What few people know is you can use that connection to save a lot of money negotiating for a better deal.

Working the Customer Service Reps.

Very few customers actually call the customer service reps at their phone company, utility companies or credit card companies.  But these people are trained to be able to work with you if you are having a problem paying your bill.  A good example is the company who handles your phone service.  This is a competitive business so if you call them up to report that you cannot handle their high prices, they can give you the service you need for much less money.  You just have to call them up and ask them for help and then ask the right questions of the right people.

It’s really surprising that to get a lower interest rate on their your cards, a better insurance payment or even lower costs for gas or electricity, you just have to ask for it.  This is especially true if there is competition for your business.  If you don’t like it that your cable TV bills keep going up, just call them to tell them you are switching to satellite because of their rates.  Just watch how they scramble to give you a cheaper program.  This should be an annual ritual with all of the companies you write checks to each month.

Don’t get discouraged it the service rep gets difficult with you.  You can always ask to talk to his or her supervisor.  Or just hang up and call back and get a better service rep.  Persistence makes a big difference when it comes to saving money on your bills.

You have a lot of leverage if you are willing to pit one competitor for your business against the other.  Don’t be afraid to get another bid for your internet service, your insurance or even for your lawyer.  Then when you talk to the agencies you already do business with, let them know that you have found cheater bids.  In most cases, they will meet or beat those prices rather than let the competition steal a customer away.

Some Tips on Calling Customer Service Reps.

• Never assume you will lose.  The only guaranteed way you will not get what you want from a business is to not ask.  So call them up and tell them what you want.  Believe it or not, this kind of negotiation is exactly what customer service reps are paid to do.  So make them earn their paychecks by giving you a good deal.

• Don’t give up. If you are calling for a refund or to get your rate brought down, don’t let one bad phone call discourage you.  Keep calling until you get someone who is willing to help you.  Don’t get emotional.  As the saying goes, don’t get mad, get even.

• The internet can help.  You don’t have to call lots of competitors to get bids for your services.  Many times the businesses who want your business will give you a bid through their web site.  If you don’t like how your bank is treating you, there are websites that will make lots of banks compete for your business.  You will always win that kind of situation.

Experts Are Out There to Help You

Sometimes what you need is an expert to come to your home and help you figure out what to do about lowering costs.  Utility companies keep experts like this on staff and they can send someone out to your home who knows what they are doing to help you find ways to save money.  It really is just a matter of asking.

In a lot of cases, the advice you get from an expert won’t change your life or cost very much money.  There are lots of ways to cut down on your energy use and some are as simple as replacing air conditioning filters or using timers on outside lights so they are not on all day.  If the improvements to your home might cost more than you can handle, many utility companies know how to get you a grant or a low interest loan for that home improvement.  Not only do you end up saving a lot of money, you start living greener as well.  And that benefits everybody.

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All credit reports will be divided into four different sections: personal information, credit history, inquires, and public records. You personal or identifying information is the information a creditor or the reporting agency uses to identify you and verify that you are the one that is accessing your credit report. It is the information such as you name, birth date, social security number, and address. All of this information should be double checked in order to make sure that there are no major mistakes that could cause confusion with accounts. If you have a name suffix such as Jr. or Sr, you will want to make sure your information is correct for you.

The credit history section includes all of the accounts that you have opened. The information provided is the name of the creditor, your account number, when you opened (and closed, if applicable) the account, the type of credit, how much to still owe, and the total amount of the loan. You will also be able to see if you have missed a payment, made a late payment, and all of the payments that you have paid on time.

Inquiries are of all of the companies that have accessed your report. Any time that you get a credit card offer or a loan offer in the mail, these companies have first accessed your credit report to see if you would be a good customer for them. Many companies will access your credit report each year, and you can see all the names listed on your credit report.

The last section is public records. This will include any information about your credit such as a bankruptcy, tax liens, and the use of a credit counselor. Lenders will take these things into consideration before offering you a loan.

Knowing how to read your credit report is an important part of monitoring your finances. You will want to have a good idea of what the lenders see so that you can make the decision of applying for a loan and know what kind of a chance you will have of receiving it before you even approach a lender. Use this information to help you with your financial status.

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Obviously “bad credit” is not a value judgment.  It refers to your status in regards to your credit report and your credit score.   But there is no clear demarcation between bad and good credit just based on whether there is anything bad or good is on the report.  Just because there may be a few negative entries, that doesn’t make your credit “bad” any more than good comments on your report make you a good credit manager.  You have to look more closely at your credit before we draw those kinds of conclusions.

Your Credit Score: Who You Are at the Credit Bureau

We should not feel that it is not personal that in terms of your credit status as it is represented by your credit score, you are essentially a number which is your credit score and financial numbers from various credit and even insurance resources.  But the numbers that define us as a credit entity are what make things like getting credit offers from credit card companies and how we are treated by different financial entities we have to do business with.

Your credit score can make the difference between whether you are considered a desirable customer by a bank or a department store or a bad credit risk.  It can make things easy or difficult when setting up an account with an insurance or utility company, when renting a car or an apartment or even when you are applying for a job.

There is no reason to take it personally how you are treated by credit, insurance or other businesses.  That credit score will set the tone for the way you are treated and to what extent you are considered a risk or a good prospective customer by businesses you interact with.

It’s good to clear up the mystery about what the difference is between a good or a bad credit report.  It is similar to the grading system in college.  We all shoot for the 4.0 when we go through our school years.  But 4.0 is not the only good score.  Even a 3.0 is a good score that can get you into your next level of schooling.  So if you have a 3.2 or a 3.6, it would be wrong to call them a bad score.  That is a similar scoring system as the credit score system.  So it’s an apt comparison.

The same can be said for “bad credit”.  While a credit score that is not strong is generally not preferred, there really is not clear cut line of demarcation about what makes up a good or bad score.  If you looked at 50 people with “bad” scores, we would find that some of them do just fine in their relationship with credit and insurance agencies and others do poorly and there is not direct connection between the nuances of the credit score numbering system.  And it is a ray of light for those with “bad credit” because you can still function in the financial world even if your score needs work.

Click here to see Part 2: When Good Credit Goes Bad Part 2

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Measuring Debt: Total Debt and Number of Accounts

There is a value that is just as important to those you look at your credit report as it is to you and that is the total amount of debt you are carrying.  This is often called your aggregate debt.  That final number includes how much you owe on your home, your auto loan and all of your credit accounts as well.

In addition to total debt, how many active credit accounts is a value that is important to your credit score.  On your credit report, every type of credit account you are carrying including your mortgage, credit cards and other forms of debt will all be listed.  So if you have a mortgage, a second mortgage, a car loan and numerous credit cards, everyone who orders your credit report can look at those accounts and their balances.

Your Credit Usage

Along with the details about your individual accounts, lenders who are considering you for a new account look at how muck of your credit you are using and how frequently you are using your credit.  If you have 10 credit accounts and there is activity on each one of the every month, that is a very busy credit profile.  But even more important is how much of your available credit is being used.  This is called the “revolving utilization”.  The formula for computing this value is pretty straightforward.

• You start by looking at every credit account you have and noting your credit limit for each account.  Using a spreadsheet, list each and the draw a total.  This is how much credit you have available in total.

• Now you do the same thing with your current debt balance on each account.  In the next column of your spreadsheet, enter how much you owe on each account.  Now draw a total.  This is your total debt.

• When you have all that detail in one place, it is a simple task to compute a percentage of credit being used.  Simply divide the total debt by the total credit you have available and multiply by 100.  The percentage you see as a result is what lenders call your revolving utilization number.

This is a good exercise for you to go through.  You can do it without a credit report by using the statements you pay each month that will show your current balance and your credit limits.  Once you know that percentage, you can determine if it is too high and how to go about bringing it down.  It should be as low as you can get it for very good reasons.

Click here to see Part 2: Credit Improvement: Manage Your Debt Part 2

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The formula that the three major credit bureaus use to compute your credit score is called FICO.  There are several major factors that can make a significant difference in the outcome of your credit score.  Your credit history and the number of times you have made late payments may be the biggest factor in how your credit score looks.  But next to that, your level of debt in ratio to your available credit may be the second most potent value in what your final credit score will be.

Thirty percent of your FICO score comes from your debt level.  If your revolving utilization is quite high, the credit score that shows up on your credit report will be low.  And that value is what is used by businesses you need to work with to decide if you are a responsible manager of your finances.  But you have control over this number and there are things you can do including…

• Now that you know your revolving utilization, continue to monitor it and set some goals to bring it down.  Your primary tool for doing that is lowering your level of debt by paying it off.
• You can also work toward increasing your credit limits.  If you are a good customer for your credit accounts and you pay your monthly bills on time and demonstrate financial responsibility, your creditors may naturally raise your credit limits.

• Pay some accounts down but don’t close them.  By keeping paid off accounts open, the available credit in those accounts is added to your credit ceiling but you have little or no debt to add to your used credit.  This reflects well on your revolving utilization.

• Keep enough activity on accounts so your lenders don’t close your accounts.  By charging a small amount on each account and then paying it down, your account is active so they will leave it open.  Not only does this give you more credit availability, it looks good when your credit score is computed.

• If an account is getting close to being paid off, slow down.  Yes, leave small balance on every account so you continue to get statements and make payments on the account.  This activity demonstrates good use of credit, which is what your credit score is all about.

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Your credit report will break out your debt by account.  You will find a line item for each account along with the current balance as of the statement you paid last month.  So it is a little behind where you are right now.  This approach to debt reporting is standard in credit reporting across the three major credit bureaus on all kinds of loans.

Types of Debt

There primarily three major types of debt that will be listed on your credit report.  They are…

• Installment Debt

This is a loan that is set up to be paid down in a series of fixed payments.  You are not expected to pay more than the standard payment although you can.  You are familiar with installment loans if you financed a home or a car.  If you pay a mortgage on your home, you pay the same basic amount every month for the entire life of the loan, in most cases 30 years.

The mortgage payment only changes because of insurance and property taxes.  There is a schedule of depletion that you can get from your loan carrier, which shows how much of the payment you make comes off the debt.  Generally, very little is paid on the actual debt at the beginning of an installment loan and toward the end of the term, you are paying a lot against the principle.  On your credit report, look for an “I” in the Current Status Rating section of the report which will tell you if a debt is housed in an installment loan.

• Revolving Debt

Your credit card payment is revolving debt.  This kind of debt is paid back in payments that are based on the amount of your current balance.  So if you have a small debt on that credit card, your payment is low and as you add more debt, your payment goes up as well.  Since each month the balance and the payment might change, that means the debt “revolves” or changes routinely.  A revolving debt will show up as an “R” on the credit report in the Current Status section.

• Open Debt

Some bills you get and you have to pay them off entirely.  You do not carry a balance.  This is called an open debt.  If your cell phone plan is based on usage, then the bill you get is an open debt.  It might be different each month but you are expected to pay it in full.  American express commonly works with open debt rather than revolving credit.

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As with all other cards, there are some things you should know before choosing the right gas rebate card. The one that may look like a great deal may not be as good as you thought at first, but keeping a few simple things in mind will allow you to make an informed and wise decision.

An important thing you should ask is how much cash you will get back on every purchase. Typically, gas rebate cards give you rewards that fall within a certain range, usually from as low 2% to as high as 5%. A higher rebate means that a bigger amount of money comes back to your pocket.

A card that offers you a high rebate percentage may look like the best choice at first, but there are some other things to consider before deciding. Some cards have limitations on where you can fill your tank, allowing you to pay for fuel at any gas station but only rewarding you if you buy from a specific one. Typically, gas rebate cards have arrangements with some gas stations, instead of with all of them. This may be very inconvenient, especially if that gasoline station is far from your home or work, because the cost of the fuel your car uses to get that particular fuel provider may be higher than the rewards you may earn with the card you selected.

Hunt for those credit cards that offer rebates for every purchase, regardless of the place where you get your fuel (unless, of course, you are a client of a specific chain of gas providers, in which case you’ll get customer loyalty rewards too). Even if the cash-back percentage is a bit lower, you will have the freedom to choose where to fuel up your car, rather than being forced to use one fuel provider.

Another thing you should know is that there are cards that offer rebates not only on gasoline, but also on a fair number of other goods and services. These usually have a lower cash-back percentage, but the fact that you can use them to buy many different things at several different places may make those cards a better choice, simply because you are rewarded not only at the gas pump, but also at the market, the 24/7 store, and many other places you may buy from. In addition, some cards offer a dual-rebate model, entitling you to higher rebates when buying fuel, but offering lower ones when you buy other things.

Look for gas rebate cards that come with an introductory reward. There are some of them out there that feature a sweet 8% to 10% rebate during a few months, later decreasing to a more typical 3% to 5%. These cards are especially convenient if you obtain one just before a long trip, because they will allow you to make the most out of that high introductory rebate.

Yet another thing you should ask the card issuer is how and when you will qualify for cashing your earned money. Some cards require that you have a certain amount earned in rewards before you can cash out your money; others will not pay you until you reach a certain number of charges, or until you have been using the card for some time. Be aware of these things when you are evaluating your choices.

Finally, you should consider the important aspects that apply to every card. These include the APR (which determines how much you will be charged if you carry a balance), the annual fee (a fixed amount that will be charged every year just for having the card), and the penalty fees (which apply in the event of you failing to pay your bill on time each month).

If you remember to check every card offer carefully, you’ll be able of finding the best deal on a gas rebate card in very little time. Now you know what to look for, finding the most convenient gas rebate card is up to you. Make your choices right and you will be surprised of how much money you’ll be getting back every month!

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Develop a budget plan that is based on your cash flow.  You should know on a weekly basis when money will be showing up in your bank account or in the mail so you are looking for it.  You should know how much money you have and how much is coming in so if a check doesn’t show up, you get right on the problem and find that financial resource.  You should also know what your weekly expenses are.  If you have your living expenses paid for so you have a student cash card to use for your meals, keep track of that card and of the balance on the card.  The last thing you want is to show up for breakfast one morning and you have no money to pay for food.

When you went back in the house for dad to show you how to balance a checkbook, learn also how to organize a budget that can help you keep track of all of these expenses and income resources.  A good computer spreadsheet is a great way to organize your tuition payments, your food expenses, budget money for gas, clothing, and books and even for dating.   You can get quite specific on your budget so you have money set aside for everything from your next haircut to your car payment or the money you send off to help feed starving orphans in Africa.  Make a plan and live within that budget and you will find your financial woes much less troubling for your entire college career.

When you have learned to manage the many financial “events” that go into our first year at college, you may then be ready to move off campus into your first apartment.   Even if this means moving in with some roommates, think about the responsibilities you should be prepared to attend to for this first home away from home that you can call your own.

Talk to the apartment management and have them explain the lease to you. If it is a one year lease, you don’t want to sign that if you only have a few months left before summer when you might be moving back home.  Also get a feel for the extra fees that are part of having your own apartment.  That includes first and last months rent, security deposits as well as living essentials like furniture and kitchenware.

Going to college is a growing up experience.  Managing your money by yourself is a big part of being an adult so you keep your bills paid and have a little money in your wallet for fun each week as well.  So take the financial side of your first year away from home seriously.  If you do, you will have a very successful first year at college that is exciting and fun because you know you have your financial life under control.

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There are other automated systems at your disposal to help you manage your money.  Online banking and automated alerts when your account is in trouble can really help you out when you have a million things on your mind relating to your schooling.  By using online resources, you can manage your money and still keep up with your school work.

Your wallet is going to fill up with cards because along with your ATM and debit card, you should also launch into the world of credit cards by heading off to college with a credit card to use when appropriate.  The good thing about learning to use a credit card wisely in college is that you build a good credit history this way which is a real asset for you when you graduate and you need a credit history so you can buy a car or for other necessities of getting your adult life underway.

Which credit card you decide to apply for may be something worth discussing with your financial advisers which are probably your parents.  In some cases parents will take out a student credit card and the bill will go to mom and dad to pay.  The credit limit is low so you cannot abuse the card but it gives you some credit to fall back on and it gets your credit history moving.  This is a great way to get your start in the world of credit.

If you are trying to pick between several credit cards and you don’t have parental or other issues to consider, take into account the interest rate they are going to charge, whether there is an annual fee for having the card and what their policies are if you pay the card a day late.  While all credit cards charge a fee for late payments, there is a lot of variety to these policies so pick the one that have policies that are best for you.  It will mean reading the fine print of the credit card offer which is usually on the back and printed small to discourage you from reading it.  But get a magnifying glass and read those terms and conditions of the card so you don’t get broadsided by credit card charges you agreed to without knowing it.

Financial aid is an important part of paying for college, particularly if your parents are not paying for everything out of a trust fund.  Even if you are not paying the bills yourself, you may need to work with your parents to make sure financial aid has been researched and that you are getting everything you can from low interest students loans, grants and scholarships.  There are dozens of tuition wavers and other financial aid resources out there if you look for them.

Click here to see Part 3: What Every Bright Eyed College Freshman Must Know About Money Part 3

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First of all, you are going to need some help with the movement of funds.  Even if mom or dad are paying your bills, you will need a bank account for money  that is sent to you for your daily expenses.  If you work as well as go to school, you need a reliable checking account to manage your earnings and to pay bills with.  Banks near universities usually offer checking accounts to students that carry no fees.  Take advantage of these programs.

Make a plan for how you will get cash from your checking account each day.  An ATM card is perfect but before you even go to the bank to open your account, scout out the campus and the neighborhood around campus to be sure there are ATM machines that are easy to get to.  If you don’t have a car, you will need an ATM you can walk to.

Be aware of ATM branding when you scout out the locations around the area for you to use.  ATMs are owned by particular banks so just because you find five ATMs on campus, that doesn’t mean all of them are operated by the same bank.  Use the bank that has the most ATMs you can get to because if you only use ATMs from that bank, you will not have to pay any fees.  Using ATMs from other banks will almost always result in a hefty fee being charged against your account.

Keep in mind also that the use of a debit card or by overwriting checks when you make purchases, you can get cash without fees.  By just thinking ahead, you won’t come up short when you want to take that cute coed on a date and you have to pay for the pizza.  Debit cards are great because you can use them like a credit card but the money comes right out of your account like writing a check.  Merchants love them too because they get paid immediately for your purchases.  A debit card is a powerful tool but it can hurt you too.

Learn early on to keep track of your transactions including debit card purchases.  If you are about to leave home to go to college and don’t know how to balance a checkbook, go back in the house and get dad to show you how.  A great way to manage your checking account is to use a computerized check ledger like Quicken so you just enter your checks or other bank transactions and the computer does all the math.  This is a godsend when you need to keep your brain energy preserved for classes, assignments and exams.

Learning to balance your checkbook may be the most important skill you learn in college because it is vital to avoid overdraft fees.   If you spend all of the money in your bank account, the bank has a system where they either bounce the checks you write or put your account into what is called “overdraft” which means it has a negative balance.  But banks make a lot of money this way because every time you have a check or transaction that there are insufficient funds to pay, the bank hits you with a hefty fee for each overdraft they handle.

That means that if you wrote five checks for ten dollars and each of them went into overdraft, that doesn’t mean your account is $50 overdrawn.  For each check, the bank might charge your account $25 in overdraft fees.  So for covering $50 worth of checks, you wake up one morning with your account $175 overdrawn.  You can see that you should do everything in your power to avoid over drafting your account.  And the number one weapon against letting banks nail you for these fees is to learn to manage your account by keeping an up to date checking account ledger and learning to balance your checkbook every week.

Click here to see Part 2: What Every Bright Eyed College Freshman Must Know About Money Part 2

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