LaToya's Credit / Debt Blog

When you hear the word "deadbeat", what kind of person do you think of? I think of someone who doesn't meet their obligations, probably lazy or just plain negligent.

Even though we mostly hear it used to reference parents who don't provide financial support for their kids, you can use the word "deadbeat" to describe many different types of people who just don't do what they're supposed to do - employees, renters, and even credit cardholders. Yes, you can be a credit card deadbeat.

Unlike other deadbeats, credit card deadbeats actually meet their financial obligations. That's right. A credit card deadbeat makes his (or her) payments on time. As a matter of fact, he pays his balance in full every month. So why's he called a deadbeat? Read With Credit Cards, Being a Deadbeat is a Good Thing to find out.

It's pretty common knowledge that bad credit scores can make life difficult. Try getting a credit card or loan with a bad credit score. If you manage to get approved, you'll probably have an interest rate so high your minimum payments may not even cover the finance charges.

You'll pay another high price for a bad credit score - a higher insurance rate. Until they get an unexpected rate increase, not many people realize insurance companies check credit scores. They argue that people with lower scores tend to file more claims and are therefore more expensive for the company. These companies haven't shown us the statistics to back up this claim, so we'll just have to take their word for it - for now.

What do you think? Does a low credit score mean you're a bad driver and deserve a higher insurance rate? Should insurance companies use credit scores to set premiums?

Take a look at Bad Credit, Bad Driver to learn more about how insurance companies use credit scores.

This may sound a little harsh, but it's not the credit card's fault you went over your credit limit. It's your own.

"But they let me go over," you argue. Your car will "let" you go over the speed limit, but do you blame the manufacturer for your speeding ticket?

When you exceed your credit limit - the maximum amount you can charge on your card without penalty - there is a string of consequences, some you may not be aware of. First, you'll get charged an over-the-limit fee. Not only that, your interest rate might increase to the default rate. Due to universal default, your other interest rates might go up too. Finally, depending on the balances of your other credit cards, you might see a credit score drop.

Some consumers argue that credit cards should be declined rather than letting you go over your credit limit. I say it's your responsibility to know your limit and stay far enough below it so that you don't get assessed fees.

There are cases where cardholders mistakenly exceed their credit limits because they've recently been lowered. The current credit crunch has many lenders dropping credit limits, even for timely-paying customers with good credit scores. If anyone has an excuse for going over their credit limits, it's these cardholders.

Ideally, a creditor would have to notify the cardholder in advance of a credit limit decrease to give them the opportunity to lower their balance and avoid any penalties. Of course, this would mean the credit card companies earned less money, so I don't see them volunteering this practice.

If you're a credit card user, 5 Ways to Avoid Over the Limit Fees will help you avoid those $39 limit fees and interest rate increases.

• Common Credit Card Fees and How to Avoid Them
• 5 Principles of Making Credit Card Payments
• How a Late Payment Affects Your Credit

Soon students all over the country will be headed to campus. So will credit card companies.

Today, I asked a friend of mine, a senior in college, about her experience with credit cards. Her parents only advice regarding credit cards - stay away from them. Fortunately, she managed to do so, even though companies are often on the college's campus, offering free subs and drinks in exchange for a completed application.

Lucky for her, she works for a bank's call center, so she hears first-hand how consumers get trapped with credit card fees and high interest rates. It steered her away from credit cards until she knew she could afford one. Now, at 21, she has 2 credit cards (only actively uses one of them) and makes sure to pay the balance in full each month. She's definitely a rarity.

The college student is one of credit card companies' favorite type of customer. Students are on their own for the first time and finally get to have one of those pieces of plastic they've been enamored with for so many years. The credit card companies couldn't be happier.

In College Students Are a Credit Card Company's Dream Come True, I talk about how credit card companies market to college students and advise students on the right way to choose a credit card. It's a must read for students and parents of students heading off to college this fall.

Your credit report includes information about your financial habits, like what credit or loan accounts you have, how much you owe, and if you've been paying on time. Your creditors report the information directly to credit bureaus - the companies who create and maintain your credit report. If the creditor says you were late on a payment, the late payment goes straight to your credit report, no questions asked. Since credit bureaus don't automatically check to make sure the information is right, checking for accuracy is up to you.

Your credit report information needs to correct because your future credit applications depend on it. When you make applications for credit cards and loans, your credit report is checked. Incorrect information could get your application denied.

How to make sure your information's right? Start by checking your credit report. Look through it and verify the information with your own records. If you find something that's wrong, dispute it with the credit bureau providing the report. They'll do an investigation and if the verdict is in your favor, the information will be removed.

• How To Read Your Credit Report
• When Should You Check Your Credit Report
• Should You Freeze Your Credit Report?

Co-signing may seem like a good idea when your friend or relative calls and asks for help getting a loan. Helping out someone in need always make you feel good, but, you know what they say, "No good deed goes unpunished."

If it sounds like I'm saying co-signing is a bad thing, I am. When you co-sign on a loan for someone else, you're not just helping them get a loan. You're saying if that person defaults on their loan payments, you'll pick up the slack. As a co-signer, you probably won't realize the other person has missed loan payments until the lender calls and tells you. By this time, the loan could be a few months delinquent, costing you more to bring it to date.

Lenders can sue you for loans you co-signed, even if it's a car loan and you don't have possession of the car. Getting sued might sound like the worst of it, but there are more reasons you shouldn't co-sign.

You might also be interested in:

• Can a Creditor or Collector Garnish My Wages?
• Six Worst Credit Report Entried, getting sued by a lender is related to one of them.

You may have heard about prepaid credit cards as an alternative to real credit cards, especially if you have bad credit or no credit at all. The truth is, prepaid credit cards aren't really credit cards at all, not in the sense that credit cards extend you a certain amount of credit that you must repay.

Real credit cards are a lot like loans. Prepaid credit cards are more like a plastic version of cash - once you spend your balance, you need more before you can spend more. Find out more about prepaid credit cards.

If you're looking for a way to establish or re-establish your credit, a secured credit card is what you're looking for. You make a deposit in the same way as a prepaid credit card, but your purchases are loaned to you rather than subtracted from the balance of the deposit. Learn how you can rebuild your credit with a secured credit card.

Not all credit card thieves are technical enough to hack into retail store computer systems to steal your information. Some still do it the old-fashioned way, e.g. stealing your wallet or calling you pretending to be your credit card company.

Once a thief has your credit card information, you may not detect it until your billing statement comes in the mail. If you're enrolled in an automatic payment plan and don't monitor your statements, you might not ever know.

Here are some ways to keep your credit card information safe. If you notice suspicious activity on your account, contact your creditor as soon as possible using the number on the back of the credit card. If your credit card has been lost or stolen, you can typically find the customer service number on the card's website.

• Dispute Credit Card Billing Errors
• Reporting Lost or Stolen Credit Cards
• Is CCF Settlement a Scam?

People didn't use their stimulus checks to pay off credit card debt, says Kimberly Amadeo, About.com's Guide to U.S. Economy. This month's Consumer Credit Statistical Release, published by the Federal Reserve, revealed that American's owe a total of $968.4 billion in credit card debt, or $8,255 per household.

That means the average household is spending at least $246 on debt payments each month (based on 3% minimum payment). Or not, considering the increased number of payment delinquencies.

If you're strugging with your debt payments, here are some things you can do to ease the pressure:

• Make a get out of debt plan
• Come up with extra money for your debt
• Get credit counseling

Eleven people were recently indicted on multiple charges of fraud and identity theft after stealing more than 41 million credit and debit card numbers, according to Associated Press. The 11 who stole the credit and debt information by hacking into the wireless networks of some of the nation's largest retailers. Among the victimized retailers were Office Max, Barnes and Noble, Forever 21, and DSW.

After the credit card information was stolen it was either sold or encrypted onto credit cards and used to make purchases and withdraw money from ATMs.

Of those charged, three were Americans and one was a U.S. Secret Service informant.

While the reports don't reveal how consumers can know if they were affected, there are ways you can find out. Start by checking your credit card and checking account billing statements, especially if you shopped in any of the stored mentioned. If notice charges you didn't make dispute them with your creditor.

Since the theft involved stolen credit and debt card numbers, it's unlikely that your identity was abused, but it doesn't hurt to check. Free credit reports are available through annualcreditreport.com. 10 Ways to Prevent, Detect, and Fight Identity Theft lists other ways you can find out if your identity has been stolen and tells you what steps to take if you've been a victim.

• How to Place a Fraud Alert on Your Credit Report
• Should You Freeze Your Credit Report
• Is Credit Monitoring Worth It?