Credit Managing

Source of Articles is from - ezinearticles

Most of the people have debts or credits in varying forms such as mortgage loans, student loans, and auto loans or loan in the form of credit card balance to be paid by him. Availing loan from financial institutions has become some thing that cannot be avoided by a person these days. Borrowing money from financial institutions in times of need is not a bad thing until you make default in repayment of the loan.But having too much debt may spoil a person's life by causing never ending financial problems to the borrower. In such case you will have to analyse your financial security by finding out your debt to income ratio.

Managing your credit - Is it a difficult task?

Finding out your debt to income ratio is known as the best method to understand whether you are overloaded with credits beyond your repayment capacity. While calculating the debt to income ratio includes both good and bad debts of yours to get the correct picture of your present financial condition.

If you want to calculate the credit overload of your bad debts just add up the total of the amount that you are paying for repayment of your bad credits to your monthly income. Then multiply the number that you are getting from this calculation with hundred to find out the percentage. The result will be your debt to income ratio. Now you will be able to know the exact percentage of your monthly income that you are spending to repay a bad debt. If the debt to income ratio exceeds 10%, you will have to do some thing to manage your credit as it is an indication to the fact that you are over loaded with credits.

Managing total debt

The same method of calculation can be used to analyse your total debt picture by including both good and bad credits. Add up all your payments including the credit card payments, student loans, rent, child support or alimony etc while you calculate the ratio of your total credit position.

If the final out put is below 30% you have nothing to worry about your financial position and if it exceeds 40% you should do some thing to manage your credits that goes beyond your repayment capacity.

Credit Card Debt Management - Negotiating Your Way to Financial Freedom

Credit card negotiation is something that the average credit card holder can and should do on a regular basis. Sure, there are numerous financial planners, tax lawyers, and debt consolidation companies that will gladly handle the negotiations for you; but if the idea is to put yourself in a better financial position, why would you pay someone to do what you can do yourself? This article explains how credit card companies make their money, why they are willing to negotiate, when to negotiate, and how to negotiate a better deal on your credit cards. There is even a bit of a script included, in case you are unsure of what to say in your first negotiation.

How the Credit Card Companies Make Money

A credit card gives you the ability to spend money that is not yours. Of course, you have to pay it back, and unless you pay off the entire balance within the first billing cycle, you will pay interest on the amount of your debt. That interest is one of the primary sources of revenue for credit card companies, but it is by no means the only source.

According to CreditCards.com, the credit card industry took in a whopping $43 billion in late payment fees, over-limit fees, and balance transfer fees in 2004. That is enough to support the entire industry, though you will never hear the CEO of a major credit card company admit it.

Let's talk about the people who do not incur late fees, over-limit fees, or balance transfer fees, and who keep their accounts in good standing. They usually have above average credit limits and below average interest rates. Why do credit card companies treat them so well if they are making so little money from these people? If they pay their balances in full each month, the credit card companies don't even get to collect finance charges; the credit card companies make zero from these folks, right? Wrong!

When a business sets up a merchant account, which gives them the ability to accept credit cards, they sign a contract allowing the credit card companies to collect a small fee for each transaction. This fee generally ranges from five cents to half a dollar; but when you consider how many millions of credit card transactions are executed each day, you can see that it adds up! The fact that credit card companies have several methods of generating revenue is exactly what gives you the opportunity to negotiate with them. They are not one-dimensional with their finances, and neither should you be.

Why Credit Card Companies Will Negotiate

Credit card companies make scads of money from their worst customers through late-payment fees and over-limit fees. As we now can see, their best means to make money from their best customers is to entice those customers to use their cards more often. A savvy consumer can use that fact to his or her advantage.

When to Negotiate

First, be sure your account is in good standing. To be in good standing, your account should meet these criteria:

• No late payments in the past six months

• No over-limit penalties in the past six months

• The account must be open for more than six months (obviously)

If you are not there yet, get there. If your most recent payment was a late one, don't get discouraged. Buckle down, get organized, and start making those payments on time. If you have to wait six months before you can begin negotiating, remember that financial success is an endurance race, not a sprint.

Once your account is in good standing, you are ready to call up your credit card company, unless you have too recently negotiated a new deal. Here again, the rule of thumb is six months between negotiations. You may be able to get away with once every three months with some credit card companies, but do not call more often than that. If you call too frequently, the best that could happen is nothing, so don't waste your time. Simply make a note in your calendar or planner to call your credit card companies twice a year.

How to Negotiate Your Credit Card Terms

Negotiating with your credit card company for better terms is easy, and there is no reason why every cardholder in good standing does not do this regularly. Even if you are neck deep in credit card debt, you can get a better deal as long as you make your payments on time and do not spend over your limit.

To begin, you will need your most recent credit card statement and your credit card number. Call the customer service number and push whatever buttons you have to push to speak to a human. Now, here is your script, starring "You" and the credit card company customer service "Rep."

Rep: Hello, thanks for calling Acme Card Services, how can I help you today?

You: Hi. I was just reviewing my account, and I think my APR (Annual Percentage Rate) is a bit high. I would like to have it adjusted, please.At this point, either the rep will begin reviewing your account, or he will transfer your call to the appropriate department. In any case, you will likely be placed on hold once or twice. It is a good idea to have twenty to thirty minutes free when you call.

Rep: Yes, I see you have been maintaining your account well, so we should be able to help you.The rep will then make you an offer. Is it the best offer you can get? Probably not. Be prepared to make a counter-offer.

You: Hmm, 15.9 percent, you say? I was really looking for about 13.9 percent. Is that possible?Your counter-offer should be aggressive, but not ridiculous. You may have a target number in mind before you dial the phone, or you may take whatever number the rep gives you and drop it by one or two percentage points. The worst-case scenario is that you will end up with the rep's first offer; more likely, you will get a compromise offer that you will happily accept.

This simple, twice yearly procedure can save you several thousands of dollars in interest over the years. Knowing how the credit card companies make money helps you understand why they can give you a better deal. The script above, though simple in form, is all you need. It is your financial future. Don't squander it - pick up the phone and start bending it to your advantage!

Credit Card Application - How To Get Approved For A Credit Card

Credit card applications can feel like a shot in the dark, what enables a consumer to get approved for a credit card? There are several factors that will prevent a person from getting a plastic money. Remember that companies want to approve you, after all, you'd be their customer. Don't give them any reasons you don't have to turn you away.

The first thing that some people overlook is age. To get a card you must be at least 18 years old and either a full time student or have a source of steady income. When a credit card company invests in you they're doing so with the belief that you have the maturity to operate a card and not abuse it.

But what is maturity? To a lender, maturity is stability and proof that you pay your bills on time. Paying bills on time, even for a few months, can dramatically improve your credit history and your chances of getting a card. Not doing so can be fatal to any credit card application. Holding down the same job and residence is another important factor. Stability is also seen as maturity and reinforces your image to the company that your income will be secure.

Depending on how well you do paying your bills on time and your income level, some cards maybe out of your reach. But there are cards that are within your reach and establishing your ability to use those plastic money responsibly.

Using only 50% of the line of credit dramatically improves your credit score and thus your ability to get ones that offer more options and rewards. However, having a large number of credit cards that are constantly at their credit limit is counter productive as it will lower your credit rating. Remember that the key word here is responsibly.

In applying for a card you have to assume that every question they ask will be verified. The issuer is giving you the opportunity to run up a debt as high as your credit limit. They want to make sure that you're a sound investment. All the questions need to be answered truthfully and completely. Leave nothing blank. At the very least you own it to the lender that's going to run the checks on your financial background.

In dire cases you can turn to a guarantor for your card. In essence this means using someone else's credit to allow you to use your own card and build up your credit history. However, there might be times when even that option is closed, and for those individuals, there are secured credit cards. Secured cards operate like normal cards except they require an upfront deposit.

Armed with this knowledge you'll be better able to understand how the credit card application process works and better able to select the plastic money within your reach and understand how to extend your reach.