New Credit Card Bill of Rights Has Some Side Effects

At 3pm Eastern today President Obama is expected to sign the credit card "bill of rights," which is intended to protect cardholders from excessive fees and last-minute contract changes.

But what does this legislation mean for the average credit customer?

Most experts are saying that this new "bill of rights" will prompt banks to severely restrict available credit to avoid risk - some say as much as 90 billion!

Bloomberg.com quoted Andrew Caplin, an Economics professor at New York University, as saying, "The bill may stop various forms of abuse, but it will also stop some various forms of credit. If the economic recovery is going to rely on consumer spending, it will be a long wait.”

Scott Valentin, an analyst at Arlington, Virginia-based FBR Capital Markets Corp. states “You’ll see a reduction in credit available to subprime customers, and even those in the near-prime range where the card companies have a hard time gauging what the risk is."

Experts say that this new legislation may also encourage banks to raise interest rate levels to the point where new account holders will not be able to afford them; this means that those with less than desirable credit scores may still receive cards, albeit at a heightened disadvantage. The

This new legislation may also open up new markets for predatory lenders - low to moderate income households, first-time borrowers and consumers with poor payment histories may be forced into predatory lending scenarios as traditional credit becomes unavailable.

Solutions:

first-time borrowers and those with poor credit history alike will fall victim to the adverse affects of this legislation. Anything less than a stellar credit score will lead to even higher premiums on credit spending. To be forewarned is to be forearmed - you can take real steps avoid these pitfalls. Quick, effective (and legal) solutions include:

1. Get yourself a stellar credit profile - more info on new credit profiles here.
   
2. A variety of credit enhancement options exist for those who want to beef up their score. These techniques consistently raise FICO scores as much as 200 points in as little as 30 days.

The Cost of Bad Credit

It’s surprising how many people have the following attitude towards credit: “what’s the big deal about having a great credit score? As long as I qualify for loans and mortgages, my score is good enough.”

They couldn’t be more wrong. Your credit score can affect everything from whether you qualify for a mortgage to whether an employer hires you – even the military conducts credit checks on aspirant enlisters.

For most people, a mortgage loan is where they will most reap the benefit of an improved score. This is because mortgage payments typically span over much longer periods of time.

Below is a chart that outlines typical APRs given at various levels credit-worthiness for a 30 year fixed APR mortgage loan for $400,000. The average monthly payment and total amount paid are also listed. Note that the cost difference between excellent credit and poor credit is about $200,000!

The cost of bad credit is also felt on a monthly basis. The graph below displays the monthly difference in mortgage payments:

On a monthly basis, the mortgage holder with a poor credit score actually pays over 500 dollars more than the mortgage holder with excellent credit! Can you afford to have poor credit?

For More information on credit enhancement: www.positive-credit.com

Acquiring and Maintaining Good Credit - Part 2

NEW LEASE ON LIFE

A financial life jacket has just been thrown in the water. As foreshadowed in the first installment of this series (see part 1), there is a proven, reliable, l e g a l quick way to financial freedom. A n e w b e g i n n i n g. This involves the creation of a new credit file employing the use of a Credit Privacy Number (CPN).

The principles governing this technique are not new, nor complicated. They involve the proper use of a particular set of laws put in place to protect you, the consumer, from the abusive tactics of creditors and credit bureaus. These laws help ensure the consumer gets a fair shake, so to speak.

LITTLE-KNOWN TECHNIQUE USED BY THE RICH AND FAMOUS

It is used by celebrities, clandestine agents and VIPs. Some use it because the media can use their SS# to track what they are buying and where they are simply by tracking their credit cards. Some other examples of CPN use include, but are not limited to, persons in the witnesses protection program who would otherwise risk being located if they use their true social security number for credit transactions. These are just some of the reasons the Credit Privacy Number program exists. The reasons are not limited to the previous, so why shouldn’t you have a new credit file created with a CPN?

HOW TO GET ONE

Though the principles and concepts for the creation and use of the CPN are easy to understand. I recommend one employ professionals to assist you in the creation and maintenance of your new CPN and credit file. One such group, HeadStart Financial (www.headstartfinance.com), can guide you through the new file creation process and even point you to the right service providors so that you may continue on to e n h a n c e your credit profile through b y a d d i n g s e a s o n e d c r e d i t to a new or existing credit profile.

In the next installment, we'll discuss strategies for leveraging your newly-created and/or newly-enhanced credit profile, maximize your credit potential and how to keep your files separate.

-TheCreditMaster

Credit Chronicle: Tips Towards Financial Freedom

This series of posts within the Credit Chronicle will be focused on providing you with all the latest info on personal finance!

Financial planning is not an easy or pleasant task; the process can be an expensive and time consuming one. However, we all have goals that require some measure of financial planning. Whether your goals are small or large, the best way to begin gaining control of your finances is to take the first step - get active!

Simplifi is an online personal finance planning tool that can help you take that first step. With Simplifi you can see what you own and what you owe, plus your goals and spending plan, all together in an easy-to-use format. All your information works together so you can see how changes to what you spend or save can impact your ability to reach your goals. Simplifi is a SEC Registered Investment Advisor (RIA), so they know what they're doing. Best of all, Simplifi is FREE!

Check out their website: http://www.simplifi.net/

For more information on credit enhancement: http://positive-credit.com/

Acquiring and Maintaining Good Credit - Part 1

Navigating the treacherous seas of the credit world can present itself as an ominous, even impossible task. Having bad credit is a debilitating, frustrating handicap that crushes dreams, hinders progress and limits possibilities. The financial weight of the resulting high interest rates, high monthly payments and endless rejection puts a strain on relationships often leading to divorce and depression.

Many methods exist for slowly improving one's credit score over a long period of time but there's only one reliable, quick way that people are freeing themselves from the shackles of bad credit and that is to create a new personal credit file within the credit bureau's own system. This new file won't have any of the previous credit information on it. And as you read on you'll see exactly how to make sure that only your new credit file surfaces when someone is running a credit check on you. This sounds complicated but it's very simple as you'll see in the next part to this introduction.