I Am Trying to Rebuild My Credit

A low credit score -- generally defined as a FICO score below 640, according to The Credit Scoring Site -- can prevent you from obtaining a job, getting approved for a standard credit card, finding approval for home or car loans or even signing up for cellular phone, cable television or utility services. Raising your bad credit score is not a quick or easy process, but it is crucial to improving your financial future.

Pay Down Your Credit Card Debt

The FICO credit rating algorithm, which all three major credit bureaus use to some extent, factors your debt-to-available-credit ratio into your credit score. In fact, this category, officially known as "amounts owed," accounts for 30 percent of your FICO score. Having high balances on your credit cards raises this ratio, thereby lowering your credit score. Paying down your credit card debt will lower that ratio, improving your standing with the credit scoring algorithm and raising your score.

Make Timely Payments

Payment history accounts for the largest portion of your FICO score, at 35 percent. Therefore, it is essential for you to make timely payments on your bills, especially those directly tied to your credit profile, such as credit cards, medical bills and mortgage payments. You cannot do anything to erase past late payments (they stay on your report for at least seven years), but making timely payments will keep you from further lowering your FICO score.

Keep Those Credit Cards Open

It may seem like common sense to close credit cards after you have paid them off to avoid the temptation to spend, but doing so will lower your credit score, according to Bankrate.com, a consumer finance advisory website. The FICO algorithm factors in the amount of credit a person has available, assigning higher scores to those with more credit. Canceling your credit cards will lower your available credit, dropping your FICO score.

Use Credit Cards Responsibly

Although it may seem prudent to stop using credit cards entirely, completely foregoing credit card use will not improve your credit score. Instead, you should use your cards sparingly, making small purchases you can easily afford. An article in MSN Money recommends using a credit card to buy groceries and gas, and then paying off the balance before the due date. Doing this will show timely payments and positive credit activity, which will help your FICO score. Additionally, you will avoid costly interest charges by paying off your balance early.

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Average Debt Ratio

The average debt ratio across the country does not tell the whole story of the larger debt crisis facing the United States in 2011. Debt impacts different economic groups differently. In some cases, the wealthiest segments of the population may be less affected by debt than those with lower incomes. College graduates are particularly hard hit, because a person's total debt when leaving college often is greater than an average starting salary.

Total Consumer Debt Ratio

The Federal Reserve reported the average total household debt service ratio (DSR) in the United States in 2010 was 11.9 percent, according to the Money-Zine website. This means most consumers have debts -- including mortgages, car payments and lines of credit -- that occupy about 12 percent of their total income. Most financial institutions consider a debt ratio higher than 30 percent a risk in terms of consumers' ability to repay personal loans and other extensions of credit, according to Bankrate's website.

Financial Obligations Ratio

The financial obligations ratio (FOR) includes a broader spectrum of consumer debts including home insurance, property taxes and car lease payments. As of December 2010, the FOR ratio for homeowners across the country stood at 15.27 percent for homeowners and 23.99 percent for renters according to Money-Zine's website. Nationally, the average FOR ratio for all groups during this period was 16.78 percent. The data indicate renters pay a larger portion of income toward total debts than homeowners across the country.

Credit Card Debt Per Household

Credit card debt plays a large part in the total debt of households across the United States. According to debt management firm Consolidated Credit Counseling Services, as of May 2010, the average household carried $15,788 in credit card debt. About 40 percent of credit card holders across the country carried an average total credit card debt of less than $1,000, while about 15 percent carried credit card balances higher than the national average. The average consumer in the United States has access to over $19,000 in credit card funds, according to Consolidated Credit Counseling Services.

College Student Debt

The rising costs of higher education have led to a spike in the average debt college students carry after graduation. Consolidated Credit Card Services reports the average credit card debt for undergraduates across the country was $3,173 as of April 2009. This combines with the average total student loan debt of $24,000 in 2009, according to CNN, to give college students an average total debt of close to $30,000 at graduation. This total debt often eclipses the starting salary of entry-level positions and gives graduates a negative net worth. This makes it increasingly difficult to secure new credit to purchase items such as a car or home loan.

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How to Register Credit Cards

Because credit cards are usually sent to customers through the mail, many companies try to curb security problems and identity theft by setting up procedures consumers have to follow to register the card with the credit card company. You will not be able to use the credit card unless you register the card using proper procedures.

Instructions

1

Find the sticker on the credit card. The sticker will be located on either the front or back of the card. Typically, a website or phone number will be written on the sticker.

2

Call the number on the sticker or go to the website listed. Remove the sticker.

3

Enter any information as prompted at the website or in the phone call. This could be information such as a pin number, your social security number or the account number for the credit card.

4

Use the card, even for a small purchase. This lets the credit card company know that the card is active.

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How to Raise Your Credit Score by 20 Points

Although 20 points doesn't seem like much, it can mean a lot when it comes to your credit score. You wouldn't know it from the consumer side, but there is a world of difference between a score of 580 and 600. Your options open up when you increase your score by 20 points, and they close up when your score decreases. Read this article and find out how to increase your score by 20 points. Take your financial future into your hands and watch the doors begin to swing open.

Instructions

1

Review your credit report. There are several websites that offer free credit reports and credit scores (see Resources). Find out your credit score and look for any mistakes that might be in your credit report. Dispute the validity of old debts by writing directly to the agency or selecting "invalid" on the online platforms. It never hurts to try to get them removed, even if you aren't sure whether they're actually valid. If the credit reporting companies cannot validate the debt within 30 days, the items will automatically be removed.

2

Close any open accounts that don't have outstanding balances. Most accountants will tell you you should never have more than four accounts open in your name. Revolving accounts are those that get charged up and then paid down and then charged up again. It's all right to have different types of debt, such as medical bills and student loans, but too many open revolving accounts will pull your score down.

3

Pay more than the minimum payment on your credit cards. If you pay more than the minimum, even if it's just $1 more, you will reap the benefits. The credit card company will report that you are paying more than the minimum and this will raise your score within 30 days from the date your payment posts.

4

Stop applying for credit. Your score will increase dramatically as time goes by and steps 1 to 3 are followed routinely. Two things that can bring your credit down are applying for more lines of credit than you need and too many inquiries into your credit. Make sure you don't let this happen and your good habits will raise your score in no time.

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Florida Statute of Limitations on Promissory Notes

The statute of limitations is a legal principle that establishes a designated period of time within which lawsuits must be filed in court. Florida, like other states, has provided designated limitations periods for the filing of various legal causes of action, for example, negligence, fraud and breach of contract.

Promissory Note

A promissory note is a written contract in which the promissor/debtor agrees to pay back to the promissee/lender the principal amount loaned plus specified interest. Many promissory notes contain a repayment schedule as well as a provision that the entire amount is due and payable upon demand if the promissor misses one of the scheduled payments. In most cases, upon the occurrence of the event that triggers a default, the promissee will notify the promissor in writing that he has breached the terms of the contract.

Florida Statute Of Limitations

Since a promissory note is a binding legal agreement, the applicable statute of limitations period would be that provided by Florida law for breach of contract actions. 95.11(2)(b) of the Florida Code establishes a five-year statute of limitations period for actions to recover on a written contract. The statute of limitations period begins on the date the cause of action accrued, which for a promissory note would be the date on which the contract was breached. The statute of limitations period ends on the date a plaintiff files his action in court.

Significance of "Time-Barred"

An action by a plaintiff for breach of the terms and conditions of a promissory note that is filed in court beyond the five-year statute of limitations period is characterized as "time-barred" and is subject to dismissal by the court.

Effect of the Defense Raised

A lawsuit filed in a Florida court that is beyond the five-year limitations period established for breach of promissory note actions is tolled by operation of the statute of limitations. If the statute of limitations defense is timely and properly raised by a defendant, the court must dismiss the lawsuit. A plaintiff whose promissory note action is dismissed has no further legal recourse against the defendant.

Failure to Raise the Defense

It is incumbent upon a defendant who is sued for breach of the terms of a promissory note to affirmatively raise the statute of limitations defense to the action. The Florida Rules of Civil Procedure require a defendant to raise the statute of limitations defense in his Answer to the defendant's Complaint when it is filed in court. If a defendant does not properly and timely raise the statute of limitations issue, he will be deemed to have waived it.

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Can Collection Agencies Find Out How Much Money You Have in the Bank?

Federal law limits collection agencies from using certain tactics against you as they attempt to collect debts. A collection agency won't legally know how much you have in your bank account unless you volunteer that information or the agency wins a lawsuit against you. If a creditor, or that creditor's collection agency, believes the amount of your debt is worth suing you for, then money in your bank account can be seized through court order.

Collection Attempts

It's against federal law for a creditor or debt collector to call your bank asking about your bank account or telling your bank that you owe a debt. Debt collectors are only allowed to discuss your debt with you, your spouse, your attorney or your original creditor. If you have an attorney representing you regarding a debt, the debt collector has to direct collection letters and phone calls to your attorney, not you. A debt collector can only contact your bank, or any other third party, one time and only to ask for your address, phone number or where you work.

Bank Information

One legal way that a collection agency can find details about your bank account is if you use a debit card or check to make a payment to the collection agency. Another legal way is if you set up a payment plan with the collection agency using automatic withdrawals from your bank account. Having your account information doesn't tell a collection agency how much you have in your bank account, but it does make your account more susceptible to seizure if you default on your payments and the collection agency successfully wins a civil judgment against you.

Judgment Required

A collection agency can only seize money from your bank account against your will with a civil judgment. A civil judgment is a court order that awards the collection agency an amount the agency successfully sued you for. The court order instructs your bank to hand over funds in your bank account to the collection agency to satisfy the judgment. Unfortunately, a collection agency will know how much you have in your bank account by this method after it takes possession of your money.

Fraud Protection

Sometimes your first contact with a collection agent will be by phone. You're under no obligation to give out your checking account or debit card information over the phone, especially if you don't know the caller or the debt in question. Protect your bank information unless you are sure you're talking with a legitimate debt collector, you recognize the debt and you intend to pay (see Resources). The Federal Deposit Insurance Corporation (FDIC) warns of scam artists who prey on people who are behind on their bills.

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Nonpayment on Credit Card & Collection Payment Problems

When you run into a default situation with credit card companies, they have a variety of options in trying to get your money. Frequently, this debt is sold to credit collection companies, and their methods of getting your payment run the gamut from persistent phone calls and letters to legal action. You may be evading these collection agencies, but once you reconnect, you can run into a variety of collection payment problems.

Nonpayment

Nonpayment usually goes to the collection agency after the credit card agency has exhausted all means to collect payments. The amount of time this takes to occur varies, and after a credit card company hasn't seen a payment from you, the account balance on that credit card appears as zero on your credit report, and the debt officially belongs to the collection company.

Persistent Contact

If you evade the collection company for months and then try to reconnect to start paying them back, be prepared to be asked for all of your current contact information, including phone number and address. Moving forward, if you default on any agreed-upon payments, you will hear from the company on a regular basis.

Pressure to Make a Deal

Collection companies often will provide you a deal--perhaps if you agree to pay a certain percentage of the debt up front, you can pay less on the debt in the long run. This is a sound decision if you have the money, but if you don't, you could run into more problems. If you question whether you have the money for the deal, agree on smaller monthly payments. Be advised, however, that these collection companies can be very persuasive in sealing these types of deals.

Direct Withdrawals

If you do decide to settle on a deal, the company will likely ask for your checking information so that they can directly take the money from your account, either in one lump sum or a monthly amount, depending on the agreement. Make note of these transactions and be sure there is money in your account at the time of withdrawal.

Considerations

Even though you could run into payment problems with collection companies, it really is best to make a deal with them if you have the money. Not only can you start to clean up your credit score, you can avoid legal problems and lift the burden of owing somebody money. Depending on the state, you also can avoid having your earnings garnished.

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