Identity theft is fast becoming the most preferred way to take out money from other people’s accounts. Identity thieves use your personal identifying information (PII) to steal money. There are various ways in which identity theft can occur. So it’s better to use one’s credit cards and especially the debit cards cautiously. However, there are ways to recover your credit after identity theft.

The ways to repair credit after identity theft are:

1. Pull your credit report: Pull a copy of your credit report from Equifax, Experian and TransUnion. Check if all the information on the report is correct.

2. Dispute improper listings: Note all the improper listings that you think has appeared as a result of identity theft. Dispute these items with the credit bureaus.

3. Close accounts: Close all those accounts which you think the thieves may have used or tampered with.

4. Keep track of transactions: Keep a track of all the new transactions. Check the statements on these accounts every month.
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From February 22, 2010, some new credit card rules have come into action. These rules will change the working of the financial or rather the credit card market. Life will become easier as the problems regarding debt and credit will eventually lessen. There has been much agitation from summer, 2009 to introduce new rules on credit cards. Some rules like - the credit card companies cannot increase interest rates on existing balance, a notice is to be served before 45 days of changing credit card terms and interests had been introduced in December, 2009. On 22nd February, the rule for saving young college goers from unnecessary debt problems have been been made effective.

The law for those under 21

This law requires that colleges should educate the students about credit cards, its usage and the related problems. It also mentions that this education should include debt counseling programs, to help students deal with the card problems in a much easier way.
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Credit card or plastic money is a card issued to its holder entitling him/her to shop for goods based on the holder’s agreement to pay for the goods and services. It is quite convenient to use credit cards. But before one can opt for any particular credit card, one needs to know how a credit card operates, and compare all the available credit cards.

Taking a credit card for the first time

It is quite difficult to get a credit card for the first time. There are very few credit card companies who easily issue a credit card to a first timer, without any credit history at all. However companies readily issue credit cards to college students. A person should check out the details of the company and card before opting for the card. Other than students, people who have responsibly handled their savings and checking accounts can apply for a credit card with that bank.

The 9 features you should know about credit cards
A credit card consists of various features which are:

1. Credit line - This is the maximum pre-specified amount of credit allowed by the credit card company to the borrower on the card. It is the maximum amount that a borrower can draw when needed. However if one acquires good credit history with time, the lender can increase the credit limit.

2. Account opening fee - A fee is charged by the creditor for processing an account, or opening an account.
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Credit score is the basis of a person’s creditworthiness. Maintaining good credit score is important for getting jobs, loans for various purposes like buying a house, insurances etc. However to repair credit score one should not always go to the credit repair companies. Most of the consumers who have opted for such credit repair offers have ultimately lost a great deal of money with no observable boost in the credit score.

How to avoid credit repair scams

There are various ways through which you can avoid a company scamming rather than helping you. These are as follows:

1. Check out the companies reports with the Better Business Bureau at www.welcome.bbg.org.
2. Don’t ever opt for the company which doesn’t give you a copy of your Consumer Rights.
3. Don’t trust a company which asks you not to contact the credit bureau directly.
4. You shouldn’t trust a company which doesn’t mention a consumer’s legal rights, what course to take if you are not satisfied with the company.
5. A consumer should always know that any information that is right information about credit cannot be removed from the report to boost the score. Therefore if a company promises that they can remove any such information don’t trust them.
6. If you aren’t given a copy of the contract before you can sign it, don’t trust the company.

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Are you getting into debt? Are you unable to find a way by which you can repay your debts and give a boost to your credit score? Debt arbitration is a good process to get this problem solved. As the name suggests, debt arbitration is done with the help of a third party acting as the arbitrator. It is often helpful for people who are stuck in huge debts and are struggling to be debt free.

What is debt arbitration?

Basically, arbitration is a process used to settle disputes outside courts. In this process the two parties (debtors and Creditors) place their cases in front of a third party. The third party delivers the decision based on the facts, which both the parties must follow. This third party is the arbitrator. This process helps a debtor to settle the debt with the creditor.

The debt arbitrator will help the debtor with a repayment plan which will be acceptable by both the parties. An arbitrator works on behalf of the debtor. A good arbitrator negotiates with the creditor to reduce the debt amount by 40-60% so that the debtor can pay it.

You must realize that a creditor wants his money back and he also does not want to visit the court for collecting money. Hence, even if he gets half of the money after negotiation he will not deny it. The arbitrator works on this point and helps the debtor to repay the debt within a considerable period of time.

Arbitration could be sought by the debtors to reduce any kind of debt, such as medical bills, utility bills, lawsuits, invoices, lien and many more.

Tips towards successful debt arbitration

Here are some suggestions you can follow:

• Select the arbitrator with utmost care: First of all you must be careful regarding the arbitrator you select. Do not believe in anybody who makes false promises and coaxes you into believing that arbitration is easy.

• No guarantee of debt reduction: Do not give away all the information at one go. In reality there is no guarantee that a creditor will agree to reduce the debt. You and the arbitrator can try to do it and it will depend on the negotiation skills of the arbitrator as to how much your debt can be reduced.
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The new credit card rules have been enforced with the aim to relieve consumers from the stress of dealing with sudden rise in interest rates, penalty charges and unscrupulous billing practices of credit card issuers. The reformed rules will help the consumers to manage their credit card bills comfortably and avoid going into default on their accounts. Some of them have already come into effect and close to providing desired results.

Credit card rules that have been implemented

The Federal Reserve Board, the National Credit Union Administration and the Office of Thrift Supervision have voted on the Credit Reform Bill. President Obama has signed the Bill transforming it into Credit Card Act and some of its provisions have already come into effect since 20th of August. There are various reformative measures incorporated in the Credit Card Act which will take effect at different times in 2009. Portions of the Credit Card Act, which was slated for a February 2010 implementation, might get implemented in December, 2009. The Members of the House of Financial Services Committee proposed these to be implemented faster since the major credit card companies are increasing the APR.

• Arbitrary increase in interest rate is stopped

From now on credit card companies have to follow certain restrictions on arbitrary increase in interest rates on the existing balances of the card holders. The banks have to wait for 60 days from the date of last payment before they can charge any kind of late penalty, in case the debtor is unable to pay the debt on time. The late penalty in the form of increased rate of interest could only be charged after the completion of 60 days. Hence, this increases the time period for the debtors to arrange for the minimum payment to be made on a credit card debt.

• 45 days notice before changing contract terms

The credit card (cc) companies have to give the card holders a notice 45 days ahead of making any kind of changes to the existing contract. The cc companies must also mail the bills 21 days prior to the due date of payment. Previously, the creditors were required to send a notice of alteration to the debtors 30 days ahead of making the changes and mail the bills 14 days prior to the due date. But after the implementation of the new law, this time period has increased making it beneficial to the card holders.

• Consumers have the right to accept or reject changes

The consumers will have the right to accept or reject the changes in the contract made by the creditor. However, if they reject it, they must pay the debt amount with the same rate of interest within 5 years and the minimum payment might increase. So, on one hand the debtors have the right to take decisions on how to repay the debt, while on the other hand this might end up in increasing the minimum payment for them. Moreover, the new rule states that the minimum balance cannot be increased more than 50%. Now if the time frame is not sufficient for the debtor to repay the amount, then it will depend on the creditor to increase the time frame. Hence, before canceling any changes you should keep in mind this condition associated to the rule.

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Have you got flooded with unwanted credit cards? Have you found listings in your credit report about which you are not aware of? Are you finding your bank accounts being accessed by someone else other than you? Then it is high time you must realize that, there is a thief around stealing your identity and using it to his benefits. The term ‘identity theft’ actually refers to fraud. It means that a person is assuming someone else’s identity to derive monetary and other benefits. It is considered a criminal offence all around the world.

How do you know that your id has been stolen?

There are different instances which indicate towards id theft. They are:

• Listing debts which you do not owe - You have pulled out a credit report and you find that there are debt listings made against your name. The listings are of those debts, which you have never owed. This is a typical instance of identity theft.

• Receive bills for purchases not made- You may receive bills for purchases you have never made. In such an event you know that your identity has been stolen.

• New accounts in your name- It has been found many times that the identity thief has opened a new account using your personal information.

• Loan denied or call received from CA- You may also be denied a loan, or you might receive a call from a collection agency asking to repay the debt. Whenever you find such things happening with you, you know that you are a victim of identity theft.

It is not difficult to take out loans, open new bank accounts, access existing bank accounts, purchase cars, get insurance and perform many other activities with your social security number, date of birth and your name. Hence, you must be extremely careful while handling things which might contain all these personal information. Your creditworthiness depends on your credit report and score, which get badly affected by such instances. So be aware of each and every activity related to your finance.

What to do after you become a victim of identity theft?

Whenever you find out that you have become a victim of identity theft, you must take certain measures as soon as possible. The measures are:

Put a fraud alert

The first thing you need to do after you realize your identity has been stolen, is to place a fraud alert on your credit report. Placing a fraud alert on your credit report will stop further activities on the part of the thief. You need to call any one of the credit reporting agencies on their toll free fraud number (TransUnion: 1-800-680-7289) and ask them to put a fraud alert.

After putting a fraud alert on your report, you are entitled to get free credit reports from the bureaus. Check all the information in it to find out any kind of inaccurate details. As soon as you find any discrepancy report it to the bureau. You must remember to use an identity theft report along with a letter explaining the reason of dispute.
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Do you have a number of delinquent debt accounts? Are you bothered by the phone calls of the collections agencies day-in and day-out? Then debt consolidation is the just the remedy to all your problems. Consolidation can save you from being trapped into debt cycle (relative pronoun). Debt consolidation can help you to be debt free faster than any other means.

What is debt consolidation?

A debt consolidation program or a bill consolidation program can help you when you have several debt accounts. It allows you to consolidate your debts into a single one so that you can make a single monthly payment realizing your dream of leading a debt free life quickly. With the help of debt consolidation programs you can not only reduce your interest rates, but also eliminate any extra charges or late fees pertaining to your credit account.

What happens in a consolidation program?

When you opt for bill consolidation, you will have to undergo debt counseling. A debt counselor will evaluate your financial situation and guide you through the entire process. He will calculate your expenditure and income and prepare a repayment plan for you. Once, you enroll in a debt consolidation program, the counselor will negotiate with your creditors on your behalf. After the consultant strikes a deal with the creditors, you will have to pay a fixed amount to the company every month. The company will communicate with all the creditors and you do not have to worry about dealing with them. In the meantime, if there are any changes in your financial situation, you have to inform it to the consultant so that he can inform it to the creditor and work out a convenient payment plan for you. For instance, has increased, the monthly payment amount will be calculated based on that new figure. In such a case your monthly payments will increase helping you to pay off your debts faster.
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Statute of Limitation, also known as SOL is the time frame within which the creditor must start the process of debt collection in order to recover the debt. If the Statute of Limitation on the debt expires, the creditor cannot recover the debt legally and the debtor no longer remains liable to repay the debt. Normally, the SOL starts after 180 days from the date you became delinquent and continues for 3 to 10 years depending upon the state you live in. However, the creditor may take into account the state where the agreement was signed while determining the SOL, before he sue you for the debt.

The debt agreements are classified into 4 categories – oral contracts, written contracts, promissory notes and open ended accounts.

Oral contract: It is a verbal agreement between the creditor and the debtor by which the debtor agrees to repay the money borrowed. It is a legal contract, although it may be difficult to prove in the court.

Written contract: Under this type of contract, you need to sign a loan application form accepting the terms and conditions under which the loan is offered to you. Personal loans and auto loan agreements can be included under written contract.

Promissory notes: It is just like a written contract, but with payments scheduled on the agreement. Home loans fall under promissory notes.

Open ended accounts: They include open ended accounts like credit card debts.

Statute of limitation is a powerful weapon for debtors to protect themselves from paying back an old debt. It may be noted that although it is true that the debtors are not liable to pay off the debt after the SOL expiry, the negative listing may not be removed from the credit report and may stay there for seven years and 180 days from the date of delinquency. You should always take note of the fact that before you pay off the debt, you should check the SOL status of your debt. If it has expired, you should not make even a single payment towards it, because even a single small payment may restart the SOL and the creditor may sue you to recover the entire debt. But if you do not make a payment after the SOL expiry, the creditor can never recover it.

If you want to build up your credit or repair your old credit, departmental store credit cards comes in handy. This is because these cards easily get approved even with a bad or with no credit. However, you should use these cards exclusively for the purpose of building up credit profile. Some of the leading departmental stores like Macy’s and Wall Mart now offer their own credit cards which may prove to be a very useful instrument for building up your credit profile. If you want to go for a store card, you need to visit the departmental store and fill up an application form.

After your credit card application gets approved and you get a new credit card, you should make limited purchases with your card so that you can manage to repay it within the interest free due date, as these cards carry high interest charges. Moreover, paying off the debt within the due date will help you to maintain a good credit history. Not only that, since the “amounts owed” factor plays a vital role in your FICO scores, you should not spend more than 30% of your credit limit on your cards. The biggest drawback of these cards is that, these cards come with a low credit limit and you can use these cards only within the chain of the departmental store. However, quite recently, these departmental stores have tied up with banks like Citibank and American Express and started offering VISA or MasterCard co-branded cards, which will allow you to use these cards even outside these departmental stores. In addition to this, you can even take cash advances on these co-branded credit cards just like normal credit cards. You can also enjoy lower interest charges with these co-branded cards as compared to the ordinary departmental store cards.

These cards provide you with host of other facilities as well. You may earn reward points on your purchases with these cards. However, you should not engage yourself only in earning reward points, because you may end up with debts you are not able to repay. If you cannot repay your debts on time, it may get reflected in your report as delinquent account and may badly affect your score. You should only use these departmental store or co-branded cards for the purpose of building credit. Once you build up a good credit score, you may go for general credit cards.