What to Expect When You Max-Out Your Credit Card?
According to the Federal Reserve, the average household credit card debt is at approximately $16,000. Maxed our credit cards are an epidemic. With this much debt it isn’t surprising that many people are in danger of maxing out their credit cards. It’s a good idea to stay well below the limits imposed on a credit card. This leaves a little wiggle room if an unexpected emergency would come up. If you would happen to exceed the credit limit on your card, the following is what you could expect to happen.

Inability to Use the Card

The first and most obvious consequence of maxing out a credit card is that there isn’t any credit left to use if it’s really needed. At the very least, a person would need to pay a minimum balance in order to be able to use the card again. Once the limit has been passed, however, simply bringing the balance back down may be the least of the card holder’s worries.

A Drop in Your Credit Score

Maxing out a card can cause your credit score to drop. How much available credit an individual has is a big factor in determining a credit score. This is called a high credit utilization ratio. The utilization ratio is determined by the amount of credit that is available on your cards to the amount that you’re using. It’s always ideal to have a utilization number that is as low as possible. Whenever you attempt to take out a mortgage or apply for any other type of loan, the fact that you maxed out your credit card will appear on your credit report.

The Possibility of a Penalty

Going beyond your credit limit may cause the company to charge an over-the-limit fee. Simply carrying a high balance could cause you to be pushed over the limit with finances charges. APR (annual percentage rate) is the percentage of interest charged on the amount that’s owed on the card. Your interest rate or penalties may be charged at the highest APR a credit card company can legally charge. That rate is currently 29.99 percent.

The Account May Be Closed

Credit card companies can close an account for many reasons and sometimes choose to do so if the limit has been passed. If your account has been closed it is advised to call the company as soon as possible. If they verify that the account has been closed because you’ve passed your limit you should make a payment as quickly as possible. If you’re able to make a payment so you’re no longer over the limit they may reinstate your card.

If you’ve gone over your credit limit, have incurred penalties, or even had a credit card account closed, there are things you can do to help fix your credit. Feel free to call our office at 617-265-7900 or schedule a free consultation.

There are various types of debt that a person can rack up. But, Credit Card Debt and Depression is scary. There’s what’s considered long-term debt, which is characterized as bank loans, student loans and mortgages. There’s mid-term debt, such as auto loans and personal loans. And then there’s short-term debt, such as credit card debt and overdue bills. According to a new study by the Institute for Research on Poverty and the Center for Financial Security at the University of Wisconsin, it’s this short-term debt that researchers have found is linked to depressive symptoms, especially if the individual is single, near retirement or uneducated.

And if you think about it – the results make sense. Long-term debt, such as a mortgage, can be thought of as an investment. So can mid-term debt, like student loans – it’s essentially debt with a purpose. However, lofty credit card debt and overdue bills – in this study, overdue bills are characterized as being more than two months late – more reflect one’s financial irresponsibility.

Study Details

The study measured 8,500 consumers over two time periods, from 1987 to 1989 and then again from 1992 to 1994 through the National Survey of Families and Households. The two time periods reflect spans where unsecured debt escalated in the United States. Respondents were asked to identify how many days per week they felt 12 depressive symptoms, of which a significant relationship was discovered between depressive symptoms and short-term debt, especially of the unmarried, near retirement or uneducated crowd, of which limited resources might exist for breaking out of such habits.


One important to consideration about this study is that depressive symptoms and clinical depression are not the same thing. So, it’s not accurate to say, according to this study at least, that those with short-term debt are more likely to be depressed. Depressive symptoms include the likes of:

  • Sleep changes
  • Self loathing
  • Feelings of helplessness/hopelessness

Another important factor to take into consideration regarding this study is that it was conducted well before the national mortgage crisis and subsequent economic recession of 2009, when long-term debt was the pitfall of many people’s difficulties and many were forced into filling for bankruptcy as a result. That’s not even taking into account how much student loan debt, mid-term debt, has ballooned over the past two decades. So while this study links short-term debt with depressive symptoms, it’s a good bet that if it was held during other years, say 2009-2011, long-term debt and mid-term debt would also likely show some sort of correlation.

Regardless of what you make of this study, you shouldn’t take short-term debt lightly. For instance, payment history is the single largest factor into the makeup of your credit score. Failing to pay bills on time can directly impact that – and not for the better. Excessive credit card debt can also be a credit score killer, as generally it’s advised to keep such debt under 30 percent of your total credit allotment in order for your credit score not to take a dip.

5 Signs Own Too Many Credit CardsEvery day, you are bombarded with credit card offers when you open your mail box, when you shop online and when you visit your bank’s website. But, mindlessly filling out every credit card application that comes your way can be dangerous to your financial health. Look for these signs that you have too many open credit card accounts.

Do You Have Too Many Credit Cards?

1. You don’t remember which retail cards you already have.

Have you ever looked inside your wallet and found a card you didn’t remember applying for? Do you stand at the register in stores wracking your brain to remember whether you already have that store’s card? Losing track of cards can have negative effects that include missing payments, forgetting about recurring charges and failing to catch fraud before it harms your good credit.

2. You are being turned down when you apply for new cards.

When you have too many credit inquiries, it tells card issuers that you may be seeking too much credit. You also lower your score when you have high utilization ratios. Before applying for a new card, ask yourself whether you really need it. It can take about a year for each inquiry to fall off your credit report. The effect of inquiries is low. But, if you have marginal credit, each new credit card you apply for can mean missing out on bigger benefits like lower insurance rates, better deals on car loans and employment at companies that require a credit check.

3. You’re having trouble tracking your spending.

When you need to check five or six statements every month, it can be difficult to keep a handle on how much you are spending. Try cutting down to using one or two cards to get a better idea where your money is going. No need to close the extra cards. Just keep them stored safely away so that you aren’t tempted to use them.

4. You are getting hit with late fees.

Having seven or eight cards also means having seven or eight due dates. When you have payments due all throughout the month, it can be easy to miss one. But, this can result in late fees and even punishingly high APRs. Set all of your credit card accounts to autopay at least the minimum every month. Can’t afford the minimum on all your cards? You are overspending and need to cut back. Talk to your credit card companies about closing cards and negotiating a lower payment while you get rid of your debt.

5. You’re opening new cards because the old ones are maxed out.

Getting more credit to deal with your debt is like handling obesity by buying a bigger belt. At any given time, you should not be using more than 30% of your available credit. In fact, some credit experts recommend having no more than 10% utilization at any given time. If you are drowning in credit card debt, more debt is not the answer. Go over your expenses and find out what you can cut. Often, we have expenses such as memberships, meals out and new clothing that can be cut while we get on top of our spending.

There is no one answer to the question of how many card you should have. But, if you are finding that you can’t manage your credit card debt, it is time to scale back to a level that helps, not harms, your financial health.

Black Friday

Credit Card Tactics – Avoid these on Black Friday

Gearing up for the start of the holiday season, stores are preparing for the onslaught of the Black Friday shopping masses. One of the Credit Card Tactics taken by retailers is the promotion of store credit cards. Discounts on purchases made when opening a new line of credit and zero interest financing — these are just a few of the favored ways stores lure shoppers into opening up retailer credit cards.

Shoppers who fall for these tactics end up in a jam by the start of the new year. Not only do retailer credit cards lead to lower overall credit scores, as a consumer’s credit score automatically drops by five points with each new store credit card, but there are long-term consequences. Store credit cards typically come with a massive interest rate beyond the attractive zero interest-rate financing promised at the outset. Over time, the amount of interest paid on these cards, ranging from 18 to 30 percent, eats away at any initial savings made from those discounts for opening a new store card.

Consumer spending for the holiday season is set to increase by approximately 5 percent, according to the National Retail Federation, for an estimated $804 spent per consumer. As a result, credit card deals are bound to attract more shoppers this year.

Those in the know, including the credit card comparison company CardHub, are already on the alert. They note that those retailers who market deferred interest rate plans to new cardholders are playing naughty. For instance, if a consumer misses one credit card payment or takes longer than the set period to pay off a debt, he or she will face financing expenses 27 times greater than the originally stated interest rate.

The Consumer Financial Protection Bureau is also on high alert this season. It has sent out warnings to retailers who plan to promise a promotional annual percentage rate or set transactions over a set time frame, as these are unsavory credit card tactics.

For more information on how to repair your credit, contact our team at 617-326-3685.

Nikitas Tsoukalis, President

Key Credit Repair


why focus on fixing errors

Reasons for Credit Repair – Blog

Reason for Credit RepairIf personal finance issues make you want to pull the covers over your head, it can be hard for you to know whether you’re coasting along okay or whether you need help with your credit score.

The top signs that you need credit repair:

1. You’ve been turned down for a job.

Many companies will only hire people who have good credit. They believe that good debt management skills points to a higher level of responsibility.

2. You pay more for car insurance.  

Insurance companies take your credit score into account when determining your rates.

3. You were denied a car loan.  

It is generally easier to get approved for an auto loan than other types of credit. Car loans are good to have, since keeping up with an installment loan over time significantly improves your credit score.

4. You lost a promotion.

Does your company do work with the federal government? These companies often require that employees over a certain level be able to qualify for security clearances. And, you can be denied clearance if you have excessive debt or a low credit score.

5. Debt collectors are calling and harassing you.

When you fail to make payments to your creditors, they end up selling your debt to a collection agency, which then can call you and request payments. The account will be reported by the three credit bureaus as a collection and will affect your ability to get any loans or open a new credit card, as well as damage your credit score.

6. You were turned down for a mortgage.

This is the big one. Homeownership is linked to greater financial stability, a feeling of psychological stability and even tax advantages. Having a good credit record is necessary to achieve this common goal.

7. You’ve been denied for a credit card.

Opening a new revolving account is not as easy as it used to be. If your credit card application was denied, you may need credit “clean-up”. The credit card company is required to let you know the reasons why your application was denied, so you can take the necessary actions to fix your credit.

8. You need to save more than most for a vacation.  

No credit card means that you are at the mercy of airlines and may miss airfare sales. Rental cars and hotels hold hundreds of dollars of your money for deposits. Limited or complete lack of access to credit can make every aspect of a vacation more of a hassle.

9. Your application for an apartment was turned down.

Not only can bad credit keep you from buying a house; it can prevent you from finding a place to rent.

10. You feel trapped by a lack of access to credit.

Many everyday financial interactions are made more difficult by a lack of access to credit. But, you can learn how to repair your credit and enjoy more and better opportunities. Visit Key Credit Repair to educate yourself about credit and find helpful credit tips.

For additional information on how to repair your credit, please contact our office at 617-265-7900 or request a free consultation below.

Inheriting Dead Parent's Debt

Inheriting Debt

Pop quiz: What happens to your debt after you die?

  • A) If you have a co-signer on your mortgage or credit cards, debt collectors will come after him/her for finance payments.
  • B) Your estate will pay off the remainder of your debt.
  • C) Certain debt is passed on in your will.
  • D) Creditors have to eat remaining debt.

Depending on your situation, all of the above may be true, whether you’re dealing with medical debt, mortgage payments or credit card debt. That’s because there are a lot of different scenarios that can play out depending on what arrangements a certain person has made – or didn’t make – when they were still alive.

Hypothetically speaking, say your spouse of 50 years passed away suddenly. You co-signed with your significant other on a home loan, which is paid off, and on a credit card, which has a $3,000 balance on it. Because you co-signed on the credit card, you’re responsible for paying it off. Failure to do so will be reflected in your credit history and credit report.

But say, for instance, that your 85-year-old mother passed away, leaving behind medical debt. Her estate would be responsible for settling this debt and then everything left over would go to her heirs. So, for example, the valuables your mother accrued over her lifetime – car, home, etc. – would be used to settle any outstanding debt. If there isn’t enough money to pay debt off, then her estate is declared “insolvent” and her creditors would have to eat the outstanding debt. So here’s a credit tip – if an estate is declared “insolvent,” heirs don’t have to worry about how any outstanding debt will impact them, meaning that no lengthy credit repair measures need to be enacted on anyone’s behalf – even if aggressive debt collectors still come knocking.

In some cases, however, someone may pass along a home with a balance on it to a loved one in their will. If that’s the case, this loved one is the new owner and can either decide to enact a debt management strategy to finance the remainder of the home or they could sell it and pay the remaining balance off with what it is purchased for.

For additional information on how to repair your credit, please contact our office at 617-265-7900 or request a free consultation below.

Credit Card Debt – Falling, but Still High

As of 2008, Americans owed about one trillion dollars in credit card debt. This is an amount equal to the annual GDP of Mexico. Since then, the number has gone down. But, with an aggregate debt of over $856 billion, Americans still owe a lot. The average household credit card debt is around $15,000.

This sort of debt can create a nearly impassible barrier between you and home ownership dreams and other goals. With $15,000 in credit card debt at 18% interest, just paying the minimums will eat up $375 a month of a couple’s budget. And, if you are only paying the minimum, you’ll be paying that credit card debt for over 31 years; that’s longer than most mortgages.

Getting rid of high interest credit card debt is one of the best things you can do to take control of your finances and get on the path toward new opportunities. Once credit card interest is no longer eating up significant portions of your income, that money can go toward vacation funds, retirement savings, a down payment on a home or whatever else you wish.

Struggling with credit card payments? To reduce your credit card debt load:

  • Use the snowball method. Start by making the largest payment toward the credit card that has the highest interest rate. As each card is paid off, use the amount that used to go to it to max out payments on the next bill.
  • Augment it with snow flake payments. In this method, every little extra bit of cash is put toward debt. Ten dollar rebate? Put it toward your credit card bill! Found a twenty in your pocket? To the bill!
  • See if consolidation makes sense. If you have high interest rates on your credit cards, you may be able to get a lower rate by consolidating the loans. Just make sure that any fees will not offset potential benefits.
  • Leave your cards at home. The most important factor in getting rid of credit card debt is making sure that you do not accumulate more. Leave your credit cards at home and take cash if you feel like having them might be too much temptation. Also, make a point of saving up in advance for big expenses like a vacation or a new laptop instead of charging them and figuring out how to pay for them later.

It takes time, effort and discipline to pay down credit card debt. But, the boost to your credit score, the extra cash that you no longer spend on interest and the removal of that financial stress is worth it.

Credit Card Diet – Top Secrets

Is your spending out of control? Your plastic habit could be to blame. Studies show that we spend as much as 18% more when we pay with credit instead of cash. The reasons for this are myriad: we tend to round up our spendable money to what our credit limit allows; we don’t feel the dollars leaving us the way we do with cash; and, the fact that we don’t have to pay the bill till later lets us make the cost of that new outfit a problem for another day.To combat the heavier spending of credit cards, many people are trying experiments in going cash-only. During the credit-free time,

they take the cards out of their wallet and, instead, go only with cash. Intrigued? Here’s how to do your own cash-only experiment:

  • Don’t set the bar too high. Start with a short no-plastic period, such as a week. In future outings, you can go longer.
  • Decide on the rules. Will you withdraw all your spending money for the week, or are trips to the bank allowed?
  • Review your spending to find out how much cash you’ll need. How much do you spend on groceries each week? How about gas?
  • Know that some things, like clothes shopping, might be off-limits during your cash days. But, make sure you build in a bit of fun spending such as a restaurant meal so you don’t feel deprived.

Do I need to have debt to build credit? – Credit Tips

“Opening Doors Again”

One of the most common questions we get is; “Do I need to have credit card debt to build credit?”

Short answer: NO…absolutely not. We were not placed on this planet to spend our lives working to give credit card companies endless loads of interest and fees. The fact of the matter is that we need credit to get credit but we do not need to be in credit card debt to build our credit. For example, if you do not carry a balance on your credit card the card company will still report an on-time payment to the credit agencies by default. 25% of your FICO score is based on balances and the largest part of that 25% is your proportion of credit card balances vs. your limits. The lower the ratio, the better. A 0% ratio is ideal. Who could be a more desirable person to lend to than the person that has a stack of credit cards in their wallet but never submits to the temptation to use them???

I can’t tell you how many times I’ve pulled up a report of someone that thought they had bad credit because of their “Lack of Debt” and then to their surprise they have scores over 750.

Banks and credit card companies are always giving people advise that involves actively using your credit cards to build up your credit. Remember, bankers are usually getting their advise through the sales training given by their companies. Their companies business model needs you in debt. It’s a billion dollar industry. Seeking unbiased credit and financial advise is a KEY to making the right decisions.

As always feel free to contact our office to start repairing your credit. Our company is designed around the client’s needs.

Nikitas Tsoukalis, President

Key Credit Repair

For additional information on how to repair your credit, please contact our office at 617-265-7900 or request a free consultation below.

Can settling a debt hurt my credit? – Debt Help

Credit Card Settlement
Settle your debt

Typically the biggest credit drop does not come from the settlement of your debt. It comes from the activity prior to the settlement of the debt. First of all, a lender is not going to be willing to forgive a portion of your debt to them unless they feel they might soon be included as a creditor in a bankruptcy and they run the risk of getting nothing. So typically the strategy before you try to settle your debts is to fall behind. This is never recommended UNLESS you truly are seeking a bankruptcy alternative or you truly have exhausted all other avenues for keeping the debt in good standings. When the debt falls behind that will cause the first drop to your score. While the debt is in default the creditor will start to add late payment records to your report. Remember, FICO uses payment history to calculate 35% of your credit score. The next thing that could hurt you is if the account is turned over to a third party collection agency. When this happens the creditor will close out the debt, mark it as “transferred to another lender” and then the collection agency will create a new trade line in their name. This will make futures creditors feel that there are more negative records then the actual scenario.

This is an extreme scenario and not usually the norm. Most people who are entertaining settling a debt have already fallen behind. They have taken the maximum impact to their score. Paying off the debt at this point and having a portion forgiven will not have a negative impact. At this point a consumer should try to save as much money as possible to bring their financial situation back in order. Remember, the creditor at that point has usually collected years of interest, fees and merchant fees. Also, your credit card company has probably sold the debt to the collection agency for ten cents on the dollar and the other 90 cents has been placed on their tax return as a loss. This allows them to reduce their taxable income expense.

Let’s sum things up. Settling a debt is a great idea. Save your money. But, only if you’re fallen behind or you are entertaining bankruptcy.

If your debt is up to date try and work on a payment plan at a reduced interest rate so you will not take a credit drop.

Feel free to contact our office for a FREE debt analysis. Credit Repair is serious business.