credit cards

12 tips to manage credit card debt in 2012

Tip 6Denied? You'll find out why

New federal rules that went into effect in July last year require creditors to disclose the credit score used to make a lending decision, along with information related to the score if a consumer is denied or given unfavorable terms.

The notice will provide the credit score, the range of possible credit scores under the model, up to five key factors that hurt your score, the date the credit score was created and the credit reporting agency that provided it.

Armed with that information, consumers can figure out how best to raise their credit score by tackling the key reasons the score was lower. Then, try applying again in six months.

Tip 7Cards for people with spotty or no credit

If your credit is blemished but you need a credit card now, you have two choices. Apply for a secured credit card, or become an authorized user on someone else's card.

A secured credit card requires a deposit, usually from $300 to $500, as collateral to activate it. The deposit is put into a savings account, certificate of deposit or a money market account. Sometimes, after a year of good payment history, the issuer may turn the secured card into a regular credit card.

Another option is to piggyback on someone else's credit card such as a parent or spouse. They add you as an authorized user without the need to qualify you first. The bonus: Most credit bureaus will include only good payment history on an authorized user's report, which will help lift his credit score.

Tip 8Leave a good track record

It may be appealing to just pay the minimum every month because it's less money out of your pocket. But with interest rates between 13 percent and 15 percent, a minimum payment will only balloon what you owe. So the rule of thumb is to charge only what you can comfortably pay off each month.

Second point: Always pay on time. Set up automatic payments if you're a forgetful person. Consistently paying on time is one of the best ways to boost your credit score, which can translate into lower interest rates.

And third: mind your credit limit. One of the factors used to calculate a credit score is how much credit is used versus how much is available to you. It's called the utilization rate. The lower the rate, the better your score.

Tip 9Credit card laws are your friends

There are two big acts that cover credit card practices and billing: the Credit Accountability, Responsibility and Disclosure Act, or CARD Act, and the Fair Credit Billing Act.

The CARD Act eliminated many common, yet questionable, credit card practices such as retroactive rate increases, double-cycle billing and applying payment to lower-rate balances first. It also required more advance notice for rate hikes and placed caps on fees that issuers can charge.

The Fair Credit Billing Act outlines your rights as a cardholder when you have a billing dispute with your creditor. For example, it limits a cardholder's liability for unauthorized charges to $50.

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