Congress looks to extend credit despite problems:

WASHINGTON — The Obama administration said Tuesday it was concerned about the cost of extending a popular tax credit for first-time homebuyers, a program already under scrutiny for fraudulent claims.

The Internal Revenue Service has opened 107,000 examinations of questionable claims and identified 167 criminal schemes involving the tax credit since it was expanded as part of the economic stimulus package enacted in February.

Key lawmakers said Tuesday they still wanted to extend the tax credit beyond the end of November, when it is scheduled to expire. But Housing and Urban Development Secretary Shaun Donovan said the administration is not sold on read more...

Tough Call: Keep your credit card after a rate increase, or close the account?

Ann has $10,000 in credit card debt. She was paying it off at an interest rate of 7.15 percent. “Then all of a sudden, when I received my September statement the APR had jumped to 14.99 percent,’’ Ann wrote to me. So she called the credit card company.

There was no mistake. Ann joined millions of other credit card users who have been notified that their interest rates are rising. They, like Ann, are being told to deal with it or get kicked to the credit card curb.

Ann has two choices. She can accept the higher interest rate, but she would only be able to make the minimum payment. Or she can reject the rate hike. But if Ann says “no deal,’’ the credit card company has told her it will close her account.

Under the new Credit Card Accountability, Responsibility and Disclosure Act of 2009 and Federal Reserve rules, a cardholder who is notified of a change in terms on or after Aug. 20 has the right to reject that change for the existing balance. If the consumer does so, the credit card issuer must either allow the cardholder to repay the balance on the existing terms, make minimum payments that include no more than twice the percentage of the balance included before the change in terms, or pay over at least five years.

Ann’s worried about her ability to get another credit card at a decent interest rate. She’s also concerned that canceling the card will lower her credit scores.

In advance of tougher regulations taking effect next year, many consumers have been receiving notices of lower available balances, interest rate increases, or a switch to variable rates.

What the companies are doing is wearing down a lot of good customers who, if left alone with decent rates, would have a better chance of paying off their debts.

The Federal Reserve Board’s rules implementing the CARD Act require that Ann be given the right to reject the 14.99 percent interest rate hike. However, as a general matter, the issuer is permitted to apply the 14.99 percent interest rate to new transactions.

Ann’s concerns are legitimate about getting another credit card with a rate as good as the one she had. She has less to be worried about concerning her credit score because she does not have any other credit cards.

What most affects a person’s score when an account is closed is the presence of outstanding balances on other open credit accounts. The scoring system looks at how much credit you are using compared with how much you have available.

Craig Watts, public affairs director for FICO, cleared up a common misconception. Closing a credit card account won’t affect the duration of someone’s credit history. That’s because credit reports include the history of closed accounts for a number of years, and FICO scores consider both open and closed accounts.

Ann, tell your credit issuer you won’t be played.

5 Steps to a Credit Makeover

See how much money you can save just by following these tips for raising your credit score.

Payment History

• Pay your bills on time to avoid late payments and collections that can have a major negative impact on your FICO score.
• If you have missed payments, get current and stay current.Be aware that paying off a collection account will not automatically remove it from your credit report. Consider hiring a professional as these can stay on your report for seven years.
• If you are having trouble making ends meet, contact your creditors or see a legitimate credit repair advisor.

Credit Cards

• Keep balances low in relation to credit limits on credit cards and other "revolving credit".
• Pay off debt rather than moving it around. The most effective way to improve your credit score in this area is by improving your Credit Utilization Ratio.
• Don't close unused credit cards, as a short-term strategy to raise your score. Make small purchases and pay off the balance.
• Don't open a number of new credit cards that you don't need, just to increase your available credit. This approach could backfire and actually lower your credit score.

Credit History

• If you have been managing credit for a short time, don't open a lot of new accounts too rapidly.
• New accounts will lower your average account age, which will have a larger effect on your score than if you don't have a lot of other credit information. Also, rapid account buildup can look risky if you are a new credit user.

New Credit

• Do your rate shopping for a given loan within a focused period of time. FICO scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur.
  Re-establish your credit history if you have had problems. Opening new accounts responsibly and paying them off on time will raise your credit score in the long term.
• Note that it's OK to request and check your own credit report. This won't affect your score, as long as you order your credit report directly from the credit reporting agency or through an organization authorized to provide credit reports to consumers.

Types of Credit

• Apply for and open new credit accounts only as needed. Don't open accounts just to have a better credit mix - it probably won't raise your credit score.
  Having credit cards and installment loans (and making timely payments) will raise your credit score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.
• Note that closing an account doesn't make it go away. A closed account will still show up on your credit report, and may be considered by the score.

If you have any questions about how to get the highest credit score possible, call me at (702) 275-5001 for a free consultation or visit www.nationalcreditrepairalliance.com

To your good credit,

Mike

Announcing National Credit Repair Alliance

Hello everybody,

My name is Mike Newman, and I would like to announce the formation of the National Credit Repair Alliance.

In the coming days we'll be adding lots of information about credit repair to this blog, launching our new website at http://www.nationalcreditrepairalliance.com and creating social media pages to help consumers raise their credit scores.

It's an exciting time for us, and I hope a valuable service for you.

Mike