(ARA) - Living within your means. It sounds simple enough, and who could argue with the logic of not spending more than you earn? But the fact is that more and more Americans are using credit to live beyond their means.

Consumer debt in the United States is at an all-time high. Average household debt (not including mortgages) has almost

Truth in Lending Act
Requires creditors to give you written disclosures of important terms of the credit agreement such as APR, finance charges, monthly payment amounts, payment due dates, total amount being financed, length of the credit agreement and the consequences of not making monthly payment.

Federal Trade Commission's Credit Practices

GLOSSARY

Annual Percentage Rate (APR) -- The cost of credit expressed as a yearly rate.

Appraisal Fee -- The charge for estimating the value of property offered as security.

Automated Teller Machines

what happens if you are late with your credit loan payments? Creditors understand that circumstances such as unemployment or illness can make it very difficult to meet bill payments. If this happens to you, contact your creditor, explain your situation and work out a repayment schedule.

You also might be offered the option to "refinance" or

Banks, credit card companies, auto dealers, retail stores and lenders decide if you get your loan. Most businesses that issue credit or loans use credit scores to quickly summarize a consumer's credit history, saving the need to manually review an applicant's credit report and providing a better, faster risk decision. Although many additional

Your credit report influences your purchasing power, as well as your chances to get a job, rent or buy an apartment or a house, and buy insurance. A history of timely credit payments helps you get additional credit. Accurate negative information can stay on your report for seven years. A bankruptcy can stay on your report for 10 years. If you

Application scoring
The use of a statistical model to objectively evaluate and “score” credit applications and credit bureau data in order to assess likely future performance. Scores help businesses make decisions such as whether to accept or decline the application.

Bankruptcy
A proceeding in U.S. Bankruptcy Court

Under the Fair Credit Reporting Act, a credit reporting company may only disclose your credit report if someone is:

As long as there is no outstanding balance on the secured credit card, you should be able to close the account any time. Your deposit will be returned to you as soon as the company is sure there are no new charges. It may take a few weeks to get your money back, however. If there is a balance outstanding, the company will probably withhold

Credit problems are the main reason would-be home buyers are denied a loan. The first step to clearing up your credit is to get a copy of your credit report to make sure that the negative credit information is indeed accurate. For a copy of your report, contact one of the three major credit reporting agencies: Experian at (800) 311-4769,

Federal Trade Commission (FTC) Credit bureaus are regulated by the FTC under the federal Fair Credit Reporting Act. The FTC has many free brochures dealing with credit-related issues, as well as a website with information about identity theft (www.consumer.gov/idtheft).

6th & Pennsylvania Ave., N.W.
Washington, D.C. 20580
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A creditor can charge a late fee if you do not make your loan payment on time. However, it is illegal under the Rule for a creditor to charge you late fees or payments simply because you have not yet paid a late fee you owe. This practice is called "pyramiding late fees." Under the Rule, this means that if you do not include the late fee you

To make sure they will have credit in their own name, married women should ask creditors to report joint credit accounts under their full names and Social Security numbers.

You probably can, but different companies have different requirements. If you don't have any unpaid debts and you've had no negative information about you reported to the credit reporting agencies in six months, you will probably qualify for a secured card. If you are turned down, try another secured card company.

A lot of people spend more than they can afford and pay less toward their debts than they should. To get control over your finances and to manage your debt, try:

Budgeting—In many cases, people design and then stick to a budget to get their debt under control. A budget is a plan for how much money you have and how much money you spend.

If you cannot resolve your credit problems alone, a non-profit credit counseling organization may be able to help you. Non-profit counseling programs are often operated by churches, universities, military bases, credit unions and housing authorities. You can also check with a local bank or consumer-protection office to see if they have a list

Possibly. Effective June 30, 2003, insurers are restricted from increasing your rates if you don't have a credit history. Those restrictions apply unless the insurer proves an increase is warranted for people of your age and sex, and who live in your general neighborhood. Because of this law, we anticipate that fewer insurers will penalize you

The main reason people want good credit is to be able to purchase a home of their own. Many people don't realize that the credit mistakes that they made during college or when they were young can haunt them for years to come, keeping them from purchasing a home, a car, or other things that they need. Don't let bad credit keep you from owning

When you agree to be a cosigner for someone else's debt, you are guaranteeing to pay if that person fails to pay the debt. The Rule requires that you be given a notice that explains the responsibility you are undertaking. Under the Rule, the cosigner notice must say:

li>You are being asked to guarantee this debt. Think carefully before you

If someone is willing to make a gift of funds in order for you to purchase a home, lenders will ask for a gift letter stating that no repayment of the "gift" is expected. The amount of the gift and the date funds were transferred should be spelled out in the letter, along with the donor's name, address, telephone number and relationship to the

If you're denied a loan or credit card because you have no credit history, consider establishing one. The best way is to apply for a small line of credit from your bank or a credit card from a local department store. Make sure you list your best financial references. Make payments regularly and make certain the creditor reports your credit

Although credit evaluators use information on credi- tor inquiries to predict future loan performance, the value of this information is limited in an important way. Ideally, credit evaluators would use such infor- mation to distinguish the consumers who are seeking multiple loans to greatly expand their borrowing from the consumers who are

Public records suffer from similar consistency and duplication problems that affect collection items. In particular, a single episode can result in one or more public record items depending on how it is recorded. For example, tax liens can be recorded on a con- solidated basis or treated as separate items. Similarly, amendments to a public

Whether a person is seeking new credit provides information about the credit risk posed by the indi- vidual. The number of new accounts the individual has recently established and the number of attempts to obtain additional loans, as conveyed by records of recent creditor inquiries (requests for credit reports), all provide a picture of the

Most importantly, you can avoid “creeping indebtedness” by staying aware of your debt-to-income ratio. Knowing your debt-to-income ratio will help you make sound decisions about making purchases on credit or taking out loans. Keeping your debt-to-income ratio under 20 percent will help you avoid major credit problems.

Because it

Generally, the lower your debt-to-income ratio, the better is your financial condition. A recommended debt-to-income ratio is under 15 percent. A ratio of 20 percent or higher signals a need to control credit and to begin a plan for regaining financial stability. Ideally, you will carry little or no debt so your income can be saved, invested,

Some employers use credit reports to judge job applicants' integrity and responsibility for personal financial matters. If your report shows that you handle your personal finances well, an employer might conclude that you will handle the companies' affairs responsibly, too. Employers also use credit reports to verify information supplied on

If you legally separate or divorce, cancel joint accounts and apply for new ones under your own name. Notify your creditors in writing at that time that you are no longer responsible for any debts incurred by your ex-spouse. However, you will still be responsible for debts previously incurred.

As a co-signer, you will not receive the billing statements for the loan or credit card. At the time you sign, make sure you get the lender's name and other information about the credit account. Although the lender may not contact you unless the primary borrower defaults, you have the right to check with the lender that the account is...