Are you debt smart? Want debt advice. We will provide you with essential information and advice on debt management tailored specifically for you.
Competency to manage money appears to be a skill that does not come naturally to everyone. It is quite easy to develop poor financial and spending habits but understanding basic concepts and techniques necessary to handle credit responsibly increases the likelihood for access to economically priced credit, a good credit record, consumer protection, and perhaps the most important, a higher propensity towards savings, which increases individual net worth.
Debt Sage will expose you to our expert advice and tips on debt management, personal finances through articles for no charge.
Outfox the Debt Collector's hounds
Being pursued by debt collectors can be scary, but it does not have to be if you understand your rights as a consumer and limitations collection agencies have to adhere to. If for example your last payment in respect of a debt was made more than 3 years ago and you have not acknowledged that debt in anyway during that time and no one has summoned you in respect of that debt, it has prescribed and you are no longer liable to pay it. In the debt collection game, knowledge is truly power. The Prescription Act only protects those consumers who are knowledgeable of its existence. Not all debts can prescribe after 3 years e.g. mortgage loan, municipal rates, TV licenses and traffic fines. However, this does not mean you do not have to pay your current legitimate debt.
Do not ignore letters or notices from lenders
If you are overwhelmed by debt and behind on paying your bills, there is need to be decisive and explore all solutions at the first sign of trouble. Statutory demand procedures require a credit provider to take legal action after at least 10 business days have elapsed, having delivered a notice to a consumer. If summons are issued and judgement is passed, intervention by a Debt Counselor to have this rescinded at this particular stage is limited if not impossible.
When should you consolidate your debts?
Debt Consolidation involves taking out a new loan to pay off a number of other debts. This is common if you have home equity, debt consolidation is then done to attain a lower interest rate and create greater ease in repayment of a single loan. However, avoid the temptation to use your property as an ATM. This should be used only for major expenses like a car, home improvements or education costs. If you have huge credit card and micro loan debt, this can often be advantageous because these generally carry a high interest rate.
What it means to use credit wisely
Credit is not always the best choice under all circumstances. Unless you pay your debt in full before finance charges accrue, purchases made with credit will cost more than those made with cash. Sometimes it is impossible to avoid finance charges because interest begins accruing immediately. If you do use credit, always make the minimum monthly payment by the due date and try to pay off your debt as soon as possible.
Taking control of micro loan and credit card debt
Micro loan and credit card debt gets the bills paid, but there can be consequences to relying on this type of funding. If you cannot pay cash to make a purchase you cannot afford the purchase. If any credit does not help you save money or make you better off by providing you with a useful reward at no cost to you then consider not using it. When you want to make a large purchase e.g. TV or a piece of furniture, wait until you have saved enough money to buy it. That way, even if you use a credit card or access a micro loan to make the purchase, you will be able to pay the bill in full and avoid finance charges.
How to improve your credit rating
A credit score is meant to determine the likelihood of an individual paying back borrowed money. Using your credit score, lenders will determine what risk you pose to them. The primary factors used to evaluate an individual's credit score are his or her credit payment history, current debts, time length of credit history, credit type mix and frequency of applications for new credit. The following are strategies to improve your credit ratings;
- Make your loan repayments timely and of the correct amount;
- Avoid over extending your credit / continually extending your credit to the limit which is viewed poorly;
- Do not ignore overdue bills. At the first sign of trouble explore all solutions;
- Keep your outstanding debt as low as you can;
- Limit your number of credit applications.
What is predatory lending?
As a consumer you must look out for predatory lending. This is practice whereby lenders impose unfair and abusive loan terms on borrowers e.g. interest rates which are considered to be unreasonably high. Be a sophisticated borrower, read and understand the dozens of pages you receive before you sign any credit agreement and ascertain the true cost of credit. Under the new National Credit Act, interest and fees are regulated on all agreements, including micro loans. You can report any abuse to the NCR and the Banking Ombudsman.
Can l verify or challenge credit information kept by credit bureaus
You can verify the information held by credit bureaus by contacting the credit bureau and informing the bureau if there is inaccurate information or ask the credit bureau to explain any information where you are uncertain. If you do not agree with the information, you can challenge this and request the credit bureau to correct the information. If there is an impasse, you can take it up with the NCR.