Credit Card Debt Help in Arizona

Arizona has been hit by the financial crisis very hard, a fact that is perhaps best exemplified by the efforts of the Arizona legislature to sell the state capitol building. Like the state government, many individual residents in Arizona are also facing financial trouble. According to the United States Bankruptcy Court, District of Arizona, bankruptcy rates continue to increase across the state, led by Phoenix, but closely followed by Tucson and Yuma. Like elsewhere around the country, unemployment is also on the rise, standing at some 9.5% as of July 2009.

Many people that find themselves unemployed also find themselves having to rely upon their credit cards to pay for regular living expenses like their housing and food. This has been the case in Arizona as well. According to Experian, one of the "Big Three" credit bureaus, the average debt in Arizona is $19,879; meaning that at least half the people have a debt load even higher than this. Further, the average credit usage in Arizona is 38%, meaning that on average, people in Arizona have used about 38% of the credit available to them.

This is largely the result of the real estate bubble and the era of easy credit that ended in 2007. All of the easy credit that was extended at that time combined with the subsequent economic meltdown has created a perfect storm for consumer debt spirals. In many instances, people that have lost a job or had to contend with massive unplanned for expenses - like medical bills - have no other options available except to rely on their credit cards. As the amount of money borrowed increases, so too do the monthly payments. It is usually only a matter of time until the borrower falls behind, making late payments or missing payments all together. Once this happens, the interest rate on the credit card debt skyrockets and is often combined with a series of fees and penalty charges. Before long the situation becomes desperate.

This is a common situation throughout the country, including Arizona. According to a TransUnion Newsroom article dated June 8, 2009, Arizona had the third highest rate of credit card delinquencies in the country, just after Nevada and Florida. This shows that the debt spiral situation described above is a fact of life for many people in Arizona. If you are in this position or facing the possibility of being in it soon, it is time to take action. We offer many helpful features and tools that can help you manage your credit card debt as well as more advanced services, such as debt consolidation, that can provide you with a vital lifeline before the situation gets out of control.

The very first thing you should do if you believe your debts are becoming unmanageable is to review your overall financial condition carefully. What is your current income, available savings, and additional asset values? What are your current liabilities and expenses and how much is owed each month? Your secured debt for vital necessities such as your home and car should obviously be given the priority as these items can be taken from you if you fall behind on your payments. After the necessities are covered though, the next priority should be your revolving credit as this serves as emergency insurance against unforeseen expenses in the future.

The first step one should take to bring credit card debt under control is to educate themselves about how the system works and what options are available. Both the federal government and the state government have laws that can help debtors understand their situation and prevent abuses by overly aggressive creditors. However, these protections are only helpful if you know about them and know how to employ them. We provide a number of glossaries and informative articles that can help you understand how the law works and what options are available to you.

Beyond learning about the general protections and options available, you should also carefully review the terms and conditions of your specific credit card agreements. Different lenders have different policies and some offer additional options to their clients that are facing default. Ultimately, the lender wants to get paid, so at least some of them offer clients that are in trouble options to renegotiate or modify the original terms if the proper procedure is followed and proper are conditions met.

Among the various tools we offer to help you manage your credit card debt is the credit card payment optimizer. This tool looks at the amount owed, the interest rate being charged, and other factors and determines which cards should be paid off first. The tool essentially creates a payment strategy that you can follow to pay off your outstanding debt in the quickest time possible with the least amount of money. Although this tool can be helpful for developing a strategic method of paying off debt, if your situation is already very bad, other options such as debt consolidation may be more useful. Everyone's credit situation is unique and there is no "one size fits all" option that is appropriate for all people.

In the United States, one of the most useful tools to determine your overall credit position is your FICO score. Beginning in 1958, the FICO company began developing a complex system of calculating credit scores, taking a wide range of factors into account. The initial scoring system was introduced in 1970 and to this day FICO systems for calculating credit scores dominate the industry. Virtually all lenders in the United States use your FICO score as one of the primary determinants of your creditworthiness. While some lenders, mortgage lenders in particular, take many different factors into account when deciding whether or not to lend to someone; many other lenders look at nothing more than your FICO score.

It is important to note that you actually have three different FICO scores, one from each of the "Big Three" credit bureaus: Equifax, Experian, and TransUnion. These bureaus receive their information from different sources and each of them maintain separate databases that store all of this information. This means that an item on one report may not be on another, resulting in a different score. Further, since each of the three bureaus have separate databases and errors are rife, one report may include an erroneous entry that affects your score. Finally, each of the "Big Three" also use customized versions of the FICO scoring algorithms that can lead to some differences in scoring.

Your personal FICO score is the average of these three separate scores. For example, if your Equifax score 672, your Experian score is 669 and your TransUnion score is 684; your average FICO score is 675. Due to a report sharing agreement between the "Big Three" all of them offer "3-in-1" credit reports today, that gives you all three scores so you can see what your average is. This is also why it is necessary to keep track of all three of your credit reports because a low score on one due to a mistake can easily bring down your overall rating.  

Most companies that offer large one-time loans, such as mortgage lenders and debt consolidators, look at all three scores as well as a number of other factors and tend to have their own formulas for calculating a potential borrower's credit worthiness. However, companies offering credit cards often just look at your FICO score. Some credit card issuers may look at all three of your FICO scores while others may just look at one. Other companies may look at all three, but only use your highest or your lowest score to determine whether or not to lend to you and at what interest rate. Since every lender has its own method of making these calculations and generally keep them confidential, you never know what aspects of your credit history they are taking into consideration. Therefore, you should keep all three FICO scores as strong as possible.

Experian is currently reporting that the average FICO score in Arizona is 680, with some variation in specific localities. For example, in Phoenix the average is also 680; whereas in Tucson it is 685 and in Yuma it is 672. On the general scale, a FICO score of between 680 and 699 is considered "good" which is less than "excellent" (700+), but better than "OK" (620-679). Ideally, no one wants to fall below 680 as borrowing with a lower score becomes more difficult and usually involves less favorable terms. Any resident of Arizona that is below the state average should seriously consider taking action to increase their FICO rating.

As mentioned earlier, TransUnion reports that more people in Arizona are borrowing more on their credit cards. If you are using your credit cards for basic living expenses or are carrying a large balance, it really is time to begin taking corrective measures. If you are interested in managing your credit card debt and paying it down or off, please explore the resources provided on our website. There are a myriad of free tools and resources that can help you decide what option is most appropriate for your circumstances. We also offer other services, such as debt consolidation, that may offer you the best way to financial recovery.

One of the best ways for consumers to increase their rights is to let their elected officials know what is happening.  Are you having problems with credit card debt?  Congress recently passed major reforms to protect consumers against predatory practices by banks and credit unions who issue credit cards.  There is still more to be done to help consumers with credit card debt.  Contact your Senators today to tell them about your experiences with credit card debt problems.

Call Congress About Credit Card Reform
	Senator Jon Kyl PHONE: 202-224-4521 (DC office) FAX: 202-224-2207 (DC office)		Senator John McCain PHONE: 202-224-2235 (DC office) FAX: 202-228-2862 (DC office)