Finding a Bank That Is Right For You:

Scoring for Credit

It is important to select the right bank. Do NOT choose any bank - be fussy! There are two main objectives to seek when searching for a new bank.
Find a bank that is aggressively seeking new business.
Choose one with which you can develop a personal relationship. To select a bank that is aggressive, simply watch for extended advertising campaigns. They are very costly, and must bring in new business in order to be continued. Look also for smaller banks, ones with just a few offices. They tend to be more aggressive, more lenient on qualifications, much friendlier and more personalized in the service they offer. They are forced by nature of their competition to be more flexible. With the small, independent bank, you will get friendly service, and often will be called by name. The tellers remember you and do not need to request your identification every time you want to cash a check.
Small banks do not have a large loan committee that spends lots of time shuffling papers. They may however, stall your loan application for a day or so in order not to appear too anxious! Its a minor issue...and not one to be overly concerned about. Big banks seem to have forgotten that the customer is number one. You will be far more pleased with your small bank and your personalized service when it comes to getting loans and other services for your own business.
How does a creditor decide whether to lend you money for such things as a new car or a home mortgage? Many creditors use a system called "credit scoring" to determine whether you are a good credit risk. Based on how well you score, a creditor may decide to extend credit to you or turn you down. The following questions and answers may help you understand who gets credit, and why.

What is Credit Scoring?

Credit scoring is a system used by some creditors to determine whether to give you a loan or credit card. The creditor may examine your past credit history to evaluate how promptly you pay your bills and look at other factors as well, such as the amount of your income, whether you own a home, and how many years you have worked at your job. A credit scoring system awards points for each factor that the creditor considers important. Creditors generally offer credit to those consumers awarded the most points because those points help predict who is most likely to pay back the debt.

Why is Credit Scoring Used?

In smaller communities, shopkeepers, bankers, and others who extend credit often knew by word of mouth who paid their debts and who did not. As some creditors became larger and as the number of their consumer credit applications grew, these creditors needed to establish more systematic and efficient methods for evaluating which consumers were good credit risks. Credit scoring is one such technique.
Although smaller creditors still may rely on informal credit evaluations, many large companies now use formal credit scoring systems. Although no system is perfect, credit scoring systems can be at least as accurate as informal methods for granting credit -- and often are more so -- because they treat all applicants objectively.

How is a Consumer's Application Scored?

To illustrate how credit scoring works, consider the following example that uses only three factors to determine whether someone is creditworthy. (Most systems have 6 to 15 factors.)
Example:
Monthly Income Points Awarded
Less than $400 0
$400 to $650 3
$651 to $800 7
$801 to $1,200 12
$1,200 + 15
Age Points Awarded
21-28 11
28-35 5
36-48 2
48-61 12
61+ 15
Telephone In Home Points Awarded
Yes 12
No 0
Some credit scoring systems award fewer points to people in their thirties and forties, because these individuals often have a relatively high amount of debt at that stage of their lives. The law permits creditors using properly-designed scoring systems to award points based on age, but people who are 62 or older must receive the maximum number of points for this factor.
If, for example, you needed a score of 25 to get credit, you would need to make sure you had enough income at a certain age (and, perhaps a telephone) to qualify for credit.
Remember, this example shows very generally how a credit scoring system works. Most credit scoring systems consider more factors than this example -- sometimes as many as 15 or 20. Usually these factors are obviously related to your credit worthiness. Sometimes, however, additional factors are included that may seem unusual. For example, some systems score the age of your car. While this may seem unrelated to creditworthiness, it is legal to use factors like these as long as they do not illegally discriminate on race, sex, martial status, national origin, religion, or age.
How Valid is the Credit Scoring System?
With credit scoring systems, creditors are able to evaluate millions of applicants consistently and impartially on many different characteristics. But credit scoring systems must be based on large enough numbers of recent accounts to make them statistically valid.
Although you may think that such a system is arbitrary or impersonal, a properly developed credit scoring system can make decisions faster and more accurately than an individual can. And many creditors design their systems so that marginal cases -- not high enough to pass easily or low enough to fail definitively -- are referred to a credit manager who personally decides whether the company will extend credit to a consumer. This may allow for discussion and negotiation between the credit manager and a consumer.
What Happens If You Are Denied Credit?
While a creditor is not required to tell you the factors and points used in its scoring system, the creditor must tell you why you were rejected for credit. This is required under the Equal Credit Opportunity Act (ECOA).
So if, for example, a creditor says you were denied credit because you have not worked at your current job long enough, you might want to reapply after you have been at that job longer. Or, if you were denied credit because your debt-free monthly-income was not high enough, you might want to pay some of your bills and reapply. Remember, also, that credit scoring systems differ from creditor to creditor, so you might get credit if you applied for it elsewhere.
Sometimes you can be denied credit because of a bad credit report. If so, the Fair Credit Reporting Act requires the creditor to give you the name and address of the credit reporting bureau that reported the information. You might want to contact that credit bureau to find out what your credit report said. This information is free if you request it within 30 days of being turned down for credit. Remember that the credit bureau can tell you what is in your report, but only the creditor can tell you why it denied your application.
Where Can You Go For More Information?
If you have additional questions about credit scoring issues, write to: Correspondence Branch, Federal Trade Commission, Washington, D.C. 20580. While the FTC cannot resolve individual problems for consumers, it can act when it sees a pattern of possible law violations.
Credit Card Insights

The cards we are going to discus here are the Mastercard and Visa only. Banks and Savings & Loans issue these. You can either purchase goods and services using this card or go to the institution who issued you the card and get cash advances, ie., get cash directly against the card.
To obtain these cards, one has to have very good credit or reasonably good credit. Checking your credit can be done in different way. One way is by writing to the Credit Bureau near them and getting your credit standing in the Bureau's Credit File. Another way is to evaluate you by their own standards of point system (please see table at the end of this chapter).
To get a quick guide of institutions issuing credit cards, get out your yellow-pages and look under Banks and Savings & Loans. Call them and make a list of the ones issuing these cards and then go to them and pickup their applications and keep them ready. Then go through this book and write all the ones listed and get their applications. Get a hold of other institutions using the yellow-pages of major cities and get their applications. Then when you have enough applications at hand, fill them all up and mail the ones from zip codes starting 0 to 5 the first day, the ones of zips 6 to 8 the next day, and zips 9 the third day, so they all reach the institutions the very same day (for California only - other states please improvise).
If you get accepted in 10 out of 30, each with a credit limit of $1,000, you can have access to $10,000. This is one of the quickest ways of obtaining a loan in the shortest time (and the safest).
A sure-shot way of getting credit card is the secured cards. These are credit cards issued against your depositing cash in that institution. If you have saving or other checking accounts, then you might as well have it at their institutions which give credit cards in return. The credit requirements of these mentioned ones is not very stringent. A good way to raise your credit limit on the secured credit cards is to take cash advances and re-deposit the cash (and pay the debt) till you reach your credit limit.

Visa and/or Mastercard

There are special bankcard agencies that will issue a Visa and/or Mastercard to anyone that opens a $300 savings account at their bank regardless if the person has bad credit or no credit. It makes no difference if you have a bankruptcy. You're guaranteed the cards regardless hoe bad you credit might he if you open the savings account at the bank! You would receive your card within 30 days from the time you open your savings account with them. The credit limit on the card matches dollar for dollar with the amount of money in your savings account.
A lot of people can't part with $300 for long because of bills that are pressing them. There's a way around this. Go ahead and open the savings account and get the card. Then go to a Western Union and make a $300 cash withdrawal on your card and you have your money right back plus the card. Even though you can't charge anymore because you've reached your credit limit, you can still use the card for identification or check writing purposes. Then you can pay your bill down a little at a time as opposed to putting up the entire $300 at one time and leaving it in the savings account.
Another way to get around not paying out the entire $300 at one time is for you to work with a close family member or friend in splitting the $300 cost to get the card. Decide on which one of you is going to apply for the card first. And when that person gets his card he's to make a $300 cash withdrawal on it so the other person can apply for his card. When the second person gets his card he's to make a $300 cash withdrawal on it also and give his partner his $150 investment back. This procedure will work for as many as 3 people putting up $100 each to help each other get their cards.
There's also a maneuver that a person can utilize with his secured card that will show him more credit worthy than he actually is. It will cause banks to loan him more money and quicker. And it will make creditors want to give you things that they normally would not have. In order to do this you have to be patient and you can't make any charges on you card until you've gotten where you want to be. If you can afford it secure you a Visa and Mastercard. Use one for your personal charges and use the other for the following purpose.
First of all, the bank that issued your secured card will report to the credit bureau the transaction. And on your credit report will be the banks name along with your credit limit and credit ratio. At first your credit limit will be only $300 if that's all you put in the savings account that's required for the card. When you get your card make a $300 cash withdrawal on it and put it in the savings account you used to get the card with your original $300. Then you'll have $600 in the saving account- and the bank will report this to the credit bureau which will automatically boost your credit limit on your card and credit report to $600. This move will allow you to make another $300 withdrawal on your card because you've only made one $300 withdrawal but you have $600 in your savings account. So go and make another $300 withdrawal on your card and deposit it into your savings account and this will automatically boost the credit limit on your card and credit report to $900. Repeat this procedure and your limit will he $1,200. continue until you feel that your monthly payments have reached the limit of what you want to pay. Some people have reached a credit limit on their credit report of $5,000!
The object of this maneuver isn't to reach a high credit limit on your card but rather it's to show the highest possible credit limit on your credit report. Even though your card may have a $5,000 credit limit the fact remains that it's all charged up. But when creditors or banks see a $2,000 or $5,000 spending limit on your credit report they'll think that you are a preferred customer at the bank that issued you the card. They know that banks don't give out $2,000 - $5,000 spending limits on a major credit card to anyone so therefore they'll think that you are somebody special and will be glad to give you the loan or whatever you're applying for on credit within reason especially if they can look back over time on your credit report and see that you made your payments on time every month. But what they won't know is that you were not a preferred customer at the bank but rather you took advantage of a special Visa and Mastercard program that required for you to secure the card by opening a savings account at the bank with a minimum of $300. And that you legally maneuvered your way to a $2,000 - $5,000 or more spending limit that made you look like you were a preferred customer at the bank. But as the old saying goes, "What a person doesn't know won't hurt him." In rebuilding credit it takes time to walk up the credit ladder. Utilizing this maneuver you'll get things on credit in a few months that would have taken a few years to get if you had not done it because it made you look more credit worthy than you actually were according to the standards of most creditors.
The National Credit Bureau is the largest bankcard agency in America that offers a secured Visa and/or Mastercard. Their telephone number is 1-800-433-2455. If you call them requesting their application package they'll send it to you for $39.95 which is a non-refundable fee that covers the expense of setting up your savings account at Transcontinental bank and issuing you the cards. After they receive your application they'll contact you back in 2 - 3 weeks letting you know that your account has been opened all the paper work is complete and all that is needed is your $300 deposit for your savings account. After you send in your $300 deposit you'll receive your Visa or Mastercard in 2 - 4 weeks. And it's just that simple.
Most people charge their credit card and pay installment payments each month on a fraction of their debt. Now that is exactly what the issuing banks want you to do because you are helping them to stay in business. In fact, that is how the banks make their money. However it is your loss in the interest you pay. The new tax laws do not permit you to take any deductible on the interest payments of your revolving debt. The right way to charge is to pay the entire balance WITHOUT paying any interest. That you establish credit as well not pay any interest. Which essentially means that you borrowed the money FREE for that period of time. At the same time, the each in hand can be deposited in interest bearing deposit to EARN interest money for you. So if you do not pay in each for your purchases (assuming that you already -have the each in your hands) but charge it every time at the same time keeping the each in hand in an interesting bearing account actually makes you money; which you would have lost if you would have paid by each.
How long do you think you could charge and not pay back WITHOUT paying any interest on it ? About one month, right ? WRONG !! It is actually two months. Let us show you how:
Take this case: You have a billing date of the 30th. That means the bank bills you once a month or charges accrued during the month, & the bill comes to you dated the 30th. This bill includes all the charges entered on your account up to the end of business on the 30th. You do not have to pay any of these charges for 25 days after the billing date. After 25 days, interest begins to mount up at 12 to 18 percent in most. So you start with 25 days of FREE credit.
Example: If you make a local charge -before 3 pm on the 29th, a Monday when Tuesday is not a holiday, and your bank is the same as your retailer's, your real Charge Date is one day later. That is the 30th, but your billing date is the 30th so the charge will appear on the bill of the 30th, and you will have to pay it 25 days later.
But suppose you made the purchase after 3 pm on the 29th. Then your real Charge Date is now two days later, or the 31st. That is because the charge receipts are deposited a day later by your merchant in his bank.
You will have skipped over the billing date. The charges will not appear until the next billing date...which is 30 days hence. And you will not have to pay for another 25 days.
You get 55 days plus the two days between charge date and real Charge Date, for a total free credit of 57 days. By simply shifting your chare form before 3 p.m. to after 3 p.m., you gain 32 additional days of free credit.

Obtaining Additional Credit

Now that you have the knowledge of how to start building a strong credit profile in your new credit file, you might want additional credit. DON'T BE IN A HURRY TO DO THIS! If you follow my procedure you'll have 3 banks behind you. Concentrate on improving your ability to borrow money from them and getting other banks behind you if you can. After you pay off your first secured loan, ask the bank loan officer what it takes for you to get a small loan without having to secure it with a savings account. That's what you concentrate on and follow their advice so you can start getting loans on your word! Then you're on your way!
When the doors to the credit world open for most people they start charging things they really can do without, mainly material possessions. I recommend that you concentrate on you being able to borrow the money for the material things you want in life. Then concentrate on your ability to travel by getting a couple of airline cards along with car rental, car repair cards, and a couple of gas cards. Other than this you might want to get a finance company behind you.
ALWAYS REMEMBER THAT ONCE YOU'RE IN GOOD WITH A BANK, NEVER LET THAT RELATIONSHIP SOUR AT ALL COSTS!
6 Credit Card Secrets Banks Don't Want You to Know

1. Interest Backdating
Most card issuers charge interest from the day a charge is posted to your account if you don¹t pay in full monthly. But, some charge interest from the date of purchase, days before they have even paid the store on your behalf!
REMEDY: Find another card issuer, or always pay your bill in full by the due date.
2. Two-Cycle Billing
Issuers which use this method of calculating interest, charge two months worth of interest for the first month you failed to pay off your total balance in full. This issue arises only when you switch from paying in full to carrying a balance from month to month.
REMEDY: Switch issuers or always pay your balance in full.
3. The Right To Setoff
If you have money on deposit at a bank, and also have your credit card there, you may have signed an agreement when you opened the deposit account which permits the bank to take those funds if you become delinquent on your credit card.
REMEDY: Bank at separate institutions, or avoid delinquencies.
4. Fees Are Negotiable
You may be paying up to $50 a year or more as an annual fee on your credit card. You may also be subject to finance charges of over 18%.
REMEDY: If you are a good customer, the bank may be willing to drop the annual fee, and reduce the interest rate 9 you only have to ask! Otherwise, you can switch issuers to a lower- priced card.
5. Interest Rate Hikes Are Retroactive
If you sign up for a credit card with a low "teaser" rate, such as 7.9%, when the low rate period expires, your existing balance will likely be subject to the regular and substantially higher interest rate.
REMEDY: Pay in full before the rate increase or close the account.
6. Shortened Due Dates
Most card issuers offer a 25 day grace period in which to pay for new purchases without incurring finance charges. Some banks have shortened the grace period to 20 days9 but only for customers who pay in full monthly.
REMEDY: Ask to go back to 25 da
Wipe Out Debts Without Bankruptcy

In 1938 a federal law was passed known as the Wage Earner Plan. It is administered by the same branch of our courts that handle bankruptcy. You must be a wage-earner to use the law - that is the primary requirement. The Wage Earner Plan does not in itself 'wipe out' debts, but a little-known proviso of your filing requires that your creditors must appear to verify your indebtedness to them. Statistics indicate that 40% fail to appear, in which case, those debts are indeed 'wiped out'. In some cases 100% of the creditors fail to appear, which enables you to wipe out ALL your debts without bankruptcy. If some of the creditors do appear, then the court allows you to spread your payments out over a three year period in smaller amounts so that you can afford to pay.
Once you file under the Wage Earner Plan, you stop bill collectors, lawsuits, judgements, assignments, seized bank accounts, and other actions against you. And to top it off, your credit rating is, in many cases, improved because you made an honest effort to work with the lending firms. Additionally, if the seller used deceptive trade practices to induce your purchase, your debt may be wiped out under the provisions of the Uniform Commercial Code. Under the Homestead Act, your residence can be exempted from levy to the extent determined by local law. Check at your local courthouse.
Legal Ways To Get The Bill Collectors Off Your Back

Sometimes, the formal and legal declaration of personal bankruptcy is the best way to go when you're "snowed under" with bills, and you just can't see your way clear to survive. Actually, bankruptcy allows you to make a fresh start. Generally, it takes only a small amount of money, a careful evaluation of your assets and your liabilities.
In many cases, a lawyer is not necessary. If you have very few assets, mountains of debt, and not enough income to meet your obligations, then your best bet is almost always the filing of straight bankruptcy. What you'll need is the proper forms "S3010 Bankruptcy forms, for an Individual Not Engaged In Business." These can be purchased from any full-line office supply store, especially in an area serving attorneys' offices. You'll need to know which district you live in for Federal Court purposes - so look in the white pages of your telephone book under U.S. Government - Courts - and take down the address of the nearest U.S. District Court. Check it out to be sure that your residence is in this court's jurisdiction. You then fill out the forms you purchased, listing all of your creditors - those with priority being listed first - meaning those who have extended credit to you against some sort of security or collateral, followed by those who have extended credit to you on just your signature or reputation.
You must be sure to list all of your creditors because any that you fail to list, will be able to sue you and collect even after the bankruptcy has been adjudicated. At the same time, be sure to include the names of anyone and everyone you may have co-signed a note or a loan for, as well as anyone who may have co-signed for you. The laws governing personal bankruptcy vary in all states, but generally, a bankruptcy judgment will not take away the house you live in, basic home furnishings, a car that's necessary towards your gainful employment, nor the tools of your trade. Check these things out to be sure against the list of items regarded as the necessities of life by your state.
When you've got all the forms filled out, and notarized, you take them to the Clerk of the U.S. District Court in your jurisdiction. You pay the clerk $50, and from there, you're home free. The clerk notifies your creditors, and reminds them that being as you've filed bankruptcy papers, they cannot bother you about your debts anymore. However, they are invited to your hearing. Usually they don't show up, because by that time, you have very few, if any, non-exempt assets left that they are really interested in. But, whatever assets you do have that are nonexempt, will be sold by the Court to appease your creditors. Any money realized from these sales is then added to the total amount of money you may have turned over to the court at the time of your filing, and divided equally amongst your creditors according to priorities. After all of this has taken place, and usually about 3 months after you've been adjudged bankrupt, you can start all over again to incur debt, pay bills and establish a new credit rating. However , you should be especially careful about talking with your old creditors because they may attempt to maneuver you into signing a "reaffirmation" of your old debt. The thing to do is to be sure that you carefully read anything you affix your signature to, and don't agree to pay on any debt that has already been discharged through your bankruptcy!
In some bankruptcy filings, it is definitely advantageous to hire an attorney to represent you. This is especially true for people who have assets such as real estate they want to protect, and/or people who have been operating home-based businesses or been accused of fraud. Remember this, if you decide to process your bankruptcy without a lawyer, then it is your responsibility to fill out all the necessary forms accurately and completely, and every bit as precisely as if you had paid an attorney to do it for you. Leaving out a creditor's name or address or forgetting a loan that you co-signed for, will surely bring on litigation against you even after your bankruptcy has been adjudicated. Be sure you understand all the papers, ask the Court Clerk for advice, and if you run into problems, then take it in to an attorney.
Besides the regular bankruptcy laws, there's also a little-known and little-used method of getting reorganized with your debt, particularly when you've got a steady job and just need more time to straighten your indebtedness out. This is the wage-earner's provisions of Chapter XIII of the Federal Bankruptcy laws. Basically, these provisions allow you to make new arrangements with your creditors and pay off all your debts over a new 3-year period of time. When you filed for indebtedness relief under the provisions of this law, nothing is recorded permanently on your credit record. You get to keep all your assets, but you must pay off all your debts.
But, so long as the Court grants you relief under these provisions, and you pay your creditors according to the repayment schedule agreed upon by the Court, your creditors cannot bother you. Even if they have begun a suit against you, once the Court has given you relief, they cannot touch you! Once you've filed under these provisions, your creditors are immediately restricted from even contacting you, and get only what the referee or trustee doles out to them. Often-times, if a creditor threatens to sue you, the most effective thing you can do is to tell him frankly that if he sues you, you'll have no other alternative except to file bankruptcy papers. In many instances, this will cause him to take a second look and to do whatever he can to assist you in paying him the money you owe, but over a longer period of time, and at smaller monthly payments.
The absolute bottom line is that your creditors know only too well that if you do file for bankruptcy, their chances of receiving even half of what you owe is practically nil. Thus, it's in their best interest to do everything they can to help you to continue making payments on the amount you owe, regardless of how small those payments may be. When a creditor does sue you, and gets a judgment against you, he can then get a court order directing the sheriff to seize your personal property and sell it, with all monies realized going to the creditor to satisfy your debt. When they see this about to happen, many people connive to make themselves "judgment proof." In other words, they hide their assets or move them out-of-state before the sheriff or Marshall arrives. This is illegal, but is done as often as not. Many creditors will attempt to "garnishee" your wages.
This is done by getting a court order directing your employer to set aside part of your wages or salary every pay period and turn it over to him. First, of course, he has to find out where you work; and even then, in most states, there are limits set relative to how much a creditor can garnishee for your wages. If you have no job, and no visible assets, or you live in a state where your wages cannot be garnisheed, your creditors actually have very few ways of ever collecting from you. Many techniques used by creditors and collection agencies are illegal.
A creditor or agency can write letters to you; call you once a day in quest of a payment; and even knock on your door to ask about a payment. but he is forbidden by law to harass you or invade your privacy, or use deceptive means to get you to pay your bills. He cannot use foul and abusive language over the telephone, tell anyone besides you the reason for his phone call, inconvenience you or in any way threaten your job or your reputation in the neighborhood where you live. Still, the best idea for reorganization and settlement of your debts when you find yourself in an untenable position, is in-person visits and explanations of your situation with your creditors, and a desire to explore other possible ways of mutual satisfaction without involving collection agencies or bankruptcy.