Credit Help

Q: Will I Know When I Am In Financial Trouble?

"A: There are several signs that you may need help with your finances, Including:

Juggling your bills from paycheck to paycheck and not being able to pay them all at one time;

Getting late payment reminders in the mail from your creditors;

Getting telephone calls from bill collectors. This usually means that the person or company you originally owed money to has givien up trying to collect the debt and has given up trying to collect the debt and has turned the account over to a collection agency.
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Q: Why Do I Need Credit?

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A: While few of us are fortunate enough to have inherited enough money to pay cash for a house or a car, most of us will need a loan to make major purchases. Many students need financial aid for college. Also, credit cards are required for hotel and airline reservations, car rentals, and Internet purchases. Credit, in this case, refers to an amount of money at your disposal for a variety of porposes.

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Q: Where can I Find the Terms of the Loan?

A: The Federal Consumer Credit Act requires disclosure by lenders of the total cost of credit, the amount and due dates for repayment of the loan, the amount of any late payment fee, etc. The credit card companies provide a detailed description of the terms and conditions that you should read and understand before accepting the card. Banks and other lenders provide the information in their Truth-in-Lending disclosure forms and other loan documents. These should be reviewed carefully and understood before signing.

Q: Whats is the Difference Between a Credit Card and Loan?

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A: The result of using either is the same- money that was loaned for a purchase or some other purpose (such as education) must be repaid. A credit card is typically considered an open-end loan, similar to an equity line of credit with a maximum amount from which you can borrow.

A credit card is, in reality, a loan from a lending institution that pays the merchant to whom you gave your card number, within a few days of receiving the credit card receipt. Repeated transactions are anticipated at a prescribed finance charge to be assessed on the unpaid balance.

On the other hand, a loan from the bank is often for a specific amount that is given to the borrower (debtor) at a specified interest rate with pre-determined payments. (There are many variations, however.)

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Q: What is the Difference Between a Credit Card and a Debit Card?

A: A credit card is, in reality, a loan; you will need to pay back the principal plus all accrued interest according to the terms to which you have agreed. A debit card is similar to a check; the payment is immediately deducted from your account.

Q: What Is a Credit Score?

"A: A credit score is a type of grade given by a lender based upon your application and credit history, including the number and types of accounts, total outstanding debt, number of late payments, how long you've had accounts, etc. The information si summarized to create a profile, which is then compared to others with similar profiles who have already been extended credit. The scoring system gives points for each item, which indicates that you are likely to repay the debt.
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Q: What Information Does My Credit Report Contain?

A: Your credit report contains your credit history, including: the names of all of your current and past creditors, your payment record, your employer's name and address, your employment history, current and previous addresses, public information such as judgments and bankruptcies, and referrals by creditors to collection agencies.

Q: What if I Have Never Had a Loan Before?

A: Your first step should be opening a savings and checking account. Once you have accumulated several hundred dollars, ask the bank for a secured credit card. Your deposit will be used as security for payment in case you default. You may also try getting your first loan with a co-signer, often a parent. Anyone to whom you have owned and repaid a debt can be a good reference when applying for credit.

Q: If a Creditor Reports My Late Payments to a Credit Bureau, Even Though I am Doing the Best That I Can, What Should I Do?

" A: You usually find out that a creditor has reported this type of information when you apply for a loan. If you are turned down for the loan because of your credit report, you have the right to a copy of the report from any of the credit bureaus typically for a small fee. If there are negative notations on the report, write a letter to the credit bureau explaining the reason for the late or lower payments, and ask that a copy be given to anyone who requests a report. Before you apply for credit, you should make the prospective creditor aware of your situation so that there are no suprises for either the credtor or you.
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Q: I Have Often Heard The Phrase"Don't Mess With The IRS. "Is There Anything that Can Be Done If I Owe The IRS Money?

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A: First, do not assume that the IRS is always correct. However, always respond to any IRS notice within the time allowed to avoid any additional penalties and interest over and above the taxes you may owe.

Be sure to keep all records including copies of checks, receipts and invoices in case you are audited.

The normal time limitations for an audit is three years, provided there was no fraud of gross misrepresentation of income. If you disagree with an IRS decision you can file a petition in the U.S. Tax Court.

If you have a serious problem or are in a crisis situation such as job loss or medical emergency the Taxpayer's Bill Of Rights does require that an IRS officer a Problem Resolution Officer work with you to resolve the crisis.

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