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September 24, 2006

The History of Credit and the Bureau

Our nation is in chaos and the root of it all stems from good graces of man. Credit is deeply rooted into our history and it stems from a person's or merchant’s product or service priced too high for the average consumer; or when payment for the item(s) was not convenient at the current time. This was the birth of the consumer credit program.

Let's look at a typical California House priced at $395,000. The builder, in order to make a profit, needs to sell many of these homes at this price. How many of us have $395,000 to plop down in one lump sum?

If the builder only sold homes to people who could pay the lump sum, they would not sell many homes and the price would skyrocket to $3,395,000 due to the need for the builder to earn an equitable profit. On the other hand the builder would not make any profit if the homes were sold at $4000 or even $40,000.

The homes must be sold at a price that is consistent with perceived value and quality, but still needs to make it available to the average consumer. This is the reason the mortgage business is so huge.

Let's look at another example. This trend is deeply rooted in our history. Have you ever gone to a store and realized you didn't have the money to purchase an item? Remember asking the store clerk to put it on your account?

Actually you can still find this type of system where the merchant would allow the consumer a period of up to 30 days to repay the debt; when payment for the goods or services is not convenient. This began back in the days of the general store where a patron would come by and pick up a few items, charge them to a personal account and the patron would agree to pay the entire account by the end of the month.

You can still find this type of environment but it's gone for the most part replaced by the modern day credit and department store cards. This is a system designed with the theory that you never have to pay off the balance in full - the revolving credit or charge account. Pay off some and spend it to the limit.

This is where people get in to trouble everyday; from late payments piling up debt and adding stress; who needs it? As an evolution of this process, it was natural that some type of credit reporting system would be create; the dawn of the credit bureau.

Creditors or merchants were concerned about doing business with bad debtors; they needed a way to report problem consumers and a way to get the information about them before they established an account for them.

Now that the bureau had been born they began tracking information on individuals and businesses, selling that information to subscribers (creditors) and receiving information as well.

Posted by creditreportsolution at 10:59 AM | Comments (0)

September 22, 2006

Get Out Of Debt

Finding a way to get out of debt is extremely important and it is crucial to take action as soon as possible if your debt is significant. This daunting task may seem overwhelming, but it is quite possible if you take the appropriate steps. I am nearly out of debt and if you would have seen my financial obligations just a decade ago, you would be shocked to discover that everything is nearly paid off in full.

I got my very first credit card when I was in college. This is the worst time to acquire credit because you have your entire future in front of you and the prospects seem endless. I thought that I could rack up charges with no worry because I could always get out of debt in the future. After all I was sure to land a great job after graduation.

The credit cards kept coming. They came in very handy while I was a poor college student. In fact, I took out a hefty cash advance to pay tuition one semester. It seemed like a good idea at the time. I also could finally afford the trendiest fashions and accessories with the credit. No worries, I would get out of debt once I hit the work force.

The great job was more elusive than I imagined and by the time I was in the work force full time I had racked up quite a stack of bills. When I hit my mid-twenties, I knew that I desperately needed to get out of debt quickly. Unfortunately, there is no quick way to get out of debt. You have to consider that you didn’t spend the money overnight, and you can’t expect to pay it off overnight. The good news is that there are steps you can take to get out of debt and it won’t take nearly as long as you think. The first thing you need to do is take action. Don’t wait another year or even another month. Once you decide that you need to make a plan, do it before your old habits overwhelm you.

Make sure that you pay off the credit cards that have the highest interest rate first. Never squeak by month after month paying the minimum. It will take decades to pay off high interest credit cards this way. Make a list of your debtors. Then start making a plan. This plan includes making phone calls. You would be surprised at how many creditors will take a payoff that is significantly less than your balance. Oh yes. And stop using your credit cards. This is one of the most important steps to get out of debt relatively quickly.

Posted by creditreportsolution at 08:25 AM | Comments (0)