Posts tagged: creditors

What Will Happen if You Don’t Pay Your Credit Cards?

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Your credit card has helped you buy things you never would have been able to have proper to you receiving it. It has gotten you through some rough times and has allowed you to get things that are essential but expensive. So you faithfully make your payments each month, no questions asked.

So you bought something pretty expensive on your credit card with a good feeling that you could pay for it. To your dismay, the credit card bills come and you discover that you not only owe money immediately if not sooner, but that you do not have the means right now to pay it on time. So what do you do now? How are you ever going to pay for this credit card bill if you can’t help but just get deeper and deeper into debt?

There are several options, none of which are extremely pretty. But depending on your circumstances, you may be able to lessen the consequences, put them off, or even perhaps avoid them altogether if you decide on the right option for you and your credit card company.

Consult the Company

Your creditors, if you call them and explain your circumstances, may be willing to make a special arrangement for you that will allow you to get your bills paid. If you tell them why you cannot pay them on time, and explain to them that you still intend to pay the bill, they may be willing to give you a different payment plan that will allow you to pay it in smaller increments over a longer period of time. That way, your income may be sufficient enough to get you through, but it will take you longer to pay the money owed.

Ignore it Completely

The thing about creditors is that they cannot threaten to put you in jail just because you will not make your payment. You could ignore the creditors completely, but that would only buy you time and get you into more trouble. Eventually, the credit card company could take you to court, and if you have no good argument to go on, they will win a lawsuit against you and gain permission from the court to take the money you owe out of your assets. This option is not only a bad idea because it just prolongs the grief, but it ends up costing you more in the end.

File for Bankruptcy

One way out of debt is bankruptcy. This is when all of your assets are liquidated and given to your creditors to satisfy your debt. You could lose several things like extra cars, furniture, and perhaps even things you bought with the very credit card that got you into this mess. The important thing is to just manage your credit wisely in the first place. You just have to make sure you can pay your debt in full and on time, and spend nowhere beyond those boundaries.

How Do I Write a Credit Dispute Letter?

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You have discovered a mistake on your credit report that you are absolutely sure that you had nothing to do with. You want to get it fixed, because it is doing damage to your credit score. But how exactly do you go about getting that repaired?

Writing a credit dispute letter should not have to be so difficult that you would rather have the mistake on your credit report rather than go through the hassle of having it fixed, but sometimes it may feel that way. A credit dispute letter, if done correctly and professionally the first time, will get you the change that you need on your report to gain well deserved points on your credit score. But is there anything that would possibly improve the format and the content of your credit dispute letter, therefore giving you greater chances of having the errors corrected, and having it done quickly?

In fact, there is hope. You deserve to have your credit report reflect the good credit spender you are. Here are a few tips on what kind of things you can do to draft and improve a credit dispute letter:

1. Get right to the point.

Being up front about your complaint is a factor that will get the correction made faster. Being blunt and completely clear will allow them to recognize the problem, find it, and fix it in a more timely manner than they would be able to if you give them only a vague description of your problem.

2. Use proof of the error.

Get as many files as you can from outside sources that prove to the creditors that there has been a mistake made, such as court files or documentation of your payments. Having a sort of map or proof of what the problem is and where things went wrong will speed the process up and give you a better chance of getting the problem fixed with few questions asked.

3. State how it should be.

Do not just show them where the problem is and expect them to know how you want them to change it. Make sure that you tell them why it is an error, and how you know it should be instead.

4. Communicate clearly.

You need to be able to make your letter completely black and white, with no gray areas that creditors may not understand. State that there is a problem, state the problem, state a possible solution, provide documentation, and end it. Simplicity and clarity will allow for the letter to be easily read and more quickly responded to.

Nobody wants their credit score to suffer for some mistake that they didn’t even make. Having a good credit score is something worth fighting for. You should not be cheated out of the credit score you have, and writing a clear credit dispute letter can allow you to get the needed changes made to uphold that right.

Can You Buy a Car With a Credit Card?

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Buying a car is a big step for most people. Whether you have done it once or a dozen times, buying and financing a car is an important issue because it determines where a lot of your money will be going for the next several months. It is kind of like having a credit card. You make monthly payments on something that you have, but that you have not paid for yet. Credit, in that aspect, is quite the same. But the kind of credit that you get is quite different.

So can you kill two birds with one stone and pay for your car with the credit card that you make monthly payments on? Yes. It is possible to buy a car with a credit card. For some people this may be the perfect solution, but it depends on the circumstances.

Buying a car with a credit card requires a much higher credit limit than it would if you were just using the card to make random purchases at a clothing or grocery store, depending on the price of the car. Getting high credit limits can be risky. This is because it could possibly hurt your credit score if creditors believe that you may buy something that expensive on a credit card and not be able to pay it back.

Interest rates

One advantage to financing your car on a credit card is lower interest rates. If you shop around and search for a good deal, you could get a credit card that would allow you to pay less for your car in interest than you would if you took out a loan. This, in the long run, will save you hundreds if not thousands of dollars in interest.

Still, the risk of increased interest rates are greater with credit cards if you make late payments, making it so that you may even spend more on interest. It all depends on the circumstances, and how you will be able to make your payments. It also may depend on the terms of the credit card. Make sure that you know what your introductory interest rates are, if they will change, and what they will change to if they do. Knowing the terms of your contract before you buy a car with that card will make a huge difference in whether or not you save money by taking this route.

Rewards

If you buy your car using a rewards card, you could get benefits that you also would not get by just paying for it by taking out a loan. Rewards cards give you benefits based on how much you spend. Since buying a car is such a huge purchase for a credit card, it would give you many more rewards than it would if you had just used the card to buy groceries. These kind of rewards can be cashed in for things like gasoline, travel, air miles, and cold hard cash. This is another way you can benefit from your purchase.

Top 5 Ways To Build Your Credit Score

There are several things you can do to ensure that your credit score improves. Obviously, the higher your credit score is, the more options you have at your fingertips. Here are the top five things that will give you a higher credit score and a long, healthy looking credit history.

1. Pay your bills on time

One of the most important things that creditors see when they look at your credit history is your payment history. This can make or break a good credit score. When creditors see someone who has trouble making payments on time, they see someone who is not dependable with credit cards. Because you don’t appear to be dependable, your score will go down and you will be less likely to receive credit in the future. So if you strive to pay on time one hundred percent, your credit score will not only stay protected from falling, but it will actually increase gradually.

2. Keep old accounts open

In most cases, the older the credit card account, the better it is for your credit score, even if that account is not active. Having an old credit score shows that you have a long credit history, and allows creditors to see how well you managed that credit card for a long period of time. If you have not managed that card well and have made late payments on it, closing it out will not help then either. Having bad records like that will stay on your credit report for several years, whether or not the account is closed. Only time and better credit management can heal the damage done to your credit report in the past.

3. Using credit cards

Just the fact that you have and use credit cards is a step up to a better credit score, though only if you handle them well. If you make your payments on time, and spending only the amount that you know you can pay back, your credit score will benefit from the mere usage of credit cards. Paying off credit cards regularly is a big boost. When you’re still in school, it can be a good idea to to apply for student credit cards just to get things rolling.

4. Keep the number of credit cards low

Sometimes creditors will see someone with several credit cards as a potential risk. When you have a lot of credit cards, you have more of the potential to overspend, and therefore not pay the money back on time or in full. The number of credit cards you can manage and how much of a risk you are at is up to you, but keep in mind what looks good to your creditors.

5. Keep the balance low

When you have credit cards, it’s good to keep the amount you spend within fifty percent of your credit limit. Why? If you keep the balance below half, you will not go over, or even come close to maxing out. When you hit the half way mark, it’s best to pay off your credit card, or at least pay it down to a smaller amount.

How Many Credit Cards is Too Many?

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Is there such a thing as too many credit cards?

There can be. Honestly, it goes both ways. Most people would agree, though, that they are at a higher risk of getting into debt that they cannot escape if they own way more credit cards than they can control. Having so much credit can be too tempting, and many people have given in to that temptation, spending more than they can pay back and ending up with a bad credit card and debt up to their earlobes.

This is why it is often difficult to keep, or build up to, a good credit score. Creditors look at how many credit cards you have and almost automatically see a potential threat that you will not be able to pay off your debt. This automatically decreases your score, and it also may make it difficult to receive other forms of credit, like a loan, or another credit card.

So how do you escape the automatic assumption that just because you have a lot of credit cards, you cannot pay your debt?

Well, there are some cases in which people do not have a bad credit score, even when they have several credit cards. What did these people have that those with even a few cards did not? A good credit history. That and regular payments helps your credit score either stay in the high numbers, or increase to where you want it to be.

So how do I know how many credit cards I can have?

How many credit cards you can handle is up to you. If you have a large number of credit cards in your wallet and are confused as to why you are having difficulty paying your bills on time, you may want to cut down a bit. Your spending habits and our monthly income are what determine how many credit cards you can have without letting your debt get out of control, and how well you control your debt is what will determine your credit score.

How do I build up a good credit history?

If you are just starting to get familiar with credit, you should probably start out with a low number of credit cards, if not one. Buying too many credit cards at once will make you appear as a potential over-spender, and even worse, someone who will not be able to pay their bills. To start out low and use your credit card wisely, like paying your bills on time and paying your cards off frequently, will eventually prove that you can handle credit cards carefully and result in a very good credit history, allowing for you to build up to an excellent credit score.

How can I show creditors that I’m dependable with my credit cards?

Always pay in full and on time. The thing that will hurt your credit score the most is having frequent occurrences where you make your payments late. Paying your bills on time every time will show that whether you have one or fifty credit cards, you can pay back the money that you borrowed on those cards.