Credit Card Consumers : Beware !

By Ryan Dennin

Credit Card Crackdown

The Fed is regulating credit card companies to benefit the users and help improve consumers' credit. But these rules will not go into effect until 2010.

Posted by Katherine Mejia

Being the Target: The College Credit Card Trap

Chances are, most of you reading this have been aggressively pursued on campus to sign up for credit card. It is a well known fact that credit card companies use college campuses to attract new customers. As college students, many of us are a bit strapped for cash, and signing up for a credit card seems an all too easy way to offset this setback. However, it is extremely important to understand the risks of signing up for a credit card on campus.

First, know that the methods many of these companies use to attract new customers are anything but ethical. An example of this would be a credit card company luring students to attend a seminar promising food, clothing, gifts, etc. and requiring the attending students to sign up for a credit card before receiving any of the “goodies”. Some students may decide to sign up for the card on the spot, and later on they may find themselves in serious debt.

The credit card companies may promise zero interest rates and zero payments for a length of time; however, they also reserve the right to change these rates at any time. In this situation, students can find themselves with huge amounts of debt reaching into the tens of thousands of dollars. If this were to happen to you, it would be extremely hard down the line to receive home loans, auto loans, or other credit cards. Some debt on a credit card can be good, but you’re spending needs to be properly managed and paid off in a timely fashion. Something that most college students have trouble doing. This is what credit card companies hope for. In essence, signing up for a credit card on campus can affect your life for years after graduation.

Many colleges and universities have now put strict regulations on how they allow credit card companies to operate on campus. However, they still manage to attract new customers with the lure of easy money, free stuff, and the promise of rates that seem to good to be true. As with everything, if it seems too good to be true, it probably is. This is certainly the case with credit card companies operating on campuses.

http://money.cnn.com/magazines/moneymag/money101/lesson9/

http://www.msnbc.msn.com/id/14031324/

http://www.nytimes.com/2008/10/18/opinion/18sat2.html

Posted by: Andrew Moran

4 Ways to Build Credit

By: Alcides Hoy Jr.

So with the recent economic crisis everyone credit is either falling or staying stagnant. Now everyone is trying to figure out how they could raise it or at least get it out of the bottom tier that most are in. Here are 5 ways that you could build credit and or fix your current credit that might not be in a good economic state:

1. Get a Checking and/or Savings Account- These accounts help credit lenders to see that you have means of stability. Also it allows them to see that you own something that they could collect in the event that you are unable to make payments. In many cases the more money you hold int these accounts, the higher credit lending you will receive.

2. Department Store Card or Gas Card- Usually department stores cards are easier to get and they do not come with as much risk as many major credit cards would. Gas Cards will allow you to be able to pay for gas at a later date but as well build your credit along the way. Try to monitor the number of cards of these types you get because sometimes you could go beyond what you could pay monthly.

3. Gaining An Understanding of Credit Scores- Nowadays many people don't even take the initiative to find out how the credit score system works. In many cases its in your best interest to find out how you can receive the highest credit score possible so that in your favor you could receive highest credit lending.

4. Take Out a Short Term Loan- In these cases lenders get EXCITED to see that you have received prior loans. This shows that your payments are more reliable and that they will almost guarantee their payments every month.

Credit Scores: What You Need to Know

Posted by: Andrew Moran

Many of us use credit cards on a daily basis as a means of convenience in order to purchase the goods we need without carrying large amounts of cash on-hand. In order to be approved for a credit card, or any other type of loan, consideration must first be given to the individuals credit score. A credit score is also known as a FICO score, moreover, it is the score derived from the Fair Isaac Corporation. The credit score that they develop ranges from 300-850, and takes all types of credit, mortgages, and loans into account. 30% is determined by your payment history; 30% is based on the amounts you owe each of your creditors, and how that compares with the total credit available to you; 15% is based on the length of your credit history, how long you have had accounts, and how long it has been since there was any activity; 10% is based on the number of accounts you have recently opened compared with the total number of accounts you have; finally, 10% is determined by the types of credit you have used.

This FICO score can have significant implications regarding future home loans, auto loans, college loans, etc. In order to receive the best loans with the best rates a score of 700 or better is generally needed. Since FICO scores are extremely volatile, it is important to make sure you avoid falling into credit traps. Five things that everyone must try and avoid are:

1. Late Payments

2. High Card Balances

3. Closing Credit Card Accounts

4. Having Too Many In-Store Credit Cards

5. Fines

Avoiding all of these things is sure to provide a consumer with a relatively good credit score. Having a good credit score is essential for obtaining future loans, and without a good FICO score, it is nearly impossible to get loans. For instance, merely applying for a home loan will make your FICO score drop an average of 5 points. The score will drop because creditors will request a copy of your credit report in order to make a decision. This inquiry goes down on your report, and will affect your FICO score for a year. In this regard, it is extremely important to manage your credit. If you wish to view your credit score, reports are available online annualcreditreport.com.

Sources:

http://money.cnn.com/2006/07/10/pf/credit_killers/index.htm

http://www.nytimes.com/2009/01/06/your-money/credit-scores/primerscores.html

http://www.washingtonpost.com/wp-dyn/content/article/2009/01/24/AR2009012400163.html