Rewards

If you have followed along you now know the basics of
challenging the reporting agencies:

- How to obtain your annual credit reports

- Reviewing your reports

- Choosing items to dispute

- Deciding on a dispute method

- Following up and keeping track

- Dealing with collections

Now, in fairness to you, you have the basic knowledge
necessary to start fixing your credit. Yes, there are
a zillion little details that may improve the speed
and effectiveness of your efforts, but basically you
can get started now.

If you are inclined to learn by trial and error go
ahead and send out your dispute letters today. You
may be the kind of person who enjoys learning by doing
and the necessary information is available at your
fingertips.

Sometimes we all can lose sight of our reasons for under-
taking a challenging project. Here are a few reminders
of the benefits you gain by taking control of your
credit & debt:

- Improved self-esteem

- Maximize your cash leveraging ability

- Have lenders offering you multiple loan options

- Slash thousands off of your borrowing costs

- Enhance employability during pre-employment checks

- Reduced insurance premium costs

- Increased investment income opportunities

- Financial flexibility to do the things you want

- Enhanced self-confidence

You may have seen a number of tips and informative ideas
regarding credit and debt. Although a lot of the inform-
ation available is consistent, sometimes you'll find dif-
ferences of opinion as to planning, methods and ethics.

For example, some advisors may call on you to cut up your
credit cards and close the accounts. While this may be a
useful tactic to prevent overspending, it can reduce your
scores dramatically if done without understanding the ef-
fects on scoring models.

Others may suggest that it is wrong (morally) to dispute
any reported item that you know to have some truth to it.
They may even suggest that you 'can't' dispute an accurate
item.

Well, the truth is that you can dispute any item on your
report as long as you can present a legitimate reason to
demand that the reported item be verified. Every day
people's scores are improving because they have disputed
and had removed reported items that were totally accurate.

I leave the moral and ethical issues for you to decide.

Debt and Collections

Just as the FCRA regulates the reporting agencies and sets
out consumer rights in reporting credit and scores, the Fair
Debt Collection Practices Act (FDCPA) was established to reg-
ulate collection practices and sets out the rights of people
subject to collection activities.

Few of us really know what are rights are when it comes to
dealing with heavy handed collectors. The FDCPA provides
for consumers to demand that collectors 'validate' the debt
they are attempting to collect before collectors can demand
payment. Validation includes proving that the collection
agency has the right to collect a debt as well as proving
that the original debt was in fact yours.


Although many collectors may attempt to begin collections
immediately upon gaining a new debt account the law holds
that they must first provide you with this proof before a
collection request can be made.

A review of the FDCPA and related casework is very helpful
in providing the tactics to shut down a collection attempt.
Much like disputing reports with the credit reporting ind-
ustry, collections can be disputed and often successfully
thwarted by a validation demand which disputes the right of
the collector to collect and demands written proof that the
debt actually belongs to you.

Thinking of Settling?

If you seek to make a settlement agreement with a collector
you may want to start your offer at about 25% of the original
debt. Note that the collector may have paid as little as .06
or .07 cents for every buck owed.

More Tips:
-Never talk to a collection agency on the phone.
-Get your deal in writing before you even think about paying.
-Keep good records.
-Post your letters receipt requested via registered mail.
-Keep a copy of everything.
-If you call (Why are you calling?), keep a log of when, and
who you spoke with.
-Follow up all phone correspondence (again, why are you calling?)
with a registered letter.
-Penalties and extra interest are bogus fees added on by the
collection agency.
-Time is on your side.
-Never appear too eager to settle
-Don't Forget; negotiate your credit rating before you accept
any deal.

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Following Up and Keeping Track

If you are fortunate and have some good luck, all of the items you
disputed will have been corrected and your new reports sent out to you
within 30 days. It's more likely that one or two of the agencies have
challenged your disputes and/or that you haven't heard back from them.

For the agency that did change your report, or remove items from your
report, great! Now you need to send another dispute letter to that
same agency to deal with any of the remaining items that you didn't
dispute the first time. Same procedure, keep copies of everything
send off the new dispute return receipt post and hope for the best.

If your dispute was challenged by the agency as frivolous, you will
want to send out a second dispute letter making note of the original
dispute, it's date, and perhaps a reminder of the law under the FCRA.

It is up to you to convince the agency that your dispute is genuine
and not the result of a 'dispute mill' or a service that basically
challenges everything on the report.

Again, personalizing the letter will help the agency see your dispute
as the honest effort of an abused consumer to correct a harmful
error.

There are numerous ways to overcome the objections of the agency's
review. Use your imagination to add to the possible responses you can
provide to support your claim.

I have seen six or seven standard responses to dispute letters from the
three agencies. The most common response is the claim that the dis-
pute is either unjustified, dishonest or frivolous. Sometimes they will
answer with a stalling tactic by asking for more specific information.
Whatever the response to your dispute, there are many ways to reply
and hold them accountable for verifying the item under dispute.

While you are waiting for the initial response to your first disputes
it is a good time to get organized so that when the responses come you
will be able to track each dispute and respond accordingly.

Start with three file folders. Mark each one with the name of a dif-
ferent reporting agency; Experian, Equifax, Transuniuon (EXP,EQX, TRU).
Always keep a clean unmarked copy of your report from the specific
agency in the file, ex.: TRU file folder holds the TRU report.

For every piece of paper that relates or applies to a specific agency,
keep a copy of it in that agency's folder. Copy everything! You
should still have 2 copies of the credit reports from each agency, one
which you've made notes on and one that is clean. Copy each dispute
letter for the folder and save the postal return receipts in the proper
folders. Make a copy of every response letter you receive. Copy,
Copy, Copy. You may need some of this stuff later.

One of the things that you are doing by tracking and copying everything
is building a case. It's awfully hard for the agencies to keep up with
all the disputes coming through their offices. Those of us who keep
really good track of the process can prove when they've fallen behind
and are subject to regulatory requirements. It's at this point when
our work pays off since you may be able to force the removal of items
when the agencies have fallen behind on reasonable timeliness of
response.

Think about the ways you might personalize the many dispute letter
templates available so that your dispute appears credible and original.

Credit Repair- continued

Why not just call the reporting agencies? On line? Why Mail?


You are welcome to call the bureaus if you wish. However, it's
been my experience that calling them is never as effective as
working with them through the mail for several reasons:


- You will always have a precise record of the dialog.
- You will have a paper trail of evidence if you need it.
- A telephone conversation is too easy to misinterpret,
misunderstand or misrepresent.
- A telephone dispute may move too quickly
- An on line dispute forces you to respond to the agency,
our tactic is to force the agency to respond to us.
- A letter requires more attention, staffing and
resources.
- It takes longer to process a written dispute than an
on line or telephone dispute.
- Writing is not as efficient as going on line or calling.


Keep in mind, that once the agency has received your dispute it
must be reviewed and then processed. Since the FCRA was written
a reasonable response time has been held to be about 30 days.


So, if the agency can take your phone call or on line dispute and
immediately review and process it, you've lost out on some
valuable delay time. If your letter takes a day to go through
their office, another day to review and finally it makes it's way
to the dispute process, you've managed to slow down the process
and increased the likelihood of a positive outcome.


You would think that the agencies would want to have accurate
concise information in their consumer reports, but the way they
discourage disputes will make you wonder!


Once a dispute has been placed with an agency they are obligated
to verify the original report by contacting the original credit-
or asking for proof of the report details. The agencies are ex-
pected to get that verification and respond to you in about 30
days. If they can't get the verification they must change or
remove the reported item from your account.


This is why we want the possible delays a written dispute may
cause.


There are several possible responses to your dispute which the
reporting agencies are apt to send back to you. The best result
is that they have corrected the error or removed the negatives
that you disputed. When doing so they are required to send a
new copy of your report to you and to any other organizations
that viewed your report recently.


The less satisfactory response is when the agency responds that
it considers your dispute to be ungrounded or 'frivolous'. In
fact, many, many disputes are quickly passed off as frivolous
and not even followed up on by the agencies. At this point a
quick follow up letter demanding action and maybe even hinting
at legal action is often useful.

Try to keep your cool. You are dealing with a huge operation.
It may be as simple as them trying to save money by not taking
your first letter seriously. If you never get back to them,
they win, ...and they didn't have to spend any more resources
on your request.


Also, try to remember that the person who opens your letters
probably has no clue what your dispute is, what previous response
her company gave you and may be more sympathetic to you if you
don't trash her company in a follow up letter.


Be courteous, accurate, clear and state your demand plainly.
Adding some personal touch to the letter may make it more
believable. i.e.: "My brother the mortgage broker says that
you guys have to correct this error."

Pay Day Loans

Many people take out a Pay Day Loan to raise cash for unexpected expenses, to start a home-based business, or even to buy holiday gifts. The interest rates of these loans can border on Usury!

Have you taken out a pay day loan? What was your experience- good, bad, or ugly? Did it help, or did it just get you deeper into debt? Post your thoughts here!

Credit Repair- the next step

You've reviewed your report information, so let's study our enemy a bit. The bureaus are a storehouse of consumer credit info. They sell the stored data to creditors,
marketing companies and others.

The information in your file was provided to them by your
original creditors, courts, collection agencies, insurers and
other organizations.

The big mistake in the system is that the reporting agencies do
not have to verify the truth or validity of the information
reported to them. As a result, independent research has found
mistakes as high as 40% among the major reporting
agencies.

Ultimately that had to change and The Fair Credit Reporting Act
(FCRA) was passed to take care of some of the problems of the
industry.

What we are talking about today is your right to dispute any item on your
reports and to receive a timely response. The FCRA
holds the agency responsible to verify the disputed item with whomever reported the item to
the agency.
It helps to know what items are
hurting us most and how to dispute those items most effectively.

Often the easiest items to have changed are old items that were
paid late. Next you may wish to dispute derogatory items that
you don't recall ever signing for or otherwise authorizing.

Many service companies will dispute every negative item on your
report. While this can be done, it is more effective to pick and
choose a few high value targets and dispute those. You can always
find a way to challange the rest of the stuff later. Meanwhile, some
of the easier disputes will begin to raise your scoring.

Even though you might be tempted to dispute an incorrect current
address or employer, save that for later. There are a couple
reasons for this, 1) correcting this will not increase your score,
and 2) this blatantly incorrect information may be useful later.

I suggest using the US postal service to submit your disputes.
Either hand write or type a convincing and personalized dispute
letter to the agency that you wish to dispute an item or two with.
Include the item information; creditor name, account number, etc.
and include a copy of the agency's credit report with the items high-
lighted. Provide your SS# and Date of Birth.

Mail this using return receipt confirmation so that you'll know it was
recieved by the agency. Repeat this process with the other two
reporting agencies and keep copies of everything you have sent.
(All of this can be simplified with the use of my Step-By-Step Guide)

Mailing Addresses:

Equifax Credit Information Services, Inc
P.O. Box 740241
Atlanta, GA 30374
800-685-1111

Transunion
P.O. Box 1000
Chester, PA 19022
800-916-8800

Experian
P.O. Box 2002
Allen, TX 75013
888-397-3742


Mail in dispute letters rather
than disputing via telephone or online.

Making Sense of Your Credit Reports

The reports you have received should have some instructions to
help you understand most of the details reported.

Using a mark up copy, start by error checking all of your personal
information at the top of the report; name, name changes, address,
previous addresses, employment, previous employment, SS#, birthdate,
and any other information. Get a yellow and a blue highlighter. High-
light errors, misspellings, and typos in yellow. Then mark all negative,
adverse or derogatory items in blue.

Do the same thing for the public records & judgments section, the
inquiries section and finally the consumer credit accounts section.

You will likely find a number of entries that you don't recognize
or that have some incorrect details. Some of the items may be
accounts that report to the agencies using a different office or
corporate name than the one you might be familiar with. So give it
a couple days of review and thought before you are certain that an
entry truly doesn't belong on the report.

Clues to determining if items are in fact your accounts are; checking
the start date and last activity date of a reported account as well
as the item's account number.

Make a list of all the items that show discrepencies. It might be
useful to set up a spreadsheet for this list. It will be an excellent
tool for tracking the repair process as you move forward.

Fixing your credit

Before you learn the ins and outs of credit repair, the quirks
of the credit reporting agencies, your legal standing to correct
the credit agencies or the tactics to employ in your dialog with
them, you must learn what they are saying about you.

You MUST get your credit reports - all three of them. The three
major credit reporting agencies will likely have a report on you.
You need to see what's on each of these three reports.
The easiest way to get your reports is to visit this link:

https://www.annualcreditreport.com/cra/index.jsp

This site will walk you through downloading each of the three
credit reports. You can order your credit score from each of
the three agencies for about $9 per report.

Once you have recieved your reports be sure to print and copy
them so you will have one original, one working copy to mark up
and one copy to send out as needed.

The reports can be confusing to read so go easy on yourself and
expect it to take you a day or two to read the instructions and
contents of each report.

If you've completed this step, getting your credit reports and
credit scores, you are already way ahead of about 50% of the
people who really need credit report help. Good for you!

Credit checks in employment

Wonder why you didn't get that great job that you were well-qualified for? Your credit may be one reason! If you have been "credit - challenged" during your adult life, your poor credit score is probably turning off some employers.

It's a Catch-22, really. You need a good job so that you can get yourself out of the mess you are in and get your bills caught up. Yet, you get turned down for a good job on the basis of a credit report. Seems like a vicious cycle that you can't break out of!!!

There has got to be a way to clean up your credit report, so that you can do things with your life again. Do You Have Bad Credit? Don't give up!!

Do It Yourself Credit Repair

Everyday, so called "credit repair" businesses nationwide advertise to people with blemished credit histories. They promise, for a fee, to clean up your credit report so you can get a car loan, a home mortgage, insurance, or even a job. The truth is, they can’t deliver. After you pay them hundreds or thousands of dollars in fees, these companies do nothing to improve your credit report; most simply vanish with your money.


No one can legally remove accurate and timely negative information from a credit report. The law allows you to ask for an investigation of information in your file that you dispute as inaccurate or incomplete. There is no charge for this. Everything a credit repair clinic can do for you legally, you can do for yourself at little or no cost. According to the Fair Credit Reporting Act (FCRA):

* You’re entitled to a free report if a company takes adverse action against you, like denying your application for credit, insurance, or employment, and you ask for your report within 60 days of receiving notice of the action. The notice will give you the name, address, and phone number of the consumer reporting company. You’re also entitled to one free report a year if you’re unemployed and plan to look for a job within 60 days; if you’re on welfare; or if your report is inaccurate because of fraud, including identity theft.
* Each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — is required to provide you with a free copy of your credit report, at your request, once every 12 months.
The three companies have set up a central website, a toll-free telephone number, and a mailing address through which you can order your free annual report. To order, click on annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. You can print the form from ftc.gov/credit. Do not contact the three nationwide consumer reporting companies individually. They are providing free annual credit reports only through annualcreditreport.com, 1-877-322-8228, and Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. You may order your reports from each of the three nationwide consumer reporting companies at the same time, or you can order your report from each of the companies one at a time. Otherwise, a consumer reporting company may charge you up to $9.50 for another copy of your report within a 12-month period.
* You can dispute mistakes or outdated items for free. Under the FCRA, both the consumer reporting company and the information provider (that is, the person, company, or organization that provides information about you to a consumer reporting company) are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under this law, contact the consumer reporting company and the information provider.

STEP ONE
Tell the consumer reporting company, in writing, what information you think is inaccurate. Include copies (NOT originals) of documents that support your position. In addition to providing your complete name and address, your letter should clearly identify each item in your report you dispute, state the facts and explain why you dispute the information, and request that it be removed or corrected. You may want to enclose a copy of your report with the items in question circled. Your letter may look something like the one on page 6. Send your letter by certified mail, “return receipt requested,” so you can document what the consumer reporting company received. Keep copies of your dispute letter and enclosures.

Consumer reporting companies must investigate the items in question — usually within 30 days — unless they consider your dispute frivolous. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information. After the information provider receives notice of a dispute from the consumer reporting company, it must investigate, review the relevant information, and report the results back to the consumer reporting company. If the information provider finds the disputed information is inaccurate, it must notify all three nationwide consumer reporting companies so they can correct the information in your file.

When the investigation is complete, the consumer reporting company must give you the results in writing and a free copy of your report if the dispute results in a change. If an item is changed or deleted, the consumer reporting company cannot put the disputed information back in your file unless the information provider verifies that it is accurate and complete. The consumer reporting company also must send you written notice that includes the name, address, and phone number of the information provider.

If you request, the consumer reporting company must send notices of any correction to anyone who received your report in the past six months. You can have a corrected copy of your report sent to anyone who received a copy during the past two years for employment purposes.

If an investigation doesn’t resolve your dispute with the consumer reporting company, you can ask that a statement of the dispute be included in your file and in future reports. You also can ask the consumer reporting company to provide your statement to anyone who received a copy of your report in the recent past. You can expect to pay a fee for this service.

STEP TWO
Tell the creditor or other information provider, in writing, that you dispute an item. Be sure to include copies (NOT originals) of documents that support your position. Many providers specify an address for disputes. If the provider reports the item to a consumer reporting company, it must include a notice of your dispute. And if you are correct – that is, if the information is found to be inaccurate – the information provider may not report it again.


Sample Dispute Letter

Date
Your Name
Your Address
Your City, State, Zip Code

Complaint Department
Name of Company
Address
City, State, Zip Code

Dear Sir or Madam:

I am writing to dispute the following information in my file. The items I dispute also are encircled on the attached copy of the report I received.

This item (identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.) is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted (or request another specific change) to correct the information.

Enclosed are copies of (use this sentence if applicable and describe any enclosed documentation, such as payment records, court documents) supporting my position. Please investigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible.

Sincerely,
Your name

Enclosures: (List what you are enclosing)

The Attorney's Guide to Credit Repair-is it a Scam?

Here are some of the promises made:

"Discover Step-By-Step How To Repair Your Credit Report Within The Next 60 Days, So You Can Buy A House , A New Car, Get Credit Cards, and Much More!" "

You'll learn step-by-step...

• How to remove Chapter 7 and Chapter 13 bankruptcy from your credit report using my 2 step bankruptcy removal technique anyone can follow.
  
  
• How to remove charge offs and slow pays from your credit report using my "Prove It Or Remove It" technique.
  
  
• How to remove judgments and liens from your credit report using a critical flaw in the court system.
  
  
• How get your creditors on your side, so they're actually willing to help you by removing late payments from your credit report.
  
  
• How to reduce your debts to a fraction of what you owe by mailing a simple one page letter to your creditors.

Sounds too good to be true, doesn't it? Let's hear from you out there in cyber land! Has anyone tried this system? Did it help? Or, did it just take your money? Post your replies on this blog!

Collection Agencies

The phone rings, and you get that sick feeling inside. Oh, no- not ANOTHER bill collector!! Sometimes you just don't answer or you look at the caller ID first, if you have it on your phone.
Don't these people know that you are a good person who is going through a hard time right now, and if you did have the money, you would pay them? Calling you day after day won't get them their money any faster, especially since you just lost your job, and your mate is only working part-time.

I used to work for a collection agency myself, not as a collector, but as their outside sales rep. If the agency does not follow the procedures outlines in the Fair Debt Collections Practices Act, you can not only be off the hook for what you owed the creditor that they represent, but you can sue them for three times the amount of the debt!

Are you aware that the credit report banks and businesses get to see has about TWICE the financial information compared to the credit report you receive from the credit bureaus?
CLICK HERE for more info!!

http://www.ezniche.com/data/article.php?l=477

A Fresh Start Overseas?

Sometimes, when things look bad in your location, you seriously consider moving one. "Change your place, change your luck" as the old Yiddish saying goes.

If you have had credit problems and live in the United States, do those problems follow you when you move abroad? It probably depends on which country becomes your new home. I've been looking into moving to New Zealand. Your bad credit doesn't follow you there, but when you start off, you have "no credit". I guess no credit could be better than bad credit!!

Banks are very eager to lend money for mortgages there. No hassles, no hearing "NO". Bankers in New Zealand, for the most part, are anxious to help you and take making their customers happy seriously- diametrically opposed to the US banker who could care less about you unless you happen to be a multi-millionaire. Bank fees are higher than we are used to paying, though- $3 per check is the usual charge for check-writing.

One thing to watch out for: in New Zealand, credit card rates are very high.
Usuariously high, to be exact, with 29% being the norm.

I'll have to research what other countries do about credit for new immigrants wanting to set up residence there. If anyone knows about situations in other countries, please feel free to comment.

Every Problem has a Solution

How many times have you caught yourself saying that there could be no other solution to a problem – and that that problem leads to a dead end? How many times have you felt stumped knowing that the problem laying before you is one you cannot solve. No leads. No options. No solutions.

Did it feel like you had exhausted all possible options and yet are still before the mountain – large, unconquerable, and impregnable? When encountering such enormous problems, you may feel like you're hammering against a steel mountain. The pressure of having to solve such a problem may be overwhelming.

But rejoice! There might be some hope yet!

With some creative problem-solving techniques you may be able to look at your problem in a different light. And that light might just be the end of the tunnel that leads to possible solutions.

First of all, in the light of creative problem-solving, you must be open-minded to the fact that there may be more than just one solution to the problem. And, you must be open to the fact that there may be solutions to problems you thought were unsolvable.

Now, with this optimistic mindset, we can try to be a little bit more creative in solving our problems.

Number one; maybe the reason we cannot solve our problems is that we have not really taken a hard look at what the problem is. Here, trying to understanding the problem and having a concrete understanding of its workings is integral solving the problem. If you know how it works, what the problem is, then you have a better foundation towards solving the problem.

Not trying to make the simple statement of what problem is. Try to identify the participating entities and what their relationships with one another are. Take note of the things you stand to gain any stand to lose from the current problem. Now you have a simple statement of what the problem is.

Number two; try to take note of all of the constraints and assumptions you have the words of problem. Sometimes it is these assumptions that obstruct our view of possible solutions. You have to identify which assumptions are valid, in which assumptions need to be addressed.

Number three; try to solve the problem by parts. Solve it going from general view towards the more detailed parts of the problem. This is called the top-down approach. Write down the question, and then come up with a one-sentence solution to that from them. The solution should be a general statement of what will solve the problem. From here you can develop the solution further, and increase its complexity little by little.

Number four; although it helps to have critical thinking aboard as you solve a problem, you must also keep a creative, analytical voice at the back of your head. When someone comes up with a prospective solution, tried to think how you could make that solution work. Try to be creative. At the same time, look for chinks in the armor of that solution.

Number five; it pays to remember that there may be more than just one solution being developed at one time. Try to keep track of all the solutions and their developments. Remember, there may be more than just one solution to the problem.

Number six; remember that old adage," two heads are better than one." That one is truer than it sounds. Always be open to new ideas. You can only benefit from listening to all the ideas each person has. This is especially true when the person you're talking to has had experience solving problems similar to yours.

You don't have to be a gung-ho, solo hero to solve the problem. If you can organize collective thought on the subject, it would be much better.

Number seven; be patient. As long as you persevere, there is always a chance that a solution will present itself. Remember that no one was able to create an invention the first time around.

Creative thinking exercises can also help you in your quest be a more creative problems solver.

Here is one example.

Take a piece of paper and write any word that comes to mind at the center. Now look at that word then write the first two words that come to your mind. This can go on until you can build a tree of related words. This helps you build analogical skills, and fortify your creative processes.

So, next time you see a problem you think you can not solve, think again. The solution might just be staring you right in the face. All it takes is just a little creative thinking, some planning, and a whole lot of work.

Welcome to my blog on Consumer Debt and Credit Repair!

Welcome to my blog on Consumer Debt and Credit Repair! It's my hope that we can share ideas to improve your credit score and your quality of life. credit repair, bad credit repair,credit repair report, credit services,credit free report,credit information, credit scores- it's all good here!
Everything in the United States seems to revolve around your credit score. The reasons we as Americans buy on credit varies, but without it most of us would probably never be able to purchase necessities such as a home or automobile. The nation's economy depends on credit, the promise to pay later for goods and services used today; but along with consumer credit comes consumer debt. With the rise in telemarketing and commercializing in America it is no wonder why Americans feel the impulse to buy now,
pay later. The most common form of consumer debt is installment debt, which is when a
consumer borrows the money to purchase an item and agrees to repay the loan in equal
installments over a fixed period of time.
Without installment debt most consumers could not afford to purchase items such as a home. The truth of the matter is that we, as Americans, tend to want to purchase more than we can afford to purchase when we want it. But, we can afford to pay it out, over time, in fixed payments.
Mortgages, a debt owed on real property, are the latest form of installment debt. Other forms include automobile loans and credit card purchases. Just pick up the newspaper any time after Christmas and you will find articles on managing your mounting debt from Christmas.
Not realizing the extent of the consumers' debt is one of the most common types of credit problems. Denial may play a partial role in this problem, but the lack of education seems to be the largest reason for consumer debt. Credit card use is up 20% and a large number of Americans do not know the percentage rate at which the credit card companies charge. Many credit card companies have started "personalizing" interest rates by not disclosing the interest rate until after the consumer has received the card. By not disclosing the interest rate on the application the credit card companies prohibit the consumer from shopping around for the best deal.
You could just say they should cancel the credit card, but did you know several requests for consumer credit could be viewed negatively because the information is reported to the credit bureaus? This leaves you, the consumer, with a bad credit report. Household debt and bankruptcy are at record levels and appear to be on the rise. We as consumers must begin to educate ourselves and stop living beyond our means.