You have seen them, everybody has. You open your credit card bill and there it is. A blank check with your name on it, for you to use in any way you want. Best of all, there is a low interest rate...0%... a limited time. Sometimes for as long as six months or more. It looks too good to be true. As is the case most times, when something looks to good to be true, it usually is.
Credit card companies routinely send these magic checks out to people with low balances or who limit the use of the credit card. After all, a credit card that isn't being used isn't doing much for the bank's bottom line. So they make these offers in the hope that their customer will transfer high interest balances, take advantage of low interest for that vacation they have been passing by, or get more air miles just in case. While these are all valid reasons, there are some pitfalls to this plan that many or most people find themselves falling into. Here are some things to remember before you take advantage of these offers.
LOOK OUT FOR THE FEES There is often a transaction fee for balance transfers, often as high as 3%. This term is hidden in the fine print. Be careful. That transfer of $3,000 at zero interest just cost you a cool ninety bucks.
CAN YOU PAY IT OFF IN TIME The low monthly interest is a good idea if you can pay off the amount within the time limit of the offer. It's a good idea to save on interest. But remember that after the six months are up, that interest goes up to the regular interest rate. Make sure that rate is not higher than the rate on your other cards.
DON'T BE LATE If you are late with your payments –even for a day– special rate reverts back to your original interest rate. Often, credit card companies that appreciate your business will raise your interest rate to a default rate, typically over 29%, as a token of their appreciation.
DON'T DOUBLE DOWN Remember, if you pay transfer a balance or use these checks to pay off another credit card, that card now has a zero or low balance. While your intentions may be good, the temptation to use that card is great. Most people will use it. Cautiously at first. Just to buy gas. Maybe to go out to dinner a couple of times. Then they get an email about a great deal on a plasma TV, and before they know it, the six months have gone by and both cards are at the maximum.
DON'T USE THEM If you are not sure that you will be able to make timely payments and control your other debt, the best thing to do is avoid the temptation to take advantage of these offers. If you fail to use the checks in the allotted time, don't worry. You will get more in your next statement. If you don't need them or if it doesn't make sense to use them, don't use them.
DESTROY THE CHECKS IF NOT USED There will be another time to discuss identity theft. But if the banks are enjoying a bonanza with these checks, identity thieves are right behind them. These checks often provide information that can be used by someone else. If you are in the habit of discarding your statements, these checks and other information without destroying them, get out of that habit. People go "dumpster diving" for this information, and often use it to steal identities. It's a sad fact. But it is something we all have to be aware of.
The next time you get one of these offers...check the mailbox...remember this. Credit card companies were given enormous leverage in their ability to recover defaulted debt by the new Bankruptcy rules. Your ability to discharge this debt is severely curtailed. So even if you took advantage of these offers with the best of intentions, you may find yourself strapped with mounting debt and nowhere to turn for relief, or even a claim of fraud from the credit card company. Late fees, over limit fees and 30% interest can turn a $3,000.00 limit to a $8,000.00 lawsuit in no time. For many people, this spiral downward starts when they cash those checks or transfer a balance. Many of them never recover.
So, what do you do with these offers?
1. If you must use them, use them wisely.
2. Make sure you can pay them off.
3. Never make a late payment.
4. If you pay off another credit card, close the account or exercise the discipline it
takes not to use it.
5. Don't pay off a credit card with a lower interest rate.
6. If you don't think you can take these steps, DON'T USE THE CHECKS!
7. Make sure you destroy the checks if choose not to use them.
You have worked hard to get the kind of credit rating it takes to qualify for these offers. Don't let the use of credit be the reason you lose your good credit rating.
As many of us know, a negative credit rating can cost you countless thousands of dollars over the course of your life. Having an account go into default, collections or litigation can literally bury you in debt for the rest of your life. If you find that things have gotten out of hand, get some help. Call the credit card company. Call a credit counselor. Call a lawyer if you need one. But don't ignore the problem. Take control. It will not go away on its own.
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Brooklyn Credit Repair is a Professional Credit Repair Company located in Brooklyn, New York. We specialize in correcting inaccurate or unverifiable remarks on credit reports with experian, equifax and transunion. We serve all boroughs of NY including Bronx, Queens, Staten Island, Manhattan as well as Long Island's Suffolk and Nassau counties. Identity Theft, Late Payments, Collections, Chargeoffs, Foreclosure, Judgements , Bankruptcies, Liens, Inquiries, Credit Consulting, Credit Repair, and Debt Settlement.
Showing posts with label credit cards. Show all posts
Showing posts with label credit cards. Show all posts
Brooklyn & Queens Credit Repair : NY : BrooklynCreditRepair.com
BROOKLYN CREDIT REPAIR: NEW YORK CREDIT EXPERTS
Brooklyn Credit Repair is a local Brooklyn Credit Repair company in New York. We provide Credit Repair in Brooklyn, Queens, and it's surrounding areas in NY. We work with the three major credit bureaus directly; Experian, Equifax & Transunion.
Your credit score is the most important three-digit number in your life. We offer credit and financial consulting and work to raise your credit score so you can recover and save thousands to hundreds of thousands on your mortgage, credit cards, auto loan, car insurance and more.
Brooklyn Credit Repair works with you on devising an action plan for things you can do to improve your credit score. We educate you every step of the way so you know how you can continue to manage your credit long after your time with us.
During this entire process, you are able to login to your file 24/7 to view recent activity, messages from our staff, and to see what negative items have been removed from your report. The most important part is that everything we do to raise your score is 100% legal. We NEVER had an unsatisfied client.
With an average credit score increase of 60-100 points, our clients have the opportunity to save hundreds of thousands on their mortgage, credit card bills or even their car insurance.
BrooklynCreditRepair.com: Identity Theft, Late Payments, Collections, Chargeoffs, Foreclosure, Judgements , Bankruptcy, Liens, Inquiries, Credit Consulting, Credit Repair, Debt Settlement and more...
Call today for a FREE consultation: (718)975-0155
Brooklyn Credit Repair proudly offers its professional Credit Repair Services nationwide and provides in-person credit consultations to the following new york communities in Queens, NY: Arverne, Astoria Heights, Astoria, Auburndale, Bay Terrace, Bayside, Bayswater, Beechhurst, Bellaire, Belle Harbor, Bellerose, Breezy Point, Briarwood, Broad Channel, Cambria Heights, College Point, Corona, Ditmars, Douglaston, Dutch Kills, East Elmhurst, Edgemere, Elmhurst, Far Rockaway, Floral Park, Flushing, Forest Hills, Fresh Meadows, Fresh Pond, Glen Oaks, Glendale, Hamilton Beach, Hammels, Hillcrest, Hollis, Howard Beach, Hunters Point, Jackson Heights, Jamaica, Jamaica Estates, Jamaica Hills, Kew Gardens, Laurelton, LeFrak City (housing development), Linden Hill, Lindenwood, Long Island City, Little Neck, Malba, Maspeth, Meadowmere, Middle Village, Murray Hill, Neponsit, Ozone Park, Queens Village, Queensboro, Queensbridge, Rego Park, Richmond Hill, Ridgewood, Rockaway Beach, Rockaway Park, Rockwood Park, Rosedale, Roxbury, Saint Albans, Seaside, South Jamaica, South Ozone Park, Springfield Gardens, Sunnyside, Utopia, Whitestone, Woodhaven, Woodside
Brooklyn Credit Repair proudly offers its professional Credit Repair Services nationwide and provides in-person credit consultations to the following new york communities in Brooklyn, NY: Canarsie, Flatlands, Georgetown, Marine Park, Mill Basin, Sheepshead Bay, Bergen Beach /Paerdegat, Bay Ridge, Bensonhurst, Borough Park, Dyker Heights, Fort Hamilton, New Utrecht, Sunset Park, Brighton Beach, Coney Island, Gerritsen Beach, Gravesend, Homecrest, Madison, Manhattan Beach, Plum Beach, Sea Gate, Bath Beach, Starrett City, Bushwick, Greenpoint, Williamsburg, Cypress Hills, East New York, Highland Park, New Lots, Spring Creek, Bedford-Stuyvesant, Brownsville, Kensington, Lefferts Manor, Manhattan Terrace, Midwood, Ocean Parkway, Parkville, Prospect Park, Remsen Village, Stuyvesant Heights, Boerum Hill, Carroll Gardens, Cobble Hill, Brooklyn Heights, Crown Heights, East Flatbush, Farragut, Clinton Hill, Downtown Brooklyn, DUMBO, Fort Greene, Gowanus, Park Slope, Prospect Heights, RAMBO, Red Hook, Windsor Terrace
BrooklynCreditRepair.com: Identity Theft, Late Payments, Collections, Chargeoffs, Foreclosure, Judgements , Bankruptcy, Liens, Inquiries, Credit Consulting, Credit Repair, Debt Settlement and more...
Brooklyn Credit Repair is a local Brooklyn Credit Repair company in New York. We provide Credit Repair in Brooklyn, Queens, and it's surrounding areas in NY. We work with the three major credit bureaus directly; Experian, Equifax & Transunion.
Your credit score is the most important three-digit number in your life. We offer credit and financial consulting and work to raise your credit score so you can recover and save thousands to hundreds of thousands on your mortgage, credit cards, auto loan, car insurance and more.
Brooklyn Credit Repair works with you on devising an action plan for things you can do to improve your credit score. We educate you every step of the way so you know how you can continue to manage your credit long after your time with us.
During this entire process, you are able to login to your file 24/7 to view recent activity, messages from our staff, and to see what negative items have been removed from your report. The most important part is that everything we do to raise your score is 100% legal. We NEVER had an unsatisfied client.
With an average credit score increase of 60-100 points, our clients have the opportunity to save hundreds of thousands on their mortgage, credit card bills or even their car insurance.
BrooklynCreditRepair.com: Identity Theft, Late Payments, Collections, Chargeoffs, Foreclosure, Judgements , Bankruptcy, Liens, Inquiries, Credit Consulting, Credit Repair, Debt Settlement and more...
Call today for a FREE consultation: (718)975-0155
Brooklyn Credit Repair proudly offers its professional Credit Repair Services nationwide and provides in-person credit consultations to the following new york communities in Queens, NY: Arverne, Astoria Heights, Astoria, Auburndale, Bay Terrace, Bayside, Bayswater, Beechhurst, Bellaire, Belle Harbor, Bellerose, Breezy Point, Briarwood, Broad Channel, Cambria Heights, College Point, Corona, Ditmars, Douglaston, Dutch Kills, East Elmhurst, Edgemere, Elmhurst, Far Rockaway, Floral Park, Flushing, Forest Hills, Fresh Meadows, Fresh Pond, Glen Oaks, Glendale, Hamilton Beach, Hammels, Hillcrest, Hollis, Howard Beach, Hunters Point, Jackson Heights, Jamaica, Jamaica Estates, Jamaica Hills, Kew Gardens, Laurelton, LeFrak City (housing development), Linden Hill, Lindenwood, Long Island City, Little Neck, Malba, Maspeth, Meadowmere, Middle Village, Murray Hill, Neponsit, Ozone Park, Queens Village, Queensboro, Queensbridge, Rego Park, Richmond Hill, Ridgewood, Rockaway Beach, Rockaway Park, Rockwood Park, Rosedale, Roxbury, Saint Albans, Seaside, South Jamaica, South Ozone Park, Springfield Gardens, Sunnyside, Utopia, Whitestone, Woodhaven, Woodside
Brooklyn Credit Repair proudly offers its professional Credit Repair Services nationwide and provides in-person credit consultations to the following new york communities in Brooklyn, NY: Canarsie, Flatlands, Georgetown, Marine Park, Mill Basin, Sheepshead Bay, Bergen Beach /Paerdegat, Bay Ridge, Bensonhurst, Borough Park, Dyker Heights, Fort Hamilton, New Utrecht, Sunset Park, Brighton Beach, Coney Island, Gerritsen Beach, Gravesend, Homecrest, Madison, Manhattan Beach, Plum Beach, Sea Gate, Bath Beach, Starrett City, Bushwick, Greenpoint, Williamsburg, Cypress Hills, East New York, Highland Park, New Lots, Spring Creek, Bedford-Stuyvesant, Brownsville, Kensington, Lefferts Manor, Manhattan Terrace, Midwood, Ocean Parkway, Parkville, Prospect Park, Remsen Village, Stuyvesant Heights, Boerum Hill, Carroll Gardens, Cobble Hill, Brooklyn Heights, Crown Heights, East Flatbush, Farragut, Clinton Hill, Downtown Brooklyn, DUMBO, Fort Greene, Gowanus, Park Slope, Prospect Heights, RAMBO, Red Hook, Windsor Terrace
BrooklynCreditRepair.com: Identity Theft, Late Payments, Collections, Chargeoffs, Foreclosure, Judgements , Bankruptcy, Liens, Inquiries, Credit Consulting, Credit Repair, Debt Settlement and more...
Calculating Utilization, Let Me Count The Ways
For the first time in 2010 and what has to be the 100th time overall, here’s how utilization is calculated.
First off, utilization 101…Mark has a credit card with a $1,000 credit limit. That is, his credit reports show a $1,000 credit limit. His current balance as reported on his credit reports is $500. The utilization of that card is 50% because the balance ($500) divided by the credit limit ($1,000) equals .50 or 50%. Now we can get started.
It’s important to note that the figures I use for my next few examples HAVE to be reported on your credit reports to make these math problems accurate. That’s the bottom line. If it’s not on our credit report then all bets are off.
Line Item Utilization – This is the same calculation as described above for Mark but done for every single open credit card or credit card with a balance. So if you have 10 open credit cards, and open in this examples means it’s not closed, then you’ll have 10 different line item measurements. This is important because the number of highly utilized credit cards on your credit report is a consideration in most credit and insurance risk models.
Aggregate Utilization – This is the same calculation as described above for Mark with one huge difference. For this calculation we are going to combine all of the open credit cards on a credit report to do the math. For example, if I have two credit cards and each has a $5,000 balance and a $10,000 credit limit then I have $10,000 in aggregate balances and $20,000 in aggregate credit limits. Divide $10,000 by $20,000 and you again get .50 or 50%. This measurement is important because the higher utilization the percentage the more risky you are to lenders and insurance companies and the less attractive their terms will be.
High Balance in Lieu of Credit Limits – In some cases your credit cards will not have a credit limit reported. (Note: I’m not talking about charge cards. I’m talking about revolving credit cards that are not reporting a credit limit). In those cases most credit scoring models will look for the historical highest balance, which is typically reported by the credit bureaus, and use that figure in lieu of the missing credit limit. So, if I have a credit card with a $10,000 credit limit but it’s not being reported then the credit score will look for my highest balance figure. If it finds, for example, that your highest historical balance was $7,500 then that’s the figure it will use in lieu of the missing $10,000. So, with my same $5,000 balance and a $7,500 “pseudo limit” I appear to be 67% utilized on that card instead of the true 50%. This is a line item measurement and an aggregate measurement, meaning it is the same regardless of which is being calculated. This practice of withholding credit limits got the credit bureaus sued in a class action case several years ago because Capital One was not reporting credit limits. The case was dismissed because, in my opinion, the court simply couldn’t grasp the details of the problem and the breadth of its impact. Shortly after the lawsuit was filed Capital One began reporting credit limits for the first time in their existence. So, some good did come out of the case.
Missing High Balance and Missing Credit Limit - Now this is a tricky one. In some examples a credit card account will be missing the credit limit and the highest balance. Most credit scoring systems will simply ignore the account for the above referenced utilization calculations because, well, you have no limit to include in the math. This can help the consumer’s scores and it can also hurt the consumer’s scores. For example, if you have a very high balance on that particular credit card but no limit or high credit then that balance can’t increase your aggregate utilization because it’s ignored for that math. It can hurt your score in the example where you have a very low balance relative to the credit limit, which isn’t reported because you don’t get any value of the large difference between the balance and the limit, which is called open-to-buy.
Shadow Limits – A shadow limit isn’t a credit card that’s been left under a leafy tree. Instead it’s the unpublished maximum preset spending limit that all credit cards have, even charge cards that are marketed as not having a preset spending limit. That would suggest that you could use your charge card to buy a $100,000 Mercedes, if the dealership took plastic for such a purchase. And while some very wealthy individuals might be given that amount of shopping power, it’s atypical.
The shadow limit is not reported to the credit bureaus so the high balance is the next best figure to use when calculating utilization. And if it’s a charge card the newer FICO scores will not count it in utilization at all. There are, however, revolving credit cards that are also marketed as not having a preset spending limit and, thus, a shadow limit. The moral of this story is simple; you’d like to do business with credit card issuers who do report the credit limit to all three credit bureaus. It give you the ability to strategically use that card so that you never exceed some self applied utilization percentage. For example, if you know your credit card has a credit limit of $10,000 (and it’s being reported to the credit bureaus) and you never want to exceed 10% utilization on that card then you know you can never allow more than $1,000 to be reported to the credit bureaus as a balance.
-
Brooklyn Credit Repair is a Professional Credit Repair Company located in Brooklyn, New York. We specialize in correcting inaccurate or unverifiable remarks on credit reports with experian, equifax and transunion. We serve all boroughs of NY including Bronx, Queens, Staten Island, Manhattan as well as Long Island's Suffolk and Nassau counties.
Call today for a free consultation (718) 975 - 0155
BrooklynCreditRepair.com
First off, utilization 101…Mark has a credit card with a $1,000 credit limit. That is, his credit reports show a $1,000 credit limit. His current balance as reported on his credit reports is $500. The utilization of that card is 50% because the balance ($500) divided by the credit limit ($1,000) equals .50 or 50%. Now we can get started.
It’s important to note that the figures I use for my next few examples HAVE to be reported on your credit reports to make these math problems accurate. That’s the bottom line. If it’s not on our credit report then all bets are off.
Line Item Utilization – This is the same calculation as described above for Mark but done for every single open credit card or credit card with a balance. So if you have 10 open credit cards, and open in this examples means it’s not closed, then you’ll have 10 different line item measurements. This is important because the number of highly utilized credit cards on your credit report is a consideration in most credit and insurance risk models.
Aggregate Utilization – This is the same calculation as described above for Mark with one huge difference. For this calculation we are going to combine all of the open credit cards on a credit report to do the math. For example, if I have two credit cards and each has a $5,000 balance and a $10,000 credit limit then I have $10,000 in aggregate balances and $20,000 in aggregate credit limits. Divide $10,000 by $20,000 and you again get .50 or 50%. This measurement is important because the higher utilization the percentage the more risky you are to lenders and insurance companies and the less attractive their terms will be.
High Balance in Lieu of Credit Limits – In some cases your credit cards will not have a credit limit reported. (Note: I’m not talking about charge cards. I’m talking about revolving credit cards that are not reporting a credit limit). In those cases most credit scoring models will look for the historical highest balance, which is typically reported by the credit bureaus, and use that figure in lieu of the missing credit limit. So, if I have a credit card with a $10,000 credit limit but it’s not being reported then the credit score will look for my highest balance figure. If it finds, for example, that your highest historical balance was $7,500 then that’s the figure it will use in lieu of the missing $10,000. So, with my same $5,000 balance and a $7,500 “pseudo limit” I appear to be 67% utilized on that card instead of the true 50%. This is a line item measurement and an aggregate measurement, meaning it is the same regardless of which is being calculated. This practice of withholding credit limits got the credit bureaus sued in a class action case several years ago because Capital One was not reporting credit limits. The case was dismissed because, in my opinion, the court simply couldn’t grasp the details of the problem and the breadth of its impact. Shortly after the lawsuit was filed Capital One began reporting credit limits for the first time in their existence. So, some good did come out of the case.
Missing High Balance and Missing Credit Limit - Now this is a tricky one. In some examples a credit card account will be missing the credit limit and the highest balance. Most credit scoring systems will simply ignore the account for the above referenced utilization calculations because, well, you have no limit to include in the math. This can help the consumer’s scores and it can also hurt the consumer’s scores. For example, if you have a very high balance on that particular credit card but no limit or high credit then that balance can’t increase your aggregate utilization because it’s ignored for that math. It can hurt your score in the example where you have a very low balance relative to the credit limit, which isn’t reported because you don’t get any value of the large difference between the balance and the limit, which is called open-to-buy.
Shadow Limits – A shadow limit isn’t a credit card that’s been left under a leafy tree. Instead it’s the unpublished maximum preset spending limit that all credit cards have, even charge cards that are marketed as not having a preset spending limit. That would suggest that you could use your charge card to buy a $100,000 Mercedes, if the dealership took plastic for such a purchase. And while some very wealthy individuals might be given that amount of shopping power, it’s atypical.
The shadow limit is not reported to the credit bureaus so the high balance is the next best figure to use when calculating utilization. And if it’s a charge card the newer FICO scores will not count it in utilization at all. There are, however, revolving credit cards that are also marketed as not having a preset spending limit and, thus, a shadow limit. The moral of this story is simple; you’d like to do business with credit card issuers who do report the credit limit to all three credit bureaus. It give you the ability to strategically use that card so that you never exceed some self applied utilization percentage. For example, if you know your credit card has a credit limit of $10,000 (and it’s being reported to the credit bureaus) and you never want to exceed 10% utilization on that card then you know you can never allow more than $1,000 to be reported to the credit bureaus as a balance.
-
Brooklyn Credit Repair is a Professional Credit Repair Company located in Brooklyn, New York. We specialize in correcting inaccurate or unverifiable remarks on credit reports with experian, equifax and transunion. We serve all boroughs of NY including Bronx, Queens, Staten Island, Manhattan as well as Long Island's Suffolk and Nassau counties.
Call today for a free consultation (718) 975 - 0155
BrooklynCreditRepair.com
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