The Priority Pay program is a brand new addition to the many
other services offered at RethinkingDebt. This program is available
to clients who, due to financial restrictions, do not qualify for a
traditional debt management program. At your appointment with
RethinkingDebt, you will speak with a certified credit advisor and
create an in depth budget based on income, living expenses,
creditors, and amounts owed to each creditor in order to see your
financial situation as a whole. This will allow the advisor to
determine the most beneficial way to pay off outstanding debt.
Priority Pay allows our clients to start debt repayment while still
maintaining their everyday living expenses. Our staff understands
each individual has a unique financial situation, and we try to
assist each client in determining the best option based upon their
own individual needs. Unlike the debt management program, when on
Priority Pay, there is not a minimum payment requirement for each
creditor. Once a creditor is paid in full, the funds can be
reassigned to another creditor with an outstanding balance until
all debts are paid in full. There is no time restriction for paying
off the debt. This program simply allows you to start the process
to obtaining financial health by paying one, two, or a few accounts
at a time without disrupting your monthly budget. Our certified
advisors would be glad to schedule an appointment in person or over
the phone to review your current debt situation. Call us!
Often, consumers feel the pinch of needing something
immediately, whether it be money or a physical item. During these
times, consumers need to be very wary, as many of the options
available to them are sometimes well disguised traps meant to take
advantage of their situation. Two of the biggest traps to avoid are
Rent-To-Own stores and payday lenders.
Rent-To-Own stores prey on the consumer's desire to immediately
have material possessions. These stores have become popular with
people who have poor credit, and heavily target lower-income
Rent-To-Own stores lure in consumers with promises of providing
high-end merchandise, such as flat screen TV's and furniture, at
"affordable" payments drawn out over a long timeframe.
The problem with Rent-To-Own stores is that they are able to
hide extremely high interest charges and fees over time. Interest
charged at these stores can run as high as 50% and end up costing
you far more than the item is actually worth.
Alternatives to these stores include making a savings plan to
buy the item outright or shopping at second-hand stores like
Goodwill for more affordable items.
Consumers who feel the need for a smaller amount of cash in a
short timeframe sometimes turn to payday loans. These products are
short-term loans that are meant to give people money until their
next payday. Although this sounds like a noble, useful product, the
interest rates and fees can make it impossible for the
borrower to repay the debt in the anticipated timeframe.
The interest rates are so high that these loan products are
currently illegal in the state of New York due to usury laws. The
annual percentage rate (APR) of a payday loan can reach into the
hundreds, trapping the consumer in a cycle of being unable to repay
These loan products should be avoided at all cost. The best way
to avoid feeling the need to take out a payday loan is to prepare
an emergency fund into which you deposit a small amount each month
in case of unexpected expenses.
If you are struggling each month to pay your bills, and you
don't seem to be making any progress, maybe it's time to consider
getting some help. A Debt Management Plan (DMP) is a great option
if you need professional advice. The goal of any DMP is to help you
decrease your debt and allow you to take back your financial
A DMP can help with your unsecured debt. Unsecured debt is debt
that is not secured by an underlying asset or lien. Examples of
unsecured debt are credit cards, personal loans, and attorney or
medical bills. A DMP will take all of your unsecured debt and
combine it into one affordable monthly payment. It is not a debt
consolidation loan though and unlike debt settlement services,
there are no upfront fees. A credit counseling agency will provide
you with practical budget counseling services and work with you and
your creditors to build a budget you can live with. A DMP will help
you pay off your debt and improve your credit rating. An agency
that offers DMP's can offer helpful suggestions and assist you
•lower interest rates
•reduction or removal of late or over limit fees
•relief from collection calls and letters
Regardless of your specific need, choosing a good credit
counselor is extremely important. Some organizations, including
some non-profit credit counseling agencies, may be more interested
in their bottom line than in helping their clients. A 2005 Senate
committee, though, lauded the National Foundation for Credit
Counseling (NFCC) for its commitment to ethical credit counseling
that is provided at low or even no cost to consumers. The NFCC has
member agencies all over the US including Consumer Credit
Counseling Service of Rochester. There are some important criteria
to keep in mind when choosing an agency to work with.
•Find out if the agency belongs to a national organization such
as the NFCC to ensure it meets quality and ethical standards
•Ask the Better Business Bureau and other third parties about the
•Watch out for large upfront or monthly fees
•Be skeptical of BIG promises
•Make sure the agency will work with all your creditors
•Be wary of "fly by night" agencies- make sure the agency you
choose has many years of experience
Keep in mind that a DMP is not a "quick fix". No one can get rid
of your debt overnight. A DMP will get you back on track though and
improve your finances for the future. You must be committed though.
A credit counseling agency can help you lower payments but you
still have to be disciplined to make those payments and not incur
any further debt while you are on the DMP. Your patience and hard
work will be rewarded with a brighter financial future!
Occasionally, hackers are able to breach the
security precautions of companies and access protected consumer
However, there are some proactive steps you can
take as a consumer to safeguard your personal information.
The best method of monitoring your credit report
would be to pull all 3 credit reports annually, ideally spreading
them out over a course of a year.
You can acquire your credit report for free
through annualcreditreport.com; this site is a free,
government-sponsored site with no fees or temporary membership
If you feel that your identity has been
compromised, you can place a personal statement on your credit
It is important to place instructions for a
creditor to follow if they are trying to issue you credit,
including a method for them to contact you.
Make sure to update your passwords and contact
the bank or lender immediately.
Request the bank or lender to issue out a new
card, and change any PIN‟s associated with the accounts.
Contact companies that have recently solicited
you and ask to be removed from their mailing list.
To avoid e-mail solicitations, you can direct them to the junk
or spam folder. Then, each time you‟re sent a solicitation from any
company you sent to junk or spam, it will automatically go
By: Rachel Douglas, NFCC certified Credit Counselor
Card skimming is a method used by thieves
to steal credit or debit card information. Skimmers place
counterfeit devices on ATMs which record your information when
cards are inserted into them.
This practices illustrates that credit
and debit card accounts are vulnerable even if the cards themselves
are never lost.
In part, that is because credit and debit
card numbers are usually stored unencrypted on a magnetic stripe on
the reverse of each card, which thieves can easily copy at low
Summer is the highest-risk season for
scams and thefts, so make sure you know how to properly protect
yourself to avoid becoming an easy target.
To protect yourself from card skimming
scams, practice the following:
Avoid ATMs that you do not
Thieves commonly put out-of-order signs on legitimate ATMs and set
up nearby counterfeit ones that skim information from your card.
ATMs positioned inside banks within view of watch cameras aren't
risk free, but they create more challenges for the thieves who
install skimming equipment.
Cover your code.
When entering your PIN into an ATM or card reader, cover the
keypad from the observation of hidden cameras or anyone in close
Use the "credit" option with your
If you must use a debit card, choose the option to have the
purchase processed as a credit transaction rather than entering in
This option is available at many point-of
sale terminals, and functions the same exact way as using the debit
option. This way, your debit PIN is more secure.
Card skimmers particularly target gas
stations, especially in vacation areas. Make sure to be extra
careful while filling up your gas tank!
There's been a lot of talk recently about
raising the US debt ceiling, but not a whole lot of context as to
what exactly this means and why it's supposedly such a big
Think of the debt ceiling as a credit
card or a line of credit for the United States department of the
Treasury. If the Treasury does not have enough cash to pay its
bills, it can borrow money to cover its expenses. However, just
like a line of credit, there is a limit to how much money can be
borrowed - this is what is known as the "debt ceiling."
The limit to the ceiling can be raised
through an act of Congress, and in fact has been raised 74 times
The problem has recently become the fact
that the limit to the debt ceiling ($14.3 trillion at the time of
this writing) is lower than will be needed for the government to
continue paying its expenses. The estimated day on which the United
States will no longer be able to borrow in order to meet its
financial obligations is August 2, 2011.
So the big question becomes - what
happens if the problem doesn't get solved?
This is where it gets rather tricky. The
truth is that nobody is completely sure what will happen. Just like
how the stock markets are inherently unpredictable, the US not
meeting its obligations will have unpredictable outcomes.
One of the major concerns is that the
United States will get a decrease in its debt security ranking.
Currently, the ranking of US debt is AAA, which means that
according to the expert financial agencies, US debt is among the
most secure debt to own (with the highest likelihood of getting
paid back with interest).
If the government is unable to pay
interest dividends (just like interest fees based on an APR to a
credit card agency), the security ranking might get downgraded.
But, again, nobody is completely sure what effect, if any, that
will practically have.
Ultimately, raising the debt ceiling is
only applying a band-aid to a large wound. As much of a quagmire
the debt ceiling debate has been, the only real solutions are even
more difficult to swallow.
The government needs to eventually either
cut spending or raise taxes (or a combination of both). These, of
course, are not easy options to swallow for anybody.
It looks like the Treasury could stand to
Guest article by John Ulzheimer of SmartCredit.com
When it comes to boosting your FICO
credit scores there are a variety of strategies that will yield
varying amounts of improvement. Many people believe that
getting negative information removed from your credit reports is
the number one way to increase your scores. This is correct
but only if the consumer is successful at getting most, if not all,
of the negative information removed. Getting one of your
twelve collections removed isn't going to do anything for your
A much more actionable (and realistic)
way to increase your scores is to pay off debt. Not only is
this a proven way to earn better scores but also it's practically
immediate. Paying down debt can result in a better score in less
than 30 days, which is lightening fast in the slow moving
But before you crack open your checkbook
you'll want to consider WHICH debt you're going to eliminate.
Why? Because when it comes to improving your credit scores
not all "debt elimination" is created equal. In fact, paying
some huge debts will yield little to no score improvement while
paying smaller debts can result in meaningful score boost.
Using a scoring tool built by FICO, I
recently simulated the following "pay off" scenarios and measured
their impact to a FICO score of 630, which is clearly one that
you'd like to improve. Nothing other than the following
actions changed on the credit report.
1) Paying off a $250,000 mortgage
2) Paying off a $35,000 auto loan
3) Paying off a $5,000 credit card
The results are as follows…
Paying off a mortgage loan of
$250,000 improved FICO 630 to FICO 635
I've been telling people for many years
that installment debt, even in large amounts, doesn't have much of
an impact to your scores. This is the quantification of that
advice. And while this is just a simulation, in 2010 I sold a
house and eliminated a $249,000 mortgage and my FICO scores went up
Paying off an auto loan of
$35,000 improved FICO 630 to FICO 635
An auto loan is an installment loan (like
a mortgage) and the effect of paying it off is equally unimpressive
from a scoring perspective. Don't get me wrong; it's nice not
having a monthly car payment. And, it'll save you big bucks
not paying interest on a $35,000 loan any longer.
Paying off a credit card balance
of $5,000 improved FICO 630 to FICO 665
Eliminating the credit card debt resulted
in the largest improvement to the credit score, and really it
wasn't even a close race. Credit card debt is scientifically
proven to be a riskier type of credit for lenders to extend, which
means even smaller amounts like what was used in the simulation can
have a significant impact to your FICO scores. It also means
if you can pay it off your scores will improve a lot, and very
quickly. And even if you can't pay off your credit cards
100%, your scores will still improve by paying it down as much as
Now, where's my checkbook?
John Ulzheimer is
the President of Consumer Education at SmartCredit.com, the credit
blogger for Mint.com, and a
Contributor for the National
Foundation for Credit Counseling. He is an expert on credit
reporting, credit scoring and identity theft. Formerly of FICO,
Equifax and Credit.com, John is the only recognized credit expert
who actually comes from the credit industry. Follow him on Twitter here.
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