When you hear about someone taking out a bad credit loan, you think of the worst – high interest rates and terrible pay back conditions. That’s not necessarily the case though, as bad credit loans do have their place in the financial market. In fact, bad credit loans offer some distinct advantages for people with less than stellar credit.

Provides needed cash
If you need $10,000 to help pay for that upcoming wedding, and you can’t get approved for a regular loan, a bad credit loan may not be a bad choice. You’ll have to pay a higher interest rate, but the alternative of not having the money is not an option. Likewise, if you need the extra money to fix your car’s engine and you can’t afford to buy a new car, then the bad credit loan can save the day. Just make sure that you can afford the monthly payments; otherwise, you’re asking for even more credit worries.

Helps improve your overall credit score
Paying off your bad credit loan in a timely manner, month after month, can actually help improve your overall credit rating. Creditors will see that you can make your payments on time, especially for a loan with a higher interest rate. If you happen to get in a bind and can’t afford a payment one month, notify the lender and try to set-up alternative payment arrangements. Perhaps you can pay twice the amount the following month without it negatively affecting your credit score. You would be surprised how flexible some of these lending institutions can be, especially at the higher interest rate charges.

No rejection
If you have less than ideal credit, you’re probably tired of being denied credit. It can be a humiliating experience when you’re turned down time and time again for having poor credit. It also negatively affects your credit score when you apply to a bunch of lenders. With a bad credit loan, on the other hand, you’ll be approved as long as you agree to the interest rate charges and terms of payment. No more rejection notices in the mail from gigantic lending institutions. You can even apply for loans online, with quick application procedures and fast approval times. It will completely take the humiliation factor out of the credit application process. It will almost be a pleasurable experience.

Fx-auto is a top online Forex trading system provider, where online trading is possible 24 hours a day.

http://carloan.vg/blog/2008/06/advantages-of-taking-out-a-bad-credit-loan

Attorney General Tom Corbett urged Pennsylvanians to review information about a recent legal settlement which could give consumers across the country access to a free version of their credit score.

Corbett explained that one of the major U.S. credit bureaus, TransUnion, recently agreed to provide virtually every adult in America with access to a free version of their credit score under a proposed settlement for a class-action lawsuit. The settlement (In re Trans Union Corp. Privacy Litigation) stems from allegations that TransUnion sold consumers’ personal information without their permission in the early 1990’s.

“Credit scores are a useful tool – especially when combined with other credit report information - helping consumers gauge how potential lenders and creditors may view them as customers,” Corbett said. “Federal law already gives consumers the right to a free copy of their credit report every year, but credit bureaus are allowed to charge a fee for your actual credit score.”

Corbett said the settlement with TransUnion affects all consumers who had an open credit account or line-of-credit between January 1, 1987 and May 28, 2008. That means anyone with a car loan, credit card, department store card, student loan, mortgage or other form of credit during that timeframe – an estimated 160-million consumers – is eligible.

Corbett explained that in order to resolve the allegations included in the lawsuit, TransUnion has agreed to provide several options to consumers who chose to participate in the proposed settlement. These options include two different levels of free credit monitoring services, one that is available for six months and includes access to a credit score from TransUnion, or an “enhanced” nine months of free credit monitoring services, which includes access to a credit score and other services, including a mortgage simulator.

According to the settlement terms, consumers who choose the enhanced option will give up their right to sue TransUnion for the claims asserted in the lawsuits. Consumers who choose the enhanced option also agree to give up their chance of receiving a possible monetary payment at a later time from a settlement fund to be established by TransUnion. No consumer is required to participate in the settlement, and consumers are also free to file their own private legal action against TransUnion.

Corbett noted that the settlement is subject to final court approval in September, but added that consumers can review information now regarding the case and submit a form indicating which settlement benefits, if any, they wish to receive. Details are available by calling the TransUnion settlement number, at 866-416-3470, or on the official settlement Web site.

Corbett added that all consumers, regardless of whether they participate in the settlement, are eligible for free annual credit reports through www.annualcreditreport.com

“Every consumer should take advantage of the free credit reports that are available to them each year,” Corbett said. “These reports provide valuable information about your credit history and can also help identify possible instances of identity theft.”

Consumers who are interested in knowing their credit score, but would rather not pay for the information, should consider whether participation in the TransUnion settlement is something that is right for them. Additionally, several websites offer free credit score simulators which can give you an estimate of your actual score without disclosing personal information

NEW YORK (AP) — Just as Americans grow more reliant on credit cards to help pay monthly bills, they’re being hit with a one-two punch: Card companies are reducing borrowing limits for tens of thousands of consumers, which then can lead to lower credit scores.

Those facing this predicament might not even know it until they apply for a loan or another credit card, and then get denied because their credit score has dropped.

This is an unintended consequence of the financial world’s widespread ratcheting down of risk. Banks and other card lenders are trying to better protect themselves from more massive losses like those they’ve seen from subprime mortgages.

As a result, they are looking for ways to reduce their exposure to cardholders more likely to default. That’s why they are lowering credit limits, which means they are reducing the maximum amount of credit extended to an individual, along with boosting card interest rates and allowing fewer balance transfers.

“This is what they have to do at this time,” said John Hall, a spokesman for the American Bankers Association, a Washington-based trade group.

Such moves come as consumers are increasingly using their credit cards as a source of liquidity, especially since it’s becoming harder to tap their home equity as much to pay for everything from renovations to vacations to trips to the mall. As the housing and mortgage markets have collapsed, lenders have also reduced the limits on what are known as home equity lines of credit, or HELOCs.

Net home equity extraction fell nearly 60 percent from a year earlier to $205 billion in the first quarter, according to Merrill Lynch. The investment bank also notes that some $1.2 trillion in equity and housing wealth was wiped out in the first quarter alone because of plunging home values.

At the same time, revolving credit usage — which includes credit cards — accelerated sharply to a year-over-year growth rate of about 8 percent in recent months. That’s the fastest rate in seven years and well ahead of the 2 to 3 percent rate of growth from 2004 through 2006 when home equity lines of credit were a bigger source of cash for consumers, according to Merrill.

But as credit cards are used more frequently, that often results in bigger balances left on the cards. What’s worrisome is that consumers who are faced with a number of ugly economic scenarios hitting at once — falling home prices, surging commodities costs and a weak job outlook — won’t be able to pay their bills.

American Express warned Wednesday that more of its customers were falling behind on their payments. That led some Wall Street analysts to forecast that the card company may soon lower its predicted earnings growth for 2008.

“Business conditions continue to weaken in the U.S. and so far this month we have seen credit indicators deteriorate beyond our expectations,” American Express’ CEO Kenneth Chenault said in a statement.

That’s why card companies including Washington Mutual, HSBC and Wells Fargo are lowering their credit limits, according to data from the consulting firm Institutional Risk Analytics.

Consumer advocates aren’t saying that is bad news — in fact, they believe it helps prevent cardholders from overextending themselves and is preferred to having a sudden surge in card interest rates.

“In the purest sense, it is the better way to manage the risk of a cardholder,” said Linda Sherry, director of national priorities for Consumer Action, a national non-profit consumer rights and education group. “But a low credit limit can also unknowingly hurt a credit score.”

Here’s how that happens: Let’s say a cardholder has a credit limit of $10,000 and a balance on the card of $4,000. The card company worries that large balance may increase the prospects for default, so it lowers the credit line to $5,000.

But in doing that, it completely changes what is known as the credit utilization rate, raising it from 40 percent to 80 percent. That is then factored into the calculation of one’s so-called FICO credit score, which measures creditworthiness, according to Craig Watts, a spokesman for FICO-creator Fair Isaac Corp.

A lower FICO score could make it more expensive for someone trying to borrow money. For instance, someone taking out a $25,000 36-month auto loan would see an interest rate of about 6.4 percent and a monthly payment of $765 if they were in the highest range of FICO scores of 720 to 850, according to Fair Isaac’s Web site myFICO.com.

That then jumps to an interest rate of 7.3 percent and a monthly payment of $776 for those with a score of 690 to 719 and as much as 15 percent or $866 a month for those with the lowest FICO range of 500 to 589.

According to the Comptroller of the Currency, one of the government agencies that regulate U.S. banks, companies must notify cardholders at least 15 days in advance before making changes in the terms of their account, such as lowering the credit limit. But they don’t have to explain how that could change an individual’s credit score.

That puts the burden on consumers to watch out for this. They better so they don’t get blindsided.

With auto manufacturers reporting slow sales and gasoline at record highs, anyone in the market for a new car can find some great deals. But before you hit the dealership, you should do a little homework to make sure you can get the best rate on an auto loan.

The single most important thing you can do to get the best rate is to know your credit score at least 30 days before you apply for a loan. This provides you with the opportunity to raise your score if you find out it’s low. Knowing your credit score means you’ll be better aware of the rates a lender will give you. A higher score tells lenders you’re less of a risk because you have a history of responsible credit usage and paying on time. Consequently, you will receive better rates.

You can check your credit score quickly and easily at GoFreeCredit.com. The credit report is free and you can try to credit monitoring service free for 30 days. Use it to monitor any activity and make changes to increase your score, if necessary. GoFreeCredit.com gives a detailed, personalized analysis of your credit report with advice on how to improve it. You can also get information on how to understand your credit report. After the 30 day trial, you can continue the service for a low monthly fee to keep an eye on your credit report and help prevent fraud.

Experts advise checking your credit report several times every year, but checking too often with other services can hurt your credit score. Using GoFreeCredit.com will not negatively affect your score, no matter how often you check it.

When checking your report, it’s important to verify your credit history is correct. No one wants to sit down to discuss an auto loan only to find out a simple error has lowered their credit score, negatively affecting their rate. Examples of common errors include small unpaid balances from long-forgotten credit cards or false accounts opened in your name by someone else.

GoFreeCredit.com can refer you for a free consultation with an accredited credit repair company to help you remove such errors from your report.

The last thing to do before visiting the dealer is to arrange your financing. Most people don’t realize that dealers tack on extra percentage points to the interest rates they offer. Arranging your financing online can save you hundreds of dollars per year.

Just a few extra steps before you start test driving new cars can help you get a great rate on your next auto loan. To sign up for your free credit report and score with unlimited access to your 30-day credit monitoring trial, visit GoFreeCredit.com and check your credit report today.

We’re talking credit card tricks. The expensive kind, in which over-limit fees, residual interest, default APRs and other surprises suddenly appear as if by magic on your credit card statement.

No, your credit card company isn’t exactly dealing off the bottom of the deck. In each instance, they are within their rights to take your money, thanks to the often inscrutable terms of your cardholder agreement. But just like Three-Card Monte, these tricks can clean out your wallet faster than you can pick a card, any card.

Some of these tricks may soon be outlawed by the Federal Reserve Board’s proposed Unfair or Deceptive Acts or Practices reforms, on which the Fed is seeking public comment through Aug. 4, 2008. To share your thoughts via e-mail, fax or letter; drop into CreditCardReform.org.

In the meantime, keep your eye on your statement, your hand on your wallet and watch out for these five sneaky credit card tricks.

1. The closing date mind crunch
Cardholder Lynnae McCoy thought she was doing the right thing when she switched from paper to paperless billing on her 0 percent APR card. When she didn’t receive an e-mail notice of payment due around her customary statement date, she chalked it up to a transition glitch and made her normal payment at the usual time of the month.

The following month, her online statement showed that a late fee and interest had not only bumped her balance by $100 but shot her 0 percent introductory APR up to 11.24 percent.

To McCoy’s surprise, it turns out the card company had changed her closing date to later in the month. “Apparently my payment was posted one day before the new billing cycle began, so I ended up making two payments in one billing cycle and none in the next,” McCoy says.

Columnist Liz Pulliam Weston, author of “Easy Money,” sees this happen frequently to folks who try to buff their credit score by paying off a chunk of credit card debt a month before they apply for a major loan.

“The way the credit card computer systems are set up, they are only looking for payments between the statement closing date and the due date,” she explains. “So if you paid early and failed to make a second payment in that little window, then you’re counted as late.”

In other words, early birds get the shaft. McCoy admits she’s one of the lucky ones because she didn’t have other outstanding card balances whose rates may have similarly been bumped due to a highly controversial practice known as “universal default.”

After repeated, lengthy phone calls, McCoy convinced her card company to drop the late fee and restore her 0 percent APR, “but they didn’t take the interest off. It was about $37. I just gave up and paid it. There came a point at which my time was worth more than $37.” The McCoys have since sworn off credit cards for good.

Solution? “Pay off the card,” says McCoy. “That and persist. If you’re thinking about going to paperless billing, really stay on top of it, and maybe even make a small extra payment in the middle of the cycle until you’re sure when your billing cycle is.”

Gail Hillebrand, senior attorney for Consumers Union has an additional suggestion: “I think it’s actually quite helpful to not take paperless billing. I do think this makes it harder for the customer to hold up their end of the bargain and pay on time.”

2. The over-limit limbo
At the other end of your minimum payment is the credit limit on your card. What happens to those Icarus-like cardholders whose spending flies above their credit limit? They get burned by an over-the-limit fee that not only typically exceeds $35, but keeps recurring every cycle that they remain out in the blue. It’s the credit card fee that keeps on taking.

There are numerous ways to accidentally soar over your limit. You can charge over it, of course. A stray automatic payment for an annual or semi-annual insurance bill could do it. If you’re close enough already, an annual fee or even additional interest on purchases could exceed the ceiling.

Some card companies also use this clever trick: They suddenly lower your limit below your balance and then ding you with an over-limit fee.

Weston says the practice runs counter to what those credit card TV ads would have you believe. “Everybody has seen the commercial where the guy is taking his boss out to dinner and his card gets turned down,” she says. “Well, typically, they won’t turn you down because they can charge you that fee. The time you get decflined is when you’ve really screwed up and it has gone to collections. You can wind up paying these fees to infinity.”

Solution? Weston suggests using online personal finance programs such as Wasabi, Mint or Quicken to monitor closely your available credit.

Flying a little lower financially may be your best option, however. “Try to stay under half your limit,” says Hillebrand. “It helps avoid the problem, it’s better for your credit score and it also leaves some reserve if you have to get your car fixed.”

3. Toad in the hole
Credit card companies survive on the simple notion that, left unchecked, a good number of us will choose to remain indebted to them ad infinitum rather than curb our spending. They prefer us to be toads in the hole, jumping in but never actually climbing out.

Toward this end, some card issuers limit the number of payments you can make each month to one or two.

“This really upsets some folks because they get paid weekly, they want to pay their credit card bill every week, and some are being restricted from doing so,” says Weston. “If you’re talking little payments, the company may not want to deal with them. It’s not in their best interest to help you pay your debt anyway.”

Similarly, as we’ve seen, most card issuers won’t allow you to pay your bill ahead. If you’re heading off for a summer in Tuscany, you’ll still need to land your monthly payments within the payment window (between statement date and payment due date) or suffer for it. And that window has recently been shrinking from 22 days to 20 days on some cards, further tightening the screws.

“You’re talking about prepaying, you’re not talking about any kind of favor,” says Hillebrand. “I think it’s a policy issue that the issuers should be looking at, especially now because its really important to not miss a minimum payment because the consequences can be so drastic.”

Solution? “Automated payments that pay your minimum every month is the best way to go about that,” says Weston. “Set it up through your credit card because they’re the ones who know the minimums. If you don’t do it that way, you can just look at the balance you typically carry, figure out what your average minimum payment is, double or triple that and make that your automatic payment.”

4. The ghost account
Want to try something really scary? Close a credit card account without looking at the final statement. The small balance left behind — often a dab of interest or occasionally a fee for making your final payment by phone — can grow to a monster in no time once the domino effect of late fees, default APR and interest get rolling.

The most common ghost in a closed account is residual interest; that is, interest that was generated between the time the bill was issued and your payment was received. It can be darn hard to see, but it will haunt you if you ignore it.

“It’s very confusing, when you look at your online statement in particular, to figure out how much you actually owe,” says Hillebrand. “The statement balance will be one thing and the actual balance will be something different. How do I get to zero is really the question that should be easier for the consumer to answer.”

Solution? “The best way to avoid residual interest/finance charges is to make sure the balance is paid in full,” says American Express spokeswoman Mona Hamouly. “Do not stop making payments after the account is canceled. Payments must continue to be made by the payment due date each month until the balance is paid in full.”

Also, to protect your credit score, be sure to request a letter from your card company confirming that the account was closed at your request, not theirs. Hamouly says AmEx mails confirmation letters at their card member’s request within 10-12 days of the closure date.

Weston adds this tip: “Hang onto that last statement so you can prove you paid it off.”

5. Revenge of the sock puppet
There is so much confusion over the impact that closing a credit card will have on one’s credit score that some cardholders simply choose to “sock-drawer” their unused cards — that is, they tuck them in the back of their sock drawer and forget them.

“It’s very hard to give any general rules of thumb because it depends in part on how many cards you already have,” says Hillebrand. “If you have too many cards, closing a non-used one can help you. But if your other cards are maxed out or close to maxed out, closing a non-used card will up your utilization rate, making it look like you’re using more of your available credit, and that’s going to hurt your credit score.”

The downside to “sock-drawering” is its potential for identity theft. If someone steals or clones your card and has its statements sent to them, they could quickly run it up without your knowledge.

Although “sock-drawering” is one card trick we usually play on ourselves, Weston says card companies are increasingly getting in on this game.

“In this environment where companies are very concerned about profits, they are much more willing to shut down an unused account than they have been in the past,” she says. “I just had one shut down from underneath me that I had for over 10 years; I never used it anymore and boom, they closed it. It didn’t really hurt my credit score, but if you had a marginal score you were trying to improve, that could really hurt.”

Solution? “If you have too many cards and your credit score is good, 750 or above, you can close some of your more recent cards,” says Weston. “Do it slowly over time. You want to keep your oldest and your highest limit cards active. Charge something small to these accounts, such as newspaper or magazine subscriptions, and have it paid automatically. That will keep them active so they’re still showing on your credit report and are less likely to be closed.”

www.creditcards.com