Wednesday, May 30, 2012

Tips to Apply for a Student Credit Card

College students are encouraged to apply for a student credit card when they feel they are already eligible. This will allow them to establish their credit promptly. However, because of the reform enacted on the Credit CARD Act of 2009, those who are under 21 years old are not qualified. They are only allowed to get a card if they either submit regular income proof or if they have someone with income as a co-signer. If you are a college student and have decided that you want to start having credit, here are a few things that you need to know:

Before You Sign

All companies present their clients with an agreement. It is your job to comprehend everything that is written in the agreement, including the interest rates and the fees. Some card companies will offer you with great deals, but for a price or with confusing programs. Make sure that all is clearly disclosed to you. This builds trust between you and your creditor. If there are items that you do not understand, do not hesitate to ask.

How Many Credit Cards Should You Have?

Since you are just starting to establish your credit history, it is a good idea to begin with just one credit card. It is understandable that you will be tempted to apply for a few more cards. However, it is better to use a single card at this point. Aside from the fact that each card application can hurt your score, having more of these plastics may lead you to debt in just a short period of time.

Using the Student Card

Paying with plastics can be fun, especially for college students. Having such a tool is often viewed as a symbol of financial prestige. Often, students do not realize that credit cards should not be used for purchases that they cannot afford. This is actually the quickest path towards debt that you will find difficult to repay. It is unwise to carry a balance since this will cause your grace period to end. The next thing you may know is that you are already knee-deep in debt without money to pay for it.

Do You Know That Your Account Has a Limit?

All credit cards have a credit limit. Students are often presented with low limit at first. This will gradually increase as you construct your history over time. If you go over your limit, you may be required to pay a fee as punishment. Creditors earn more interest as you carry a balances. As you struggle to pay for your debt, they enjoy taking more money from you.

Should You Pay an Annual Fee to Gain More Benefits?

One of the first things that you should look at before you sign up for a credit card is the annual fee. Since you are just a student, it is strongly recommended that you choose a card without an annual fee. When you use your card, the creditor already earns money as they charge a small fee to the merchant. There are other fees that you may have to pay but an annual fee should not be one of them.

Friday, May 25, 2012

3 Credit Repair Practices To Avoid

The credit repair process can be tedious and take several months depending on how much negative information exists in your credit reports. Consumers engaged in credit repair often have a purpose and goal. It may be to purchase a home, refinance a mortgage, change careers, obtain a home equity loan or even buy a new car.

The time and energy involved in repairing your credit should not be wasted by making mistakes along the way. Here are 3 credit repair practices you should avoid in order to make the process smooth and result in a better credit report and increased credit scores:

1. Use of Boilerplate or Template Form Letters

When disputing items on your credit report the best practice is to customize your dispute letters. Credit repair manuals, credit repair companies and even some credit repair websites offer form letters to dispute negative credit.

The problem with form letters is the sheer number of consumers who may be using them to repair credit. The credit bureaus receive tons of dispute letters daily. Because the credit bureaus receive an enormous amount of dispute letters; they utilize a letter recognition technology which scans each letter, whether computerized or handwritten.

As a result of the letter recognition technology, the credit bureaus have amassed a huge database of letters from consumers and discovered many of them contain the exact same information -- word for word. This includes copying and pasting letters from the Internet. Duplicate form letters are easily recognized by the credit bureaus.

Using duplicate or form letters can get your dispute letter labeled frivolous or irrelevant. Once a determination is made that a dispute is frivolous the credit bureaus can terminate the dispute process. The consumer can be barred from disputing that item for several months. The one-size-fits-all dispute letters does not work.

2. Failure to Customize Dispute Letters

Failure to customize dispute letters is related to using boilerplate or template form letters. Any credit repair letter; even if the issue is minor, should be unique, customized and based on a factual error. It's hard to argue with facts. Disputing a factual error can get your credit repair letter taken seriously.

Customized letters get the attention of the credit bureaus. In addition to automating the process of reading dispute letters; the actual dispute process has been automated by a method called e-Oscar. The e-Oscar method of investigating credit disputes converts written dispute letters into a two or three digit code.

That code is transmitted to the creditor who is the subject of the dispute and the creditor verifies the accuracy of the code. Customizing your dispute can help ensure your dispute is actually processed and investigated. You want to make it as difficult as possible for the credit bureaus to reduce your dispute letters to a code which is simply transmitted to the creditor to verify as accurate or inaccurate.

Customizing a dispute letter also gives you the opportunity to attach supporting documentation. The more detail the better. By basing your disputes on factual errors you establish a good foundation in case the credit bureaus flag your disputes as frivolous or irrelevant. You will have the basis for the credit bureaus violating the Fair Credit Reporting Act by not conducting re-investigation of disputed items as required by law.

3. Dispute every negative item at once

All errors and inaccurate information should be disputed, but not all at once. Performing a blanket dispute of all negative items can also lead to the credit bureaus flagging your disputes as frivolous or irrelevant. They may even accuse you of using a third-party credit repair company.

The best way to dispute all negative items is to dispute a few errors at a time in intervals of 30 to 60 days apart. Bombarding the credit bureaus with multiple credit disputes is a sure way to get your credit report flagged and your credit disputes ignored.