The Proper Use Of Credit Cards
Is it true that credit cards may save your money? Yes! Some people never purchase if they do not have enough cash. Cash simply disappears from our pockets. It is very easy spend it right here and right now... Using credit card for purchases takes more effort because you definitely know that you will have to pay the bill later.
Your credit card may also offer a rewards program where you get cash back, frequent flyer miles or discounts on services and purchases which you could do for cash without having bonus. Read more... 
1. Introduction and Summary
Credit reports are a gold mine of information about consumers. They contain Social
Security number, date of birth, current and previous addresses, telephone number (including unlisted
numbers), credit payment status, employment, even legal information. Ordering your credit report once
a year and knowing your credit reporting rights are among the most important steps you can take to
safeguard your privacy. The federal Fair Credit Reporting Act (FCRA) as well as state laws restrict
who has access to your sensitive credit information and what uses can be made of it. These federal
and state laws also set the standards for the operation of consumer reporting agencies, called
"CRAs" or "credit bureaus." A credit report is just one kind of consumer
report covered by the FCRA.
Deflate Your Credit Card Rate
State PIRGs did a survey to show a simple action consumers can take to lower interest rate of their credit card and saving them up to thousands of dollars paying the balances. Volunteers who took participation in this survey had to call their credit card issuing company and ask do decrease annual percentage rate. Read more... Recent changes to the FCRA were made in December, 2003, with the Fair and Accurate
Credit Transaction Act (FACTA). Some provisions of FACTA will become effective only after federal
agencies issue final regulations. The 2003 FACTA changes are reflected in this version of Fact Sheet 6. For more on FACTA, see:
To summarize your credit reporting rights, you have the right to:
- Obtain a copy of your credit report. Depending on where you live, you may receive a
free copy of your report
once a year, staring in December, 2004.
- Know who has received a
copy of your report.
- Dispute inaccurate information.
- Even if negative information is included, to explain the circumstances .
- "Opt-out" to prevent credit bureaus from using your information for marketing.
- Complain to the appropriate government agency or file a lawsuit.
Quick Facts About Credit Cards
Credit cards are widely used as a convenient source of credit purchases in hotels, on-line shopping, gasoline stations, restaurants, mail order, grocery stores, and others as well as products advertised on telephone and television. There is a number of advantages of using credit cards if you do it in a wise way. As well you may have drastic and painful consequences if misuse your credit card. Read more...
2. Credit Reporting Basics: What's in a Credit Report?
What Is a Credit Score?
What is in my credit report?
Your credit report is actually a credit history. It is created by data about you
from many different sources. Companies that have granted you credit make regular reports about
your accounts to the three main CRAs: Equifax, Experian (formerly TRW), and TransUnion. If you
are late in making payments, those to whom you owe money such as utilities, hospitals, landlords
and others may report this information to the CRA. Your bank may inform the CRA if you overdraw
your account or do not make credit card, auto loans, or mortgage payments on time. Your credit
report may also contain information about delinquent child support payments.
The FCRA allows CRAs to report records of convictions of crime. However, it is not
the practice of any of the three main CRAs to report criminal convictions on credit reports. Such
information may, however, be reported in connection with an employer background check, an application
for automobile insurance, or an application to rent a house or apartment. For more on these types
of consumer reports, see www.privacyrights.org/fs/fs16-bck.htm (employment background checks) and www.privacyrights.org/fs/fs26-CLUE.htm (insurance reports).
Credit Bureau - Credit Report
Firs of the most important steps to good credit history is ordering your credit report once a year and knowing your credit reporting rights. The federal FCRA (Fair Credit Reporting Act) as well as state laws restrict the access to your credit records. Read more... In addition, your credit report contains your name and any name variations, your
address, and previous addresses, telephone number (including unlisted number), Social Security
number, year and month of birth, and employment information. Information in your report also
includes matters of public record such as civil judgments, tax liens and bankruptcies. Because
you have the right to know who has inquired about your credit file or has requested your report
over the last six months, any copy of the report you receive must also include the identity of
all such inquiries. Inquiries related to pre-approved offers, as well as your own inquiries, are
not available to credit grantors. However, they are included in credit reports that you order for
yourself.
How do credit scores affect my application? Can a credit reporting agency
deny my application for credit?
CRAs do not make decisions regarding a consumer's creditworthiness. Rather, the CRA
compiles reports of what your file contains and passes that along to the potential credit grantor.
Credit decisions are, in fact, generally made based upon a number of factors that comprise a
"score." Inquiries made in connection with your applications for credit may also be a
factor in your score. If, for example, you have applied for several credit cards or loans in a
short period of time, this may result in a lower score. Inquires made in connection with pre-approved
credit offers or those you make yourself should not result in a reduced score.
The practice of credit scoring is widespread and growing. Until recently, consumers
have seldom gained access to their credit score and have not been able to learn the factors that went
into the scoring. But a recent law in California gives mortgage applicants a right to see their credit
score (California Civil Code 1785.10, 1785.15-1780.20, SB 1607 in the 2000 legislative session).
And the credit industry is voluntarily loosening its grip on the credit score because of
legislative and marketplace pressures.
Credit Cards: Profits and Losses
Credit cards issuer covers its costs (including interest costs paid to merchants prior to the bank being paid by customers), and earns profits, by: credit cards fees; interest on credit card balances; other fees charged to customers. Read more... To learn more about the topic of credit scoring, see the Federal Trade Commission's
(FTC) information at www.ftc.gov/bcp/conline/pubs/credit/scoring.htm . Additional information can be found at the Fair, Isaac and Co. (FICO) web site ( www.fairisaac.com) . FICO is the leading developer of scoring methodology. The credit score is often called a
"FICO." The most recent changes to the FCRA give you new rights to know your credit
score as well as an explanation of the factors that determined the score.
Is there anything that cannot be in my credit report? How long can
information be reported?
Certain pieces of personal information cannot be in your credit report:
- Medical information (unless you give your consent).
- Notice of bankruptcy (Chapter 11) that is more than 10 years old.
- Debts (including delinquent child support payments) that are more than seven years old.
- For California residents, records of arrest, information, or misdemeanor
complaints must be removed after seven years. But under federal law, records of criminal convictions
may remain on a credit report indefinitely.
- Age, marital status, or race (if the request is from a current or prospective employer).
Certain kinds of information may remain on your report indefinitely. If, for example,
you are applying for credit, insurance or employment above the dollar limits noted below, information
can be reported beyond the usual seven- to 10-year deadlines.
Credit Card Wealth Secrets & Ideas
There are 2 kinds of credit card debt: `good debt` and `bad debt`. Bad-debt occurs when you borrow to purchase some consumer items. Doing so you limit your future financial status. It may look like you have more, because you get it right now. But you pay interest extra, and consider a psycological factor when you`re buying more on credit card. Paying cash you`ll never do many useless purchases. Read more...
- A credit transaction involving, or which may be expected to involve, an amount of $150,000 or more.
- Information about a job with a salary of more than $75,000.
- An application for credit or life insurance for more than $150,000.
- Tax liens that are not paid.
For additional information on the length of time that negative information can remain
on your credit report, read the "Ask Max" section of the Experian web site, www.experian.com/ask_max/deleting_information.html .
Refinancing After Bankruptcy
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