Credit Card Blog

Transparent Financial Services, of Chicago, IL was awarded a grant from CEC (Chicagoland Entrepreneurial Center) to support TransFS’s rapid national growth. Clients of TransFS are businesses in need of financial services, such as locating a dependable credit card processor. Transparent Financial Services are recipients of this grant through the CEC’s Entrepreneur in Residence program. This program places startup companies displaying significant growth-potential with entrepreneurs who are experienced with business success.

Transparent Financial Services now have over twelve markets in the customer base of their comparison-shopping site offered to their clients through their credit card processing services. TransFS has a wide network of credit card processors bidding on each merchant’s services but, they are all bound by strict contractual stipulations. The system is carefully designed so that a client is not contacted by or connected with a credit card processor until they have officially chosen one through the services of Transparent Financial Services.

TransFS was established in 2008 and their client base of businesses now includes more than twelve various industries. The owners founded Transparent FS, while in Business school, after their many challenges as entrepreneurs trying to choose the best credit card processor and locating top quality financial service providers. They have developed a unique strategy which enables them to locate processing fees that are about 40% lower than average. TransFS has already saved some of their clients well over $72,000 per year in credit card processing server fees. Even their processing providers are rewarded when they adhere to contract regulations and earn TransFS certification, by becoming eligible for quicker contact with clients at reduced costs. Transparent FS also offers their services to all business clients free of charge.

It’s common for couples to share credit card accounts, with one spouse opening the account and adding the other as an authorized user. This is especially useful when one spouse has a good credit history, and the other needs to build their credit.

But things get tricky when marriages go bad. For one thing, if you’re still an authorized user on your ex’s credit card, their spending habits can harm your credit score. For another, keeping you as an authorized user is a good way for your ex to see what you’re spending money on.

So what should you do? Experts recommend calling the credit card companies and asking to be removed as an authorized user. Remember, you’re responsible for at least half of the debt incurred on your credit cards during the marriage. If you stay on the accounts following your divorce, you can also be held liable for half of the debt incurred after the marriage ended.

If you’re receiving alimony or child support in the form of credit card privileges, it might be a better idea to set up automatic deposits or old-fashioned checks instead. If your ex defaults on the credit cards, your support - and your credit score - will suffer.

Most people do not monitor their credit with the credit bureaus. There are two reasons for this: first, it costs money. The credit bureaus allow you to purchase your credit reports directly from them so that you can see what items they contain. Second, most people do not monitor their credit report because they are afraid of what is contained in them.

Do It Anyway - A proactive approach needs to be embraced however in keeping your credit reports clean and helping you remain aware of the consequences of not doing so. You can obtain a free report for all three reporting bureaus by going to annualcreditreport.com. You should comb through these reports and see what is there and needs to be changed if the data is in error.

Straighten It Up- Once you have copies of your reports, work with the credit bureaus to fix any legitimate errors. This will help your credit score go up eventually. This is the one of the best ways to influence your score to increase.

Face It and Change- After you see your credit bureau reports and see what is on them, you will be able to use that as motivation to change your money management activities. Pay all of your bills on time, make more than the minimum payments on credit cards, find ways to increase your income and reduce expenses.

Paying this type of attention to your credit cards and the tasks that goes with them is hard work. It is easy to get into debt, but more difficult to get out. If you make yourself do these things, then you will be able to use credit cards responsibly again. But, for now, get to work.

Credit cards are still good to use if you use them wisely. However, your credit score can get damaged by a few things that are caused by your own activities. Here are four that you need to steer clear of in order to keep your score up.

Cash Advances - Taking a cash advance from your credit card might seem like an innocent thing, but it is a red flag with the credit card company. They view these as a desperation move. So, why do they continue to offer them? Because they make money on them. Using cash advances to pay for daily expenses is not a good thing to do anyway. It is a sign of a larger problem that you need to address. Either, increase your income or lower expenses – or both.

High Balances on Retail Cards- Retail cards are used less frequently than other credit cards. Large balances on these cards tend to indicate fewer financial options and signal that you might be under financial stress. Make a strong effort to pay these down and then use them only for necessary purchases that you know you have an income stream with which you can pay off within a month.

Too Many Opened Accounts Too Soon - If you try to open too many credit card accounts to close together, then that is another sign of financial desperation. Even if you are in financial desperation mode, do not try to get more credit cards. You will be adding to your frustration by putting off the facing of your situation.

Unpaid Medical Bills - If you have outstanding medical bills, those will be reported to the credit bureaus and your score will go down. These types of bills are not uncommon, but you need to manage them better. One way of doing this is to set up a repayment schedule with the medical provider before the account goes delinquent. Find out what they will do to work with you. Most of these offices are used to this and will work with you.

For months, people have been complaining that their credit limits have been reduced, and wondering what the long term implications of that would be.  Turns out - just as predicted, the FICO scoring model is not quite holding up to the changes in the credit card industry.  As credit limits are reduced by banks (and not always at the fault of the cardholder), the debt utilization percentage increases for individuals and suddenly they wind up with lower credit scores.

 One woman in Oregon complained to JPMorgan Chase & Co when they reduced her credit limit that it would hurt her 760 credit score.  She claims the company said that wasn’t their problem - it was FICO’s problem to deal with.  When her credit limit was reduced from $42,500 to $12,000, her debt in relation to the amount of available funds she had quadrupled.  Since the debt utilization percentage is a large factor in how the FICO formula calculates someone’s credit score - she is concerned her lower score will cause problems if she should want credit in the future.

Approximately 30 million Americans have had credit limits reduced during the second half of 2008, according to estimates from FICO. 

The biggest problem with this situation is that when banks reduce a consumer’s credit line based on the overall economy, it is not an accurate indication of whether or not that person is a higher risk for creditors to lend to.  So when their FICO score is reduced, they’re labeled as higher risk for credit - increasing the interest rates they pay and making it harder to obtain credit.

It’s been a well known “secret” that credit card companies analyze cardholder spending and how they make their payments as a method of determining risk. They’ve learned that people who buy certain brands are more likely to pay their bills late or not at all; and what sorts of products paid for with credit will pretty much predict the cardholder will always pay their bills on time.

As an extension of this analysis, it’s possible that certain spending will start to affect your credit score. People who use their credit cards with the following industries may be among the first cardholders to experience credit score adjustments due to their spending habits:

• Gambling (casinos and racetracks)

• Pawnshops

• Liquor stores

• Marriage counseling

• Massages

• Spas

• Bail bonds

• Hospitals & Doctors offices

• Court fees

• Escort Services

• Thrift stores or secondhand stores

Based on research of cardholders making purchases with these industries and the probability of these cardholders paying their bills late or not at all – these are a few of the first industries that are considered suspect when a lender is deciding whether or not to extend you credit.

In 2010, the credit card legislation changes will provide regulations for just how far a credit card company can go to learn about you and your purchases. If you want to be sure your credit score isn’t being adjusted based on where you shop - be aware of where you are using your credit cards.

Credit scores can be mysterious things. They’re formulated by taking many factors into consideration, including your total debt load and payment history. For consumers who want to see how their data is affecting their credit score, Credit Karma has a new offering: the Credit Report Card.

This free service requires customers to register with their date of birth and Social Security number. (This information is not stored.) The tool uses this information to pull data from the customer’s credit report. Then they can see a breakdown of how their credit card use and other factors are helping - or hurting - their credit score.

Credit Karma believes that consumers deserve full access to their credit scores. To check out the new tool and get a free copy of your credit report, go to www.creditkarma.com.

Most people are aware that closing credit card accounts will lower their FICO credit score.  The reason closing accounts can lower the score is because it reduces the amount of available credit you have - and if you have any balances on any of your accounts - reducing your available credit will increase your debt utilization.

If you want to close some of your credit card accounts without affecting your FICO score is to pay off your credit card accounts (or reduce your balances as low as possible), make sure the accounts are reported to the credit reporting bureaus as paid off or with low balances, and then begin closing credit card accounts.  If you have no debt or very little debt, you aren’t going to be increasing your debt utilization percentage as much when you close the accounts, so your credit score will barely be affected by closing the accounts.

It is not wise to close numerous accounts all at once, under any circumstances, though.  Close one or two at a time and wait until you see the affect it has on your credit score (if any) before closing additional accounts.  Most of the time, having unused, open credit isn’t lowering your credit score and it doesn’t hurt you to keep the account open.

As an increasing number of credit card companies are agreeing to settle cardholder debts, it’s important that individuals recognize that there may be minor tax consequences associated with the settlement. A debt settlement is when the creditor allows the account holder to pay less than what is owed and consider the account paid in full.

A partially or fully forgiven debt through a settlement is sometimes considered as taxable income by the IRS and must be reported on your tax return if you saved more than $600 during the settlement. So if you owed $5000 on your credit card, and settled for $2,500 you would have to report $1,900 as income ($2,500 minus $600). The credit card company that settles the debt will send you and the IRS a Form 1099-C reporting the forgiven amount.

There are exceptions to having to count the forgiven debt as income, for individuals who are insolvent at the time of the settlement. Insolvent means you owed more than the fair market value of your assets.

A settled debt typically is marked as such on your credit report as well, which is better than a bankruptcy, but not as good as “paid in full” or “paid as agreed”.

If you do end up having to pay taxes on the amount of debt forgiven, chances are you will still come out ahead than if you continued to struggle and repay that debt with 27% interest and credit card late fees.