Help! I need more credit.

If you've been turned down for a new loan, you are probably familiar with the term "Overextension of Credit"

Credit scoring models use the information on your credit report to estimate the probability that you'll repay a loan. One measure used is the ratio of credit used to available credit. If this ratio is to high, you've probably been told that your credit is overextended, and turned down for a new loan.

Most people believe that the way to get and keep a good credit report is to borrow money and continue to make on-time, minimum payments. Many people believe that the more they borrow, the better their credit report will be. These people are operating on the assumption that if you don't use your credit, the banks won't raise your credit limit. The fact is, if you have a higher than 30% debt to income ratio, your credit report already has some bad risk marks against it.

How can I reduce the overextension problem?

Many people try to reduce their extension of credit problem with several self help notions, including, closing or canceling accounts, balance transfers designed to make your income to debt ration appear lower. None of these will help in regaining credit and may in fact aggravate the overextension problem. Every application that you make for credit stays on your credit report for two years. When a lender sees closed or cancelled accounts and numerous applications for credit it solidifies and assumption that you already are in financial trouble and lending you more money is an unjustifiable business judgment decision.

What is the true cost of credit?

Credit is a convenience. It lets you charge a meal on your credit card, pay for an appliance on the installment plan, get a loan to buy a house, or pay for schooling and vacations. With credit, you can enjoy your purchase while you're paying for it, or you can make a purchase when you're lacking ready cash. But there are strings attached to credit as well. It usually costs something. And, of course, what is borrowed must be paid back.

Let's say you have $9,000.00 in credit card debt and you are struggling to make your minimum payments. How much truly owe depends upon your interest rate. Most people don't realize that their credit card minimum payment is a loan amortization on some extremely unfavorable terms. The hidden catch is that the minimum payment is going to go on for about the same length as a home mortgage, and at a very high interest rate. Most credit cards are amortized over an extended period in excess of twenty years. The average credit card interest rate is between 24.99 and 29.99 percent. If you are at the high end of that interest rate your minimum payment on your credit card debt will be about $225.52 per month. At that rate it's going to take 20 years to pay off the credit card for a total outlay of $54,124.00.

What will happen to my credit report if I file for bankruptcy?

The Pacific Bankruptcy Center is not a credit repair company, nor are we trying to dramatically improve your credit rating. Our objective is to eliminate your debt as quickly and as painlessly as possible and get you back into a debt free situation so your life belongs to you again, and not the creditors. Remember that your credit report is basically your ability to accumulate debt. The better your credit report is the more debt your entitled to accumulate. If you've been turned down for credit, even though you've never missed a payment, your credit report is bad. Remember overextension of credit?

Can I solve over extension of credit without bankruptcy?

You may be able to, but it is unlikely for most people and extremely difficult. The bankruptcy reform act of 2005 requires you to investigate this question through a non-profit consumer credit counseling agency approved by the US Attorneys office prior to the filing of a bankruptcy case. For example, in the foregoing we mentioned an individual who had $9,000.00 of credit card debt and demonstrated how long it would take to pay it off and and what expense. A non-profit credit counseling agency might be able to reduce your interest rate to about 8%. At the lower interest rate your payment could drop to about $182.48 per for a much shorter period of 60 months rather than 240 months. They have fees too on top of that, so your payment isn't going to be much lower.

Little Italy, California

Little Italy is a neighborhood in Downtown San Diego, California that was originally a predominately Italian fishing neighborhood. It has since been gentrified and now Little Italy is a scenic neighborhood composed mostly of Italian restaurants, Italian retail shops, home design stores, art galleries, and residential units.