Can Credit Card Companies Take Your Car?

Your credit card company wants you to pay your balance voluntarily and will do everything possible to make sure this happens. Unfortunately, not all individuals are able and willing to make payments on their credit card debts. In the event the creditor cannot procure voluntary payments from you, it can pursue payment by force. Unpaid creditors have the right to seize assets, such as your car, if you do not make payment arrangements.

Debt Collection Lawsuit

Before a credit card company can seize your vehicle, it must get a judgment against you through the court. A judgment serves as the court's acknowledgement that the debt in question is valid and the creditor has the legal right to collect. A credit card company obtains a judgment by filing and winning a debt collection lawsuit against you.

Personal Property Lien

After receiving a court judgment, the credit card company has the right to place a lien against your car's title. The lien secures the judgment and gives the credit card company a valid legal claim to your property -- in this case, your car. You cannot sell your vehicle until you pay off the judgment and have the lien released. In the event you continue to ignore your defaulted credit card debt, the credit card company has the right to use its lien to repossess your vehicle.

Collecting Through Repossession

After the creditor seizes your car, it will sell the vehicle either at an auto auction or through a private sale. Creditors must sell repossessed vehicles for a reasonable amount, according to the Federal Trade Commission. Thus, while the company does not have to hold out for fair market value, it cannot sell your repossessed vehicle for a ridiculously low price. After the sale, the credit card company applies the proceeds to your outstanding balance.

Deficiency Balance

Just because your credit card company repossessed and sold your car, that does not mean that you no longer owe the debt. If your creditor sells your car for a reasonable amount but that amount does not meet or exceed your card balance, you are responsible for paying the amount that remains -- known as the "deficiency" on the account. The credit card company can seize other assets you owe or garnishee your wages when collecting the deficiency.

Lien Priority

If you used an auto loan to purchase your car and have yet to pay off that debt, your vehicle already carries a lien. Because your auto lender filed its lien before the credit card company, the original lien takes priority over the new one. Thus, the credit card company must pay off the original lender's lien before it receives any money from the sale of the car. Depending on the amount you owe on your auto loan and how much your car is worth, seizing and selling the vehicle may prove more troublesome than its worth for the credit card company.

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Rapid Debt Reduction Strategies for Erasing Credit Card Debt

In 2010, CreditCards.com reported the average American household carried nearly $16,000 in credit card debt. The Federal Reserve reported the average annual percentage rate at 14.67 percent for the same period, making the minimum payment on such a balance just under $200 per month. By engaging in a few simple strategies, consumers can eliminate credit card debt faster and regain control of their financial life.

Negotiate the Lowest Rates Possible

Negotiating interest rates to the lowest level possible should be the first step in erasing credit card debt. A few minutes on the phone could reduce monthly finance charges and save hundreds of dollars--especially with a good credit history and solid record of regular on time payments. Shop around and compare your current rates with those of other companies. Give your credit card company the opportunity to match an offer; if it won't, don't be afraid to move on.

People often think they have little or no leeway in bartering when it comes to their interest rates, and legislation has put restrictions on lenders to tighten up unscrupulous business practices; however, the laws haven't eliminated a person's right to attempt to negotiate lower payments. In a June 2010 CNNMoney article, Nick Bourke, director of the Safe Credit Cards Project at The Pew Charitable Trusts, said, "I think [card companies] will be just as willing now as they have been."

Transfer Balances to Lower Interest Cards

In his book "Rapid Debt Reduction Strategies," John Avanzini encourages readers to transfer debt from their highest-rate credit cards to the lowest wherever possible. By moving balances with higher interest to accounts with lower rates, consumers can reduce finance charges and apply the savings toward paying down the principal faster.

When considering this option, it's imperative to read the fine print and take everything, including rates, transfer fees, other expenses, incentives and long-term adjustments into account. Avanzini also notes that lending institutions might be more flexible to cut rates and extend credit to clients who give them considerable amount of business and offer other incentives such as automatic payments.

Pay Off Highest Interest Rate Cards First

People with more than one credit card should review the interest rates on each and work to pay off the account with the highest interest rate (not the highest balance) first. You can accomplish this by making lower payments on all other cards and applying the rest of your monthly credit card budget to the highest rate account. After the first card is paid off, apply the same principle to the card with the next highest rate, and so on.

Suze Orman, author of "The Road to Financial Wealth" and numerous other personal finance books, suggests making minimum monthly payments plus $10 per month on other accounts while using this method. She also states that in order to work quickly and effectively, consumers should cancel or maintain a zero balance on cards paid off and not reduce the total monthly amount budgeted for payments.

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Can You Have an Old Paid Debt Removed From Your Credit Report?

Every consumer who has ever used credit has a credit report, a collection of information about how the consumer has used credit in the past. Regardless of the kind of information contained on the report, specific items on the report can stay there for a only limited time as dictated by federal law.

Credit Reports

The three main companies that collect credit data and compile it into consumer credit reports are Experian, TransUnion and Equifax. You have the right to inspect each of your credit reports for free every year by going to AnnualCreditReport.com, the only site authorized by the Federal Trade Commission to provide you your credit report information.

Errors

If a paid bill mistakenly appears on your report as unpaid, you can have that mistaken entry removed. You have to contact the credit reporting agency that made the report, inform the bureau that the item is in error and provide evidence that the item is wrong. You can do this in writing, though when you do you should provide copies of any documents, keeping the originals. Once the credit reporting company receives the written error notification, it will investigate the report and remove any items it finds in error.

Time Frame

Credit reports can contain accurate negative information for up to seven years, though bankruptcy information can remain there for 10 years. The period begins once the negative event takes place, and if the item appears on your report for too long, you have the right to have this item removed in the same manner in which you would have an error removed.

Considerations

While you can demand that an old paid bill gets removed from your credit report, you do not always have to take this action. As long as you paid the bill on time and didn't suffer from a late payment, debt settlement or similar negative report item, removing the old debt will not have a significant impact on your report or credit score. However, if the old debt is a negative item, having it removed might help your score.

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How to Report to Collection Agencies

Dealing with a collection agency can be extraordinarily stressful. In most situations, they have the legal power to sue for collection of debts, confiscate money from checking accounts and garnish wages. Contacting them directly and making all agreements in writing limits their ability to take adverse action on your assets even if you are not able to fully pay the debt.

Instructions

1

Make a written record of all communications with debt collectors. If you receive phone calls, either record them or make small notes regarding the contents of the call. Do not make agreements with debt collection agents over the phone. Insist that they put all offers in writing to be mailed to you.

2

Educate yourself on your rights by reading the Fair Debt Collection Practices Act brochure, which is accessible through the "Resources" links below. If the collection company violates sections of this act, you may not be required to pay the debt. For example, a phone call from a collector falsely claiming that you can be taken to criminal court for unpaid debts is against the law, and will void their attempt to collect on your debt.

3

Attempt to settle or pay the debt by negotiating with a collection agent. Debt collectors purchase debts from the original creditors for much less than the value of the outstanding loan. Try to negotiate a lower price for settlement.

4

Ensure that the debt collector agrees to report the updated status of the loan to the credit reporting agencies. If you settle the debt with them, they may report it as settled to the credit bureaus. In some cases, you may be able to settle a debt and convince the collector to report it as paid in full as part of your negotiation.

5

Follow up with your credit report to make sure that the collector sent in the information. If the account is not updated on your report promptly, file a dispute with the credit bureau along with copies of relevant documentation demonstrating your agreements with the collector.

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How to Understand FICO Score Calculations

Your FICO score -- a calculation created by the Fair Isaac Corporation to measure your creditworthiness -- is a key component of your financial life. A good FICO score can unlock lower interest rates on your loans and pave your path to a bigger house, a better apartment or even a job. A poor credit score can do the opposite: It brands you as a bad risk. Your credit score is based on some fairly straightforward components, all of which are calculated from information on credit reports compiled by the three main credit reporting agencies -- Experian, Equifax and TransUnion.

Instructions

1

Take your payment history into consideration. The biggest portion -- 35 percent -- of your credit score is based on whether you pay your bills and in a timely manner. Liens, judgements and delinquencies are all a result of not paying bills. They will play a bigger factor in your overall score. Likewise, being diligent in paying your bills will have the largest impact on boosting your score.

2

Take a good look at how much you owe all your creditors. The amount you owe, relative to your credit limits, plays into 30 percent of your FICO score. Even if you pay your bills on time, if your outstanding bills push your credit limits, your credit scores will drop.

3

Think about how long you have had credit. Are you new to the credit game? Do you have a long history of receiving credit? How long have you maintained the credit accounts that you have? A large chunk -- 15 percent -- of your score is based on this information. It would follow that you cant possibly get a credit card today, pay the bill next month and expect a large jump in your FICO Score. It takes time. It also follows that it's a bad idea to cancel old credit cards, even if you don't use them. The longer they have been on your credit reports, the higher your score will rise.

4

Take a look at your credit "portfolio." Here is where 10 percent of your score falls. Is it diverse? Do you have a good balance? Do you have a large amount of one type of credit extended to you? A diverse array of credit types is best.

5

The last step is to look at what is now called your "New Credit." This is the category that takes credit report inquiries into account -- the more you have in a short period of time, whether from prospective landlords and employers or from credit card applications, the lower your score might droop. In other words, signing up for a department store credit card just to get that 10 percent discount at the register may cost you more than you think. Think about the types of new credit accounts you have opened recently and how many. All of these factors make up 10 percent of your score.

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How to Check My MIO Balance

MIO Money is a pre-paid reloadable MasterCard. You can use the card anywhere MasterCard is accepted worldwide to make purchases, payments and ATM transactions. Purchase a MIO Money card at a grocery store for an average cost of $9.95, according to the MIO website. The MIO Value Plan offers free direct deposit or you can reload your card at a participating retailer for an average cost of $4.95. Using the card allows you to control your spending as you control your card balance. Check your MIO card balance before using the card to avoid transaction denials.

Instructions

Checking Your Balance Online

1

Visit the MIO card website and locate the "Cardholder Login" link on the left side of the page under the banner.

2

Click "Cardholder Login" and enter the verification code in the box provided and click "Submit". The verification code step prevents the use of automated programs and helps secure your MIO card.

3

Enter your MIO card number and pin number and click "Log In" to view your account balance.

Checking Your Balance by Phone

4

Locate the toll-free number on the back of your MIO card to contact customer service.

5

Dial 1-866-840-MIO1 (6461) to reach the customer service line. The customer service department is available 24-hours a day, 7-days a week.

6

Follow the prompts of the automated system or speak with a representative to check your card balance.

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Does My Credit Report Affect My Homeowners Insurance If It Is Tied to My Auto Insurance?

According to U.S. law, all individuals who wish to operate an automobile must purchase at least a minimum amount of car insurance. This insurance policy must be purchased from a private insurance company. In many cases, insurers offer policyholders the chance to purchase both auto insurance and homeowner's insurance together, with each offered at a discounted rate. In many cases, a person's credit score directly affects the premiums he must pay on these policies.

Credit Scores

An individual's credit score is a measurement of the risk a lender undertakes in lending to him. This score is an estimation of the likelihood that, were the lender to loan the individual money, it would be paid back on time and in full. While primarily used by lenders to assess an individual's creditworthiness, credit scores may also be used by other businesses, such as insurance companies, to help estimate an individual's overall trustworthiness.

Auto Insurance

After purchasing an auto insurance policy, an individual is generally required to pay a monthly fee known as a premium. The size of this premium varies greatly depending on the insurance company's estimate of the likelihood that the individual will trigger a claim against the policy. Drivers more likely to get into an accident are charged higher premiums. According to Bankrate.com, over 92 percent of insurance companies use an individual's credit score to determine the size of his premiums.

Homeowner's Insurance

Homeowner's insurance covers damage to a person's residence, as well as injuries sustained by guests to the residence. Insurance companies use credit scores to determine homeowner's insurance premiums. However, the variables a company uses to determine the likelihood that a person will get in an auto accident are significantly different than those used to determine the likelihood that he will incur a claim against his homeowner's insurance.

Considerations

The precise formula that a company uses to price homeowner's insurance and auto insurance can differ greatly. While one company may tie the price of the homeowner's insurance to the price of the auto insurance, it is more likely that a company will use separate models to calculate the cost of the homeowner's insurance and the auto insurance. However, these models may use some of the same variables to calculate the cost.

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Can a Victim of ID Theft Recoup Any Money From a Bank?

Identity theft is defined as unauthorized use or attempted use of existing credit cards; other existing accounts such as bank accounts; or misuse of personal information to obtain accounts, loans or for other criminal purposes. In 2008, the Bureau of Justice reported that in a two-year period, the financial cost of identity theft was $17.3 billion and affected 11.7 percent of the population 16 or older.

Identifying Bank Fraud

If your identity is stolen and unauthorized transactions appear on your bank statement, you must ascertain if the withdrawals made were electronically or were paper transactions. If the thief wrote checks, the case falls under state laws, but if the withdrawal was made electronically, federal law prevails. If you are unsure what type of transaction occurred, contact the bank that processed it.

Electronic Withdrawals

If a thief uses an ATM or debit card, an electronic funds transfer or some other electronic means to debit or credit an account, you are protected by the Electronic Fund Transfer Act, which limits your liability for fraudulent transactions if you follow the reporting requirements. If your ATM or debit card is lost or stolen and you report it within two business days of discovering it, your loss is limited to the first $50 taken. If you report after two business days but less then 60 days from the date it appears on your bank statement, you could be liable for up to $500 of the loss. If you wait more than 60 days to report it, you could lose all of the money taken. If your card was used as a VISA or MasterCard to charge items, your loss is limited to $50 regardless of how much time elapses.

Paper Transactions

If you discover your checks are lost or stolen, contact your bank immediately, stop payment on the missing checks and close your account. Have your bank notify Chex Systems Inc. or the check verification system the bank uses so the checks can be flagged, which alerts retailers to decline them. This will minimize your losses if the thief forges your signature and passes the check. Federal law does not minimize your losses from paper transactions but some states have laws that protect you and most hold the bank responsible. You can also contact the major check verification services yourself by calling TeleCheck at 800-710-9898 or 800-927-0188, and Certegy Inc. at 800-437-5120. You can also call SCAN at 800-262-7771 to see whether bad checks were passed in your name.

Signs of Trouble

If you have a check rejected by a merchant, it may be because the thief is using the micro-encoding at the bottom of your check---he would need this if he counterfeited your checks; your driver's license number; or another identification number. Ask the merchant for the number of its verification service and call that company. It will tell you what number he's using. If it's your micro-encoding, call your bank and close the account. If you can't open an account, a thief may have opened one in your name. Contact Chex Systems and request a credit report. Chex Systems produces credit reports strictly about checking accounts.

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How to Cut Your Monthly Expenses

With unemployment rates soaring and many people facing job losses, reducing your monthly debt is critical to your personal economic survival. Here's a few steps you can take to reduce your monthly expenses.

Instructions

1

List your monthly expenses. There will be some expenses that are fixed - you cannot reduce or change them and many other expenses are flexible and can be reduced. Fixed expenses are expenses such as real estate taxes. Flexible includes groceries, electric, etc.

2

Credit Card Debt: Making minimum payments to the credit card only prolongs the debt and usually results in a growing balance - you just can't get ahead if paying the minimum amount due. Check your monthly statement, what rate is being charged? Any other fees such as Late Fees? Call the credit card company and request a "Hardship Rate". Some credit card companies are reluctant to offer hardship rates, you will probably have to call a couple of times before you reach a representative willing to help (it's easier to tell you 'No, we don't offer that' than it is to help you) Be persistent.

3

Have a car payment? Call the finance company to request a hardship rate. Many finance companies will offer deferred payments or interest only payments. Interest only payments will not have a negative impact on your credit report but will help you keep payments current when struggling with finances.

4

Mortgage Payments. If you haven't already done so, call your lender and get a lower rate and extend the term of your note. You do not have to be in default to obtain a loan modification. Please see link below for info How to Talk to Your Bank.

5

Groceries. Make a list - buy only what is on the list, don't be lured by attractive displays. Clip coupons for groceries ... and everything! Watch for sales - Buy-One-Get-One sales are a great way to save on items that store easily such as mayonnaise, toothpaste, paper products, etc.

6

Electricity. Unplug electric items when not in use. It really does make a difference in the electric bill. Unplug phone chargers, WII, small appliances, shredders, etc. Turn off ceiling fans unless you are in the room. Be watchful of the temperature setting on your thermostat. It all adds up.

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Who Can Legally Request to See My Credit Report?

Your consumer credit report offers plenty of details about you including your name, address, Social Security number, employment history, credit lines, habits and much more. That information is confidential, but is available for review by more people than you may think possible. Moreover, there is nothing you can do about that.

Creditors

As expected, creditors can check your credit reports. This includes lenders and credit card companies, including companies that may be interested in extending credit to you. The credit reporting agencies who may have consumer reports about you include TransUnion, Equifax, Innovis and Experian. By law, you are allowed to opt in or opt out of firm offers of credit or insurance via a website at OptOutPrescreen.com.

Insurers

Insurance companies will take a look at your credit and auto insurers will often base their rates on your credit scores. An "insurance score" involves certain parts of your consumer report, but not all of it, according to Consumer Reports.

Potential Employers

If you are in the running for a new job, potential employers can obtain copies of your credit reports with your written consent. Companies look with favor at those job candidates who have a good credit report and may hold bad credit against you. Review your credit reports before employers do to avoid surprises and to dispute mistakes.

Landlords

As long as a landlord follows the provisions of the Fair Credit Reporting Act, they're allowed to use consumer reports to evaluate whether to consider your rental application. If your rental application is rejected based on what was found in your credit report, the landlord is required to provide you with an adverse action report, according to the Federal Trade Commission.

Cell Phone Carriers

You shop for cell phone plans, but cell phone companies will shop you too. Specifically, they'll obtain copies of your credit reports to see if you're a responsible consumer and likely to pay your bill each month. Expect to pay higher monthly rates or be required to put down a deposit if you have credit problems.

Considerations

You can head off potential credit problems by keeping a firm eye on your consumer reports. Federal law requires that the three largest credit reporting agencies---TransUnion, Experian and Equifax---supply one free copy of your credit report to you annually upon your request. Review your reports and ask that incorrect information about you be removed.

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Spouse Responsibility for Debt in Georgia

Debt is treated differently in community property states and non-community property states. Georgia is an equitable distribution state, meaning that, in terms of responsibility, property and debt are not divided equally between spouses.

Signatory

When both spouses sign off to incur a debt, the responsibility for payment is equally divided and both parties are liable for repayment. When only one spouse signs a loan agreement, he is solely responsible for the debt and repayment.

Residency

In order for Georgia law to apply to spouses, they must sign a loan agreement as residents of the state. A non-resident is subject to the laws of the state in which he claims residency. When moving from one state to another, property division and debt laws apply in whatever the state individuals claim residency.

Bankruptcy

If a spouse files bankruptcy in Georgia, that bankruptcy filing does not affect the other spouse unless they file together.

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Non-Profit Debt Counseling Help

Large amounts of debt, coupled with compounding interest charges, leave consumers feeling trapped and helpless. There are options to getting out of debt, however. Nonprofit debt-counseling agencies help consumers create budgets, pay down outstanding debt, and avoid future debt.

Benefits

Nonprofit debt counseling agencies help consumers build payment plans for credit card debt. Consumers satisfy the debt, using payment plans that could take several years. Most of these agencies provide the debt counselors to work with consumers to develop a repayment plan specific to their needs. Many agencies also offer free financial courses for customers.

Fees

Most nonprofit debt counseling agencies charge fees for their service. Although some credit counseling agencies offer a free consultation for potential customers, customers are required to join the credit counseling service to obtain a detailed debt management plan. Upon signing up, customers in most cases pay a start-up fee. The average charge is about $50 to set up a new account, according to MSN Money. This gives customers access to the agency's services, including a personalized debt-management plan and budgeting courses. Consumers should "rate shop" several agencies to find the lowest fees and avoid those that charge unusually high fees.

Downsides

Credit counseling appears on a consumer's credit reports. Although this will not lower a person's credit score, some lenders may not extend new credit to consumer who are working with credit counseling agencies. However, the credit counseling agency will remove the information from the credit report when the consumer completes a repayment plan.

Tips

Consumers should research nonprofit debt counseling companies beforehand. Determine whether your desired counseling firm is accredited by a third-party evaluation association such as the International Organization for Standardization or the Council on Accreditation. The Better Business Bureau provides a company overview, rating and a list of consumer complaints for many companies in the U.S. Get any required fees in writing before joining.

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How to Get Help From the Government to Pay Your Credit Cards

You can get help from the government to pay your credit cards -- but don't expect any direct payments. Nonprofit credit counselors certified by the U.S. Department of Housing and Urban Development can offer free advice and guidance for paying your credit card bills. The counselors can show you how to legally and ethically pay your credit card bills while improving your credit. That may not be quite as satisfying as a pure credit card bailout, which was rejected in 2008 by the U.S. Office of the Comptroller of the Currency. The agency rejected a proposal to allow as much as 40 percent of credit card debt to be forgiven through tax writeoffs.

Instructions

1

Gather the billing statements for your credit cards.

2

Make an appointment with a government-certified credit counselor. Find a counselor in your area by checking the HUD website.

3

Talk to the counselor about your problems paying your credit card bills. The counselors provide free advice on negotiating with your card companies for lower monthly payments, reduced interest rates and more. For a monthly fee, the counselors can also take complete control of your credit card debt. Through a debt management plan, the counselors will personally contact all of your lenders and set up payment programs designed to eliminate your credit card debt in about four years. You will be asked to commit to the program and make a lump sum payment to the counseling agency each month to cover minimum payments and a management fee. The agency will then pay your creditors, with a goal of saving you money over the long-term on reduced finance charges and the waiver of some fees by the lender.

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Alternatives to Cutting the Budget

When you experience a budget shortfall, the common advice that a financial adviser will give you is to make cuts to your budget. That usually includes reducing miscellaneous expenditures on items like entertainment, and lowering variable expenses like your grocery or cell phone bill where possible. But when you've done all the cutting that you can and still have an issue, you have to consider some alternatives.

Part-Time Employment

If you have a budget shortfall, you may have to trade your time for more money. Instead of cutting your budget expenditures, you need to add to your budget income. To do so, you can take on a part-time job, at least until the budget issue is resolved. You could also freelance your services around town and take on odd jobs, like maintaining lawns or providing nanny services.

Credit Union Loan

Another alternative to making cuts in your budget expenses is to try to get a small cash infusion to make up the difference. To take this option you need a solid credit profile and score. Credit unions often offer lower rates compared to standard bank loans. Credit unions are sometimes more willing to make personal loans of smaller amounts.

Refinancing Debts

Another way to resolve your budgeting issues is to try to refinance your current debt. Try to consolidate your high-interest credit card debt and loans into one lower-interest account. A consolidated loan can reduce your monthly debt payments and speed the process of getting rid of the debt completely. Consult with a trusted credit counseling service, like the NFCC (National Foundation for Credit Counseling) before deciding to refinance your debts. A credit counselor can also help you better manage your money in general.

Warning

Avoid taking on predatory loans like payday or title loans, which come with exorbitant interest rates, to resolve a budget shortfall. Getting a payday or title loan could put you in a worse position than before -- if you don't pay the loan back on time, you have to pay default fees in addition to annual interest rates that could exceed 900 percent.

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Can I Consolidate My Secured Debt?

One of the main solutions for people who have taken on more debt that they can pay off is to have the debt consolidated by a lender. Many finance companies are willing to buy a person's current loans and issue a larger one. This may increase the size of the person's debt load, but it may allow her some financial breathing room, as the size of her monthly payments may shrink.

Secured Debts

A secured debt is attached to a form of collateral. If the person defaults on the debt, then the lender will be given permission to take possession of the collateral as a means of compensation. Generally, people who are able to secure their debts are provided a lower rate of interest than people with unsecured debts, as the lender faces less risk of not being paid back on the loan.

Debt Consolidation Companies

Debt consolidation companies are finance companies that pay off people's debts in exchange for issuing them new debts. Sometimes this will make financial sense for a person who has difficulty managing payments to multiple companies each month or who is seeking to pay less each month but is willing to extend the overall life of his debts.

Terms

Generally, debt consolidation companies will not require that people secure their debt, although some may ask for a form of collateral. It is not any more difficult for debt consolidation companies to buy secured debt than it is for them to buy unsecured debt. The terms that a company will offer its customers for loans will vary, with some charging extensive fees and high interest rates and others providing the new loan at a relatively low cost.

Considerations

Even if a person is able to find a company willing to consolidate his debt, this may not be a wise financial decision. This is because debt consolidation firms are for-profit companies, meaning that they will be attempting to make money by issuing the client a new debt. Some people who take on consolidated debts are charged fees for the new debt and may see an increase in both size of their debt and the interest attached to it.

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Can a Spouse Be Sued for a Debt That She Did Not Co-Sign For?

When you co-sign a loan for a loved one, you bear the burden of paying your loved one's debt if he cannot. Lenders have as much right to sue nonpaying co-signers as nonpaying borrowers and will occasionally pursue a co-signer for payment before pursuing the borrower herself. Co-signers, however, aren't the only individuals on the hook for someone else's debts. In some states, lenders can pursue a borrower's spouse for debt the borrower incurred whether or not the spouse co-signed for the debt.

Community Property States

Nine states are community property states. In a community property state, assets that either spouse accrues during the course of the marriage belong to both spouses equally. Unfortunately, the same is often also true of debt.

If you live in a community property state, a lender can sue you in an effort to force you to resolve your spouse's unpaid debts--regardless of whether you co-signed for the debt or not. An exception to this rule exists if your spouse incurred the debt prior to your marriage. In community property states, any assets or debts an individual holds before getting married belong to that individual alone. If you do not live in a community property state, the lender does not have the right to sue you if you did not co-sign for the debt.

Lawsuit Risk

Just because a lender has the right to sue you, that doesn't mean it will. All lenders' policies differ, but companies typically weigh the cost and effort of legal action against the potential gain. Thus, if your spouse's debt is small or you have solid legal grounds on which to contest the lawsuit, the lender may drop its claim against you.

Your spouse's lender has a limited amount of time in which to sue either you or your spouse for the debt before doing so is no longer legal. This time period is known as the statute of limitations for collection and varies in each state.

Consequences

If the lender wins a lawsuit against you, you face the same consequences that would befall either your spouse or a co-signer on the account. What your lender can and cannot do is contingent on your state's specific collection laws. After a lawsuit, a lender may have the right to file liens against your property, garnish your wages and bank accounts and seize nonexempt assets.

Lawsuit Effects

The effects of a collection lawsuit are similar regardless of which spouse a lender decides to sue. Wage garnishment and bank levies detract from the income of the entire household while a lien can attach to a home or car even if both spouses' names are on the title. Only the spouse who faced the lawsuit, however, suffers credit damage as a result. The length of time that a lender's court judgment will remain a derogatory credit feature varies depending upon how long the couple's state gives the lender to enforce its judgment.

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How to Build Excellent Credit After Delinquency

Deciding to fix your credit after months or years of deliquency is an excellent investment in your future. Credit card companies, car dealerships, mortgage companies, landlords and even potential employers check credit, and having a good financial standing adds to your financial and personal integrity. It can take several years to build your credit after delinquency, but it can be done.

Instructions

Rebuilding Good Credit After Bad Credit

1

Repay your creditors what you owe them, or work out a payment agreement. Call your creditors and ask for their assistance. Tell them you'd like to clear up the debt you have. More than likely, they will offer you a settlement of some kind, depending on how delinquent your account is with them.

Most creditors will work with you to help you repay your debt; anything you can afford to pay them is better than nothing. Making a conscious effort to pay off bad debt reflects favorably on your credit report and score.

2

Consider credit counseling.There are many companies that offer free or affordable credit counseling. These companies work with your creditors and allow you to make one affordable monthly payment.

(Some programs require that you have a minimum amount of unsecured debt to proceed into credit counseling. This varies by agency, but is usually about $10,000.)

3

Build a savings account. Setting aside funds for use only in emergencies can help you control your reliance on credit cards. Shop around for a high-yield savings account with a local bank. Even if you can afford to deposit only a few dollars each week, that money will grow into a substantial amount of money sooner than you think.

4

Apply for a secured credit card. Secured credit cards are revolving credit cards that work like traditional cards, but a security deposit equal to the credit line is required upon opening the account. This security deposit is used to pay back any balance owed if you should stop making payments. In some cases, the security deposit might be returned after several years of on-time payments and responsible use of the card. For best results, charge only small amounts and pay off the balance each month.

5

Fix any errors that appear on your credit report. Inspect your credit report from each of the three major bureaus: Trans-Union, Experian and Equifax. Dispute any errors by using their online dispute forms, calling them directly or mailing in a dispute report. Be sure to note all pertinent information regarding the disputed items.

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Information on Being Debt Free

At the beginning of the 20th century, the American Dream was simple enough---land a good job or build a business for yourself, buy a home and raise a family. In 2011, the American Dream has changed as many people live burdened with debt that they can never hope to pay back. Becoming debt free has become the new American Dream and realizing that ideal is not as far-fetched as it might seem.

Evaluate "Necessities"

If you are drowning in a sea of unpaid bills and high-interest credit card debt, you need to do something and the first step is prioritizing your expenses. Of course, you'll first need to understand your financial situation. Start by itemizing all your debts---from your home mortgage to your gas card. Find out how much interest you are paying and the monthly minimums for each. Compartmentalize your expenses, separating into necessities and luxuries. You might be surprised to learn what you consider a necessity. You'll need to start making hard decisions here---you might decide to cut-out that gym membership, opt for basic cable or a less expensive phone data plan. You might decide to downsize your home or your vehicle. Those are lifestyle changes that can be painful, but they are the start to your life free of debt.

Pay Wisely

You have listed your debts with their interest rates and now it is time to start paying off balances. Theories on how to pay off these debts abound. Some people believe in the "snowball" approach, putting the most money towards a balance, either the one with the highest interest rate or the lowest balance, and paying the minimums on the others. Once that bill is paid, take that amount and apply it to the next in line. Financial experts, such as Dave Ramsey, believe in paying off the smallest debts first for an emotional uplift. However you decide, pick a strategy, and start applying that approach to your debt.

Budget

Planning a family budget is about as fun as getting a root canal, but like dental work, eliminating the problem causing the ache in your life is necessary. You must create a budget that is both realistic and allows you to accomplish your intended goal of being debt free. Your budget must account for the payment of "necessary" expenses (housing, food, utilities, medicine, transportation and clothing), repayment of debt and savings. You'll also want to build in rewards for meeting and exceeding your budget. If you have a family, get everyone involved and make a contest of saving money. Do what is necessary. Although the first steps may be painful, eventually you will begin to adjust to your new normal way of life.

Don't Stop

All experts agree, staying the course with your budget and your debt management plans is key. Emergencies and unexpected expenses arise but, if you have budgeted properly, you will meet those challenges without throwing your expenses out of whack. Pay with cash and keep a credit card with a low interest rate on hand and use only in the event of an emergency. To help you stay the course, use budgeting software, print out the charts that show your progress and involve everyone in the process of reaching your goals. Debt management strategies do work, but only if you apply them consistently over time.

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Bankruptcy & FICO Scores

Bankruptcy can erase overwhelming consumer debt and give you the chance to start over and rebuild your credit history. Unfortunately, bankruptcies drop your FICO credit score, and it can take years to regain lost points. Bankruptcy isn't the end, rather it's the beginning of rebuilding your credit score and proving that you're creditworthy.

Causes

A variety of situations can bring on a bankruptcy. Most people file bankruptcy because they're unable to afford their current debts. Maxing out credit cards, losing employment or acquiring a massive amount of medical bills can cause a bankruptcy. Some situations are beyond a person's control, whereas other situations are simply a matter of poor debt and money management. Regardless of the cause of high debts, bankruptcies remove the financial burden and give debtors the opportunity to get rid of outstanding debts.

Consequences

A damaged credit rating is a major consequence of filing bankruptcy. And once there's a drop in credit rating, this creates a snowball effect that affects finance options in the future. Buying a car can result in a higher interest rate or decreased buying power. Some mortgage lenders reject applications if you are applying for a home loan with a fresh bankruptcy. Even worse, bankruptcies affect employment opportunities because some employers -- mostly in the banking and finance industry -- run credit checks, and they prefer candidates with good credit and debt management skills.

Opening New Accounts

Despite the risk of receiving a higher interest rate on credit cards and loans, opening new accounts after a bankruptcy is key to repairing a bad FICO credit score. Fortunately, several creditors and lenders specialize in bad-credit financing and they work with people who have bankruptcies on their credit file. Individuals can apply for a bad-credit credit card, secured credit card -- which requires a security deposit -- or a high-interest personal loan to get back on track and re-establish their credit history.

Paying on Time

Opening a new credit account after a bankruptcy isn't enough to fix a low FICO score. Managing these new accounts responsibly helps build a good score and repair the damage of a bankruptcy. This involves paying monthly bills on time and keeping debts on credit cards to a minimum to avoid repeating past mistakes. Timely payments and the amount owed to creditors account for 35 and 30 percent of credit scoring, respectively.

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How to Pay Back Student Lines of Credit

Student loans, or lines of credit, are popular options for students to pay for college expenses. The loan terms are favorable and repayment doesn't commence until after you have graduated. There are a few options to consider when determining how to repay your student loans. Deciding which method works for you will be based on your particular set of circumstances.

Instructions

1

Account for all accumulated student debt prior to graduation. It is important to know what your obligations are before you are required to begin paying for it. Student debt can include subsidized and unsubsidized federal student loans, private loans, and credit card debt.

2

Prioritize your debt. It is important to understand how debt works and eliminate the most expensive debt first. Put your accounts in descending order starting with the most expensive debt first. The list will usually look like this: credit cards, private loans, and federal loans.

3

Pay more than the minimum payments on your credit cards (the most expensive debts) and do not use them any more. You must continue to make minimum payments on your other debts during this period. Many student debts have a grace period between graduation and when payments must begin. If this is the case, take advantage and try to pay down expensive debt quickly.

4

Consolidate debt your student debt under one lender, so you can make one payment to one lender every month. Weigh the benefits against potential drawbacks such as a higher interest rates or shorter repayment times.

5

Do not miss payments. Missing payments will lower your credit score and causing lasting damage. If you find that you are having difficulty making your payments, contact your lender immediately to work out a repayment plan you can afford.

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Who Can Garnish Wages in Texas?

Usually, when a debtor owes a creditor money and the creditor receives a civil judgment against him, the creditor can make a motion to garnish the debtor's wages or another form of income. However, this is not true in most cases in Texas. In Texas, 100 percent of a person's wages are exempt from garnishment by private creditors. This means only a few types of creditors can collect money through garnishment.

Garnishment in Texas

Texas is one of only a few states that make the garnishment of wages for the collection of a private debt illegal. Even if a creditor wins a lawsuit against a debtor and is awarded damages, he will still not be able to collect the money that he is owed. However, several parties are exempt from this law or can find ways around it.

Out of State Creditors

The exemption on wage garnishment only applies to civil judgments that are won in Texas courts. If a creditor files a suit in an out-of-state court and that court orders a Texas resident's income to be garnished, then a Texas court may honor the garnishment. However, this would be contingent on the out-of-state creditor having jurisdiction that allows him to file in an out of state court.

Governments

Restrictions on wage garnishment do not apply to governments. Both state and federal governments are allowed to seek wage garnishments if the person owes them money. If a person owes a state such as Texas back child support or he owes the Internal Revenue Service taxes, then both of these agencies would be allowed to garnish his wages in Texas if they were to secure a ruling against the debtor.

Local Creditors

According to the reference website Debt Settlement Attorneys, there is one way that a Texas creditor could garnish the wages of a Texas debtor. This could happen if the creditor took a civil suit, moved to another state and then attempted to "domesticate" that suit in an out-of-state court. Then, the out-of-state court could order a garnishment of the Texas debtor's wages.

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Government Debt Reduction Programs

For the most part, debt reduction programs tend to fall under the private sector. That is to say, private companies have created programs that enable consumers to work with creditors and debt collectors in an effort to reduce or even remove debt. The federal government has not yet created its own sweeping debt reduction program, but Congress has provided several pieces of legislation that help indebted consumers to seek relief and try to find a way out of their debt. Taking the right step in handling debt is a matter of considering your situation and deciding how you need to proceed.

Mortgage Forgiveness

The Mortgage Forgiveness Debt Relief Act, enacted in December 2007, gives homeowners the ability to work with their lenders to reduce or modify their home loan to make it more manageable. In particular, the Mortgage Forgiveness Debt Relief Act provides homeowners with the means of excluding certain income that would otherwise be used to pay off the loan. Lenders must then work with homeowners to determine how much of the loan can be paid off. This enables homeowners to try to pay off some of the loan, rather than risk foreclosure and being forced out of their home.

Fair Debt Collection Practices

The Fair Debt Collection Practices Act provides consumers with some relief from creditors and debt collectors who attempt to gain the required payment by what amounts to constant harassment. This act establishes that creditors are limited to certain hours of contact (not before 8 a.m. and not after 9 p.m.) and that they may not harass or utilize unfair methods in their debt collection practice. Also, consumers have the right to make a written request for the debt collection contact to stop, and collectors are required by law to honor the request and cease all contact.

Bankruptcy

While filing for bankruptcy will create an immediate hit on your credit report, it is a perfectly valid option for those who need to reduce extensive debt that they have no real chance of paying off. Filing for Chapter 7 or Chapter 13 bankruptcy (both established for personal bankruptcy) can offer a financial break to those who are struggling with debt. More specifically, a Chapter 7 filing will liquidate many assets, excluding such property as a car or even furniture. This type of filing can make your home vulnerable to creditors, so Congress has also provided for a Chapter 13 filing. This type of filing gives those who still have an income the opportunity to retain their paychecks and any personal property and also provides for the debtor to pay back the debt rather than relinquishing such personal property as a house.

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How to Lease a Hot Dog Machine

Whether for private or commercial use, purchasing a hot dog machine can require a big investment. If you do not have the money to buy a hot dog machine outright, you may be able to lease a hot dog machine. Your success in leasing a hot dog machine will depend on several factors, including the leasing company, your credit history and your ability to fulfill a leasing contract.

Instructions

1

Decide what type of hot dog machine or cart you want to lease. There are nearly as many types of hot dog machines on the market as there are types of hot dogs, and deciding the type of machine you need will help you narrow your search for a company that may provide a leasing option for the product. Hot dog machines can range anywhere from $100 to $20,000, as of 2010. You may want to use the Internet as a research tool to search for hot dog machines in your area. Warehouse stores may also have small commercial and private use hot dog machines for sale with options to lease. Consult Resource 1 for a list of commercial equipment companies.

2

Speak to a company associate about leasing options for the company's machines. He will be able to tell you about the leasing contract, and also tell you what kind of information the company will need from you.

3

Provide the store with your credit information. The company will check to see if your financial and credit history are suitable for a leasing contract. In most cases, they will need information about your job and your social security number.

4

Carefully read the terms of the lease agreement. If you are leasing the hot dog machine and do not plan on purchasing it outright at the end of your lease term, you will have to keep the machine in good condition. This condition will be specified by the company in the leasing contract and it is essential to know these qualifications before agreeing to the lease.

5

Sign the leasing contract and begin to make the agreed upon payments to the hot dog machine company. Make all necessary payments and repairs to the machine throughout the term of the lease agreement, as failure to do so could result in the company repossessing your hot dog machine.

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How to Manage Home Equity

Managing home equity properly is crucial for avoiding excessive debt or even foreclosure. Some people who tap into their home's equity for loans discover later that they are upside down on their mortgages, meaning that the equity has vanished with the house now worth less than the mortgage balance. This usually happens after a dramatic decline in the property's value because of a housing slump, deep recession, declining neighborhood or some combination of the three.

Instructions

1

Make at least a 20 percent down payment when purchasing a home. This creates instant equity and provides a cushion against cyclical downturns in the market.

2

Turn down offers to apply for home equity loans unless you really need the money for an important reason, such as medical bills or tuition payments. The Federal Trade Commission warns that you should not tap into your home's equity for frivolous expenses such as vacations, cars and debt consolidation. Such purchases can deeply tap into your home's equity and leave you in a vulnerable position if housing prices drop.

3

Keep balances on home equity loans low if you do take out a loan. Ideally, keep the balance to about 10 percent of the credit limit. That means for a $50,000 line of credit, your balance should never exceed $5,000. Pay the balance down quickly if you do exceed more than 10 percent of the credit limit. Keeping balances low helps your credit score while you make on-time payments and also helps avoid excessive debt.

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What Happens When a Creditor Gets a Judgment in Its Favor?

Having failed to collect on a valid debt through other means, a creditor might choose to file a lawsuit in court in hopes that a favorable decision will be awarded by the judge. A favorable decision gives rise to the question of how the court will allow the judgment to be enforced. Since we no longer have a debtor's prison in the United States, the mere presence of a court's opinion that money is owed is not enough to always elicit automatic payment. Case in point --- the guilty verdict in O.J. Simpson's civil trial, in which he was found liable for millions and still has not paid a cent.

Judgment

A positive judgment is only the first step in the process of a creditor receiving money he is owed. The initial judgment means a legal court in the United States has decided the debt is valid and the creditor is owed the money as claimed. At this point, there are a few different directions the collection process might go.

Lien

The attachment of a lien to a debtor's property often follows a court judgment in favor of a creditor. The property normally comes in the form of a house, business or perhaps a car. Though passive in nature, a lien can remain uncollected for years until the debtor tries to sell his property, at which point the power of a property lien becomes apparent. It is difficult to sell property with a lien attached to it because, since the lien is attached to the property and not the individual, any buyer would be assuming the lien as his legal debt, which is not likely to happen. This encourages a debtor to pay his bill in order to sell his property.

Garnishment

Wage garnishment can sometimes be obtained by a creditor after a favorable court judgment. This means that certain percentage of the debtor's regular paycheck, legally capped at 25 percent, must be held by the employer and sent to the court for payment to the creditor. The garnishment will continue until the debt is paid in full. A garnishment doesn't have much effect if the debtor is self-employed --- only if he has a W-4 on file with an employer and receives a W-2 at the end of the year.

Execution

A more serious court decision is to issue an execution of judgment, which directs an officer of the court to go to the residence of the debtor, seize the property, and put it up for sale at auction. After paying court costs and those of the officer, the money netted from the sale goes to pay the creditor. An execution of judgment is not normally the court's first recourse, since it is so severe, but, in certain cases, it might be employed.

Payments

Any of the preceding judgment enforcement actions can put a serious crimp on the debtor's ability to conduct day-to-day financial matters. He is always free to contact the debtor and set up a payment plan to satisfy all or part of the debt. Another option is to file for bankruptcy, a legal process that might discharge all or some of the debt.

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Statute of Limitations to Collect Debt in Connecticut

Connecticut law regarding the statute of limitations for enforcing debts varies depending on the basis for the debt. Different limitation periods also apply after the debt has been made into a judgment and depend on the court that made the judgment. If a creditor does not take enforcement action before the expiration of the applicable statute of limitations, the creditor is barred from enforcing the debt.

Six-Year Statute

Connecticut Statute Section 52-576 specifies a six-year limitation period for debts that are based on "an account, or on any simple or implied contract, or on any contract in writing." Debts based on an account include credit card and charge card accounts, sometimes referred to as "open accounts." Promissory notes and installment agreements typically used in consumer transactions are included in this statute.

Three-Year Statute

If the debt is based on an "express contract or agreement which is not reduced to writing," Connecticut Statute Section 52-581 sets a three-year limitation period to enforce the debt. This statute applies to oral contracts and agreements based on the conduct of the creditor and debtor. The statute does not apply to a sale of goods between merchants, which has a four-year limitation period if the contract is not in writing.

Enforcement of Judgments

The six-year and three-year limitation periods apply to the deadline for filing a lawsuit to enforce a debt. After a lawsuit has been filed and a creditor obtains a judgment, new limitation periods apply to enforcing the debt. As a general rule, a creditor has 20 years from the date the judgment was made to enforce the judgment by such court process as a levy on a bank account or wage garnishment. However, if the judgment was made in small-claims court, the creditor must enforce the judgment within 10 years. As of March 2011, the maximum judgment allowable in a small-claims case is $5,000.

Reviving a Judgment

The statute of limitations on enforcing a judgment differs from the limitation on filing a lawsuit in that Connecticut law permits the judgment creditor to extend the enforcement period. Connecticut Statute 52-598(c) authorizes the filing of a motion to revive a judgment, so long as the motion is filed before the enforcement period has not expired. If the court grants the motion, the enforcement period can be extended up to the same length of time as the original enforcement period, either 10 or 20 years.

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Tips to Reduce Debt Ratio

When examining an application for credit, many lenders look at the consumer's debt-to-income ratio as one of the deciding factors in approving an application. The debt-to-income ratio gives lenders a glimpse into the financial picture of a consumer and helps evaluate his ability to repay additional debts. Often consumers look for ways to decrease their debt-to-income ratios not only to receive new credit accounts but to also get out of debt

Increase Income

One of the most obvious ways to decrease a debt-to-income ratio is to increase the amount of income that is coming in on a monthly basis. This can be done by obtaining a second job or having a spouse that is currently not working obtain employment. If a consumer works in a job that has available overtime, taking additional hours is another way to increase income. Consumers may also think about doing freelance work or starting a side business to bring in additional funds. Increasing income can also provide additional funds to pay down debts.

Pay Down Debt

When trying to reduce a debt-to-income ratio, many consumers may consider increasing the rate at which debts are repaid. This can be done by putting the increase in income directly toward debt repayment or by simply paying more on monthly payments. One recommended option is to pay additional principal payments on any debt to reduce the overall amount owed. This will also cut down on the amount of interest that is added to the account. Some consumers choose to use the snowball method of paying down debt by paying all their extra funds towards one debt until it is paid off and then snowballing that payment into the next debt.

Pay Cash for Purchases

After establishing a debt reduction plan to reduce a debt-to-income ratio, it is important to pay for subsequent purchases with cash, checks and/or debit cards. Consumers should also postpone any large purchases until they have the savings to pay in cash or have the option to make a larger down payment to decrease the amount of credit needed to complete the purchase. This will reduce the likelihood of the consumer taking on any more debt before the ratio is reduced.

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How Do I Pay a Debt That Is Past the Statute of Limitations?

No debtor has a legal requirement to pay a debt that has gone past its statute of limitations in the state from which it created. In some cases, however, a debtor may choose to pay an expired debt out of a sense of moral obligation or so he can open another account with the company that originally lent the money. If a debt collector attempts to collect on a debt that has expired under the relevant statute of limitations, they may be liable for a $1,000 penalty to the debtor for each recorded violation.

Finding Debt

Contact the company that owns the expired debt. The debt may still be on your credit report even if it has gone past the statute of limitations in your state, but it doesn't mean that you are obligated to pay it. A charged-off debt will remain on your credit report for seven years. Ask a customer service representative how you would go about paying the debt. Mention that the debt has expired according to the relevant statute of limitations.

Settling or Paying Debt in Full

The company that owns the expired debt will be amenable to a settlement for less than the total amount owed because the firm lacks any legal ability to pursue you for collections. Request that the company provides you with a written agreement to settle the debt. Make an initial offer at 10 percent of the amount owed and move up from there if they refuse.

Paying to Clean Your Credit Report

You may request a "pay for delete" for any expired debt from the company. If you can successfully negotiate this, the company will delete the relevant entry from your credit report in return for a payment. This can instantly improve your credit report. You can even get credit card charge-offs deleted in return for payments. Although companies are contractually obligated to report accurate information to the credit bureaus, the individual companies themselves have a strong incentive to take payments in return for changing a single entry in their databases. Only offer a payment if you have a written agreement from the lender to delete, settle or mark your debt as "paid in full."

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What Questions Should Be Asked of a Debt Management Company?

Sometimes when people feel overwhelmed by their debt they turn to a professional organization such as a debt management company. Getting advice on how to better manage your finances from a professional is comforting to some people, and it is not a bad idea if you do not feel as though you can deal with your debt on your own. But before you entrust you financial well-being to a company that deals in debt management, it is a good idea to ask some questions up front.

Range of Services

According to the Federal Trade Commission, it is helpful to get involved with a debt management company that offers a variety of services that work with the concept of debt management. Try to find companies that offer financial adviser services, debt consolidation options and monthly budget counseling as well. A proactive company that reaches out to the community with debt consolidation seminars or debt management courses show that they understand the importance of educating the consumer and are not just interested in writing a plan to get their commission.

Certifications

It is up to you to do some homework before settling on a debt management company. Some states require that debt management companies be certified financial planners in order to do business. Find out if your state has that requirement by contacting the state attorney general's office, and ask prospective debt management companies if they are certified. There are other certifications that a proactive debt management professional can achieve, such as becoming a certified public accountant or registering with one of the national debt management bureaus, such as the American Association of Debt Management Organizations.

Membership in these organizations is not mandatory by law, but it does show that your debt management representative takes their job seriously enough to stay certified and remain current on the newest debt developments.

Bill Paying Process

According to the Wisdom Journal, which offers advice on financial services, it is important to find out the process a debt management company goes through before you sign an agreement with them. When you create a plan with a debt company, you would deposit your monthly payment in an account designated by the company, and then it would make your payments for you. Ask how long money is held before payments are made, and then get that holding period in writing. If the holding period seems too long then move on to a different debt organization. Making payments to a debt counselor does not help you if the counselor's policies cause late payments to your creditors.

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Good Ways to Establish Credit

You need to have good credit to survive in today's world. Without it you will find it difficult to buy a new car, a home, or even rent an apartment. Employers, too, often check your credit history, and without good credit you may not be able to get certain jobs. The national average credit score is 692, according to credit-rating service Experian. A score below 620 is considered to be questionable and could cause you problems. Fortunately there are ways you can build solid credit history and earn a good credit score.

Basics

Open checking and savings accounts. Having bank accounts shows that you are responsible and stable. According to MSN Money Central, this is something that is often overlooked when people are trying to establish credit. It is also suggested that you check your credit report. Perhaps you have never had credit, but you need to make sure that your credit report is free of errors. If you find problems with your credit history, immediately report the problem to all three credit bureaus---Experian, Equifax, and Trans Union---and request that the erroneous information be removed.

Credit Cards

"Borrowing" someone else's credit is the fastest way to establish credit, if you can do it. Talk to family members who might be willing to help you. Ask someone with a good credit rating to add you as a joint member on one of their credit-card accounts. This gives an immediate boost to your credit, as once you are added your credit rating will reflect the other person's credit history. Be aware that when you do this you become responsible for all debts on the card, and if for any reason the other person stops making payments that will reflect on your credit as well. You can also get a credit card in your own name. Use it responsibly and make regular payments as required on the account, and it will help to build your credit history. You can apply for a major credit card but, if you don't qualify, the Say Good Credit website suggests that you apply for a prepaid credit card, which is reported to the credit bureaus, or a gasoline company credit card.

Loans

Getting credit cards can help you to establish credit.

MSN Money states on its "establishing credit" Website that if you can qualify for a loan, t will help you a lot with establishing your credit. A small car loan for a used car works well, or a personal loan used for any purpose. If you cannot qualify on your own for the loan, see if a parent or other family member will cosign for you. Having a cosigner will allow you to get a larger loan that you would otherwise. Having a credit history that shows a loan is a good way to establish credit, provided you make payments on time.

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How to Reduce Old School Loans

You've long left the hallowed halls of higher learning, but the school loans that put you there are still following you around like an annoying salesman who doesn't know the meaning of the word "no." If you're tired of paying off your old school loans, but don't want to change your identity and go into hiding, explore your to legitimately reduce your student loan debt.

Instructions

1

Find all of your school loan payment information, including all correspondence between you and lenders. Student loans are sold during the life of the loan, so it's important to find the contact information of the current lender.

2

Contact your debt holder. Ask if you qualify for a reduction in your interest rate, Loan.com suggests. Time has passed since you graduated and your credit rating should be higher than when you first took out the loan. If so, it's possible that you could qualify for a new loan at a lower interest rate.

If you can't meet your obligations due to job loss, medical expenses or an emergency, some lenders will agree to a loan modification that reduces your interest rate or changes the terms of the loan so payments will be reduced.

3

Ask your lender if you qualify for an income-based repayment plan, the News & Observer of Raleigh, North Carolina, suggests on its website. If you do, your payment would not increase, but remain at a level that's calculated to be appropriate and affordable based on your family size and income.

4

Fill out any necessary paperwork for your lender and send it back promptly in the requested format. The sooner you send the information, the quicker the old school loan will be reduced.

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Information on Credit Collection

Dealing with credit collection agencies is an experience that no one enjoys. If you find yourself with a large amount of debt that you are unable to pay, the chances are high that a collection agency will be calling you soon. When this happens, it is important to know what to expect and what your rights are.

Collection Tactics

When a company hires a collection agency, the agency will use various tactics to try to get its money from you. Most of the time, the collection agency will start calling you throughout the day. Many collection agencies call multiple times during a given day to try to get in touch. The collection agency will also try to reach you through the mail. It might send statements and other information about trying to collect the debt from you.

Stop Contact

If you are constantly contacted by a debt collection agency, it can be very annoying. If you want to stop the contact, you can use a few different methods. For example, if you hire a lawyer to help you with this process, you can direct all calls to your lawyer. The collection agency can then not contact you at all. You could also ask the collection agency to stop calling you and only communicate through the mail. You should ask them in writing to stop contacting you, so that there is a record of your request.

Consumer Rights

Even though you owe a debt, you do have certain rights when it comes to dealing with debt collectors. Debt collectors do not have the right to harass you in any way. Calling you early in the morning or late at night is against the law. They also cannot use any profane language or threaten you in any way. The debt collector is also not allowed to make any false statements or misrepresent who he is.

Solutions

Even though you may not feel like dealing with a collection agency, you still have to handle your debt in some way. Instead of only ignoring the credit collection agency, you may want to talk to a representative of that agency to see if an arrangement can be made. You might be able to set up a payment plan or negotiate a settlement that will eliminate the collection calls. A willingness to work with the agency can make things a lot easier on you.

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How to Remove Negative Items From Credit Reports

So let's say you got a little careless with the credit cards in the past. Only, even though that period is far in your past, it's still coming back to haunt you. There are steps you can take to mitigate negative credit information and return your credit to a more user-friendly, credit-acceptable state.

Instructions

1

Start by ordering your credit reports. There are three main credit reporting agencies and each one may have a slightly different version of your credit. Experian, Equifax and TransUnion all have your credit report on file. You can either order from each one separately or go with one of the online services which will provide you with all three reports in one form.

2

Go over the reports and look for discrepancies. While you are going through it, make a list of anything that you feel is a negative. At this point, it doesn't really matter whether you did something to deserve the negative mark or not.

3

Fill out a dispute form in regards to anything on those reports that you feel is negative. One of the nice things about being able to go through and dispute negative information is that, if it's not true the agency will remove it. Sometimes, even when it is true, the credit reporting agency will still remove it just because they can't verify it through the company that reported the negative credit information in the first place.

4

Wait for the credit reporting agencies to respond to your disputed charges.

5

Send for new credit reports. It's not free but it doesn't cost all that much either. If you go directly through the credit reporting agencies, depending on where you live, you get a free one every year. The second one will cost you $10 to $15 depending on the agency. Once you get your new reports, you can go back through them to find out which negatives have been removed and which ones haven't.

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Legal Help for Credit Problems

Getting behind on your bills or falling into financial difficulties can cause no end of stress and worry. Whenever you've fallen into debt difficulties and are worried about what to do, you are entitled to certain rights and protections under the law. No two debt situations are identical, so talk to a lawyer or financial adviser if you need assistance with a debt problem or require legal advice.

Credit Reports

If you're having trouble getting approved for a loan and don't know why, one reason may be your credit report. Under the terms of the Fair Credit Reporting Act, or FCRA, all consumers has the right to view what is on their credit reports every year without charge. The Federal Trade Commission has authorized AnnualCreditReport.com to provide consumers with copies of their reports. You can also contact the Federal Trade Commission at 1-877-FTC-HELP for more information.

Debt Collections

Some consumers who fall behind on debt payments may experience calls from debt collectors or other collections agencies. You have specific rights under the terms of the Fair Debt Collections Practices Act when you deal with these collectors. Once part of the law, for example, restricts collectors from calling you before 8 a.m. and after 9 p.m. If the collectors violate this law, you can report them to the Federal Trade Commission and sue them even if you have not suffered any damages.

Discrimination

The Equal Credit Opportunity Act is a law that prohibits lenders from denying consumers credit based on factors such as sex, race, religion or national origin. This law prevents creditors from using these factors as part of the credit approval process. Typically, this prohibits creditors from, for example, asking about your race on a credit card application. If you suspect you've been denied credit because of illegal discrimination, you can file a complaint with the Federal Trade Commission.

Bankruptcy

The last resort for some consumers who have financial difficulties is bankruptcy. When you file for bankruptcy, you are protected from your creditors. The creditors have to go through the bankruptcy court to try to collect on any claims they have against you. Though filing bankruptcy damages your ability to get new credit, it is an option that can allow you to get out from overwhelming debts.

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How to Remove Defaults From Your Credit Report

If a financial institution or business extends credit to you, but you fail to make the required payments, then you are in default. Many people have defaulted on loans and credit cards due to a financial hardship occurring in their life. Unfortunately, creditors normally report this type of negative information to the credit bureaus. Having defaults on your credit history can drastically damage your creditworthiness. However, there is a way to properly remove a default from your credit report.

Instructions

1

Review your credit report. You should order a copy of your credit report from the major credit bureaus--Experian, TransUnion and Equifax. Carefully review each credit report and make a note of the defaults that appear on each report.

2

Contact the creditor to bring your account current. Try to negotiate a reasonable payment plan or settlement offer with the creditor. Be sure to get the payment plan or settlement offer in writing. In addition, verify that the creditor will update your account status with the credit bureaus as soon as you bring your account current.

3

Submit your payments in a timely manner. If you are able to negotiate a payment plan with the creditor, it is important that you stay current on your account. As long as you make the required monthly payments, your account will continue to remain in good standing, and this positive information will appear on your credit report.

4

Confirm that your account information has been updated with the credit bureaus. Your creditor should report your positive payment history each month to at least one of the credit bureaus. If your credit report has not been recently updated, you should contact the creditor as soon as possible about this matter. By law, creditors are required to report accurate and current information to the credit bureaus in a timely manner.

5

Submit a dispute form to the appropriate credit bureau. If your credit report still shows that your account is in default, you should dispute this inaccurate information with the credit bureau. When you submit a formal dispute form with the credit bureau, they will contact the creditor and validate your account status and payment information. As a result, the credit bureau will update your credit report with the correct information.

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What Is a VantageScore & a FICO Score?

A VantageScore and a FICO score are two different types of credit scores that indicate how responsible a person is with credit. These scores are important as lenders and others use the scores to make various financial decisions regarding a consumer. While the VantageScore and FICO scores are similar, they are not identical. Each score uses different scoring methods and its own range of scores.

Fico Score

The FICO score has been in use longer than the VantageScore and most lenders still use this score. The FICO score comes from the Fair Isaac Company and uses a scoring system from 300 to 850. To qualify for the best mortgage loan products, many lenders require a score of 740. To determine the FICO score, the Fair Isaac Company looks at five different factors: payment history, amounts owed, length of credit history, types of credit used and new credit. Of these factors, payment history and amounts owed are by far the most important, representing 35 percent and 30 percent of the total score, respectively.

VantageScore

The VantageScore is a newer form of credit scoring developed by the three major credit reporting agencies: Experian, TransUnion and Equifax. The VantageScore runs from 501 to 990, which also translates into a letter grade. A VantageScore in the 500s is an F, in the 600s is a D, in the 700s is a C, in the 800s is a B and from 900 to 990 is an A which is the best. The VantageScore looks at six different factors when creating a score: payment history, utilization, balances, depth of credit, recent credit and available credit. The VantageScore's most important factors are payment history and utilization, which represent 32 percent and 23 percent of the total score, respectively.

Score Importance

Both the VantageScore and the FICO score are important to consumers. Banks and credit unions use these scores to determine whether or not to offer a consumer mortgage or auto loans, credit cards and other loan products. In addition to simply approving or denying a loan, lenders offer more favorable loan terms to those with better scores. In addition to lenders, some insurance companies and employers use these scores to set rates for insurance products or determine whether or not to make a job offer to an applicant.

Improving Scores

While the FICO and VantageScore use different factors to determine a person's credit score, the formulas are close enough to allow consumers to take steps that will result in increases in both scores. As each score weighs payment history as the most important factor, this area is where a consumer should concentrate to improve her credit score the most. Paying down debt is also important as it reduces the total amount owed and increases available credit, which will also increase both credit scores.

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Financial Credit Counseling

Financial credit counseling comes in different forms, depending on the severity of your debt management situation. Professional credit counselors can help with mild to moderate problems, while court-mandated financial counseling is required for issues bad enough to drive you into bankruptcy. Counseling is usually voluntary, but it is legally required in certain circumstances.

Voluntary Credit Counseling

Voluntary credit counseling is available through non-profit firms to anyone having financial problems. Credit counseling companies have trained professionals to talk to you about your debt management issues and help you formulate a plan. Sometimes counselors recommend budgeting or financial classes, or they may suggest a formal debt repayment plan for situations that are beyond simple solutions. Credit counselors should not get commissions for pushing you to use certain services, and legitimate firms should get the bulk of their financing from creditors rather than clients, according to the Better Business Bureau (BBB).

Pre-Bankruptcy Counseling

Anyone wishing to declare bankruptcy must go through financial credit counseling with six months before filing her case, according to the Federal Trade Commission (FTC). You must choose a government-approved counseling firm that supplies a completion certificate for the court. The 90-minute counseling session usually costs about $50, but government-approved providers must waive the cost if you cannot afford it. It focuses on bankruptcy alternatives to ensure you know your options before proceeding with a court action that badly damages your credit rating.

Post-Bankruptcy Counseling

The law requires you to go through financial counseling before your bankruptcy case is complete to prepare you for the credit-rebuilding process. You can only file for Chapter 7 bankruptcy once every eight years, so the counseling helps you avoid reaching a desperate point again. The FTC advises that post-bankruptcy financial counseling last about two hours, with fees ranging between $50 and $100. Government approved counselors must waive the fee if you cannot pay. The counseling firm provides a certificate for the course so your bankruptcy can be finalized.

Considerations

Not all credit counseling firms are legitimate, even if they have non-profit status. The BBB advises finding a financial credit counselor through the the National Foundation for Credit Counseling or Association of Independent Consumer Credit Counseling Agencies when you are seeking voluntary help. Members of these professional groups adhere to certain quality standards. Ask about the counselors' training and the firm's licensure and request a full disclosure of fees before agreeing to work with a company. Be suspicious of credit counselors who make exaggerated promises, like total elimination of your debt within an unrealistic time frame.

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How to Qualify for Student Loans With Bad Credit

Acquiring student loans with bad credit is actually easier than it seems. The majority of the federal funding provided to students in need are offered without any credit checks. This may come as a surprise to some students. However, there are restrictions when applying for credit, so be sure to understand the process when applying for federal loans.

Instructions

How to Qualify for Student Loans With Bad Credit

1

Fill out the FAFSA form. This document (which stands for Free Application for Federal Student Aid) is required for all those seeking federal aid for undergraduate or graduate school. Check the Resources bar for a link to this form. Before you go in to fill out the form, make sure you have the following: social security number and all personal information, your previous year's tax return, the school codes where you hope to apply and your parents' information (if you are underage).

2

Apply for a Stafford Loan. These loans are the most commonly offered by the federal government. Check the resources bar for the application. These loans are provided by the government. The government bankrolls both the principal amount financed (and pays the school) and the interest payments. In subsidized Stafford loans, the government covers the interest that accrues while you are in school--and it never needs to be repaid. In unsubsidized Stafford loans, the interest is held in reserve, and then you must pay after graduation. Stafford loans do not require a credit check.

3

Apply for a Perkins loan. These loans are different from Stafford loans in that they are based primarily on need. Those who qualify for Perkins loans usually have little to no other means for paying for school. See a link in Resources. These loans are often offered, interest-free, in the amounts of $1,000 through $4,000. The information gleaned from the FAFSA will determine your eligibility for these loans. Perkins loans do not require a credit check.

4

Apply for a federal Pell Grant. These funds are again awarded based on need and academic achievement. The only difference is that these grants need not be repaid. The FAFSA and your academic record will determine your eligibility. The application for these grants do not require a credit check.

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How to Get Rid of a Bad Credit History

A bad credit history affects your ability to obtain lines of credit. Applications will be declined, and the more this happens, the worse your credit history will get. Knowing whats in your credit history report is important. Obtain a copy of your credit report for free, once a year, from the AnnualCreditReport Web site. This is the only official Web site sponsored by the three credit-reporting bureaus: Equifax, Experian and TransUnion. Getting your credit report is the start of getting rid of a bad credit history.

Instructions

1

Request copies of your credit report online from the AnnualCreditReport Web site (see Resources). Its simple, fast, and you can view the report online. Choose the state you reside in from the drop-down menu and click Request Report. Enter your details accurately in the online application form. Type the alphanumeric security code into the box at the bottom of the form. Click Submit. Select the reports you want: Experian, Equifax or TransUnion. You also can choose all three; they may be different. Click Submit. Your identity will be verified. Click the link to open your credit reports. Access is immediate, so you can start to see ways to get rid of a bad credit history.

2

Print a copy of each credit file. Compare them for differences. Make notes. Check for errors. Highlight them. Detail the correct information. Contact the credit reporting bureau that shows an error in writing (see Resources). Credit-reporting bureaus aim to correct errors in 30 days. This is the fastest way to start getting rid of a bad credit history.

3

Check the credit file for details about late or missed payments. Payment histories are recorded by each lender and reported to the credit bureaus. Late or missed payments affect your credit history. Pay off accounts in arrears quickly. Ensure that future payments are made on time. Once any arrears are cleared, and you've kept up timely payments for five or six months, your credit history will improve.

4

Ensure that your utility bills are paid on time. Electricity, gas, water and telephone companies report late payments, and this affects your credit history. Set up automatic bank payments. Having a clean utility payment history will help you get rid of a bad credit history.

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