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If you’ve fallen behind on your bills, defaulted on a loan or filed for bankruptcy, chances are your credit has taken a serious hit. Multiple negative marks on your credit history can lower your credit score and make it more difficult for you to obtain new loans. Even if you’re able to find a lender who is willing to offer you credit, you’ll most likely end up paying a hefty interest rate. Fixing bad credit takes time and knowing what steps to take can help you to get back on track financially. Here are some helpful tips on how to rebuild your bad credit.

1. Understanding Your Credit Score

Before you can begin rebuilding your credit, you need to understand how your credit score is calculated and what factors can cause it to go up or down. While there are several different credit score lenders you may choose from to evaluate your credit-worthiness, FICO scores are most widely used. The FICO score, developed by the Fair Isaac Corporation, measures five specific factors in determining your credit risk. These factors include your payment history, the total amount of debt you owe compared to your available credit, the age of your accounts, the number of inquiries made for new credit and the types of debt you owe.
Your payment history accounts for the largest percentage of your credit score so having multiple missed or late payments on your report will cause your score to go down and it also makes you look less responsible to potential lenders. One of the easiest things you can do to begin repairing bad credit is to simply pay your bills on time. Most banks offer online bill payment services and you can set up automatic payments or monthly reminders to help you stay on schedule. If you need help creating a budget or bill-payment system, you can seek the assistance of a non-profit credit counseling agency in your area for additional guidance and advice.

2. Managing Debt

If you’re carrying a significant amount of debt, this can also cause your credit score to go down. This is particularly true if you have numerous debts that are delinquent or have been charged-off. Your credit score is based in part on how much debt you owe versus the amount of available credit you have. If your credit cards or lines of credit are close to or at the credit limit, your score will suffer and lenders may perceive that you have trouble controlling your spending.
Managing your debt requires that you stop using credit to make unnecessary purchases and you begin to aggressively repay what you owe. If you’re only making the minimum payments on your debt, you’re not likely to make much headway, especially if your debts are all at higher interest rates. As you pay your credit cards down, don’t close the accounts right away. Having older accounts on your credit history actually improves your score but closing them can cost you some points.

3. Cleaning Up Your Credit Report

The federal Fair and Accurate Credit Transactions Act (FACTA) and the Fair Credit Reporting Act (FCRA) offer consumers some specific rights when it comes to their credit report. Under the Fair and Accurate Credit Transactions Act, you’re entitled to a free copy of your credit report each year from each of the three major credit reporting bureaus (Experian, Equifax and TransUnion). The Fair Credit Reporting Act protects your right to know what’s in your credit report and how that information is used. The FCRA also outlines the steps consumers can take to dispute inaccurate or incorrect information contained in their credit report.
If you believe that your credit report contains false or incorrect information, you must send a letter to the appropriate credit reporting agency in order to initiate a dispute. The letter must contain your name, address, the information you’re disputing and the reasons why you believe the information is incorrect. The credit reporting bureau is required to investigate the dispute within 30 days. If the information is determined to be incorrect or inaccurate, the credit bureau must either correct it or remove it from your credit report. If the credit reporting agency determines that the information is accurate, they must notify you in writing. If your credit report contains negative information that is accurate, only time will minimize the impact on your credit score. Generally, negative items can remain on your credit for up to seven years but the older the item is, the less damaging it is to your credit.

4. Avoiding Credit Repair Scams

There are a number of credit repair companies that promise consumers they can fix any type of bad credit. In reality, many of these companies make false promises to consumers in order to defraud them. Some companies will claim that they can help you to create a new credit identity using a federal Employee Identification Number (EIN) instead of a Social Security number. Others may claim that you can fix bad credit by “piggybacking” on someone else’s credit report. In exchange for these claims, they charge a fee for their services which many unsuspecting consumers are willing to pay.
In reality, companies operating credit repair scams generally can’t deliver on their promises and they can end up causing even more damage to your credit. The Federal Trade Commission advises consumers to avoid any company that asks you to pay a fee before providing services or makes claims that appear too good to be true.
While bad credit can temporarily hinder you in the short-term, it doesn’t have to determine your financial future. Taking the time to learn more about how credit works can help you to avoid repeating past financial mistakes and rebuild your credit history over time.

Differences Between Chapter 7 And Chapter 13 Bankruptcy

If you find yourself unable to repay your debts and your creditors are threatening to sue, seeking bankruptcy protection may be the best solution to your financial problems. There are two chapters of the U.S. Bankruptcy Code that apply to consumers: Chapter 7 and Chapter 13. Under Chapter 7 bankruptcy, your debts are eliminated and your non-exempt assets are liquidated in order to repay your creditors. With Chapter 13, you repay your debts over time but keep your assets. If you’re contemplating filing for bankruptcy protection, it’s important to understand the key differences between Chapter 7 and Chapter 13.

Eligibility Requirements For Filing Bankruptcy

The means test is the standard which determines whether you’re eligible to file for Chapter 7 or Chapter 13 bankruptcy. The means test looks at your median income for the previous six months and compares it to the median income limit for your family size in your state. Median income limits for the means test are based on U.S. Census Bureau data. If your median income for your household size is equal to or less than the limit allowed for your state, you automatically qualify for Chapter 7. There is no limit to the amount of secured or unsecured debt you may include in a Chapter 7 filing.
If your median income exceeds the allowed limit, you must file Chapter 13 unless you can demonstrate that your monthly income is not sufficient to allow you to make regular payments towards your debts after you’ve paid all of your other expenses. If you plan to file Chapter 13 bankruptcy, you are also limited as to the amount of debt you can include in your filing. As of April 2012, debtors could claim a maximum of $360,475 in unsecured debt and $1,081,400 in secured debt in a Chapter 13 bankruptcy filing. Both Chapter 7 and Chapter 13 filers are also required to complete an approved credit counseling course within 180 days prior to filing.

Discharge Of Debts

Chapter 7 bankruptcy is designed to give debtors a fresh start financially by effectively wiping the slate clean. Your liability for any debts included in the bankruptcy filing is eliminated once your case is discharged. With a Chapter 7 filing, discharge typically occurs within three to six months following the date you submit your petition to the appropriate bankruptcy court. Before you can receive your discharge, you must attend a 341 meeting or meeting of creditors and complete a second course in financial education.
Chapter 13 bankruptcy gives debtors the opportunity to repay some or all of what they owe over time without having to surrender any of their assets. Within 14 days of filing your bankruptcy petition, you must submit a detailed repayment plan to the bankruptcy court which specifies how you will repay your outstanding debts. Your repayment plan will generally last between three to five years and is based on your income. During the repayment period, you must make your payments each month to the bankruptcy trustee or administrator who is charged with overseeing your case. Once all plan payments have been completed, your bankruptcy case will be discharged. If you fall behind on your plan payments, the court may choose to dismiss your bankruptcy petition which will leave creditors free to resume pursuit of claims against you.

Treatment Of Assets

When you file a Chapter 7 petition, you must provide the bankruptcy trustee with a list of any assets you own, including your home, your vehicle, bank accounts, jewelry, etc. along with an estimate of the item’s fair market value. The trustee will liquidate these assets and distribute the proceeds among your creditors. Under the federal bankruptcy code, Chapter 7 debtors are allowed to exempt a certain amount of assets according to federal or state guidelines. The exemption limits allow you to protect your home equity, keep your car or protect other assets. If the value of an asset exceeds the exemption limit, you may be forced to surrender it to the trustee unless he’s willing to let you pay the difference in order to keep it. Depending on where you live, you may be able to choose whether you use federal or state exemptions, based on which system offers the most benefit.
With a Chapter 13 bankruptcy, you can keep your assets but you must still provide an estimate of their value to the bankruptcy trustee. The trustee uses the total value of your assets to determine whether the terms of your repayment plan are fair to your creditors. Specifically, your repayment plan must provide the creditor with at least the same amount of money they would receive if your assets were seized and liquidated.

Impact On Your Credit

Filing bankruptcy has a significant negative impact on your credit, regardless of which chapter you file. Generally, Chapter 7 bankruptcy can remain on your credit report for up to ten years while Chapter 13 can be reported for up to seven years. A bankruptcy filing can result in a significant drop in your credit score and it will likely make it difficult to obtain new credit right away. If you are able to obtain a credit card, loan or line of credit, your lender is likely to charge you a much higher interest rate than they would if you had good credit. The negative impact of bankruptcy lessens over time but generally, it may take several years to get your credit back on track. You may consider applying for a secured credit card account during this period in order to begin rebuilding your credit history.
While filing bankruptcy can help you to regain your financial footing, it’s just one of many options that you should consider if you’re struggling to manage your debt. You should carefully weigh the pros and cons of both Chapter 7 and Chapter 13 before you commit to filing bankruptcy.

What You Need To Know About Stores With Online Layaway Programs

Layaway – a way to buy something without paying for it all at once with cash or using a credit card – has been around for hundreds of years. It became very common during the Great Depression, when much of the lower and middle classes were short on cash, and then it practically disappeared in the 1980s when the masses started using credit cards.

Credit cards charge interest, of course, and most layaway plans have never done that, so retailers didn’t have much use for them, and they were happy to end the need to store layaway items and to pay bookkeepers to keep track of those items.
However, the severe recession that hit five years ago and the years of economic sluggishness that have followed have ushered back layaway plans, most recently Internet layaway plans, which retailers hope to use to attract customers, particularly those who may not have credit cards, who may value living within their means and who may want a gift they buy to be safely hidden from the recipient.
Besides attracting new customers, the retailers – or in this case, e-retailers – like online layaway plans because many of them collect fees and may end up keeping payments if the customers can’t afford to keep making payments. What’s more, online layaway items typically remain at distribution centers until they’re paid for rather than taking up valuable space at stores.
Here are five sites where online shoppers can buy things on layaway:

Kmart

At Kmart, all items are not in the layaway program. Kmart shoppers browsing on the store’s website need to look out for a note that says “Available for Layaway.” Then they must call their local stores to see if they stock the items they want to buy. If they do, the shoppers should select the items they want to buy and click on the layaway option before checking out.
Shoppers make a down payment of $15 or 10 percent of the purchase price, whichever is greater, as well as a $5 service fee to layaway their purchases for eight weeks. They must finish paying for the items in four payments over those eight weeks. If they can’t, they receive a seven-day grace period. If they still can’t, they must pay a $10 cancellation fee, and their money, with the exception of the service fee, is returned. A shopper who buys something that costs $300 or more may opt to pay over 12 weeks and pay a $10 service fee.
After they pay in full for the item, they must go to the store to pick it up. Having to do this, sort of defeats the purpose of shopping online, but Kmart sells the service by pointing out that using the layaway plan means customers will not go into debt to buy what they want.

Sears

Sears and Kmart are both owned by Sears Holding Corporation, so the stores have nearly identical online layaway policies. One difference is Sears shoppers can opt to pay over 12 weeks if they buy something that costs $400 or more. The other very obvious difference is Sears shoppers pay at www.sears.com/layaway, and Kmart shoppers pay at www.kmart.com/layaway.
Like Kmart, Sears requires shoppers to pick up their purchases at a store. Despite the inconvenience, Sears pats itself on the back for offering a “unique” program, saying, “Online layaway programs are just beginning to really get started, and once consumers realize how convenient they are, they're sure to get more widespread.”

Ebay Retailers

A growing number of e-retailers that sell through Ebay offer online layaway plans. The terms vary greatly. Some allow buying on layaway for purchases of as little as $30 while others require purchases of $500 or more. The stores that have small purchasing limits often do not refund any money if shoppers can’t pay in full. Others offer partial or full refunds. Read the fine print. Shoppers typically have four to 16 weeks to pay, depending on the size of the purchase and the retailer. In most cases, customers pay via PayPal, and the retailers ship the items after they’ve been paid in full.

Lay-Away.com

This e-retailer offers a variety of products but mostly electronics, such as laptops, audio equipment, TVs and MP3 players, as well as toys. Everything, of course, is available to buy as a layaway item.
After shoppers find something they want, they click on “shopping cart.” They must make six monthly payments, which vary depending on the cost of the item. Unlike most online layaway plans, shoppers can pay online – by online check only -- or they can mail in a check or money order to a P.O. Box in Chicago.
If a product is discontinued, Lay-Away.com’s “support team” chooses a comparable item and asks customers for their approval. Lay-Away.com charges a $35 cancellation fee.

eLayaway.com

This is a web-based clearinghouse for more than 1,000 companies that offer layaway plans for shoppers. It bills itself as an “online payment system” that charges a transaction fee of as low as 1.9 percent and holds payments “in trust” and transfers them to the merchants after the full payment has been made.
To use this site, shoppers must register. (Don’t worry: It’s free.) They’ll also need a bank account because money is taken out of shoppers’ bank accounts on a payment schedule that shoppers approve. If there isn’t enough money in their bank accounts, the overdraft fee is only $5, and the cancellation fee is $25 or 10 percent of the purchase price, whichever is less.
eLayaway.com characterizes online layaway programs as “somewhat rare,” which is only somewhat true. But the nice thing about it is they offer a wide variety of things, and customers don’t have to go somewhere to pick up what they bought. The layaway balance includes shipping and taxes, if any.
Online layaway plans aren’t very different than traditional layaway plans. Customers who shop online see what they’d like to buy, make a down-payment, sometimes pay a small fee and agree to a payment schedule that requires them to make regular payments online. They have to wait for what they bought, of course, but they avoid going into debt.

6 Best Personal Finance Apps For Your Mobile Phone

Today, our phones are used for so much more than just making calls and sending text messages. Now we can send emails, browse the Internet, do some online shopping and schedule appointments all from the convenience of a cell phone. In addition to making communication easier, our phones have also made handling financial matters simpler than ever before. There are a variety of great personal finance apps available for mobile phones today. In this article, we’ll take a look at some of the best ones and explain how they can help you spend and save your money wisely.

Mint.com

This app is one of the most popular on mobile phones today for both its speed and efficiency. Users can connect the Mint.com app to their bank accounts, giving them an instant look at their updated balances. Unlike an app for a specific bank, you can connect accounts from different institutions to one app to provide a personalized at-a-glance financial overview. A great feature with this app is the ability to categorize your transactions. The app actually does this categorization automatically so you can see how much you’re spending on different things, such as groceries, dining out, coffee, clothing, gifts, bills, etc. You can even set your own personal budget for each of these areas and have the app notify you if you are close to going over your monthly budget for those items or services. One drawback is that users must also have a Mint.com web account.
The Details: The Mint.com app is free. The current version requires iOS 5.0 or later and is a 10.3 MB download.

DebtTracker Pro

If you have multiple credit cards, loans or other debts, then DebtTracker Pro is a great personal finance app to consider adding to your mobile phone. Once users put in their loan or debt information, they can create and maintain a manageable payoff plan. The app has a built-in feature which will tell you how long it will take to pay off a debt at the current rate you are repaying it and lets you play with the numbers a bit to see how a different payment amount each month with affect your debt. One drawback with this app is that users have to enter in information manually since it does not sync to your accounts.
The Details: This app is currently priced at $1.99. It is a 1.0 MB download and requires iOS 3.0 or later.

Mortgage Calculator Pro

Current or future homeowners can benefit from using Mortgage Calculator Pro to calculate the monthly payment for a mortgage. Users simply enter in basic information, like the property cost and down payment amount. Then insurance, monthly fees and interest rates can be added in to test out different scenarios. A complete payment schedule is stored on the app so users can see their principal, interest and balance for every payment. In addition, this app will work for any fixed rate loan, such as car or credit card payments.
The Details: The Mortgage Calculator Pro app is currently priced at $0.99. It requires iOS 3.0 or later and is a 0.5 MB download.

Grocery Gadget

Groceries take up a significant chunk of your budget, so it’s important to spend wisely when you’re shopping at the supermarket. This app allows users to make grocery lists and check off items as they shop. In addition, the app keeps a history of what you’ve purchased and lets you share your list with other iPhone users if you choose. It evens learns the order in which you pick up items at the store and will reorganize your list to match your usual route through the store. Best of all, the Grocery Gadget app lets you scan in barcodes to add items to your list and to enter in the price. With this level of detail in your grocery shopping routine, it is easier to see where you are overspending.
The Details: This app is currently priced at $3.99. It requires iOS 4.2 or later and is a 8.7 MB download.

MoneyPass ATM Locator

As simple as it sounds, avoiding ATM fees can really add up in the long run. With this app, users can quickly find the closest surcharge-free ATM and even get directions that will lead them right to it.
The Details: The MoneyPass ATM Locator app is free. It is a 0.3 MB download and requires iOS 3.2 or later.

PayPal

This personal finance app makes spending money safer and easier. With the PayPal app, users can easily send money to others. This feature comes in handy for things like splitting a check at dinner or collecting money for a group gift. Another great feature is the ability to deposit a check into your account just by taking a picture of it. The best part is that PayPal is known for having great security, so you know your money will be safe.
The Details: This app is free. It is a 15.9 MB download and requires iOS 4.0 or later.
The most important thing to keep in mind when choosing finance apps for your mobile phone is what your personal needs are. In many cases, it’s best to stick to a small handful of apps that provide you with the best financial assistance and advice. That way, your information isn’t spread out among so many apps that it’s difficult to keep track of your saving, spending and investments.

Warning Signs That You’re The Victim Of Personal Identity Theft

The people most vulnerable to identify theft are those who don’t know what the warning signs are. Make sure you aren’t left out in the dark by getting up to speed on these red flags. While they certainly do not guarantee that you are the victim of identity theft, they might persuade you to take a close look at your credit report to make sure that nothing fishy is going on.

You Get Turned Down For A Loan Or A Purchase

Getting turned down for a loan or purchase is a common identity theft red flag, especially if you have decent credit. If you apply for a loan and are turned down, your first step should be to ask the lender for an explanation. Because they have likely just run your credit report, they may be able to let you know if you were turned down for bad credit.

Your Mail Goes Missing

One way that identity thieves steal your information is by stealing your mail with sensitive information. Account statements and bills are prime targets for mail thieves. If you are one of the many Americans who still receive their bills through the mail, you are an easy target for identity theft. If you notice that you have not received your bills, you should call the involved company immediately to ask where your bill is. You should also immediately check your credit report for any suspicious activity.

You Receive Bills Or Phone Calls About Owed Money

If you receive a bill from a company that you have never transacted with or for a purchase than you don’t remember making, this should send off the warning signals. So should phone calls from creditors and debt collectors informing you that you owe money.

You See Unusual Withdrawals From Your Bank Account

Bank withdrawals that you didn’t make are a major red flag. Check your monthly statements carefully to make sure there are no oddities. If you notice any suspicious withdrawals, call your bank immediately.

You See Strange Charges On Your Credit Card

Take a close look at your monthly credit card statement. If you don’t recognize a charge, call your credit card company for further clarification.

A Company That You Have Done Business With Informs You They Have Had A Security Breach

Occasionally, the information database of a company (such as a credit card company) that you transact with will get hacked. If this happens, your personal information, including your social security number and billing information, could be stolen by hackers. If a company’s information database has been breached, they will generally let you know about the breach. If you receive a notice, you might want to check your credit report for fraud.

The IRS Contacts You

Another way that the thieves can take advantage of you is to file a fraudulent tax return in your name. The goal is to receive a large tax refund from the federal or state government. After you file your taxes, if you get a message from Uncle Sam that you submitted two tax returns, you need to contact the IRS immediately to figure out what is going on.

You Find Errors On Your Credit Report

If you do not already, you should check your credit report at least once a year. It’s free and it’s one of the best ways to detect fraud and check for errors. Get a copy of your credit report. It will list all of your loans and credit card accounts. It will also list other important financial important pertaining to missed payment, loan defaults and evictions. If you see something out of the ordinary, you can contact the credit rating agencies for further clarification. If fraud is going on, the Federal Trade Commission has a framework in place for fixing your credit report.

Your Health Insurer Rejects Your Medical Claim Because You Have Reached Your Coverage Limit

Another form of identity theft involves stealing your health insurance information and filing fraudulent medical claims. If your health insurer informs you that your health coverage limit has been reached and you have not filed any claims, you may be the victim of identity theft.

You Are Arrested For A Crime You Did Not Commit

Some identity thieves will give your name and personal information to the police if they get caught committing a crime. If the police come knocking at your door and allege that you committed a crime, identity theft might be the explanation.
It is impossible to prevent identity theft. However, knowing what the key signs are can help you to limit the damage if your personal information is stolen. Do your homework ahead of time and you’ll be able to act quickly if identity theft happens to you.

7 Tips On Improving Your Credit Score

Your credit score can be a blessing or a curse depending on how good it is. A good credit score will help you to get approved for loans and services. It will also allow you to get a better interest rate on your debt. A bad credit score can really hamper your financial and personal life. If your credit score isn’t what it should be, take a look at these seven tips. If followed correctly, they can give a real boost to your so-so credit score.

Stop Making Late Payments

If you are making late payments on your credit cards or other bills, then your credit score is taking a beating. Late payments are one of the leading causes of poor credit scores. Do your best to avoid missing your payment deadlines. Even if you cannot pay off your bills in full each month, you should at least make the minimum payment listed on your billing statement. Over time, this will help to pull up your credit score.

Take On Some Debt, But Not Too Much

If you don’t have any credit cards and you have never taken out a loan, then your credit score is probably pretty crummy. This is because you have no track record of taking on and repaying debt. The only way to get a high credit score is to establish a consistent history of repaying your debt on time and in full.
If you have no credit history, then your first step should be to get a credit card. Once you have secured a credit card, you should start using it to pay for your normal everyday expenses such as gas, groceries etc. Do your best to pay off the credit card bill in full every month so you can avoid interest charges. Make sure that you do not use the credit card to buy things that you cannot afford. It is very easy to get into trouble by overusing your credit card. Remember that your goal should be to replace your cash payments with your credit card. You should not use your credit card to add to your overall debt level.
Taking on a car loan, a mortgage and additional credit cards can also help to improve your credit score as long as you make your payments on time.
Keep in mind that if you take on too much debt, your credit card will suffer. The national credit agencies will ding you if your amount of available debt is far in excess of your income. It is also not a good idea to max out your credit cards because this is often viewed negatively.

Get Different Types Of Debt

Taking on different types of debt is good for your credit score. Mortgages and car loans are particularly helpful because the credit agencies view them as requiring more financial responsibility than credit card debt. For example, it is easier to boost your credit score if you have a credit card, a car loan and a mortgage than it is with three credit cards.

Don’t Close Your Credit Card Accounts

Closing your credit card accounts hurts your credit score. This is because the credit agencies view closed accounts as a sign that you have run into financial trouble and need to cut off your access to credit. If you have credit cards that you no longer use, cut them up, but keep your accounts open.
Additionally, the credit agencies like to see credit card accounts that have been open for a long time. This shows them that you have a long history of using credit. Therefore, you should never close the credit card accounts of your oldest cards.

Don’t Open Too Many New Credit Card Accounts

If you open multiple credit card accounts over a short period of time, your credit score will likely suffer. This is because the credit agencies will think that you are in financial distress and need access to a lot of money. Protect your credit score by spacing out your applications for credit.

Don’t Co-Sign

Co-signing for a loan, credit account or service agreement can hurt your credit if the person that you co-sign with does not pay his share of the bills. For example, many parents co-sign on an apartment lease so that their child can get approved to rent an apartment. However, if the child misses a rent payment, the credit score of the parents will be damaged. To avoid someone else ruining your credit score, avoid co-signing for anything.

Check Your Credit Report A Least Once A Year

Identity theft happens all of the time. If someone steals your identity and racks up a ton of debt that you don’t know about, your credit score can take a nosedive. The best way to prevent this from happening is to check your credit report at least once a year for suspicious activity.
Having good credit is important. If your credit score is currently subpar, take note of these tips to give it a much needed boost. This will pay off when you want to buy a house, buy a car or get approved for another financial transaction.

How To Report Personal Identity Theft If You’re A Victim

Even the most cautious consumers can find themselves the victims of personal identity theft. If identify theft has happened to you, the most important thing to do is to act fast. The faster that you identify and report the fraud, the faster you can resolve the situation and get you credit profile back on track. The Federal Trade Commission (FTC) has put together a list of important steps to take for victims of identity theft. Here are the key steps that the FTC stresses you need to take to report identity theft.

Put A Fraud Alert On All Three Of Your Credit Reports

The first and most important step is to place a fraud alert on all three of your credit reports. A fraud alert will make it more difficult for the identity thief to open up any new accounts under your name because a business will have to verify your identity before opening any account. Therefore, if the thief tries to open a new account, you might get contacted by the business. Make sure that your contact information at the three credit agencies is up to date so you don’t miss an important phone call.
To put a fraud alert on your reports, you only need to call one of the three credit reporting agencies: Equifax, Experian and TransUnion. Ask whichever company you call to put an initial fraud alert on your credit report. The company will then alert the other two companies. The alert will stay in place for 90 days and you can renew it after three months.
You can also put an extended fraud alert on your credit report. It is free and it lasts for seven years.

Think About Getting A Credit Freeze

A credit freeze is a credit alert on steroids. Putting a credit freeze on your credit report means that businesses cannot access your credit report. This makes it extremely difficult for a thief to open up a new fraudulent account.
To get a credit freeze, you will need to contact all three credit agencies. Unlike fraud alerts, credit freezes are not necessarily free. Whether or not you are charged for a credit freeze will depend on what state you live in. If you do have to pay, a credit freeze should run you about $10. Your state will also determine how long the freeze lasts.

Go Over Your Credit Reports With A Fine Toothed Comb

If you put a credit alert or credit freeze on your credit reports, you will be entitled to order a free copy of your credit report from all three agencies. Get a free copy from all three agencies and scan it closely. Here you want to look for accounts that you did not open or other unusual activity. Check for new credit card accounts opened, new utility accounts opened and new loans taken out. If you see anything suspicious, contact the three credit agencies and the business that reported the fraudulent transaction.

Check Your Credit, Debit And Bank Account Records For Unusual Activity

Take a close look at all of your bank and credit card accounts. Look for charges and withdrawals that you did not make. If anything looks suspicious, contact your bank or credit card company immediately.

Close Accounts That Have Or May Have Been Affected

If you figure out which accounts have been tampered with, call those businesses and ask to speak with someone in the fraud department. You should be able to close the fraudulent account and open a new safe account if necessary. Make sure to document all correspondence with the businesses that you speak with.

Create An Identity Theft Report

An identity theft report will help you to:

Remove fraudulent information from your credit report
Stop a company from trying to collect money from you
Get more information from companies about your affected accounts

To create an identity theft report, you will need to get an identity theft affidavit from the FTC and you will have to file a police report. The combination of these two documents creates the identity theft report. The credit reporting agencies may ask for this before they remove the fraudulent information from your account.

Keep Good Records

The FTC stresses that keeping records of all of your transactions pertaining to reporting the identity theft is key to successfully resolving the issue. Specifically, the FTC recommends:

Keeping A Phone Call Log: Write down the name, number and date for all phone calls. It’s also a good idea to have your questions written down ahead of the phone calls so you don’t forget anything. Write down the answers to your questions.
Create An Efficient Filing System: Keep the original documents (such as credit reports and account statements) in a safe place. Make copies that you can send out to the credit agencies and banks.
Use Certified Mail: If you are mailing documents out, send them by certified mail and ask for a return receipt. Remember never to send originals.

If you are the victim of identity theft, don’t take it lying down. Being proactive will allow you to put an immediate stop to the fraud and restore the accuracy of your credit report.

How To Fix A Credit Report Error

The key to fixing errors on an individual credit report is simple: catch it early. The faster mistakes are found, the quicker they can be fixed and the less impact the mistakes will have on your credit scores.

Why Check?

Credit reports are a financial snapshot of a person and the data can have an effect on whether or not that person is approved for home loans, car loans, insurance, apartment leases and checking accounts.
According to the U.S. Federal Trade Commission (FTC), a credit report contains information such as your past mailing addresses, debt-load, a record of paying bills on time, lawsuits and bankruptcies.
An error in any one of these factors can have negative financial repercussions unless it is fixed. Since credit reports impact how much interest is charged on a loan, for example, it pays to correct errors.

Mistakes Vs. Fraud

According to the credit reporting agency Equifax, a credit report can have two types of errors: a mistake and a fraudulent listing.
A mistake is caused by wrong or incomplete information that is submitted to a credit bureau by a creditor. Oftentimes, the mistake is minor and is caused by human error.
The second kind of error is fraud, and it is a whole different ballgame. Fraud is what happens when someone steals your credit card or assumes your identity to obtain credit and run up a debt. The Federal Trade Commission estimates that 9 million people each year are victims of identity theft.

How To Get Your Credit Report

Under the federal Fair Credit Reporting Act (FCRA), each person is allowed to order one free copy of his or her credit report each year from each of the three nationwide credit reporting agencies: Equifax, Experian and TransUnion. Therefore, you should check your credit report at least once a year to check for errors and fraud.
There are three easy ways to obtain your credit report:

Online: The credit agencies have set up a website, annualcreditreport.com, for consumers to easily order their credit reports from each of the three.
By Phone: The free credit reports also can be ordered over the phone from the three agencies by calling (877) 322-8228.
By Mail: A third way to order the credit reports is to fill out a request form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

In addition to the free annual report, the FCRA also entitles consumers to obtain a free credit report if something happens like a company denies an application for credit, insurance or employment because of the credit report, the FTC said. The consumer must ask for the report within 60 days of receiving notice of the denial of credit.
Once the credit reports are in hand, look them over carefully for anything that doesn't match personal finance records and make a note of any errors.

Correcting Errors

Once an error is spotted on a credit report, contact the credit reporting agency by mail to request a correction and provide copies of any documents that would support your claim that it is an error. In your correspondence to the credit agency, make sure that you:

Identify the item in dispute
Explain why the item is in dispute and is considered an error
State the facts of the case
Request that the item be removed or corrected

Send the letter via certified mail with "return receipt requested" to be able to document when the credit agency received the letter and make sure to keep a copy of the letter and any enclosed documents for personal records.
Once the credit agency has your request, it can begin an investigation into the dispute. The credit agency will forward the disputed item to the information provider to investigate. If an error is found, the information provider must submit the corrected information to all three credit reporting agencies.
Equifax confirmed that the process can take between 30 to 45 days to complete.
After the correction has been made, you can request that the credit reporting agency send corrected copies of the credit report to anyone who received the report in the last six months. For employment purposes, the consumer can request a report be sent to anyone who received it within the last two years.
If a disputed item isn't corrected, a consumer can request that a statement of the dispute be included on the credit report.

No Error Is Too Small

Some people find errors on their credit reports but choose not to fix them because they consider the errors too minor. Do not do this.
Errors that you might think are trivial like a wrong address can have a negative impact on your ability to qualify for credit.
The bottom line is that the best way to fix errors and detect fraud is to frequently monitor your credit report. This will allow you to catch any discrepancies early. If you do encounter an issue, follow the guidelines above to resolve it as quick as possible.

10 Common Myths About Declaring Consumer Bankruptcy

Bankruptcy can be the best solution or the last resort for many Americans in the midst of personal economic turmoil. With mounting debt and few options to get out from under the pile of bills, some turn towards personal bankruptcy as a way out.

Unfortunately, there are a lot of widely-held myths surrounding bankruptcy that may incorrectly discourage those in financial trouble from taking the proper steps to protect their finances. To make educated financial decisions, consumers must separate fact from fiction in the bankruptcy process.

Myth: Creditors Will Take Everything

Fact: Most people filing for bankruptcy lose very little, if anything at all. According to Bankrate.com, certain assets such as homes, cars, money in certain retirement plans, household goods and clothing are typically protected from collection. In addition, vehicles and homes with liens can be kept as long as the owner continues to make monthly payments.

Myth: Filing For Bankruptcy Will Not Affect Your Spouse’s Credit

Fact: If shared accounts are included in the bankruptcy filing, the account will show up on the spouse’s credit report as a bankruptcy, according to Bankrate.com. If no accounts are shared, the filing should not affect the spouse’s credit. It is recommended to check credit reports after all debt has been discharged to ensure accuracy.

Myth: All Debt Can Be Erased With Bankruptcy

Fact: Not exactly. Unsecured debt, like medical bills and credit cards can be erased with bankruptcy. However, debt resulting from child support, alimony, student loans, court-ordered restitution or taxes will not be eliminated through bankruptcy and will require continued payment.

Myth: Bankruptcy Will Prevent Any Credit Score Improvements For Ten Years

Fact: Despite the fact that creditors will see the bankruptcy as part of the consumer’s credit profile for ten years, bankruptcy law firm Bolinske & Bolinske reports that improvements in credit scores can be seen in as little as two years as long as the debtor's balances are kept current and credit reports are accurate.

Myth: Not All Debts Need To Be Listed When Filing For Bankruptcy

Fact: All debts must be included, including personal debt. A consumer cannot pick and choose which accounts to disclose. However, Bolinske & Bolinske recommends that if a consumer feels strongly about paying a debt back, he can continue to do so after the bankruptcy has been discharged.

Myth: Bankruptcy Will Give The Consumer A New Start

Fact: Actually, most consumers do begin receiving credit card offers shortly after filing for bankruptcy; however, they are often from subprime lenders with exorbitant interest rates, bankruptcy attorney Howard Ehrenberg tells Bankrate.com. This is because bankruptcy will leave a negative notation on a consumer’s credit report, affecting overall FICO scores. In addition, low FICO scores can even affect a consumer’s ability to get a job or rent an apartment.

Myth: Getting A Loan Or Mortgage After Bankruptcy Is Impossible

Fact: According to Laura Bramble's article, "How Do I Get a Mortgage After Bankruptcy & Foreclosure?" posted on SFGate.com, it is possible to get a competitive home loan post-bankruptcy, sometimes in as little as two years. But it may take some work on the part of the consumer in order to reestablish credit worthiness. In many cases, lenders will also want to know what caused the financial trouble and how the borrower is preventing it from occurring again.

Myth: Late Payments On Credit Cards Are Just As Bad As Bankruptcy

Fact: Although late payments do leave negative marks on credit profiles, they are not as detrimental to your credit as a filed bankruptcy, according to Bankrate.com. Most creditors understand that consumers go through rough patches and are willing to take late payments into consideration when approving loan and credit applications. Late payments can be corrected and erased from the credit report much quicker than a bankruptcy.

Myth: Bankruptcy Is For Losers

Fact: Bankrate.com claims that most consumers who file for bankruptcy do so after a life-altering event such as a divorce, the death of a spouse, a medical emergency or the loss of a job. Often times the situation is beyond their control and bankruptcy is a final effort to regain control over their finances.

Myth: A Consumer Can Only File For Bankruptcy Once

Fact: A consumer can file for Chapter 7 bankruptcy once every eight years. According to TotalBankruptcy.com, this type of personal bankruptcy liquefies assets, completely eliminating unsecured debt. Chapter 13 bankruptcy, however, can be filed more frequently. TotalBankruptcy.com explains Chapter 13 as an "adjustment of debts" and provides the consumer the opportunity to repay delinquent debts based upon a predetermined schedule. Overall, filing multiple bankruptcies is strongly discouraged by nearly every financial expert.
Bankruptcy is an unfortunate reality for many people. And in some instances, it is the best option for debt management. Understanding how bankruptcy will affect your short- and long-term financial goals is critical. Financial planners and bankruptcy lawyers can help assess your personal finances and advise the best course of action based on your individual circumstances.

5 Financial Resolutions To Improve Your Fiscal Health

Many people kick off the New Year by cleaning out their closets or starting a new fitness routine. Everyone should also have financial resolutions on their list. One of the best gifts you can give yourself and your family is to put a priority on improving your financial situation this year.

Here are five financial resolutions to make this year.

Save More Than You Spend

It sounds so simple. If your expenses are higher than your income, it will be almost impossible to meet any other financial goals. But the goal remains hard to achieve. Neil Ellington from Consumer Education Services notes that people chronically underestimate the amount of money they spend each month. Therefore, he recommends writing down all expenses for 30 days.
Once you have completed a spending log, review your monthly expenditures to identify and plug your spending leaks. “Everyone has them - those little leaks will let the money flow out without your truly being aware of it, such as eating out, daily coffee or impulse spending,” said Ellington. He then recommends using the information to create a spending plan for monthly expenses.

Have An Emergency Fund

The recent recession has shown that personal financial situations can change quickly. The sudden loss of a job or a major injury can cause substantial financial stress. “Create an emergency fund with enough to cover at least 9 to 12 months’ worth of monthly expenses," said Harrine Freeman author of How to Get Out of Debt: Get an "A" Credit Rating for Free. "This will prevent you from getting into debt.”
Use a spending plan to calculate the exact amount of money you need to have on hand to pay expenses.
Once you know how much you need for your emergency fund, determine how much more you need to save each month or week to reach your goal. Create an automatic transfer to your savings account from either your checking account or direct deposit to help build your fund. If you receive a raise or a gift of cash, save the additional income instead of increasing your spending habits.
Once you have met your emergency fund goal, direct the money you were saving towards retirement or other financial goals instead of increasing your spending.

Evaluate Your Retirement Savings

If you are not currently saving for retirement, your top priority this year should be contributing to a workplace retirement plan or other personal retirement plan. Even contributing a small percentage of each paycheck will have a significant impact in the future because of compounding interest. Your goal should be to increase your contribution over time as your income increases.
Contribute at least the maximum amount that your employer matches so that you are capitalizing on your own contribution.
If you are already saving for your retirement, assess your contribution levels and your projected savings by retirement age to determine if you need to increase your contribution. Maliz Beams, CEO of ING U.S. Retirement, also recommends eliminating any idle or orphaned retirement accounts from previous employers. “Evaluate rollover and IRA consolidation options, which can generally help to lower custodian fees, enhance portfolio management, reduce paperwork and improve beneficiary designation planning,” Beams said in an interview.

Make Estate Planning A Priority

Thinking about who will take care of your children or how your assets will be distributed if you die is never pleasant. However, it is important to have a will to provide financial security for your loved ones. If you do not have a will, make it a priority to draw up a will this year. For basic estates, you can use an online website to create a will. However, you should visit an estate planning attorney for more complicated situations.
If you already have a will, set some time aside to review the will with your spouse to make sure it reflects your current wishes. Evaluate if the people named as guardians of your children are still the best choice. Verify that all beneficiaries of your estate are still the desired recipients and that all are currently living.
Give a copy of your new or updated will to several family members for safekeeping and also keep a copy at your home. Additionally, create a list of all bank accounts, monthly bills, retirement accounts and insurance policies to help your family continue paying your bills and distribute your assets quickly in the event of your death. Keep a copy of the list at your home so you can easily update it. Make sure to tell a family member where it is located.

Talk More About Money

Money can be a hard topic to talk about, but having open conversations about finances with your loved ones can be important to both your future and theirs.
One of the most important gifts you can give the children in your life is a healthy attitude about money and the tools to make sound financial decisions. Teach children living in your home how to manage money on a small scale through weekly allowances, saving for a coveted toy or working on the family budget. Have honest conversations with adult children or grandchildren this year about money mistakes and successes that you have made during your life. Take the time to listen to any concerns or questions that they may have.
If your parents are senior citizens or nearing retirement age, talk with them about their financial wishes as they age and get a clear picture of their finances. You should also make sure that you or a close family member has all of their financial account information and a copy of their will to alleviate stress if they pass away.
While it is easy to view financial resolutions as a one-time goal or something to check off your list, spend time throughout the year measuring your progress and making adjustments. Think about any personal financial goals that you have and create additional resolutions that are meaningful to your situation.

Helpful Financial Planning And Budgeting Advice For The New Year

The end of the year is a great time to review your finances. It's an opportunity to look at your accounts, determine what needs to be changed and make plans for the future.

Here are 10 tasks you can tackle now to put yourself on track financially for the new year.

Take Stock Of Your Retirement Accounts

Now is the time to look at your 401(k), IRAs and other retirement accounts to see how they've been performing over the prior year and determine what you might need to adjust. If one sector has done particularly well, for instance, you might need to rebalance your holdings to ensure that your asset allocation is what you want it to be.
If a portion of your portfolio is underperforming, however, don't automatically unload it. Markets are cyclical, and often the worst thing you can do is sell stocks or other investments when they're at a low point. The best thing you can do is to develop an asset allocation strategy and then stick with it, rebalancing your account at the end of each year so that your allocation stays on course.

Review Your Beneficiaries

Things change during a year. Babies are born or adopted, kids graduate from high school and marriages begin or end. Therefore, you need to periodically review and update the beneficiaries on all of your accounts, including savings, retirement and life insurance. Check online or speak to a customer service representative to obtain a beneficiary change form for each account.

Update Your Insurance

Life changes also lead to new insurance needs. Evaluate your life insurance and make sure you have enough coverage. Determine whether you need all the bells and whistles on your car insurance. Think about whether you need to raise or lower your deductibles. If you need help understanding the options with your insurance, talk to a financial adviser or a representative of your insurance company for help and advice.

Save Or Invest Bonuses

It might be tempting to spend your year-end bonus, but consider saving or investing at least part of it. Putting it in a vacation fund is a good way to make putting aside the money easier. You can also use it to pay down credit cards or other debt.

Examine Fees And Interest Rates

Look back over your statements from credit cards, bank accounts and other accounts and determine their fees and interest rates. Now's a good time to shop around to see if you can find better fees and rates elsewhere.

Check Into Refinancing

Sometimes it's easy to let your home loan go along on auto-pilot, ignoring the money that can be saved through refinancing. Research current rates and use an online mortgage calculator to determine if refinancing might be right for you. Then talk to the bank or a mortgage broker to start the process. Remember that it doesn’t always make sense to refinance your mortgage.

Analyze Your Monthly Income

Look back over the year at your monthly income. Is it enough, given your spending habits and needs? Are there ways to raise your income? Consider asking for a raise or developing a consulting business on the side. Increasing your monthly income is one way of making yourself more financially fit.

Examine Your Spending

Now is also a good time to go back over your spending for the year. Determine how much you're spending in a variety of areas including housing, utilities, food, medical care, entertainment, travel and incidentals. You can use software like Quicken, or you can do your analysis by hand. However you do it, taking a cold, hard look at your spending will help you to see what you spend, when you spend it and how you can cut back.

Adjust Income Tax Withholding

As you complete your tax returns for the prior year, you'll discover ways that you can adjust your income tax withholding. If you get a large refund, for instance, you might consider decreasing your withholding. On the other hand, if you owe a significant amount in taxes, you may wish to consider withholding more in the coming year.

Make Financial Resolutions

The end of one year and the beginning of a new one is also a good time to make financial resolutions. The best way to make these resolutions is to consider your priorities. Money is only valuable, after all, because of what it lets you do. Think about what you want to do in the coming year and in the long-term. Do you want to send your kids to college? Take more vacations? Live more simply? Work at home? Have a comfortable retirement? Think about your short- and long-term goals, and then come up with financial resolutions that will help you to achieve them.
These tips should help you to get a great financial start to the new year. Remember that there is always room for improvement and reevaluation when it comes to your personal finances.

7 Tips To Avoid Making Your Debt Situation Worse

When you’re in debt, it may be hard to imagine ever being able to dig yourself out. “I’m already in up to my ears,” you might reason. “What difference will another big purchase on the credit card make?” Unfortunately, this line of thinking has a tendency to worsen your situation and make it even harder to become debt-free.

Here are a few tips for staying focused on eliminating your debt. If you follow these guidelines in the coming year, you will have taken a huge step toward paying off your debts and getting on strong financial footing for your future.

Acknowledge Your Debt

The desire to bury your head in the sand when it comes to your debt is strong. It’s also easy in a society where access to credit (and even more debt) is just a click away.
The only way to get yourself out of debt is seeing your current situation clearly so you can make a plan for paying down your balances. A good first step is to gather up all your statements for loans, credit cards and other debts to check them against your credit report.

Make Sure Your Report Is Accurate

Don’t be one of the people who only finds out about mistakes on their credit report after applying for a big loan. Being proactive about checking your credit report through the three major credit reporting agencies can save you a lot of hassle down the road. It also might actually improve your financial situation since interest rates are often set based on the information in your credit report.
Make sure your records match what is on the report. If there are any inaccuracies, you’ll need to inform the individual credit reporting agency first, followed by a notification to the credit card company or other loan agency affiliated with the error. More information on these steps is available through the Federal Trade Commission.

Resist The Urge To Apply For More Credit

Just because you can, doesn’t mean you should. In fact, if you’re trying to get yourself out of debt, the very last thing you should do is apply for another credit card.

Make Your Payments On Time

Late payments are one of the leading factors in ruining your credit score, which quickly translates into higher interest rates and higher debt for you. Set up automatic bill pay through your bank or sign up for email and text message alerts so you will always know when your bill is due. If you’re submitting a payment by check, make sure you leave plenty of time for the check to arrive prior to the deadline.

Avoid The Curse Of The Minimum Payment

You probably already realize that paying only the minimum payment on your card results in more debt down the line. Visit the calculator at the Real Damage before making a purchase to see how much that handbag will really cost you if you only make the minimum payment on it.

Don’t Take It To The Max

Maxing out your credit cards or even approaching the credit limits is another activity that is sure to hurt your credit score and eventually your debt load. Set up a budget and work on living within your means. Remember that paying for things with cash can ensure that you’re not spending more than you have in the bank.

Don’t Co-Sign For Loans

The plea may be great. Your son really needs a new car in order to get to work, or your niece can’t get a line of credit without someone co-signing for the loan. Resist the urge to help out by co-signing, particularly in cases where the other party to the loan has bad credit. What’s at stake? If that person defaults on their loan, it comes back on you along with a smear on your credit report. Don’t take a co-signing situation lightly. Explore other options first and, if you do agree to co-sign, act as if the debt is your own. Making sure that the loan statements are sent to you and that the bills are paid on time.
Once you commit to taking these steps, it’s time to focus on paying off your debts. Start with your highest interest rate loans first. If you’re like a lot of Americans, your New Year’s resolutions might have involved paying off your debt. With some commitment and patience, you’ll be celebrating that financial independence by New Year's Day 2013.

6 Important Tips For Getting Out Of Debt

Overview

Debt is a powerful drain on your financial profile and peace of mind. It makes you stressed about your future, keeps you from getting a good night's sleep and the worry can even lead to health problems. Though your situation may seem bleak, it is possible to pull yourself out of debt.

Many people overcome seemingly insurmountable debt by adopting a realistic budget. This step-by-step guide gives you a road map to a brighter financial future.

1. Calculate Cash Flow

Before you can create a realistic plan for paying down debt, it's important to know exactly how much money is coming in and going out. Chances are you have more debt than income. Knowing exactly how much you are in the negative each month enables you to make necessary adjustments.
Add up your income. Besides your regular paycheck, add in other sources of money, such as interest income, dividends, landlord income and child and alimony support. Add in only recurring income sources. To get an accurate average monthly amount, add up all your income for the past year and divide by 12.
Track your spending. Record all expenditures for one month, including major and minor expenses. The $4 you spend three times a week for a bagel and cup of coffee may seem insignificant, but those purchases add up to $576 per year. Also make sure to include recurring intermittent expenses like insurance payments, gifts and periodic home and auto repairs.
Subtract your monthly spending from your income. If the figure is negative, that's how much you are short. For instance, if you make $2,000 and spend $2,200, you have a $200 shortfall each month that could eat up your savings or lead to the use of credit cards or loans.

2. Slash Expenses

In order to stop adding to your debt load, you need to cut back or eliminate non-essential spending. Cutting back in the following areas can save you a significant amount of money each month.
Salon and spa visits. Rather than monthly visits, try going every two months.
Clothing. Chances are you have clothing in the back of your closet you haven't worn in a while. Rather than buying a new outfit, rotate your clothing.
Gym membership. Plenty of ways exist to exercise for free, including walking, jogging and swimming. This is an especially good category to cut if you find that you don't often get into the gym.
Restaurant dining. Eating out several times a week, including takeout, adds up. Decrease the amount of times you eat out to once or twice a month.
Food. Of course you have to eat, but you can save money by planning your meals around what is on sale. Clip coupons. Avoid relying on expensive prepackaged dishes and cook your own meals from scratch.
Electronic items. Get a prepaid cellphone and contract with a service provider that bundles Internet, phone and cable.
Entertainment. Seek out free or inexpensive options in your community, such as a picnic at the park or the many complimentary programs offered at your local library.

3. Prioritize Debt

Rather than trying to pay off all of your debt at once, which usually isn't feasible anyway, focus on one debt at a time. When deciding which debt to concentrate on first, consider interest rates and amount owed. Initially, you may choose to pay off a credit card or loan with the highest interest rate or instead focus on debt with the lowest balance. Consolidating your debt into one loan is another effective method, because it eliminates multiple payments each month and can mean paying lower interest. Whatever method you choose, keep in mind that in order to reduce your debt you must pay more than the minimum on credit cards each month.

4. Remember to Save

It's important to set aside a portion of your income for an emergency fund to cover unexpected expenses so that you don't derail your debt reduction plan. Aim for saving 10 to 20 percent of your positive cash flow each month.

5. Increase Your Income

Ramp up your debt-reduction plan by making more money. Even a small amount each month can add up to big savings. For instance, $100 more a month could pay off $1,200 in credit card or loan debt over the course of year. Consider taking on a part-time job, selling items through garage sales and on-line and starting a side business that capitalizes on your talents.

6. Stay Motivated

Paying down debt can be a bumpy journey fraught with potholes and setbacks. Make the necessary budgetary changes and stay on course and you will eventually reach your destination of financial peace of mind. Keep yourself inspired about getting out of debt by listing your debt reduction goals. Each time you reach a saving or debt reduction goal, reward yourself with something small like a book, a hike or a trip to the movies.

10 Frugal Living Tips To Happiness On A Tight Budget

Whether you're dealing with a mountain of debt or trying to save money for your retirement, there are numerous circumstances that can force someone to change his or her spending habits. Frugal living is typically viewed in a negative light, where the word "sacrifice" becomes synonymous with "suffering." However, this does not have to be the case. Here are 10 frugal living tips to achieve happiness on a tight budget.

1. Keep Track of Your Spending

If you're planning to live on a tight budget, you need to start by keeping track of all your expenses. From car repairs to that cup of coffee you buy every morning, everything must be recorded. It's easy to lose track of how much you spend in any given week. The next thing you know, you are looking at a credit card bill that is well outside your means. So, you pay the minimum payment, which is another no-no, and the cycle of perpetual debt begins. Keeping better track of your spending can help you avoid wasting money on unnecessary expenses.

2. Change Your Spending Habits

Now that you're keeping track of what you're spending your money on, look through your monthly expenses and start trimming the fat. This is where people begin to think that frugal living is a complete downer compared to a lifestyle of superfluous spending. Don't think about limiting yourself on the things you want, start thinking about cutting out the things you don't need or waste money on. Avoiding name brand items, buying in bulk, and buying used or refurbished items are just a few examples to help you save and change your spending habits.

3. Monitor Your Money

Many people are guilty of not knowing how much money they are carrying in their pocket or purse on a daily basis. Even worse, many people are guilty of not knowing how much money they have in their bank account. How are you supposed to follow a budget if you don't even know what you are working with? What if you dropped some cash without even knowing it? Finding random cash in your pocket is the best feeling in the world, but you should be taking better care of your money if you plan on living on a tight budget.

4. Carry a Coin Purse

Want to live happy on a tight budget? Start carrying a coin purse, and stop treating loose change like it's the plague. Most people become annoyed with fishing through their pockets for change, so they just pay with large bills and get more loose change that they don't want. Keep those coins organized with a coin purse. If you still refuse to pay with exact change, just stuff the coins in the coin purse and empty it into a jar when you get home. When the jar is full, take it to a coin counter at your local grocery and exchange it for cash or a gift card.

5. Give Yourself an Allowance

Limit yourself to a set amount of spending cash per week, like $100, and only withdraw that amount from your bank account. Stretch that weekly allowance as far as you can, and if you spend it all, don't withdraw more money until it's time for your weekly withdrawal. Giving yourself an allowance will help you develop better spending habits to help you save money for when it counts.

6. Start Living a Healthier Lifestyle

Yes, your health can play a factor in how much money you're spending. One of the best frugal living tips anyone can follow is to get in better shape. Those who smoke, consume too much alcohol, have poor eating habits, are out of shape or are overweight tend to spend more money than a person who is living a healthy lifestyle. If you are in shape, you will eat less. If you quit smoking and drinking, you aren't wasting money on alcohol or cigarettes. If you jog, walk or run on a regular basis, you are giving yourself an activity that will make you healthier and hardly costs any money.

7. Look for Ways to Earn on the Side

While you don't necessarily have to take up a second job or even a part-time gig, finding ways to earn money on the side is a frugal living tip that will help you reach your retirement goals, or give you more spending money. Earning money on the side will also keep you preoccupied so that you feel less tempted to waste money, and what better way to live happily on a tight budget than to spend time earning money rather than spending it.

8. Stop Impulse Buying

Never walk into a store and purchase something without thinking about it first. Frugal living requires you to consider all purchases with at least a 24-hour timeframe. If you still feel compelled to have the item in question after 24-hours, then it might be worth buying.

9. Never Buy Anything at Full Price

Have you ever purchased something, only to see it go on sale a month later? If you find an item, and followed the suggestion in tip #8, make sure that the item you must have is at least on sale. If it's not, then wait till it goes on sale before you buy it. Hopefully, by the time the item goes on sale, you'll no longer feel compelled to buy it, thus saving even more money in the long run.
Another useful tip would be to only allow yourself to purchase something if you are able to find a coupon for it. Websites like CoupounMountain.com provide free coupons you can use for online purchases. This is another great way to help you curb your shopping impulses and practice frugal living habits.

10. Change the Way You Eat Out

Giving up on restaurant dining and eating out may be a good tip to save money, but it probably won't make you very happy. Instead of giving up on it completely, try changing the way you eat out. Always keep an eye out for promotions or deals. Restaurants tend to offer discounted meal prices during off hours, so try eating earlier or later than usual to save. Scan the appetizer section and see if you can turn an item into an entrée. Many times, a restaurant will have an appetizer and an entrée that are virtually the same, only the appetizer is a bit smaller and comes at a cheaper price. Also make sure you take advantage of any coupons you receive in the mail, or print your own from online.

Bottom Line

Living frugally doesn't mean you have to give up on all the things you love, it just means you have to learn to enjoy them in a different way. It's all about self-control and being smart with your money. Whether it's watching an early matinee showing, or opting for the red-eye flight when you want to travel, you can still enjoy the many pleasures in life on a tight budget.

Credit Repair Advice: Things To Know About Credit Repair Services

Having a low credit score can be extremely detrimental to your day-to-day life. Whether you're financing a car, renting an apartment or signing up for a new checking account, your credit score matters. Don't let yourself get dragged down by your bad credit score. The best thing you can do to help yourself is do your research. Understand where you stand, what resources you have at your disposal and which would be the best for you. Before you do anything, you need to properly asses your own credit.

How Bad Is My Credit Score?

A lot of things can affect a credit score: late payments, total accrued debt, public records and several other factors. It is a good idea to monitor your credit using online resources. Many sites allow you to track your credit report for free, if you sign up for their online services. Make sure that if you do sign up for these sites, you cancel your account before they charge you for their services. Before you let a third party run your credit score, check and see where you measure up.

Bad credit: Anything below 600 can be viewed as a bad credit score.
Moderate credit: Most people have a credit score between 600 and 750.
Good credit: In general a good credit score is anything over 700.

When Should I Ask For Help?

If you're finding it hard to start new accounts, and you find yourself relying on cosigners for things you should be handling on your own, it might be time to look into credit management. There are several places to start when you're looking into legitimate credit management programs. The Credit Repair Organizations Act must provide you with your "consumer credit rights" before you consent to sign up for their program. This act was created to weed out the fraudulent companies that aim to take advantage of individuals suffering from bad credit. There are resources that can help you fish out the good from the bad.

Federal Trade Commission: independent government agency that aims to advocate consumer rights.
Equifax: one of the three major credit agencies that maintains public credit holder records.
Experian: another one of the three major credit agencies and is a large advocate of public financial education.
Trans Union Corporation: the last of the three agencies that helps consumers monitor their credit reports.

What Are My Options?

Enrolling in a credit counseling program may be your best bet for improving your personal finances. Since credit counseling is so common, it is becoming easier and more affordable to get in touch with a credit counselor in a variety of ways

In-person: This is the most reliable form of credit counseling. Military, university and financial institutions offer in-person crediting services that are both reputable and trustworthy. If you already have a relationship with the institution, you will feel more at ease with allowing them access to your personal finances. They will often weigh your debt against your salary and personal bank accounts to forge a plan to repair your credit.
Online: You can download software to help manage and repair your finances from the comfort of your home office. These services often include 24 hour live-chat services so that someone can field your inquiries. Although they are more affordable, online credit services can only be beneficial if you have the time and patience to sit in front of your computer screen weeding through numbers. They are also much more likely to prove fraudulent, so you need to make sure these companies have been accredited.
Over the phone: Chances are, both in-person and online services will include a telephone help line. Much like the online services, phone credit repair allows you to have a much more flexible schedule.

Just remember, if you're not looking your credit counselor in the eyes, it is much easier to be taken on a fraudulent ride. Personal finances are prime territory for fraud.

How Do I Avoid Credit Scams?

There are several fraudulent companies that prey on individuals who struggle with poor credit management. However, there are common red flags to look for when considering credit management. No company can guarantee an improvement in your credit score or a decrease in debt, that's up to you. There is also no legal way to clear bad credit from your account without going throw the legal motions to do so. To avoid these companies, look out for scam catch phrases and taglines like this:

Bad credit? No problem!
We can lower your debt and raise your credit score in 30 days!
We can get rid of your bad credit - guaranteed!
We can wipe your credit report clean!

Can I Fix My Own Credit?

There are ways to fix your own credit without enlisting the help of a credit management company.

Clip your credit cards: If you can't stop yourself from maxing out every bit of plastic in your wallet, it may be time to break out the kitchen shears. If you're not an advocate of credit violence, you can lock your credit cards in a filing cabinet in your home to prevent yourself from using them when you're out.
Stop paying the minimum monthly payment: Tack on a bit more money to your monthly credit card payoff. If you've been only paying the minimum payment, you definitely can be doing more to lower your debt, and raise your credit score. Try doubling your monthly payment and watch the debt slowly trickle off.
Sign up for a free online finance management program: There are several websites that allow you to track your daily, weekly and monthly finances for free online. You can track your spending from both your debit and credit accounts, as well as receive monthly alerts when your accounts near the red.

Keeping track of your credit takes both time and dedication. You have to remain both confident and vigilant to lower and maintain your credit score. Fortunately, there are plenty of free and affordable resources to help you monitor your credit, as long as you make sure to weed out all of the scams. Your credit is in your hands, you're the best resource you've got.

Helpful Facts And Tips On How To Prevent Identity Theft

According to the Identity Theft Assistance Center, more than 8 million adults were the victim of identity theft in the U.S. in 2010. Seventy two percent of them claimed they did not know the source of the theft. Unfortunately, there is no foolproof way to prevent identity theft, but there are ways to help safeguard your information.

In order to understand how to prevent identity theft, it is essential to understand how thieves steal personal identities. It often starts with the misuse of identifiable information such as an individual’s Social Security number, credit card numbers or other account information. According to the Federal Trade Commission (FTC), thieves regularly use a variety of tactics to gain a person’s information including:

Dumpster Diving: Thieves will sift through trash seeking discarded bank and credit card statements which may contain identifiable information.
Skimming: Thieves use special devices attached to credit card readers to capture your credit card information when a retailer processes a payment.
Phishing: Thieves will send email spam pretending to be your financial institution asking for personal information.
Changing Addresses: Thieves may have your credit card and banking statements sent directly to them.
Old-Fashioned Stealing: Thieves will steal wallets, purses, mail and personnel files, all which often contain credit cards, financial documents and sensitive information.
Pretexting: Like a conman, a pretexter uses false pretense to gain identifiable information. The pretense often sounds legitimate, but the information gained is used to access financial and credit card accounts.

The FTC has adopted the credo Deter, Detect and Defend -- deter thieves by safeguarding identifiable information; detect suspicious activity through regular monitoring of financial accounts; and defend against ID theft by reporting a problem immediately.
How do you deter thieves from stealing your identity? There is no surefire way to prevent identity theft, but there are steps you can take to decrease the odds of someone stealing your identity.

Online Deterrents

The emergence of mobile technology and the increase in online banking and shopping has provided a virtual platform for thieves to gain identifiable information. According to the Identity Theft Resource Center (ITRC), there are several key tips for protecting your identity online.

Use the highest level of security allowed. Never use the default settings for security.
Know the privacy policy of the websites you use. Some sites will use or sell your information in order to display advertisements.
Use the least amount of information to register for a site. If the site is using information like your birthday simply for promotional reasons, consider using false information.
Create screen names that do not include identifiable information such as your name and year of birth.
Change your passwords regularly. Do not use information that can easily identify you, such as the name of your child or pet. It is advisable to use a minimum of eight characters, include numbers and symbols and use “non-dictionary” words whenever possible. Never share your password.
Verify emails asking for password resets or identifiable information. These emails are often spam and used to gain access to your accounts. Again, read the privacy policy of the site. Many will openly claim to never ask for identifiable information via email.
Do not post identifiable information including your phone number, address, Social Security number, etc. when blogging, networking or posting photos.

Shopping online presents another set of security issues since you are authorizing payment from your financial institutions. If you are shopping online, the IRTC suggests several key tactics to help ensure secure transactions.

Research the vendor, looking for positive and negative reviews from consumers and business institutions such as the Better Business Bureau. If there are no or limited results for a business, be wary. Consider shopping in stores with locations within the U.S., which would make them subject to U.S. consumer protection laws. In addition, read the vendors privacy and return policies.
Be sure to shop from secure websites. There are two quick and easy ways to determine if a website is secure. If the URL includes "https://" the “s” indicates a secure site. In addition, most web browsers will display some security information about a website.
It is recommended that credit cards be used over debit cards. In the event something does go wrong, credit cards are protected by the Fair Credit Billing Act. Payments can be suspended if unauthorized charges are made. Shopping online using debit cards and e-checks leaves consumers vulnerable to bank fraud.
Provide only the minimal information needed by the company to complete the transaction. Remember that Social Security numbers are not needed when shopping online.

Everyday Deterrents

There are also several ways to help protect your identity in everyday life.

From bank and credit card statements to the never-ending pile of credit card solicitation letters, never dispose of these documents without first shredding the information. This prevents dumpster divers from gaining access to your information. In addition, you can opt out of pre-approved credit card offers by registering with OptOutPrescreen, the official website of the Consumer Credit Reporting Industry.
Instead of signing your credit or debit card, write “See Photo ID.” This prompts the cashier to verify the name on the card with your ID.
Be diligent about checking your banking/credit card statements and your credit report. Look for obvious discrepancies and contact the appropriate agencies to work on resolving them.
Although it may seem like a good idea to have your driver’s license or phone number pre-printed on your bank checks, it provides identifiable information to anyone who sees the check.
If something just doesn’t seem right, it probably isn’t. Keep alert for individuals watching as you enter your PIN while using an ATM machine or debit card. Steer clear of stores and websites with less than stellar reputations for security.

These tips may not guarantee that your identity will never be stolen, but they will hopefully reduce the risk. Education is the key. Knowing the steps to help deter the thieves will make you a less likely target.

Credit Card Debt Consolidation

Credit cards have easily become a leading supplier of debt in the United States. Whether young or old, consumers find many incentives in using credit cards, including convenience, availability and simplicity.

What Is Credit Card Debt Consolidation?

Credit card debt consolidation is the process of merging multiple credit card balances and consolidating them into a single monthly payment. In short, the debtor takes out one big loan to cover all other loans in order to lower payments and interest rates. This allows the debtor to ease their way out of debt slower and easier, and many creditors will cease collection calls and waive late fees and overage charges.

How It Works

There are multiple procedures for credit card debt consolidation, and each works slightly differently.

Credit card debt consolidation programs are run by third-party companies and can help you avoid paying higher interest on your credit card bills. A consultant will communicate directly with your creditors and/or collection agencies to reduce interest rates, waive late fees and find an affordable repayment plan. Instead of paying several creditors, you will make one lower monthly payment to your consolidation company.

Do-it-yourself credit card consolidation is considered "free" credit card consolidation and does not require a third-party organization. Rather, you as the debtor can transfer balances from your higher-interest cards to one with the lower interest rate. By doing this, you minimize interest payments and leave yourself with only one monthly payment. However, you should never close all your other credit cards at once -- this will negatively affect your credit score.

Paying off credit cards with a consolidation loan is very similar to regular debt consolidation. You take out a debt consolidation loan -- usually through a bank or other credit agency -- to pay off all your credit card bills. While these consolidation loans have the benefits of lower interest rates than personal loans, they typically lead to the debtor paying more money over time than their original balance. Also, not everyone qualifies for consolidation loans. This is determined by your credit score and history, or by your ability to put up collateral.
If you choose to take out a consolidation loan for your credit cards, then there are two options: unsecured consolidation loans and secured consolidation loans. The former typically has higher interest rates and requires a qualifying credit history, while the latter has lower interest rates due to the debtor's putting up collateral, such as their car or home.

So It's Time for Credit Card Consolidation

After weighing the costs and necessities of credit card debt consolidation, you may decide to do it. When proceeding with the process, always be on your toes. For processes involving third-party affiliate for your consolidation needs, you should always read the fine print in your contract or agreement. While fees are standard for consolidation services, some companies will sneak in extra charges, like monthly "account management" fees and sometimes even a lump percentage of your overall debt. To verify a company's legitimacy, always research its certification and consumer reviews. Also, consolidation companies are required to offer credit counseling services to their customers as an alternative to consolidation. In the end, make sure you are comfortable both with the service you're receiving and the amount you're paying for services. This process is all about making your life easier, not a company's.

Debt Reduction

Many people in debt make their credit card payments every month but feel as though they aren't making any progress toward paying off their balances. In order to get out of that threatening cycle, debtors need to create a financial plan that will effectively reduce their debt.

What Is Debt Reduction?

Debt reduction is the process by which a person in debt manages their balances and continues to make payments. Through debt reduction, a debtor can clear themselves of pesky creditors and collectors. To do so, the debtor must make some sort of financial plan, of which there are many, and stick to it over time. Often slowly, the debtor finds their way out of deepening debt.

How It Works

Debt reduction is based completely on the debtor's actions. In order to reduce debt, a person must acknowledge their existing balances and take steps to manage them. There are several different methods to debt reduction, and a few of them are as follows:

Debt-snowball method: The debt-snowball method of debt reduction is a debt management technique most commonly applied to repaying revolving credit. In it, debtor's aim at repaying their smallest balances first, and slowly building upward. To do so, the debtor first lists all their existing balances, in ascending order, and commits to pay the minimum monthly payment on every debt. Any extra spending money afterward is put toward the smallest balance. When the smallest balance is paid off, its old minimum payment is added to the minimum payment on the next smallest debt. That amount, plus any extra income available is put toward that next smallest debt. This is repeated until all debts are paid off.

Debt settlement: Also known as debt negotiation, debt settlement is a situation in which a debtor and creditor agree on a reduced balance that will be regarded as payment in full. While a debtor may do this themselves, some hire a lawyer to act for them, or use a debt settlement company. Debt settlement is only possible for unsecured debts like medical bills and credit card balances. Secured loans on assets like cars, homes and student loans are not eligible for debt settlement.

Debt management plan (DMP): DMPs are typically for debtors who are struggling more than the typical credit holder. For example, many DMP participants have credit payments that exceed their income. A DMP takes place when a third-party organization meets with creditors to negotiate a reasonable repayment plan for the debtor, taking into consideration their available funds after priority expenses are handled, such as mortgages, rent and food.

Debt consolidation: Usually the last resort before filing for bankruptcy, debt consolidation involves the debtor taking out a loan that will pay off all their other loans. In essence, it lumps all the debtor's balances into one lump sum, often lowering monthly payments and decreasing interest rates. Debt consolidation gives the debtor more time to pay off a large balance without handling multiple payments at once. While debt consolidation temporarily reduces debt, it can heighten it in the long-run, as longer periods of payment lead to more interest and higher balances.
In the end, there is more than one way to reduce debt. Other financial experts will say to pay off the cards with the highest interest rates first, thereby avoiding any additional balances accruing due to interest alone.

So It's Time for Debt Reduction

The first step in reducing debt is realizing how much of it you have. Before moving forward, gather all your recent statements and documents regarding your debt. Go over the amounts, and make a list of what you owe, who you owe to, and how much you can afford to pay on your debt each month. If your minimum monthly payments are higher than your income allows, then you will need to consider some sort of debt settlement or other professional consultation. Always, before you sign any kind of contract or make any sort of down payment for financial services, check the financial institute's credentials, customer reviews and company affiliations. Red flags include creditor affiliations, several reviews regarding scams and credentials from companies you cannot find online or in the local library reference section.

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1. Understanding Your Credit Score

2. Managing Debt

3. Cleaning Up Your Credit Report

4. Avoiding Credit Repair Scams

Eligibility Requirements For Filing Bankruptcy

Discharge Of Debts

Treatment Of Assets

Impact On Your Credit

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You Get Turned Down For A Loan Or A Purchase

Your Mail Goes Missing

You Receive Bills Or Phone Calls About Owed Money

You See Unusual Withdrawals From Your Bank Account

You See Strange Charges On Your Credit Card

A Company That You Have Done Business With Informs You They Have Had A Security Breach

The IRS Contacts You

You Find Errors On Your Credit Report

Your Health Insurer Rejects Your Medical Claim Because You Have Reached Your Coverage Limit

You Are Arrested For A Crime You Did Not Commit

Stop Making Late Payments

Take On Some Debt, But Not Too Much

Get Different Types Of Debt

Don’t Close Your Credit Card Accounts

Don’t Open Too Many New Credit Card Accounts

Don’t Co-Sign

Check Your Credit Report A Least Once A Year

Put A Fraud Alert On All Three Of Your Credit Reports

Think About Getting A Credit Freeze

Go Over Your Credit Reports With A Fine Toothed Comb

Check Your Credit, Debit And Bank Account Records For Unusual Activity

Close Accounts That Have Or May Have Been Affected

Create An Identity Theft Report

Keep Good Records

Why Check?

Mistakes Vs. Fraud

How To Get Your Credit Report

Correcting Errors

No Error Is Too Small

Myth: Creditors Will Take Everything

Myth: Filing For Bankruptcy Will Not Affect Your Spouse’s Credit

Myth: All Debt Can Be Erased With Bankruptcy

Myth: Bankruptcy Will Prevent Any Credit Score Improvements For Ten Years

Myth: Not All Debts Need To Be Listed When Filing For Bankruptcy

Myth: Bankruptcy Will Give The Consumer A New Start

Myth: Getting A Loan Or Mortgage After Bankruptcy Is Impossible

Myth: Late Payments On Credit Cards Are Just As Bad As Bankruptcy

Myth: Bankruptcy Is For Losers

Myth: A Consumer Can Only File For Bankruptcy Once

Save More Than You Spend

Have An Emergency Fund

Evaluate Your Retirement Savings

Make Estate Planning A Priority

Talk More About Money

Take Stock Of Your Retirement Accounts

Review Your Beneficiaries

Update Your Insurance

Save Or Invest Bonuses

Examine Fees And Interest Rates

Check Into Refinancing

Analyze Your Monthly Income

Examine Your Spending

Adjust Income Tax Withholding

Make Financial Resolutions

Acknowledge Your Debt

Make Sure Your Report Is Accurate

Resist The Urge To Apply For More Credit

Make Your Payments On Time

Avoid The Curse Of The Minimum Payment