Debt Reduction – Your Personal Credit File

There are two types of personal credit files: standard and investigative. A standard credit file contains a more or less complete outline of a consumer’s financial history. Chances are you won’t ever have to deal with anything besides a standard credit report.

Investigative reports are much more detailed and may contain information about a person’s lifestyle. Investigative reports are usually prepared for companies that want a really thorough investigation of a person’s background. For example, an investigative report may be prepared on someone trying to take out a million-dollar insurance policy, or an executive being considered for a high-level job, or someone applying for a job requiring a security clearance.

There are four parts to a standard credit report:

Personal Information

Your name, address, previous addresses for the past five to ten years, your date of birth, your Social Security number, your spouse’s name and Social Security number, the names and addresses of your previous and present employers, and your phone number can appear in the personal information section of a credit report.

Tradelines

A tradeline is industry lingo for a credit account. In this section, you will find a list of most of your credit accounts, the date each account was opened, whether you have paid each account on time, how much you still owe, whether you share your accounts with someone else, and any negative information about the account (for example, if it was included in a bankruptcy filing).

Public Record Information

Monetary judgments (if you were sued in court and lost, a judgment would order you to pay the person who won), state and federal tax liens, and bankruptcies appear on credit reports. Past-due child support may also be listed. Public record information is usually collected by companies that go to courthouses and gather financial public record information, and resell it to credit bureaus and other interested parties. Debt Reduction is covered in other articles found on this site.

By the way, information in credit reports is reported in a factual and straightforward manner. For instance, if you filed bankruptcy, your file would list the date and court particulars of your bankruptcy filing, but it wouldn’t say you’re a “deadbeat.”

Inquiries

A listing of everyone who has seen your credit report recently will appear on your credit report. Each listing is called an inquiry. There are three kinds of inquiries:

One kind is usually generated when you apply for some type of credit, insurance, or a job. Another kind of inquiry is a promotional (sometimes listed as a “PRM”) inquiry. These are usually created when lenders ask the credit bureau for lists of people who fit a certain profile so they can mail them pre approved credit card offers. These companies don’t actually receive your report, only your name and address if you match their guidelines. (And they don’t actually get that either, since the names and addresses go to a mailing house that sends the solicitations.)

While you would receive the names of the companies that were involved in a promotional offer under the inquiry section, those types of inquiries are not included on the reports that are sent to credit granters and other companies that get a copy of your report.

An account review inquiry is created when lenders want to review the credit of some of their customers. Say, for example, your department-store card issuer wants to increase customers’ credit lines before the holidays. They may go to a credit bureau and ask them to run criteria through a certain group of customers’ credit reports to find out who meets their qualifications. Those who do will get credit-line increases. Again, this type of inquiry is not reported to lenders.

If you’ve ordered your own credit report recently, you may also see consumer inquiries. Those just indicate that you reviewed your own file. They aren’t sent to lenders, either.

The previous three types of inquiries—promotional, account review, and consumer—are called “soft” inquiries because they will appear only when you order your own report, not when a lender orders it for review.

In addition to these soft inquiries, there are several distinct types of “hard” inquiries that will appear on your credit report whether you order it or a lender does. Mortgage-related inquiries, auto-loan-related inquiries, credit inquiries, insurance company inquiries, and employer inquiries are examples of hard inquiries.

Under the credit reporting law, employment inquiries are reported for two years, all others for one year. Debt can create a huge set of problems in your life, so its best to avoid it. Otherwise your options are debt management, or debt consolidation. If you’re interested in debt reduction look for other free informative articles on our site.

Debt Counseling Services – Signs its a Scam

Whether someone is offering you debt consolidation services, debt management, a credit card application or just trying to get you to sign up for a free credit report its important that you pay attention to the details. Here are a few different scenarios.

• The ad assures you that there will be no credit check. Any legitimate company is going to want to see your credit report, even those that lend money to people with less than perfect credit.
• You have to call a 900 number to apply.
• The ad absolutely guarantees that you will be approved. No legitimate company will do that. This is a double warning sign if the ad specifies that you are absolutely approved for a large credit limit such as $2,500.
• The card is offered by a company that claims to be in the business of credit repair, especially if the name implies that it’s a not-for-profit operation. The real credit repair agencies are more interested in getting people out of debt, not into debt.
• Any offer that prompts you to say, “Wow! That sounds too good to be true.” You know the old saying about that. This is another one of those situations in which you should listen to your gut.

Even legitimate credit companies sometimes offer useless services.

For example, some companies offer “credit insurance,” to protect your card in case it gets stolen. The offer assures that you would not be responsible for any bogus charges if you notify the company right away. Sometimes, the company will offer this service free for three months but then charge you a monthly fee, which it will helpfully take by hitting your credit card automatically.

The problem is that under federal law, you are protected in the event someone steals your card for any purchase over $50, if you notify the company right away. Many companies will forgive that $50 anyway.

Another worthless service is credit disability insurance. Again, the idea sounds good. If you are disabled, your minimum payments are covered until you can get back on your feet.

Once you do get some credit, use it wisely. Resolve to never again get in the position of waking with cold sweats or letting the answering machine pick up because you have no way to pay your bills. Debt consolidation or debt management companies will be wanting to speak with you soon.

Your best friend right now is your good common sense. You know now how easy it can be to get in over your head. You know that nothing you buy on a whim will bring you more pleasure than a savings account and little or no debt.

I’m reminded of that great Jimmy Buffett song, “Permanent Reminder of a Temporary Feeling.” He was talking about things like tattoos, but he could just as well have been talking about having huge credit card balances with nothing to show for them. You know from your own experience how easily that can happen and how stupid you feel later on. If you’re not careful you could find yourself calling a debt consolidation company to help resolve the thousands of dollars in debt you have.

Great ways to avoid credit card debt

Credit card debts are becoming the most common forms of debts today. The process of settling the credit card debts is much simpler and hence should be settled faster.

Debts and credit cards

Credit cards are the most essential financial tool provided to consumers today. Immense competition in the world of banking and financial tools has resulted in easy availability of the same. Having multiple credit cards is no big deal with 0% charges and no balance prerequisites for getting a credit card. But this facility is often used in the wrong way by consumers. The benefit of paying later and buying now is an appealing prospect but leads to high interest payments with bills piled. Credit cards are used for payments of utility bills, medical bills, grocery bills and all kinds of bills. These pile up and result in debts. If not paid on time the high interest rates can make the financial situation worse. Hence avoiding debts of credit cards is the best way out.

Avoiding credit card debts

The best way to avoid debts on credit cards is to limit the use of the same. Also reducing the number of credit cards is another way out. Generally if card has overdrawn its limit then another card is used. This results in a repetitive chain of debts which are never ending. Hence by reducing the number of credit cards and trying to make payments by cash are the best ways to avoid debts on the credit cards.

Settling smaller bills

The credit card debts result in poor credit rating which can be a problem for future financial investments and loans. Credit rating can be improved through the settlement of smaller bills. Usually the smaller bills are piled on because they are less in amount and the general conception is to settle these all together. But by settling smaller bill amounts the credit rating can be improve and also unnecessary interest charges on these bills can be saved. Settlements of smaller amounts of bills are the best ways to avoid credit card debts.

Negotiations for credit card settlements

Even though avoiding debts are the best way out of credit card debts there are unavoidable circumstances like illnesses and loss of employment which leads to the same. In such circumstances negotiations are the best way out to avoid further debts. Negotiations can lead to reduction of the credit card debt. The amount can sometimes be reduced to almost 50% which is a benefit only on credit card debts. It helps to improve the credit rating and the remaining amount of the debt can also be paid in installments.

Using common sense is also always a very good option.