Credit Card Debt – How to Manage It

Before you can really start to make real money, you will have to deal with the debt you might have accrued through earlier borrowings. Most people get themselves into financial difficulties through, borrowings made on credit cards. This is the primary product used by the banks to create debt in peoples lives, the interest on the capital borrowed that this creates for the banks, can keep people in debt for their whole life. Injudicious use of credit cards is promoted by a constant bombardment through the media of a buy now pay later philosophy, A constant call to our egos, that stokes discontent within lives. If you don’t have money you cannot have respect, without these material possessions, the money,the girls, the cars, you are nobody. With this continual disparagement, we compare ourselves to others and begin to believe, that we deserve all sorts of things that others may have had to pay a heavy price to obtain.

To break this cycle of ever increasing debt the first thing that has to change is your mindset. You must believe you are worth something, that you are valuable, and are a special and unique person. This is not an easy thing to perceive, especially if you have had a life full of people telling you something other than this. To have an identity, to know who you are, is a place of contentment, If you are content, you will stop striving for things, if you are happy, it does not matter what you have or do not have. You are created in the image of God, allow Him to define you, God say’s you are fearfully and wonderfully made, he took his time putting you together, He thought about what your purpose was and gave you the tools to achieve that purpose. This God sent His Son who we killed, but that was part of the plan, because without His death the Comforter could not come, If you need some financial comfort, know that godliness with contentment is great gain, and that without a credit card, you immediately rid yourself of a source of credit card debt within your life, get the scissors out cut up all your credit cards and you put your self in a place where the debt generated by the credit cards cannot get any bigger. Freed from debt you are now free to earn money from the Internet.

You can start to address the debt outstanding, by changing the way you make purchases. Pay for all purchases with Cash or by Debit Card. This will give you a much greater appreciation of what you are spending, this takes a bit of getting used to, but the first thing you will feel is empowered, this will make you feel good about yourself, and will also give you a sense of control over where the money is being spent and what for.

To get an even tighter grip on the debt situation you will need to make a budget, fill out a budget planner, and begin to forecast future spending, but more importantly look to find areas where you can begin to save money. Once you are saving money, this frees you up to spend time earning money on the Internet. I told you this was not a get rich quick scheme, but do not bail out, all you need is an attitude adjustment, a new mindset, and I can help you with that.

Understanding Debt Utilization Is Important to Maintaining Healthy Credit

“Debt utilization” sounds, at first blush, like a complicated element of corporate finance, and while the term is certainly applicable to the world of big business, that’s not the context in which it is used here. At the consumer level, debt utilization represents an important component of one’s overall credit profile, and refers to the degree to which available revolving credit is actually used. While debt utilization seems like a subordinate issue that many believe is nowhere near as significant to a credit profile as late payments and collection items, the truth is that debt utilization impacts between one-quarter and one-third of a typical consumer’s credit score. Accordingly, it’s appropriate that we take a closer look at the subject, so that you are able to more beneficially manage your own credit score as you navigate through increasingly-choppy financial waters.

How many times have you heard the old saw that “banks only loan to people who don’t need any money?” The saying refers to the basic truth that banks are more eager and willing to loan money to people who have a long history of financial stability (and thus, presumably, don’t really “need” money), and are much less inclined to lend to those who have checkered financial histories (the very histories that tend to suggest they are much more in need of the cash). Well, the same, general idea applies to the matter of one’s debt utilization ratio, and how that’s viewed by the process that determines credit scores – the less you use your available credit, the higher the score that evaluates your use of that credit. So, am I saying that one of the best ways to help ensure a high credit score is to use your available revolving credit balance as low as possible? Basically, yes.

Before going any further, let’s talk more about revolving credit, and just what it is. There are, broadly, two types of credit lines that a consumer may have: revolving, and installment. Installment credit is that which an individual uses for a fixed period of time to purchase a specific, big-ticket (usually) consumer good, like an automobile. As noted, the term of the loan is fixed, like 48 months, as is the monthly repayment amount. Once the repayment is made in full, the account is closed. With a revolving credit line, the consumer borrows against an established “open” line of credit, such as that represented by a credit card, and may borrow up to the limit set by the credit grantor. As the balance is repaid, the available space on the credit line may be reused by the account holder for new, ongoing purchases. Another feature of revolving credit is that the size of the monthly payments is not fixed; although a minimum amount, recalculated each month, must be paid basically every 30 days, the account holder may pay just that sum, or any amount greater.

Debt utilization pertains to revolving credit, because the inherent nature of revolving credit means the account holder has discretion over how much of the available credit in a revolving line he actually uses. It is said that those with the highest credit scores use, on average, only about 8 percent of their available, revolving credit. Don’t miss the significance of this – even if you have never missed a payment, and have made all of your payments on time (behaviors which are also very impactful when it comes to credit score), your credit standing will nevertheless be diminished as you carry higher balances. Potential future credit grantors view high utilization ratios as being indicative of higher-risk debtors.

So, what’s your current debt utilization ratio? Total up the credit limits associated with each one of your open, revolving credit lines, and then total up the current balances. Divide the balances by the limits, and you’ll have your utilization number. For example, let’s say your revolving credit is represented by two credit cards, each with limits of $5,000 – this means your total available credit is $10,000. Now, let’s say the current balances of each total $7,000. Divide $7,000 by $10,000, and you will see that your current utilization ratio is 70 percent. That’s not good. Even if you’ve yet to make any late payments, potential grantors of credit will interpret a 70 percent ratio as a cue that you’re heading into dangerous territory, where your credit balances may soon become unmanageable. The best way to handle revolving lines of credit for the purpose of strengthening your credit score is to make small purchases that you can easily pay in full each month – that way, you create a regular payment history of timely payments, and also keep your utilization levels, at any given time, at just a few percent.

While it may not seem fair to some that a credit score can be adversely affected by higher utilization levels while one’s payment record remains pristine, that is how the system works. In truth, it’s not difficult to see, if you think it through, why high utilization levels are viewed as potential minefields by “the system.” The takeaway for you is to know it matters as much as it does, and to keep your utilization ratio as low as possible.

The information contained here is for general information purposes only. Bob Yetman disclaims responsibility for any liability or loss incurred as a consequence of the use or application, either directly or indirectly, of any information presented herein. Nothing contained in this article should be construed as a solicitation or recommendation to engage in any financial transaction. You should seek the advice of a qualified professional before making any changes to your personal financial profile.

Dealing With a Judgment on Your Credit Report

When trying to move about in the land of credit, those among us with checkered repayment histories will often find their travels to be rather arduous. There are many components to a credit file, and whenever one of those falls into disrepair, it behooves the individual to see what he might be able to do in order to rehabilitate that item and resume functional access to all that good credit provides. As this column has noted before, in addition to the more obvious benefits well-served by having good credit, it can now make the difference in what rates you pay for insurance, and even if you can land that job for which you’ve been desperately vying. The fact is that one’s credit history has, over time, become a yardstick by which to measure personal integrity, fair or not, so it is essential that you do everything you can to ensure that yours is as “pure” as it can be.

This said, there is one type of credit report entry that can prove especially troublesome to address – the judgment. Although the presence of judgments are generally subject to a seven-year time limitation, they are severe enough in appearance that many people would like to find a way to make them disappear more quickly; plus, because judgments can typically be renewed by creditors (the specifics of this will vary by state), there is always the chance that a judgment will re-appear on your credit after the original seven-year clock has wound down. Although there are things that can be done more readily to directly mitigate, even remove, other kinds of items on a credit report, judgments are a particular nuisance… so is there anything that can be done?

What differentiates judgments from “garden-variety” collection items on a credit report is that a judgment is representative of a court action, which means that the judgment becomes a part of one’s file not out of deference to the creditor who initiated legal action, but at the behest of the court. Once a collection matter moves from being a two-party issue (the debtor and the creditor) to a three-party issue (with the court added), the court becomes the 800-pound gorilla in the room. The only way to get a judgment removed from a credit report is to go through the legal process necessary to have it vacated, and that takes the help of an attorney, which also means time and money – plus, having a judgment vacated is simply a tall order.

So what are the options? Other than waiting for the judgment to eventually fall off of the report (and hope that it does not reappear), you might want to see about settling it… or paying the amount due outright, if that’s small enough… in exchange for a satisfaction of judgment. It is up to the creditor to file the satisfaction with the court, so before paying anything, be sure you have the creditor agree in writing that the satisfaction will be filed as a condition of your payment. In the case of paying a judgment, even a small one, it is smart to involve an attorney – even though it is not necessary, and will cost you some additional bucks to have one help you with the process, the benefit and weight of legal representation in the creation and review of the settlement agreement, as well as in pressuring the creditor to live up to the terms of the agreement, if necessary, can certainly be worth the money.

The information contained here is for general information purposes only. Bob Yetman disclaims responsibility for any liability or loss incurred as a consequence of the use or application, either directly or indirectly, of any information presented herein. Nothing contained in this article should be construed as a solicitation or recommendation to engage in any financial transaction. You should seek the advice of a qualified professional before making any changes to your personal financial profile.