How to Get Approved For High Credit Limit Credit Cards With Bad Credit

Getting a higher credit limit with a bad credit score is not impossible. Several techniques can be used to help facilitate the approval of raised credit limits for credit card holders with bad credit and those with bad credit who don't have credit cards.

Complete article link: http://www.helium.com/items/2128247-how-to-get-a-higher-credit-card-limit

How to read your credit report

 Knowing how to read your credit report can help prevent credit fraud, fix credit reporting errors and assists with building credit. If you have credit errors on your credit report, knowing how to read the report can help you identify and report those mistakes, and knowing how to identify false credit inquiries may protect your credit information and credit score. Knowing how to read your credit report assists with building credit because in cases of credit scores in need of repair, the report summarizes outstanding debt, number of creditors, credit related legal actions, and late payments.

• Credit reports display a financial profile

To know how to read a credit report involves knowing what creditors will look for when they read your credit report. Creditors want to assess how high their lending risk is, and the credit report is a primary way to do this. They do this using a FICO score in addition to a credit report. Fair Isaac Corporation provides a general outline of what is in your FICO score through http://myfico.com and these things include credit history, types of accounts, debt to credit ratio, new credit and amounts owed.

After you know what creditors look for and how those things impact your FICO score you may be able to better identify what you are looking at when you read your credit report. For example,  item 27 of the above sample TransUnion Report shows credit inquiries. By looking at this you can 1) determine who's been trying to pre-qualify or pre-approve you for credit and 2) how many times it has been done.

If the inquires are not directly related to applications you have made this may mean creditors have you on an active marketing list. Knowing this, you can then take steps to be removed from those lists. An effective way to do this is to freeze access to your credit information. However, doing so prevents new credit from being issued from creditors whom you don't currently borrow from according to the Federal Trade Commission.

Knowing how to read your credit report can be assisted by referring to the explanations provided with the sample credit reports in this article. Having done so, you can be better prepared to investigate your credit in the future. Moreover, by knowing how to read your credit report you can repair, contest or improve your credit in a more informed way. The Federal Trade Commission (FTC) provides useful information on how to dispute credit information contained within your credit report.

• How information is presented on a credit a report

Credit reports don't have credit scores on them, but credit grades may be acquired when joining consumer lending networks as they sometimes require a public credit grade with which lenders can assess creditworthiness.

Information is placed and presented differently on each credit bureau's credit report, however some similarities exists between them. For example, Equifax, TransUnion and Experian all have name and date information at the top of the credit report.Some information that is included on credit reports is listed below:

• Account history

• Personal information

• Employment history

• Account activity data

• Disputed credit

• Credit inquiries

• Debt to credit ratio

• What a credit report looks like

Sample credit reports from these three agencies are linked to below. These credit reports can help you know how to read a credit report by familiarizing you with what's on them before you receive them. Also, the sample credit reports have explanatory notes indicating what particular items on the report mean.

1. sample credit report  (TransUnion)

2. sample credit report  (Equifax)

3. sample credit report  (Experian)

Looking at these sample credit reports it becomes evident that address information is not necessarily at the top of the report along with name and date. For example, the TransUnion report indicates this information near the beginning of the report whereas Equifax includes it in the 'Personal Information' section. Depending on how you like to read information, one credit report may be easier for you to read than another.

• Where to get a free credit report

Free credit reports can most easily be obtained from http://www.annualcreditreport.com. This is the government authorized site for accessing free credit reports. Other sites may have purchase or service agreements connected to their 'free' credit reports so being weary about where you get you credit report from can save money.

Sources:

1. http://bit.ly/ggXQt    (MyFico.com)
2. http://bit.ly/7ouzJ     (Federal Trade Commission: Consumer Credit)
3. http://bit.ly/8YghNh (FTC: Credit Freeze)

Do Prepaid Debit and Credit Cards Affect Credit Score?

Prepaid debit and credit cards can build credit score, but not in the same ways as a secured or unsecured credit card does. Since prepaid cards are structured differently, understanding how they work and what benefits they provide helps clarify how they can build a credit score.

Since secured and unsecured credit cards are financial instruments that charge interest on a balance, a line of credit is directly established and recorded through either a bank account or credit card balance. Prepaid cards on the other hand can be used like debit and credit cards, but without a bank account and with different application requirements. These prepaid cards can build credit in the following ways.

• Prepaid cards and payment history

Fair Isaac Corporation, the creator of FICO credit scores claims the scores are based on bill paying, debt levels, credit history and types of debt.(1) Payment history, which accounts for 35 percent of a FICO score, can be improved with any type of payment method including prepaid debit and credit cards.  Some prepaid cards even help cardholders build a card history as described in the next point.

• Prepaid card fee payments

A prepaid card that helps build credit are the Eufora prepaid Preferred and Elite Mastercards. Eufora's creditbuilder program automatically withdraws a monthly payment that goes toward the prepaid card's annual fee. This payment history is then reported by Eufora to TransUnion and Experian credit bureaus to help build cardholder's credit scores.(5)

• Line of credit via prepaid card

A prepaid debit or credit card may also have a line of credit feature that doesn't require a credit check or good credit.  An example of this is the iAdvance Line of Credit on a the AccountNow Prepaid Visa Card.(4) This line of credit feature is described as being auto-paid and reported to credit bureaus by  DoughRoller, a detailed money blog that provides a wide range of financial information for deal hunters.(3) This type of account feature is actually a hybrid between a prepaid card and secured credit card that requires no credit check.

• No credit check required

According to www.creditcard.com, the Upside Visa Prepaid Card does not require a credit check and doesn't require a bank account like credit cards do. This allows persons with bad credit scores to benefit from debit and credit payment systems. Moreover, the Upside Visa Prepaid Card also allows online personal checks and direct deposit making it somewhat similar to an bank account debit card.(2)

• Builds responsible card use

A final way prepaid debit and credit cards help build credit scores is by using the cards in a similar way to credit and debit cards. Since they are prepaid, the card user gets in the habit of working on a cash basis, but still uses the prepaid card as a method of payment. This trains the mind to use cards responsibly and may carry over into use of secured and unsecured credit cards by virtue of habit.

Sources:

1. http://bit.ly/ggXQt (myFico.com)
2. http://bit.ly/qvVSi (creditcard.com)
3. http://bit.ly/3M8MdF (doughroller)
4. http://bit.ly/9koCGb (AccountNow)
5. http://bit.ly/aWfjRm (Eufora card)

Tips for choosing a credit counselor

Credit counselors can assist in negotiating lower interest rates with credit card companies in addition to guiding clients through important steps in building better credit ratings, regaining financial control, consolidating debt and making pre-existing debt obligations more manageable.

Choosing the right credit counselor and deciding if one needs credit counseling might best be considered in advance with care. A credit counselor should be able to perform specific tasks related to credit repair in accordance with ethical standards.  To locate a government approved credit counseling service this U.S. Department of Justice credit counselor locator can be used.

When credit counseling may be useful

While not everyone needs a credit counselor, in some cases when debt is unmanageable, the services a credit counselor can offer may be useful. When seeking out credit counseling services, a few upfront questions may help determine if they are the right service for a clients debt management needs.

• Negotiation of lower interest rates: If a credit counseling company or representative cannot offer to negotiate better terms for credit card interest, they may not be performing all the functions credit counselors are assumed to be capable of.

• Debt Consolidation: Consolidating debt may involve finding a creditor willing to take on a lump sum loan for more reasonable payment terms for their own profit and as part of a credit counseling program. If a credit counseling service can offer debt consolidation assistance, they might be a good choice.

• Avoid Bankruptcy: Bankruptcy stays on credit records for several years and can damage one's credit report to the point new creditors for car loans, mortgages and other loans may thing twice before offering loans. Credit counseling is designed to take steps that avoid client bankruptcy.

• Improve credit score: Another use of credit counseling is to help improve credit score. Building credit can be a straightforward matter i.e. pay bills on time, don't have too much debt etc. However, credit counseling services may have additional ways and suggestions as to how to increase credit scores faster and more efficiently.

What to look for and where to find credit counseling

Locating a suitable credit counseling involves searching in the right places, asking the right questions such as those pertaining to the above financial issues in addition to questions that ascertain the organizations legality, cost, ability and know how. A few important questions and concerns are the following:

• Cost: A credit counseling service is there to help one get out of debt, not further into debt. Fees should be reasonable and fair. Some organizations may offer sliding scale services but anything over $50-100/month can be on the high side.

• Legality: There may be class action law suits, or formal complaints against the credit counseling business. The company should honestly state if such law suits are pending especially if the phone calls are recorded. If not, the Federal Trade Commission or Better Business Bureau may be off assistance in this matter.

• Terms of Service: If the service can't offer to do anything with certainty, they may not be worth considering especially if one is paying over $50/month for the assistance. The terms of service and/or customer agreement should clearly state what functions the credit counseling service provides.

• Licensing and Professional Endorsements: The more credentials an organization has the better. Such qualifications can include certifications from the Better Business Bureau, operating licenses and endorsements from reputable and/or creditable financial institutions.

There are many credit counseling services available to consumers. Finding the right one first involves narrowing one's search down to locality. A service that has a physical location in one's city or within driving distance is a good place to start as this gives one the opportunity to investigate the company first hand and be able to tackle issues in person with a person rather than just a voice on the phone. A few places one might consider inquiring about credit counseling are illustrated below:

• Local Financial Institution or Bank: A good place to ask is one's own bank or credit union. Banks may be aware of the more reliable and credible services and may be able to offer friendly and helpful advice themselves.

• Non-Profit Credit Counseling: When a company offering credit counseling is not-for profit, there motivation generally isn't greed by virtue of their corporate status. For this reason, they may offer sliding scale and/or lower fees than for profit services.

• Consumer Interest Organizations: As mentioned above, The Federal Trade Commission can be of assistance in researching a credit counselors credibility. They may also be helpful in locating a reputable service in one's area in addition to the Better Business Bureau. The websites for both these organizations are listed at the bottom of this article.

In summary, credit counseling services should ideally be useful in the above mentioned ways, affordable, credible and local. One's finances are an important part of daily life and regaining financial control and avoiding bankruptcy involve some significant financial steps. Credit counseling services that are able to meet most if not all the parameters laid forth in this article can assist with these financial concerns.

Sources:

1. http://www.ftc.gov (Federal Trade Commission)
2. http://www.us.bbb.org (Better Business Bureau)

Credit Repair Companies Versus Consumer Counselling

Credit repair and consumer credit counseling are different forms of financial assistance that help those who face large debt or out of control credit. In the case of credit repair, the goal is to rebuild credit rating or credit score with the help of a third party claiming to be skilled at negotiating with creditors and credit agencies.

Credit counseling is different from credit repair services as there may be a conditional requirement by either a lender or court.  For example, in the United States, consumers who file for bankruptcy are often required to receive consumer credit counseling as part of the bankruptcy filing procedure. Credit counseling may also involve debt management and debt settlement services.

Credit repair

According to the U.S. Federal Trade Commission (FTC), credit repair company's are often scams. The proliferation of such scams led to the rise of the Credit Repair Organizations Act which made it a requirement to receive a copy of any contracts before signing them. Even so, credit repair company's may be apt to creating misleading promises that consumers should be aware of.

The fact of the matter according to consumer advocates is that there's nothing a credit repair company can do for hundreds of dollars that an individual cannot. It may seem intimidating or complicated dealing with poor credit, but that doesn't have to be an excuse to lose money paying for a service that can be done for free. If there's nothing a credit repair company can fix after they receive your money, they don't pay it back.

To illustrate the above point, credit repair company's tout being able to correct erroneous information on a credit report if there is any at all. An individual can do this by visiting www.annualcreditreport.com and obtaining a free credit report then sending a dispute letter such as the one available at the Federal Trade Commission's website.

Consumer credit counseling

Consumer credit counseling generally has a more specific and legal function. In regard to pre-bankruptcy counseling, consumer credit counseling is also required to be free for those who cannot afford according to the FTC. The U.S. Department of Justice provides a search form on its website that allows consumers to find a legitimate consumer credit counseling service.

Bank of America distinguishes consumer credit counseling into two groups. Those two groups are debt management agencies and debt settlement companies. Both may provide consumer credit counseling, but the latter is an alternative to bankruptcy that can have a negative influence on one's credit report and costs more. Debt management companies are more educational and help consumers proactively eliminate debt while building credibility.

Credit counseling and debt management companies can also help individuals avoid foreclosure in some instances. For example, the U.S. Department of Housing and Urban Development sponsors an approved housing counseling agency program nationwide. These approved credit counselors can assist with existing and future credit and debt obligations. Thus, consumer credit counseling is not necessarily exclusive to bankruptcy proceedings, but also serves as a financial planning mechanism that helps individuals manage their debt.

Sources:

1. http://bit.ly/aXYN5p (Federal Trade Commission)
2. http://bit.ly/PtC5l      (Department of Housing and Urban Development)
3. http://bit.ly/bhQe4Z  (Overnight Credit Repair Services)
4. http://bit.ly/cuELwf   (Bank of America)

What Shows Up On a Locked Credit Report

The information that shows up on a locked or frozen credit report depends largely on the circumstances surrounding the request  and who is requesting the credit report from a credit agency. A locked credit report prevents creditor access to the information on your credit report which includes your payment history, term of accounts, creditors, available credit and personal information. 

By locking this credit information via a credit security freeze, credit data cannot be sold and distributed thereby preventing fraud, theft and distribution of personal information. A list of things that don't show up on locked credit reports is below.

1. Credit history

2. Existing creditors

3. Credit limits and use

4. Delinquent accounts if any

5. Personal information

How locked credit report data may still be viewed

What shows up on a locked credit report also depends on a number of criteria being fulfilled in addition to the circumstances in which those criteria take place. For example, the method by which a credit report is locked may vary from State to State. This information and the different State criteria to freeze credit reports is available on the Experian Credit Agency's 'Security Freeze' webpage . Some of the questions that may assist in determining what information on a locked credit report is available, if it is indeed locked and when the credit report will be locked.

• Which credit bureau(s) is the credit report locked at?

• Has the credit freeze been temporarily lifted?

• Is there a legal investigation affecting you?

• Have your existing creditors sought your locked credit report?

• Have you requested a credit report for yourself?

• What State do you reside in?

• When did you request the credit freeze?

When locked credit information is still available

It is important to note that the above credit information is still accessible by some parties. In other words, a frozen credit report enables is commercial restriction from new creditors gaining access to your credit background. For example, the credit recipient him or herself can still request access to a personal credit report. Furthermore, should an existing credit card account service provider want to consider increasing a credit limit, they too may request access to the credit report. Thus, in some circumstances, access to locked credit reports is still available. Some of these exceptions are listed below:

• Collection agencies

• Existing creditors

• Government agencies ex IRS

• Person the credit report represents

To view personal credit reports that have been frozen one can visit AnnualCreditReport.com. It may be of use to note accessing credit reports through sites other than annualcreditreport.com may require a subscription to trial products which at the time this article was written, does not require strings attached to the free credit report information.

The three major credit agencies in the U.S. are Experian, Transunion and Equifax. These credit agencies also provide individuals free access to their credit reports once every twelve months as required by law. For more information on viewing the information in free credit reports the U.S. Federal Trade Commission's webpage about free credit reports may be helpful.

Summary

What information shows up on a locked credit report includes the credit and personal information discussed and/or linked to herein. Whether or not the frozen credit report is actually frozen depends on a number of circumstances such as the number of credit agencies at which the credit report is frozen and how recently the request to lock the credit report was made.  

For state specific credit freeze information the following National Conference of State Legislatures (NCSL) webpage offers state by state summaries of credit freeze law. At the federal level Section 605B of 'The Fair Credit Reporting Act' is available via the U.S. Federal Trade Commission website and contains stipulations regarding the blocking of credit information.

Sources:

1. http://www.ftc.gov (U.S. Federal Trade Commission)
2. http://www.experian.com (Experian Credit Agency)

How loans affect your credit score

Loans affect your credit score plain and simple. How loans affect your credit score is another matter entirely as this article will demonstrate. Credit scores are derived from credit reports that illustrate your credit profile in detail.

A credit score is the result of a quantitative analysis of one's credit variables, some or all of which are within a credit report, and is often computed by a company called Fair Isaac and called a FICO score (myfico.com) Consequently, understanding how a FICO score is computed can help you understand how loans affect your credit.

Types of loans and their influence on credit

There are so many types of loans that it would be unreasonable to apply the same credit influence to each kind. This is because different loans have different interest rates, risk, terms of service, guarantees, fees etc. Since these differences affect credibility in varying ways determining how these loans affect your credit requires a specific look at the different loans available, a few of which are listed as follows:

• Credit cards
• Vehicle Loans
• Mortgage loans
• Business loans
• Student loans
• Equity loans
• Secured loans

To determine how these loans specifically influence credit, a closer look at the credit score reveals their influence. As noted above, loans' affect on credit depends on a number of factors and are illustrated in the Understanding Your FICO score' document available through www.myfico.com. Some of these factors used by FICO are listed below with approximate weighted percentages of affect on credit score. The term credit' refers to money lent via various loan type(s) to the borrower who's credit score is in question.

• Credit/payment history (35% of credit score)
• Length of credit history (15% of credit score)
• Types of credit in use (10% of credit score)
• Amounts owed (30% of credit score)
• New credit (10% of credit score)

In the case of credit card loans, the amount of available credit used negatively affects credit score if it rises above 40%. Additionally, the total amount of debt from a loan and/or group of loans determines how indebted a borrower is i.e. amount owed. If loan payments have been missed, those missed payments will have a greater impact on credit score if they are closer in time to the present. Taking on a lot of debt or applying for several new loans at once can also negatively affect credit score because it statistically adds to a negative debt profile when this happens.

Since amount of debt owed only affects near 30% of total credit score, having a lot of debt does not automatically rule out having a good credit score. Rather, if this is the case, it does imply other factors such as paying bills on time and not applying for new loans become more important in keeping your credit score good. Further points to consider include having different types of loans and paying them off, and banking with the same institutions can improve the credit mix score and credit history aspect of the credit score. Too many credit cards can also impact your credit score negatively even if the credit isn't used. Some tips to keep your credit score up when borrowing through loans are listed below.

• Have 3 or less credit cards
• Use less than 40% of available credit
• Pay off a variety of different loans over time
• Bank at the same institution for a long time
• Avoid late payments
• Refrain from multiple new loans

Summary

Loans affect credit score in 1) the way they are paid off, 2) the amount of the loans and 3) the frequency and type of loans applied for and borrowed. Since credit history constitutes a considerable part of credit scoring, how one has borrowed in the past can also be influential even if the loans don't exist or have been paid off.

This article has illustrated how debt in the form of loans influences personal credit score and offers tips and information on how to potentially improve credit score from loans. Loans can be used to help build credit scores but only in certain circumstances and as defined by the credit score reporting agency involved.

Source: http://www.myfico.com

How to correct mistakes and errors on your credit report

A credit report error is an informational and/or quantified inaccuracy on a credit report which is a financial disclosure document containing information regarding creditors, credit inquiries, and credit history. Errors in credit reports can affect credit scores which are used by lenders to determine qualification for credit.

Since the FICO credit score and credit information is used to determine a significant amount of lending and other criteria, it is in one's financial interest to ensure the information on such a report is correct. This article will discuss repairing credit report errors in terms of 1) credit report error cause, 2) error type and 3) method for correcting the error.

Types of credit errors

Many people have credit errors on their credit reports be they minor or major mistakes. The flow of credit information from lender or financial institution to credit reporting agency can be interrupted and/or disrupted by no fault of the consumer who's credit can be affected. For this reason, understanding the type of credit errors that may come up can be helpful both in preventing and resolving credit report errors.

As evident below, the types of errors on a credit report can vary and may include any one of the following. (consumerreports.org). Identifying the error type is important in the tracking down of, and amelioration of the disputed information. The types of credit errors may be anything from an incorrect address to a late payment that was paid off long ago.

• Unresolved credit charges
• Inaccurate late payment
• Wrong personal information
• False billing data
• Data entry errors
• Credit history mistakes
• Computer virus related error

Causes of credit errors

The best way to correct an error on your credit report is to avoid the error altogether. There may be several sources of credit report errors, some may be unresolved reporting ambiguities, where as others may be related to identity theft that has unduly affected credit report information. Whatever the reason(s) for the error, the first step in correcting errors is 1) to limit the probability of the error occurring and then 2) identifying the error to be fixed. The following lists potential causes of credit report errors and solutions for such.

• Identity theft related events: Prevent security violations
• Ambiguous credit data: Review credit report
• Financial institution or creditor reporting mistakes: Utilize functional institutions
• Faulty utility provider credit information: Confirm utility provider data
• Inaccurate bankruptcy related information: Verify documentation
• Credit reporting agency miscalculation: Check credit report

The U.S. Consumer Sentinel Network, comprised of agencies including the Federal Bureau of Investigation and the Federal Trade Commission have reported a disturbing trend in identity theft complaints. Between the years 2000-2008 the network's identity theft complaint count rose from 31,140-313,982. (ftc.gov) Thus, maintaining secure financial practices is a good preventative technique.

Avoiding financial reporting errors can be difficult in some cases as when your credit information is handled by other parties, it is subject to the ability of all those parties and machines capacity to relay credit information properly. Limiting the number of organizations that handle your money and credit information may help in addition to banking with reputable financial institutions.

Ultimately however, checking a credit report is the verification of credit information so that you can handle any mistakes in your credit report if they do exist. What's more since there may be more than one credit reporting agency, there may have to be multiple credit report checks and an increase in the number of potential errors. For example, in the United States, three major credit reporting agencies exist; Experian, Equifax and TransUnion in the U.S.

How to correct errors on your credit report

Correction credit report errors may not always be as quick and easy as a phone call to the reporting agency. This could be because of the volume of customers, bureaucracy, and vagueness in the credit reporting law, systemic inefficiency etc. Thus, patience is a useful ingredient after requesting a credit report from one or all relevant credit reporting agencies.

The following is a list of the three major U.S. credit reporting agencies with their phone contact information as reported by the Federal Trade Commission (FTC). However, according to the U.S. Federal Trade Commission, credit reports should be requested through http://www.annualcreditreport.com

U.S. Credit reporting agencies: (ftc.gov)

Experian: 1-888-397-3742, http://www.experian.com

TransUnion: 1-800-916-8800, http://www.transunion.com

Equifax: 1-800-685-1111, http://www.equifax.com

PRBC: 1-800-884-4747 http://www.microbilt.com/nontraditional-credit-report.aspx

The following credit report correction method is gathered from the Federal Trade Commission (FTC) and Consumerreports.org. Both these organizations advocate for consumers, correction of credit report errors being one of those things.

• Example credit dispute process: (ftc.gov and consumereports.org)

1. Identify credit error(s)
2. Locate evidence supporting dispute ex. Receipts, statements etc.
3. Gather all dispute documents including dispute letter and make copies
4. Mail via certified mail, copies of all relevant credit error disputes
5. Follow up and file a complaint with one or more members of the Consumer Sentinal network if necessary

Additional tips to consider when identifying and/or disputing credit errors involving becoming aware of the process, parties involved, how to communicate with those organizations, and available legal options, reporting agency and creditor obligations, and consumer rights. Below are a few tips that may help with fixing a mistake on your credit report.

• Differentiate disputable from non-disputable errors
• Utilize defensible dispute methods
• Report errors to all parties involved
• Properly document and complete error reporting information
• Be aware of different available options including credit statements, and non-disclosure rights.

Sources:

1. https://www.annualcreditreport.com/cra/index.jsp
2. http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre21.shtm
3. http://www.ftc.gov/bcp/edu/microsites/idtheft/reference-desk/national-data.html
4. http://www.consumerreports.org/cro/money/credit-loan/credit-reports-6-07/overview/0706_credit_reports_ov.htm

Bad Credit: Bank Account Reference Guide

The "no-chexsystems" bank account is a type of bank account extended to individuals with an unfavorable credit scores. A bad credit bank account should be insured by the Federal deposit insurance corporation (FDIC), if located within the United States. FDIC insurance allows the money within the account to be protected. If the money is not FDIC insured, the bad credit bank account may be located offshore or be an unsuitable type of account.

To obtain a bad credit bank account and individual should be of legal age i.e. 18 or over and have a valid form of appropriate identification. These types of bank accounts can be set up online and deposits can be made via an electronic payment service of which there are several on the internet that are reliable.

As with any transaction involving finances, it is wise to take precautionary steps before depositing and/or sending money to a financial institution. Such steps may include but not be limited to verifying a physical address in the case of online banking within one's country, performing fraud and scam searches using the bank's name, and by contacting the FDIC to verify insurability of the funds.

Obtaining a bad credit bank account may allow an individual to later obtain a secured credit against the account or obtain loans against the funds in the account. In such instances, this would allow the account holder to build credit and have a bank account in which to deposit paychecks, and/or other funds. Bad credit bank accounts may also allow the account holder to obtain debit cards, issue checks, offer interest on savings etc.

Disadvantages of bad credit bank accounts include the possibility of few or no physical locations other than ATM machines. This is especially the case if the bad credit bank account is obtained through an online financial institution. Additionally, the risk of online identity theft is present when conducting financial transactions over the internet. Whether an account is through a brick and mortar financial institution or via the internet, confirming privacy policy with the bank may be necessary.

Learning From Bad Credit

Bad credit can be caused by irresponsible financial practices or via no fault of one's own. The Fair Isaac Corporation reports the average consumer carries 13 credit responsibilities generally consisting of credit cards and installment loans. Moreover, in 2009 the U.S. Federal Trade Commission (FTC) reports 278,078 potentially credit damaging, identity theft complaints were made according to the FTC's identity theft clearinghouse and consumer sentinel.

This doesn't include the 721,418 fraud complaints from the same year. Such identity theft can lead to bad credit in addition to faulty credit reporting and individual factors such as late payment of bills.

Poor credit in an economic system sometimes forces individuals to learn from the resulting situations. However, a bad credit situation isn't always the fault of the individual. If the bad credit is due to individual reasons, it doesn't have to be a terrible thing. Having bad credit can leave one with new options and as the saying goes, "when one door closes, another may open."

Knowing what that new door is indicative of learning from bad credit. More specifically, creditors are more likely to be reluctant to lend to persons with bad credit in effect asking one to improve the credit score before any new money is loaned. How an individual learns from the bad credit may lead to different outcomes. This article will illustrate ways an individual may choose to learn from the bad credit.

Report identity theft and faulty credit reporting

The first step in learning from bad credit is knowing what caused the bad credit. Unfortunately, this may involve some research for no fault of the individual if one's identity, credit cards or other financial information has been stolen and in the case of poor credit reporting on behalf of financial institutions. To find out if the bad credit is one's own fault the following steps may be helpful:

• Check bank statements for erroneous or suspicious charges
• Call the bank or credit card company to report lost or stolen cards
• Request an immediate investigation and reversal of false charges
• Order a free credit report(s) from http://www.annualcreditreport.com
• Request a marketing freeze by calling 1-888-opt-out to minimize financial risk

Allow experience to show the way

In the case of an individual bad credit score, one can either learn to not be so dependent on credit companies, learn to build credit scores or choose renunciation the credit institution altogether. In either one of these cases, one is learning from the experience of bad credit, and making a decision for oneself about how to move forward with life. A first step one may take in learning from bad credit is to acknowledge and identify what is going on. The following are signs of bad credit:

• Low credit score
• Late payments on bills
• High interest rate
• Financial stress

After the bad credit is identified, one may then begin the process of thinking about it, reacting emotionally to the situation, or simply not caring. Which ever method one chooses the bad credit presents some unique opportunities:

• A chance to recognize one's financial situation
• A financial reality, in which one must either act or live without credit
• An excuse to not spend money
• The beginning of a new credit life, and the end of an old chapter in one's life
• A way to learn about protecting one's credit identity and profile

Immediate solutions and building new credit

It is not the end of the world when bad credit strikes. There are several ways to deal with the situation. In the case of identity theft, one can file a identity theft report. The Federal Trade Commission is a Federal organization that may be of assistance in this matter. If the credit problem is due to faulty financial reporting by a financial institution, one may need to produce paper work proving the fault and request the credit reporting agency correct the credit report. To rebuild bad credit caused by personal reasons, a step by step process may be followed. A few tips with which to deal with the bad credit are below:

• Ask the credit company or lenders for debt re-negotiation
• Contact a reputable credit counseling service
• Stop spending as much or re-budget
• Consult people one feels comfortable talking about such matters with.
• Consider legal options

The above methods may provide some immediate assistance to the situation but are not necessarily a long-term fix or cheap. Credit counselors, credit card companies and others may try to help one achieve a second chance, but what one does with that chance is up to the individual. One can learn a number of things from bad credit such as how to deal with credit card companies, what remedies are available and what steps must be taken to report financial reporting problems and theft issues.

After dealing with the immediate problem, one may then learn how to build new credit through obtaining secured credit cards, paying bills on time, identifying the ways credit scores rise etc. The whole process could take weeks to years depending on the severity and how complicated the situation is.

In summary, bad credit is not usually a pleasant experience that may or may not be caused by individual fault. In identifying, acknowledging and reacting to bad credit one may learn either directly or indirectly, how to deal with the bad credit, build new credit and take new approaches in the future. In these ways, bad credit is a learning experience, and in some cases a somewhat involuntary learning experience.

Sources:

1. http://www.myfico.com (Fair Isaac Corporation)
2. http://www.ftc.gov (Federal Trade Commission)

Tips for Obtaining Credit Cards with Bad Credit

Even if you have bad credit you may still be able to obtain a credit card. Several ways to obtain a credit card with bad credit exist, and if those don't work there are viable alternatives to credit cards that can allow you to apply and receive a credit card in a relatively short period of time.

Image source: Petr Kratochvil

• Instant approval credit cards

The obtaining instant approval credit cards is less dependent on credit scores because they require the balance on the card to be paid in advance. Several instant approval credit cards exist and include the 'GreenDot PrePaid Mastercard', and AccountNow Prepaid Visa Card among others.(1)

• High interest credit cards

If a pre-paid credit card isn't what you're looking for a high interest card may be a reasonable short-term solution if you plan on paying off your purchases before expiration of your credit card's billing cycle i.e. on time. Establishing and paying high interest credit card credit can build credit score and warrant lower rates in the future.

• Secured credit cards

A classic way of obtaining a credit card with bad credit is the secured credit card, this ensures the creditor that no matter how bad you spend, an amount equivalent to the card's balance has been put aside to cover the cost of risk should the credit card holder fail to make payments on the credit card. As with regular payments on high interest credit cards, secured credit cards can help build credit toward obtaining a non-secure credit card.

• Single store credit cards

Retail outlets such as clothing distributors or automotive repaid companies may also issue credit to people with bad credit depending on their credit requirements.(2) A condition for more easily obtaining such credit cards may be higher fees and/or interest rates. This may be because sales made to people with bad credit can be sold to collection agencies for a fraction of the price at least yielding a partial revenue to the company printed on the credit card.

• Co-signed credit cards

Co-signed credit cards are similar to secured credit cards except they are secured by the credit of another person with presumably better credit, than with actual funds. This helps the lender guarantee payment of the balance should a problem occur with non-payment by the primary account holder. In such instance, the co-signer of the credit card loan is also responsible for the credit card balance so finding a willing co-signer may be just as difficult as obtaining a willing credit card lender for the same reason of bad credit.

If obtaining a credit card with bad credit is not achievable right away, several additional options exist that help build credit may also help you acquire a credit card in the near future. For example, some prepaid debit cards actually have a built in credit reporting program that helps the card's holder build credit score. After the program is complete, the issuing bank or other lenders may then be more willing to offer credit card to those with bad credit.

Sources:

1. http://bit.ly/bfRf8Z(Creditcard.com)
2. http://bit.ly/aHT1SC (Bankrate.com)

Credit cards: How to Ask For and Get a Lower Rate on Your High Interest Credit Card

It isn't always necessary to use a credit counseling service to negotiate a lower interest rate with a credit card company. Very often the company will negotiate a lower interest rate with their client, especially if bills are paid on time or if one is experiencing financial difficulty. There are several steps of ascending impact that can help an individual lower the monthly finance charges on credit cards. This article will first outlines steps credit card holders can take then illustrate additional methods for lowering interest rates.

• Call the credit card company

Simply calling the company and asking for a lower interest rate may be all that is needed. Keeping the request reasonable i.e. in accordance with one's credit score, and having good reasons for asking for the reduction can be helpful in terms of obtaining a more favorable response from the credit card company. If the credit card is already charging a dramatically high-rate, the benefit of keeping a client's business may be worth a couple of percentage points or more. If the credit company declines the offer, don't worry, there are other methods that may work as well.

• Send a credit negotiation letter

If asking for a reduction in interest rates doesn't work, one may send a more formal written request via a credit negotiation letter. There are many sample 'credit negotiation letters' available on the web that can be used as models and some consumer service organizations allow consumers to freely download and copy their letters for the purpose of interest and other credit negotiations.

• Request to speak with a credit manager or account supervisor

If neither of the above two methods have proven effective after following up with the credit company and/or after a couple of weeks have passed another step may be taken. This next step involves contacting the company again by phone and asking for a credit manager, customer service manager or account supervisor. In a polite, yet firm voice express how the previous steps have had little reception and that one's request is not unreasonable. The customer service manager may be more willing to listen and have more influence in the interest rate reduction process.

• Express Interest in a different credit card company

If the customer service manager still does not accept to lower the rate, ask him or her why. They may respond with reason such as irregular payments, credit risk, market rates etc. Don't be discouraged by such banking lingo. As a client, one's power derives from one's business with the company. If the credit card wants to keep one's business, they may think twice about lowering interest rates. Informing the manager paying bills would be easier with a lower interest rate and that there are several other companies who would gladly accept a balance transfer at a lower rate in return for one's business.

• Credit counseling services

Sometimes, one's credit rating may just be too low, or the negotiation method employed doesn't work, or the credit card company won't negotiate. It's not over yet, but could get a little more complicated at this point. Credit counseling services are skilled with working with credit card companies and can often obtain a lower interest rate for their clients. In some case a 0% interest rate is workable if one is experiencing financial difficulties and is trying to avoid bankruptcy. These credit counseling services are ideally researched well, offer reasonable rates and guarantees.

It is very possible to acquire a lower interest rate on one's credit card. If for some reason none of the above methods work, trying again after a 4-6 months of on time payments will help nullify the credit managers potential complaint about irregular payments and possibly make him or her more amenable to providing the lower interest rate. Acquiring a lower interest rate on one or many credit cards is possible, and is achieved on a daily basis by clients, credit negotiation companies. Utilizing the above steps may greatly empower a credit card holder in obtaining a lower interest rate.

Sources:

1. http://creditfederal.com/debt-negotiation-letter.html
2. http://www.investopedia.com/articles/pf/08/negotiate-credit-card-apr.asp
3. http://www.askmrcreditcard.com/creditcardblog/negotiating-with-your-credit-card-company/

How to keep your good credit score

After working to get a credit score to its best numerical value i.e. between 735-850, keeping it there may also require some maintenance. Keeping a credit score high shouldn't be a challenge so long as one continues the techniques and methods one used to get the credit score high in the first place. There are also a few ways to prevent a credit score from lowering that are not related to strong management of personal finances.

Image source: Phillip Newton

Maintain less than 40 percent usage of credit

Individual debt management decisions also affect credit score. Moreover, the lower the percentage of debt one uses, the more debt management credibility one may achieve in the form of a high and maintained credit score. If one has a high credit score then uses the maximum debt for all one's credit the affect could be lower credit score. Paying as much of one's monthly credit card bill as possible not only helps maintain ideal credit levels, but also indicates a willingness to pay down debt to creditors.

Stay with financial institutions and creditors

How often a debtor switches and closes financial institutions indicates a potential strike against credit worthiness. Sticking with financial institutions and lenders demonstrates debtor may be less likely to engage in risky financial behavior based on statistical correlations and data. So if one must close an account, finding a new financial institution one can feel comfortable banking with over the long term can be a healthy choice for one's credit score.

Avoid frequent credit checks

A credit check from a lender once in a while shouldn't hurt a credit rating however frequent credit checks can indicate a sudden need and application for credit which could adversely affect a credit rating and/or credibility. By spacing out car loan, credit card, mortgage refinance, and individual business loan applications, the chances multiple credit checks will lower a credit score go down. Additionally, avoiding too many comparison related inquiries can also be helpful. For example, if shopping for a credit card one may require pre-approval, too many credit card inquiries could have a negative affect even if one just wants one credit card.

Keep good financial habits

The same financial habits that enabled a debtor to achieve a high credit score must be continued in order to keep the credit score high. The typical practices that contribute to strong credit scores are listed below:

• Budgeting
• Debt Management
• Pay bills on time
• Reasonable Debt to Income ratios
• Credit History

The above methods require ongoing fiscal discipline, know how, financial record keeping and organization skills. Maintaining a cost of living and standard of living in proportion to one's income level is also a good idea in avoiding an over accumulation of debt. Making extra mortgage payments and paying taxes on time can also have an influence on financial credibility.

Protect financial information and identity

Lowering the risk of identity theft can also assure a credit score is less likely to be compromised. Shredding old and unneeded financial documents, obtaining credit freezes during periods of loan inactivity, reviewing credit reports once or twice a year, and removing one from marketing, and credit card distribution lists can all be helpful ways to protect identity. Other techniques include using license numbers instead of tax payer identification numbers at doctor's offices and other places where TIN's are not necessary, changing computer passwords often and using data encryption, firewalls and spyware protection on computers.

Avoid overdraft and bounced checks

Another way a credit score may be affected may be from writing checks that bounce or make use of overdraft protection. Bad checks are reported to credit agencies and although overdraft protection is technically a line of credit, it can incur financial penalties and may also be reported to credit agencies depending on the financial institutions practices.

Keeping a credit score high has several potential benefits including qualification for lower interest rates, higher loan qualification amounts and beneficial background screening for job applications that require good financial credibility and credit scores. Additionally, the satisfaction of knowing one has make a solid and consistent effort in maintaining a deserved credit score can be of personal benefit.

A high credit score can also be useful in unexpected times of low cash flow and when additional credit is required for large expenditures and/or investments. Whether it be personal or business related, be able to qualify for low interest credit and or loans an assist one in realizing one's dreams so long as they are well managed.