Eliminate High Interest Credit Card Debt

The average American family currently owes more than $9,000 in credit card debt – and many people owe much more than this amount. Unfortunately, people find themselves in this position due to any number of unforeseen circumstances. As a matter of fact, great deals of individuals have used credit cards responsibly for many years, and due to some misfortune have ended up needing their credit cards as a safety net.

This situation tends to have a "snowball" affect due to high interest rates, and makes it nearly impossible for the average American to successfully pay off their credit card debt in a reasonable amount of time. It's no wonder that people can't get ahead; take a look at the staggering amount of monthly accruing interest on many of these accounts:

Credit Card

Amount of Debt

Interest Rate

Monthly Interest Accrued

ABC

$20,000

29.99%

$499.83

DEF

$15,000

28.99%

$362.37

GHI

$25,000

24.99%

$520.63

JKL

$20,000

29.99%

$499.83

TOTAL

$80,000

$1,882.66

If interest is accruing at a rate of nearly $2,000 each month in some cases, it's just not realistic that the average family can pay their credit accounts off simply by making the required minimum monthly payments. Rather, a much larger amount will be needed to even put a small dent in their credit card balances.

If your credit card debt is out of control, and you're facing a similar situation as cited above, it's important that you take the necessary steps to pay your accounts off much sooner than the several years it will take if you continue making monthly payments to your credit card companies.

Fortunately, you have options available, and I highly recommend that you start taking a serious look at these options, and carefully research each of the following:

• Consumer Credit Counseling
• Debt Settlement
• Debt Consolidation
• Bankruptcy

You may be required to give up some of your time to put the effort into researching and ultimately finding the best solution for your individual situation, but you deserve some relief from the interest rates you're paying. I can honestly tell you that once you have completed your research and made your decision, you'll immediately breathe a sigh of relief. It's time to start living again and make your debt a thing of the past.

Improve Your Credit

Your credit score is a very important number. It will decide many things in your future, including whether or not you will qualify for auto loans, credit cards, and mortgages; what interest rate you will have to pay, and many other credit limits. But many people do not really know what affects their credit ratings, nor do they know how to improve their credit ratings. It is not just about paying your bills on time. There are many other factors the the credit reporting agencies consider when determining an individual's credit score.

Credit Score Composition

Punctuality of Payments (35%) - The single largest portion of the credit score is punctuality of past payments. Credit score is affected only by payments more than 30 days late.

Available Credit (30%) - Almost one third of a credit rating is calculated by the ratio of debt to available credit for revolving accounts, such as credit cards. This is the amount of credit that is available to be used.

Length of Credit History (15%) - This is portion of the credit rating is determine by how long your credit history goes back. When determining your credit rating, the age of your oldest account, and the average age of all your accounts are taken under consideration.

Types of Credit Accounts (10%) - All three credit reporting agencies like to see a mixture of different types of credit accounts, including installment, revolving, and consumer finance.

Recent Credit History (10%) - One tenth of the credit score is calculated by recent credit searches and recently obtained credit. This includes financial institutions running your credit with or without your consent, as well as if a new credit account was recently opened.

Tips to Improve Your Credit Rating

- Pay all bills on time. One late payment
could take your credit score down up to
100 points. Try to use automatic payment features if possible.

- Try to keep balances for accounts such
as credit cards under 60% of total available credit.

- Open non credit accounts, such as savings and checkings accounts.

- Don't close older unused credit accounts. This will lower both your level of available credit, as well as the average age of your accounts.

- If you can afford to, do not declare bankruptcy. Most people with accounts that are in delinquency or collections will suffer an ever greater deduction from their credit ratings if they file for bankruptcy.

Why Is Your Credit Application Being Rejected

Are you being turned down for mortgages, credit cards and car loans? Does the thought of a credit application make you shiver? Do you keep asking yourself why?

A simple answer is that your credit report contains negative credit information. The most common negative items , in order of severity, will be discussed in this article.

Bankruptcy

When you find yourself sinking in debt with no possible life vest available to you, bankruptcy is the only solution available. Bankruptcy law is complex and you should seek legal advice. Basically, the court declares that you are unable to repay the money that you owe .Under Chapter 7 your debts are deemed to be zero. You are not held responsible for any payment.

Bankruptcy stays on your credit report for 10 years. I t is the most severe negative item that you can have on your credit report. It will drastically affect your credit score. Only time can heal this. No one can legally remove a bankruptcy from your credit report.

Foreclosure

You buy a house. You put a down payment and finance the rest of the purchase with a mortgage. You have monthly payments to make. If you fall behind in your payments, the mortgage company will take you to court. They will have you removed from your home and take possession of it.

Foreclosure stays on your credit report for 7 years. It is difficult to remove from your credit report because the credit reporting agencies can easily verify its authenticity. It will reduce your credit score.

Repossession

You purchase big ticket items like a care and finance the purchase. You agree to make scheduled payments to the seller or the lender who has financed the purchase. If your account becomes past due or you fail to make payments, the seller or lender can repossess the financed property. They have a secured interest in the item you purchased.

This negative will remain on your credit report for 7 years and lower your credit score.

Charge Off

A creditor gives up on collecting the amount that you owe. He doesn't believe that he will ever collect. He writes the account off his books and no longer shows it as a receivable. Your account is sold to a collection agency.

This will remain on your credit report for 7 years. Paying it won't make much of a difference because the charge off will still remain on your credit report. It will be shown as a paid charge off and still lower your credit score.

Late Payments

Payments received after due dates are reported to credit bureaus by lenders and creditors. If you remain current on all your payments, a history of old late payments will not have a major impact on your credit score.

Do not fall prey to credit repair scams. No one can legally remove verifiable negative items such as bankruptcy, foreclosure and repossessions.

The only way to negate the impact of negative items on your credit report is to start a credit repair process. Pay your bills on time and don't spend more than you make. Keep your credit balances low and don't apply to every credit card that comes your way.