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Get the FACTS about Credit Cards...

Here is what you need to know...
   to break free of Credit Card Karma:

Credit Card Traps...
"Eliminate Your Debt Legally,
   Negotiate It Away"

To understand what a credit card trap the urban legend of "eliminate your debt legally, negotiate it away" really is... you need to understand how your credit history is built and how credit ratings work.

How Your Credit History is Built

As you use your credit card, the card company tracks your usage:

- The detail of your transactions (used primarily for billing purposes).
- Your payment history (when and how much you have paid).
- Your credit limit history (what it was, how often over the limit).

The credit card company details are shared with the three main credit bureaus.

- Based on your history, a credit rating (score) is calculated for you.
- Your credit rating-score is updated very regularly (at least monthly).
- It is available to all your creditors on request (not just credit cards).
- You have the right to know your own credit rating-score. There are many sites on the Internet where you can get a free credit report.

How Credit Ratings-Scores Work

Your credit rating-score is used by a variety of financial institutions (mortgage firms, credit card companies, banks, etc) to assess your credit worthiness (if they will extend you a loan).

When you apply for a mortgage, a home equity loan, a line of credit, a car loan, a business loan and so on, the first thing the financial institution will do is get your credit rating from the credit bureaus. The rest is very simple:

- If you have a good credit rating, then loan approvals can be gotten in a matter of minutes.

- If you have a bad credit rating, you will be rejected -or- you will get a "bad" loan deal (as in a higher interest rate, lesser loan amount, or restrictive terms and conditions).

- If you have a bad credit rating, it can have other "unexpected" consequences (as is keeping you from getting a better job because you appear to be irresponsible).

To get and keep a good credit rating comes down to two things.

* Control Spending: Credit card debt is borrowed money.
    Only you can control "your urge to charge!" So...

- Use cash as often as possible rather than resorting to credit debt.
- Do not spend more than 75% of the total available credit limit.
- Do not automatically "go for" each bargain:
    these offers come and go and will come again.

- Never default on your credit card payments.
- Never default on payments of other loans.
- If you have incurred late fees and penalties, pay them.

- Know when your bill is supposed to come in...
    and request another one if it does not come on time.
- Pay by check - do not pay by automatic deduction...
    which is highly error prone.

About Legally Eliminating Your Debt

Here is the bottom line about these "eliminate-your-debt" services:

* Debt Consolidation:

Whether it is called "debt consolidation", "debt restructuring", "debt reduction", it all boils down to... you have to pay back the debt anyway and now you are out the fees you paid to have it done. Plus if you have your debt "negotiated (written) down" too low, your credit rating-score will rapidly worsen.

Lawyers will tell you that there is a "legal loophole" in Federal law that will allow you eliminate your debt legally... apparently that is true. What these lawyers fail to tell you is - that if you use this loophole - you will have killed your credit rating-score... probably forever!