much more than now.

I have put away all of my credit cards and stopped using them for about 4 months but owe about $18,000.00 on them. They are all in my name, and my husband does not know that this debt exists.

Will he find out about my debt if I take care of all the bank information and warn our banker not to mention it to my husband? Roni

Dear Roni,

Thanks for your question! I’m not even going to touch on the right or wrong of this - different strokes for different folks. Not every couple manages their money together.

So, will he find out? Yes, probably. Especially if you get rejected for the loan based off of your existing debt. If you are really serious about buying this house, then you’ll want to do your homework first.

Check your credit score, and his

If either one of you has a credit score under 750, (and maybe even then) your outstanding debt is certainly going to come up, and may even be the basis for a denial of your loan application.

Lending policies have tightened up with the rest of the economy - It’s a good time to buy a house if you have great credit.

If you don’t it’s going to be like getting stuck under a very hot microscope.

So, check your credit scores to see where you stand.

Next, get all of your paperwork together, and call a banker that you don’t plan to use. Tell them what your credit score is, and ask them exactly what you asked me. Ask them what you should do. Or, call the banker that you do plan to use, and explain the whole situation.

If you both have great credit scores, and you can warn your banker beforehand, then you *might* be able to skate by on this. You are certainly going to have to be pro-active though, or it’s going to come up. It’s probably going to come up anyway, so be prepared for that if you are serious about borrowing money for a house right now.

Wish I could give you better news - thanks for your question.

Advice I wish I had when I was 22:

A reader, Chelsie, wrote in with this question:

So, I’m 22, I’ve got pretty good credit but since I’ve not had a steady job for more than a year i need a co-signer for a $6000 loan. If everything goes smoothly for paying back the loan, does it improve my credit score or only my co-signers?

I read an article where sometimes a co-signer will start a pattern of banks asking for co-signers. how can I get good credit if I can’t even get a loan without a co-signer? Chelsie

Hi Chelsie, those are good questions.

Yes, if you get a co-signer then everyone (no matter how large or small the loan is) is going to want you to get a co-signer from now on. Your next apartment, your next car, everything will require a co-signer, or be more difficult to get without one.

Now, if you do get a co-signer, then the loan will raise your credit score, if you do things right. If you can’t afford to pay back the loan at any point, you will ruin your co-signer’s credit. They are also liable for the debt if you can’t pay, so think carefully about who you obligate to that. Things like this can split families, and I’m not kidding!

The best thing that you can do in this situation is to keep looking for work, and put off the loan if possible.

The best ways to raise your credit score when you can’t get a loan are pretty simple. I’m going to give you a quick rundown, with links to the specific articles that explain how to do it:

• Clean up your credit report - Some of the negatives on your credit report can be slowly removed. This will raise your credit score.
• Get secured loans - You can either start using secured credit cards, or use a CD to secure a loan, either one (or both) will help raise your credit score.
• Check into pre-paid credit cards - Once you have a regular job, you can set up a pre-paid credit card to use like a debt card. For a small fee (about $10/month) these pre-paid credit cards will report to all three credit bureaus for you, and you can raise your score that way too.
• Keep your credit balances low, and make your payments on time - This is one of the most important ways to raise your credit score. Keep your balances under 30% of your available credit (the lower the better) and never be late on your payments.
• Rinse, Repeat - Cleaning up damaged credit is a lot of work, time and sometimes aggravation. But it works. Be persistent. You don’t want to spend the next 8 - 10 years of your life dealing with damaged credit, or worse, heading into bankruptcy because you can’t afford the loans that you have.

Thank you so much for your question Chelsie, I know you can do this! Even if you end up having to co-sign on this loan, just make sure that you get a steady income, and still take the credit repair steps. You will thank yourself in about five years when you are ready to move forward in life and you have a high credit score to help you do that.

Have a question for us? Leave a comment below!

Keep Reading:

• Do You Lie to Your Spouse About Your Credit Cards?
• Make A Statement (On Your Credit Report)
• Can Your Spouse Hurt Your Credit Score? The Good, The Bad, And The Ugly

Technorati Tags: Credit Card Debt, credit score, mortgage application

Hello.
In ‘05 I used two personal credit cards as low interest loans for part of my business. They are locked in at 2.9 and 3.9 till there paid off.

My pay back was 2% of the balance. My business closed in July ‘07 and I have been paying off the credit cards and have never been late.

In January they raised the payback from 2% to 5%. Making my payments go from $350 to $860 and the other card from $240 to $600. They also added an extra service charge-finance charge of $10.00 per month because I get charged a finance charge.

I called and told them that I could not pay this amount each month and they responded that if I increased my interest rate from 2.9 to 7.9 they would reduce it back down to 2% and drop the extra $10.00 fee. This 7.99 is just for 2 years and then they could charge me anything they wanted.

I owe 17,000 on one card and 12,000 on the other. I don’t want to increase my interest because that would add years to trying to pay this off. Is there anything I can do or say to make them keep the original 2% payback without changing my original interest rates? Thank you, Julie

Hi Julie, thanks for your question.

There are a couple of things you can do that will really help.

The first is to call your credit card company back and tell them you you refuse to agree to the new payment terms. This means that they will close out your accounts, but you might be able to keep the original repayment plan if you do that.

You will have to send your credit card companies something in writing in order to get this started. Send it certified mail with a return receipt so that you have proof they got your letter.

Now, this is an option that is usually used when your interest rate gets hiked for no reason, not when they raise your minimum payment. If there is no way for you to dispute the changes to your account, and your credit card company will not work with you, then you still have another option.

Debt negotiation experts like the one we just interviewed can negotiate on your behalf. This can be damaging to your credit (they will have to close your accounts too) but they can drastically reduce the amount you owe on your credit cards, and put you on a payment plan that will get your debt paid down faster.

It’s a real option - some of these companies are scams, but some of them really help people and I think that your situation is an excellent fit. You want to pay your bills off, you don’t want it to take forever, and you don’t want to pay any more in interest than you have to.

You can start investigating debt negotiation with this site here:

See what types of things they can do to help you, and make sure you understand the process, and how it will affect your credit. Having to do a little bit of credit repair is usually well worth the thousands of dollars a company like this can save you.

CitiCards has been behaving badly too:

A reader, Kevin, wrote in with his story:

I was recently frustrated trying to contact Citicards regarding the security of my account.

They sent unsolicited new cards and created a new account for me (gave me a new number) without any explanation.

When I called to activate the new cards I heard a recorded message that my old account had been “compromised” or the number stolen. This was news to me!

So I called Citicards and was tossed around from department to department, from India to Manilla, and from no one could I learn which merchant had their system hacked or how my number had been identified as at risk.

As a consumer I wanted more information, but ran into a kind of wall that insulates consumers from anyone at Citicards who actually knows what is going on. Any ideas?

Kevin,

Thanks for your question. Unfortunately, this sort of stuff happens all the time, and it doesn’t surprise me that you’re getting te run-around. Shame on CitiCards for running you around. I would be just as angry as you are in your position. If your personal information was compromised because of them, then you deserve an explanation.

Although, If I were in your shoes (and I have had my identity stolen) I wouldn’t wait on CitiCards for answers.

My recommendation is for you to temporarily pick up a credit monitoring service with identity theft protection. There are several reasons I suggest this:

• Any time your personal information has been compromised you need to check your credit reports - Since you don’t know what happened, or what sort of information was stolen (just your credit card number? Name, address, social??) you need to be sure that no one is opening up new accounts in your name.
• You need to verify that the old account was closed, and that the new account is reporting correctly - With CitiCards behaving this badly it never hurts to check that they really did close out that old stolen account. It may take a month or two for things to get changed over on your credit reports, but make sure they do!
• Credit Monitoring / ID protection services offer insurance - Identity theft insurance can come in very handy, especially if you know that some, or all of your personal information might be floating around out there being used.

Some people like LifeLock for this, but I prefer Identity Guard from Equifax. For one, it’s cheaper, and two, I think it does just as much - except that it doesn’t automatically freeze all of your credit reports.

To my mind, freezing all of your credit reports is a hassle unless you know that your entire identity has been stolen. Identity Guard lets you freeze and unfreeze your reports with a click, but they give you the option instead of doing it automatically.

Their identity theft insurance is excellent as well, it was actually fun to read the fine print. It’s about $15 / month, so it’s not outrageously expensive, and you get to monitor your credit report too.

Whatever you do, make sure you pick up some sort of identity monitoring program, at least for the next three to six months. It’s bad enough that Citi gave you no warning - identity thieves will give you even less, and it could be devastating. Make sure you look out for yourself in this situation.

Here’s the links you can check out:

You might also want to check out this article, which has some really good advice:

Thanks for your question!

Have a question for us? Leave a comment below!

Keep Reading:

• In Case of Identity Theft, Check Your Criminal Records
• Fraud Alert vs. Freezing Your Credit Report
• What To Do If Your Purse Or Wallet is Stolen

Technorati Tags: credit card debt management