Altenative Credit Scores Provide Hope for Many Consumers

I would like to share some good news for the estimated 50 million consumers that have no credit history or a limited credit history. There is now a viable option for establishing credit outside of the traditional avenues. The National Credit Reporting Association (NCRA)--a trade group representing small regional credit agencies--in combination with an organization known as Payment Reporting Builds Credit (PRBC) has created an alternative credit score tracking and reporting service for consumers.

This service includes in its credit score calculations (in addition to the normally included credit criteria, such as credit cards, auto loans and mortgage payments), portions of consumers credit history which are very often positive (for example, rent, phone, water, heat, and other utility bills, small business loans, alimony, child support, payments), but are generally not included in the credit reports from the large national consumer credit reporting bureaus (Experian, Equifax, Trans Union) nor is used by the largest credit score provider--Fair, Isaac Co. (FICO)--in calculating credit scores.

The alternative, nontraditional credit records compiled by PRBC are turned into a "Bill Paying Score" (BPS), which creditors can use as an adjunct to enhance a consumer's traditional credit report and FICO credit score when analyzing the consumer's application for a loan. And note: under federal law--specifically, the Equal Credit Opportunity Act--creditors who use national credit bureau information when analyzing a loan application must also consider other credit information not provided by national credit reporting companies, which the consumer can provide and document (such as a BPS from PRBC).

This is especially helpful to consumers who have had credit issues in the past; they may have little inclination to take on new revolving and consumer debt because they want to stay out of trouble. While this demonstrates smarter money management, it isn't helpful for creating a new credit history with the three major credit reporting bureaus.

Credit applicants who are declined because of insufficient credit history or who feel that the addition of positive but unreported trade lines can result in a favorable underwriting decision should provide a BPS and ask creditors to reconsider their applications. Home loan applications declined by automated underwriting programs can be re-evaluated by underwriting personnel, and by law, additional credit data such as that provided by a BPS must be considered.

For more information on acquiring a BPS and related services, contact PRBC. Please note that fees do apply. Also, as a reminder, some credit and prepaid cards also offer attractive ways to establish or rebuild credit with the three major credit bureaus. Good luck on improving your credit standing!

Don't Let Your Anger Ruin Your Credit

Let's face it, we've all had a poor experience with a customer service representative. Altoof times, when we get angry at a company employee that mistreats us, we feel as if the compan mistreated us, and we feel the need to cut ties with them. In the credit industry, that would pobably lead us to closing a card or other account in the heat of the moment. Whatever the reason may be, whether they lowered your limit, ratejacked you, or they gave really awful customer service....you're probably shooting yourself in the foot by closing that card/account.

I myself have had to deal with more than one extremely rude CSR (customer service rep). A few years ago, I was ready to close an account due to them. It seemed at the moment that te individual who obviously was having a bad day and took it out on me, represented the credit card company's opinion of me. n reality, they onll represened their job and their unprofessionalism. This occured to me when I was so angry I told a friend that I had closed the card nd was considering not paying them another cent. Then she told me something that saved both my account and future credit: "That person doesn't car what you do to te acount. You're not hurting them by ruining your own creit. You're only hurting yourself." Then it clicked... This person is just sitting in a cubical somewhere taking calls, viewing me as just another faceless problem they had to deal with. It had rang so true that i followed her advice and salvaged the account. It's easy to let CSR's repreent the banks because the banks put them out there to do so. However, the fact is that no matter how angry a phone rep makes you (or even an underwriter or even a supervisor), the common consumer as an individual really can't hurt a big bank no matter what you do to your own accounts, and closing an accoun...well that only hurts you.

So how can you show a bank how you feel about their poor decisions and/or attitude towards you and/or your account? Well, for one we can stop them from profiting from us. The best ay to go about this payin off and sockdrawering (not using) the card. Unless your card has some kind of fee attached to it, sockdrawering your card with a zero balance takes away any profits they were makng off you, without tang away from your available credit AND it continues to build age. Yes, credit cards continue to count in the ge category in the fico calculation whether they're open or closed, however positive accountsremin for 10 years AFTER they're closed. So by delaying the closure, you're retaining the positive tradeline on your report for a longer period of time.

I hope this helps in your future as far as decision making about closing accounts is concerned. I do NOT believe in keeping a sockdrawered card open if it has a fee attached (such as an annual fee). If that's the case, then closing the car wouldn't be a bad decision. If, in a moment of anger you closed an accoun and then regretted it later, some have had luck caling back and geting the account reopeed. In any case, when a bad CSR gives you a gun, don't shoot yourself in the foot with it.

Benefits of Using a Prepaid Credit or Debit Card

A prepaid credit card works just like any other credit card - with one major difference - the money you will be spending when you use it has been previously deposited into a secure account. Like a gift card, when the deposited money is gone, you can no longer use the card. But unlike a gift card, you are not limited to purchases at a particular merchant but can use it at any store that accepts major credit cards.

With no or a bad credit history, it may be difficult to qualify for a standard credit card. But when a card is needed, an easier solution may be to apply for a prepaid credit card. There is no worry about your credit history or more debt, because you are not borrowing any money but actually using your own money. You will be depositing funds into a secure account and using the card like a gift card until the funds are depleted or additional funds are deposited.

Other advantages include an easier way to track spending and with the ability to limit the amount of funds, many parents provide them for their college students and teens. The account activity can be monitored online to help keep within a budget. The balance can be checked or loaded with additional funds online or over the phone.

A prepaid Visa or MasterCard is a safe, secure way to carry your money. When traveling, using one allows you to leave your checkbook at home. It also offers convenience when a merchant only accepts cash or credit. You also have the security of knowing that you must sign for every purchase, making it difficult for a thief to use your card. In addition, if your card is ever lost or stolen, you can cancel it with a simple phone call.

Make sure you read all the fine print in order to find the offer with the best terms when you’re shopping for a prepaid credit card to meet your needs. When you compare offers, find one that has a PIN number that will make it possible to use the card anywhere you would normally write a check. Be sure to understand all of the fees and any minimum balance requirements.