MOST COMMON LOAN CATEGORIES

Despite our quest to become debt-free, almost all Americans will take out a loan at least once in their lifetime. Here are some common loans that we may end up taking. Many homes have one or two but others have a combination of all of them.

Car Loans –
Cars are almost an absolute necessity for Americans but this is not entirely so in the rest of the world where people delight in walking and using public transportation (although economic difficulty is also a reason why not many people own cars). It is always advisable to purchase a car in cash but many people do not have that kind of money saved up so applying for a car loan becomes a more viable option. Before embarking on the quest for a car loan, one has to figure out what kind of car they want and what is their projected long-term budget. It is good to shop around because most dealers hike the prices of cars by 15%. This means that if you negotiate wisely with the dealer you can get a reduction on the vehicle up to 15%

Credit Cards –
When shopping for a credit card, avoid cards that have exorbitant interest-rates and fees. Some even charge huge upfront fees especially if you have bad credit and you

College Loans –
Always consider investigating student loans before committing your self to a personal loan agreement. You may be qualified for a student grant from the government if you take the time to research the opportunities.

BUILDING CREDIT-WORTHINESS

In the last decade, “credit-worthiness” has gained notoriety as more and more businesses use credit to determine the risk level of a person or a business. This is termed “credit-worthiness” and is a person or business’s ability or risk of inability to pay a debt. It is therefore imperative that one learn the tips and tricks on how to maintain credit-worthiness and bid for loans with the lowest interest rates and the best. The difference between good credit and bad credit can be thousands of dollars a year in overpayment of debt and interest! It’s a smart move therefore, to be “credit-savvy”. Being credit savvy involves learning the ropes of today’s credit climate and smart ways to pay bills.

Go Automated
In previous decades, a man’s word was his bond and businesses entered into a business contract based solely on word-of-mouth. Nowadays, that is not good enough and businesses have due dates and late fees and will report late and erratic payments to one or all three of the major credit bureaus. Negative reporting can cause an adverse credit rating resulting in denial of loans of can become burdened by high interest ones. Because of today’s busy schedules, many well-intentioned people simply forget to pay their bills on time. This results in unnecessary late fees. Can you imagine what happens when one forgets, say, a court-date appearance? Not only can one be subject to arrest, but one has to pay exorbitant court fees for failure to appear!

The best way to avoid paying bills late is to go automated. This means you can either arrange with your employer or bank to pay your bills from your bank account automatically whenever they become due. New high-tech tools provided by banks, such as online bill pay, can perform this task exceptionally well.

Contact your bank therefore and set up online banking with automatic bill pay. Software such as Microsoft Money and Quicken can be configured to pay bills directly from your computer and maintain excellent records for you.

Failure to pay your bills on time causes many creditors to assume that you are unable to pay the debt. They may then initiate collection activity and report you negatively to the credit bureaus.

Stay In Touch With Your Creditors
In the event that you are unable to pay your bill either on time or do not have the money to make a full payment, one of the best options is to contact your creditor and inform them. In most cases the creditor will be willing to make “payment arrangements” and in the case of credit cards may even re-negotiate a lower interest rate. Contacting your creditor also builds trust and reveals your good-will.

3 Easy Steps To Raise Your Credit Score

Is No Credit The Same As Bad Credit?

How would you like to live life knowing you’ve paid off your mortgage, car loan, student loans and credit cards? For many this is a dream come true. This, they figure, will result in a perfect credit score. But credit bureaus think otherwise. No credit is the same as bad credit. Yes, that’s right. Credit scoring takes into account a healthy mix of debt versus not having any demonstrated record of debt-handling ability. One of the gravest mistakes people make in their quest for financial freedom is to pay off all their credit cards and then close them. This in most cases does not help your credit score.

There are 3 major ways to boost your credit score; The first is to pay charged-off accounts but make sure you get a commitment from the creditors in writing that the item will be removed from the report upon payment of the settlement amount.

Another way is to acquire new credit. Get 2-3 credit cards. Most people with bad credit may have a hard time qualifying for a good credit card so the answer would be to get a secured card. Applications for secured credit cards are hardly denied because the applicant has to deposit an amount into a savings account before the card can be issued and activated. Caution should be used when selecting a secured credit card because of the varying fees, terms and conditions offered by different financial institutions. For example, some companies have lofty annual fees, others will ask you to pay for insurance while others will require a monthly fee. Even more require an initial application fee. By far, the best place to get a secured credit card is a credit union. You may visit http://creditunionaccess.com/ to access credit unions in your area. Also visit NO Hussle Cash for secured and unsecured credit cards for people with bad credit.

A third way to raise your credit score is to ensure timely payment of your monthly bills. You can enlist the use of technology to achieve this. For example, most banks now offer automatic bill pay to their customers for a small fee. Open a separate checking account for bills and automate it.

We have seen how having no credit is as good as having bad credit because financial institutions and lenders want to see that you have a grasp on handling finances, especially installment loans, credit cards and revolving accounts.

Bouncing Back After Bankrupcy

Bankrupcy is one of the most financially traumatic experiences one can undergo not to mention that it stays on your credit report for up to 10 years. There are two different types of bankruptcies; Chapter 7 and Chapter 13. Chapter 7 is where a bankruptcy judge orders your assets liquidated and the proceeds used to pay off your creditors. Chapter 13 is where a structured payment plan is put in place and you are required to adhere to this plan to pay off your debts within a stipulated duration of time. Failure to do this can result in the court over-turning the Chapter 13 ruling and converting it to a Chapter 7.

Bankruptcy can affect your financial livelihood and cost you hundreds of extra dollars in higher interest rates not to mention the embarrassment of perpetually being denied credit. Despite the headaches of bankruptcy, there is a way out and countless families are realizing with the right strategy, they can indeed overcome.

Credit repair is the process of rebuilding one's credit especially after a bankruptcy, foreclosure, divorce or a charge-off. After bankruptcy, your credit may be reeling in the mid-400s depending on the presence of other delinquent items, length of credit history, state of revolving accounts and recent payment defaults (usually people filing for bankruptcy are delinquent in multiple bills at the same time). You can easily raise your credit score by applying for 2 -3 credit cards. If no lender wants to talk to you especially because of the bankrupcy you can try secured credit cards. These are easy to acquire and anyone is approved. About 6 or more months of faithfully paying on time will do great benefit to your credit score. So the secret here is to boost areas of your credit that are still in your control.

How Do You Know If You're Rich?

The easiest way to determine whether you're there yet financially is to gauge your net worth.

You can use this formula;

Multiply your age times your pretax annual income then divide by ten. This is what your net worth should be.

One of the biggest huddles to overcome in boosting your net worth is being debt-free. For many, that is a far-fetched goal but with the right planning and tools you can actually become debt-free in less than 3 years!! I learnt that here.

Negotiating With A Creditor For Deletion of Negative Items

One of the steps to take to cure a negative credit score is to negotiate with a creditor to get deragatory items removed from your credit. There is a right way and a wrong way to do this.

Many people from time to time find themselves with items on their credit that have been charged-off. A charge-off is a delinquent debt that the creditor has written off as a loss and has no hope of recovering the same from you. These are normally sent to an outside collection agency which in turn attempts to collect the debt from you (knowing they will keep 100% of the amount)

Paying off a charge off to a creditor will only affect your credit score possitively if the amount is eventually deleted from your credit. Before you pay off a charge-off, never admit that the debt belongs to you and then negotiate for a Letter of Deletion to be sent or faxed to you. This is a written guarantee that the item will finally be deleted from your credit upon satisfactory payment of the debt. Learn how to repair your own credit here.

Key Factors That Determine Your Credit Score

So how do the credit bureaus determine your credit score? For the longest, they prefered to keep this information secret but recent pressure from consumer advocacy groups has forced them to begin to "demystify" the criteria they employ to determine your score.

1. The length of your credit history
2. Your payment history
3. The amount of money you owe
4. Type of credit
5. Credit inquiries


Remember, the score can change daily and understanding the credit scoring criteria is essential in the battle to remain debt free.