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Consumer credit counseling services
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Improve Your Credit After the Holiday
There's nothing sadder than to face the credit card bills that come in the month of January. They're usually high and are something most of us would like to avoid. There's no doubt that you need to pay them off, but how?
What will you do to keep the finance charges affordable? Paying the monthly minimum isn't likely to help your credit situation at all. If you find yourself in debt larg... Read credit counseling article
Low Credit Score Secrets
If you have a low credit score, well below the national average of 723 then that low score will cost you plenty over time. Loans will be difficult to obtain, but if approval is given you will pay a higher interest rate than someone with good credit. Think that a low credit score can't hurt you? Well, it not only can it can make your life downright miserable.
The results of our actions a... Read credit counseling article
Consumer credit counseling services
Compulsive Spending
Do you, or someone you know, lack savings for emergencies when emergencies arise? Fall behind on such basics as utilities and rent? Find your charge cards over the limit? If so, you may exhibit some of the signs of a compulsive spender. While many of us occasionally over-spend, compulsive spenders over-spend.
Shopping becomes a way of life, actually much like an addiction that controls the individual. It often leads to self-destructive behavior with adverse emotional, financial and/or social consequences.
An individual is frequently over their credit limit yet still buys items, accumulating so much that purchases are often or rarely used. Or worse, hidden. Yet, that same shopper, realizing that his/her debt far outreaches current income, continues to shop because "it's so much fun."
But having the constant worry of juggling payments, or borrowing from one source to pay another, must be anything but fun. It has led to the loss of credit, loss of home, bankruptcy and embezzling. And though the root causes of compulsive spending are psychological, cultural influences can make it difficult for spenders to confront their problem.
Who is at Risk?
Spending sprees may be triggered by boredom, loneliness, and/or depression. Some individuals over-spend following breakups with spouses or lovers. Consider the following characteristics of compulsive spenders:
Shopping brings the pleasure, and then guilt removes the pleasure.
Shopping temporarily fulfills emotional needs, such as those from feeling unloved, insecure and isolated.
Compulsive shoppers have to shop.
Some purchases are never used.
Compulsive shopping leads to debt, bankruptcy and/or problems with family members.
The addiction to spend causes feelings of anxiety, guilt, and remorse.
Understanding the emotional trigger that creates the addiction is necessary. Budget counseling, debt management programs, and/or professional counseling may be appropriate measures.
Consider the following steps to curb your spending:
Prune your plastic portfolio.
Begin to clean up your current credit card debt.
Begin to find suitable rewards to replace the over-spending "high."
Seek the support of others working through their addictive behavior in group meetings.
Be good to yourself in ways that won't increase your debt or guilt.
Check out books from your local library on the subject of over-spending.
Debt Problem Danger Signs !!!
Charging inexpensive items.
Charging items you might not buy if you were paying cash.
Charging more each month to accounts with outstanding balances.
Charging items you don't need, and then feeling guilty.
Charging items on a delayed payment plan.
Assuming your credit cards entitle you to a particular standard of living, regardless of your actual income.
You dip into your savings account for items and never replenish the supply.
You have no savings account.
You only shop at stores where you can "charge it."
Medical insurance is too expensive to afford.
You are reluctant to open bills from creditors.
You let payments "slide" until the next paycheck.
You're still paying for last Christmas when this Christmas arrives.
Discussions of monthly bills become arguments.
You write checks today on funds that will be deposited tomorrow.
You have no budget.
Many items are purchased on a "lay-away" plan.
You're purchasing the most expensive brand to "keep up" with others your age or in your income bracket.
You postdate checks.
You've applied for more credit cards to enable you to pay off other credit card balances.
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Credit counseling service - Give yourself some credit
BLOOMINGTON -- Two of every three Americans don't know the credit score needed to secure the lowest interest rate on a mortgage, according to a recent survey by GMAC Mortgage.
The result illustrates an important fact: people who are ignorant of their credit score and what it means, can pay hundreds, even thousands, of dollars annually in extra costs.
"The better your credit score, the less you pay," said Jeff Telling of Family Credit Counseling Service in Normal.
Credit scores are grades given people based factors including how well they repay their bills and debts, and their total borrowing history. Lenders then use the scores to decide things like mortgage rates, credit limits and eligibility for other loans.
The score needed to determine the lowest interest rate on a mortgage? It's 620 -- but only 38 percent of the people surveyed by GMAC, a national lending company, knew that.
And the consequences of a low score can be costly. In the case of mortgage rates, a score of 600 instead of 620, for example, equals about a half-percent difference on an interest rate for a $150,000, 30-year, fixed-rate loan, said Telling.
In other words, the person with the 20-point lower credit score pays $54 more each month for the same home, he said.
"The rate you pay on an insurance policy can be affected by your credit score," Telling added. "That sounds ludicrous, but everybody's watching."
Many factors influential
Credit scores are calculated by private firms. On most scales, Telling said, 850 is perfect and 350 is low.
In determining a score, the firms consider a range of factors. Too many credit cards can pummel a personal credit score, but not having them can hurt, too. Abruptly closing a credit account also can damage scores, but so can keeping cards open without using them.
The first step a person who wants to improve their credit score should take is to obtain a free copy of their credit reports from Experian, Equifax and Transunion, the three major firms that calculate scores.
Telling advised people to double check information for accuracy -- including what lenders are reporting.
Also, make sure the lenders report your credit limits along with the amounts borrowed, so credit doesn't look overextended, Telling said.
A lender left that information off a woman's credit report in Maryland, Telling said, Her credit was great, but it looked as though she had extended her limit. Her credit score dropped 66 points, he said, costing her $150 each month in mortgage interest.
Telling also advised people not to borrow more than 50 percent of any credit card limit.
He and others also cautioned people against having too many credit cards.
"They say people should only need to have two credit cards," said Vicki Huddleston, manager of Budget Counselors Plus Inc. in Bloomington.
"People should not keep a balance on their cards," she added. "Pay it off every month."
Repairs can be difficult
Huddleston's agency helps people with trouble repaying unsecured debts -- such as credit card and medical bills -- by working with lenders to set up a repayment plan.
"A lot of time we can get lower interest rates and lower payments. There is a monthly fee. Of course, it does depend on their situation," Huddleston said.
Despite common thought, working with such agencies does not blemish credit histories, it helps them.
"Debt management with a certified credit counseling agency does not hurt your credit history at all. That's a myth," Telling said.
Finally, it's easier to maintain good credit than repair bad credit. The journey begins in college, possibly even high school, said S.J. Chang, a professor of finance at Illinois State University. He suggests young people get small loans on small purchases such as computers.
"That's usually a starting point to build good credit. Student loans, that's another route you can start building your credit, by paying it on time," he said.
And ultimately, a person's credit score can have a strong influence on their lifestyle.
"Better life means better credit. Your whole way of life is related to good credit and wise spending," said Chang. "People have to buy cars, houses, refrigerators. They have to think about their own, their children's education. No one will be able to pay for all of these things with cash on hand every time."
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Consumer credit counseling services
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