protect credit score
Credit Score

How to Protect Your Credit Rating

In this volatile economy, it is very important for people to preserve and protect their credit rating. Let’s get started:

1) The first way to preserve your credit is to avoid or stop using credit cards.

The most sensible way is not to spend foolishly. The Christmas season is just around the corner and the temptation to spend is readily apparent. However do the kids really need all those toys, does hubby really need another electronic gizmo?

With the economy in such a bad state, it would be wise to limit spending as much as possible. Instead of several Christmas gifts for everyone, perhaps one significant gift each. Furthermore, it is important not to go into debt over Christmas gifts. Buy with cash, that way the total family spending on the holidays will be curtailed and the added pressure of paying interest on purchases long forgotten in the New Year will be eliminated.

People rely too heavily on borrowed money. Most credit card owners are still paying on purchases they made several years before. Think of all the money wasted on broken toys from last Christmas that some families are still paying for this Christmas.

We really need to tighten up. Many people are so far in debt that every credit card is maxed out. What will happen when they really need the credit card for an emergency and there are no funds available? Only 1-hour payday loans could be a real life-saver in such times. But do remember to use them wisely.

2) The second way to preserve your credit is to use your credit card only in an emergency, and never place a purchase on the credit card that you would not be able to pay off when the bill comes in.

With people losing their jobs and their homes, a good credit rating is worth its weight in gold.

3) The third way to protect your credit rating is to pay all bills on time, your utilities, your credit cards, your insurance, house payments, car payments, your internet, and your magazine subscriptions; whatever bills you have to pay them on time. Every time a payment is left unpaid or is late this outstanding debt is reported to the credit agencies and noted on your file.

There are three credit reporting agencies in the USA, they are Equifax, TransUnion, and Experian.

Every time you apply for a payday loan or any other credit, the potential lender will inquire with these or other credit-reporting agencies to see if basically your credit is good and you have the ability to pay back your loan and to pay it back on time. The information is released to them in the form of a score, or rating called a fico score, which is a statistical score based on your credit history. The higher the score the better the credit history you have.

The best fico scores attributed to approximately 20% of all scores are over 780, while the lowest 20% fall below 620. The average American’s fico score is around 680 marks.

You are considered to have an excellent credit rating if your fico score is between 720-850 – This means you will be able to obtain the best interest rates on the items you purchase and get the best overall credit card deals.

Your opportunities are still very good if your fico score falls in the 700-719 bracket.

Your credit will still be good and you will be able to obtain most loans with a credit rating between 675-699.

If you fall within the category of sub-prime (below average) with a fico score of 620-674, you can still qualify for certain loans but you will end up paying higher interest rates.

You will have trouble getting a loan with a fico score of 560-619, though not impossible. You will be considered a risk and only certain websites will be ready to give you small short-term payday loan of $500 or slightly more.

Unfortunately, a fico score of 500-559 will be considered very risky and you would need to improve your score before approaching a lender any time soon.

These fico scores not only affect whether the lenders will grant you credit in the first place; it will also determine how much they will grant you and at what interest rate.

Some people fall in the trap of high interest rates and they never seem to get out from under it. This is particularly true for high-ticket items such as purchasing a home.

For example

According to the national average for a $300,000 loan on homes yield the following:

30 year fixed mortgage 15-year home equity loan 36 months auto loan

Fico score APR Monthly payment

760 – 850 5.675% $1,736

700 – 759 5.897% $1,779

660 – 699 6.181% $1,834

620 – 659 6.991% $1,994

580 – 619 9.024% $2,419

You will pay over $600 extra a month for the very same $300,000 mortgage loan if you fall in the lowest credit rating bracket.

Still, think you can afford to charge for Christmas and anything and everything that comes along afterward without sitting down and carefully considering if you really need to purchase these items on credit? Is the immediate joy of having the latest blackberry or Xbox or what have you worth forfeiting your new home or a new car or whatever big ticket item you might need in the future?…

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home loans
Home Loans

Bad Credit Home Loans and Seller Financing

Beginning in 2009, bad credit home loans reached near extinction as banks were reeling over billions of dollars in losses from millions of home loans during the boom of 2006 and subsequent fallout beginning in 2007.

And even nowadays foreclosure rates show no signs of slowing down and banks show no signs of releasing a stranglehold on new loan approvals. Proverbial purse strings tightened and banks are saying “no.”

What exactly is “bad credit”?

In the world of mortgages and home loans and home buying, bad credit is anything below a 680 credit score. Any report with recent collection activity or late payments or bankruptcies not discharged for two or more years is an automatic “no” in the world of mortgages.

How do I find my credit score?

Everyone is entitled to a free copy of his or her credit report each year, however, this report does not include a buyer’s credit (FICO) score; the buyer will have to pay for that. Visit to obtain your free report and information on getting your score.

What is seller financing?

Seller financing is a tool used by sellers and real estate investors to help challenged credit homebuyers. Instead of getting a loan from a traditional bank or mortgage broker, the seller is the bank.

Make no mistake, the seller is in this to make money, this is not a philanthropic effort by any means, but seller financing is a great way for a bad credit buyer to purchase a house.

How does seller financing work?

The seller is able to establish the “rules” for the loan. The seller gets to call the down payment, interest and loan term. The seller is in the driver’s seat. This can mean expensive consequences for the borrower.

The typical down payment for a seller-financed property is no less than 15 percent of the purchase price.

For example, if a home is on the market for $125,000 the borrower needs a down payment of $18,750 in order to qualify for the loan.

The interest on a seller financed home is also normally higher than one would find using a traditional lending source and can be as high as 12 percent annually.

Overall, bad credit home loans are an expensive proposition.

If the terms are so bad why use seller financing?

For three reasons:

  • You get to write off all of the interest paid to your mortgage on your income tax return, just like any other mortgage.
  • You get to write off a portion of your down payment on your income tax return.
  • Your mortgage can build credit, helping you refinance to a traditional loan or purchase another house in as little as two years.

When comparing apples to apples, or in this case renting to buying, seller financing makes sense in contrast to throwing money away on high dollar rent payments.

For buyers considering seller financing, they need only remember two magic words: money talks.

The more money you can provide to the seller up front as a down payment, the more equity you build up front, and the easier (and more favorable) the terms will be for a seller-financed loan.

For more information on seller financing, or to find out about seller financing in your area, contact your local board of Realtors.…

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car loans
Car Loans

Those with Bankruptcies Can Also Get a Car Loan

Even if you have faced bankruptcy in the past, you can still apply for a car loan. Before you apply, you need to get an “Authorization to take debt” from your trustee.

Banks have a policy when they lend to those that have had recent bankruptcies. They will only let you borrow half of your yearly income.

This means that if you have a yearly income of $50,000, you can get a loan till $25,000. The monthly payments can also be limited to 10-15% of your monthly gross income. If you are making $5000 a month, then you can make a payment for only $500 – $600 a month.

You should have at least 10-20% of the amount to put down as a down payment. If you don’t have any money for down payment, you may not be considered for a loan. When you meet the loan officer, you should tell them honestly the reasons for your bankruptcy. At the car dealerships, find a car and negotiate the price before you tell them that you have had a bankruptcy. Else they may tell you, that you qualify for only a few cars.

Write down the interest rates and the figures for the monthly payments. Ask the car dealers to write down all the payments. Don’t buy anything extra like undercoating, credit insurance extra. If you need insurance, then call your insurance agent. If you are going to trade in the car in the next 18 months, then don’t load it with extras.

Get some online quotes for the loan before you actually purchase a price, since the rates can differ from dealer to dealer, even if it’s the same car. In this way, you can negotiate for a good interest rate.

Getting a used auto loan

There are a number of places where you can get used car loans. There are a number of lenders that are present both online and offline that can give you used auto loans. You can apply for the loans at banks, car dealerships, and credit unions. Even those with bad credit can get used car loans.

When applying

Keep your credit score and credit report handy. Banks, car dealerships and credit unions use the FICO score. In fact, 90% of all financial lending institutions use the FICO score. Your credit score is an amalgamation of the payment history and transactions that you have made. If you don’t have a credit report, then you would be treated as if you have a bad credit score.

Keep your salary stubs or the bank’s statements ready (the bank account in which your salary is credited). You should also be able to prove that you are a resident of US or Canada and are 18 years and above.

With these documents, you can get pre-approved from your bank. With a pre-approval, it’s easier to get a loan. Once you have been pre-approved for the loan account, don’t go overboard else you would end up paying a higher monthly payment than you can afford. Many of the car dealerships, banks, and credit unions may not finance a private purchase. Check before applying.

At the car dealerships

It’s important to check the condition of the car before buying it. Ideally, the car should have run less than 60,000 miles and should be less than 5 years old. Get the car thoroughly checked from an independent mechanic, before the final purchase of the used car.

Getting a bad credit auto loan

Getting a bad credit car loan isn’t difficult at all. Most financial institutions including banks and credit unions are ready to give bad credit loans for cars and other vehicles. There are certain conditions that need to be fulfilled before car loans can be given.

You should have a gross income of $1500 or more. You should be able to prove it should your salary stubs or the statement from the bank account in which your salary gets credited

You should be a resident of US or Canada and should be able to prove the same. You can prove your residency through utility bills and credit card statements.

In the past 12 months, if you had vehicle repossession, you can’t apply for a bad credit car loan.

If you are bankrupt, you may be able to get a loan if you get an “authorization to get debt” from the trustee.

There are a number of online sites that can offer auto loans. For this, you would need to fill in a questionnaire regarding your personal details, income details and credit details. Based on these details, you would be matched with a number of lenders that can help you.

The interest rates on these loans can be extremely high depending on how bad your credit is. The interest rates can vary between 12-17%. But you may still be able to negotiate the credit rates with your bank or credit union. By paying monthly payments on time, you can improve your credit rating. Improvement in credit scores will let you get lower credit rates for taking loans in the future.…

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loan modification
Loan Modification

Why Your Loan Modification was Denied

It’s tough out there.

Unemployment is still at the highest rate it has been in decades and more and more homeowners are struggling to make their mortgage payments.

In light of financial difficulties, many lenders are offering modifications to existing loans, designed to make mortgage payments more affordable, assisting homeowners in avoiding the fundamental “F word”, foreclosure.

Still, even with all of the positives, loan modifications get denied.

The hardship packet

It’s like closing documents, but worse. The hardship packet is the information required by the lender to determine whether you have the resources to continue paying a mortgage while meeting other financial obligations. The number one item that undoes a possible approval, you ask. The answer is the budget letter included in the hardship packet.

What the bank wants

The bank wants to ensure that you have the money to make your mortgage payment, buy food, and pay for electricity. The bank doesn’t care if you don’t pay your Visa or MasterCard account.

They are concerned with one thing and one thing only: that they get their money at the end of the month. Homeowners that fill out a budget letter and inflate numbers like food bills, electricity bills while adding items like credit cards and other debts are shooting themselves in the foot.

The “worse” a financial picture looks; the more irresponsible a customer appears to a lender. This results in a no-questions-asked loan modification denial.

Filling out a budget letter, the right way

Complete several budget letters. The goal is to have a final draft to send to the lender showing that you can make a mortgage obligation and pay other essential bills and maintaining a surplus. Ideally, you should have around $400 to $600 left over every month after your bills are paid.

If you have more than that “magic number” left over, that can hurt you too; since the bank is now wondering what exactly you are spending your excess on without being able to manage your mortgage payment.

On the flip side, having less than the “magic number” means that you are scraping by, and that makes a bank decidedly nervous. Keep on track with the “magic number”, but do it legally.

What I mean by this is provide accurate depictions of food and housing costs, but ignore the credit cards if they force you over or under the number.

Mortgage first. Everything else second.

Loan modifications are granted to homeowners that put a mortgage first, prioritizing that commitment above all other bills. Ignore the calls from American Express and organize your housing situation first. Everything else can wait and should wait until you have your housing situation settled.

If it’s still “No”

The fact is that mortgage modifications are not for everyone. Some homeowners endure catastrophic long-term financial turmoil that forces them out of their homes.

In these cases, the homeowner should focus on a short sale agreement with the lender to sell the house, as opposed to accepting foreclosure. If this describes your situation, it’s time to make that call to your lender and move forward with that option.…

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student loan modification
Loan Consolidation

Advantages of a Student Loan Consolidation

Student loan consolidation or refinancing can have many advantages.

Generally speaking, when college students receive loans throughout the course of there college years, they usually receive them from a few different companies. In turn, this could mean multiple monthly statements for a college graduate.

Each of these loans most likely has different finance and interest rates also. Some of which fluctuate along with the economic market.

This means that students could be paying back multiple loans at the same time, which can be extremely expensive if not impossible.

So how can you get all these bills rolled into one?

A college loan consolidation can help you accomplish this. When you consolidate all your loans together you now only have one monthly payment and only have to deal with one company.

Plus the monthly payment will be extremely lower than you would be paying altogether. In order to reap all the benefits of these programs to the best of their abilities, make sure you know exactly how they work and what happens in the process.

Now, what is a student loan consolidation or refinance?

These are programs that work with all of your lenders and decrease your total monthly payment.

Most student loan lenders only give graduates a six month grace period before they need to start repaying their loans. However, for most graduates, it can be difficult finding that paying job that is able to pay all these bills while supporting themselves within this time frame.

When graduates consolidate or refinance their loans they are able to combine all their student loans into one low monthly payment along with a lower rate.

Now you may ask “Why should I consolidate or Refinance a College Loan?”

There are three main reasons why most graduates choose to consolidate or refinance their student loans.

The first one is they want to lock in a low fixed interest rate. Many student loans have a variable rate when you receive them.

This means that as the years and payments go on, the rates can continue to rise to cause the amount you owed to rise with them. With a fixed interest rate payments will always remain the same. No wondering if the rates will be higher or lower this month.

The second reason graduates decide to consolidate or refinance their student loans is due to financial reasons. Simply put, they can’t afford the high payments right now along with everything else. It is easier to combine all their bills into one while lowering their overall monthly payment total.

And the third major reason is the choice of repayment options. Most loan consolidation and refinance companies offer various payment term options. Many include payment terms ranging from 10 years to 30 years.

There are a few things you should know before consolidating or refinancing those student loans.

Consolidating or refinancing the student loans will offer a lower monthly payment, but due to the number of payments over the specified time the total amount can be considerably higher than your initial loans.

Paying a couple extra payments or paying a little more on certain months can help you to cut some of this extra cost.…

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