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.

5. Re-open old accounts with new safeguards: Close and re-open all the old accounts with new names and numbers. In addition have a discussion with the fraud divisions of the credit card companies to make sure that they know what actually happened.

6. Sending letters: Send follow-up letters to the credit card companies through certified mail, requesting a return receipt. These letters are the follow-ups of the calls made in the fraud divisions of the companies.

7. Take help from attorney: You can take advice from an attorney to deal with your creditors which will also speed up the whole process.

8. Maintain payment history: Make on-time payments, and thus maintain a good payment history. Making on-time payments is the best measure in developing a good credit score.

9. Be cautious in future: In future you need to be much more cautious while handling credit cards. To fight identity theft, you need to know the risks of id theft.

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.

This law requires that the students under 21 need to show their financial capability to get qualified for a loan. In case, the students have a low income, the parents of these students are required to cosign for the account. The rule adds that the credit card companies should in no way try to tempt the students for taking a credit card by offering them any goodies like T-shirts or water bottles. Moreover, the educational institutions are required to publish their income from the promotions made by the credit card companies.

The law also requires that the credit card companies cannot pressurize or tempt the students to sign up for credit cards, but it needs the affirmation of the directors.

Response to the law

According to the market analysts, and the Federal Deposit Insurance Corporation, this law will lessen the debt problems faced by most of the youngsters. It will let young college pass outs to start their career on the right note without any imposing debts. Parents and consumers are happy with this law, as this will help assert more control over their wards. However, according to the members of the American Bankers Association, this can have an adverse effect too on the consumers. The interest rates may rise greatly so as to compensate for the loss of a great number of customers which included the college goers.

It is true that the law will protect the students from unwanted debts, but it is also true that because of this, they won’t be able to build a good credit history and score. Thus, this will in future, create problem for them while trying to take a new loan, an apartment or a vehicle.

According to the Public Interest Research Group, the some students are finding it not that difficult to agree to the new law. Finally, the credit card issuers have accepted to comply with the new rule.

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.

3. Maintenance fee – Some creditors charge an extra fee for maintaining the account. Before taking a credit card one should inquire into this matter.

4. Over limit fees – There are credit limits on credit cards. If one exceeds the credit limit, he/she is charged with extra fees. There one should always be aware of the credit limit.

5. Minimum payment – One is required to pay a minimum amount each month before the payment date is over. If this is not paid, interest rates may increase and late fees may be added against it.

6. Annual percentage rate – Annual percentage rate or APR is the rate at which one is charged with the interest. It varies according to the credit score of the borrower.

7. Default rate - If one fails to make timely payment, he/she can be charged with default rate.

8. Cycle date – This is the date on which a credit card holder receives his billing statement every month.

9. Payment dates – One needs to pay the dues within a stipulated time or the payment date. Paying in time is very important as it is related to the credit score.

7 Factors to be considered while choosing credit cards

The various factors you should consider before choosing a card are:

1. One needs to know the annual percentage rate (APR) and if the rates are fixed or variable.
2. Check out the annual, late and the over-limit fees.
3. Check out the credit limit on the account you are going to open.
4. Check the grace period before the interest starts increasing.
5. Check if there are any rewards or cash back policy.
6. Check if the credit card suits one’s lifestyle.
7. Check if the card allows balance transfer, that also with low and fixed interest.

Before applying for a credit card one should always check into the various details of the credit cards, as mentioned above and should also check whether or not he/she qualifies for the credit card. After getting a credit card, one should always try to handle it responsibly.

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.
7. Don’t trust the company which asks for payment before they have helped you in the right way regarding your score.
8. Don’t ever trust a company which promises to lift others credit score to boost your score.
9. Don’t opt for that company which asks you to create a new ID and social security number. Creating a new social security number is almost not possible.
10. Never trust a company which promises that they can waive your consumer rights under the credit repair organizations act.
11. Never trust a company which doesn’t provide you with the following information:
    a) The amount charged by them for the repair.
    b) The address along with the name of the organization.
    c) The time needed to perform the said services.
    d) The details of the services that they are going to perform.
    e) The statement mentioning that you can stop contacting them and that you can cancel the contract within 3 days time.

Scammed? Then do these…

If you are scammed, you should contact an attorney general. You can also file a complaint to the Better Business Bureau and also to the Federal Trade Commission. If you realize that a company has scammed you, you should immediately take the above said actions. The companies following unfair means to collect money from consumers should be rightly punished.

What to do to raise the score yourself
To boost your credit, the first thing you must do is to obtain all three copies of the credit report. Then check carefully if there are any negative listings on your report. If there are, you can opt to dispute them with the credit bureaus. You should rather keep an eye on the due dates, so that you do not default. If there are any such defaults, contact the creditor for paying off the dues and the charge-offs. You can also open new accounts to reestablish credit and get secured credit cards to pay the debts.

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.

• Be ready to compromise: You have to remember that when you opt for arbitration, you must be ready to compromise. Arbitration could be entered either voluntarily or by court order. Do not go to negotiate with the creditor with any kind of prejudice. Accept if the creditor offers a deal, even if it calls for a little compromise.

How do you choose a debt arbitration company?

• Go for a recognized debt arbitration company: When you go for arbitration, it is advisable that you opt for a recognized company. Try and do some research on the company, get feedback from people who have used their services and so on. Find out about the cost of their services and see whether or not you can afford to pay them that much.

• Do not choose companies with pretty big claims: Another important thing you must find out before getting the service from a company is whether or not they make pretty big claims of reducing your debt magically. Normally the companies which claim that they can reduce your debt fast are not to be trusted. It is a slow process.

• The company must have IAPDA debt arbitrators: You must also check whether or not the company you are selecting has IAPDA certified debt arbitrators. Such arbitrators are knowledgeable about who to approach, when to approach and how to proceed with the arbitration process.

• The company must be a member of BBB and Chamber of Commerce: Lastly, the arbitration company you are considering must be a member of the local Chamber of Commerce and the Better Business Bureau. If the company is a member to these organizations, then it is not recommended to work with them. The services provided by the company will not match the quality standards.

Arbitration works as a good alternative to legal hassles in case of delinquency. When it comes to selecting a debt arbitration company, always go for the one which is committed to deliver the best possible client service and support. Be wary of the fraud ones which can consume all your money.

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.

• Time limit for payment has increased

The time by which the payment should reach the credit card company has also been changed. In accordance with the new rule, if you pay the bill by 5 o’ clock on the due date, it will be considered as payment on time. No creditor is allowed to charge any late fee if the money reaches by 5. Hence, you do not have a stiff morning deadline to follow while making payment.

• Equal distribution of payment on balances

Whenever there is an additional payment along with your minimum payment, that extra amount will go to the highest interest rate account. Earlier banks used the extra money for lowest interest account. This practice increased the time span to get rid of the debts for the card holders, since in none of the accounts the balanced turned 0 quickly.

Rules to be implemented by December 1, 2010

The second phase is a mixed bag of rules going to be implemented by December 1, 2009. These rules again bring some good and some not so good news for the consumers and the credit providers.

• Credit limit restricted for people below 21 years of age

Anyone below 21 years of age will have to struggle to get a credit card. You must have a cosigner while applying for a card. Even after you have one, the credit limit will be restricted. However, if you are a student with a considerable amount of income, then you can submit a proof of your income to exempt yourself from the purview of this rule.

• No increase in interest rate in first year

From December 1, 2009 onwards, credit card providers will not be entitled to increase the interest rates in the first year. There might be an exception to this rule, if any such condition is mentioned in the contract earlier.

• Notice before increasing rate on future purchase

Credit card providers will have to give more time to the card holders before they can raise the interest rate on any kind of purchase the holder makes in future.

Will life be a little easier after the implementation of all the credit card reform rules is complete? I suppose it will be easier with the curbing of rising interest rates, with the increased time period for late payments and with all the other advantages the Bill is offering. So, now let us look forward to the positive changes that will be brought by these reforms in our lives.

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.

File a complaint with the FTC

It is extremely important to file a complaint with the Federal Trade Commission or the FTC. You can either call or place your complaint, or you can use their online complaint form. The FTC complaint form will help you while filing a complaint with the local police station. Other than this, the report can dissuade a CA from collecting the debt from you, permanently block the reappearance of any kind of inaccurate information, and it may also help in extending the fraud alert. The fraud alert initially stays for 90 days. However, if you extend it, then it continues for 7 years.

Lodge a police complaint

You need to file a complaint with the local law enforcement body. While visiting the police station to file a complaint, remember to take the supporting documents to prove your words.

Close existing or new accounts

After you have filed complaints, you need to close to any account you think has been tampered with. Send letters to the concerned creditor or bank requesting to close your account. You must also send proofs that you are suspecting an id theft. In case the thief has used your account, dispute whatever transactions have been made. You can either ask the company to send you fraud dispute forms or you can dispute the entry through your letter. However, remember sending the letter to the ‘billing inquiries’ address of the company. In case you need to close a new account opened by the thief, you can directly dispute it with the company. Remember to send a copy of the ID Theft Affidavit of the FTC.

Which information must be monitored frequently to curb id theft?

You should monitor certain financial information regularly. The financial statements you receive must be checked closely to find out if there any charges which you did not make. It is extremely important to check your credit report at intervals. You are entitled to get a free credit report every 12 months from the 3 major credit reporting agencies. Once you get hold of the report, go through it thoroughly to find out about the latest transactions you have made. If you find any kind of inaccuracy, you must inform the credit reporting agency. Check your personal details properly.

You may also use the credit monitoring service provided by various companies to keep a watch on your credit report and score. Whenever any kind of change takes place in your credit report, you will come to know about it. However, do check the prices and the services provided by the monitoring company properly. Also find out if the company is listed with the Better Business Bureau.

Though it is difficult to control identity theft, yet with a little awareness you can prevent such a mishap. Always, monitor your credit reports and keep a written proof of any documents you are sending anybody. Do not delay to dispute inaccurate information in your credit report. It is not advisable to share your personal information. Always keep yourself updated on what to do if you become an id theft victim.

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.

What are the advantages of consolidating debt?

There are several advantages of debt consolidation such as reduction of interest rate, payment of a fixed amount every month, elimination of extra charges and late fees, improvement of credit score and getting rid of the harassing phone calls from collection agencies. Bill consolidation helps the debtor to repair bad credit and enables the credit score to shine. To be more precise, when you will start paying off all your debts properly, the negative items on your credit report will get removed accordingly.

Debt consolidation program affects the credit score positively most of the times. As you start paying off your outstanding bills, the debt amount in relation to your available credit limit will go down. In other words, the rate of credit utilization will go down. However, you must remember not to use those credit cards until you take control of the debt situation entirely. This will affect your credit score in a positive way. With the increase in your credit score, your creditworthiness will also increase in the eyes of the creditors.

However, if you are thinking of getting enrolled in a debt consolidation program, you must be careful regarding the company you choose to work with. There are several options available online. You need to choose the best option for yourself. Therefore, compare the services provided the companies before getting enrolled in any such program.

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.

Here’s something interesting to share with you.

CreditMagic has now introduced a new look with easier navigation and add-on features. The basic objective behind the makeover is to highlight different sections, so as to make them easily accessible. Thus, visitors and community members will find it easier to browse through various sections such as “Forums“, “Ask Community“, “Knowledge Bank” etc.
What are the changes and add-on features?

You’ll find the following changes and add-on features when you browse through CreditMagic.

• Helpful Resources - It includes the Glossary, FAQ and Letters of Credit sections and can be easily located on the home page. Sample Letters of Credit are very handy and these are often required in dealing with credit related issues.

  You can easily look through the Glossary section, in case you cannot follow a credit-related term. In the FAQ section, you’ll come across commonly asked questions which can help you deal with credit issues in a better way. So, you can get ready answers to simple queries without having to put it in the Forums, and waiting for a reply.

• Popular Discussions - This section makes it easier for you to check out popular forum discussions on credit. You can participate and share your views in such discussions.
• Community Area - Considering that we’ve had a large number of visitors in recent times, the Community Area is highlighted such that one can easily find it out and login or join our community. Visitors joining our community interact in a friendly manner and solve each others’ credit related problems by sharing their knowledge and personal experiences.
• New Feature- We have included an add-on feature - the Blog. It will keep you updated with the recent happenings in the community. Herein, you’ll also find information related to new developments in the credit/finance industry.

The changes in CreditMagic have been made, keeping in mind its growing popularity. The community has till date provided quick and smart solutions to credit problems and helped the members to build up good credit. The new features further ensure an easy access to the resources available in the community.