Need Credit Help? You’re Not Alone

By Chun-Ming Chen on January 30, 2010 In Uncategorized

Last statistic I read, approximately 60 million Americans have bad credit. That’s 20% (or 1 out of every 5 people).

In fact, an entire industry, called Subprime, has formed around this demographic. These are the Check Cities/Payday Loans (Check Cashing stores), the Boost Mobile phones (pay as you go), and Subprime Credit Cards (credit cards with REALLY high interest rates).

Why are these establishments pandering to these “bad credit” people? – Because they can make lots of money off these people.

For example, my sister-in-law’s sister went to a Check City place and got a loan for $400 for 30 days. At the end of the month, she had two options 1) pay back the $400 (plus some interest) or 2) pay $100 to wait another 30 days. She chose option number 2….for 23 months. Yes. She kept paying $100 every month to extend her “loan” for 23 months. She paid $2,300 on a $400 loan and the Check City people laugh all the way to the bank.

That is why these people love to accommodate your crappy credit.

Our Government is trying to help. The administration passed the Credit CARD Act of 2009 that goes into affect in Feb 2010. One of the significant regulations is a cap of 25% of the credit limit of the credit card (i.e. $75 fee for a $300 card).

However, First Premier Card, a major subprime credit card issuer, is trying to weasel around these restrictions. They used to have a $256 annual fee on a $250 credit limit card, but now, in anticipation of this new regulation, they will have a $75 fee (for a $300 card) and a 79.99% interest rate. It’s almost sick how these guys work.

Bottom line. Having bad credit will cost you lots of money. Improving your credit score will save you lots of money.

Here are my short term and long term recommendations for credit restoration –

1) Short Term: Reduce Debt (get to 30% of credit limit on credit cards) and Remove Negative Items from credit report.

2) Long Term: Get educated about your credit. Review your credit reports (from all 3 credit bureaus), create a budget, and get disciplined with your money.

Good Luck getting out of the Credit pit.

I have been working in the credit restoration industry for over a decade. I am more convinced than ever about individuals rights to take control of your credit and ultimately your life. Click for more ways to improve your credit score.

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