How to Fix Your Credit

The credit card industry, (and banking in general), took the front row seat at the Congressional hearings and in the news nation-wide. Infomercials on TV are openly talking about the financial abuse those industries are committing with the manipulation of interest rates and abusive fees they're leveling against their own customers. I wouldn't hold my breath about a resolve to come any time soon. I will help instead by offering some practical solutions instead.

Credit is nothing new. It appeared as soon as the balance in between resources and its beneficiaries was thrown off. Loans and credit existed in one form or another for thousand of years.

We have mortgages, credit cards, debit cards and department store cards. Why do we need them? Because we're conditioned by need or convenience. It's easier to make purchases in places where a personal check might not accepted or on the web. In many places nowadays, no credit card means no service. But there's other reasons why. A poor economy, increasing costs, laxed regulations and greed for profit compounds the problem.

The 80s saw leveraged buying and hostile take overs. The 90s brought hedge funds, equity brokerage and super mergers of big companies broken apart under the antimonopoly rules. Along came the dismantling of financial rules set in place after the Black Friday of the 1929 Wall Street crash, namely the Bretton-Woods, which the government did nothing to stop it. It surrendered its leadership to the financial institutions and corporate offices. That's to say in effect it's not the Congress governing the country anymore. It's the Federal Reserves who does and it does so by bribing the Congress to get out of the way.

So what can be done about it? A lot to be exact, but let's start with us and the important things we the consumers can do right away.

1. We the people should ask for reforming the banking industry by resurrecting the proven old fiduciary principles and by making loans and credit subject to the retail pricing formula. If you borrowed or charged $5.00, it should be divided by two. The $2.50 is to be added to the $5.00. The total of $7.50, which can be rounded up to $8.00 should be the one and only total amount you owe back. Since that's not going to happen, here's the alternatives.
2. First of all, stay out of debt as much as possible, period. We need to bring discipline in our spending by planning, budgeting and checking up on it all the time. The golden rule is: If I can't afford it now, I'll wait until I can. In order to be successful at it, we need ...
3. ... to make sure that we really, really need that purchase. In many cases the purchase it's not necessary, it can be done much cheaper if we shop around, or we need to delete it if it's not living up to its expectations. Many times we bought something that was advertised big, but fail to deliver what we really thought it would. “Once bitten, twice shy” is a good measure for it.
4. Use plastic only where checks are not accepted and only for emergencies. As soon as you charged, write down a check for it and record it in you check book so you'll be aware of how much money you have vs. how much you charged.
5. Do not pay with a credit card what you can pay with a check or cash. In this way you're aware of how much money you spend. With plastic, you only find that when you get the statement. By then it's too late.
6. Next, get the credit report scores from all three big ones at the addresses below and check up the rating score, transactions that are suspicious, negative reports, inaccuracies and possible identity theft.
7. If you got good credit score (over 700) than keep it that way by good discipline. If you don't have a good score here what you can do;
8. Ask for all the negatives reports and inaccuracies to be removed from your records. Dispute all the errors found. They generally have thirty days to do so. If they fail, ask and make sure they do so without any questions.
9. If you did this already, monitor your report. If you didn't, start doing it. If you balance your check book every month, get in the habit of checking your credit reports every month as well. The more you do, the easier it is because you don't have big activity to sort out and you get those disputed items corrected sooner.
10. Ask your credit card company to increase your limit. The upside is that you'll avoid going over the limit. The downside is you might start charging big. Discipline here is very important. You only want to stay away from over-the-limit penalties not to get deeper in debt. If that might be a problem then don't.
11. No matter what's the limit, do not charge more than 35% of the credit limit just because you can.
12. Pay as soon as possible and as much as possible, all of it if you can. That's where discipline comes in handy with less fiduciary pain.
13. If you're just about to spill over with the plastic and you have a 401K, you can take some money out of it. The government will charge you a hefty 50% in tax penalties, but hard times requires hard decisions. Just keep in mind that the 401K will earn you money the credit card doesn't. Better yet, if family can help ask them.
14. The monthly payments should be calculated as the minimum payment plus the financial charges and then some extra (5 to 10% at least) to top it off. That's the only way to reduce your debt under this plan. If not possible, pay at least the minimum to stay on track. Late or no payments at all, will bomb your credit score.
15. Do not close accounts where you have a good track for they keep your score high even if don't plan to use them. Close those bad ones you paid off. Better yet, spread your debt among the credit cards you keep even if it sounds crazy. That'll lower your monthly payments and keep you score high.
16. Don't go crazy on applying for many credit cards or loans. Just the applications alone lowers your credit score dramatically.
17. Finally, ask the credit report agencies to put a freeze on you name. Every time you apply for a loan or credit they'll have to ask your permission before approval. That'll keep identity theft at bay and make sure that the charges in your account are yours and accurate.
    It's increasingly hard to have total protection nowadays but to stay ahead of identity theft do the following;
18. Always use a high end shredder to dispose of private papers. If there's a company who recycle shredded confidential papers use it.
19. Do banking in person, by mail or by phone with a human operator.
20. The computer you have private data on it, should never be connected to any other computer network. Get a cheap one with security software for your Internet when possible. Use the CD burner to burn, make back-ups and transfer the data. It's hassle worth every penny.
21. Do not use anything else but your own computer for on-line banking and always log off when you're done. Do not use anything but your own paid Internet connection. The free wireless hook-ups are not secure.
22. Update your anti-virus, ant-spyware software security, watch for the HTTPs and the pedal lock icon on your browser for added security. Block pop-ups, don't download or log in sites you're not sure of and don't ever give personal information on line, by mail or by phone to anyone. If problems occur, the bank will want to talk to you in person.
23. Be very creative with passwords. Mix characters and symbols in no way related to anything a thief might get a clue. The crazier the password, the harder is to crack.
24. Save money anyway you can. Prepay if that's an option. Get a fixed low rate mortgage, refinance if need it, pay ahead of time. Be aggressive with deductions and tax write offs to save money and pay off debt.

Life is hell for anyone who had to deal with debt collectors, repositions, foreclosure or bankruptcy. The banks and the credit cards are reaping off the customers. In addition, former Democratic president Clinton and current Republican president Bush signed legislation forbidding college loans and personal bankruptcy thus protecting the abusers. Although not honorable, bankruptcy is the natural default reset button, a runaway economy needs when it's in trouble. Since that option is off the table we're left fending for ourselves the best we can.