A good credit score can mean the difference between a comfortable life and a miserable one. Indeed, those who have a good score usually lead a generally easier life, at least financially. They are eligible for loans and other forms of credits at lower interest rates and convenient terms of payment.

In contrast, if you have a bad credit score, expect to experience difficulties in securing loans and credit plans. And if you do get a loan or credit, expect to pay through the nose in terms of interest rates and additional charges. Your bad credit score makes you a higher financial risk, hence the higher rates.

This could be a huge financial setback, and will hit you where it hurts most – your wallet. Here’s the oxymoron; higher interest payments could eventually cost you more than the actual amount you borrowed from your lender, putting you in greater potential for default, which will only farther damage your credit.

Your credit score is never static, and will tend to fluctuate at different times and situations. Also, your credit rating (another term for score) will differ with each credit reporting bureau.

The most important credit score is the FICO score offered by Fair Isaacs Corporation. It is considered the most important simply because it is the score that most lenders use.

To have an idea of what a good credit score is, you should understand the various ranges, or what is considered an “acceptable credit score range”. It is commonly determined using the national average credit score.

Your credit score, or FICO score, could range from 300 to 850, poorest to best respectively. Farther, the ranges can be broken down as follows:

• 720 and above is considered a great score. This will qualify you for the best or prime interest rates, reserved for borrowers in the highest echelons. Not only that, but you are unlikely to be turned down for a loan or credit, and often borrowers will fight over you (not with fists!).
• 700-719: This is considered very good credit rating by most lenders. With this score you are considered low risk, but you might not qualify for the best interest rates.
• 660-699: This is a generally a good credit score. This may qualify you for a strong loan depending on other variables of in your credit report, but not at best interest rates.
• 620-659: This is often considered a borderline score. With this, you will be required to pay higher interest rates and prime lenders will often turn you down. Your rates will also often be based on the rest of your credit history.
• 619 and below: This is considered a poor credit score. Your loan terms will not be good (read higher interest rates and additional charges), and most lenders will often turn you down without a second glance.

Often, some people go into a fit when they discover that their score has gone down by a few points. Actually, this is not even important as long as you don’t drop to a lower range, since interest rates depend on the ranges and not individual score.

Can you improve your credit score and move it up a range or two? Of course you can. But how fast depends on your particular situation and personal determination to improve your score. Keep watching this blog for tips and tricks.

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Credit card fraud is a serious problem. In fact, it is the leading cause of identity theft. And, credit card fraud is on the rise and the perpetrators continue to get more and more sophisticated. This article offers some credit card fraud prevention tips to help you avoid becoming the next victim.

These thieves, con men and scam artists that steal credit card numbers make millions of dollars in purchases and cash withdrawals/advances, often before consumers are even aware that there’s a problem.

It is therefore of paramount importance that every step we can to secure our credit cards and information. Here are some simple credit card fraud tips to keep in mind:

• Be aware of your surroundings. That guy or gal waiting to use the ATM after you may actually be watching your fingers as you punch in your PIN. The ATM machine could be owned or managed by some crooked person who will install software to read your credit card number. Others have been known to install cameras that record the numbers as you punch in. 
• Know where your credit cards are. Don’t let them lie around and avoid lending them to other people. Also, be careful what you do with your credit card receipts, as they often contain your complete credit card number.
• Check you statements. Make a habit of opening credit card statements promptly and check for any suspicious charges. If your issuer provides online account access, use that facility to regularly keep up to date on activities on your card.
• Call to activate and sign your credit cards as soon as you receive them.
• Keep a list of all your credit card numbers, expiration dates, customer service numbers and addresses. Keep this list in a secure place (not together with your credit cards!), and keep it up to date.
• A lot of credit card fraud is perpetrated by retail sales employees who handle credit cards. Be careful of who you hand your card to, and don’t let it out of your sight if at all possible.
• Make purchases and bill payments online. Contrary to popular belief, online payments are the safest as no person handles your credit card information, and they are secured through encryption. In fact, internet credit card fraud is much less common if not rare.
• Never give your credit card information out over the phone, unless you initiated the call or are very certain whom you are talking to.
• Though online payments are safer, do be careful with your online purchases all the same. Before entering any personal information on a website, verify that the website is secure. Do that by checking the status bar at the bottom of your browser, somewhere on there it’ll show the symbol of a closed lock to indicate that the website is secure and your information will be encrypted. That means that outside parties will not be able to read the information you’re sending.
• Trust not. That innocent-looking “student” selling magazine subscriptions (or whatever) at your door could cause you the worst credit card nightmares.

The above credit card fraud prevention tips are neither comprehensive nor fool-proof. Commonsense, guts and continuous awareness are still required. Keep watching this blog for more fraud tips and alerts.

Their ads are enticing. Credit card debt consolidators, that is. They make grandiose promises. Some promises include cutting your debt by up to 60 per cent and making you debt-free today. Are they for real? Indeed, is it smart to consolidate your debt? The answers may surprise you.

The term “credit counseling” is often misused. How?

You see, that term (credit counseling) gets mixed up with debt settlement, debt consolidation, debt management, debt clinics and more, and gets “lost in translation” so to say. What’s worse, some of the so-called credit counseling agencies, including a few “nonprofit” are nothing but scam operations.

But first to answer the question: is it smart to consolidate your debt? Yes and no. What do I mean?

Creditors are often more than happy to work with reputable organizations that specialize in helping debtors who are serious to repay their debts. These include credit counseling and debt consolidation agencies.

A good credit counseling agency can among other things help you in, 1) negotiating for a lower interest rate on your behalf, 2) assisting you make a realistic budget that you are likely to stick with 3) finding leaking points in your finances, and 4) coming up with a workable repayment plan. These are all good things.

Depending on your particular situation, a credit counselor might also recommend or offer you the option to consolidate your debts. This means that you’ll be making one monthly payment, often at a lower interest rate.

The objective of consolidating debt is to pay off all your debt in terms acceptable to your creditors but that also leave with some money for your living expenses. After agreeing to a certain monthly figure, you are required to remit the funds to the consolidator, who then distributes it to the various creditors.

A debt consolidation company often can also negotiate waiver of late and over-limit fees, therefore reducing the debt burden.

And, once you have been set up with a debt management plan (another term for debt consolidation), creditors and debt collectors should stop calling you and instead call the agency. You can now breathe easier, with all those collectors off your back.

But there are also downsides and even dark sides of debt consolidation. For one, debt consolidators do charge a fee, often exorbitant if you come across the wrong type.

Secondly, cases exist where a debtor paid a consolidation company, but the company never disbursed the money, using it for their own purposes. The hapless consumer realized, often too late, that her/his bad situation that was supposed to be getting better only got worse. And she/he now had an even bigger dent in her/his credit rating.

Some debt consolidators charge hefty fees upfront. Some of them will require an amount equal to your first payment in order to set you up, asking you to negotiate for a repayment delay with your creditors. If you come across this type, run!

While on a debt management program, you will be required to close all your credit card accounts, which will hurt your credit score. Also, you will not be allowed to open new credit accounts, therefore you won’t start rebuilding your credit history. Credit experts recommend that you start rebuilding a good credit history right away.

Debt consolidation is a double-edged sword. Use it if you must, especially if it’s the only way to avoid bankruptcy (which can be devastating to your credit for 7 to 10 years). But first do explore other options.

Knowing what’s in your credit report should be among the first things towards understanding and repairing your credit. Lenders (except mortgage companies) are not obligated to give you a copy of your report and in most if not all cases will just not do it. But you can get your free credit report, online or by mail.

Why should you obtain (and check) your credit report? For one, creditors are not perfect. They do make mistakes which can impact (negatively most of the time) on your ability to obtain credit.

Also, some sneaky creditors have been known manipulate or fail to report credit limits, thus negatively affecting your score (this is subject for a different article).

Knowing what is on your credit report will also help protect you from some tricky creditors who tend to make you believe that your credit history is not good enough, so as to hit you with a higher interest rate – their favorite line is “considering your credit history”.

Most importantly, in order to clean up your credit history, you simply must know what is in your report.

Credit reports are compiled by three major credit bureaus; Equifax, Experian and Trans Union. All the three bureaus are (surprise!) private for-profit companies that gather your credit history and then sell it to lenders and some employers.

The federal Fair Credit Reporting Act which came into full effect in 2005 entitles you to one free report from each of the three major credit bureaus per year. You are also entitled to an additional free report from each of the bureaus if:

1. You were denied credit because of information in your report within the last 60 days.

2. You are unemployed and intend to apply for a job within the next 60 days.

3. You receive public assistance (you are on welfare).

4. You believe your credit report contains errors due to fraud or identity theft.

Getting a copy of your credit report is fairly simple. You can get it by making a phone call, visiting the bureaus’ website, or through the mail.

If you decide to make a phone call, know that you will not speak to a real person but an answering machine, and some bits of information may be missed thus requiring you to verify your information in writing (this has happened to me). Visiting their website or requesting your report by mail are the best options.

Here is the contact information for the three major credit bureaus (it is recommended that you do a double-check online as the bureaus are notorious for changing addresses):

Equifax
P.O. Box 740241, Atlanta, GA 30374
800-525-6285
www.equifax.com

Experian
P.O Box 2104
Allen, TX 75013-2104
888-397-3742
www.experian.com

TransUnion
P.O Box 2000
Chester PA 19022
800-916-8800
www.transunion.com

If you want to skip the individual bureaus, you can go to a central source that allows you to get all the three reports. Here’s one such source:

Annual Credit Report Request Service
P.O Box 105281
Atlanta GA 30348-5281
877-322-8228
www.annualcreditreport.com

In order for the bureaus to supply you with your report, you will need to prove that you are really who you say you are. Among the information (some of it will be optional) that you might be asked for is:

1. Your full name

2. Date of birth

3. Your social security number

4. Spouse’s name if you are married (not absolutely necessary).

5. Full current mailing address.

6. Telephone number

7. Previous addresses (for the last two years)

8. Your employment history.

You should be aware that credit bureaus are not required to give you your credit score. For this, you might have to pay a fee (they might even try to sell it to you together with your report). If you decide to buy your credit score, make sure it is a true FICO score because this is what most lenders use. Equifax is the only bureau that can sell you a true FICO score.

Contrary to popular belief, enquiring about your own credit will not hurt your credit score.

Hot tips:

1) Though I recommend obtaining your report online, be warned that online reports may come with an arbitration agreement  that limits liability to the cost of the report. The best way, albeit slower, is to get your reports by mail from each credit reporting bureau.

2. If you intend to dispute, and have removed, adverse information from your credit reports, you are better off purchasing them. Why? Because by getting free reports, there’s a technicality that allows the bureaus to increase reinvestigation time to 45 days instead of 30. Needless to say, the shorter the time for reinvestigation, the better.