Credit Cave

Whether you realize it or not, a simple number can be the determining factor for many things in your life. Your credit report will be analyzed by a number of different companies throughout your life and it is vital that it be a correct reflection of who you really are. Here are fifteen easy ways that you can protect and improve your credit rating.

1. Stay out of debt - Although you need to have a little debt to start building your credit rating, don’t let it get out of control. If you don’t have the money to purchase something outright, reevaluate how much you really need it before you jump. Just think that one pair of shoes could mean the difference on whether or not you can buy a house in the future.
2. Get a credit card with a high limit - Just remember that you need to keep the balance low. This will dramatically improve your credit rating.
3. Stay on top of your report - If you find an error, get it fixed right away. There are numerous places like freecreditreport.com where you can get updates whenever something is added to your report.
4. Always pay your bills on time - This really does matter, especially with some services such as your phone bill.
5. Don’t over apply for credit cards - Only request credit that you actually need.
6. Don’t close out your credit cards - If you have no balance on your credit card, don’t close the account. Keeping it open and current will help improve your credit rating.
7. Close new accounts first - If you do need to start closing a few accounts, start slowly, sticking with the newest ones first.
8. Never max out any of your cards - This gives a bad impression on your credit report. Keep your balances low and pay down any cards that may be carrying a high amount of debt.
9. Be smart about transferring balances - If you get a new card that has a low interest rate, it’s fine to switch, but don’t let the balance sit there. Even if you get one of the many low interest credit cards, you’ll still need to pay it off as quickly as possible.
10. Go secure - If you are already in credit trouble, get a secured credit card and use it occasionally. Pay off the balance regularly and keep it current. You’ll be able to rebuild you credit.
11. Ask for an increase in your credit line periodically - Every six months or so, you should ask your credit card company for an increase in your available credit. This will help build up your score. Just don’t max them out once you do get an increase.
12. Never overspend - If you can’t afford something, don’t buy it. Find a budget that works for your income level and stick with it. If you really have to have something, start saving for it instead.
13. Open a savings account - Stable people have savings accounts. You can start putting aside a little bit here or there and over time, it can really add up.
14. Pay more than the minimum payment - Sticking with the minimum payment usually will handle only the principle on your account and not the interest.
15. Keep at least one good account open - If you are out of debt, it can be a relief, but you should keep at least one open account to keep your rating from sliding down.

This is our seventh and final installment in our series designed to help people prepare for a phone negotiation with their credit card company to reduce their interest rates and save money in the long run.

Our final three points for this series close things out in a way that is similar to our beginnings. These suggestions are some what basic but can be very important. They both speak to the need to insure that you get comfortable on the phone, stay comfortable and keep as many advantages as possible during the discussion with the credit representative on the other end of the line that could save you thousands of dollars.

Get Comfortable

The first thing that you should do before making the phone call is to get a headset or use some other hands free device for your phone. You will need to be comfortable and flexible when you call. Use an ear bud or headphone with a mike so that you can talk hands free. This will make it possible for you to manage your notes, computer, files or anything else that is important or might prove to be distracting.

Keep in mind that the operator you speak with will have one and will be working on a computer so give yourself the same advantage.

Outnumber the Call Center Representative

Next, bring someone else into the room during the conversation or put the call center person on speaker phone with your spouse, significant other, or parent. A conversation with two people on your side versus one slightly skews the conversation in your favor. You now outnumber the credit card company representative. Two brains are better than one. Use them.

Ask your spouse or relative questions as the conversation develops.

1. Does that make sense?
2. What do you think?
3. Is that really a better deal?
4. Should we accept the other offer?

Show the representative that the other person is influencing your decision. Now they have to convince both of you and work a little harder. That gives you an advantage and decreases the chances that you will miss an important detail. Plus, if a supervisor comes on the line, the match up will be even and you will not be out numbered.

Record the Call to Practice for Next Time

Finally, ask the representative if you can record the call and then record it. This will give you a record of the conversation. It serves as proof to any deal you might be offered. Probably most importantly, it gives you a record so that you can study your performance and make improvements or modifications the next time you call to negotiate a better rate on this credit card or any other!

For More Information see:

Part 1: Prepare Before You Call Your Credit Card Company for a Better Interest Rate

Part 2: Credit Curb Appeal for Credit Card Rate Negotiations

Part 3: Paying Down Debt Positions a Better Rate Negotiation

Part 4: Researching and Scripting the Pitch to Lower Your Credit Card Rates

Part 5: Credit Footprint Improvements Prior to Rate Negotiations

Part 6: Organizing All the Angles before Negotiating a Better Rate

Last time we discussed the benefits of rebalancing your debt load. This time we need to take a half step back and employ a very useful tactic.

Three Way Negotiating Dynamic in Your Favor

Before you actually transfer a balance, call the card where the balance resides and tell them you intend to transfer a portion of your balance or the entire balance if that is the case, but be specific. Then ask the company holding the balance today to give you a lower rate before you use the balance transfer. This will save you a cash advance fee and that can be very important even if they are only matching the rate!

You should also ask for a lower regular rate as opposed to a teaser rate. Tell them that you would like to keep things where they are not just for the next 3-6 months, but until the balance is paid in full.

If they can’t give you a lower regular rate then ask for a teaser rate and if that doesn’t work, then transfer the balance.

Know Your Credit Report

Order a copy of your credit report and study it in detail to understand how you will look to your credit card company at this point in time. Keep in mind that they will look at your history covering all of your creditors and not just your single account with them. If you find any errors or omissions, note them and take actions to correct them, but be ready to describe them on the phone and fill in the gaps. Similarly, if the credit report lags behind the actual status of your accounts by a month or three, be ready to do a fast reconciliation explanation on the phone.

For More Information see:

Part 1: Prepare Before You Call Your Credit Card Company for a Better Interest Rate

Part 2: Credit Curb Appeal for Credit Card Rate Negotiations

Part 3: Paying Down Debt Positions a Better Rate Negotiation

Part 4: Researching and Scripting the Pitch to Lower Your Credit Card Rates

Part 5: Credit Footprint Improvements Prior to Rate Negotiations

This is our fifth part in our series describing the steps that you can utilize to prepare for a future Credit Card Rate Reduction.

Today we are going to focus on three areas. Reviewing your total footprint on the credit card company you will negotiate with, transferring balances to ‘balance’ your debt load percentages and avoiding the balance transfer trap.

Total Foot print with a Bank or Credit Card Company

If you have more than one account with the same bank, review those accounts as well. With the mergers and consolidations it is not unlikely to have multiple accounts with the same company. Review the big picture of your relationship with this bank and discuss it with the agent on the phone.

Rebalance your debt burden so that none of your credit cards have balances in excess of 80% of your Credit Limit.

Consolidate your debt utilizing balance transfers. Move your outstanding balances to your cards with both:

1. A low fixed or adjustable rate before the balance transfer incentive, and
2. A good balance transfer incentive

Avoid the Balance Transfer Trap

Do not transfer your balance to a card with a teaser transfer rate when the normal fixed rate is higher than the card you are currently paying today.

It’s a trap. The credit card companies are counting on consumers to screw up and borrow more at higher rates. There is a reason why they offer those rates and its not to get your business, its to get your business plus interest. They know they will profit from you in the long run.

Don’t skip a payment on a card just because the balance transfer covered your minimum for the month. Pay anyway. It lowers your total debt balance which is good!

For More Information see:

Part 1: Prepare Before You Call Your Credit Card Company for a Better Interest Rate

Part 2: Credit Curb Appeal for Credit Card Rate Negotiations

Part 3: Paying Down Debt Positions a Better Rate Negotiation

Part 4: Researching and Scripting the Pitch to Lower Your Credit Card Rates

We have been covering the steps you need to take to prepare to successfully negotiate your credit card rates down. Today, we start to build your case. In general, you need to gather the facts and then prepare your message in a script.

Research Your Accounts

Review your Accounts in detail and compile that information in a place where you can find it and use it when you make the call.

If you have accounting programs like Money or Quicken, run reports and calculate the total amount of interest and fees you have paid on this credit card over the life of the card.

Run the same reports for the last 5 years, the last year and the last 6 months.

Gather up the facts about your recent progress

1. If you have made a payment and its in the mail prepare to mention it.
2. If your income has gone up or your expenses down, note it.
3. Be prepared to make your case with this information too.

Prepare a Script

After you have read all of our Preparation instructions including what to do and say on the call and what not to do.

1. Then write or type a legible script of your opening statements, your detailed request and reasoning, and several individual pages for potential standard responses if they say no. Think of these responses as mini scripts.
2. Memorize your scripts.
3. Practice your script with your spouse or a friend on the phone. Remember the person taking your call at a call center is trained and experienced at doing this every day all day, you are not. You need the practice and you need it on the phone!

Next time we will look at some of the additional complications that are present for many debtors and how you can prepare for those details as well.

For More Information see:

Part 1: Prepare Before You Call Your Credit Card Company for a Better Interest Rate

Part 2: Credit Curb Appeal for Credit Card Rate Negotiations

Part 3: Paying Down Debt Positions a Better Rate Negotiation

Last time we mentioned that your credit card rate negotiation will benefit from paying down your debt and boosting your income. Now its time to cover the obvious step that every body hates.

Stop Spending So Much

It’s the discretionary income that really makes the difference. If you earn a $100k a year and spend $120k you are worse off than someone that earns $30k and saves $10k, but you have more potential to turn things around. From a financial perspective its easier to cut costs and expenses than it is to boost your revenue. Psychologically, it’s a different story, but force yourself it will help.

Before you make the call work hard to decrease your expenses. There are a number of things you can do to decrease your expenses and divert some of those funds towards your credit cards. These are just a few:

• Stop dining out all together
• Buy cheaper food at the grocery store
• Take your lunch to work
• Don’t go shopping for anything but necessities
• Stop renting movies
• Drive less to save money on fuel and wear and tear on your car
• Drop your cell phone plan down
• Drop your cable package down or cancel it even if its just for the summer.

Why?

All this work to decrease your expenses can make it possible for you to get your balance down further and faster. That might bring your outstanding balance down to a percentage level that allows the credit card company more room to offer you a better deal. Paying down your credit card is the overall goal anyway, and so it helps no matter what the result of your rate negotiation.

What’s coming In our next installment?

We will cover some of the research needed and start to talk about ‘The Script.’

For More Information see:

Part 1: Prepare Before You Call Your Credit Card Company for a Better Interest Rate

Part 2: Credit Curb Appeal for Credit Card Rate Negotiations

As we continue to look at the ways to better negotiate your credit card rates, today we are focused on some very basic steps to take. You want to look good to the credit card companies when you call so that they will give you what you want. Here are two basic things you can do to brighten up your credit.

Pay Down as Much As Possible

You need to attempt to pay off your debt aggressively before you call. If you have extra money in your bank account, send it in as a payment to get your balance down. Do what you can to bring in more cash and make a big payment on the target card in question.

Benefits

• This helps bring your total balance down improving your metrics.
• It shows the credit card company and possibly the analyst on the phone that you are serious.

Boost Your Income

Find ways to bring in extra money, such as asking for a raise, taking a part time job, doing freelance or contract work on the side, holding a garage sale, using your income tax refund, selling a few things on Ebay.

Paying down your debt as much as possible and reporting that your income is higher than what it used to be are the two most powerful things you can do. Now don’t worry if this is not an option we have more tips coming in our next installments.

For More Information see Part 1: Prepare Before You Call Your Credit Card Company for a Better Interest Rate

A few days ago we prepared an article providing the useful tip that it only takes a little negotiation to get a rate decrease on one or more credit cards. Since then we have received several requests to elaborate on this topic more and we have prepared this article to provide a more comprehensive strategy for decreasing your credit card rates through negotiations with current and new credit card companies.

This process can be done off the cuff with a simple phone call and a request, it never hurts to ask or you will definitely receive nothing. A rate reduction can save you hundreds if not thousands of dollars, which can make it very important to many people.

So we will cover are going to cover 15 steps in multi part series to prepare you for the call. Future articles will cover even more strategies and tactics that you can use. Lets face it something that can save you thousands of dollars in compound interest is worth a little more investigation!

The Test Run Option

Now, I do not recommend calling without preparation but it won’t hurt much and will give you some practical experience. If you fail come back and do the preparation we recommend and improve your odds of succeeding. Do not wait forever to make things ‘perfect.’ If they were perfect, your debt would be paid off you would be able to use cash to make your purchases and the call would not be necessary.

Getting Serious

If you tried the test run or not the first thing you need to do is a little soul searching. You are going to be negotiating to save yourself thousands of dollars. That is like trying to talk yourself into a free car. You need to understand your own position and motivation and perspective. So our first tip is to ask yourself if you want to change to a different credit card company if you do not get a better rate?

1. Consider their customer service.
2. Consider how often they have increased your rates in the past.
3. Consider how many penalties they have charged you.
4. Consider how many balance transfer fees your have been charged and if they were reasonable.

You need to understand just how serious you are about your effort before you proceed. Everything that we will cover in the future will be determine by your goals and attitude, which will come across on the phone!

Many people are sometimes able to avoid bankruptcy by negotiating a settlement with their credit card companies. On occasion when your finances are in tough shape you may find yourself negotiating a lump sump debt settlement on your credit card. To achieve such a settlement, a lawyer or credit counseling agency may also assist. However, I would highly advise you try a debt repayment plan first, as this will affect your credit score.

These settlements can save you thousands of dollars in interest and possibly in principle as well.

A simple argument that is weighed by the credit card company plays out as follows:

1. So they might agree to a settlement with you. Suddenly, your mountain of debt has been greatly reduced! Congratulations, but be warned life is not entirely green on this side of the fence
2. Your credit card company has to write off a portion of your debt and they have to account for this in their financials.
3. They also have reporting agreements in place with credit monitoring agencies. When they write off that remaining balance, that write off will go on your credit history as bad debt.
4. That Bad Debt note will stay on your credit history for seven years.
5. You can add an explanatory note to your credit report, but it will not change the fact that you have cost a company a bad debt.

When possible you are usually better off trying to negotiate a payment plan that includes a reduction in interest rates. This has the benefit of allowing the credit card company to recover their principle without reporting a lump sum payment bad debt write off.

Under these plans you can typically pay the balance down faster if you have the money, further reducing your actual interest costs.

Regardless of the credit rating implications a lump sum settlement can be the right course of action to take. If you do not have the money, you do not have the money and not too much can change that. Odds are that if you are at this stage you already have some credit issues to concern yourself with and so the blight on your credit may not be insurmountable, but you should understand that it is similar in principle to a foreclosure, repossession or even a bankruptcy and that will take effort to overcome.

It happens to everyone. Your credit card interest goes up. Its a fact of life almost as certain as the tides.

Just because you have stellar credit does not mean that a bank or finance company will not test your boundaries. They will move your interest rate up often times just to see if you are paying attention.

Then there are the other reasons for rate increases. General interest rate rises as tracked on the LIBOR or through Prime Rates. Missed or late credit card payments. Too many over draft fees. Your balance gets to high for the credit card companies to keep that warm feeling about your ability to pay, so they raise your rates.

Take Steps to Lower Your Interest Rate

It is certain that if you do nothing, you will pay a higher rate. You have nothing to lose from trying to lower your rate.

1. The best way to proceed is to pay off the balance. This isn’t always possible, but this is the best way to avoid interest rate increases.
2. Call your credit card company and simply ask for a lower rate. Many credit card companies are waiting for your call. They do not want to lose your business as they make too much money from you. So their call center employees often have scripts or transfer lines standing by awaiting a call with a request to lower the rate. Use this Option!
3. Transfer your balance to another account with a lower rate.
4. If you are going to miss a payment, go over your credit limit or any other event that might trigger a negative check on your credit, call your credit card company. Tell them the situation and tell them what you are doing to address it. They may only take note of it in their system, but that note could be valuable for you when someone is confronted with a decision to raise your rate later.

The bottom line is that you do not have to suffer the rising rates. You can act and you can get your rate lowered. The old saying, “Nothing ventured, nothing gained,” applies both to you and the credit card company. You won’t gain savings if you don’t try and lower your rate, and they won’t gain more profits if they don’t try to bump up your rates every now and then to see if you are paying attention.