It was not too long ago, we used to play the balance transfer game. We used to get the 0% APR promotional offer from credit card companies; there would be a transaction fee of $40 max and the promotional period runs for a year. We could transfer $10,000 from the credit card account to the checking account and put that $10,000 in a CD that could yield 3 to 4% per year. We used to get around $400 in interest for the $10,000 transferred from the credit card account with a 0% APR promotion. If you deduct the $40 transaction fee, you could still come up with $360 profit which is literally free money.

Now, the banking industry is getting smart… very smart actually. Many banks still offer 0% APR for one year. However, the transaction fee is 4% per thousand dollars. So if you transfer $10,000 from your credit card account to your checking account you’ll be charged $400 as transaction fee! On top of that, many CDs offer less than 1% interest. Effectively it will be a dumb move to use 0% APR because it is not really 0% APR. When you get the 0% APR offers in the mail or email, just trash them unless you are really willing to pay 4% APR.

So you have filed for a bankruptcy, now what? Probably the first question in your mind is how will it affect my credit score? There are too many factors to accurately predict the fallout on your credit report. If you had a pretty high score prior to filing you may find that your score is still hovering around in the 600’s. However most people’s credit gets pretty trashed from lates and charge offs, so their score after filing is closer to 500 than 600.

The total number of credit accounts you have is a factor as well as the ratio of debt to available credit. Both those can sink your score in a hurry, especially when you pile up a chapter 13 or 7 on top of it.

So, which is better, chapter 7 or chapter 13? I am not a lawyer so I cannot answer that question and it should be put to bankruptcy lawyers.

What I do know is that there are a few advantages to chapter 7 over chapter 13. If you file a chapter 7 the process is quick, usually from 3 to 6 months. You get your discharge date rapidly and you are on your way to starting over, and with no debt hanging over your heads. If you file chapter 13 you are required to pay off your debts in 3-5 years. Most people who file chapter 13 do not complete the program and find themselves in hot water again. If you file chapter 7 you still get to keep most of your assets including the home you live in. Keep in mind, not everyone qualifies for chapter 7 and that is something you will have to research with bankruptcy attorneys.

Remember, just because you have a BK on your report that doesn’t mean you cannot refinance or purchase a new home. Check around with different lenders and let them know all the facts up front before you allow anyone to check your credit. You may be in for a pleasant surprise.

Related Link: Bankruptcy and Your Credit — Part 1

This is a big topic so I will try and break it down in a couple articles. Rather than focus on what your score may be after going through a bankruptcy, I am going to tell you how lenders view a borrower who has a BK (bankruptcy) on their report.

Of course everyone wants to know, how long do I have to wait before I can refinance or purchase a home? The answer is, quite often there is no set time you have to wait. Bear in mind that it will stay on your credit report for up to 10 years so get used to it.

All lenders have a bottom credit score they work with and that is usually 500. As long as your bankruptcy doesn’t lower your score beneath that floor, you may be in business. In fact, many lenders will still work with you even if your BK has not been discharged yet. Make the call and you will find a consultant that will be eager to push your loan through if there is any way possible to do it. If you filed a chapter 13 it will have to be paid off with the loan. You will also have to get a rating from the Trustee. That rating is much like your mortgage rating and if you do not have any late payments you may still be able to get your loan. However, if you do have late bankruptcy payments, that is kind of your last chance and you will have a tough time getting the loan.

The one factor that prevents many borrowers from getting a loan is the LTV (Loan to Value) that is allowed under the underwriters guidelines. If you have a recent BK many lenders will not let you borrow more than 60% of the home’s value. Some lenders are a little more forgiving so you will just have to check around. Some lenders will not let you get any cash out which will not work if you have filed a chapter 13 because you have to pay off the debt you own to your various lenders. If you have filed a chapter 7, wait till the discharge date has passed and it will be a lot easier to get the loan and you may find lenders who are willing to give you cash out, or at least let you borrow up to 80% of your home’s value.

Bottom line, having a bankruptcy does not necessarily prevent you from getting your loan. If you can wait, the one year mark is a magic number for many lenders and you will find them more agreeable after that date has passed.

Related Link: Bankruptcy and Your Credit — Part 2

Being unemployed for months is horrible, getting cheated on top of that is very frustrating. Wall Street Journal published article detailing a scam that targets unemployed people. The scheme works like this. Crooks establish a company, website and post online job ad in job portals like careerbuilder.com. When the applicant sends the resume, the company asks the applicant to take some trial projects to ship certain items to Europe. To pay for these items, the company transfer the money to the applicant’s credit card. For each shipment, the applicant earns $350 in commission.

Sounds simple? Easy job, isn’t it? Only problem is that the money transferred to the applicant’s credit card is the stolen money. Read the complete article here.

What happens to my credit score when a mortgage lender checks my credit? The old answer used to be, “your score drops.” Not so any more.

If you are getting ready to purchase a home, or refinance an existing home, do all of your investigation within a thirty day period. The law says your score will only drop one time in a thirty day period if you are getting a home loan or purchasing a car. If you have the first potential lender run your credit on March first, make sure that at the end of the month you don’t allow any other lenders to check your credit. That of course could lower your score, maybe enough to disqualify you from the low rate you could have had.

“But my lender warned me not to let anyone else check my credit or my score will drop.” That’s a common sales tactic to scare borrowers from shopping around; don’t believe it. The next question people often have is, “How much could my score drop if I apply for a loan outside of my thirty day window?”

I had the opportunity to ask a representative from TransUnion that very question and received the following answer. “There is no way to tell for sure.”

Before I could object, he qualified his answer and here it is in a nutshell. How much ones score will drop is dependent on a number of factors. Some of those being; number of revolving accounts open, debt to available credit ratio, length of time accounts have been open, and of course adverse factors like late payments on accounts. Those are just a few factors that influence how much you score will drop.

Be safe, do all your searching for lenders in the thirty day window and you won’t have to worry about your score dropping fifteen points and disqualifying you from the best possible rate you qualify for.

You don’t need to lose your ATM card for someone to steal the money from your account. You just need to swipe the card in a compromised ATM machine to give all your information to identity thieves. ATM Skimming is the process in which crooks steal your ATM card information without your knowledge. Wall Street Journal published article detailing this prevalent identity theft problem.

It’s always a better idea to use the ATM machines only in the bank branches. Do not use the ATM card when you travel abroad. Do not use ATM card in gas stations, strip clubs and in any place where the ATM machine looks different than usual. According to Wall Street Journal, sophisticated skimming devices are placed right over a card-reader slot that allows the scammers to capture the information embedded on the magnetic strip of a debit or credit card. Camera mounted on the right place also captures your hand movements and PIN number. If you are curious about how a skimmer would look like, take a look at the following video.

It’s highly recommended to cover the keyboard with the other hand when you key in your PIN to block anyone or a camera from seeing your PIN. This may seem paranoid, but it’s better to look paranoid than actually losing lot of money. If the ATM machine looks different than usual or if it looks crooked or damaged, just walk away.

Related Link: Man accused of installing cameras in ATM machines

Have you ever played this game? Get a credit card with 0% balance transfer rate for 12 months, transfer $10,000 from credit card to your CD account, earn free money of about $300 in your CD for a year and return $10,000 back to credit card company after a year? It may not work any more with CARD act and the lack of 0% balance transfer offers.

“Teaser rates aren’t going to go away, but they’re probably not going to be as lucrative for the consumer as they were — you’re going to see a higher rate and a shorter introductory term,” says Jerry Straessle, president and CEO of JLS Associates, a consulting firm specializing in the credit and debit card industry. If you are still into this game, read the devilish fine prints carefully before transferring the money from credit card account to your checking/CD accounts.

Even if you get 0% balance transfer rate for 6 months, you may not get higher rate in CD account to justify the balance transfer fee and any other one-time fee your credit card company charges. Always calculate the total fees and total gains you would make before writing the balance transfer check.

Credit cards and debit cards are very easy to use and they can be great, but that ease of use can also get you in trouble over the long run. This is why I believe as a consumer you should take advantage of credit card reward programs when you can, but also carry cash and use that for most of your smaller purchases. Cash doesn’t have the potential to get you into a much deeper hole like credit or debit cards do.

Some people have gotten into a habit of only using their credit card and never carrying any cash. This is certainly convenient, and if you live in an area where theft is high it can also be wise, but in most instances using credit for all purchases is doing a little too much. Using that debit or credit card every time you go to a local fast food restaurant for lunch or catch a movie on a Friday or Saturday night can create bad habits.

The great thing about cash is you can’t what you don’t have. If you don’t have enough cash, you simply will have decide what you want to buy and what you won’t be able to purchase. While this might not be quite as convenient as using your favorite card to buy everything it is also much more safe for your personal budget.

The amount that you should use cash versus credit or debit cards really depends on your spending habits and how well you are able to keep things under control. You need to be completely honest with yourself and realize that if you like to use that plastic too much, it may be a good idea to go back to counting out those dollar bills. It’s alright to pay for things in cash sometimes, in fact it can be a great way to stay away from credit card problems.

In an era where identify theft has risen exponentially over the last few years, it is always a good idea to keep close track of your credit card charge receipts. The same is true with a debit card, since they are also the subject of identity theft of your banking account. Having the receipts available for you allows you to check and make sure you were charged the right amount when you receive the bill or statement, and could save you a whole lot of hassle in the long run.

Keeping track of your charges can be difficult or it can be easy, it really is up to you. If you choose to not keep every single receipt from the purchases you make it will be next to impossible to go back and find the proof of your purchase. On the other hand if you do keep every single receipt you will find it easy to keep a close eye on each month’s bill or statement. Probably the best method of keeping track of these receipts is to have a designated folder or envelope where your receipts go as soon as you get home. It is definitely advisable to keep them in the same place each time so there is no confusion as to where this important information is. By keeping this information when you receive the statement you are able to go down and check each and every purchase you made one by one. Mark off the purchase as you go and after you have paid the bill or verified your debit card statement you can throw away these receipts and start the process over for the next month.

While keeping track of every receipt can be a little bit time consuming it is more than worth your time, and in the long run it takes much less time than trying to track down a fraudulent purchase on your card if you haven’t kept close records of your purchases.

What do you do if you desperately need a loan or insurance but you have no idea about your credit score?

First, understand how the lending process works. Your credit score will determine whether or not a lender can give you the credit you need. In order to get a loan you need a good credit score.

What is a credit score? Basically it’s the score from FICO that tells the lenders about your credit worthiness. FICO Scores are calculated from a lot of different credit data in your credit report. Actual calculation of FICO score is a secret like Coke Recipe. Your payment history, length of your credit history and types of credit used play major role in deciding your credit score. 

How can you get your credit score? In order to determine your credit sore, you will need your credit report. This will be sent to you every three months by national credit reporting companies. You can get your credit report for free. However, if you wish to get your credit score, you will have to pay these companies a nominal fee.

Equifax, Experian and TransUnion are the three credit reporting agencies in the United States. They use the FICO software to generate credit scores which are then sold to lenders who wish to get data regarding the credit score of their customers. You don’t have to be a lender to get details about your credit score. FICO, Experian, Equifax and TransUnion also sell credit score to their customers. Besides national credit reporting companies, there are several other websites and tools that will enable you to get your credit report and calculate your credit score for free.

1. Quizzle.com – this web site enables you to determine your credit score, the value of your home, property etc for free.
2. Experian.com – Experian is a leading provider of analytical services and their web site has a feature which permits you to check out your credit score.
3. Freecreditreport.com – As the name suggests, this is another website for free credit reports. You can get credit reports from Experian, Equifax, and TransUnion through this web site.
4. Creditreport.com – Use this site to get both your credit report and your credit score for free.
5. myFico.com – You can get your credit scores directly from FICO at this website.

Now that you have an idea about your credit score, the next question is how you can improve it. If you have a good credit score, you won’t have much trouble getting a loan but poor credit has to be repaired. Start by paying your bills on time. Cut down expenses on food and clothing and focus on paying off your bills. Don’t max out your credit card. Credit card debt can wreck havoc with your credit scores so, use credit cards only if you have to. What can you do if you have already run up credit card debt? Work on repaying it as soon as possible. Try and pay at least the minimum amount each month so that you don’t have to pay higher interest.

If you have applied for credit from different lenders recently, that also can have a negative impact on your credit score. The kinds of credit accounts you have can also affect your credit score. Having a couple of established credit accounts can boost your credit score. On the other hand too many credit accounts can lower the score.

You will need a minimum credit score of 700 points if you plan to get a loan or mortgage. Experts feel that a credit score of 740 gives you the best shot at getting a good loan, insurance or mortgage scheme

Once you learn how to manage and improve your credit score, getting credit should not be all that difficult.