Dealing with the Creditors: 10 steps to make the process easier

Sometimes noticing something incorrect on your credit reports can be annoying. However, in order to clear it up, sometimes you need to confront the creditors. This may not always be a pleasant situation, but there are ways to make sure you keep your cool while trying to get your credit back on track!

1. Stick to Your Story
The person on the other end doesn’t want to hear all the details about why you’re not able to pay your bills. However, they do need to know if you are in a hardship situation and what you are trying to do to get back on track. For example:
“I was very ill, and have been out of work for two months. I am trying to get caught up.”
“My wife was laid off, and I’ve taken a significant cut in pay. She’s looking for a job so we can catch up, but we don’t have any money to pay right now.”
“My interest rates have doubled and I can no longer keep up. I am meeting with a bankruptcy attorney to see whether I should file.”

Be truthful! If you tell everyone a different story, especially one that’s not true, it’s bound to backfire.

2. Stay calm, cool and collected
Try to stay calm regardless of what the person on the other end of the line says. You’ll get nowhere if you lose your temper. If you find yourself losing your cool, call back. If you need to talk with that representative again, tell them you’d like to record the conversation.

3. Ask Questions
If a collector says you’ll be sued, or that you’ll lose property if you don’t pay, just calmly ask for specifics.
“When can I expect to be notified of this lawsuit?” Or “When will you take the money from my bank account?”

4. Take Notes
Have a pen and paper handy so you can take notes of your conversations. Write down the name of the person you talked to, when you talked, and what was discussed. Not only can this help you take the emotion out of the situation, but you’ll also have a record if the creditor or collector broke the law in their attempts to collect.

5. Read (and Save) Your Mail
Don’t throw away mail from your creditors or ignore it. Open it, read it, and save it in a file.

6. Know What You Can Afford
Go over your income and expenses with a fine-tooth comb. Figure out what you can afford, and only agree to pay a realistic amount. Generally, you can negotiate the best settlement on a debt if you can come up with a lump sum amount to resolve the debt. If you agree to a payment plan, you will likely pay more over time. If you do agree to a payment plan, make sure you understand the total amount you will pay.

7. Deal with Creditors, Not Collectors
If possible, try to work out an agreement with your creditors before a bill is sent to collections. While late payments affect your credit reports and scores, collection accounts can result in even greater damage. By the way, it’s a myth that as long as you are paying something toward a debt (even $5 or $10), it can’t be turned over to a collection agency. Once a debt has been sent to collections, you may have no choice but to deal with the collector.

8. Get it in Writing
When you do come up with a payment arrangement, or a settlement agreement, get it in writing before you pay a penny. Otherwise, the terms can change and it will be your word against theirs. We’ve heard of consumers being hounded for balances they thought were resolved years before.

9. Get Help
If you are having trouble coming up with a repayment plan that works, find out whether a credit counseling agency can help you work something out with your creditors. If it is unlikely you’ll be able to pay back your debts, or if debt collectors are hounding you, request a free consultation with a bankruptcy attorney. Even if you decide not to file, the attorney can tell you what a creditor can and cannot do to collect.

10. Put the Past Behind You
Catching up on a delinquent account, or paying off a collection account, won’t improve your credit unless you can get the creditor to agree to remove the late payments. But even if that’s not possible, you can still begin to build better credit as soon as your debts are resolved.

Spend Less and Save More: 5 helpful tips to save your money

If there is one goal many of us share it is to spend less and save more! We all have things to pay for, but what about those extra wants in life that we splurge on? There is nothing wrong with treating yourself after you have accomplished a goal or have had a long week. However, going overboard with your spending is what can cause financial trouble. Here are five tips that can help you save more money while you spend.

1. Make a budget
One of the most important things to do on your quest to save money is to make a budget. Using your monthly income, determine how much money you need to spend on necessities first. If you have some money left over to spare, then you can determine if you can afford to do something special for yourself. Don’t forget to include saving a little money in the budget as well! It is fun to see how your money grows over time.

2. Go shopping with a list
Whether you are shopping at the grocery store or the mall, when you go with a list, you are bound to spend less. Having a list can also reduce impulse buys.

3. Check for coupons
Still get the newspaper? Every Sunday there is a coupon booklet filled with different coupons to help you save on your favorite items. Take an hour to sit and cut out the coupons you need. Also, checking the internet or store’s website for coupons can also be beneficial. Many stores have coupons or Buy One, Get One offers during the week. The coupons are there; all you have to do is look!

4. Pack a lunch
When going to work, it is easy to eat out. However, spending $5 a day for lunch can add up to $25 by the end of the week! Consider packing a lunch when you can. You save money, and eat a little healthier by skipping the fast food options available.

5. Try going for generic brands
When you can buy generic, go generic. Sometimes the generic product is just as good as the name brand one. Generic brands are also much cheaper, and can save you a lot of money in the long run.

Happy Saving!

Show me the money: Cash vs. Credit

When making purchases, it is sometimes difficult to decide whether using cash or credit is best. Here are 5 reasons why credit and cash are beneficial for certain purchases.

1. You can’t spend cash you don’t have.
And sometimes, this can be a good thing to remember. When you go to a store to purchase something, and you do not have any form of payment in hand, do you still purchase the item? More than likely you don’t. When you have cash, you have the freedom to spend as much money as you have available. However, credit cards do not work the same way. It is true that when you swipe your card and it approves, you can still walk away with the item in hand, however, you still have not bought it. You OWE the company the money. It is not until you pay your credit card bill (the money that you DO have), that your purchase becomes final. Also, spending what you have can eliminate playing catch up with your credit card bills. If you overspend on your credit card, your credit card bills may have potential to pile up.

2. You are more easily tempted to spend more when you pay with a credit card than with cash.
Think about it like this- if you see the money leaving, you’ll be more inclined to watch what you spend. When making a purchase with a credit card, you do not physically see the money leaving your hands. It’s hard to watch that $100 bill become a $20 dollar bill after a purchase!

3. There’s always the potential for fees such as interest, late fees, etc. with credit cards.
When you pay with cash, the transaction is complete. You owe nothing. However, with using credit cards, you run the risk of additional late fees or interest rates being tacked on to your account. That’s why it is important to pay your credit card bills on time so you will not owe more than you spent.

4. Credit Card Offers and Rewards
It’s easy to be enticed by special credit card offers and rewards. But be careful! That is how they get you to sign up. Always double check and call the credit card company for more information. The services being offered may just be for a promotional period, so it’s important to rethink if you need an extra credit card.

5. Tracking your purchases
If you prefer to track your purchases using a credit card versus cash, consider only using a debit card so you’ll be spending money you have versus money you don’t have. A debit card works the same way a credit does. The only difference is that when you swipe your debit card, the money comes out automatically. However, when you swipe you credit card, you charge the account rather than take the money out at the same time.

Your 4th of July on a Budget

Holidays shouldn’t always be about dollar signs! Between quick weekend getaways, large BBQ’s or planning a day out with family and friends, it seems as if celebrating a holiday on a budget is impossible. However, the 4th of July is considered one of the most pocket friendly holidays due to the many activities that are advertised as free around town. Here are 5 great ideas for this 4th of July weekend that cost little to nothing.

1. Throw a potluck BBQ
One of the easiest activities to do this weekend, plan to invite some friends and family over for a day of celebration. Instead of supplying all the food for the BBQ, encourage your guests to bring their favorite dish. This way, everyone will be able to taste each other’s favorite dish, and you don’t have to worry about purchasing extra food.

2. Have a picnic and enjoy fireworks after
Many people enjoy a great fireworks show, especially during the 4th of July. However, instead of doing them yourself, gather a group for a 4th of July picnic. Find a local park and pack sandwiches, snacks and drinks and enjoy each other’s company while enjoying the fireworks later. It may also be a good idea to pack games or a football or basketball to play with before the firework show starts!

3. Look for a free concert or event
Sometimes during major holidays, a city may promote a concert or event and invite the community to attend. Take advantage of these activities and bring your family. You will be able to meet new people, and also enjoy your loved ones!

4. Search for a fireworks show near you
After the BBQ, head out to see some fireworks with friends and family. There are always opportunities to see fireworks on the 4th of July. And, if you are one of the lucky one’s, you may even be able to view the fireworks from your backyard.

5. Plan a movie day- or a World Cup viewing party
If weather does not permit a BBQ, relocate your festivities to indoors. Have a themed movie day, or if you are soccer fanatics, host a World Cup viewing party. This way, you can still spend time with loved ones this holiday weekend while enjoying your favorite film, or routing for your favorite team.

Happy 4th of July, and Happy Saving!

Caution: 5 habits that can affect your credit score

Knowing your credit score is important, however, knowing habits that can hurt your credit is just as beneficial. Everyday we encounter obstacles that may end up harming our credit in the long run. The following are five habits that can affect our credit. Are you guilty of any one of the following?

1. Payment History
When your credit card bill is due, do you try to pay on time? According to the article “5 things that affect your credit” published on MSN money, the writer states that your payment history is 35% of your total credit score. If you pay your bills on time and never miss a payment, then your credit score will reflect as such. However, if you constantly miss payments, you will hurt your credit score.

2. New Credit
We all get those new credit card offers in the mail. We have been pre-approved for a credit card, so our credit must be good! However, just because we receive these offers doesn’t mean we should take advantage. How often you apply to a credit card accounts for 10% of your credit score, and according to federal law, inquires can remain on your account for up to 2 years. However, any inquiries that are made in the last 12 months will reflect on your credit score. So, before you take advantage of that credit application, rethink if a new credit card is what you need.

3. Debt
Between student loans and credit cards, many people find themselves in debt. Your debt accounts for 30% of your credit score. If you find yourself in debt, the first area to clean up is credit card debt. High balances, maxed out credit cards, consistent closing of credit cards, or too many credit accounts with balances can all reflect on your credit score. It is best to keep one or two credit cards open, or consider a debit card. A debit card does everything a credit card does. The only difference is the money comes out of your account immediately rather than there being a charge you have to pay off.

4. Filing for Bankruptcy
If you are filing for bankruptcy, your credit has already taken a hit due to the accounts that are already delinquent. However, filing for bankruptcy will make your credit score take a further dip. It is recommended that before filing for bankruptcy, you sit down with a credit counselor to see your options. It may be possible to pay your accounts off, or just enough where you are no longer needing to file.

5. Procrastinating on your Bills
If you get a letter or email about a bill being due, it is best to pay as soon as you can. Allowing bills to pile up just makes the process of paying them all at once a little more difficult. If you are able to pay bills as soon as they come in, it is less likely that your bills will roll over and become overdue.

Erase bad credit: Get your credit back on track!

Tired of getting shut down while applying for credit cards or loans? Have you been trying to get your credit back in good standing only to have been unsuccessful? Although credit repair takes time, here are some key steps you can do on your own to erase bad credit and get your credit back on track!

1. Know your credit score: It is easy to say you have bad credit, but are you aware of your credit score? Consumer reporting agencies such as Equifax, Experian and TransUnion make it easier for you to get a hold of your credit scores. You are entitled to one free copy of each report every 12 months by visiting annualcreditreport.com. So take advantage of this opportunity, and once you’ve received your scores, reach out to the companies that are listing the debt on your credit report!

2. Start with the basics: Sometimes you need to go back to the simple things to identify a problem. Make sure all of your information like the spelling of your name, social security number or address are all correct. Once you’ve done that, look back at your accounts to make sure that you’ve authorized them all.

3. Dispute mistakes: See something off on your credit report? Don’t hesitate to contact the credit bureau. It may be something as simple as someone else’s information reflecting on your report, or something major such as fraud. If it looks unfamiliar, be sure to take the steps necessary to get it resolved.

4. Make sure to follow up: With every dispute you’ve made on your credit report, make sure to revisit the dispute with a follow up. Make sure to keep notes of the people you speak with and the information that was provided to you. Also, be sure to check your report periodically after the dispute was made to see if any progress was made.