What Happens When You Miss a Credit Card Payment

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Your phone rings — and rings, and rings some more. You know who’s calling. You know what the caller wants, too, but you can’t afford to give the money you owe on your credit cards. So, you let the debt collector leave a voicemail you have no intention of returning.

That’s the wrong way to deal with delinquent credit card debt, says Michaela Harper, debt counselor and director of the Community Education for Credit Advisors Foundation in Omaha, Neb.

“Don’t be afraid to talk to your creditor,” says Harper. “Avoiding them makes the problem worse because it sends it onto the next division” and brings your debt closer to being charged-off, which Harper says consumers with past-due debt should do their best to avoid. (More on that later.)

Credit card debts — or most debts for that matter — become delinquent the moment you miss a first payment. The events that follow the missed payment depend on how long the past-due debt goes unpaid. It begins with friendly reminder calls from the bank to pay your credit card bill, and can culminate in losing up to 25 percent of your annual income to wage garnishment.

The portion of consumers missing credit card payments has been on the rise since the lowest levels of delinquent credit card debt ever recorded were reached two years ago. About 2.47 percent of credit card loans made by commercial banks were delinquent in the second quarter of 2017, according to Aug. 23 figures from the Federal Reserve Economic Database.

Below is a timeline chronicling what happens when you miss a credit card payment, as well as tips from debt management experts on what you can do to mitigate the situation at each point. (You can jump to a specific time period by clicking on the milestones below.)

Zero to 30 days past due: Missed a payment

After you miss your first payment, your debt is delinquent and the clock starts ticking. Your bank should begin to contact you to remind you to make a payment. You are also likely to incur a late fee.

The first 30 days will sound more like courtesy calls, says Randy Williams, president and CEO of A Debt Coach. In reality, the bank is trying to verify your address and personal information to update the system in case your debt becomes more delinquent. (Williams used to work as a bill collector before switching over to debt consulting.)

What you can do

At this point, the bank’s agents may be more willing to provide customer service, so you can ask for an extension or create a payment arrangement to address the past-due debt before the missed payment begins to impact your credit report, which can be as early as 30 days past due. You may also try your luck at asking if the bank could waive any late fees already incurred, although the creditor is not obligated to extend this courtesy.

There’s only so much leeway a bank will give you, says Gordon Oliver, a certified debt management professional at Cambridge Credit Counseling. If you’ve asked for a late payment or interest charge to be waived in the past, you won’t have much leverage.

“There will be different reasons why a creditor may not extend those benefits at the time, but usually those terms are for borrowers who are in better standing,” Oliver adds.

30 to 90 days past due: Collection calls begin

Over the 30- to 60-day delinquency period, the bank will attempt to reach you to collect the past-due amount on your credit card bill.

“This is when they are trying to figure out what’s wrong. They are trying to collect the money,” says Williams.

“At this point it’s starting to affect your credit,” says Williams. He says the robo-collection calls may come as often as every 15 minutes. Borrowers with higher credit scores are likely to see a bigger drop than borrowers with lower scores. According to FICO data, for example, a 30-day late payment could bring a 680 credit score down 10 to 30 points and a 780 score down 25 to 45 points.

In addition to seeing your credit score drop, you will be charged late fees on the past-due account. After you have owed debt for two payment cycles, the CARD Act allows creditors to flag you in their system as a “high-risk” borrower, which means the interest you currently pay will rise to whatever the bank charges for customers at a high-risk status. That number varies from bank to bank but in some cases can get as high as 29.99 percent. The rate will stay that high at least until you have made six consecutive on-time payments, at which point the bank is required by law to reset the rate.

However, “the law doesn’t say they have to do it on their own,” says Harper. So, you will likely need to request a reset. You can find the APR charged to high-risk borrowers in your credit card terms.

What you can do

Harper says if you respond at this point, the bank may ask you to negotiate a payment arrangement.

“Never make a promise to pay that you can’t keep just to get someone off the phone,” says Harper. “If you are silent, you agree to the payment.”

Missing promised payments also gives the bank more leverage if the bill eventually goes to court, says Harper. “If they walk into court and they can point to all of the promised payments, it undermines your credibility.”

Harper advises debtors to be very clear if they cannot meet the bank’s proposed payment arrangements. You need to specifically tell them you cannot make the payments. If possible, take a look at your budget. If you find you are able to send them a small amount every month, tell them.

“That’s a valuable thing because it goes back to when the account charges off. You can slow down your progression toward charge-off by making the partial payments,” says Harper.

A charge-off happens when a creditor believes there is no chance of collecting your past-due debt, so the debt’s considered a loss. The debt gets written off the creditor’s financial statements as a bad debt and sold or transferred to a third-party collection agency or a debt buyer.

“If they feel like it’s a tough situation [you] are going through they will refer [you] to a credit counselor” around the 60- to 90-day mark, says Williams. Again, that benefit may not be extended to all consumers facing financial hardship.

90 to 120 days past due: Bank requests balance in full

After your bill is 90 days overdue, the bank will turn collection over to its internal recovery department to engage in more aggressive collection attempts. Williams says the bank will now be calling for the balance in full, not only the past-due amount.

The bank’s collectors will continue to call, but they may also send you multiple letters every day, or may attempt to reach you via social media, emails or emergency contacts.

Harper says the account may stay with the bank’s internal collections for another 90 days (180 days past due), but it’s important to note that at the 120-day past-due mark, your debt is at risk of getting charged off and being sold to a third-party collection agency.

That’s because the CARD Act states the past-due amount needs to be the equivalent of six months’ worth of your credit card’s minimum payment in order for the debt to be charged off. Including late fees and the amount added in higher interest payments, consumers may reach that figure in as little as four calendar months.

What you can do

If you can’t give them the entire past-due amount or balance in full, take a serious look at your budget. See if there is any room to make even a small payment. If you can find a few dollars, you may be able to enter a repayment plan with the bank, which will at least pause the collection calls. Don’t forget to leverage the collector’s insider knowledge. Explain your situation and ask if you can negotiate a solution with the bank.

“You want to pay off the debt, they want to pay off the debt. They may have solutions they can offer you that you don’t know about,” says Harper.

Once you’ve got an active repayment plan in place, the bank will pull you out of the collection list, Harper says.

120 to 150 days past due: Hardcore collection attempts

Watch your credit report carefully after your account becomes 120 days past due, as it may be charged off at any point. At this point, the collectors will continue to try every channel available to them to get in touch with you and collect on the debt. The attempts may get closer together and collectors may try more aggressive tactics to scare you into paying up.

“One hundred and twenty to 150 days, it is hardcore. Now they are going to offer you a settlement. They will do whatever they want to try and get to you to pay the debt off. It’s basically motivation to get you to pay now,” says Williams.

Debt collectors at this point may also take time to remind you of your rights under the CARD Act and Fair Debt Collection Practices Act as well as their right to collect on the past-due debt.

The bank’s collectors may not directly say they will proceed with legal action or wage garnishment if they do not intend to, as that is illegal under the FDCPA, but they may remind you of those possibilities if you do not pay and emphasize the bank’s right to collect on the debt owed to them, Williams says.

Williams adds, “They never say they are going to sue you; they say, ‘We have the right to protect our asset.’”

What you can do

Williams says at this point the debtor essentially has three options. Bring the account current by paying the entire past-due amount, arrange a debt settlement plan with the bank or try going to a credit counselor to create a debt consolidation plan.

“Near 120 days past due, they need to get some form of help to remedy the account before it goes to a charge off,” says Oliver, who adds that the timing the charge off will be difficult to predict.

For those who may be behind on several bills, Oliver also recommends getting some form of financial counseling to create a plan that addresses all your financial issues.

150 to 180 days past due: Last chance

At 150 days, collections efforts will remain aggressive and may even increase in frequency as the bank is now concerned about losing the debt to a charge-off.

Once your credit card payment is 150 days past due, you may start to hear the bank’s agents’ tactics shift as they may make a last-ditch effort to recover the debt, according to Williams.

What you can do

You will still have the options to pay the balance in full or reach a settlement with the bank, but you may have an additional option: Re-age your debt.

When your account is past due and you enter a re-age program, the late payments and collection activity are removed from your account. As a result, “your credit score may improve by 10 to 15 points if not growing every month from there,” according to Williams.

You will generally be asked to make at least three on-time payments on the debt before your account is re-aged. For example, the bank could ask you to pay $100 each month for three months before bringing your account back up to a current standing, but the bank will add the interest and fees you’ve already incurred to the total amount you owe. After the account is re-aged, you’ll go back to making minimum payments on the total amount of debt outstanding. Re-aging the account may also remove the “high-risk” stain from the account so your interest rate drops to to whatever it was before.

Williams says a re-age can be seen as a win-win for both parties: You are able to catch up on your delinquent debt and — in some cases — have its impact removed from your credit report, and the bank is able to recover the interest and fees that have accumulated since your account became delinquent.

Of course, the credit card company doesn’t have to allow you to re-age the debt and may not offer the option to you, but there is a possibility it will do so if you ask. Keep in mind you are only allowed to re-age an account once in 12 months and twice within five years, per federal policy, and re-aging is only an option on accounts that have been open for nine months or longer. Credit card issuers are allowed to set more strict re-aging rules for its accounts, as well.

After 180 days: Charged off to a third party

When you are about six months past due, it is extremely likely the bank will charge off your account and sell the debt to a third-party collection agency. If the bank does not charge off your account, it may take the matter to court.

If it goes to collection, third-party debt collectors may employ some of the same tactics the bank’s collectors did. Most collection agencies will push hard for the first 90 days, then at the end of that point in time they may decide to sue you, Harper says. Or they may sell your debt to another collections agency.

The third-party collectors will attempt to contact you using every channel available to them for the next 90 days or so, before they must decide to either charge off the debt or sue you. The collectors will likely demand you pay the full balance or ask you pay the balance in thirds, says Harper. If they can’t get a hold of you or get you to arrange a payment plan in that time, they may decide to turn it over to an attorney.

What you can do

You should try the same tactics that you would have used with the bank’s internal collections agency with the third-party agency, negotiating the price down and reaching a settlement with the third-party collector. If you don’t respond to the collection requests, you may be sued.

You may not be sued for some time. Companies can only sue you for unpaid debts within a certain period of time, called a statute of limitations — anywhere within three to 10 years, according to your state’s law. Your debt may be sold and resold several times before that happens. Check with the office of consumer protection at your state’s attorney general to find out what the rules are in your state.

If you are served with a lawsuit, you should check the letterhead to make sure the attorney or company filing the suit on behalf of the collections agency is licensed to practice law in your jurisdiction, says Harper, as you cannot legally be sued for credit card debt by an attorney outside your jurisdiction.

You should also be sure to respond to the lawsuit. If you don’t, you’ll likely lose. The court can automatically side with the lender if you don’t show up in court, also known as a default judgment. That may result in getting your wages or federal benefits garnished to pay the debt, not to mention the credit damage a judgment causes. Federal law states a creditor can garnish no more than 25 percent of your disposable income, or the amount that your income exceeds 30 times the federal minimum wage, whichever is less.

If you can’t afford to settle

If, given your current financial situation, the debt is unmanageable for you and you are not able to settle the account, you may want to consider bankruptcy. But you will have to file before a judgment is entered against you in court, which may be tricky to time, Harper says.

Given the difficulty in timing when the creditor will take your account to suit, you shouldn’t wait if you think bankruptcy is an option for you. Read here for more information on how and when to file for bankruptcy.

The post What Happens When You Miss a Credit Card Payment appeared first on MagnifyMoney.

Can Refinancing to a Higher Mortgage Rate Actually Lower Your Debts?

Are you handling your debt the smartest way possible?

Your ability to save money can become compromised by the financial obligations you are paying in your life. If you have a mortgage and other consumer debts, it’s easy to stay the course, pay your monthly bills and rely on credit cards for emergencies. But taking action — namely, refinancing your mortgage —  could actually help you get better control of your cash flow. Allow me to explain.

The nuts and bolts of a good financial plan includes having “preferred debt,” which includes debt that is tax-deductible (a mortgage) and has no consumer obligations that are non-preferred (i.e. credit cards, student loans, car payments, etc.). Non-preferred obligations will compromise your ability to save money.

Consider the following scenario:

John Borrower has a mortgage of $300,000 with an interest rate of 3.875%. His mortgage is a 30-year fixed rate loan and his monthly payments are $1,410.71. John also has a car loan of $10,000 with an interest rate of 6% and a monthly payment of $500. His credit cards total $8,000 with an average interest rate of 16% on which he has to pay $400 per month, for a total of $2,310.71.

John Borrower has a great credit score because he always carried a small balance on his credit cards, has never missed a payment, and his credit history is squeaky clean. However, John’s car just broke down and he needs a new transmission that will cost him $3,500. Unfortunately, John’s mortgage payment and other obligations take up a majority of his income and now he has very little money saved up.

What does John do? He turns to his credit cards and goes further into debt. He is reluctant to make any changes to his financial burden. He has a great interest rate on his mortgage, but is he really getting ahead financially?

A Better Approach to Debt

There is a more proactive approach John can take that will be more consistent with having a strong financial foundation that will not only make him more creditworthy, but will also give him the ability to save and plan for the future.

The first thing to look at is all of John’s interest rates. True, his mortgage rate is low but the weighted average of his interest rates on all obligations is quite high. His interest payments alone take up a lot of extra money. Let’s look at the math:

Debt Balance Interest Rate Monthly Interest Payment
Bank of Bank Mortgage $300,000.00 3.875% $968.75
Car Lots Mega Car Loans $10,000.00 6.000% $50.00
Credit Cards (BULK) $11,500.00 16.000% $153.33

The total amount John owes in debts is $321,500, which includes his new credit card debt of $3,500 from the new transmission. If you multiply John’s amount owed by each individual interest rate and add it together, John is paying a total of $14,065.00 in interest alone each year.

Broken down: ($300,000 x 3.875%) + ($10,000 x 6%) + ($11,500 x 16%) = $14,065.00

Dividing the yearly interest paid by the total amount owed ($14,065 / $321,500) results in John paying an annual average interest rate of 4.375%.

If John were to refinance his current mortgage at that average 4.375% interest rate, something really interesting would happen to his payments. John is currently paying $2,310.71 each month in debt payments while interest is being accrued on his debts. By combining his debts under one mortgage at the higher 4.375% interest rate over a 30-year fixed-rate term, his monthly payments, interest included, would drop his payments from $2,310.71 to $1,605.20 each month.

Say what?

If John refinances his mortgage for the purpose of debt consolidation, his average interest rate does not change AND his monthly payments are lowered. Of course, because John is already cash poor, he’ll want to roll his closing costs into his mortgage refinance to keep his out-of-pocket expenses down. Suddenly, John Borrower is saving $705.51 each month. John can take that money and invest it or start a vacation fund. He can also put it to the side in case something else on his car breaks down. Regardless of his plans for the savings, the fact is that he is saving money and gaining control of his cash flow.

Having low rates and high rates on multiple forms of debts probably means you are going to be paying a higher rate of blended debt on all of your preferred and non-preferred obligations over time. The reality is that you can save through consolidation and fixing on one lower rate. It might be higher than your current lowest rate, but as John discovered, he could save money by increasing his lowest rate and combining his debts.

What’s Your Ideal Scenario?

The ideal financial scenario for any borrower is to have a single mortgage payment with no debt obligations and to have at least 6 to 12 months of savings (“reserves”) to be used as “back up.” This financial platform increases your borrowing power and is optimal for having a choice and control over your funds. (You can find more tips on how to determine how much home you can afford here.)

If you are thinking about taking out a mortgage or making some financial adjustments in your life, it’s a good idea to first check your credit scores to see where you stand (you can get your two free credit scores, updated every 14 days, on Credit.com.) Next, work with a mortgage lender who has the skill set and ability to really investigate your debts and can show you the real breakdown of your debts and what you are paying over time. You might end up realizing how much control you are missing out on by having payment obligations in an ongoing debt cycle. The numbers might astonish you.

Looking to a new abode? Be sure to avoid these mistakes first-time homebuyers make.

Images: andresr

 

The post Can Refinancing to a Higher Mortgage Rate Actually Lower Your Debts? appeared first on Credit.com.

4 True Tales of Maxing Out Credit Cards

maxed-out-credit-card

Some people like to joke about taking things to the limit, but when it comes to your credit, maxing out a credit card is no laughing matter.

Maxing out a credit card means swiping until you reach the card’s credit limit, or the total amount of credit extended to you. And that’s bad news for your credit scores because your debt utilization ratio (e.g., how much debt you have versus your total available credit) is one of the key factors credit agencies use to determine your score. Bump up against that limit, and your score will take a hit.

Debt levels are another factor that go into your score. Carry too much, and you’ll send a red flag to lenders that you’re in over your head; slack off on a few bills, and they’ll begin to think you can’t manage your payments responsibly.

We spoke with a few Credit.com readers who learned the hard way about the dangers of maxing out credit cards. While they aren’t proud of what they did, they came out stronger for their experience and took steps necessary to get their finances back in order. (Note: At their request, some names and locations have been withheld to protect readers’ privacy.)

‘I Maxed Out Seven Cards’  

Between 2006 and 2008, Steven M. Hughes was saddled with a lot of debt. “I maxed out seven cards in my freshman year alone,” he said via email, “two more as a young professional.” The problem was he didn’t understand how to use them. “My parents always told me to stay away from them and didn’t teach me how to manage them properly,” he said.

“I had one credit card for emergencies that I maxed out on car repairs for a car at the time. I had department store cards that I maxed out on clothes for school and work because I worked while I was in college. I had a card I maxed out going to a family member’s wedding in New York City. I started assigning jobs to each card, but I didn’t have the income to pay them off, and paying the minimum balance wasn’t cutting it. All but one card was charged off. I managed to pay the lone card off and start a new account with the creditor.”

Today, the Columbia, South Carolina, resident teaches millennials how to manage their money through his nonprofit, Know Money, Inc. “After making all the financial mistakes, I started to learn as much as possible about personal finance,” he said.

‘I Was Into Wearing Ralph Lauren’ 

Deborah Sawyerr, a fashion and lifestyle blogger based in London, was about 32 when she visited Woodbury Common Premium Outlet, in Central Valley, New York, during a family holiday in 2005. “We bought clothes, shoes, suits, my daughter some bits, belts, jackets and some gifts,” she recalled via email. “At the time, I was into wearing Ralph Lauren clothing, so most of my spend went on this particular brand.”

Her credit card balance at the time was pretty low, but she admits she went a bit overboard that trip, racking up roughly $5,000. “As luck would have it, at the same time, my employer had just paid me in excess of £5,000, or thereabouts, as a redundancy package,” she said. “I basically — and perhaps I wasn’t so naïve — used the entire redundancy package to clear the debt in one go.” Humbled by the experience, Sawyerr said hasn’t maxed out a credit card since.

‘I Knew Very Little About Money’ 

In 1997, John Schmoll, Jr. was an undergrad with four maxed out credit cards totaling a whopping debt of $25,000. “When I went to college, I knew very little about money and was enticed to sign up for credit cards out of the promise of some sort of free swag — T-shirt, Frisbee, you name it,” he wrote in an email. “I ended up signing up for four credit cards this way, and used them to finance a lifestyle that I wanted but could not afford.”

Teetering on the verge of bankruptcy, at a roommate’s urging Schmoll decided to meet with a debt counselor, who helped him lower the rates on his cards. From there, he set up a budget, which enabled him to pay the cards off five years later. “That changed my life forever and put me on the path I am today, working toward financial independence,” he said. Today, the Omaha-based father and finance industry veteran blogs at Frugal Rates about what he’s learned.

‘0% Offers Were Appealing’ 

Years ago, Lisa, a marketing strategist, found that the 0% promotional APR offers from credit card issuers “were appealing.”

“I had six credit cards, all with a little over $3,000 on them,” Lisa said in an email. “I consolidated them into one account, maxing out that card, and I paid it off in about two years.”

So what got her there in the first place? Overspending. “I was floored to find out how liberal I’d been with spending — luxury items, travel to the Maui Writer’s Conference, etc.,” she said. “I behave very differently now.”

For starters, she said she doesn’t keep a revolving balance, and diligently pays her balances off every month. “That way, there’s no surprise debt, no interest charges, no late fees, etc.,” she said.

If you have reason to believe your spending’s out of control and it’s affecting your credit, you can read up on these tips to build credit the smart way and view your free credit report summary on Credit.com to see where you might want to improve.

Image: m-imagephotography

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Is Your Credit Card Ready for the Holidays?

holiday-credit-card-spending

Ah, September. That magical time of year when boots and open-toed shoes intermingle, mornings get crisper, people start lining up for those infernal pumpkin spice lattes and some retailers start hauling out their holiday cheer.

It seems every year, some store somewhere feels the need to make the holiday shopping season just a tad bit longer. In fact, I wouldn’t be surprised if roadside fireworks stands start selling Christmas trees in late June next year.

There’s one positive to be said about the ever-earlier start of the holiday shopping season, though: preparedness. That’s especially true when it comes to your credit and credit cards.

If you’re like most Americans, you’re carrying some credit card debt. In fact, revolving credit debt, made up mostly of credit cards, climbed 3.45% in July, compared to 11.5% the month prior, the Federal Reserve said last week. In fact, credit card debt is expected to top $1 trillion dollars this year, closing in on the all-time high of $1.02 trillion set in July 2008, just before the Great Recession.

If you’re worried what your holiday gift-giving, party going and other festivities might do to your credit card debt, now’s the time to make a plan.

1. Start by Checking Your Credit Scores

Whether your holiday spending plans involve opening up a new credit card or taking measures to protect your credit, the first thing you’ll want to do is see where your credit scores stand. You can get two free credit scores, updated every 14 days, on Credit.com, and, in your credit report summary, you’ll see what areas of your credit are helping (or hurting) them. For example, 30% of your score is based on the amount of debt you’re currently carrying in relation to your credit limits. This credit utilization ratio can bring your scores down quickly if you’re carrying a lot of credit card debt.

2. Ask for a Credit Limit Increase … No, Not So You Can Spend More

Another way to improve your credit utilization is to ask for a limit increase. To be clear, just because people tend to charge more during the holidays doesn’t mean it’s a good reason to spend more than you can afford. Given the high interest rates on credit cards, a little overspending can take months to repay and cost you hundreds — potentially thousands — of dollars in interest.

That being said, if you’ve budgeted for the increase in spending and plan to put it on credit cards, it’s important to be careful about how high you push your credit card balances. To keep your credit scores in good shape, many experts recommend using less than 10% of your available credit.

3. Pay Down Your Debt

Once you know where your credit stands and how your current debt is affecting it, it’s a good idea to put together a plan pay it off. If your credit card interest rates are high, you could benefit from taking a personal loan at a lower interest rate and using that money to pay off your credit card debt. That also can potentially help your credit scores in the long-term, since the mix of credit accounts you have (mortgage, auto loan, personal loan, credit cards, for example) also affects your credit scores. You can see how long it will take you to pay off your debt using this credit card payoff calculator.

4. Make a Holiday Spending Budget

Yes, part of the joy of the holidays is gift-giving; seeing that look of excitement on your loved one’s face is priceless —until you look at your credit card statement the following month. Ouch. It’s a good idea to set a budget for what you’ll spend on presents, parties, outings and even decorations. The important thing with any budget is to be realistic, so if you know you’re going to end up buying that iPhone 7 Plus for your girlfriend, just put it in your budget and figure out how you can save in other areas (like eating peanut butter for dinner for the next three months, or buying your dad a tie).

Just remember, the holidays will be more fun if you plan ahead a little and aren’t stressed about how much you’ve spent and how much extra you might end up paying in interest. ‘Tis the season to be jolly, after all, but seriously, stay away from the pumpkin spice lattes.

Image: Joan Vicent Canto Roig

The post Is Your Credit Card Ready for the Holidays? appeared first on Credit.com.

How to Figure Out How Much Debt You Really Have

find-tax-preparer

Between student loan payments, a monthly mortgage (or your rent), credit card bills and maybe even an old gym membership that somehow (whoops) went to collections, it can be all-too-easy to lose track of how much debt you actually have on the books.

Fortunately, there are steps you can take to tally up all the red in your ledger. Here’s what to do if you willfully or woefully don’t know what you owe.

1. Pull Your Credit Reports

Your credit reports help lenders determine your ability to repay a loan as agreed — and, as such, generally include key information about all the financing you have on the books, including credit card balances, outstanding mortgage, auto or student loan debt, collection records and public records such as bankruptcy filings and tax liens. If you have no idea how much you owe, obtaining copies of your credit reports from all three major credit reporting agencies (some lenders only report to one or two) is a great place to start tallying up your balances. You can pull your credit reports for free each year at AnnualCreditReport.com and view your credit scores for free each month on Credit.com to see how the data on those reports are impacting your scores.

2. Review Your Credit Card Statements

Credit reports can change from month to month and, if you’re actively paying off your credit cards, there’s a good chance that the balances shown on yours are a bit out-of-date. (Complicating matters, issuers tend to report balances as of your statement’s billing date, not due date, so your latest monthly payment may not be reflected in those totals just yet.) To get an accurate read of how much credit card debt you owe, you should check your current outstanding balance online.

3. Call Your Creditors

Account balances are generally listed on your credit report, but if they’re not — or you’re otherwise confused about what you owe — you should contact the creditor associated with the account. You may have to do a little digging, particularly for an account you don’t recognize, like an unpaid medical bill you were unaware of. However, if you don’t have a credit card or billing statement, contact information from major lenders and even collection agencies should be available on the company website. Some firms may even have designated landing pages for customer service issues or complaints.

4. Dispute Any Errors

If you’re really in the dark about your debts, it’s important that you don’t necessarily take every account listed on your credit report at face value, simply because it’s actually very common for errors to appear on one. If there is an account you don’t recognize on your report, again, contact the creditor in question to get as much information as you can about the balance. You’ll want to make sure the debt is actually yours and not the result of identity theft or another reporting error. If you do determine that the information was a mistake, you should dispute it with the credit bureau. (You can go here to find more information on how to get errors off of your credit report.)

Remember, it’s important to stay on top of the amount of debt you owe since that number is a major component of most credit scoring models. If you have a lot of balances on the books, you may be able to improve your score by paying down high credit card balances (to at least 30%, and ideally 10%, of their total available limit), making all future loan payments on time and limiting new credit inquiries until your debts are paid down.

[Offer: If you’re having a hard time keeping track of your debt and how it affects your credit, you can hire companies – like our partner Lexington Law – to manage the credit repair process for you. Learn more about them here or call them at (844) 346-3296 for a free consultation.]

More on Managing Debt:

Image: macniak

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10 Financial Choices You’ll Regret in 10 Years

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Life is full of financial decisions, some simple, some complex, but all with the potential to make a real impact on your life. In a decade, your world can look quite a bit different than it is today – all because of these decisions.

Today I’d like to focus on some financial choices you’re likely to regret in 10 years. I’d like to save you from the pain, the chaos and the heartache that occurs when people make these decisions.

Put these on your not-to-do list. You’ll be glad you did.

1. Waiting to Start a Budget

Have you procrastinated on starting a budget? It’s time to sit down and get your spending under control.

The beautiful thing about a budget is that it not only keeps you on track with your spending, but it tells you what you should feel free to spend. Have you ever eyed a triple-scoop ice cream cone and thought to yourself, “You know what, I’m not sure I should buy this – perhaps I’m spending too much money on little things.”

No more, my friend. No more. When you have a budget, you know how much you can spend and still be OK.

The long-term benefits of having a budget are incredible. Think of all the money you’ll save, the financial goals you’ll fund and the peace you’ll have with your spouse when making financial decisions together. That’s worth it!

2. Not Paying Off Credit Card Balances Every Month

Credit card debt can pile up fast. If you’re not paying off your credit cards every month, you should start. The interest on credit cards can divert money from other important goals like buying a home or saving for retirement. (You can make a credit card payoff plan using this calculator.)

Budgeting can help you ensure you’re using your credit cards appropriately. You can see how your credit card debt is impacting your credit scores for free on Credit.com.

3. Buying a Financial Product Without Doing Your Homework

I know a woman who paid more than $3,500 in variable annuity fees and didn’t even know it. Don’t think it can’t happen to you.

If a financial adviser or insurance agent is selling you a financial product, make sure you educate yourself on the product before you sign on the dotted line. (Full disclosure: I’m a Certified Financial Planner.)

4. Neglecting Your Emergency Fund

Emergency funds help protect you from the inevitable. You’re going to have a financial setback at some point. It could be a few hundred dollars, or a few thousand.

I recommend you have eight months worth of expenses in an emergency fund. After you use the fund for emergencies, make it your top financial priority to replenish it. If you let your emergency fund slip into the abyss, you might find yourself down the road with more debt than you can handle.

5. Buying a New Vehicle When You Can’t Afford It

Vehicles are important for many people, but they can also become a discretionary black hole. If you are planning on buying or leasing a vehicle when you know you don’t have the money, please don’t.

The ramifications of a car payment well exceed the financial hit of the price of the car, and you can end up spending your retirement away without realizing it.

6. Letting Hubris Get in the Way of Smart Investing

If you’re not a financial professional or haven’t been exposed to financial education, you really can make some huge mistakes by going it alone. That’s not to say some people can’t do it, but you may regret it down the road when you try to short a stock (a move that the pros make) and end up losing a huge amount of money. Investing in your own financial education by at least meeting with an adviser, however, is smart.

Financial advisers can save you a great deal of time and money, ensuring your investing strategy is relevant for your situation. There are many different kinds of advisers, so do your research on which kind is right for you and your goals.

7. Ignoring Your Insurance Options

If you were to die right now, would your family be financially OK? If not, you may need life insurance.

And, that’s just one example. There are a number of important insurance policies you should consider putting in place: disability insurance, perhaps long-term care insurance if you’re over 60 years old, maybe even umbrella insurance.

Insurance protects you from financial liability you wouldn’t be able to cover with your emergency fund alone. Don’t neglect it.

8. Putting Retirement on the Back Burner

Saving for retirement is critical. If you’re trusting Social Security to be your sole source of income, think again. It’s not likely that you’ll be able to maintain your lifestyle with Social Security benefits alone. If you would be able to, congratulations, you’re living pretty frugally!

9. Not Getting on the Same Financial Page With Your Spouse

If you want to crash and burn financially, not getting on the same page with your spouse about money is a surefire way to do it.

When you got married, you became one – one in purpose.

Why not align your financial goals? Talk through your differences, learn to compromise, sail in the same direction. It will be worth it – especially down the road.

10. Letting Recurring Expenses Rule Your Budget

Have a high smartphone bill? Paying too much for garbage service each month? How about that cable TV bill – how many channels do you have that you don’t really watch?

Ask these types of questions. They’re good ones, because they focus on recurring expenses. While certain recurring expenses may not cost much each month, they can certainly add up over time. Look for ways you can cut these expenses and just imagine how much money you can earn by investing what you save over the next 10 years – it’s probably more than you think.

Make smarter financial choices that lead to a brighter future. Even taking on just a few of these tips will make a significant difference in your life. Which ones do you need to work on next?

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its partners.

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