Get a Copy of Your Credit Report

Under current credit law, you are entitled to receive one copy of your credit report from each of the three credit bureaus (Trans Union, Equifax, and Experian) without any cost. Once you receive you rejection letter, find out which credit bureau provided information to the creditor.

Now, send a copy of your credit report and the rejection letter, along with a letter that mentions your personal details including name, address, Social Security, and so on, which makes it easier for the bureau to identify your account. Make sure you send these documents through certified mail that requires signature of the recipient on delivery (and you get the receipt). So, you will have a proof that the letter sent by you was received on the other hand.

Why Should I Check My Credit Report?

You must check your credit report for errors once every quarter. As pert the data released by United States Public Interest Research Group, around 80% of such reports have errors, and 25% among them are very grave causing credit card application denial. In case you find any error in your report, contact the respective bureau, in writing and ask them to fix the errors.

Ask The Credit Provider for Further Clarification

Many credit providers simply reject your application (literally without any reason), inform you about the source of credit data used by them (which they haven’t). If you find out, after you get a copy of your report, you score is completely okay, with good score and without any error, you must find more about the reason for rejection of your credit card application (and you have legal rights to do so). Under Section 615(b) of Federal Fair Credit Reporting Act, you can write to the creditor asking specific reasons for such rejection.

If There’s an Error in Your Credit Report

If there are few errors in your report that needs to be fixed, get it corrected by the credit bureau, and send the corrected version to the credit provider. Send a letter along with the corrected version mentioning the issues (that are now fixed). However, this doesn’t guarantee that the issuer would change its decision.

In my case, I am depended on business credit cards to a large extent. I own several business websites, and most of the transactions involve online payment. Hence, I am left with very few payment options: credit card, debit card, business checks, and PayPal account.

Among these options, a business card is an obvious choice because it provides better protection as compared to other payment options. These cards also offers rewards and cash back benefits, which most debits cards don’t. Hence, along with making business payments, I save few bucks on every transaction.

Did You Know?: You can apply for a business credit card, even if you don’t own a small business. In fact, any one (American Citizen) can apply for this card using his/her Social Security Number. Why should you get one? Because it offers some benefits that other cards don’t.

Benefits

For business owners, though it’s not a must, having a card can help considerably. Here are some benefits of using a business credit card:

Differentiating between Business and Personal Expenses

This is one of the most important benefits you can have as a business owner by owning this card. Differentiating business from personal expenses becomes quite easier when you have separate card for both purposes.

Higher Credit Limit

Most business credit cards have limits higher than personal credit cards. This can be extremely important for start-ups, as it can serve as a temporary source of finance. Besides, not all vendors would accept payment through PayPal or other such accounts.

Rewards

Most business credit card offer rewards and cash back benefits. Hence, ever time you transact, you can receive cash, discount on air fares, restaurant bills, office supplies, and so on.

Automated Payments

For recurring expenses, you can easily set up automated payments on your business credit card. It is possible to do it with your checking account as well, but not all companies would accept payment from a personal account.

These benefits can be availed even if you don’t own a business. So, it’s better to go for a business credit card than a simple, usual card with limited benefits.

Standard Cards

This type of card can be extensively found in USA. If you own this credit card, you can make a purchase, and keep repaying for the item by making monthly minimum payments. If you repay the entire balance, or a part of it, you can use it for further purchase. Some of major providers of standard card in USA are MasterCard, Chase, American Express, and Discover.

Charge Cards

Unlike Standard Credit Cards, you have to repay the whole balance on the month preceding purchase, if you have a charge credit card. You cannot pay it in installments or monthly payments. One of the biggest advantages of using this card is you are not charged with any financial charges.

Limited Purpose Credit Card

The name says it all. These cards have limited use. Some kind of cards are used only at gas stations, while there are other cards which cannot be used anywhere except grocery stores.

Premium Cards

Apart from providing credit, some cards offer additional benefits to people with big pockets. These are one of the most luxurious types of credit cards in USA. Some of the benefits it offers are cash back facility, airline miles, reward points, discounts, and so on. This card is not available to everyone. Only the ones with high credit score can apply for Premium Cards. They have high credit balances.

Affinity Cards

This is one of the very uncommon types of credit cards in USA. An affinity card is given to people associated to specific company, organization, or a cause. Some amount of purchases made through these cards goes to the related organization, company, or the cause.

There are several types of credit cards in USA like Prepaid Cards, Secured Cards, Co-Branded Cards, Smart Cards, and so on. They are, however, not as poular as the above ones.

If you are amongst such people, let me tell you, if you go to a credit card debt settlement company, you would have to disclose every possible detail. Until then, they wouldn’t be able to derive a proper plan for you. However, if you still don’t feel safe or comfortable talking to them, here are few things you can do to keep reduce your debts, without having to contact such debt settlement company.

1.    Introductory Rate is a Temporary Luxury

No credit card company would provide you a card with 0% APR for lifetime. All such lucrative rates you see on TV commercials or posters are for limited period, usually for 6 months or a year. As soon as the introductory period ends, the APR increases radically. Even if you transfer your high interest balance to a lower one, make sure you repay the amount before such introductory period ends.

2.    Make Sure You Know What’s Written in Fine Print

Whenever you fill-up an application form or receive a welcome kit, either at the bottom, or behind the main information page, there would be some conditions mentioned in fine print. The reason why they use such diminutive fonts is they don’t want you to read any information mentioned there. It would have something like “You interest rate would be increased to x% if you don’t make payments on time” or other such things that are generally unacceptable by the consumer.

3.    Know What Factors Affects Your Score

Just being aware about what are the factors that affects your credit score would help you to maintain it. Did you know that every time a creditor (when you inquire about a loan) calls up the bureau, you lose 3 points from your score?

Even if you don’t seek help from credit card debt settlement companies, you can reduce your debt and improve your score by doing the above things.

Recently, we have heard economists being a lot optimistic about the economy and the job market. While there is no equipment for a common man to measure the GDP, one can quickly say, just by looking around, the employment rate is certainly not growing, not even gradually.

Many lost their jobs and many experienced a sharp cut in their income. They, however, had one thing in common. They didn’t have much saving and relied heavily on credit cards. And gradually, the minimum payment exceeded their income. Hence, we now see lots of people opting for debt management and debt consolidation plans.

Today, however, I would ask you to disregard all those methods and have a look at some very practical things you can do to eliminate credit card debt.

Is it possible to reduce the interest rates?

If holding the line for a few minutes doesn’t annoy you, call up your card provider and negotiate lower interest rates. Initially, like every company, they wouldn’t agree to it. However, if they are quite adamant about it, inform them that you’re quite unhappy with their service and you would switch to another card after paying this off. But it’s important to have competitor’s information with you while you talk to them. If they still don’t agree, threaten you will close the account. You are very likely to get a lowered interest rate by the end of this conversation.

Purge other expenses

Debt is definitely expensive than your entertainment. By this I mean, eliminate all other expenses to save and reduce your debts. Determine how much you need for your basic requirements, purge all other expenses for few months, and repay your debts completely. It’s not difficult one you start doing it.

Is it possible to generate an additional source of income?

Once you have reduced your monthly expenses, find new ways to earn money. Initially, one can start an online or other home based business. Actually, there are many other ways to generate a secondary. It just needs dedication and commitment. Money generated through this source can be used to repay your debts.

Transfer the balance to other credit card

It may not help you to eliminate your huge debt. It may, however, help you to avoid sinking deeper into the debts. Interest is an essential part of any credit card debt, and if you can successfully manage to reduce the rate, you can save considerable amount.

You definitely have many other expert opinions on how to reduce your credit cards debts. If you haven’t come across any, you can find millions online. But these tips would provide an added advantage. Get rid of your debts. Learn to tame that monster.

Along with repaying all the debts quickly, debt consolidation services also help an individual to get rid of irritating calls by creditors. However, before you avail such services, it’s important to know few things about debt consolidation service and loans offered by them.

By availing debt consolidation services, all your debts are covered under one loan, which provides you the benefit of making a single payment instead of many. When you contact a debt consolidation company, they usually conduct a debt counseling session to understand your financial condition and your repayment ability. Next, all your credit cards debts are repaid by credit card debt consolidation loans. You then have to repay this single loan, which is usually at a very lower interest rate.

This service is coupled with regular debt counseling sessions that help you to get your finances back on track and correct your credit score. Fees charged by them are quite lower. However, it is quite essential to conduct a self-research before choosing any debt consolidation company.

A good debt consolidation company provides various benefits like tailor-made repayment plans, monthly budget, credit rating improvement methods, lower fees, expert counseling, etc. They ensure you repay all your debts on time and assist you to lead debt-free life.

However, if you don’t conduct a proper research and select a fraudulent company, you will get deeper into the debt hole. Due to the increase in demand of such services, many deceptive debt management companies have emerged lately. These companies focus on making money, instead of helping you. Hence, it’s important to do your homework before going for it.

You can start by making a list of popular, reputed companies that offer credit card debt consolidation loans. Contact all of them and provide your details. Most of these companies offer free debt management counseling. Although every company will divulge a rosy picture to allure, you will immediately be able to differentiate between a genuine and a fake one. Select any of the genuine ones and get started immediately.

It’s true that credit card debt consolidation loans will help you to get rid of your debt faster than you could actually have without them. However, it still takes time. Hence, it’s quite crucial to be patient and persistent while paying your monthly amount.

However, what is considered a good credit score?

Before I directly give out the ideal number, let me define few things first. To avoid complication, let us use the most common type of score – FICO Scores. FICO Score of an individual is calculated based on the credit information given by three chief credit rating agencies, TransUnion, Experian, and Equifax.

The FICO software is used by all these agencies to calculate an individual score because it’s impossible to gauge a person’s credibility as he/she will have three different scores. However, there isn’t much difference between these three scores.

Determining what is considered a good credit score is quite difficult but let’s try to narrow down the confusion. Mostly, the score ranges from 300 to 850. According to myfico.com, median score is 723. This means 723 is the point where the bottom half and top half is divided. So, if your FICO score is above 723, it lies in the top half, that means it can be termed as ‘a good score.’

However, we aren’t seeking to get a perfect score. We need as score that is at least liked by the banks, who eventually are responsible to lend us money. Practically, 680 is what is considered a good credit score by banks. Hence, if your score is 680 or above, you will effortlessly get prime credit.

However, people can get credit even if the scores are miserable; but the interest rates are too. So, what is considered a good credit score in regards with interest rates? This information is best explained by Informa Research Services. A thorough study by this research company mentions that people whose score ranged from 680 to 699 availed 30yr fixed mortgage at 4.9% APR. Whereas, score between 700 to 759 got mortgage at 4.72% and score between 760 to 850 got at 4.5%. Hence, if you want to know a score ideal for decreased APR, it’s above 760.

This seems to be a very high figure. However, if you are anywhere around 600 and above, there are many ways to boost your score. You will get ample of information on the web on how to improve your credit score.

For Construction Work

Paying up for construction work with a credit card does seem an odd proposition doesn’t it? Yes it does seem, provided you don’t know how to use it tactfully. As usual, you can pay your contractor with real cash or check. But you can always buy the raw materials like cement, bricks, metal etc. using plastic money can’t you? These days, many contractors are also agreeing to accept payments for building permits and other construction works.

For Paying Childbirth Bills

Of all the unlikely situations for using your credit card, maternity bills payment is something that you might really find an unexpected treat! Imagine paying up all those high pregnancy bills of your wife! That can be quite a big relief isn’t it? Apart from pregnancy bills you could use the credit card to pay up adult therapists and health clubs.

For Paying Adoption Agencies

Paying up the adoption agency fee with your credit card is something that you might not have thought of till now. You can pay up the adoption attorney and also the birth mother charges with your credit card.

For Paying Up the College Fee of Your Children

Many colleges don’t insist on cash payments. They accept bank checks and also credit cards. So if you think paying in plastic, is the easiest for you, you can always pay up in that. There are no hassles regarding that. These days even schools accept credit card payment right from kindergarten level to the high school level. Many private tutors don’t mind getting paid via credit cards.

For Bail in Prisons

This is one of the most uncommon usages of the credit card that I have come to know of! If you’ve offended law some way and want to avoid spending a night in jail, pay up bail money with your credit card! You may not be able to access your bank during the emergency. But you always carry the cash card with you don’t you?

For Funerals

Hey! You don’t need money only for living in this world, but also for going out of it! Today, one might have to make arrangements for one’s own funeral! So if you want your mortal remains to be bid farewell in the way you desire during the funeral process, pay up at funeral homes for it . You can also opt for funeral insurance. You need not pay up for yourself but also for any loved one too.

For Church Donations

If you want to make some contributions to your church, and are not carrying enough cash to put on the church plate, you can always pay with your credit card. Make direct payments or pay up at websites such as MyChurchDonations.Com or HolyProcessing.com.

People are generally unconvinced or ignorant about the ways to make money from Cash Back Credit Cards. Let me tell them, there are ways to do it and extreme precaution is needed. You might be aware about one way of getting cask back in your pocket; spend money and receive 5% back, Spend more money and receive more cash as ‘bigger 5%’.

Great! You know one method to receive cash. However, there are many other ways to exploit the cash back card that you aren’t aware about. Alright, what are they?

Generally, the amount of cash back depends on points accumulated by you while shopping. In most of the cases, you get one point per dollar spent through your card. However, there are several recognized brands or companies that offer purchases which can bestow you two, or sometimes three points, per dollar spent. So, instead of spending $450 and receiving 450 points, you can go to such shops and get 450 points by spending only $150. Wow! Smart idea. Where will you get the list of these recognized brands or companies? You can find it on the card provider’s website or in the fine print in welcome letter or bills.

Then there is ‘bulk way’. This is nothing but ensuring all your expenses are incurred through this cash back credit card. No matter how small the amount is, use your card to purchase the item. However, while you do this, don’t forget to regularly repay the amount, or you might end up selling your shirt. In short, make sure you don’t accumulate debt.

Pay all the utilities bills using this credit card. These bills include telephone, internet, cable, electricity, etc. By doing this, you don’t have to spend extra to collect extra points. You are paying your regular bills and earning profit. But pay off the amount when the bill arrives, or you might lose the privilege.

Here is another smart way to earn profit from cash back credit cards. Use your card to pay company bills and ask them to reimburse it. You get cash back and you also get the spent amount in full that you can directly pay for the bill as soon as it arrives. So the cash back is your earned profit. This is useful for those you often go for business meetings, lunches, trips, etc.

Earning money through this card is fun until you are charged with some fees. Charges like late fees, over-limit fees, penalty charges, and high interest rates deteriorate the fun. You avail lot of benefits from cash back cards. However, remember that the penalty charged on these reward cards is much higher regular cards.

Avoid these fees by paying the bill regularly. Regularly missing payments may result in cancellation of your card. So, adhere to their guidelines and take advantage of the card.

They promise lower interest rates or a free balance transfer and fall for such pranks immediately without reading the fine print. They set palpable traps and you easily become their prey.

Here are 5 common traps used by credit cards, and plans to evade them:

Trap #1: “APR just 9.99%”

You see this and instantaneously purchase a new card. Did you check the fine print? No? It says the interest rate can go up to 21% any day.

The Plan: As soon as you receive the credit card, read the welcome letter or any other letter that mentions that they approve your request to offer you credit with lending details behind it. In most cases, you will realize that this 9.99% rate is temporary, maybe some introductory or promotional offer. Generally, this piece of information is provided under the title “Schumer Box.” Read the letter very carefully before using the service.

Go for companies that offer a flat interest rate and asks you to take it or leave it. No traps, no hidden charges.

Trap #2: “Cash Back”

Getting certain percentage of ‘cash back’ after shopping sounds great. Now, there are card companies that provide “upto 5% cash back”. You buy the card because you noticed the “5%” figure, but not “Upto”. The fine print mentions that you are eligible to receive a 5% rebate only if you shop more than $2000 per month. Or sometimes you receive 5% rebate for the initial $200, then it drops to $1 thereon.

The Plan: Do not buy any card that mentions “upto x%”. Instead, go for a company that says “flat 5% cash back” or “full 4% rebate”. However, don’t forget to read the terms and conditions applied.

Trap #3: “Transfer balance at zero percent APR for a year”

Nothing comes for free. They charge you 3% of the total amount to be transferred. It is almost unworkable for them to offer you a balance transfer without charging any amount. If you decide to transfer $500, you will be charged $15 even before you think of paying off the balance.

Here is another sub-trap. You transfer you balance at 0%. However, as soon as you spend some and repay the balance, you are charged higher. For instance, if you transfer $600 to another card at 0%. However, the interest rate on new purchase is 12%. Next day, you go shopping and spend $200 using your card, and you pay it off as soon as the bill arrives. So, do you think you still have $600 at 0%? Kidding right? You now have $300 balance at 0% and other $300 at 12%.

The Plan: A difficult but helpful way is to promise yourself not to use the credit card for purchases until you have paid off the balance in full. It becomes quite tough for you to purchase new items. So, what do you do now? You can get a new card that offers zero percent interest rate on all the new purchases for a year. So shop with this card and keep repaying the balance of previous card.

I guess you are getting the message here. I have shown a way quite similar to a “0% balance transfer” scheme that will help you to save the hidden 12%

Trap #4: “Credit limit on your card is $5000”

Credit limit literally means you cannot withdraw beyond a limit, $5000 in this case. However, the fact is you can spend much beyond the limit. Okay, this isn’t an additional service they are providing. They straight away charge $39 overdraft fees.

The Plan: It’s a credit card company, not a parent that will restrict you from spending more. These card providers want you to spend more. They set these limits just to earn money from overdraft fees. You should keep track of your expenses and how close you are to the limit. However, it is suggested that you shouldn’t get much close to the limit because it impacts your credit score adversely.

Trap #5: “No reason, No time”

Along with the signing the card agreement, you also give them the authority to alter the APR at any time without any reason. According to the rule, the will serve you a fifteen days notice, to save your …

The Plan: The best solution is to always have an additional credit card. You don’t necessarily have to use it; it’s just for your safety.

I guess you are a bit more informed consumer now. Remember these key traps before you buy a card and fall for them.