Nobody likes rejection.  Here’s an interesting article – it’s out of Britain but the rule still applies to the U.S., as U.S. and U.K. consumers are facing similar problems with both attaining credit and paying it off.  If you thought the credit crisis was an America-centric problem, you’re wrong.  It’s something that affects all markets.  

The news is that credit card companies are denying 18,000 credit card applications a day.  I have to say I found this surprising.  It doesn’t entirely make sense for a credit card company to reject a credit card application outright – unless the applicant has proven to default on credit cards time and again.  And by default I mean neglect to pay them off at all.  A recent survey shows that 1 in 14 people have their credit card applications rejected.  

The normal application process goes like this: an applicant tries for one card and then the issuer says, You don’t qualify for this card, but here’s one with a 19% APR.  It’s how credit card issuers lure people in with attractive credit card offers with the caveat “For those who qualify” which often means you’ll eventually be offered an entirely different type of card.  One of the reasons that you should never try and elevate your numbers – credit rating, income, etc. – on a credit card application is that this can lead to you being offered a card with worse terms than if you were honest.  

Because credit card companies can offer you whatever card they deem appropriate, it’s surprising that they’d deny so many applications.  It shows how deep an affect the credit crisis is having that a credit issuer would rather not issue a card with a high APR than not issue a card at all.  The financial losses from defaults on both credit cards or even mortgages are having that deep of an impact.  

What this means, of course, is that it’s harder now to secure credit – and normally a credit card is the easiest type of loan to secure.  However, if you’re rejected by one credit card issuer, this doesn’t mean you’re out of luck.  You could just apply to a different credit card issuer and be offered a card.  However, applying for one credit card after another is bad for your credit rating so it’s not advisable.  

One of the better ways to bypass this process is with an instant approval service, which will narrow down your options based on your financial standings, ensuring that you’ll be offered some type of card.  If not that, then you could go for a prepaid debit card to get your credit rating back in shape, if you’re being rejected due to a poor credit standing.  

One of the best ways to pay off credit card and other debt is through a home equity loan.  You borrow off of equity, pay off all your debts in one lump sum, and then pay off the home equity loan – normally for a lower interest rate than all the other debts combined.  Even if it doesn’t have a much lower rate, it can still be a great help by raising your credit rating by eliminating credit balances.  You’ll also have freed up space on your credit card, should you need it.  

But hold it.  Stop right there.  It’s this last issue that causes a lot of trouble for people.  For many people, there’s nothing more tempting than an empty credit card.  You’ll be led to think: what’s one purchase?  And then another.  And another.  Soon you’ve revived your credit card debt in addition to what you’re paying for the home equity loan.  Your problem has worsened.  

If you do you go through a debt repayment strategy such as a home equity consolidation loan, you’ve got to be smart about how you spend from this point forward.  The same goes for transferring a balance to a 0% APR balance transfer card.  The major mistake that cardholders make is then putting new charges on the balance transfer card.  When you enter into a debt payment strategy you have to change your financial habits as well.  

In short, just getting a loan or transferring a balance is not enough.  What you really need to do is stop your credit spending as much as possible.  Because look at what will happen if you don’t.  You’ll no longer have the equity to take out another loan.  Your debt payments could double.  This is the type of thing that leads to bankruptcy or foreclosure.  Be careful.  A debt consolidation loan isn’t a way to clear away your credit so you can use it again.  It’s a way to get out of debt and keep out of debt.  Once the equity loan is paid off, you have the freedom to use your credit again, but hopefully you’ve learned some good habits in the meantime to never overspend on credit.  

 

Brad Pitt and Angelina Jolie are millionaires many times over and the celebrity couple is unique for their unusual spending habits. The dynamic duo likes to spend some of their considerable earnings on nice homes for their growing family. But unlike many celebrity couples, Brad Pitt and Angelina Jolie eschew a lot of the other trappings that our favorite celebrities succumb to in favor of giving back.

 

Brad Pitt earned an estimated $35 million last year and Angelina Jolie earned close to $20 million last year. But even though they have the cash, the celebrity couple’s spending habits are tame compared to many Hollywood couples. Although the couple has homes in California, Louisiana and New York, they also give a good deal of money to worthy causes. Pitt has been in the news a lot lately for his work to help rebuild New Orleans in the wake of Katrina. Jolie claims to donate 1/3 of her income to charity. It’s rare to go for more than a week without hearing about another charitable act from the celebrity couple.

 

You don’t have to be a celebrity to save money or to have more money left over to give to charity. Get money back with a cash back credit card or save money with a low interest credit card. And learn more before you apply by checking out consumer reviews of credit cards.

One of the major misconceptions about credit reporting is that it only has to do with loans – i.e. money you’ve borrowed.  This isn’t true.  Other types of bill defaults will go on a credit report as well: utility bills, phone bills, cellphone bills, car insurance bills, and medical bills.  What this means is that if you pay off these bills on time, it will help out your credit rating.  

A credit report is weighted by the size of the bill you’re paying.  So a mortgage, which normally has a high monthly payment, will have a greater impact on your credit rating than a credit card.  The same goes for different types of medical bills: one trip to the dentist won’t have the same impact as repeated defaults on a stack of different medical bills.  

Medical bill defaults will not usually end up on your credit report unless you go into severe default and the bills end up in collection.  This is true for most types of most bills that are not loan-based.  If you don’t pay off that one dentist bill for many months, it’s likely going to go into collection.  This won’t have the same affect on your credit rating as a stack of bills for a major medical procedure, but it’s still to be avoided.  

It can take several months of defaults for medical bills to go into collection, so just defaulting on a medical bill one month will not necessarily have the affect as defaulting on a loan bill.  It depends on where you get the medical procedure: some doctors will report immediately to credit bureaus, while many may not.  It goes without saying that you should try to pay your bills on time because if you end up being severely delinquent, this can have a negative effect on your credit rating.