U.S. Sen. Lamar Alexander, a Republican representing Tennessee, recently said that his party and the Obama administration still disagree on the state of the federal government’s current education policy, which in turn could endanger the current student loan interest rates of 3.4 percent, according to a report from CBS News. GOP lawmakers in the U.S. House of Representatives recently introduced and approved a bill that would tie federal student loan rates to those available in the market, rather than a set number. However, while the White House’s plan does the same, it also allows for less fluctuation of the rates over the life of the loan.

Another obstacle to these new allowances is that Republicans generally disagree with how the administration is setting national education policy, the report said. For instance, they believe Democrats are trying to freeze current mandates from the federal government, rather than giving more power to states themselves to decide their own education policies, and have moved to make the latter more possible.

“It puts Washington out of the business of deciding whether local schools are succeeding or failing,” Alexander said, according to the news agency. “It rejects the federal mandates that create a national school board, and prohibits the Education Secretary from prescribing standards or accountability systems for states. It continues the requirement that states have high standards and quality tests, but doesn’t prescribe those standards.”

In recent years, student loan debts have exploded nationwide, with the increase in both tuition costs and students’ reliance on financing those costs. While the interest rates on existing student loans will not go up, new student loans taken out after July 1 would see their rates double to 6.8 percent if federal lawmakers don’t reach an agreement.

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The post Big Hurdles for Student Loan Rate Agreement appeared first on Credit.com Blog.

For some of these potential disasters, we have insurance available to help us rebuild. When we do have that insurance, we have peace of mind that our precious belongings can be replaced if disaster should hit.

But insurance isn’t always available for every disaster. Nor will it always adequately cover the cost of rebuilding or replacing that which is damaged. And even if you do have adequate coverage, it can take months for that money to be paid.

One thing that isn’t considered is the “meantime.” What do you do in the meantime – after disaster has struck, but before you get paid from insurance (assuming that you have insurance at all)?

A Lifeline in a Disaster

This is where credit can help. A good credit score gives us access to money when we need it. It enables us to bridge the gap between disaster and the eventual recovery.

• When disaster strikes, you often need emergency supplies like food, water, clothes and fuel when you can’t access the supplies you owned. Good credit allows you to have a credit card to buy those things.
• When disaster strikes, you might need to temporarily replace key belongings (such as a car or furniture) and if you don’t have savings to dip into, you’ll need a loan. That’s where your credit also comes in.
• When disaster strikes, you might need to rent a temporary living space while your house is being repaired or rebuilt. Landlords may pull your credit information before they rent to you.

And that’s assuming you have insurance. If you don’t have insurance, or if insurance is not available or does not cover the particular disaster you faced, your credit will be the tool you rely on to help you. There are many reasons to have good credit: access to money when you need it, a competitive edge in the job market, and credit is even growing in importance in burgeoning romances.

Just as insurance gives you peace of mind and allows you to sleep at night, knowing that you are covered for disasters, so too does credit. Credit is the way you can bridge the gap in an emergency and ensure that your family’s health and safety are looked after while you wait for insurance to help you rebuild.

Image: Zoonar

The post When Disaster Strikes, Your Insurance May Not Cut It appeared first on Credit.com Blog.

Step 1: Determine a Destination

If you’re like me, you probably already have a bucket list of travel destinations. That’s great. But before I decide on a destination for a particular trip, I research the cost and weather using these tools:

Numbeo.com: The world’s largest user-contributed database on cost-of-living worldwide.

SoloTravel.org: A site which offers a cost calculator based on your travel preferences.

WorldWeatherOnline.com: This provides historical climate data on countries around the world.

Speaking of weather, I always put together a chart so I can see at a glance which months look best. For example, to prepare for a 48-week trip through Central and South America, I put together a chart listing the average temperature and average rainfall for each country I planned on visiting for each month of the year. Then I planned out our route to give us the best chance of hitting great weather. You don’t want to visit the country of your dreams during a monsoon, only to discover you should have known it was the rainy season!

Step 2: Book a Flight

Booking flights might seem straightforward, but there are options to consider—such as whether you should book a one-way, round trip or round-the-world ticket to get the most bang for your buck.

Personally, I love the freedom of having a one-way ticket. Also, booking a return ticket is generally less expensive if booked in a foreign country.

Round-the-world tickets are ideal for visiting multiple countries on multiple continents. The most common round-the-world tickets are offered through airlines or specialty providers such as Airtreks.com. One thing to remember: Over-land travel (by bus, train, car or pack mule) gives you greater flexibility and lower prices. However, if you’re planning on a whirlwind tour of the world’s great cities, a round-the-world ticket might be right for you.

For more ways to save on flights, check out my six money-saving airfare secrets.

Step 3: Get Vaccinated

At least three months before a big trip, I visit a travel clinic to get my vaccinations—some of which may take three or four visits. Know that vaccinations can be expensive. I spent almost $1,000 getting my vaccinations for Southeast Asia. If you’re currently employed, check if your health benefits will cover the cost of your shots.

In addition to visiting the travel clinic, I also visit my doctor and ask for a general antibiotic prescription in case I get any viruses while traveling. It’s a little bit of a cost upfront, but nothing compared to getting seriously ill in a foreign country.

Visit the Centers for Disease Control and Prevention for the recommended vaccinations by country.

Step 4: Manage Mail

A couple of months before your trip, go paperless for all your important mail. If you will not be returning to the same address, ask a friend or family member (thanks Mom!) if you can temporarily use their address. Use the free USPS change of address form to update your address.

Step 5: Get a Passport and Visa(s)

Be sure to get a passport as soon as possible. Passports are valid for ten years, though some countries will not accept passports that will expire within a year. To get a passport, visit the U.S. travel website. An adult passport costs about $135—more if you require one in a rush!

Many countries require you to obtain a visa prior to entering the country. My husband learned the hard way and was deported from Vietnam after arriving without a visa. But know that visas aren’t cheap—and, depending on where you’re visiting, they can take a long time to be processed and approved.

The Department of State admits that fees vary between countries and even between applicants, as they’re generally managed by the embassies of the country you plan to visit. You can learn more about visa requirements, fees and limitations at the U.S. Department of State.

If you’re crossing borders—especially in developing nations—bring at least two passport-sized color photos for each country you plan to visit.

Step 6: Get Rid of (Almost) Everything

Before leaving, I sold my furniture on Craigslist and had a garage sale for smaller items. Not only did this lighten my load, but I also made over $1,500 in the process.

If selling everything seems extreme, you can rent your home furnished or move everything into storage for the time being (but remember thatstorage isn’t cheap—fees for storage units can run up to $255 per month).

As far as your car goes, you can either loan or rent it to a friend, or sell it. I’ve done both and they’ve worked out pretty well. Make sure to call your car insurance company to inform them of your travel and ask them to cancel or put a hold on your policy.

Step 7: Book a Hotel

While you probably want to book your accommodations well before you arrive, I usually take care of the more time-consuming tasks first (hello, visas!), then turn my attention to accommodations.

Generally, I look for alternative, budget-friendly options such as home stays, apartment rentals and camping grounds through sites like VBRO, Airbnb and Craigslist. Sometimes, if I can’t find affordable, acceptable options ahead of time, I’ll arrive without any at all and get help on the ground finding a place to stay. While my husband and I traveled around Asia, we would arrive without a place to stay and check into a guest house—basically, a nicer version of a hostel where you can get a private room for about $10—and decide which city to visit next.

But the first two days in any new country are a transition period. For that time, I book two nights at a nice hotel so I can acclimate, sleep and determine my next plan of action. Trust me, you don’t want to worry about changing money, communicating in a foreign language or finding accommodations while you’re jet lagged. Stretch your budget those first few days—it’s worth it.

Step 8: Manage Your In-Transit Money

I used to be a big fan of traveler’s checks, but with debit cards they’re almost extinct and expensive to exchange. In any case, I still bring some traveler’s checks and U.S. dollars in case of an emergency.

I also contact my bank and credit card companies to tell them the countries I plan to visit and ask about any possible fees for using my card in a foreign country. If there are a number of fees, consider getting an international debit/credit card.

Step 9: Prepare for an Emergency

I love the saying “safety is no accident.”

Before I leave, I always:

Enroll with the Smart Traveler Enrollment Program for travel warnings and alerts

Scan two color copies of my passport and driver’s license—and keep one copy in my backpack and one in my money belt

Email my parents and myself a copy of my passport, driver’s license, credit card numbers and international lost/stolen phone numbers, traveler’s check numbers and travel itinerary.

A little low-cost preparation ahead of time can save you major headaches abroad.

This piece originally appeared on LearnVest, the leading personal finance site for women. Need help managing your money? Our free Money Center will help you create a budget. Our free bootcamps will help you take control of your money, cut your costs or get out of debt. And you might even be interested in one of our premium financial plans–managed by LearnVest Certified Financial Planners.

MORE FROM LEARNVEST:

• Flying Solo: Summer Travel Tips for Singles
• The Best Time to Buy Airline Tickets for Every Occasion
• How I Travel the World … While Working

Image: Hemera

The post How I Got Ready for 9 Months of Travel appeared first on Credit.com Blog.

What to Plan For

By providing your mortgage company with the most accurate and true picture of your circumstances  — starting with the loan application — you’re helping them to find the best way to structure your loan for a favorable credit decision.

The lender will also look at your divorce decree for any other undisclosed/non-credit report financial obligations such as child support, alimony/spousal support paid or received.

If: You receive income in the form of child support or alimony …

Then: This income can be used for qualifying for the mortgage, so long as there is a six-month history and the income is poised to continue for the next three years, determined by child support or am alimony agreement detailing the terms of the obligation for the party paying the debt.

If: You pay alimony or child support …

Then: This reduce yours borrowing ability as debts reduce income, and income is needed to offset a mortgage payment.

If: You are divorced even as long as 20 years ago …

Then: There is no statute of limitations on mortgage loan underwriting, so the full divorce decree will be required no matter how many years you have been divorced.

If: You own a house and are on a mortgage with an ex-spouse …

Then: As long as the divorce decree awards the other party with the home, and the other party is willing to provide supporting evidence that they make the mortgage payments on that home — by providing 12 months of bank statements and/or canceled checks — the total mortgage payment on that home can be omitted from the decision-making process on your new mortgage, which can improve your ability to qualify.

If: You and your ex make the mortgage payment from the same joint bank account and the divorce decree awarded the other party with the property …

Then: You are both 50-50 responsible because the money is “co-mingled” funds from the same place to pay the obligation. There is no way to support your position that one person is responsible for making the payment because it’s coming from a joint account.

If: The ex-spouse is responsible for making the mortgage that you are also on …

Then: Explore the possibility of having the ex-spouse refinance you off the mortgage obligation.

If: Your ex-spouse is refinancing you off a mortgage loan …

Then: A final closing statement called an HUD could be required by the lender you’re working with for procuring your loan to omit the payment from the other house.

If: You have a joint consumer credit such as credit cards, installment loans, auto loans or even student loans …

Then: Unless you can prove the other party is for responsible for the credit obligation (with 12 months of canceled checks or bank statements), those liabilities will be factored into your ability to qualify.

Tips If You’re Not Yet Divorced

It’s so important to create a marital settlement agreement prior to being divorced. This is a precursor to getting a divorce that could be a great asset in helping you qualify for home financing. Navigating the financial questions that inevitably come up during the separation or divorce can easily be taken care of by having a clear delineation in writing on whose property is whose.

Consumers planning a divorce in the future would also benefit by separating their finances. This means having separate bank accounts, and paying any obligations from these separate accounts. If you are trying to get a mortgage, or will be trying to get a mortgage, consider having a conversation with mortgage professional upfront, who can guide you through the complexities in the underwriting process during a divorce.

Image: Jeffrey Hamilton

The post Is Divorce Keeping You From Buying a Home? appeared first on Credit.com Blog.

This article is for anyone who feels stretched financially. It will give you some ideas on how to save more money each month. Oh, and if you’re actually keeping your money under your mattress please go sign up for a bank account! Keeping your money in a federally insured bank account is a whole lot safer than keeping it under your mattress. (You should also have a savings account set up, where you can earn interest as you save.)

Here are the first places you can look to shave some money off your monthly expenses.

Your Phone Bill

For most of us, a phone bill is a non-negotiable expense. We need a phone in order to communicate with the outside world — friends, parents, coworkers, service providers, etc. But a lot of people these days are paying more than they need to for phone service. If you have both a cellphone and a landline, it may be worth canceling the landline and directing all phone traffic to your cellphone. And speaking of the cellphone, ask the company if you can switch over to a less expensive plan. In particular, look into prepaid plans — these do not require a contract and are sometimes cheaper than the regular plans. Do an Internet search for cheap prepaid plans and you’ll get a lot of different options to compare.

Insurance Policies

The vast majority of Americans have several different types of insurance. Car insurance, health insurance, renters insurance, homeowners insurance, life insurance — the list goes on! But are you getting a good deal on your insurance policies? Sometimes people don’t realize that they may be paying for more insurance than they need. When you sign up for an insurance policy, you generally tell the provider information that can be used to get you a discount or lower rate. But sometimes this information goes ignored or misplaced. And sometimes your circumstances change.

Call your providers and see if there are lower rates available. For example, I recently talked to my auto insurance provider and realized that I had been paying more than necessary because the amount of miles I drive each year has decreased since I originally signed up for the policy.

TV and Entertainment

Are you paying an exorbitant amount for cable television? I’ve had cable service in a few different cities and it almost always comes out to more than $80 per month — sometimes much more than that. But if you’re trying to save money, why not cut the cable? These days, you can get plenty of entertainment options online and with a Netflix account (around $8 per month) you can still watch quite a few TV shows and movies.

If you do decide to keep your cable, at least try to negotiate with the company to make sure you’re getting the best rate. Often, they’ll get you started on a discount rate and after a few months they’ll raise it up, so you have to be vigilant.

Debt Payments

At first glance, it may seem strange to list debt payments as one of your major budget items, but for many people today that is the case. With student loan debt increasing and credit card debt remaining high, the minimum monthly payments can be a big expense. To escape the debt trap, you will need to be resourceful and make a plan to pay off those debts. Start by focusing on the debt with the highest interest rate and pay as much as you can toward it each month.

If you have really high interest rates on your debt, look into doing a balance transfer or getting a debt consolidation loan to lock in a lower interest rate. For those with student loans, be sure to check out some of the many federal programs that can help you pay off student loan debt faster.

Food Budget

A little over a year ago, I looked at my budget and realized that food and groceries made up a big percentage of my monthly spending. So I began to find ways to reduce that number. The obvious first step is to refrain from buying meals at restaurants — whether it is eating out at lunch every day or going out for dinner on the weekends. Those bills add up quickly.

Instead, make meal plans for the week ahead, buy the necessary ingredients at the grocery store, and get comfortable with some easy recipes that you can turn into two meals (dinner and the leftovers for lunch). Once you get in the habit of doing this, you’ll find it gets easier and more fun. Plus, you’ll be joining many others who are part of the “brown bag lunch” club.

Your Mindset

One thing that all of these tips have in common is that they require you to prioritize saving money over other things in your life. This can be really hard to grapple with, especially when you feel like you have to give up something that you want. However, there are a few ways you can change your perspective to overcome the psychological challenge of saving money.

The most important is to confide in those close to you (your family and friends) that you are working to save money. They’ll be able to help you and give you encouragement. Another thing that can help is to spend time focusing on all the things in your life you’re grateful for. Sometimes appreciating the simplest things can help make it easier to make a few sacrifices for your budget.

Hopefully these ideas for saving money can help you gain more control of your finances and find ways to save more money. If you have additional tips, share them in the comments below.

Image: iStockphoto

The post How to Save More Money This Month appeared first on Credit.com Blog.

In a harshly critical memorandum to the Federal Student Aid’s Chief Operating Officer, the assistant inspector general condemned the agency’s repeated failure to validate the accuracy of certain subcontractor invoices before authorizing payment.

These weren’t just any nickel-and-dime invoices.

The remittances in question were for commissions and bonuses totaling nearly a half billion dollars. They were paid to private collection agencies (PCAs) that claimed to have recovered cash on previously defaulted student loan accounts — those that had become so past due, they were at the point of foreclosure.

I have absolutely no quarrel with the IG’s rebuke, nor am I opposed to rewarding for extra effort. However, I am concerned about the operational controls that govern incentive compensation plans, especially those that pertain to something as problematic as the student loan program. I wonder in particular whether the feds are ensuring that the collections companies are doing all they should to prevent past-due payments in the first place or worsening when they do.

Stopping a Bad Situation Before It Gets Worse

Experienced lenders know how important it is to quickly nudge back on track the borrowers who’ve fallen one or two months behind in their payments, lest they become chronically delinquent — or worse, headed toward default. That’s why it’s surprising the DOE’s PCA Procedures Manual doesn’t mandate such proactivity or even establish guidelines for acceptable levels of payment delinquency when mega-bonus dollars such as these are at stake.

Moreover, according to Consumer Financial Protection Bureau, education borrowers are complaining about the difficulties they’re having understanding the terms and conditions of their agreements, confirming that their remittances have been promptly and accurately recorded, and complying with instructions that seem to change with each customer service call they make.

The college grads who’ve contacted me also frequently complain about being pitched negatively amortizing forbearances and graduated payment plans instead of provided more helpful information regarding the government’s superior debt-relief programs.

This merry-go-round of misinformation and obfuscation is the reason the CFPB announced in March a proposal to oversee the largest nonbank student loan servicing companies, just as it currently supervises the largest bank-owned operations.

A Real Solution to the Student Loan Problem?

Now that the public comment period for this has passed and the bureau is at work crafting the rules that will govern its new activity, we can only hope the guidelines that are put into place will comprehensively address the fundamental process of managing this enormous level of debt — more than for credit cards or auto loans — at a time when student loan-payment delinquencies are at record high levels.

I say that because there’s no point in attempting any legislative solution to this serious problem unless it also universally overhauls the manner in which the loans are serviced, not only by the companies the CFPB plans to oversee but also by the bevy of newcomers that successfully lobbied for a piece of this lucrative loan-servicing action.

In particular, we need standardized protocols for the proactive servicing of all education loans, whether performed by the originating lenders or their subcontractors. Among other things, it should stipulate:

• A definitive timeline for contacting debtors and resolving late-payment issues.
• Minimum acceptable levels of staff training and systems support to properly describe and accommodate loan restructures and modifications.
• Maximum turnaround times for adjudicating customer service inquiries.

We also need incentive programs that reinforce these standards without causing additional harm to cash-strapped borrowers, or added costs for the federal government.

For example, servicers should be held accountable for limiting:

• Each category of delinquency — 30, 60 and 90-days past due, worse — to levels that are consistent with other forms of unsecured consumer debt.
• Past-due payments that migrate from one month to the next (which are known as receivables agings in financial services-speak) so that the collection companies are not undeservedly rewarded.

The validation process should incorporate these important performance measurements before the bonus checks are cut or the servicing agreements renewed.

Meantime, borrowers who are frustrated in their dealings with unresponsive loan-servicing companies should continue lodging complaints to the CFPB and their legislative representatives, as well as with the offices of those who appear to be attempting constructive solutions. They should also familiarize themselves with the various government relief programs that have been put into place so that they are in a better position to advocate for the help they need.

Image: Wavebreak Media

The post How to Stop a Neverending Student Loan Nightmare appeared first on Credit.com Blog.

While someone with a serious or chronic medical problem might expect to wind up in the emergency room or hospital periodically, no one plans to get the flu, break a bone or get in a car accident.

More than 54 million people reported having trouble paying medical bills at the start of 2012, according to a survey from the Centers for Disease Control. And medical bills are often cited as a major contributor to bankruptcy.

How can you prepare so that a medical emergency doesn’t wipe you out financially? Here are six strategies:

Research Local Hospitals

When our reader Quentin’s daughter injured her ankle, he and his wife took her to the emergency room. They suspected a broken ankle. After X-rays were taken, they were told their daughter had no broken bones, and she was sent home with an ankle brace. That wasn’t the end of it though:

Two months later we get a bill from the hospital for $1500.00. They stated that my wonderful Blue Cross/Blue Shield (Federal) wouldn’t pay the bill. I call my Insurance Co and find out that the Hospital isn’t (a Preferred Hospital). Then I get an Insurance statement from BCBS stating that they covered the xray bill ($900). Then I get another bill from the Doctor (which my daughter or wife never saw) for $950. Again BCBS stating that this Doctor wasn’t a preferred provider. So I appeal the bill with BCBS and they agree to pay the $1,500 hospital bill, but only $250 of the Doctor bill. So now I’m getting $700 Doctor bills in the mail.

If you have health insurance, make sure you know the locations near your home, work, and/or children’s schools that participate in your health insurance network. Not only will you save money by going to an “in network” provider (which usually means lower out-of-pocket costs), these providers must agree to a fee schedule negotiated by the insurance company. If the amount they charge is higher than that, too bad. They can’t “balance bill” patients for the difference.

A warning, though: the physicians you see at an emergency room may be contractors of the hospital and therefore may not participate in your insurance network. It’s nearly impossible for patients to know this; but you certainly can try to ask – provided you are not in severe pain or unconscious when you make it to the hospital.

Before you travel, do the same thing: find out how your insurance company handles care outside your local area and scout out participating hospitals and urgent care providers.

Don’t have insurance? Request information about local hospitals’ financial assistance policies and review them to figure out which ones may be willing to work with you to reduce the bill.

Put Urgent Care on Speed Dial

A few years ago my daughter was thrown from the horse she was riding and we suspected she had a broken arm. It was too late in the day to take her to her physician’s office so we wound up in the emergency room. Because we had a high deductible for ER visits, her x-rays wound up costing us about $2,500 out of pocket. It was only later that I discovered we could have taken her to an urgent care instead, and our costs would have likely been much lower.

Many of the common medical ailments that bring patients to the emergency room can be handled in an urgent care facility, and the cost savings can be dramatic. For example, according to data published by Wisebread.com, treating an earache will run around $110 at an urgent care center and $400 at an ER. For a sore throat you would pay an average of $94 at urgent care; while at an ER, the average tab comes to $525.

Research which urgent care centers are in your insurance company’s provider network. If you are uninsured, you really need to try to seek care from an urgent care (rather than the ER), if your illness or injury warrants it. Keep those phone numbers and addresses in your phone or posted in your home where you can find them quickly. You never know when you may need one.

Give Insurance a Second Look

If you haven’t been insured because of the cost, or due to a preexisting condition, you may want to shop for health insurance again. Health exchanges required under the Affordable Care Act are starting to open up, and within the year will be mandatory.

Even if you can’t afford great insurance, you may want to consider a high deductible policy. One of the main advantages of being covered by health insurance is the fact that insurers negotiate reduced prices with participating providers. That means that even if you are responsible for a large deductible, the rate that the hospital or physician charges will likely be significantly discounted by the insurer. You may still have to pay a hefty amount out of pocket, but it can be far less than what you would be charged without insurance.

Max Out Your Flex Account

If your employer offers a Flexible Spending Account at work, you may want to contribute to that plan to build up a cushion for medical emergencies, copays etc. In 2013, you can contribute up to $2.500 a year to an FSA.

While contributions will be withheld from your paycheck each payday, you will have access to the full amount you elected to contribute at the beginning of the year. That means if you incur a $2,000 ER copay on Jan. 2, you can use your flex account to pay for it, even though the full amount hasn’t yet been withheld from your paycheck.

Just keep in mind that whatever funds you don’t spend on qualifying health care expenses will be forfeited, so you want to make sure you can spend the money in your account.

Make Friends With Your Pharmacist

Each year, millions of Americans experience health complications due to medication mistakes and interactions and wind up in the emergency room or hospital — if they survive at all. One way to protect yourself from a medical emergency is to make sure your pharmacist is aware of all the medications and supplements you are taking. Don’t be afraid to ask questions about possible interactions — including food interactions — when a new medication is prescribed.

Also take the time periodically to shop around for lower cost prescription drugs so you know where the best deals are to be had. When you find a pharmacy that you believe is a good value, make sure they have complete information about all the medications you take.

Keep a Credit Card Handy

Virtually all medical providers accept credit cards these days. If you have a card you normally pay in full, make sure you know what the interest rate is for purchases just in case you need to charge medical expenses. If you don’t have a low-rate credit card, consider a personal loan to cover the bill or to pay off a high-rate credit card you used to pay for medical bills.

While it’s less than ideal to have to borrow money to pay these expenses, it’s far better than allowing a medical bill to go to collections and ruin your credit for years to come.

Image: iStockphoto

The post 6 Ways to Prepare for a Medical Emergency Now appeared first on Credit.com Blog.

Applying for a small business loan has always been a hassle, but with the world economy still floundering and credit still tight, the process in recent years has become a full-on nightmare.

The good news is that, while lending is still slow, it’s picking up; and with both the government and big banks pushing initiatives to boost small businesses, now may actually be a good time to apply for the funding your business needs.

So, how do you get your application approved?

There are a few things every small business owner should do to prepare for success before they start looking for a loan.

Clean up your credit report

Before you apply for any funding, you should request a copy of your personal and business credit reports and do a thorough review.

Check for any misinformation or reporting errors, and clear up any mistakes that may be harmful before you start your application process.

Even seemingly innocent details like a misspelled name or an address you can’t remember ever living at may indicate potential fraud or other problems; so be sure to follow up on any discrepancies.

If there’s an error in the information reported from a creditor, it’s often easier to go to the company that made the report directly and discuss the situation with them before turning to the reporting agency.

One instance might be the report of a late payment on a credit card that you’re sure you paid on time. Rectifying errors promptly before you start applying for loans will make the road ahead much smoother.

Prepare a killer business plan

Researching and drawing up a business plan can be tedious, but a well-thought-out plan is essential for a winning loan application.

It’s an opportunity to flaunt your experience and qualifications, and an excellent exercise in self-reflection and meticulous planning for every business owner.

Your business plan should include extensive market analysis and specific income, expense, and cash-flow projections that will stand up to scrutiny.

In the funding request section of your business plan, give details of exactly where each dollar of the loan will be going, and prioritize the uses to which you’ll be applying the funds.

Even if you aren’t approved for the full amount you requested, you may be approved for enough to fund your most important projects. This also helps you make sure you aren’t applying for funds you don’t need.

Businesses often overestimate their funding needs, which can lead to unnecessary loan rejections or interest charges that could have been avoided.

Know what you have to offer

Most lenders don’t want to be the only party taking on risk. They want to know that you’re also investing in yourself.

Many small business owners dip into personal savings, 401(k)s, or a home equity line of credit to get their businesses off the ground.

You should also prepare a collateral document itemizing which business assets you have that can be used as collateral. This can include personal assets like your house, car, or even a college fund.

Business assets might include property owned by the business, such as real estate, vehicles, or inventory. Having adequate collateral to back up your loan will make it much easier for a lender to say “yes” to you.

Find the right lender for a small business loan

Finally, once you have your application materials in order, you should take the time to research different your lending options.

Big banks are an obvious option, but their approval rates can be much lower than for often-overlooked alternatives such as small, local banks or credit unions. This is partly because they attract more applicants. But be prepared for a potentially less personal and less flexible approach.

Big banks rely on automated methods to sort through the high volume of applications they receive, so rigid numbers like credit scores play a major role and you could end up rejected before anyone’s even glanced at your business plan.

Lenders can also differ in their specialties or the services they provide.

If you have a favorable relationship with a bank, they are more likely to approve you. Some lenders may specialize in SBA loans or have initiatives to encourage certain types of businesses with favorable rates.

Researching which lenders are most likely to take an interest in your business, or using a service that matches you with appropriate lenders, can save you time, money, and the disappointment of rejection.

“4 Steps to Take Before Applying for a Small Business Loan” was provided by Mint.com. Mint is a free personal finance tool that brings all your financial accounts together online or on your mobile device, automatically categorizes your transactions, and helps you set budgets so you can achieve your financial goals.

Image: Jupiterimages

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Through the end of last year, the average patient was dealing with significantly increased out-of-pocket medical costs than they were just 12 months earlier, according to a report from TransUnion Healthcare. Those costs rose some 22 percent during that time, to an average of $2,042 from the $1,678 observed at the end of 2011. However, the average amount of debt borrowers carried across all their various accounts declined slightly, slipping to $34,301 from $34,430.

The reason for the minimal movement in outstanding balances compared with those huge increases in healthcare costs they might face in the event of a medical emergency is important because it shows just how much these bills can affect a borrower’s wallet, the report said. At the end of 2011, for instance, for every $100 in healthcare costs borrowers face, they tended to have about $2,050 in revolving credit, but that number dipped to $1,680 last year, making medical bills create a larger burden both overall and proportionally on those hit with them.

“In the short term, it appears consumers on average have been able to successfully manage their increased out-of-pocket medical expenses with their existing credit facilities,” said Milton Silva-Craig, president of TransUnion Healthcare. “But as those costs continue to rise, there is a concern that consumers — particularly those in the non-prime credit tiers, already strapped for cash – may find themselves in a tight position financially, as healthcare costs compete for a larger share of their disposable income.”

Medical bills are one of the leading causes of bankruptcy in the country, as many consumers, even those with fairly comprehensive insurance plans, may face significant out-of-pocket costs for emergency treatment, or especially for care as a result of a grave illness. For example, statistics show that those with cancer are far more likely to be hit with burdens that are nearly impossible for many to afford to pay back, and that in turn can lead to massive financial problems.

Image: 

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Overall, the amount of homes on the market at the beginning of June stood 12.2 percent below those seen at the same time in 2012, according to new data from the online real estate marketplace Zillow. However, the number had improved some 5.3 percent since January, potentially indicating that slowly improving prices are once again pulling more sellers into the market.

What may be more interesting, though, is the sometimes wild disparity between the number of properties for sale in some of the nation’s biggest metropolitan areas, the report said. For instance, inventory in Phoenix, where the housing market took a beating during the downturn, led the nation by rising 31.9 percent on an annual basis, well ahead of San Diego (14.9 percent) and Minneapolis (13.5 percent), which finished in the second and third spots. Meanwhile, Las Vegas, another of the cities hit hardest by the meltdown, saw inventory drop 55.2 percent from the same period a year earlier.

“Inventory will likely remain below year-ago levels for a while yet, as builders ramp up capacity and sellers wait to squeeze every drop of equity from their home before listing,” said Zillow chief economist Dr. Stan Humphries. “But a corner has been turned. Going forward, as this new supply makes its way to market, we expect the pace of home value appreciation to slow down from unsustainably high annual levels of 5 percent or above to more moderate levels closer to historic norms of 3 percent or 4 percent.”

The type of homes that most moved off the market during the 12-month period were the most expensive, with top- and middle-tier homes each seeing drops of 15.7 percent in inventory overall, the report said. Meanwhile, low-cost property availability only dipped 2.5 percent.

Millions of Americans may now be in a financial position to move into the housing market, but may be held out by the lack of available homes. Frustration with this process has been reported among many prospective buyers currently looking to buy today, though the restricted inventory combined with high demand is likely only going to drive prices higher.

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Some 850,000 homeowners across the country saw their underwater mortgages move back into positive equity as prices continued to rise nationwide between January and March, according to the latest data from residential analytics company CoreLogic. In total, that brings the total number of consumers with mortgage balances and positive equity to 39 million.

Meanwhile, the firm’s data indicated another 9.7 million people — accounting for slightly less than one in five residential properties with mortgages — are still dealing with negative equity, and their properties are worth a total of about $580 billion.

However, that decline in negative equity was actually rather substantial. In the previous quarter, 10.5 million people (21.7 percent of homeowners) were underwater on their mortgages, the report said.

“The negative equity burden continues to recede across the country thanks largely to rising home prices,” said Anand Nallathambi, president and CEO of CoreLogic. “We are still far below peak home price levels, but tight supplies in many areas coupled with continued demand for single family homes should help us close the gap.”

Danger Still Exists

Unfortunately, though, many of the consumers who saw improvements in home values so large that they moved above water on their home loans may still be in some amount of danger, the report said. Under-equitied properties — considered to be those with less than 20 percent equity overall — still accounted for 11.2 million consumers nationwide, and of that number 2.1 million had equity of less than 5 percent. Those people, in particular, are vulnerable to fluctuations in the housing market that can potentially drag them back underwater (though many experts consider this to be unlikely on a national level).

Home prices are expected to keep rising for most of the rest of the year at the very least. Continual economic improvements observed nationwide will likely encourage more buyers to continue entering the housing market, driving prices higher, even as interest rates creep up and affordability continues to decline overall.

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Credit.com chairman and co-founder, Adam Levin spoke to MainStreet about the dangers of discarding your smartphone before deleting the data from them. @Mainstr @Adam_K_Levin

Adam also spoke to MarketWatch about how privacy should no longer be expected at the work place. @MarketWatch

Adam talked to WTOP about how we become susceptible to identity theft when we take out the garbage or answer a call from a telemarketer. @WTOP

The post Credit.com in the news 6/15/13 appeared first on Credit.com Blog.

According to the latest study by Javelin Strategy & Research, “almost 1 in 4 consumers that received a data breach letter became a victim of identity fraud, which is the highest rate since 2010.”

A couple of months ago, I commissioned a poll by GFK Roper to gauge awareness and concern about identity theft. To my chagrin the results were worse than I expected. Approximately 40 percent of the respondents said they believed that threats about the danger and probability of becoming a victim were little more than a marketing ploy cooked up by communications departments at identity theft service providers. Even Consumer Reports recently said that they believed the threat of identity theft was “overblown.”

While your risk of becoming ill fluctuates depending upon factors such as the strength of that season’s particular flu strain, your chances of becoming roadkill for an identity thief continue to rise. The percentage of all consumers who have become identity theft victims has increased in each of the last three years, as the crime spread to affect 12 million victims in 2012 alone, according to Javelin.

If your Social Security number is exposed in a breach, your risk multiplies. Javelin found that, “consumers who had their Social Security number compromised in a data breach were 5 times more likely to be a fraud victim than an average consumer.”

According to the Open Security Foundation, more than 267 million (yup, that’s “million”) records were exposed last year in 2,644 data breaches and at least 60 million pieces of personally identifying identification wound up in the hands of identity thieves and fraudsters. Even this astronomical number paints an unnaturally rosy picture, since the actual number of breached records is not reported in more than a quarter of all incidents.

Scammers are able to slither into our lives through more cracks and crevasses these days because they are extremely patient and grow more sophisticated by the hour. This spring, hackers cobbled together enough personal information belonging to celebrities and public figures, including First Lady Michelle Obama, Vice President Joe Biden, Jay-Z, Beyonce and Secretary of State Hillary Clinton to access a government-mandated free credit report site and export the purloined data to a Russian website where it was posted for the world to see. Last month, security researchers discovered a piece of data-stealing malware that attacks Android phones and cannot be deleted. Meanwhile, across the globe, hackers manipulated bank computer systems to create fake prepaid debit accounts, hired thugs to withdraw cash from thousands of ATM machines across more than two dozen countries, and stole more than $45 million in a matter of hours.

Just as the flu virus evolves and mutates over time, becoming more virulent as it responds to and overwhelms vaccines designed to contain and defeat it, hackers and identity thieves are able to avail themselves of quantum leaps in computer processing power used by legitimate companies to create modern Internet authentication and security systems which they then manipulate for their own nefarious purposes.

It’s no wonder then that criminals are more effective than the flu at infecting vulnerable segments of our society. However, unlike the flu, which must figure out its next move by the random mutations of natural selection, identity thieves have only to follow the maps that we ourselves create for them. As the latest data from Javelin shows, the bad guys are getting better and better at it.

How to Beat the Identity Theft Flu

If you want to avoid becoming a flu victim, there are precautions you can take. The same can be said for identity theft as long as it is tempered by the reality that you are trying to prevent (or minimize) further damage. Here then are five things you should do that will help mitigate the fallout from being on a compromised database.

This is not a test.

Take breach notices very seriously. Forty-six states and the District of Columbia have laws requiring entities that gather individuals’ personally identifiable information (PII) to inform victims when that data is breached. These notifications have proven to be surprisingly effective at predicting fraud. According to Javelin’s survey, 12% of all consumers received notice in the previous 12 months that their information had been compromised in a breach. But among actual victims of fraud, a whopping 51% had received such notifications.

God helps those who help themselves.

Many companies, government agencies and nonprofits that suffer data breaches either offer credit and/or fraud monitoring services often for a year or two after the breach takes place. Some even provide access to fraud experts to help victims resolve the issue. Credit monitoring is not the silver bullet but it can be a reasonably effective early warning tool to help detect suspicious activity. A combination of credit and public records monitoring is a more effective detection suite. If they offer monitoring and access to a fraud resolution expert, you would be irresponsible not to accept. Identity theft is not something you should face alone.

Check to see if you already have a damage control program.

Through a variety of other relationships, you may already have access to someone who can help you deal with the problem. If you discover that there’s a chance your personal information has been improperly accessed, immediately contact your insurance agent, the Human Resources Department where you work, your bank or credit union representative. It is quite possible that one of these institutions may offer such a service at minimal cost or as a free perk to customers, clients, members or employees.

Contact the credit reporting agencies.

Put a fraud alert on your file or “freeze” your credit. With an alert, you’re placing a note in your credit file requesting creditors to take extra steps before granting new credit in your name. Alerts must be renewed every 90 days, and can be extended for up to seven years. Unfortunately, many creditors don’t follow them, which may make them less effective.

The other option is a credit freeze. This makes sense if you’re relatively sure your personal information has been compromised. Unlike an alert where it’s possible to access your own credit with sufficient additional identification, a freeze blocks anyone from opening any new credit accounts, including you. The process can prove somewhat cumbersome, however if you actually need more credit—thawing and re-freezing your credit requires advance notice, and can cost between $5 and $20, depending on your situation and state.

Adopt a culture of monitoring

Pay close attention to all of your accounts. This is something you should do as a matter of course, anyway. Your credit is a portfolio. It’s an asset just like your investments and must be continuously built, nurtured, monitored and protected. You can also enroll free of charge in a variety of programs offered by banks, credit card issuers and credit unions that notify you whenever a transaction (or a transaction in excess of a designated amount) occurs in any of your accounts.

However, if your personal information has been improperly accessed, this process becomes even more critical and should not be limited to financial accounts. The ramifications of identity theft go way beyond stolen dollars and cents. It could lead to lives endangered or lost. Medical, criminal, synthetic and tax-related identity theft can land a victim on a no fly list, in jail, standing in front of IRS criminal investigators, or in the morgue. That’s why you must check your Social Security Annual Earnings Statements, health insurer’s Explanation of Benefits, Lexis Nexis CLUE reports, medical records and any other report that can be accessed.

An ounce of prevention

The quicker you detect identity theft the more ammunition you have to challenge fraudulent charges and immunize other segments of your life from contagion. It’s similar to the flu, with one grave exception. If you are a victim of identity theft, staying in bed and hiding under the covers will only make things worse.

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CFPB Zeroes In on Bank Overdraft Fees

The CFPB released a report Tuesday that showed the burden overdraft fees can have on those who opt in for the service banks provide.

The starkest statistic from the report showed accounts that had at least one overdraft or non-sufficient funds (NSF) fee in 2011 from the banks surveyed paid an average of $225 in annual fees. Also, these fees accounted for 61 percent of total consumer deposit account service charges in 2011 among the surveyed banks.

The study also identified a group of Americans as “heavy overdrafters” — a small percentage of consumers who incur 10 or more NSF or overdraft charges in a year. The proportion of consumer checking accounts with at least one overdraft or NSF fee that were heavy overdrafters was 27.8% for banks that tracked all incidences for all accounts opened at any time during 2011.

@CFPB @CreditExperts @kgeldis

10 Steps Women Have Made Toward Financial Equality

The Equal Pay Act was signed into law 50 years ago this week, ensuring that women could not be discriminated via their wages based on their gender.

While the act was one step in the right direction, there have been many steps that have been taken to make women more secure financially. The ability for women in the U.S. to own land, vote and even get a credit card are all rights that had to be fought for. What’s next on the horizon?

@LearnVest

Easy Changes to Make to Your Monthly Budget

There are two ways to save more money — make more or spend less. Unfortunately, for many, making more money is not as feasible as it is to cut your costs.

Some of the great tips offered up by Mint are to cut out midday snacks like protein bars or yogurts, which can cost up to $5 a pop. Those costs can add up, especially if you’re doing it on a daily basis. If you don’t want to cut the habit entirely, you can shop in bulk to cut down on the price per bar.

@Mint

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But it’s not a lost cause. Efforts to provide relief for those who are deep in debt and restore sanity to higher education costs are gaining momentum. Make no mistake: this will not be an easy battle. Billions of dollars earned by lenders, servicers, student loan debt collectors, and even the government are at stake. That means things won’t change unless the millions of borrowers, parents, and citizens who are affected by this debt speak up.

Want to make your voice heard? Here are seven ways you can get involved:

Share Your Student Loan Story

You may not feel quite as alone once you hear what others are going through. Personal stories are also very effective in garnering media attention to the issues involved. Here are some places to share your story:

Occupy Student Debt: Borrowers are asked to submit a picture that shows how much they borrowed for school, versus how much they owe now. While you are there, read their goals page for a fresh take on tired arguments that put the blame on students. Example: “Not every social worker should have been a biophysicist.”

Move.On.orgs’s Bank on Students Campaign: Parents, students and professors can share their stories about how student debt has affected them on Tumblr here.

Student Loan Borrower Assistance: A project of the National Consumer Law Center, this site offers a wealth of information and resources for borrowers. You can share your experience with financing a higher education here.

Credit.com blog: Students who have managed to get their student loans cancelled due to disability often find themselves facing a potentially massive tax bill as a result. Share your story about student loan debt cancellation and taxes here. While you are there, check out Mitchell Weiss’s insights into the issues facing student loan borrowers.

Weigh In On Legislation

We’ve been here before: rates on certain subsidized Stafford loans are set to double July 1, 2013 if Congress fails to act. As a result, several pieces of legislation have been introduced in Congress to try to protect students from this increase, including the Student Loan Affordability Act; Smarter Solutions for Students Act; and the Bank on Students Loan Fairness Act.

But once this issue is addressed (as it most likely will be in one way or another), the bigger problem of unmanageable debt remains. You can be sure they are hearing from lobbyists.  Letting your legislators know your views on this issue is critically important.

Use StudentLoanBillTracker.com and GovTrack.us to keep up with the latest developments in student loan legislation.

You can also keep up with the student loan legislation at the state and federal level at the US PIRG Affordable Higher Education Updates page.

Sign Petitions

Signing petitions for efforts you support takes just a minute. After you’ve signed, you can spread the word about the petition through email or social media channels. While there are many petitions about specific legislation going at any given time, here are a few sites that maintain regular campaigns.

The Project on Student Debt features petitions based on their latest initiatives and campaigns. For example, at the time this article was written, they were asking visitors to sign a petition supporting legislation to stop student loan rates from doubling.

I Am Not A Loan is a campaign by the nonprofit Education Trust. Students don’t sign the petition; instead they ask their schools to sign a pledge to reduce student loan debt. At the site, they can find out if their school has signed on, and learn about actions they can take to help promote affordable college educations.

Search Change.org for the term “student loan” to find current petitions about student loan debt. Or start one yourself!

Join Movements on Facebook

The Institute for College Access and Success is working to make college affordable and accessible to everyone. By following them on Facebook you’ll be updated on legislative efforts, and you can join the discussion on important issues facing student loan borrowers.

Student Loan Justice is founded by Alan Collinge who wrote the groundbreaking book The Student Loan Scam. A grassroots organization, they are fighting to return standard consumer protections – including bankruptcy – to student loans. They maintain an open group on Facebook in addition to their website.

Forgive Student Loan Debt (now StudentDebtCrisis.com) is a movement that began in January 2009 when founder Robert Applebaum proposed forgiving student loan debt to stimulate the economy. Many many borrowers agreed, and the grassroots movement was off and running. Follow them on Facebook or on their website.

Default: The Student Loan Documentary is an award-winning documentary, produced in the fall of 2011, that shares the story of individuals affected by student loan debt and describes the growing crisis. Follow them on Facebook or their website.

The Young Invincibles is a non-profit group focused on issues affecting 18- 34 year olds, including higher education costs.  Check out their interactive student debt infographic and join the movement on Facebook as well.

Tweet

You can follow all of the sites mentioned in this article on Twitter. In addition, you may want to join the conversation at the following hashtags: #studentloans #DontDoubleMyRate #StudentDebtCrisis #DreamsNotDebt #StrikeDebt

Talk to Regulators

Student debt was one of the first issues the Consumer Financial Protection Bureau tackled with their Know Before You Owe tool, and they continue to take a leading role in the effort to protect borrowers against predatory lending practices. Share your student debt story with them or submit a complaint against a student loan lender, servicer or debt collector.

Donations

Finally, virtually all of the organizations in this article welcome financial support as well. If you’ve been able to pay back your student loan debt, and want to help the next generation, you can pay it forward with a monetary donation. Before you do, you will need to do your due diligence.

How are you getting involved in student loan advocacy? Share your story in the comments below.

Please note, this is not an endorsement of the organizations listed and the views in this article are those of author and not necessarily Credit.com. 

Image: Lite Pictures

The post How to Influence the Student Loan Debate appeared first on Credit.com Blog.

What makes child ID theft uniquely problematic is its tendency to be underreported to law enforcement and difficult to investigate when detected, due to: 1) the frequency with which family members and friends are the ones committing the crime, and 2) detection often not occurring until years later.

Each year, 500,000 children under 18 are victimized by identity thieves, according to the Federal Trade Commission — facilitated by clean credit records that parents rarely think of monitoring, and the fact that personal identification information is more easily available to close family and friends.

“Child identity predators are drawn to the fact that their victims’ Social Security numbers are unused — they’re like blank slates,” said Matt Cullina, CEO of Identity Theft 911. “Since children can’t legally apply for credit, thieves know that their Social Security numbers are unlikely to be associated with fraud or bad credit. That makes them attractive to fraudsters who have credit problems or who can’t legally use Social Security numbers of their own to apply for jobs, government benefits, or other services.”

In the 2012 Child Identity Fraud Report, sponsored by the non-profit Identity Theft Assistance Center (ITAC), researchers found that:

• 2.5% of U.S. households — one in forty — with children under 18 experienced child ID theft at some point during the child’s lifetime.
• More than one in four victims (27%) reported knowing the perpetrator of the crime.
• 50% of households of child identity theft victims had incomes under $35,000, while only 10% had incomes exceeding $100,000 — indicating that low income families are more likely to be impacted by child ID theft.

Checking Your Child’s Credit Report

Evidence of child ID theft often surfaces when the child later applies for a driver’s license, a job or college and is denied, or the validity of the SSN comes into question. Sometimes, the victims even receive a call from a collection agency for an unpaid debt incurred using the child’s identification. As a consequence of late detection and reluctance to prosecute a relative or family friend for these crimes, 17% of the children cited in the ITAC study were victimized for a year or longer.

The first thing a parent should do when concerned about a child’s personal information being compromised — or as a precautionary practice prior to a teen getting her driver’s license or first job — is to obtain and review the child’s credit reports from the three national consumer reporting agencies: Equifax, Experian and TransUnion. Be ready to provide each credit reporting agency with your child’s complete name, address, date of birth and a copy of the child’s birth certificate and Social Security card. You will also be required to provide a copy of your driver’s license or other government-issued proof of your identity that includes your current address, and a current utility bill containing your current address.

Don’t be surprised if there are no credit reports on file for your child. This simply means that there has been no credit reported using your child’s identification, and can be considered a good sign. If you find suspicious information, however, you should close any open accounts, place an extended fraud alert or credit freeze on the credit file, and file a police report in the community where the theft took place. You can also file a complaint with the Federal Trade Commission.

Guarding Your Child’s Info

Here are some protective steps you can take to maintain safety for your child’s information, as well as your own:

• Making sure holders of your child’s personal information — school, medical provider — employ secure procedures for storing this data.
• Storing the child’s information in a secure place at home, and not on a computer or mobile phone; not carrying the child’s Social Security card with you; and never providing it via email or other non-secure online transmission.
• Teaching your child to avoid sharing personal identification information on social networking sites or elsewhere.

Image: iStockphoto

The post Can You Check Your Child’s Credit Report? appeared first on Credit.com Blog.

The average balances across all accounts carried by the nation’s youngest borrowers stood at $32,587 through the end of October 2012, down significantly from the $39,408 in the same month five years earlier, according to the latest data from the FICO Banking Analytics Blog. Since that time, average debts for all types of balances (save for student loans) have fallen appreciably, with a special consideration apparently having been paid to slashing credit card debts.

In all, credit card debt declined by nearly a third during this five-year period, slipping to $2,087 from $3,073, the report said. Much of this change came, it seems, as a result of a larger percentage of young people no longer having this type of account in their own names. In all, about one in every six people in this age group is without a credit card, up from only about 12 percent three years earlier, and nearly double the roughly 9 percent observed in 2005. Part of this can be attributed to a portion of the Credit Card Responsibility, Accountability and Disclosure Act, which made it more difficult for those under the age of 21 to obtain an account in the first place.

The percentage of young people without credit cards, predictably, far exceeds those for other age groups, the report said. Only about 8 percent of consumers 30 to 39 years old don’t have these accounts, compared with some 6 percent of those 40 to 49, 4 percent of people in their 50s, and less than 2 percent of people 60 or more years old.

Today, the average college student leaves school with tens of thousands of dollars or more in outstanding debts, most of which are comprised of student loan balances that can be especially burdensome. Adding in credit card debt and auto loans may make it extremely difficult for manyyoung people to gain the financial independence soon after graduation that their parents might have enjoyed, and reduce their capabilities of buying a house for a lengthy period of time.

Image: Hemera

The post Average Debt Carried by Young Borrowers Reaches $32,587 appeared first on Credit.com Blog.

The newest data from the Experian-Oliver Wyman Market Intelligence Reports and Experian’s IntelliView tool show that the years of the credit crunch are becoming a distant memory, with more consumers getting access to home loans and larger credit lines.

From the first quarter of 2012 to the first quarter of 2013, mortgage origination volume grew 16% and bankcard limits increased 20%. This is the eighth quarter in a row that mortgage originations have grown, marking a general upswing in the housing market as a whole.

“This year is off to a solid start given continued upward trends in origination activity,’’ said Linda Haran, director of product management and strategy for Experian Decision Analytics. “With loan delinquency continuing to show exceptional performance, combined with the growth in originations over the past year, we expect to see a strong remainder of the year, and an improving economy can keep this performance going.”

The increase in bankcard limits can be partially attributed to consumers with the highest credit scores on the market. Significant year-over-year growth also occurred within the near-prime segment of borrowers (42%), while prime consumers saw 30% growth.

“There is clearly opportunity in the near-prime segment, and lenders are definitely starting to loosen their criteria to acquire some bankcard growth,” said Haran. “We have always felt that near-prime consumers were ready to take on a little more debt than was being extended to them.”

The growth of bankcard limits to near-prime consumers should be good news for borrowers who are rebuilding their credit following the Great Recession. The opening up of credit means lenders are more apt to reach out to borrowers that have, for the most part, been shut out from record-low mortgage rates.

Don’t understand what your chances are of getting access to credit? You can use the free Credit Report Card to see where you stand and keep track of your score if you’re trying to build your credit.

Image: iStockphoto

The post Credit Card Limits Up 20% From 2012 appeared first on Credit.com Blog.

I received a notice that a collector was seeking a judgement but have misplaced the notice and have no way to communicate with the collector. How can I find out before it’s too late? — Dan

The quickest and easiest way to find the contact information for the collector is to order copies of your credit reports. As long as the collector has reported the collection to the credit reporting agencies, your credit report will disclose the collector’s name, mailing address and contact number.

Under federal law, you’re entitled to free copies of your credit reports from each of the three credit reporting agencies once every 12 months. To claim your free annual credit reports, make sure you use the federally mandated website at AnnualCreditReport.com.

Special Considerations for Debt Collection

In some cases, a debt collector may only report to one of the three major credit reporting agencies, so you may need to check all three of your credit reports (from Equfiax, Experian and TransUnion), just to be safe. We suggest checking all three of your credit reports at least once a year, regardless.

If you’ve already claimed your annual freebie, you’ll have to pay for copies of your credit reports, but in this case it’s worth paying the $7-$9 charge in order to locate the contact information rather than risking even more damage from a default judgment.

If you have more than one collection in your credit report, which can often happen if the collection has been sold repeatedly, then it may be a little more difficult to figure out which collector actually owns the debt and pinpoint which collector would have sent the initial notice regarding the judgment hearing. In this case, you may need to reach out to more than one collector to find out which collection agency currently owns the debt.

Whatever You Do, Don’t Ignore It

In the end, it’s best to do whatever you can to address the collection summons. If you fail to appear in court or respond to a collection summons, the judge will have no choice but to award the collection agency with a default judgement against you. If this happens, it gives the collector additional options to collect, “including wage garnishment or the ability to take money from your bank account depending on your individual state laws,” says Gerri Detweiler, Director of Consumer Education for Credit.com. “Worse, the collector may be able to add attorney’s fees, court costs, or interest to the balance. In some cases, the balance can double or triple due to these additional costs,” adds Gerri.

If you’re facing a collection lawsuit, we highly recommend the following resources from Credit.com. Not only will they help you deal with aggressive collectors, they’ll also help you better understand your options and possible outcomes:

• The Dos and Don’ts of Paying a Debt Collector
• Seven Ways to Defend a Debt Collection Lawsuit
• Creditor Gets a Judgment Against You – Now What?

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The post Help! I Lost My Debt Collection Notice appeared first on Credit.com Blog.

It might sound like an overwhelming task, but it helps to take small steps. Start by reflecting on your values and what is truly important to you. Then, using this information, write down the goals you would like to accomplish over the next five to 10 years.

Initially, you should just brainstorm, and write your goals as they come to mind; don’t analyze the practicality of each goal. Later, review your list of goals and prioritize those you’d really like to accomplish. This gives you a basis from which to make decisions on where to spend money.

But to realize these goals, you have to put what you have in writing into action.

Keep From Getting In Too Deep

People frequently run into trouble with debt because they don’t understand their current situation. Evaluate your current cash flow by identifying your expenses and comparing them to your current income. Then see if — and where — you’re coming up short, and whether you are on track to accomplish your goals. Break it down into these steps:

1. Look through your checking account and credit card statements for the past year to determine where you have actually spent money. Be sure to include bills that are paid annually and expenses that are generally paid in cash. It can be helpful to categorize expenses as discretionary or non-discretionary.

2. Compare your expenses to your income and determine how much is left for saving and investing.

3. Evaluate how you are spending your money and how it aligns with your goals. Does your spending plan support or sabotage your plans? Rework your spending plan to better support your goals and values. Monitor your cash flow on a monthly basis to make sure you stay on track.

Generally, a great way to avoid going into debt is to live below your means. Make the tough decisions to keep your expenses below what you earn so you can deal with unforeseen problems when they arise. It is common for us to continually increase our expenses and standard of living as our income increases.

It’s easy to get caught up in a lifestyle that we can’t afford should we lose our job or run into other financial difficulties. And we can get trapped in a lifestyle and a job we may not enjoy. Living below your income provides you with the flexibility and security to adapt to a changing environment. Staying out of debt is generally under our control based on the decisions we make.

Create a Safety Net

There are a few key steps everyone should take to avoid going into debt. The first is to create and maintain an emergency fund of at least four months of expenses. This money should be kept in a savings, checking or money market account that is fully liquid.  The second is to save at least 10% of your gross income. Think of this as a bill that must be paid. Initially, this may be used to build up an emergency fund and later may be used to build your retirement fund. By saving at least 10% of your income you always have a buffer to keep you out of debt should financial emergencies arise.

Finally, do not carry a balance on any credit cards or personal loans. If you can’t pay off your credit cards in full at the end of every month, don’t use them. Avoid financing personal items such as furniture, clothing and electronics. Instead, wait and save up the money to pay cash for the personal items that you want.

The Good Side of Debt

There are some instances when debt can be a useful tool in achieving your financial goals, such as using a mortgage to purchase a house. However, when purchasing a home, it’s important to make sure that you can easily afford the mortgage payment and still have money to save and meet your other financial obligations.

Similarly, so is the reasonable use of student loans. A student loan can be a good investment toward getting a higher paying job once you graduate. Be sure to use student loans sparingly, and for a degree that will lead to a worthwhile career. As a rule of thumb, college loans should not exceed more than one year’s salary in your career of choice.

Some ideas for minimizing student loans include living at home, attending a community college for the first few years, working a part-time job and applying for scholarships. Parents should never sacrifice their retirement savings to put a child through college.

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