Have any idea what your rights are, such as what a creditor can ask you to provide as it sets out to make its decision? Maybe you think you can’t request a copy of your credit card? Here are some of the most important facts about your personal credit that you might not have known.
Shopping for Offers
Credit card offers are not the same; in fact, the differences can mean thousands of dollars every year. Whether you’re saving it or paying it as interest on your credit card is up to you. Comparison shopping is something we do before buying a new car or computer, right? Many consumers don’t even think twice about comparison shopping for the best credit card offers. It’s worth a bit of research, especially if you find a better offer as a result.
Level the Playing Field
If you’ve ever found yourself arguing with an unbending credit card company, you have rights and you don’t have to keep fighting an uphill battle. The Equal Credit Opportunity Act protects you when dealing with any creditor, including credit card companies, banks, finance companies, stores and credit unions. There are many resources available that will allow a consumer to level the playing field.
Not only that, but a creditor cannot – under any circumstances – ask you certain questions as part of its decision making process. Questions about your sex, race, national origin or religion may not be asked. Also, questions about your marital status or your spouse (unless he or she is included on the application) and whether you have children or plan to have children is off limits.
If you request it, a creditor must consider any kind of income such as public assistance, alimony and/or child support when making its decision. Further, you can’t be denied credit if the only reason is where your income is generated.
You can also apply for and receive credit in your maiden name, or a combination of your maiden name and your spouse’s name. A creditor cannot add anyone else to your account unless you request it in writing.
Ever received a denial letter in the mail? These days, if you’re denied credit, you can contact the company that declined you, within sixty days, for specific reasons. If you’re approved, a creditor must also provide specific information on how much that credit is going to cost you.
A credit history encompasses many aspects of your credit experiences. These include any late payments (and whether or not there’s a pattern of paying late), your bill-paying history, how many and what kind of accounts you have, liens, bankruptcies, foreclosures and a host of other information. This information is used to generate a three digit number, which, of course is your credit score. This is what determines whether you’re worth the creditor’s risk as well as how much interest you’ll pay on credit cards, mortgages and automobile loans.
Debt Consolidation Loans
Many consumers will consider a debt consolidation loan before filing bankruptcy if they’ve exhausted all of their other options. While these types of loans are preferred over bankruptcy, it’s important to keep in mind that you’re using your home as collateral and not only that, but there’s no guarantee that you’ll even be approved for a debt consolidation loan. That said, millions of consumers have dug themselves out of credit card debt with a loan such as this.
As mentioned above, this is a final option consumers find themselves facing. The repercussions can haunt you for ten years or more and will make it challenging to reestablish yourself as a responsible consumer.
Not only that, but a bankruptcy can prevent you from getting a job or securing an insurance policy. A Chapter Seven bankruptcy is what’s referred to as “wiping the slate clean”. It basically means you are able to walk away from your financial obligations courtesy of a court ruling. Many consumers prefer a Chapter Thirteen since it allows them to regroup and begin making smaller and more manageable payments.
The court approves a repayment plan that allows them to use their future income to pay off debts during a three-to-five-year period, rather than surrender any property. After all the payments are made under the plan, the consumer then receives a discharge of his debts. Keep in mind, though, both filing options have many of the same limitations in terms of what you’ll be able to do following a bankruptcy.
There are a host of resources available online that can help you better understand the financial side of your life. The federal government is the best first place to start as it provides current and most importantly, accurate, information. While we all have a high level of responsibility when it comes to our financial decisions, we also have many resources when we need them.
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