It is a common misconception that if you do not have any plan to get a big loan in the next few years, you probably need not be concerned about your credit scores.This is not actually the case.Regardless of whether you have any plan to get a big loan or not,it is advisable that you must keep your credit record free of inaccuracies.You might know that your loans will be affected by your credit score. The higher the score the lower the rate you will get on mortgages, car loans and credit cards. What if you do not have any plan to get a mortgage or car loan? In this case, does your score matter? Yes, it does matter.

Four unusual situations where the bad credit or an inaccurate report is likely to harm you are discussed in detail below:

Prospective Employers:

Employers,while making decisions about your hiring,firing and promotion, may make inquiries into your credit report.If you have bad credit score then it is most likely to leave a bad impression on your employer and may affect your career.

Federal law gives you protection against the adverse decisions that the employer may make against you. You will be immune to such adverse decisions only if you file bankruptcy (Title 11, Bankruptcy, of the U.S. Code), otherwise every other negative item may be used against you. If you are a loan defaulter or you have missed a payment of your loan then this puts you in a vulnerable position. In this case the employer can use that information against you. It is known that government runs routine background checks on your personal records like criminal history and credit history. If you have a low credit score then this may weaken your position. Such a person could be considered a potential security risk because, due to his financial constraints, he is more likely to be bribed or may easily be exploited. Credit history information may help establish the credibility of a person.

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There are two types of inquiries that a company may make into your credit record,i.e. “‘hard inquiry” or “soft inquiry”.

If a company makes a  hard inquiry into your credit record,it will damage your credit score temporarily.Your credit score may be damaged only by a hard inquiry while a soft inquiry does not affect your credit score.

If you are planning to get a mortgage or you need a car loan then in this situation even a few points difference in your credit score cannot be ignored and this small difference in your credit score may magnify into a considerably big change. So we need to know that how can we decide whether the inquiry is going to be “hard” or “soft”?

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Even If you don’t want to take a loan in the near future, your credit score still matters. Credit scores are not only about loans and banks. There are other people and organizations that care about your credit score. They will deal you differently depending upon the level of your credit score and contents of your credit report.

Prospective Employers

In case of business scenario employers has the power to use your credit details in making decisions for example to hire or to fire a particular person. in case of a bankruptcy employer have the ability to use any kind of a negative trait against you, he can make adverse decisions. if you take a loan from a bank or from another source or unable to make the payment of someone then employer have a power to use your credit details or previous history against you. Employers are the important part of an entire organization we should aware from their activities. security considerations should be focused especially in case of dealings or decision making. for example if you work four years in California but in the documents your residence is not mentioned then it may cause a serious problem for you in the future.

Landlords

The landlords use credit checks to analyze the persons that whether they were able to pay the rent monthly. once credit reports help to determine about the persons activities. it called once profile that help the lender to make decision before giving a debt to the person. credit reports seems to be more helpful for the landlords, to analyze the person by viewing their previous credit history.

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This is an actual letter written to bank manager by an old lady who got her check bounced by the bank due to lack of funds. it was first published in the New York Times in 2006.

Dear Sir,

I am writing to thank you for bouncing my check with which I endeavored to pay my plumber last month.

By my calculations, three nanoseconds must have elapsed between his presenting the check and the arrival in my account of the funds needed to honor it.

I refer, of course, to the automatic monthly deposit of my entire pension, an arrangement which, I admit, has been in place for only eight years. You are to be commended for seizing that brief window of opportunity, and also for debiting my account $30 by way of penalty for the inconvenience caused to your bank. My thankfulness springs from the manner in which this incident has caused me to rethink my errant financial ways.

I noticed that whereas I personally answer your telephone calls and letters, — when I try to contact you, I am confronted by the impersonal, overcharging, pre-recorded, faceless entity which your bank has become.

From now on, I, like you, choose only to deal with a flesh-and-blood person. My mortgage and loan repayments will therefore and hereafter no longer be automatic, but will arrive at your bank, by check, addressed personally and confidentially to an employee at your bank whom you must nominate.

Be aware that it is an offense under the Postal Act for any other person to open such an envelope. Please find attached an Application Contact which I require your chosen employee to complete. I am sorry it runs to eight pages, but in order that I know as much about him or her as your bank knows about me, there is no alternative. Please note that all copies of his or her medical history must be countersigned by a Notary Public, and the mandatory details of his/her financial situation (income, debts, assets and liabilities) must be accompanied by documented proof. In due course, at MY convenience, I will issue your employee with a PIN number which he/she must quote in dealings with me.

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You need to cut down your monthly expenses and live frugally if you ever want to get out of debt. Let’s assume you have a $20,000 in credit card debt and you current minimum payment is around $500 per month. Unless you really don’t want to pay your credit card bills at all. You have to pay it in full before you can cancel your credit card.

Let’s say you have $14,000 in credit card debt and your current minimum payment is $350. At 21% with a minimum payment of 2.5% it will take you 542 months to get rid of your debt. In that time, you will pay more than $32,000 in interest. this is not at all funny. but this is how this works.

If you keep paying a fixed amount of $350 dollars (which is your current minimum payment),It will take you 70 months to be rid of your debt. In that time, you will pay $10,290.27 in interest. Still Its unacceptable.

However, If you manage to reduce expenses by $200 each month and apply that amount to your credit card’s minimum payment, then each month you can payback $550. this way, It will only take you 34 months (3 years) to get rid of all your debt. during this time, you will pay only $4,692.23 in interest. this is also crappy but better than 542(45 years) ye and 70 months(6 years) and you will save some where between $6,000 to $28,000 in your interest payments.

Best course of action in this situation is to transfer your debt to a low interest credit card or apply for a debt consolidation loan

If you still doubt in what I say, You can use this Minimum payment calculator to find out how much money you will be wasting by not paying off your credit card balance as quickly as possible.

Indeed, there is no feeling like getting out of debt. Its always better than watching cable tv or dining out with friend. You will get more joy out of these activities when you are debt free.

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Things that come in mail these days are pretty scary. Especially I am worried about those pre filled credit card applications that are sent to my mail box. If some one get them from my mail box and change the ID, they can be spending lot of the money on those credit card, never to pay back. Recently I came across an article on cookeyed.com. The dude tore his credit card application and then re-glued it.  made changes on it and sent back to CHASE. Guess what, he got a credit card delivered to his father’s address.

The dude got a pre-filled application. here is what he did with that…

He tore them into little bitty pieces.

Next, he arranged the bits back. It actually took a surprising amount of effort to get them all flipped and aligned properly.

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These are difficult times for our economy. Each one of us is feeling the pinch due to increased cost of living. It is getting very difficult to make ends meet. In difficult times like this it is very easy to amass a huge credit card debt. It can happen to anyone. Even to people who have been financially responsible. “Can I just don’t pay my credit card bills?” is the question many individual ask themselves and friends. This option is very much there. It also will give you some extra cash for few months ahead. But following are few of major problems you can get yourself into if you stop paying your credit card’s monthly payments.

Collection Calls

This is most scary part of Credit Card Game. Credit Card Companies will constantly call you and demand their money back. Collectors may call you 5 – 7 times a day. They will call you at home, They will call you at work and they will call you on your mobile phone too. There have been some reports that collection agents have been calling bosses, co-workers, and family members (which amounts to harassment and is not legal). They go to any length to get you on phone and when they get you on phone they use a lot of psychological techniques to lure you into giving them checking account numbers and other banking information. They will use every trick to make you pay. One of  the well known methods is that they intimidate and threaten you by telling you that they will take your house, car etc. Or they will bring police to your home. all this can be very stressful on some people. You will also start getting letters in the mail from them that may eventually turn more demanding.

Don’t get intimidated by them, Know your rights and report any violations to police and seek help. Most of the credit cards are unsecured so no one can take your car, house, furniture, etc. Worst thing these credit card companies can do is…  they can really damage your credit score.

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