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>CREDIT: How To Obtain, Increase and Preserve Credit by RUSS WHITNEY
CREDIT MANUAL
TABLE OF CONTENTS
- INTRODUCTION
- CHAPTER 1 – UNDERSTANDING CREDIT
- CHAPTER 2 – YOUR CREDIT RIGHTS
- CHAPTER 3 – CREDIT CARDS
- CHAPTER 4 – THE CREDIT BUREAUS
- CHAPTER 5 – GETTING STARTED
- CHAPTER 6 – ENHANCING YOUR CREDIT
- CHAPTER 7 – IMPROVING BAD CREDIT
- CHAPTER 8 – PRESERVING WHAT’S YOURS
- CHAPTER 9 – WHERE TO FIND HELP
- CHAPTER 10 - IT’S A NEVER-ENDING PROCESS
- GLOSSARY
If you have no credit
If you have some credit and need more
If your credit needs rehabilitation
If you have some credit and need more
If your credit needs rehabilitation
Then this manual was written for you.
Credit or one’s ability to pay their obligations has always been a critical component of our system of exchange. For years, government was on the side of the lender to the extent that people were actually sent to jail for nonpayment of obligations. Debtors’ prisons were abolished long ago, but it wasn’t until 1968 that the Consumer Credit Protection Act was initially enacted. For the first time, creditors had to state the true cost of borrowing.
HISTORICAL PERSPECTIVE
Today to buy a car, home, get a job, or a new TV, most will have to pass the credit criteria of a credit bureau. With the electronic age, the collection of credit data is a multi-billion dollar industry. The first known credit bureau was formed by a group of tailors in London, England in 1803. Members of the Mutual Communication Society of London exchanged information on bad credit risks. The first US credit bureau was started in Brooklyn, New York in 1869.
For years, consumers were able to obtain credit primarily from their local stores and vendors. Then, to take advantage of all those eating out and traveling, a whole new set of credit evolved, the travel and entertainment cards. American Express and Diner’s Club are prime examples. The economy was booming and banks were anxious to partake in what was the “plastic” revolution in America. Up to that point, to make a “material” purchase you had to have an account directly with the merchant you were buying from. Then some banks in California got together and the MasterCard was born.
Credit Tightens
Credit was easy. Credit card companies were determined to sign up as many members as possible.
“You have been pre-approved for X amount of credit,” stated their marketing materials. More often than not, the annual family income was the only criteria considered.
But consumers went on a spending spree, charging everything in sight; as a result many were unable to pay, and credit procedures were tightened considerably. The economy went sour, interest rates went through the roof and numerous consumers fell into a credit “no-man’s” land. Downsizing became the buzzword in corporate circles and many became unemployed and without credit.
Credit Boom
Then, we came full circle. The economy was booming at a 50-year high and interest rates were very low. A Time magazine story quoted the Consumer Federation of America as stating that from 55 to 60 million Americans had an outstanding balance of over $7,000 in their credit card accounts, up $1,000 from the previous year. However, bank profit margins at that time were declining steadily since the mid-eighties. The article estimated a 300% decline during that period. Where did they look for additional business?
One way was to further penalize current customers. Some have decreased the grace period from 30 to 20 days. Others actually started charging a fee if the account is not used during a certain time frame. How important is this business to their bottom line? Credit card loans account for 7.8% of total bank lending, however it represents 12.2% of their loan income. It is very important to them.
Some even instituted a fee for closing an account.
How about those 50 million Americans with poor, or no credit? Many financial institutions are
actually targeting them as a major new source of consumer business, realizing that their stringent rules have prevented many good and stable people from receiving the credit they deserve. A divorce, illness, job loss or even a bankruptcy deprived consumers of a record that included years of steady and faithful payments.
UNDERSTANDING CREDIT AND YOUR RIGHTS
Let’s start by understanding credit. What do the lenders look for when they evaluate someone for a loan? What are the different methods they employ to do so? We will explain the terminology used in credit, and review the different types of credit cards that are available.
We will identify the nine important pieces of federal legislation that were enacted to protect you in the marketplace. We will explain the significance of each and review what they mean to you, from the landmark Truth in Lending Act to the Real Estate Settlement Procedures Act.
Did You Get the Best Deal?
We will explain how to evaluate the different types of credit card proposals that you receive, how to shop around for the best deals and where to look. This will include the most comprehensive evaluation list available.
To read the full report: CREDIT MANUALS
