Credit scores are important, and can be improved. Image: Flickr / pyxopatamus / CC-BY-SA

A credit score is a number intended to indicate how risky a financial gamble a person may be. There are three big credit reporting agencies in the United States, and each one reports its own score. There are numerous factors that affect your credit score, and you can control your credit score by taking specific actions.

The history of credit scores

Credit score reporting, in its current form, has been around since 1841. Store owner Lewis Tappan started keeping files on customers and their payment history. Tappan hired thousands of correspondents to report on the credit worthiness of individuals in their communities. These reports on individuals soon had hundreds of customers, and the modern credit reporting system was born.

How credit scores are used

Credit scores were originally intended for informing decisions about extending credit to customers. Credit scores are used much more extensively now. Many lenders check credit reports on individuals applying for a credit card or loan. Landlords, potential employers and insurers may run credit reports in order to inform their decisions. There is controversy over the use of credit scores to make decisions that do not deal directly with the issuing of credit or providing of financial services, but the practice is legal and widespread.

What goes into a credit score

Each of the three credit reporting agencies has a different formula for creating a single credit score. The FICO score, developed by the Fair Isaac Corporation, is the most widely used measure of credit in the United States. The general information included in these reports has been determined to be:

• 35 percent payment history – how often you make payments on time
• 30 percent debt – what type of debt and how much debt you have
• 15 percent length of credit history – how long you have used credit
• 10 percent credit diversity – how many different types of credit you make use of
• 10 percent hard inquires – when a creditor checks your credit report

Defining good credit

The FICO credit score ranges from 300 to 850. What is considered a good credit score depends on the creditor doing the checking. However, the relative risk factor associated with each score can be estimated. In general:

• A FICO score of 770 to 850 is considered “choice”
• A FICO score of 710 to 770 is considered “good”
• A FICO score of 600 to 710 is “average” or “medium” credit
• A FICO score below 600 is considered “bad” credit or “high risk”

Taking control of your credit score

The federal government mandates that every credit reporting agency provide a free copy of its credit report on an individual once a year. These free federal reports generally do not include the numerical credit score, but they do include all the information on your report. The government-supported AnnualCreditReport.com provides access to these free reports. There are also numerous services that provide a “free” copy of a credit report in exchange for subscription to services. Once you have a copy of your credit report, check it for accuracy. Credit report errors must be disputed in writing, with a copy of any relevant documents included. The agency has 30 days to investigate the dispute and inform you of the outcome.

Improving your credit score

Once you determine the information on your credit report is accurate, you can improve your credit score by taking a few simple steps. First, pay your bills on time. Second, take a close look at the debt you are carrying and how it is being used. If your credit card balances are close to their limit, pay down that debt. You should also try to keep your debt to income ratio – the ratio that compares your total monthly debt payments to your total monthly income – below 30 percent. For an income of $2,000 per month, a 30 percent debt-to-income ratio is $600. Rebuilding your credit really is simple – make payments on what you owe on time and in full. Once you are doing that, it simply takes time.

Sources

MyFICO.com
PBS.org
FTC.gov
Investopedia
CreditScoring.com

Credit score numbers

Your credit score reflects many elements of your financial history. Your credit score is also sometimes called a FICO score, for Fair Isaac and Company, and it can be a number between 350 and 800. Higher numbers are considered better scores. In general, 700 and above is a very good to excellent credit rating. A score of 680-699 is a good score, 620-679 is fair and at 580-619, you might still be able to get a loan, but at a high interest rate. A credit score of 580 or below is considered bad credit and you most likely will not be able to get a loan. Let’s take a closer look at your credit score number.

• Payment History and Amount Owed: 65 percent of your credit score is made up from your payment history and amounts owed. So if you have missed some payments and carry a lot of debt, you have done some serious damage to your FICO score. Most credit scarring happens from just these two factors.
• Length of Credit History: The length of time you have had credit contributes 15 percent to your score. You are considered financially healthy if you have had more experience managing your payments and have had longer to show that you pay on time and are, therefore, a responsible borrower.
• New Credit and Type of Credit: Each contribute at 10 percent. Potential lenders don’t want to see that you are always searching for and acquiring more debt, such as credit cards. And debt may be classified into types, as well. Credit card and revolving debt will count against your score more than a home mortgage, which is considered an appreciable investment.

Your personal credit score and payday loans

So, is your credit at a healthy 700 or is it scarred at 590 from missing a few payments? Making payments on time is vital to your credit score and your future ability to get new loans. If you find yourself in a short term financial emergency and need an unsecured loan fast to pay your bills on time, consider an online payday loan. Getting an online payday loan is a fast and easy process, and it can get you as much as $1,500 in as little as two hours in most cases. And the best part is there is rarely any credit check and the loan will not be reported to the credit bureaus, so your credit will not be affected by a payday loan.

Sites like Personal Money Market specialize in providing loans for people with bad credit. They understand that money problems can happen to anyone at anytime, no matter how good their credit scores may be. But before you submit your application, let’s take a quick look into the world of credit today.

Beyond bad credit loans – the World of Credit

Although there are payday loan lenders who can provide you with bad credit loans for your short term needs, it’s important that you work hard to get your credit back in good standing. Of course, these types of loans come in handy any time, but a poor credit can definitely work against you in many other aspects of life. For instance, it’s nearly impossible to get a new mortgage loan these days. And even if you do find a mortgage lender willing to work with a low credit score, the process is almost too complicated to handle, and you will likely be required to pay a higher interest rate. From your dream home to the latest electronics on the market, bad credit can make life a nightmare.

So continue working on your credit and never give up. There are many ways to re-establish a good credit score — all you need is commitment, consistency, and a little bit of sacrifice.

Get back on track with bad credit loans

When life’s unexpected financial mishaps occur, don’t risk more damage to your credit; seek out the help you need as soon as possible. If you feel that getting bad credit loans today will help you back on your feet, do not hesitate to do so. Get your application started right away. Your credit history will not determine your eligibility, and you will be informed of your status within seconds of submitting the form. Don’t let your credit score come in the way of you and the help you need today.

Start your application HERE!

Why would I need a poor credit payday loan?

Well, as stated above, you might need this loan if you have poor credit. Banks will not give out loans to people who have bad credit, so your best chance for a loan is through an online poor credit payday loans company.

What if I don’t have credit?

Even if you have no credit you are still able to get this loan.

What is the difference between poor credit and bad credit?

There is no difference. It’s just two ways of saying the same thing.

What are the requirements?

Poor credit payday loans have 5 basic requirements:

1. Need to be at least 18 years of age
2. Must be employed for at least three months and currently working
3. Submit full Social Security Number
4. Must be a legal U.S. citizen
5. Valid U.S. resident address

How can I contact the loan company if I have questions?

Go to their website and look for the contact section. There should be a company phone number, email and business address.

Is it safe to submit my personal information on a loan site?

It is very safe. Basically, you just need to know what to look for to make sure the site you are on is safe. For instance, if the site is secure, you should see a lock icon on the top right hand corner of the page, right next to the address bar.

When can I get this loan?

You can get this loan at anytime. There is no designated time period for such a loan.

Where can I get poor credit payday loans online?

You can apply for one right here on this secured page. The short application form is just below this article. You should be able to complete it in less than 5 minutes.

Poor credit payday loans | Start HERE!

Benefits of no credit check loans:

• Generally no credit checks.
• Money in your personal account, sometimes within two hours of completing your loan application.
• The loan can be paid back in installments to the lending agency.
• Your personal information is protected with online security features.
• Only need to be employed for the past three months.
• A simple three- to five-minute form to complete.
• An online textual guide to assist you through the loan application process, plus a 1-800 number to help you with any questions (if you would like to speak to a real person).

What must I have to apply for no credit check loans?

• Your social security number
• Your current address information
• Must be a legal U.S. citizen
• Must be employed for at least the past three months
• 18 years of age or older

How much will I receive?

You can get up to $1,500 if you qualify for that amount. Companies decide based on how much you need and the information you provide to them in your application. Make sure all the information you provide is accurate.

How long does the loan process take?

You should be informed of your status just minutes after submitting your form. The loan agency will contact you via e-mail to let you know whether they have accepted your application.

Where to get no credit check loans?

You’re in luck. The website you are on right now connects people with loan companies online that offer different types of loan products, from no credit check loans to auto loans. Just complete the short form below and the folks here at Personal Money Market will match your loan application with a suitable loan agent that fits you best.

No Credit Check Loans | Start your application HERE!

Zero percent liability

The FTC requires that consumer liability for fraudulent charges made to their credit or debit accounts be limited to $50. However, VISA and MasterCard, which control 100 percent of the U.S. debit card market and the majority of the U.S. credit card market, have taken it one step further, requiring that all of their card issuers adhere to a zero percent liability policy for customers affected by fraud.

Equal protection for both accounts

This means that whether you use a credit or debit card, you are equally protected and will receive a 100 percent refund on fraudulent charges made to your accounts. Since both your credit and debit card issuers are required to adhere to the same zero percent liability policy, you should feel equally comfortable when using either account, right? Not necessarily.

Your debit account

When you use your debit card, you’re risking direct access to your checking account. Someone making fraudulent charges to your debit card is stealing your actual money, making the logistics of a refund to your checking account a more difficult and nerve racking process.

What you can expect as a victim of debit card fraud

As a victim of debit card fraud, you run the risk of bouncing important checks, such as your electric and water bill, or even your mortgage payment. Your cash flow for day-to-day expenses is cut off until the dispute is resolved with your bank. While you will get your money back eventually, you have to act fast.

The difference using your credit card

Your credit account, on the other hand, exists on the basis of borrowed money. If someone makes fraudulent charges to your credit card, it has no direct effect on your cash flow for your day-to-day living expenses and you’re generally not responsible for the debt for 25-55 days.

What you can expect as a victim of credit card fraud

For example, let’s say fraudulent charges are made to your credit card account 10 days before you receive your bill. Assuming that you don’t notice the charges until your printed bill comes in the mail, you have a minimum of 25 days to resolve the matter before your bill is due. However, if you’ve been a little more diligent by checking your account online, you will have an additional 10 days to resolve the dispute. Either way, with a credit card, you should have enough time to detect, report, and resolve fraudulent charges before you become responsible for paying them.

And the winner is…

These practical matters clearly make credit cards a more convenient payment method when it comes to fraud protection. However, if you have trouble handing your credit responsibly then credit cards remain an unfit choice.

*Source: CSCU, The Nilson Report, VISA

There are ways to overcome financial hardships, no matter the situation.

Hardships can affect consumer’s cash today. The recession was hard on consumers and many had to drastically change their ways of life to manage. On top of the financial situation, some consumers suffered other hardships to make matters even worse. For anyone who had difficulties personally and financially, it was a challenge.

For example, Michelle Plumbley, of New Castle, New Jersey, is a homeowner with three children. Four months ago, her husband died of cancer and she was notified that she would no longer be receiving the $2,100 in Social Security benefits to live. Her credit card debt is $18, 000 and comes along with a hefty interest rate. She is debating options and weighing pros and cons for her future.

The solution for a homemaker after tragedy

Plumbley has some options:

• She can contact a debt consolidator and pay $285 a month for 4 years
• She can borrow on her retirement to pay off her debt
• She can sell her home, which she owns in-full, and pay off all debts
• She can downsize to a smaller home, and use the left over money to pay debt

Although there are many options, each one comes with an interesting set of after-effects. For example, she could sell her home and buy a new one, but the leftover funds may just cover her credit card payoff. In addition, the market isn’t at its best position right now to start selling a property, so it may be on the market for a while before the solution comes to fruition.

The expert’s opinion

Steve Bucci, financial expert for Bankrate.com, said that Plumbley has critical decisions to make. First of all, losing $2,100 in monthly income is a drastic change for anyone to manage. The good news for her, though, is that her house is paid for. That could be what saves her from a disastrous outcome. The biggest issue she has to deal with is her credit card debt. Bucci advises her to submit a “letter of hardship” to her credit lending company. Many lenders are more sensitive with cash today because they know the state of people’s finances. To ask for a letter of hardship, consumers need to talk to a manager at their credit lending company and be prepared with a payment plan. Some lenders offer six-month to year-long breaks in payments for qualifying hardship-suffering customers.

The second thing for Plumbley to look into is how to increase her income, or decrease her expenses. To pay off her debt, she needs an additional $400 a month. That averages out to about $13 a day. Bucci suggests all people who owe considerable debt should break it down to manageable amounts and then think strategically about how to handle it.

Thirdly, Plumbley also was considering selling her home and downsizing to a smaller one. Rather than that, Bucci instructs her to look into a home equity line of credit, or HELOC. A HELOC will have a low interest rate and a longer lifespan. That will allow her to pay back the money much easier and at a much lower rate than what her credit card company is currently offering. The one caution with this option, though, is that consumers need to understand that they are exchanging unsecured debt for secured debt with the move. If payments aren’t made on time and the loan defaults, homeowners could potentially lose their property.

Finally, debt consolidation is another possible solution Plumbley could use. Bucci instructs that debt consolidation can help consumers, but only if they are careful what company they use. A legitimate nonprofit credit counseling agency can help a difficult financial situation. The problem is that there are so many unscrupulous companies preying on consumers in financial turmoil. Bucci says, “If a company promises anything that seems outrageous, it probably is…it’s impossible to lift a credit score one-hundred points in a few months.”

Managing debt after a hardship

Managing cash today is difficult, and adding a serious hardship to the mix can mean even more stress. For anyone who finds themselves in this position, the best thing to do is to take stock of what the issue is, what the options are, and then weigh each one out objectively. As Bucci added, “It is very important for those in trouble to remain financially strong and a safe harbor for dependents until they become independent, and perhaps can help you in return.”

Need cash today? Start your quick loan application HERE!

Establish Credit

This starts by simply borrowing money — could be with a car loan, credit card or any number of different types of loans. What really establishes your good credit, though, is the way in which you pay back the money that was borrowed, how you handle the money and your consistency in payments. Creditors are basically looking to see if they can trust you with money. Loan amounts and credit limits start out low, but as you show that you can be responsible, you will build your credit, allowing you to borrow more so that you can buy a car, a house or any other major life purchase.

Protect Credit

With all the talk of identity theft, how can you protect your credit from a thief? It is very important that you are mindful of where your debit/credit cards and account numbers are. Only keep the cards you plan on using with you while you are out shopping. Don’t give out personal or account information to parties which you aren’t currently doing business with.

You can also protect your credit by paying close attention to all your billing statements, making sure all charges are legit and for the right amounts. It is your responsibility to report any mistakes on your bill in a timely fashion, usually 30-60 days, and if you don’t notice and report it, the debt is assumed yours and you will be stuck paying for it. Overall, in protecting your credit, vigilance is the cornerstone to keeping your good credit.

Improve Credit

This is often where most people get lost. It’s easy to get in over your head. With our cultural “want it now” mindset, it is all too easy to get behind and feel as if you are drowning in the sea of debt. There is hope; you can restore, regain and get back on track with your credit. It must start by taking responsibility for your debt. You can’t just ignore it. Contact your lenders and try to work out a new payment schedule. Often they will work with you in creating a payment plan that you can afford.

Immediately stop purchasing with credit. If you can’t pay back what you currently owe, don’t add to it. If you have substantial debt, it would be a good idea to contact a credit counselor. You can start with the National Foundation for Consumer Credit – call (800) 388-2227. It will help you find a counselor in your area. Be cautious of debt consolidation companies that offer you a quick fix to all your problems. Remember that it took you time to build your credit in the first place, and that it will again take time to rebuild your great credit.

Identity theft can seriously disrupt the lives of its victims. Essentially, it is characterized by one stealing the identity of another for the purpose of using the victim’s credit information and finances for ill-gotten gain. Thieves are sometimes able to ruin a person’s credit and drain a checking and savings account before a victim even knows that their security has been compromised. To prevent this from happening, there are a few things that every person can do.

Tips for preventing identity theft

Information storage. Do not store personal financial and identifying information on a computer. Social security numbers, identification numbers, bank account numbers, passwords, password reminders and other log in information is what identity thieves are after. Keep this information safely stored elsewhere, but do not store it on a computer that can be hacked into.

Virus-protection software. Keep all personal and work computers adequately protected with . Some computer viruses are specifically designed for identity theft and may harvest personal information, such as social security numbers and bank account numbers, from an unprotected computer. To avoid this, virus-protection software should not only be installed on all computers used, but also updated regularly.

Firewalls. Install a good firewall program, which will prevent thieves from accessing any information stored on a computer.

Hyperlinks. Do not click on hyperlinks unless it is from a trusted source. Identity thieves are notorious for sending special offers by email that require a recipient to click on a link for more information or to make a purchase. Unfortunately, these links are often used to expose the computer to a virus or some sort of program that harvests personal financial information from a person’s computer.

Trusted sources. When making a purchase, applying for a personal loan or performing other financial transactions online, always be sure that the site is a trusted source. Never follow a link from an email to make a purchase or apply for a cash advance, even if the link looks like it is from a source that would ordinarily be trusted. Instead, take the time to type the store or lender’s URL into the browser’s address bar directly.

Safe Browsers. Only make purchases or perform financial transactions on the Internet when using a safe browser that will scramble or otherwise encrypt all of the date you send online. Also, look for a tiny padlock symbol at the bottom of web pages asking for personal or financial information. This lock means that the site has been deemed secure. If you do not see it, do not proceed with your transaction.

Computer-servicing precautions. Be careful when sending your computer out for servicing. It cannot be repeated enough times not to store personal financial information on a computer. However, if you do, be very careful as to whom you allow to service your computer, as the technician will easily be able to access this information, as well as other private photographs and information.

Selling precautions. When selling a used computer or even if you are just throwing one away, always delete any personal information that was previously stored on it. Special wipe programs exist, which can help delete this information. Be advised that simply erasing the information by hand is not recommended as deleted information still remains on a computer’s hard-drive.

Keeping up in a dangerous game of cat and mouse

Overall, shopping online, applying for an Internet loan and handling other financial transactions by computer are all relatively safe if the tips described above are regularly implemented. There is no guarantee that identity theft will never happen to an individual, as thieves are always inventing new and resourceful ways of stealing information. However, making an effort to stay up to date on these tips and others, as they become available, can save a lot of money and heartache.

High credit card debt and numerous personal loans can mean disaster for people wanting to buy houses. Lenders are slowly beginning to open their doors again, but they are still being picky about who gets approved and who doesn’t. If you are looking to move into your own house soon, there are some crucial steps to take to better your chances of getting a mortgage loan.

Tips to attract buyers

The first thing to remember when trying to find a lender is that credit scores need to be good. In fact, the recession made many bankers worried and more stringent with rules as to who can get how much money for mortgages. Because of this, potential borrowers need to start working on their credit scores six months to a year before they ever fill out an application. To get the best deals, applicants need a FICO score of at least 740, and the lower they fall below that the more they will end up paying. These days the cut off for eligibility is 620. Most lenders won’t even look at someone with a score lower than that.

The second most important thing lenders look at when reviewing an applicant is their steady income. Lenders normally request two years of tax documents and recent pay stubs. Job consistency is also a factor in the mix. For those borrowers who are self-employed, there are many more cautions to take. Most likely the lender will want your business tax returns, profit and loss statements, business license and sometimes a letter from an accountant.

Keeping debts in control is the next key to getting approved for a loan. When it comes to using the ratios to calculate eligibility, lenders are using older models. They now are returning to the 28%-model where a mortgage should not exceed more than 28% of gross monthly income. Other debt, including personal loans and credit card debts, shouldn’t be more than 8%, creating a total debt-to-income ratio of 36%. If you are looking to take out a loan, you need to pay down debt to bring the debt-to-income ratio as low as possible.

Finally, having a 20% down payment on a property can give you a real fighting chance when it comes to getting a mortgage loan. Without it and you will have to pay for private mortgage insurance, or PMI, and that increases monthly liability. People who have less than 20% to put down on a home are being directed to the FHA loan option. With this option, borrowers with less capital can get approved, but at higher interest rates. It’s a good way for those without upfront cash but who can handle a heftier monthly payment to buy a new house.

Owning a home in the future

In the end, buying a house should be a happy experience. Today’s post-recessionary economy is making it difficult, but not impossible to qualify. Watch personal loan and credit card debt, cash reserves, credit scores and maximize income to not only get approved, but to find the best rates possible. By using all these tools, potential homeowners can assure their financial home-owning futures.

Start your personal loan application HERE!

Borrowing money is a way of life for most people. Whether it is for a home mortgage, auto financing or a pricey item purchased on a credit card, most do not mind creating debt by borrowing money, as long as their dreams can be financed right away. While there is nothing intrinsically wrong with this, as long as a borrower can comfortably afford to repay their loan or credit debt, it is nonetheless interesting to consider why borrowing money is so popular.

Money and Happiness

Is it true that money cannot buy happiness? If so, why is it that so many people anticipate that it will? What is it about money that makes human beings feel as though, the more of it they have, the better they will feel about their lives? And why does it seem that some of the wealthiest people are also the most miserable and insecure?

Money buys satisfaction, not happiness

Researchers who study the psychology of money, including famed psychologist and esteemed Nobel laureate, Daniel Kahneman, have suggested that people believe money buys happiness because, when they can afford the material trappings of their dreams, even when this involves borrowing money to finance their purchases, such makes a statement to the world that they are productive members of society who are able to accomplish conventional goals that the rest of society is also striving for. It is this nature to compare and measure one’s accomplishments by this preset standard that is the true motivation. Therefore, people equate money with happiness, because their happiness has been defined by what their main social group strives to achieve. In reality, however, psychologists believe that money only buys fleeting satisfaction and not true happiness.

When researchers have delved more deeply into studies relating to money and happiness, they have discovered that people with a lot of money, when asked on a regular basis about their happiness, do not report being happier than people of lower financial rankings. Instead, these studies reveal that people with more money are often more satisfied and comfortable with their lives, but were also more stressed by the day to day demands of their career positions or the activities that they engage in in order to maintain their standard of living. So, while they were more satisfied, this stress actually hampered their actual feelings of happiness.

The media, money and illusions of Happiness

Because most people are bombarded with daily images suggesting that money equates happiness, those who feel like they don’t have enough of it often find themselves obsessed with chasing more money, while creating more debt and increasing their levels of stress. Very few images in the media, which emphasize happiness without a lot of money, exist and, therefore, most people’s minds are trained on obtaining more money while feeling unhappy or dissatisfied when they aren’t able to do so. Such leads to higher instances of people borrowing money that they cannot afford to comfortably repay.

Happiness vs. Satisfaction

Instead, those interested in the psychology of money and its correlation to happiness are encouraged to distinguish between what makes them feel satisfied and what makes them feel happy. Doing so, of course, is an inside job and will vary from individual to individual. While money is necessary for affording basic needs, such as food and shelter, those who earn enough to comfortably afford these are advised to study their own motivations for acquiring more than what they need, such as a larger, more expensive home, and why they are willing to go into debt in order to achieve such. There is nothing wrong with doing so, as long as one can afford to, but if a person is seeking more happiness in the process, they should recognize that happiness isn’t for sale and that the illusion that it is may very well lead them down a dark path of bad debt and bad credit.

If you are thinking of borrowing money, apply HERE!

You may avoid student loans with these tips for saving for college

Throughout history, parents have used savings, unsecured loans and credit to get their children through college. Since 1996 however, a new savings vehicle has been on the market and growing numbers of parents are utilizing it. Section 529 plans offer tax-advantages for saving when it comes to college savings. One thing to remember is that college costs are not set to decrease any time soon. In fact, since the 80s, they have consistently risen straight across the board. Also, for parents who wait too long to start saving, many older savings options won’t help. For example, the Coverdell Education Savings Account has an annual contribution limit of $2,000. If parents don’t open it until a child is in high school, it most likely will only put a small dent in college funding. Finally, prepaid tuition plans sound good, but children have to go to schools that participate in the plan. That limitation could mean disaster for a student wanting a specific field of study.

The 529 Plan

State-sponsored college savings plans allow flexibility in choosing a school. In addition, parents starting to save later still have the opportunity to make a sizable investment. The Section 529 plans allow people to invest in a predetermined pool of stock and bond investments. Most plans involve dividing investments according to a given asset allocation that is determined by the child’s age. Younger children traditionally have more aggressive asset allocations and older children have more conservative ones.

The lifetime contribution limit for the 529 plan often times is greater than $200,000 and that affords a great flexibility in how much parents contribute. All earnings in the account are tax deferred and for parents living in the state when the plan is used, they also may be eligible for state tax deductions. Once the child reaches college age, the account can be used to pay for qualified higher education expenses. If money remains in the account after paying off college, the balance can be transferred to a younger sibling or other related family member headed for college.

The advantages and disadvantages of a 529

Older methods of paying for a child’s college meant dipping into savings, taking out unsecured loans or family assistance. Today, the 529 savings vehicle is offering a much less intrusive method of saving for college. The biggest advantage of the fund is that the plan is flexible and has few limits. Plus the state-sponsorship means that they are tax-deferred vehicles for saving money. The other big advantage is professional asset management. Each participating state contracts an asset management firm to handle the plan. You can find out what company your state uses by visiting SavingForCollege.com.

Disadvantages

When it comes to the disadvantages of the plan, there are a few to note. First, the plan is funded by various stocks and bond investments. With any stock or bond-funded account, there is a risk to be aware of. When it comes to the 529 Plan, returns are not guaranteed. That means that potentially your account could lose value, or remain the same. Companies cut back on the aggressive stocks and bonds as the child ages, but risk is never completely out of the picture.

Parents also should have a complete understanding of the contribution and withdrawal rules to the plan prior to signing up. Every state has its own rules in terms of procedures, so be sure to read up on what state is applicable. There are also penalties to be aware of if withdrawals are not used for higher education expenses.

Choosing the right plan

It takes some research to find the right savings vehicle for college funding. The Section 529 plan can be extremely helpful, but there are other options to consider. A prepaid tuition plan may make it possible to lock-in on a college’s tuition rate. That can cut down considerably on savings, unsecured loans and credit needed to fund a shortfall. Coverdell Accounts may be useful for parents who start saving early and commit to saving religiously every year. What plan a parent uses needs to be individualized to their specific financial situation. Research is key in finding the right solution to the problem of funding college.

If you could use unsecured loans, apply here!

When it comes to borrowing money, Americans are getting a good lesson in the new rules. Pre-recession credit was thought of as a tool available to almost everyone. People used their credit for a wide variety of things, seeing its convenience as a major advantage to their monthly bill payment plan. For this reason, there was estimated $3.5 billion in open credit for US consumers in 2006. Then the market began to decline.

It was a wake up call of sorts when the recession first began. Martha Coleman, consumer in Pittsburgh, Tennessee said, “I had always thought of credit cards as safeguards against financial disaster. If I didn’t have the cash up front, I charged it. I always mentally knew if the money wasn’t available I had a credit cushion to save me.” Coleman soon learned that “credit cushion” was gone when her credit card company slashed her limit at the height of recession. She added, “It could not have come at a worse time because I got laid off. I was counting on having extra credit to tide me over and suddenly it was gone.”

How the recession changed credit

The recession greatly changed how consumers manage credit. When it comes to purchasing big-ticket items, almost everyone needs to have credit. Homes, cars, appliances and electronics are all normally financed. The biggest problem however is when people use their credit cards to pay for small expenses too. Gale Frampton, analyst for Crohn’s and Dackman, said, “Everyday expenses normally only drive up your balance and do little to actually help you. If you are buying a $30 item, why stretch the payment out over a few months? If money is that tight, then don’t buy it at all.”

It’s a hard lesson consumers learned via the recession and how credit lenders responded. To mitigate damages credit card companies slashed limits and increased interest rates to unmanageable amounts. The problem was that an abundance of sub prime borrowers forced credit card companies to turn to their good-paying customers, to find as much profit as they could. Many people who were borrowing money wisely felt that they were being penalized undeservingly. Frampton added, “Bad borrowers bowed out of the game early, leaving good borrowers holding the bag. Credit lenders realized that if they weren’t hard on their good customers, they wouldn’t make any money back.”

How to manage credit now

When it comes to post-recessionary credit, there are new rules to follow. One the most effective ways to manage credit is to pay down balances. Craig Watts, spokesman for FICO, said, “The overall effect of paying down credit balances is based on an individual basis…but depending on a consumer’s overall credit profile, he or she could push their score to the 700 range just by paying it down.” The reason for this is because 30% of a credit score is based on “credit utilization.” That term is used to gauge the amount of credit being used versus the total amount of credit available. For example, if a consumer has $5,000 in debt and an open credit line of $10,000, then their credit utilization is 50%. That percentage is what creates about one-third of a credit score and the lower the credit utilization ratio, the higher the overall credit score.

Another tip for consumers is to always make payments on time. The chronically late payer is doing nothing but hurting his or her score. For example, Watts also pointed out that paying all bills on time for just one month could potentially “boost a credit score by as much as 20 points.” Overall the two biggest tips when it comes to managing credit are to pay down balances and pay on time.

Figuring out credit for positive results

Borrowing money does not have to be detrimental to a credit score. Credit cards are meant to help consumers, but the new face of credit lending forces them to be wiser about management. Credit card lenders are strict these days, but if a consumer knows how to maneuver their accounts they can still walk away with a positive outcome.

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Recent research is showing a decline in borrowing money. The Federal Reserve announced that Americans borrowed less for a tenth consecutive month. This marks the lowest amount on the records going back for seven years. It seems that most Americans are getting smarter about credit after the recession taught a hard lesson about credit.

In former years credit cards were thought of as emergency options when people needed money. People stuffed one credit card away for those times when cash wasn’t readily available. Once the recession began, people were surprised at how credit lending companies dealt with them. Many good customers saw their credit limits slashed. Other customers had huge hikes in their interest rates. Still others saw added fees attached to their bills.

The lessons learned on credit

The Federal Reserve reported that total borrowing dropped by $17.5 billion in November, which was much more than projected. In fact, economists calculated the fall of borrowing at only $5 billion. It seems that Americans learned the lesson on credit and new studies are giving reasons for their decline in borrowing. Some are fearful about their job prospects for 2010 and they are trying to replenish savings that were ravished by the recession. It was reported on Friday that employers cut another 85,000 jobs in December and that brings the total job losses in the country to 7.2 million since December of 2007.

Aggressive borrowers have problems too

There are also a growing group of Americans who still want new credit. They are knocking on credit company’s doors asking only to be turned away. Many banks were hit hard by the crisis of the economy and tightened their lending requirements. Even consumers with better-than average credit are having problems getting approved. Economists are worried that if lending doesn’t start happening again, consumers may continue to focus on saving rather than spending. While in former times they were concerned the low savings rates of US banks, now they are concerned that if consumers continue to save, they won’t be fueling the economy. Consumer spending accounts for 70% of total economic activity.

Credit borrowing down

Borrowing money is not like it used to be. Gregory Daco, economist at HIS Global Insight, said, “With consumers facing difficult labor market conditions and tight credit conditions, downward pressures on credit are likely to remain strong and improvements will be very gradual.” The overall drop of borrowing has fallen $17.5 billion, but the credit card borrowing portion of that number is also huge. Studies showed that credit cards fell by $13.7 billion, which is an all-time record decline in dollars. The drop was 18.5% from November, which marks the biggest decline since December of 1974.

Hope for the future

Studies are showing that regulations for borrowing money are not as easy as they used to be and it’s taking its toll on the American economy. Spending is still lingering and even the Christmas season didn’t prove to be as lucrative as retailers had hoped. Research is also showing that the tendency these days is for consumers to focus on bulking up their cash reserves and that is also hampering spending. Only time will tell when people feel comfortable enough to return to their old ways of spending, but economists are hoping it is soon.

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Poor Debt Management Can Affect Generations

Most who struggle with personal finance, debt and credit issues do so because they never learned how to properly budget money. It is likely that these same people have more than one parent, siblings and other close relatives who also have personal finance debt issues. Most never learned to differentiate between needs and wants or are not very disciplined in spending accordingly. Left unchecked, such behavior has caused individuals to fall deeply into debt. Just as in situations of physical abuse and substance abuse, the dysfunctional handling of debt and credit is often passed down to future generations. Poor financial decision making, however, is much easier to rectify than the aforementioned dysfunctions.

Everyone Has Control Over Their Own Financial Future

In looking at personal finance, debt and credit, it is important to understand that an individual has ultimate control over their destiny in any of these arenas. While many feel as though their spending is out of control, the exact opposite is true. Even if there are psychological reasons as to why a person’s personal finance, debt and credit are spiraling out of control, as is the case with shopaholics or excessive gamblers, the truth is that, with help, it is still possible to maintain control over one’s personal portfolio. Simply, a person must recognize that they have a problem, that this problem is a threat to their future and that correcting the problem is fully within their control.

Debt Education is the Answer

Once a problem is realized, a person can then begin to take steps to repair their personal finance debt by becoming educated on financial topics. More than ever before, access to financial education topics are readily available to everyone. From personal finance budget software, to local community classes, to library books written by respected authors, a full financial education is within everyone’s grasp and most resources are free of charge. Keeping this in mind, a great place to start one’s financial education is with the basics of understanding how to create a personal finance debt budget and to understand how credit works. This can be learned by combing the Internet and reading various articles written on the subject or books can be checked out from the library to gain a basic understanding.

Low-Cost Debt Counseling is Also Available

Also, several non-profit organizations offer low-cost debt counseling services. Contacting one’s local Chamber of Commerce or related public agency can help locate such services. In doing so, a debt counselor can help with creating a budget, consolidating outstanding bills and offer further resources helpful to one who is determined to regain control over their personal finance debt.

No More Excuses

No matter how a person learned to mismanage personal finance, debt or credit, there is no excuse for this type of behavior to continue. Nor is there any reason for such economic woes to be passed on to future generations. Instead, a person who is truly interested in correcting bad habits and living a stress-free financial life, will take this advice to heart and begin, immediately, to learn all there is to learn about handling their finances more responsibly.

When it comes to bills, many people have been using small loans to fund them. The recession was difficult on many consumers. Finding ways to pay for monthly expenses was hard due to the out-of-control jobless rate, lending crash and inflated expenses. Though most people thought that credit cards would keep them out of financial difficulties, the lending crash took care of that.
Credit-card lenders quickly closed their doors when the economy took a downturn. People were left to manage on their own by using alternative methods of funding expenses. Now that the recession is over, credit is making a comeback but consumers are cautioned to be wiser about managing it. The credit card rules today are vastly different than they were pre-recession. To make it through the difficult financial economy, everyone needs to understand how the world of finance has changed.

Managing credit

Prior to the recession it wasn’t uncommon for consumers to spend more than they earned. People used credit for a wide variety of things they wanted, with little concern for repayment. When credit lenders changed their rules, or closed accounts altogether, people got scared. They suddenly realized that credit wasn’t the reliable option for paying bills that it once was. A study of the market shows that consumers need to change their way of thinking. Michael Silverman, economist for Baird and Friedman, stated, “Credit needs to be planned carefully based on a consumer’s priorities. If you see yourself buying a house in five years, then this is the time to start worrying about fixing your credit score, paying down debt and acting wisely with credit you already have now.” According to experts, the biggest caution when it comes to dealing with debt is to use forethought. Silverman added, “Gone are the days of using credit to buy whatever you want. In today’s world, credit needs to be used for one purpose: to create a positive credit history.”

Managing debt

Almost everyone has debt. Whether it is in the form of mortgage loan, automobile loan, credit card advance loan or other small loans, it is imperative to have a plan to tackle it. Budgeting is the number one way to manage. Every consumer should keep track of their expenses and income. They should know exactly how much left-over money they have at the end of every month. If there isn’t any, then that is an issue too. Silverman added, “Too many consumers live paycheck to paycheck despite the recession… the recession should have been a wakeup call for everyone.”

Installment debt

When it comes to installment debt, almost everyone needs it. To buy big-ticket items, most consumers need to use installment debt. For example, 30-year mortgage loans come with interest rates from about 5% to 7%. Automobile loans come with 8% to 9% loans. Everyday items need to be funded somehow and credit has been a life-saver for most Americans. The great thing about installment debt is that it is easily budgeted into daily life, and it has an end date. That end date is when the account is totally paid off and the asset purchased becomes owned-in-full by the borrower.

Revolving debt

In the world of debt, there is also revolving debt. Revolving debt includes any “open-ended line of credit.” Visa, MasterCard, and department store credit cards. These are the worst type of credit because there is no end date and the interest rates can change. Of course there is legislation in place to thwart credit card companies from gouging consumers, but it still takes a vigilant eye to manage it. This is the type of credit that gets most people in trouble. It’s easy to over-charge and convenient to buy on credit, but there is a price to pay. Normally that price is anywhere from 10% to 35% in interest. For example, paying the minimum payment on a $3,500 credit card loan could mean making monthly interest payments for 15 or more years.

Credit in its best form

Although credit has its downside, there is still a great advantage to using it wisely. Managing credit makes it one of the best tools when it comes to funding big-ticket items like homes, cars, appliances and vacations. Rather than using small loans or savings, sometimes it makes sense to pull out a credit card. Credit shouldn’t be feared, but rather consumers should educate themselves on how it works, how to use it for their lives and how on-time payments should be a priority.

Installment loans are still popular, but surveys are showing that Americans are getting better at managing their credit. TransUnion made a prediction recently that credit card delinquencies should continue to fall throughout 2010, but at a much slower rate. Their studies showed that people want to pay off credit and realize how important a good credit rating is, but the unemployment rate is going to hamper their efforts. Still, TransUnion is estimating that the delinquencies on MasterCards and Visas should both drop to 1.04% by the end of the year.

How the numbers are calculated

TransUnion uses a calculation to predict how people will handle their future credit and it involves former payment habits of customers. The common belief is that the past three months’ payment habits are indicative of how a borrower will deal with credit in the future. For example, the chances of a consumer catching up on payments after just missed deadline is 86%, however if they miss two payment deadlines, that percentage drops to 62%. After three missed payment dates, the percentage is under 20%.

Numbers like this give analysts the ability to project what the future of lending will hold. Though TransUnion is making predictions that numbers of non-delinquent payments are on the rise, that rise is said to be just a fraction of how sharply it declined in past months. Full recovery is still a long way off.

Where the lending industry is headed

Director of consulting and strategy at TransUnion, Ezra Becker said that “delinquencies lag behind other statistics, like the jobless rate. Until more people are back at work, there will not be any dramatic improvements in payments being made on time.” The number of new unemployment claims has been lower in recent months than the year-long norm and that’s good news for economists. They are studying the economy looking for nascent signs of relief. They are also trying to forecast the future by combining research on mortgage, car and installment loans. Combining all forms of lending is enabling them to formulate what to expect in coming months.

One of the most closely watched states is Arizona. In the recession, Arizona was one of the hardest-hit and its turnaround is much anticipated. It is the only state where industry analysts are predicting credit card delinquencies will still rise throughout the beginning of 2010. Becker added, “Credit card reforms that take effect in February will have a material impact on the credit card industry next year.” He believes that lenders will be tight-fisted still, but will come up with new lending options for those without premiere credit histories. “The industry will adapt to new rules and a customer base with new credit requirements. Lenders will be forced to be more innovative in the products that they offer and how they manage their customers,” he added.

Consumers need to be smart

Though there are fresh products coming to the market, it’s important for consumers to be as vigilant as ever regarding their credit. New reforms are slated to aid people with all types of credit, but that does not mean that the lending process will be any simpler. For anyone needing credit, mortgage loans, car loans, or installment loans, it will be very important to have relatively good credit. Becker added, “People with very low credit scores may have to wait longer for the door of credit to open for them, but they still need to be fixing their credit now.”

You’ve been working hard to build a good credit history – paying your bills on time whenever you can and never taking on more debt than you can handle; but it’s been a rough month. Payday is a week or more away, but you’ve run into unexpected expenses – your car breaks down, your significant other’s birthday is coming up, or the cold temperatures meant a more expensive heating bill.

No matter what the reason, there are times when everyone can use a helping hand. Instant payday loans can be that helping hand that protects your credit. Getting an instant payday loan puts extra cash in your bank account in just a few hours, and you can pay it back next time you get paid.

Protecting your Credit is important

Your credit rating is a score based on several factors, including if you pay your bills on time and how much debt you carry. If you have good credit, it is important to protect your score by avoiding overdue bills. If you have bad credit, it is even more important to avoid late fees, overdue bills, and more blemishes on your credit report. Taking out an instant payday loan is a simple way to take steps towards rebuilding a good score.

How An Instant Payday Loan works

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Paying back your loan is easy

When the date you and your payday loan company agreed on arrives, paying back your loan is just as easy as getting it. The your instant payday loan is automatically repaid, and the funds are deducted from your bank account – no muss, no fuss.

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What happens when shopping is a compulsion instead of a hobby? Image from www.designmom.com.

Many people who love spending time at the mall and filling their closets with the latest fashions call themselves “shopaholics.” Usually it’s followed by a laugh or a joke, but this habit can sometimes take the form of a destructive disorder called oniomania, which is the clinical term for the compulsive desire to buy things.

You might know an oniomaniac — someone who is already in debt, already in some kind of trouble but keeps buying more and more stuff. Sometimes oniomania, from the outside, looks like another disorder: hoarding. People who compulsively buy things end up filling their houses to the brim with stuff to the point you can barely get around the house.

Does America create oniomaniacs

It’s not surprising that oniomania exists, especially in a country that has entire historical period called “the rise of consumerism.” The introduction of credit, including loan lenders, in the U.S. changed consumer behavior radically. I highly doubt oniomaniacs would exist if people had to stop buying things as soon as they ran out of money.

Rather, perhaps oniomania would still exist, but people would not be able to act on their compulsions so much. As you can probably tell, I think oniomania is a disturbing and dangerous disease, but why?

Bad for people, bad for the planet

As anyone who has ever watched the A&E series “Hoarders” knows, oniomania and the conditions it spawns can be very dangerous to people’s health and relationships. For anyone who is not extremely wealthy, oniomania can cause serious debt and an overabundance of stuff to the point that it is dangerous. Debt and money issues are at the root of many relationship problems, and oniomania sometimes is at the root of debt and money issues.

Furthermore, as U.S. consumers buy more and more stuff, companies make more and more stuff. Most of that stuff ends up in a landfill, and someday we’re going to run out of space for garbage. If you think you might be an oniomaniac, seek help for the sake of yourself, your finances, your loved ones and the planet.

In many countries outside the U.S., cell phones have replaced credit cards. In Japan and Finland, for example, travelers rarely carry cash, checks or credit cards, but rather swipe their phones or send text messages to pay for train rides.

In the U.S., the cell phone hasn’t yet reached this capability, mostly because of carriers who cannot settle on how that service’s revenues would be divided amongst each company. One up-and-coming company, however, thinks it just may have a handle on how to make it work. Paymo is a mobile payment network and it has so far confirmed deals with AT&T, T-Mobile, Cellular One and Virgin Mobile, allowing consumers to make online purchases with their phones.

Their business model is quick and simple. When a consumer decides to purchase an item, they click on a Paymo logo, much like the PayPal logo. This takes them to the online checkout area where they enter their cell phone number. A text is sent via Paymo to their cell phone asking for a verification on the purchase. Once the customer replies, the transaction is verified and completed. The item will then be either deducted from the owner’s prepaid account or be itemized on their next cell phone bill.

Paymo in the U.S.

Paymo is used in about 45 countries, and it’s slowly working its way into the online business world. Credit card companies, banks and mobile carriers have tried in the past to work out a deal that allows for online pay tied to cell phone accounts. So far two methods have been tried in the U.S. The first allows customers to wave their phones in front of a reader for payment. The second allows them to pay via a text message confirmation process. Neither one has taken off with the American public.

Paymo, a San Francisco-based company, still thinks paying with cell phones will become mainstream in the U.S. once people understand its true value. CEO and co-founder Paul McGuire stated, “Paymo will succeed by serving cell phone and website users who don’t have credit cards. They want to buy stuff online but need an easy way to pay. And what better way than via a mobile-phone account?”

Will cell phone companies bite?

Most cell phone companies supplement their phone packages with additional items, such as ringtones, wallpapers, games, news, e-mail retrieval and web-browsing. Because of the economy, they are looking for more revenue-building ways to bring services to consumers.

Paymo believes it has the perfect solution and is hoping to woo cell phone companies into using their product. With Paymo’s proposal, cell phone carriers would walk away with 20-50percent of revenues generated by online sales. The remainder would go to the retailer and Paymo.

Paymo is no longer alone

Although Paymo does have an aggressive pay structure, it is not alone in trying to break into the cell phone payment market. PayPal has been working on the same thing for a few years now and met with the same success rate. Zong and Mobilcash are two more companies working hard make cell phones replace credit cards. With this type of competition it will be hard for Paymo to gain its market share in the US.