Simply Refusing Credit Is Not Enough To Get a Good Credit Score

As a fairly young professional, I often come across peers who seem to be going through a rough financial patch. It’s doesn’t require a large stretch of the imagination to see why young people have it so hard – they’re fresh in the workforce (aka not earning that much), they are riddled with student loans, and their credit might be non-existent or even poor!

For some, a natural solution might be to simply swear off using credit completely. I can see the logic behind this- credit is a scary beast that can get out of control. All it takes is for you to be behind on one payment, and if you’re living paycheck to paycheck, then you’re going to be playing catch up forever.

People who refuse to use credit might hope that their frugality would help their credit improve over time. Indeed, black marks on your credit report will fall off eventually. But there are even better ways to improve your credit.

Of course, it will require sacrifice. But as we will see later in this article, that initial sacrifice will put in place a virtuous cycle for your financial situation.

You want Good Credit, instead of No Credit or Fair Credit

As a society we’re growing smarter every day. Gone are the days when debt was viewed with flippant disregard. Our parents would have warned us of the dangers of having debt. However, that might have instilled almost too much fear of credit.

It’s gotten to a point where people are refusing to use credit cards, or pay for a house with as much cash as possible.

To me, it’s the “easy” thing to do. Put your head in the sand and your credit should naturally become not bad. But hey, not bad doesn’t mean good. And it’s Good Credit that gives you financial advantages in life like getting lower rates on your loans, having options in terms of renting an apartment, or even successfully applying for mortgages etc.

Often, you can improve your credit with easy wins

Earlier, I spoke of sacrifice in order to improve your credit. Yes, you probably know what’s required – cut back on a bunch of stuff – even (or especially) your morning latte.  Yes, I do believe that you should hold off on credit for a while, saving where you can and paying off what debt you already have.

IN ADDITION, however, you should also take steps to rectify issues that are marring your credit report. For example, it’s not very difficult to correct delinquent payments, as I show in my guide to getting late payments removed from your credit report.

Firstly, you’d be shocked by how often credit reporting companies actually make errors on your report. Secondly, sometimes it just takes a letter to convince your creditors to remove the delinquent payments from your report.

Having Good Credit is a Virtuous Cycle

Imagine how sweet life would be if you’re on top of all your debt repayments, bills etc. Sure, you have peace of mind. But more importantly, you get options in life. Let me show you what I mean:

Having good credit means that you’re more likely to get lower interest rates or more favourable terms on your new loans ->  you get to save more and build up an emergency reserve fund -> you won’t be caught back footed when you need to shell out in an emergency -> you won’t have to take out loans in an emergency and rack up more debt -> you don’t have huge loan repayments to make and can keep on top of your current payments -> credit improves further -> without all that debt weighing you down you can do more with your money.

See how it’s a virtuous cycle? That’s why it’s so important that you begin the cycle by making some sacrifices today!

Conclusion

Not taking on new credit is a sensible way to improve your credit. But it must be accompanied with other steps in order to really accelerate your credit repair. Steps like spending less, building a reserve fund and paying down your existing debt can really put you in good stead with prospective creditors.

Eventually, you’ll want to take on credit. Simply not using credit will not give you good credit. You build good credit by taking on loans that you can manage, and by staying on top of the repayments. Then you’ll start opening doors in life.

Here’s to wishing you all the best in your credit improvement journey!
Simply Refusing Credit Is Not Enough To Get a Good Credit Score Maiane Cassanego 5 of 5
As a fairly young professional, I often come across peers who seem to be going through a rough financial patch. It’s doesn’t require a large...

Women and Credit

Women and CreditEvery woman, whether married or single, should have credit in her own name. Should anything ever happen to her spouse and the family credit is in the husband’s name, she may not be able to then establish credit for her self. This is especially true if she is a homemaker who is suddenly widowed or divorced with no job or income.

The Equal Credit Opportunity Act was designed to stop discrimination against women. She may not be denied credit just because she is a woman or because she is married, single, widowed, divorced, or separated. As long as she shows that she is creditworthy and falls into the guidelines of the credit application, she can’t be discriminated against.

When she applies for credit, she does not have to use Miss, Mrs., or Ms. with her name. She can choose to use her married name, maiden name, or a combination of both surnames (for example, Mary Williams Smith).

If she has recently married, she should contact each of her creditors and give them her new married name and other pertinent information. Have her creditors update their credit files and notify the credit reporting agencies of the changes.

If she divorces and decides to use her maiden name, she should ask each of her creditors to change her name on their accounts. Once the creditors’ records are updated, it is important that they notify the credit reporting agencies. Obviously, if she had some negative accounts in her husband’s name, I would strongly advise not to have them changed into her name; her credit report would be ruined. The idea is to try and build a credit report without any derogatory information.


Jenny’s Story: A Controlling Husband

On an Internet talk show, “For Women Only,” we (the hosts) opened up the telephone lines for questions; a woman named Jennifer called in. She whispered, “I can’t talk very loud because my husband is in the other room and I don’t want him to hear me. We have been married for eight years. Before I got married, my husband had me sign a prenuptial agreement. He has credit cards and a checking and savings account that he uses in his name only. He has never set up a joint account with my name on it for either a credit card or bank account. I have to ask him for any money that I need to run the household. I feel very insecure with our finances. My husband never tells me how much money we have or the status of our financial situation. We are having marital problems. Is there anything I can do to protect myself and establish credit in my own name?”

Jennifer’s husband was trying to control her by not allowing her to spend money without his consent. Her marriage was in trouble. The first thing we recommended to Jennifer was to open up a checking account in her name. Any extra money she could save and put aside needed to be put into her checking account.

The second thing we instructed Jennifer to do was get a copy of her credit report from all three credit reporting agencies. It was important for Jennifer to see if there was any payment history on her credit report. Perhaps her mortgage was being reported on her credit report without her knowledge. Any positive item that appeared on her credit report could be used to help Jennifer establish new credit in her own name.

Once Jennifer received all three credit reports, we advised her to apply for two different credit cards. We instructed her to apply with a local merchant or department store for a credit card. Once she received the credit card from a merchant in her own name and made payments for at least six months, she needed to apply for a VISA or MasterCard. Where the application asks if the account is for individual use, or joint, Jennifer checked “individual.” An individual account holds the applicant solely responsible for payments on the account and authorizes her as the sole person to make purchases with the credit card.

When she was approved and received the credit cards, we suggested that periodically she make small purchases that she could pay off when the bill came due. This would reflect a good payment pattern on her credit report.

If Jennifer and her husband were to get divorced, Jennifer would be in a much better position than she currently was by planning ahead and getting her credit established, rather than trying to do it later.


Q. The credit cards that I use are in my husband’s name. Because I am using his cards, do I need to get any credit cards in my name?

Yes! Every married woman should have at least one or two credit cards in her name. This is to protect yourself should your husband die or you get divorced. If something happened to your husband and all the credit was in his name, you could have a difficult time establishing new credit for your self. Your credit report could show “no record found;’ which can be interpreted as having bad credit.

Because the credit cards are in your husband’s name, you are only a user on the card. Sometimes the credit card company will reflect this on your credit report, however don’t count on it. Check your credit report from all three of the credit reporting agencies to see if any of the accounts you are using are listed on your credit report.

If you apply for a credit card while you are married, you do not have to have your husband as a cosigner or be listed jointly if your income is high enough to meet the stated requirements.


Q. My husband and I went through a major financial crisis. The credit cards that my husband was using became delinquent and are now being reported on his credit report. I have two credit cards that are in my name only and in good standing. Can I put my husband on my account? Would this help him rebuild his credit?

Yes! Many times a wife is able to help rebuild her spouse’s credit re port by adding him to her credit card account. You can add your spouse as a joint applicant. The credit card company would then request his Social Security number and income information. Because you are the primary applicant, you are responsible for all the payments.

If all the payments have been made on time, this will be picked up by the credit reporting agency and reflect as a positive entry. The more positive entries on your husband’s credit report, the easier it will be for him to reestablish his credit.

It still is advisable for you to have a credit card solely in your name. You never know when you may need it for an emergency.


Q. My husband died several years ago. All the credit cards were in his name. I applied for a new credit card and was denied. I made all the payments on these cards but my credit report says “no record found.” What can I do to get new credit?

Check to see if any of the credit cards that your husband had were joint accounts. If they were, contact the credit card company and instruct it to report this to the credit reporting agencies. If none of the accounts were held jointly, you will have to start all over in reestablishing your credit.

Go to your local bank and see if it offers a secured credit card program. A secured credit card is a VISA or MasterCard that you get from a bank after you make a security deposit. I would recommend that you get two secured credit cards and charge small amounts each month. Pay the full balance off every month. Your good payment history will be reported on your credit report. Make your payments on time. Within six months to one year, request that the bank issue you an unsecured credit card in place of the secured credit card.

This is not an overnight process. If you continue to make your payments as agreed, however, you eventually will be able to get new credit.


Q. When I apply for credit, can I report my child support and alimony payments as income to qualify?

Absolutely! When reviewing your application, the credit grantor must consider any income—whether it be full-time or part-time employment, child support, and alimony.

I have a friend who is divorced with three children. She is working full time and receives child support and alimony. The child support and alimony payments are higher than her income.

Several years ago she applied for a mortgage for a new home. Her wages were not sufficient; however, with the child support and alimony, she was able to qualify for the home and complete the purchase. Always include child support and alimony when applying for credit or a loan.


Q. When you get married and have a new last name but have the same Social Security number, can you get new credit?

Whether you are married or single, the credit reporting agencies use your Social Security number as an identification source. If you apply for new credit under your married name, the Social Security number would be cross-referenced and reported with your maiden name. This could cause your credit report to be merged together with your married and maiden names. All of your accounts would appear on one report.

It is important that you notify the creditors of your name change so that creditors can update their records, which would be reflected on your credit report. Once creditors are notified of the name change and their files are updated, they will report your active accounts and any activity on your ac counts to the credit reporting agencies using your new name.


Q. My husband died and we had some joint credit card accounts. Will I lose the credit cards?

A joint account is the only type of account that protects you against being closed because of the death of a spouse. The Equal Credit Opportunity Act states that a creditor cannot automatically close or change the terms of a joint account solely because of the death of a spouse. The creditor may ask you to update your credit application or reapply if the initial acceptance of the application was based on all or part of your spouse’s in come and the creditor has reason to suspect your income is inadequate to support the line of credit.

If a creditor requires you to reapply, it must give you a written response to your application within 30 days. While the application is being processed, you may use your line of credit with no interruption. If, for some reason, your application is turned down, you must be given the reason in writing.

The chances of the creditor closing your account are very slight, as long as you continue to make your payments on time and do not exceed your credit limit.
Women and Credit Maiane Cassanego 5 of 5
Every woman, whether married or single, should have credit in her own name. Should anything ever happen to her spouse and the family credit ...

Your Retirement Checklist

Your Retirement ChecklistAs the baby boomers reach retirement age, many find themselves unprepared for the changes that lie ahead. Planning for the future doesn’t need to be overwhelming. If you are nearing retirement age (or want to start planning ahead), here are a few things to keep in mind as you prepare for and plan your retirement.

Make a Will

As you start to review your investments, retirement accounts and social security benefits, you should also make sure you have a will. If you don’t have one, now is the time to sit down with a lawyer and write one. If you already have a will, make sure that it stays up-to-date. Wills need to be updated due to a variety of reasons including a birth, marriage, divorce, move to another state, etc. Often an out-of-date will can cause more problems than not having a will at all, so make sure you stay on top of any changes that need to be made. Since you’ve worked so hard earning your wealth, make sure your family will be taken care of the way you intended.

Retirement Budget

To know whether you have enough saved, you need to compare your expected income to planned expenses and create a retirement budget. Keep track of your current spending and include any known future vacations to get a sense of what your expenses will be like during retirement. For your income, add the government benefits you will receive (such as Social Security) to what you have in your 401k, IRA and/or any other retirement accounts. To help estimate these amounts, try using a retirement calculator like the one on CNN Money. Once you know these values, you also must estimate how long your savings will last you. Most retirement experts say you should be able to safely use 4% of your savings each year so that your money will outlast you.

If you find that your expenses will be greater than your income, you have two options. The first is to see where you can cut back in your expenses. Maybe cut back on the amount of travel or consider retiring somewhere cheaper. The other option is to supplement your income. To do this, consider picking up a part-time job during retirement or try saving more money in your retirement funds. While you can usually only contribute a maximum of about $16,500 to your 401k before age 50, that maximum increases to $20,500 after age 50. If possible, you can also consider delaying retirement by a few years that will allow you to save even more in your fund.

Retirement Living

In planning for retirement, you need to consider where you want to live. Do you want to stay in the comfort of your own home, move to a smaller place or sip Mai Tais in the Caribbean? This living situation can be a large factor in estimating your expenses and can affect your other retirement plans. For example, if you want to visit your family in the Mid-West a lot, it’s going to be easier and cheaper to do so if you’re living in Indiana versus Bermuda.

If your home is fully paid off, many people opt for staying put. This way, they don’t need to consider paying a mortgage or rent during retirement. Often this can also be more comfortable as you already have established yourself in that location.

If you’re looking for a change of pace, try looking at a smaller home that won’t require as much maintenance. These will be cheaper and you will save on housekeeping and yard work. Keep in mind that metropolitan areas will be more expensive in general and adjust your expenses accordingly. For some ideas, check out Forbes’ list of the best places to retire.

While you’re looking at where to live, also consider looking into nursing homes for the future. Depending on the type of home, the prices can range dramatically and this can be a good way to make sure you have the funds saved now.

Retirement does not need to be complicated. For those who still have many years before retirement, continue saving so you will be able to have your dream retirement. For those who are soon to retire, make sure you have gone through this list so you can ensure a stress-free and enjoyable retirement.
Your Retirement Checklist Maiane Cassanego 5 of 5
As the baby boomers reach retirement age, many find themselves unprepared for the changes that lie ahead. Planning for the future doesn’t ne...

The Fair Credit Reporting Act: Know Your Rights

The Fair Credit Reporting Act: Know Your Rights

Fair Credit Reporting Act (FCRA)The Fair Credit Reporting Act (FCRA) is designed to promote accuracy, fairness, and privacy of information in the files of every “consumer reporting agency” (CRA). Most CRAs are credit bureaus that gather and sell information about you – such as where you work and live, if you pay your bills on time, and whether you’ve been sued, arrested, or filed for bankruptcy — to creditors, employers, and other businesses. The FCRA gives you specific rights in dealing with CRAs, and requires them to provide you with a summary of these rights as listed below. You can find the complete text of the FCRA, 15 U.S.C, 1681 et seq. at the Federal Trade Commission’s website.

You must be told if information in your file has been used against you. Anyone who uses information from a CRA to take action against you — such as denying an application for credit, insurance, or employment must give you the name, address, and phone number of the CRA that provided the report.

You can find out what is in your file. A CRA must give you all the information in your file, and a list of everyone who has requested it recently. However, you are not entitled to a “risk score” or a “credit score” that is based on information in your file. There is no charge for the report if your application was denied because of information supplied by the CRA, and if you request the report within 60 days of receiving the denial notice. You are also entitled to one free report a year if you certify that (1) you are unemployed and plan to seek employment within 60 days, (2) you are on welfare, or (3) your report is inaccurate due to fraud. Otherwise, a CRA may charge you a fee of up to eight dollars.

You can dispute inaccurate information with the CRA. If you tell a CRA that your file contains inaccurate information, the CRA must re-investigate the items (usually within 30 days) unless your dispute is frivolous. The CRA must pass along to its source all relevant information you provided. The CRA also must supply you with written results of the investigation and a copy of your report, if it has changed. If an item is altered or deleted because you dispute it, the CRA cannot place it back in your file unless the source of the information verifies its accuracy and completeness, and the CRA provides you a written notice that includes the name, address and phone number of the source.
Inaccurate information must be deleted. A CRA must remove inaccurate information from its files, usually within 30 days after you dispute its accuracy. The largest credit bureaus must notify other national CRAs if items are altered or deleted, however, the CRA is not required to remove data from your file that is accurate unless it is outdated or cannot be verified.
You can dispute inaccurate items with the source of the information. If you tell anyone — such as a creditor who reports to a CRA — that you dispute an item, they may not then report the information to a CRA without including a notice of your dispute. In addition, once you’ve notified the source of the error in writing, they may not continue to report it if it is in fact an error. Outdated information may not be reported. In most cases, a CRA may not report negative information that is more than seven years old; ten years for bankruptcies.


Access to your file is limited. A CRA may provide information about you only to those who have a need recognized by the FCRA — usually to consider an application you have submitted to a creditor, insurer, employer, landlord, or other business. ? Your consent is required for reports that are provided to employers or that contain medical information. A CRA may not report to your employer, or prospective employer, about you without your written consent. A CRA may not divulge medical information about you without your permission.
You can stop a CRA from including you on lists for unsolicited credit and insurance offers. Creditors and insurers may use file information as the basis for sending you unsolicited offers of credit or insurance. Such offers must include a toll-free number for you to call and tell the CRA if you want your name and address excluded from future lists or offers… If you notify the CRA through the toll-free number, it must keep you off the lists for two years. If you request and complete the CRA form provided for this purpose, you can have your name and address removed indefinitely.
You may seek damages from violators. You may sue a CRA or other party in state or federal court for violations of the FCRA- If you win, the defendant may have to pay damages and reimburse you for attorney fees. If you lose and the court specifically finds you sued in bad faith, you or your attorney may have to pay the defendant’s fees.
You may have additional rights under state law… You may wish to contact a state or local consumer protection agency or a State attorney general to learn those rights. 

How You Can Fight Back

Helping consumers take advantage of their rights to a fair and accurate credit report is what Credit Zeal is about. Credit repair companies provide everyday people with simple, effective, and affordable credit repair services designed to help improve their overall credit picture. Working together with you, they companies I've reviewed will challenge inaccurate, outdated, and unverifiable information contained in your credit reports on your behalf, with each of the three major credit bureaus directly. Through the use of proprietary methodologies and proactive interventions, they bring together a whole range of approaches tailored to your specific needs in an effort to help remove or improve questionable, inaccurate, and outdated information appearing in your credit reports.

Raising Your Credit Score

Over the years reputable companies have developed various systems and methods that they have experienced great success with, and have encountered almost every credit issue there is. Negative information such as late payment histories, bankruptcies, charge off’s, judgments, foreclosures, repossessions, collections, liens, settlements, etc, all have to meet the same criteria under the Fair Credit Reporting Act to be continuously reported on your credit report. To date our methods have helped to remove thousands of inaccurate, outdated and unverifiable items from credit reports all over the country. Providing expertise and compassion in a time of need, their services enable people to move forward with their life, by helping them clean up the past.
The Fair Credit Reporting Act: Know Your Rights Maiane Cassanego 5 of 5
The Fair Credit Reporting Act: Know Your Rights The Fair Credit Reporting Act ( FCRA ) is designed to promote accuracy, fairness, and pri...

Understanding The Risks Of New Age Mortgages


It has become difficult in these times for many people to even think about owning a home. This economy and the damages it has brought about has scared a number of people away from home ownership. However, to combat this fear many banks and lenders have produced new age mortgages that are far more tempting for consumers, but come with a number of hidden drawbacks that people are unaware of. Many people are able to qualify for these new mortgages but at the beginning the pitfalls are often unseen. 


The economic downturn left many people unable 
to purchase a home that is in their price range. Banks have seen this and come up with options for people looking for a home that are downright risky for many people to have. This has led many people to take out mortgages that have high risk and low initial payments. Many people haven’t realized that this can put their new home in jeopardy along with their financial well-being. We are going to look at these new age mortgages and when they could be right for you. Let’s look at some of the examples of new age mortgages that you might be tempted into taking.

One of the first examples of mortgages banks have come up with is the piggy back mortgage. This is one of the least risky options. What is entailed here is taking out two different mortgages. The first will be a line of equity of the home up to twenty percent of the value. This becomes the amount you use to make your down payment. You then take a second mortgage to cover the rest of the home. The risk involved with this is that you have zero equity in the home. This becomes very critical when the house depreciates in value.
In terms of the most dangerous mortgages that have come out, we have to discuss option-payment mortgages. What is entailed here that you have options of payments each month. These options include principle and interest, interest only, or a minimum payment required by the bank. The minimum payment can be lower than your interest each month. The risk involved with this is that anything you don’t pay gets put on top of the mortgage. If you get too far behind with payments you can be turned upside down financially rather quickly and get yourself in a lot of trouble. 

Another risky option is an interest only mortgage. This process goes on by paying only the interest each month for three to ten years. When that time is up your payments will jump so you can start paying the principal. When this happens you need to be ready for that jump in payment each month. People often time get into these payments when they are looking to resell the house, but if you are unprepared for the quick increase in monthly payments then you could easily miss a payment or two and fall into an uncomfortable financial situation. 
The safest mortgage one can take out is a 40 year fixed mortgage. This gives you ten extra years over a 30 year mortgage and essentially gives yourself lower payments. The risk involved is that you are going to take much longer to build equity in the home. 

One more option that is very hard to find anymore are low-doc mortgages. This is when a lender will allow you to take a loan without needing to provide a proof of income. This can be very risky because many people get into loans that they cannot afford. You should only look at this if you are sure you can make your payment each month, and are not intrigued by any of the normal mortgages that are offered. 

So how do you make sure that you are protected from the bank when searching out the mortgage that fits your life and budget

If you are a high risk home buyer, often time’s banks will only require you to look at some of the riskier options. The first thing to do when protecting yourself is to make sure that you get a fixed rate mortgage. Rates at the time are low and you will be protected from increases in rates.

If an adjustable rate mortgage is what you qualify for make sure not to walk into the situation blindly. Look at what can happen when the rate increases as you need to make sure that you will be able to make the payment if the interest rate goes up.
When searching for the right loan, do not be afraid to shop around. You are not only limited to your bank or banks in your area. Often times you can find a better rate from a lender online. 

In all, just make sure you don’t get yourself a loan that is larger than you can afford. Waiting another year to save up enough money might be the most beneficial thing in the long run, rather than jumping into a situation that you are not prepared for financially.

Understanding The Risks Of New Age Mortgages Maiane Cassanego 5 of 5
It has become difficult in these times for many people to even think about owning a home. This economy and the damages it has brought abou...

Avoid Quick Fix Debt Elimination Scams

Debt Elimination ScamsConsumers that are looking to improve their credit and credit score often look for ways to get their existing debt under control. Managing and reducing existing consumer debt is certainly one way to help manage debt payments, credit reports and credit scores. Unfortunately, too many consumers in need of debt relief fall victim to debt elimination scams.

Debt elimination will help with an individual’s credit score over time. With lower monthly payments, a consumer can now better manage their payments and improve their payment history as well as reduce the amount of debt displayed in their credit report. These changes in debt payments and debt load will help improve a credit score. But, quick debt elimination programs are not the solution are usually just scams.

The Office of the Comptroller of the Currency has recently produced a press release informing consumers that the number of fraudulent schemes supposedly designed to “eliminate” debt is increasing. As the credit crisis continues and consumers remain overwhelmed with credit card debt, collection agency calls and even foreclosures it is no surprise that debt elimination marketing has increased as well. These fraudulent debt elimination schemes are being marketed to ordinary consumers, not just those in foreclosures or with poor credit histories. The new targets of the debt elimination scams include borrowers who are current on their payments.

There are number of potential significant consequences to using these fraudulent services. The scams are generally designed to defraud the consumer with fraudulent fees that can ranges from a few hundred dollars to a few thousand dollars. Since the debt elimination plan is established as a scam and will not eliminate or reduce the consumer’s debt the end result often includes a worse credit report and lower credit score. Furthermore, the creditors that may be contacted under a fraudulent pretense by debt elimination company may take additional legal action against the consumer to resolve the fraudulent attempt to eliminate the debt.

Some of the debt elimination scams do more harm to an individual’s credit report and credit score because the intention of the scam artist to steal the consumers identity. A potential result of participating in the illegal scheme is that the fraudsters acquire personal information and the engage in theft of a victim’s identity. Once the personal data and identification is obtained, they may be able to run up substantial new debts before the victim is aware of the theft and further damage the individual credit score.

The deceptive processes are pitched and revealed to the consumer or borrower to con the consumer into paying money to eliminate the debt. Some of the scams used by the fraudulent debt elimination companies may include the following processes and notices:

A phony arbitration award from an arbitrator not authorized under the debt agreement.

The use of a nonexistent “trust account” supposedly held in a person’s name at the United States Department of the Treasury or some other part of the federal government.

The substitution of a fictitious U.S. government debt instrument, which claims to be payable or authorized by the United States Department of the Treasury or a related person or entity, for the obligor’s original note or account at the creditor.

A notice to the creditor that the contract or note is illegal and, therefore, the borrower does not have to pay the debt and may even be entitled to a compensatory award.

A notice to the creditor that the creditor does not have authority to “lend its credit” to the obligor and has violated the law, and therefore, the borrower does not have to pay the debt and may even be entitled to a compensatory award.

The sample fraudulent processes listed were listed by the Office of the Comptroller of the Currency Special Supervision Division.

There may be a number of variations on the elimination debt scams. Consumers should always be careful of quick fixed to eliminate debt or fix a credit score or repair credit. If it sounds to be good to be true, it probably is. Investigate unsolicited offers carefully before going any further.
Avoid Quick Fix Debt Elimination Scams Maiane Cassanego 5 of 5
Consumers that are looking to improve their credit and credit score often look for ways to get their existing debt under control. Managing ...

Where Are You In Your Financial Lifecycle?

A financial lifecycle is a term that financial professionals use to describe where we are in our life and how it affects our financial situation. It’s a way of measuring where we are and where we should be in the next few years. Many of us tend to lag behind in the financial lifecycle, having the good habits that served us well in the previous stage of our financial lifecycle, but not having suitable skills for the stage we are at present and barely planning for the next stage. If you know where you are in the financial lifecycle you can then judge where you fall short and which skills you can learn.

1. The Early Years


The first part of your financial lifecycle is your childhood and early adult years. In these years you are mainly studying and the jobs that you can pick up tend to be part time, unskilled and poorly paid. They are more useful in teaching you what work is like rather than the spending money that they bring in. It is OK to be financially dependent on your parents; they don’t want you to drop out of education in order to get some quick money now. It is also OK to build up (some) long term debt as your education should in the end pay for this several times over.


2. The First Jobs


You then have the period of early earning. This is the period of the first few jobs, when although the pay is lower than it will be later in the career, costs are so much less as there are no spouses, children or homes to pay for. Salaries also rise rapidly. During this period a large chunk of student debt can be paid off, it is also a period when a new career can be tried out with little being lost. Starting a pension and getting on the housing ladder may not be the most fashionable things at this age but doing these things now will pay dividends later.

This period is also a time to start dabbling in investments as money lost now can easily be replaced, and so high risk investments can be considered. A big win now could be worth an enormous amount later while lost money can easily be replaced. All the time lessons, from both winning and losing investments will be learned that will pay off later.

Many people don’t fully use this exciting period. For a start they may put this period off by getting more and more college degrees with no idea of where they will be in the future. They may also still spend more than they earn, remaining dependent on their parents into their thirties or building up greater debt. More importantly there is not much desire to learn about saving or investing at this age, missing out on the best time to start a pension. 

This early stage continues on into the early stages of marriage. It is a period of relative affluence that should be enjoyed, but it is also a period where a good deal should be learned about investing and saving, as you will need those savings later.


3. The Young Family


Most people remember the early years of having a family as one where there never seemed to be any money. At this time one of the spouses often stops work for a few years, or sharply cut down their hours. The other spouse would see their pay rising slower than it had been previously, and there are sudden expenses. Children are never cheap.

In these times there needs to be a new frugality. Investment needs to be maintained, if for no other reason to keep in the habit. Debt will seem to get larger, but it should be a different type of debt from student debt, being for a larger house. Purchases will also be more practical and less glamorous. The sports car is replaced by a station wagon, and the flat in the fashionable area of town is replaced by a house in the suburbs. There is also a need to start (or continue) saving for college funds.

There is a desire to retain the old lifestyle which can mean that debts build up more easily. This is made possible by greater access to credit as the house is now a substantial asset and while the pay is not rising at the fast rate that it was, the pay rises have still compounded and so the money that is being earned is more than ever before. 

Debt to fund a lifestyle is the biggest problem at this stage. Unfortunately the lifestyle does take a hit when children come along. This is not easy when friends from school and colleagues at work are still enjoying exotic holidays and constant nights out.


4. A Growing Family


The next stage is when the children are growing up. The expenses start to seem less. The pay is still rising, and in fact many people are at the peak of their earning power at least in real terms (the pay may still keep on rising after this but for most people inflation starts eating away at the pay rises). The spouse who may not have been working can now restart a full time job.

The temptation here is to keep the savings at the same rate as before. The idea here is not to maintain the savings and investments that were made when you were, to all intents and purposes, quite poor but to expand them. Debts should no longer be treated in maintenance mode; this is no longer something that is excusable as it was when the children were very young. Credit card debts should be paid down quickly, and then the mortgage needs to be attacked and preferably paid off. The mortgage in particular will be more manageable as inflation will make the amount of the mortgage seem far lower. At the same time there should be a step up in payments to the investments that were being maintained over the early years of family building.


5. The Empty Nest


After the family has left, there is an empty nest period. The children are out of college and earning a living and even if they are at home they are paying their own way. It is OK to enjoy yourself at this time, as the disposable income will rocket. However this is not a long time. 


One of the things that should be done is to start de-risking investments. Losing a bundle at this stage is going to have far more long term effect than it will at any of the earlier stages as you will not have the time to make this money back. A cold hard look at investment accounts should be made and your investment portfolio should become far more boring. Also debts should finally be paid off (if they have not been already). This will be fairly easy, but just because it’s easy doesn’t mean it should be shunned. 

One of the shocks at this time, particularly if you put retirement off for a while to continue working, is that wages can often start falling. This is not just the case for lifestyle reasons, as part time working or a job close to home suddenly makes more sense, but for the very fact that employers want younger people who aren’t about to retire. 


6. Retirement


Finally there are the pension years when you are living off past earnings. This is a time to live off your past good habits. The disposable income will start to drop off, and inflation can be bitter during this time (even if the pension is index linked). However if you have saved up enough these are likely to be golden years.

This is a period where people tend to hold on to things that they don’t need to. The main example is the large family house. It is a good idea to downsize and to live off the money. At a later stage a reverse mortgage may be a good idea so that you can benefit from the equity in the house. Your children may not be ecstatic about the choice, but they have got a career and a home and should be in a saving habit. It is also time to put the investment portfolio into income generating assets; high risk fast growth companies aren’t much use now.

Everyone will hit different stages of the financial lifecycle at different ages. However your investment and spending needs do change throughout your life, and if you are not consciously recognizing you will be playing catch up as you use the good habits that you obtained in the last stage of your financial lifecycle but learning the habits that you need in the current stage only by your mistakes.
Where Are You In Your Financial Lifecycle? Maiane Cassanego 5 of 5
A financial lifecycle is a term that financial professionals use to describe where we are in our life and how it affects our financial situa...

Make Better Financial Decisions And Take Care Of Yourself

If you want to make better financial decisions, one of the best things you can do is to take care of yourself. It’s not just about seeing a lower health insurance bill because you are in better health. Your physical and mental state can actually influence the decisions that you make — including your financial decisions.


Stress = Poor Spending Choices

When you’re stressed out, you’re far more likely to make poor spending choices. If you want to make better spending choices, then you need to make sure that you aren’t making them when in a state of stress and anxiety.
Often, shopping while stressed results in buying more than you expected. An unhealthy mental and physical state can mean that you are less disciplined, and more inclined to make impulse purchases. You’re also more vulnerable to your child’s whining and begging for specific things. How often, when you’re stressed out, do you snap, “Ok, fine!” just to get your child to stop pestering you. This applies to shopping as well.
And, of course, the biggest stress shopping issue is that of shopping therapy. Shopping can trigger better feelings and lead to increased spending as a way to address feelings of stress and anxiety. My husband uses online shopping as stress relief. When he feels over-stressed, he looks at eBay — and usually ends up buying something he had no intention of purchase, for more than he wanted to pay.
When you feel good, you are more disciplined, and less likely to make poor spending decisions. Take care of yourself, and you will feel less stress, and your spending decisions will be more informed and you’ll practice better discipline when it comes to saying “no” to the superfluous purchases.
It’s not just about the day-to-day shopping decisions. When you are stressed and afraid, you might not make wise choices about your insurance, how much you should be setting aside for retirement, or how you are investing. Fear and stress can really mess up your long-term investment plan. Try not to make any financial decision when you are feeling frazzled and uncertain.

Before You Make A Financial Choice

One of the best ways to avoid impulse purchases and make better money choices is to live a healthier lifestyle. At the very least, though, try not to make financial decisions — from spending to insurance to investing — while feeling at your worst. Here are some things to try before you go shopping, and before you head into a meeting where serious financial choices will be determined:
  • Sleep well: Tiredness reduces mental faculties and reasoning skills. A good night’s sleep can help your mental acuity and improve your decision-making capabilities, including financial decisions.
  • Exercise: Physical activity gets the blood flowing and the brain working. You’ll be alert, and have heightened reasoning skills. A little exercise before you tackle the tough choices of the day can really help you improve your decisions.
  • Eat a good meal: Make sure that you eat a good meal. Think about it: When you’re hungry while grocery shopping, you tend to spend more and even buy more junk food. But hunger also affects your ability to make other decisions. Eat a good meal, or have a healthy snack, before you start in on something. Consider nuts and berries as great “brain food” as well as healthy choices that can help your energy level.
  • Stay hydrated: Drink plenty of water and you’ll feel better in general. You’ll avoid the mental and physical fatigue that comes with dehydration, and you’ll be in a better place to resist poor decisions.
  • Take time for you: Refresh yourself with a relaxing activity that you enjoy. This can include reading, meditation, or even a power nap. Taking time out to do something that helps you feel good can increase feelings of contentment and boost your mental faculties.
Following healthy habits on a daily basis can help you maintain financial discipline, and think more clearly when confronted with money choices. At the very least, don’t go shopping when you’re tired and hungry. Just following that bit of advice can save you hundreds of dollars a year in terms of impulse purchases. But, if you can, work on improving your lifestyle so that most of your financial decisions are savvy.
Make Better Financial Decisions And Take Care Of Yourself Maiane Cassanego 5 of 5
If you want to make better financial decisions, one of the best things you can do is to take care of yourself. It’s not just about seeing a ...

8 Simple Steps To Financial Freedom

Financial FreedomYou can achieve financial freedom as long as you want it and work hard for it. Unless you are part of the 1%, your journey on the road to financial freedom will be a long one. In this article, I want to walk you to through a few steps which I think are critical to any financial improvement effort. This road map pulls together information and ideas that I have learned by studying other financial plans, and reading books. It includes information that I learned on my own financial journey, and I hope that you will be able to use this as the starting point for your own.


1. Set Your Mind to It


Improving your finances involves a lot of work and patience. You cannot turn things around and make things better overnight. So the first step is to recognize this and put all your attention and effort into doing something.


2. Set Up Goals and Milestones


Next, set up some rough financial goals. You wont have it exactly correct the first time, but that's okay. You can start with a wishlist of reasonable objectives for now and make them better later. Some of your goals may look something like this.


Start a budget


  • Lower my expenses by $100 a month in 3 months
  • Pay off my car loan by the end of the year
  • Start saving $50 a month
  • Do 3 things to better my finances each month
  • There is no correct way to do this. Just make a list of 3-5 things and you can just go from there.

3. Spend Less


Improving your finances is really as simple as the old cliche “spend less than you earn”. Once you can get your expenses and spending under control, everything else — e.g., paying down debt, building wealth, etc. — will be that much easier to accomplish. When it comes to improving your finances quickly, nothing beats cutting your expenses. To get going, here are plenty of ideas on how to cut expenses and save money.


4. Get Out of Debt


If you are in debt, the best thing you can do with the money you saved is to pay down your debt. Being in debt is like trying to win a race with one foot on the accelerator and another on the brake. Whether they are good debt or bad debt, they are costing you money and slowing you down.  As such, one of the early step toward achieving financial success is to get out of debt.

Here is a good primer on how to get out of debt and protect your credit score


5. Start an Emergency Fund and Have a Plan


Once you’re debt free (excluding your mortgage), it’s time to start building your wealth. But before you can do this, you need to have an emergency fund and a good emergency plan in place. This is your “Get Out Of Jail Free” card — always good to have one around. 

6. Earn More


You can only take it so far with cutting expenses, so the next step is looking at ways to earn more money — especially by building alternative income streams, diversifying your income sources, and becoming less reliant on your job. To get you started, here are some ideas on how to make more money.


7. Save and Invest


After you get all the basic stuff out of the way, now it’s time to get serious and work toward your short-term and long-term goals. 


8. Protect Your Finances Against Risks

Uncertainties and risks are your biggest enemies. They can throw you off track and destroy your progress. However, there are many ways to mitigate these risks and prepare for uncertainties. To protect yourself and your family against catastrophe.

Obviously, there are much more to achieving financial success, but I believe these are the 8 most essential things to work on.

8 Simple Steps To Financial Freedom Maiane Cassanego 5 of 5
You can achieve financial freedom as long as you want it and work hard for it. Unless you are part of the 1%, your journey on the road to fi...

Savings In America

Savings in America
We all know that we’re supposed to save. You have to save for retirement, emergencies, college, large purchases, etc. However, this doesn’t mean that everyone is saving or knows how much they should be saving. During the peak of the housing bubble, the savings rate for Americans dropped to an all time low of .9% meaning we were saving less than a penny for every dollar that we spent.

This lack of savings that we saw in 2005 seems to have caught up with us. The Employee Benefit Research Institute found that most Americans have less than $25,000 saved up for retirement. 27% of Americans even said they are not at all confident about retirement. The Harris Poll also found the 27% of Americans had no personal savings.
With the subsequent recession following the housing bubble, many Americans struggled to pay for the basics, let alone save anything. This has caused about one third to tap into their savings to cover basic expenses.
However, it’s not all bad. Due to the amount of mortgage foreclosures, banks have had to write off billions in loans that went bad. That means they were much less willing to extend loans or credit, forcing many people to stop living off of their credit cards. With no other option, this has caused many Americans to start saving and paying down their debt.
In fact, according to the Commerce Department, Americans are now saving about 6% of their disposable income. On top of that, Americans now have 7% less mortgage debt, 12% less in auto loans and 15% less in credit card debt. Even retirement savings were up, with the average 401(k) balance hitting a 10-year high. Talk about a massive overhaul!
Building up savings and paying down debt are key factors that can help the economy. Once consumers get to the point where they are comfortable with their savings, they will start spending again – boosting the economy. Of course, finding the right balance between saving and spending will also help to avoid another recession.
Recession or not, everyone should create a budget to see how much they can save and where their money is going. Look into your company’s 401(k) plan (if you haven’t already) and set up automatic deductions from your paycheck. Most companies will even match contributions, so you’re losing retirement money if you don’t take advantage of this.
Hopefully, this new outlook on saving becomes a trend rather than a fad. Only time will tell if consumers have actually learned anything from this experience or whether we will see another generation of Americans reach retirement with too little too late.
Do you think we will continue to save or fall back into spending?
Savings In America Maiane Cassanego 5 of 5
We all know that we’re supposed to save. You have to save for retirement, emergencies, college, large purchases, etc. However, this doesn’...

Starting A Business With Bad Credit

Starting A Business With Bad CreditWhile having bad credit can make it more difficult to start a business, it doesn’t make it impossible. If you are truly dedicated to the idea of entrepreneurship, there are some ways to help you get the financing you’ll need for your business

First, reevaluate your funding plan. Studies show that credit card and bank loans account for only 25% of the total funds you’ll need. This means that 75% of the money you need won’t rely directly on your credit score, which is good news! However, that also means that you’ll have to convince a lot more people that your plan is solid to get funded, so make sure your business plan is polished.

To get the other 75% of funding, experts recommend that you start by asking your friends and family to invest in your business. It is reported that 50% of all business owners get financial help from friends and family. Your loved ones most likely won’t look into your credit score, so they might be easier to receive funding from.

However, don’t forget that this is still a loan, and they expect to be repaid. Talk with your potential donors about a repayment schedule and possible interest rates to make sure that you maintain good relationships with these investors. These relationships can be valuable to your start-up needs as well as your credit. If you choose to do so, you can hire a loan management company to help you report these personal loans to the Credit Bureau, which will help boost your credit over time (as long as you don’t default).

If you still need more funds, the Internet is a great resource to find private lenders. Sites like Prosper.com are great sources of capital for people with bad credit and they will also report your timely payments to the Credit Bureau. Take some time to compare different rates though to make sure you’re getting the best lending deal possible.
Depending of your type of business, you may also be eligible for state or federal government grants, so look into what’s available where you live.

Once you’ve received the initial financing, make sure to establish business credit that is not linked to your personal credit. Experian will calculate your business’s credit score based on credit obligation information from your company's suppliers and lenders, public records and the company's background information. If you can establish good credit with your business, you will be eligible for more and better loans if you apply as the business rather than an individual.


Starting A Business With Bad Credit Maiane Cassanego 5 of 5
While having bad credit can make it more difficult to start a business, it doesn’t make it impossible. If you are truly dedicated to the id...