HOW TO NEGOTIATE WITH YOUR CREDITORS

Spartanburg, SC – Face it: we live in a credit-dominated society. Most of us can pay cash for our daily living expenses, but when it comes time to make a major purchase, such as a house or car, we need a thick credit file with a long history of responsible payments. Credit is a convenience that allows us to buy now and pay later. Admittedly, many of us have taken that perk to an extreme. But used appropriately, credit can be our friend.

Many consumers must now adjust to changes in the terms affecting existing lines of credit. Higher interest rates, lower spending limits, increased minimum monthly payments, or even closed accounts have put many credit card customers on the edge of a financial disaster. To avoid a credit freefall if the terms of an account are altered, Compass of Carolina makes the following recommendations:

Ask for an explanation. Everyone deserves to know why the terms of their account were changed, so definitely inquire. The creditor may close an account for many reasons: the card has not been used recently, you no longer fit their business model, you’ve become too much of a risk, or you’re no longer profitable.
Fight to get your previous terms reinstated. If you’ve had a sporadic pay history, are at or near your credit limit, or rarely use the card, you may not have a leg to stand on. However, if you’ve been a good customer, it’s worth it to call the issuer and plead your case. But you must have your financial ducks in a row before picking up the phone.
Build your case before you call. Know how long you’ve been a customer, research the amount you usually charge each month, and underscore your good payment history.
Prove that you’re worth having. Get your credit report for free from www.annualcreditreport.com. Review it for accuracy. After all, you want to make sure that you and the creditor are seeing the same information. Next, pay the few dollars it costs to get your credit score. If you have a solid credit report and a high credit score, you should be just the kind of customer any issuer wants.
Make your creditor feel secure. Point out that you have a steady income or that you’re employed in a field that is not susceptible to layoffs.
Be prepared to negotiate. Know what you want before you call and be willing to negotiate if you have to. For example, if your interest rate has been raised and your credit limit has been lowered, start off by asking that both be returned to the previous levels. However, figure out in advance which is more important to you. Do you need a low rate because you carry a balance over from month-to-month, or does a high line of credit matter more to you? Once you’ve established your priorities, you’ll know where to give a little if the creditor raises objections.
Ask for a supervisor. If you’re not getting the answers you want, move up the ladder until you either get what you’re after or are convinced the creditor is going to stand firm with the decision.
Inquire about the opt-out clause. If it makes financial sense, ask to have your account closed while you continue to pay the balance under the previous terms. This option is often the right one for consumers who have had their interest rate or minimum payment raised to an unmanageable level. If it’s going to be a true financial hardship to meet the new terms, then it’s better to close the account.

“While having more plastic can equal more temptation, it might be smart to have a back-up card in case you lose charging privileges on your primary card,” says Brent Bishop, manager of the Spartanburg office. “You can set aside one credit card to be a safety net to keep your access to credit open,” he adds. “Credit can be difficult to obtain, so testing the waters by applying for one more card—not a wallet full—before you actually need it will provide a degree of comfort during these uncertain times.”

For help making sound financial decisions, building a budget you can live with, or assistance in digging out of debt, reach out to a trained and certified counselor. You can reach Compass by calling 864-583-7680

or 800-203-9692, or by logging on to www.compassofcarolina.org.