The Money Helper

By now everyone is aware of the Vantage credit scoring system developed by the three major credit bureaus Equifax, Experian and TransUnion that grades consumers on a grading scale of A-F. I have done extensive research but have yet to find out how lenders will use this score or what lenders will choose to use the Vantage score as opposed to the FICO score. Will they be flexible in their analysis and look at the actual score or just look at the grade of A-F.? Unfortunately, no one knows for sure. For now, when applying for a loan ask the lender which credit score they are using.

I recently refinanced my home and the lender used the FICO score. Well, I recently obtained a copy of my credit report and credit scores from the three major credit bureaus, Equifax, Experian and TransUnion. I have not made any late payments in the past 10 years; therefore I expected to get the highest credit score possible or at least very close to it. My scores were 760 and above. When I ordered by Experian credit score I wanted to order a FICO score yet I only had the option of getting a Vantage score. My Experian Vantage score was 819. To my surprise all of these ridiculous reasons were given why my credit scores were not higher:
1. Your report does not show real estate loans – this was incorrect, I have had a mortgage for the past 7 years.
2. Your report shows that available credit across your open revolving accounts is too low – I only have one credit card with a limit of $3,000. They are telling me that if I had more credit cards my score would be higher.
3. Your report shows that the ratio of balances to credit limits across your open revolving accounts is too high – My balance on my credit card was approximately $900 which is only 30% of the credit limit which is the suggested balance that consumers should have on their credit cards.
4. Your report shows that the time since your oldest revolving account is too short. – Wrong. I have one revolving account, my credit card which I have had for the past 10 years.
5. Your report shows one or more inquiries on file – I had one inquiry in June 2005. One inquiry in February 2006 and one in October 2006. Inquiries should be obtained no more than twice a year unless you are doing comparison shopping. I am being penalized because I had two inquiries within one year.

Well, needless to say, I wrote each credit bureau and disputed all the reasons they gave me. I received two responses back and am waiting for the last response. After I receive it I will order a copy of my credit report again to see if my scores have increased. I have struggled to find out how one obtains an 800 FICO credit score or higher. From the looks of things it doesn’t seem like that is possible anymore. Whether you have good or bad credit, the credit bureaus will find ways to make sure your credit score is not as high as it can be.
I advise everyone whether you have bad credit or good credit to order a copy of your credit report once a year, read every single line on your credit report and read all of the information provided along with your credit report. Make sure everything listed on your credit report is accurate. Even a few points on your credit score can make the difference between getting approved or getting declined and we all need those extra points. Good luck!

Many consumers do not know that once a delinquent account is reported to a collection agency a consumer has a short amount of time to pay the bill. This is because collection accounts are put on a nationwide registry and each collection agency in the country gets notified of a collection account. However, only one collection agency has a legal right to collect money on a delinquent account.

It can be very difficult trying to make payments on a collection account because a collection agency holds a collection account for a few months, it they are unsuccessful in collecting on the debt owed the account is forwarded to another collection agency. This process continues until the account is paid or legal action is taken against the consumer.

Collection agencies don’t want you to know that as a consumer you have a legal right to question the validity of a collection agency which is called debt validation. Many consumers have paid money on delinquent accounts to a particular company only to find out that the company did not legally have a right to collect money on that account. As a result the consumer still owed the money on the delinquent account. To prevent this from happening to you, here are 7 ways to validate a debt and ensure you are paying the right creditor or collection agency:

1. Request the creditor, collection agency or attorney to provide documentation that the company is authorized to collect on the debt. Ensure the name and address of the collection agency appears on the documentation which should be on company letterhead.
2. Ask for proof of the total amount of the debt including payment history from with the original creditor and status of the account. Verify the documentation against your own records.
3. Request the collection agency to provide the original contract or other documentation showing the agreement you made with the original creditor including the name and address of the original creditor.
4. Ask the creditor to provide a copy of their business license to prove they are licensed in their state to collect money on delinquent accounts. However this varies from state to state.
5. If the creditor use profanity, harasses you, is rude or threatens you inform the collection agency that they are subject to the Fair Credit Reporting Act (FCRA), they might argue and say they are not but they are considered debt collectors and are covered under the act.
6. If the creditor cannot verify the debt they cannot collect any money owed on your account and is not allowed to contact you about the debt. They also cannot report the account on your credit report.
7. A creditor may respond to your debt validation letter by sending you a summons to appear in court. This is a scare tactic and is illegal. A creditor has to validate the debt before they can file suit against you.

Keep records of all documentation you receive and all documentation you mail. Send all documentation via certified mail with return receipt. If you find that the creditor or collection agency is violating the FCRA you can file a complaint with your local small claims court, notify the credit bureaus and file complaint with the Federal Trade Commission, www.ftc.gov.

Credit Card blocking or a credit card hold is when a business places a hold on your credit card sometimes more than the total amount that is owed for a reservation such as at a hotel, rental car, etc. When you use your credit card at registration for a hotel or to rent a car, the cashier will contact your credit card company and provide an estimated total of your bill. If the transaction is approved, then that amount is held in reserve. In addition to the actual cost of staying in the hotel or renting a car the clerk may tack on reasonable “incidental” costs for such items as food or gasoline. This happened to me, I later found out the block was for more than the total cost of my stay at a hotel.

If you pay these bills with that same credit card used when you checked in or returned the car, the purchase will replace the block usually in a one or two days. However, if you pay using a different credit card or with cash the block may be held for up to 15 days after you’ve checked out. This happens because your credit card company was not notified that you used another form of payment and assumed they had to continue to hold that amount in reserve on your credit card. This can be avoided, by asking the clerk, receptionists or merchant to notify your credit card company, to remove their block promptly. Afterwards, contact the credit card issuer to verify the block was removed.

Some experts believe that credit card blocking can be good thing because it makes sure you don’t exceed your credit line before checking out or returning a car. I however do not like credit card blocking. I feel too many people are accessing my account which could increase my chance of being a victim of identity theft. Using blocking means that the company you receive these services from can be assured that you will pay your bill. If you are far enough below your limit you usually will not have a problem. Unfortunately, if your balance is near the credit limit, it can cause a lot of inconvenience by tying up credit that you may need for emergency purposes and can cause a denied transaction for an item that is purchased after the block is placed. 4 Tips to avoid problems with credit card blocking:

1. Pay for a hotel or rental car with the same card you used at check-in.
2. Ask the clerk how much will be blocked and how they determined that amount.
3. If you pay with another method, ask the clerk to call the credit company and have the block removed. Get the clerk’s name and ask for proof that the block was removed if possible. Also contact your credit card company to ensure the block was removed.
4. When you apply for a credit card, ask if they block credit lines and for how long.

Unfortunately, credit card blocking in not illegal as long as the amount blocked isn’t above what the customer is likely to pay at the end of the transaction. Most consumers are not aware that it happens at all, because the blocked amounts don’t come close to their credit limits. Some businesses will remove a block at the consumer’s request, if they see the bill has been paid.

Some restaurants use credit card blocking for a large party or a dinner event. Blocking ensures the business will get paid if the customer relinquishes from paying the final bill, prevents the cardholder from exceeding the credit limit before checking out of a hotel, returning a rental car or other similar type of transaction. I now pay for hotel reservations prior to check-in so that a block is not placed on my credit card. However, if a block is placed it is only for a small amount.

To prevent credit card blocking: use the same credit card the reservation was made, pay down your credit card to allow room for extra items that you may need to purchase in addition to the reservation costs, ensure the block is removed from your credit card after the reservation amount is paid in full. For more information write to: Credit Card Blocking, Correspondence Branch, Federal Trade Commission, Washington, DC 20580.

If you are looking for tips to maintain your finance then opt for the best finance solution. It will give you advice regarding the finance and help you in the better way.

Many people face financial crises at some time in their lives, at that moment applying for a loan is the best way to finance your needs. These financial crises can be due to various reasons like improper budget management, the loss of job, overspending, long time illness in the family etc. Other time some people finance to meet the luxuries of the life. If borrower wants to meet his needs in an efficient manner then he must opt for finance solution.

Finance solution helps the borrower to consider important aspect while dealing with the loan like budgeting, credit counseling, debt consolidation, debt management etc. Borrower opting for finance solution must be relaxed as finance solution offers the best option for dealing with your needs; it helps not to be worse in any case.

The first step while opting for a loan is to maintain your realistic budget i.e. your net income from various sources and total expenses. This step helps the borrower to know his potential about for how much he can opt for.

After preparing your budget borrower can contact reputed credit counselors who have gained the experience in the same. Credit counselor helps you to give an advice as these counselors are based nonprofit motto and helps you to solve your financial need.

These credit counselors, advise the borrower on managing the money and debts at minimal cost. Credit counselor can be approached through the different source like banks, leading lenders, online lenders etc. After that borrower must check the quotes that are being offered by the lenders so that he opts for the best finance solution.

While opting for the finance solution, features of a loan is depended upon the borrowers’ credit history, down payment, amount to be offered, repayment option, etc. So, borrower must be outspoken to the lender while dealing with the finance solution

Nowadays, e-finance has received boost in the west. With the progress of the internet, almost every lender can have a website to deal with his borrower. Getting the finance solution from the online source is considered better than other sources as borrowers get wider choice in selecting the best lender.

Wealth management helps you to determine the important things in your life, analyze them and then strategize to realize the most treasured hopes and dreams. It is a comprehensive approach to managing your finances which allows you to create, grow and protect your wealth.

The prime factor in prudent wealth management is to understand where you are coming from, the life that you wish to lead, and the challenges you are likely to face. Succeeding in your career, planning your children’s education and marriage and having more than enough for your future to enable you to enjoy your retirement are some of the things that are likely to hold importance in your life.

With the help of a good financial advisor the likes of Smith Barney, Mellon Private Wealth Management, Dundee Wealth Management, UBS Wealth Management etc. you will be able to identify your investment opportunities, borrowings, systematic management of risks leading you towards prudent planning for a better and happier lifestyle. They will help you chalk out a plan to help you achieve the income you need, seek adequate returns and strategies to guarantee you income.

The investing guide’s first rule is asset class diversification. This is essential in achieving your investment goals and managing risks. With increasing volatility in the markets today, predicting the course of the economy in the long run is almost impossible. Thus to attain optimal asset allocation, good judgments taking into account returns and volatility of each asset class should be determined. The function of the financial advisor would be to study the pattern of future returns of one asset class with another and determine to what extent you can attain maximum fiscal protection and profitability.

After determining your financial objectives and risk tolerance levels, the asset allocation process moves on to deciding how much of the portfolio should be in equities and how much in fixed income investments. The allocation is based on long term expectations of risk and returns.

Asset allocation is categorized in terms of long-term, strategic and tactical based on the time limits involved.

Long term asset allocation is optimal diversification derived from using long-term market returns based on more than 25 year cycles. Strategic asset allocation is between five to ten year return expectations and depends on the changing economic and investment conditions over a period of time. This creates period of opportunity for different classes of assets as their performance changes with economic fluctuations.

Tactical asset allocation is a diversification based on the short term (one year) return expectations.

In addition to direct ownership, your wealth may be held in different entities like IRAs or the 401(k) all of which need to be aligned give different tax implications for each. A structural analysis will allow for a thorough understanding of each entity to identify opportunities to minimize current and future taxes. Those asset classes that are expected to generate large tax liabilities should be assigned to tax-deferred accounts.

Once your wealth management plan has been fully chalked out, your financial advisor has to ensure a disciplined and focused implementation of the plan. It is also essential to review and manage your optimal strategy from time to time with changing circumstances.

A careful and focused approach from the financial advisor will help in maintaining equilibrium of risk and reward over a period of time. The information provided will help you to make informed decisions and provide convenient access to financial fitness tools leading you to improve your financial well-being.

I don’t think there are many people who enjoy budgeting. As a matter of fact, for some people, budgeting is probably as much fun as doing your taxes. The good news is that budgeting, whilst not much fun is definitely worthwhile, leading to more savings, less debt and best of all less stress about your finances.

People often do not budget because they find it to be an easy process. Where do you start? What tools do I use? What do I budget for? These are very common questions and when you sit down and don’t know the answers to these questions, the easiest thing to do is nothing. Then come the usual excuses, budgeting, it’s too hard or budgeting, I’ll get around to that another time. Let me tell you, if you get past the initial hurdles and understand how to budget, your finance fortunes will be better off.

It would far to say, that people do not fully understand how much they spend until they understand how much they spend. That may sound a little strange but if you read it again and think about it, it does make sense.

If you don’t sit down and complete a budget, how do you really know where your money is going every pay period? Do you really know how much you’re saving or more importantly whether you’re spending more than you earn? Nowadays, it is common place for people to live beyond their means because they have credit cards which allows it…..then the banks charge big interest rates for the privilege of letting you get deeper and deeper into debt.

How many people get to the end of their pay period, “hanging out” for their next pay day – this is not a good way to live your life and will mean you will continue to be controlled by your finances instead of controlling your finances.

People who are financially successful in life usually have strong control over their finances and understand how they spend their well earned money. People who are able to save are usually able to reduce their mortgages quicker, don’t have high credit cards debts and enjoy a higher level of disposable income and definitely less stress.

Imagine reducing the time in takes to pay off your mortgage by 5 years – what would that mean to you? Here are a couple of examples to illustrate how you can reduce the term of your mortgage by 5 years and the amount of interest you’ll save in the process:

Example 1
Loan amount $300,000
Interest rate 7.99%
Term of loan 25 years
Weekly repayment $533
Total interest payable $393,482

Additional weekly payment to reduce loan by 5 years $45
Interest payable on 20 year loan $301,165
Interest saved $92,317

Example 2
Loan amount $400,000
Interest rate 7.99%
Term of loan 25 years
Weekly repayment $711
Total interest payable $524,642

Additional weekly payment to reduce loan by 5 years $60
Interest payable on 20 year loan $401,554
Interest saved $123,088

Example 3
Loan amount $500,000
Interest rate 7.99%
Term of loan 25 years
Weekly repayment $889
Total interest payable $655,803

Additional weekly payment to reduce loan by 5 years $74
Interest payable on 20 year loan $501,942
Interest saved $153,861

If you sat down a made a budget, I’m sure you could find a way to reduce your spending on certain items by $45 or $60 or $74 to ensure you reduce your loan term by 5 years and save $92,317 or $123,088 or $153,861 in interest.

Savings money each week doesn’t happen by itself and until you understand exactly what you spend your money on, you won’t have the opportunity to cut back. Listing all your income and expenses can actually be a scary process and something you may not entirely enjoy (it may indicate you are currently living outside your means!) but as you can see from the interest savings listed above, it is definitely worth it.

If you’re struggling with budgeting and need some assistance, www.easy-budgeting.com has an easy to use budget planner available for downloading and provides tips, guidance on budgeting to assist with the budget process.

Remember, budgeting is the first step towards taking control of your finances.

Online debt consolidation is a swift mode of getting out of the debt problem by making use of the latest technologies like Internet. More and more people are getting into the debt trap because of growing consumerism and using multiple credit cards or taking loans for buying non-essential things. That is why, free debt consolidation help and free online debt consolidation quote have become the need of the hour. You may require credit card debt consolidation if you have a habit of overusing plastic money. Consolidating your debts provide you an opportunity to not only reduce your debt servicing related problems but also helps you to become debt free easily and live a stress free life.

You Need A Change In Lifestyle

Experts have devised scores of ways to reduce debt with the help of online debt consolidation. Some take you out of your financial crisis in a very short period while others are long-term solutions. Duration of the financial plan doesn’t matter as long as it is capable of taking off the debt burden you have accrued. However, you should be prepared for a change in lifestyle and spending habit so that you can get the desired results and maintain a debt free status forever.

The idea of getting one more loan for paying existing debts may not be attractive to you if you are already exhausted from existing loans. However, it is also true that you have to have some extra money to get out of the current crisis. The extra money that you get you from online debt consolidation loans lets you reorganize your bills. Now, instead of dealing with several smaller loans every month you have to make a single payment that you can afford.

While looking for companies offering online debt consolidation you must focus on lowering the amount that you need to pay as monthly installment. Once things are organized in manageable limits, you can put your budget in order. This is the beginning of your journey towards your goal of becoming debt free. You can now tackle things without affecting your credit adversely.

Many times in life we become hopeless and start thinking that it is impossible to get out of this debt trap. However, you should have faith in the words of Napoleon who said, “Nothing is impossible in the world”. You can eliminate debt with the help of a prudent budget, proper planning and execution.

The main attraction of online debt consolidation loans is lower rates of interest. In fact, if you want to become debt free you should look for only that option that carries a lower interest rate.

Every one needs to consider retirement planning when they are looking at their lives. Right now, just after tax time, if a great time to evaluate that future. There needs to be a life blueprint for what a person’s financial, physical, emotional, and even social future will entail. Unfortunately most people are so caught up with the day to day, just getting-by attitude so common in our times that they don’t take a moment to think of their future.

Webster’s dictionary defines retirement as the giving up of a working life. A quick survey of most in the work force would probably agree. There is so much more to strong retirement planning. If the finances were all that retirement truly involved then it would be a just a financial plan.

Many of the retired people today have found out, often the hard way, that to stop working often means to stop living. Today’s society revolves around work. You socialize with your co-workers, your children are friends with your co-workers’ children, and often times you have no other social network besides those developed through work.

When you leave the work force, there is no where to receive that social interaction you had before retirement. That is why the best retirement planning should take into account not only how you will live financial, but what you will do with the time that you have on your hands.

Retirees today are finding that hobbies, volunteer work, and even a second career are what keeps them going when they leave their original work force. Joining clubs and organization, along with pursuing these types of activities, keeps you active, social, and actually living life instead of just watching it pass by.

Planning for your financial future is an important part of retirement planning. It is just as important to plan for your future life of leisure. Look for new opportunities and experiences to feel your retirement time.

Most of the time people are blissfully unaware that their spending habits that rely on credit cards are leading them straight into debt, until it is too late. Many people just don’t understand where their money goes. They have a reasonably good income, but they find that their expenditure is always more than their income. You may feel lucky that you own a few credit cards that can help you to fill the gap between your income and your expenditure. If this is your practice, you are risking yourself to be trapped into a credit card debt.

Most of debtors that caught into serious finance issue are related to credit card. Statistic shows that American households are holding an average of $10,000 credit card debts. Credit cards are no longer a status symbol as it was a few years back. Everyone, and we mean everyone, can flash one around these days. Credit card provides easy and convenient payment in any of your purchases and you do not need to carry too much cash around while bringing your girl friend or family to dinner at a nice restaurant. Until, you forgot that credit card may be the evil that can lead you to serious debt trap. Here is one of examples on how you walk right into credit card debt.

Charge It To My Credit Card

Today, almost everything can be purchased with credit card. Most merchants understand that you won’t feel the pinch when you do not have to pay in cash and you can make your buying decision faster and easier if it do not involve “Cash” money. Hence, many merchants are working with the credit card companies to come out with various “0% interest Payment Schema” to purchase their products with credit card and payment can be made with 12 to 24 months with zero interest.

Now, a $4000 home theatre set can be purchased easily with only $166.70 per month pay in 24 months. What you need to do is charge it to your credit card. It’s easy right? So, you do it again and again to buy anything you liked, nothing could stop you from buying it. You don’t feel the pinch because you do not have to pay for it in cash. And the easy payment schema offer by merchant that charge your purchases on to your credit card and spread your payments across 12 to 24 months let you feel that the items you buy are within your affordability.

The situation goes even worse when you just pay the minimum payment on your credit card balances. The frequency of late payment increase because your find it hard to meet the payment schedule and minimum payment requirement. Debts are snowballing with the compound interest and late payment charges. You are walking your way into debt trap. Situation will getting worse if you do not know how to manage it and work the way out of it.

In Summary

In many cases, unmanaged and uncontrolled uses of credit cards are the root cause that leads you to a credit card debt. Hence, before you signup any of the easy payment schemas to buy the items that you like, take a moment to reconsider them and take the purchase prices not the credit card monthly payments in counting your affordability to buy these items. If you do not have discipline to use and clear your credit card balance, the best thing is not to use it.