5 Credit Report Myths You Should Know

Credit reports have a bad reputation – and it’s easy to see why. These few sheets of paper appear to have the power to make or break you. From renting a home, to accessing a loan, your credit report is sometimes the only thing left to hold you back. So it’s really important to know the truth about credit reports, and it’s not always as bad as you might think. Read on to discover the five most common myths surrounding credit reports.

It’s the Score that Counts

Unfortunately, the greatest myth of all surrounding credit reports is that you are given a numerical score which lenders depend upon make their decision. However, assessing the risk of them lending to you is far more complex than simply looking at a number. Each credit reference agency gives you a different score, so lenders will always delve deeper into the report to make their decision. Added to that, different lenders have different assessment criteria, so despite having the same report to assess, one lender can be far less likely to lend than another. Overall, they simply want to know you’ll repay the credit by reviewing all the information contained in your report.

Checking your Report Hurts your Credit

Again, this is a common myth. It’s important to regularly check your record, and in no way will this negatively impact your ability to borrow. The bigger danger is in making applications for credit, which will show up on your report. Too many of them will suggest to lenders that you’re in dire financial straits.

Credit Records are Always Accurate

Sadly, credit reference agencies do not always have the right information, so always check your report thoroughly, and make sure you’re clear about what it all means. Any errors on your report need to be rectified, and any legitimate reasons for defaults explained through a Notice of Correction. A credit report company such as Credit Cleaner can help you add a Notice of Correction to your report. The Notice of Correction should be no longer than 200 words and be factual and to the point.

You Cannot Remove Late Payments from a Credit File

This is a myth provided that the mistake was the lenders and not yours. If for example, you made a credit card payment on time, but it was not recorded on the system or came in late due to a banking error, you can write the lender and ask for them to remove the late payment mark on your file. They are not obliged to remove it, but will often do so to maintain good customer relations.

Paying off Credit Cards Harms your Credit Rating

The opposite is true – managing your credit well is the key to a good credit record. Remember another common myth is that cancelling cards will raise your score. In fact, if you are not utilising any credit this can work against you. So keep using a credit card, but be sure to pay in full each and every month, and on time.

Wendy Lin is a freelance writer who specialises in guest blogging. She enjoys travelling with her family and escaping to tropical countries whenever possible.

The Five Types Of Auto Loans

When you visit your bank to borrow money to buy a car, you will have several different choices for the type of loan you will choose. Your payment and interest rate will be based on a variety of factors, and the type of loan you choose will be factored into that equation. Making the right choice involves educating yourself on the different loans and what they mean to your bottom line. Use the following guide to help you navigate the financial waters that are the auto loan process.

Pre-Computed Loans

This is the most common type of auto loan. This loan is a basic standard principal and interest loan. Before you and your financial institution sign the papers allowing you to borrow the money, the amount of payments is computed or calculated. Once you have signed the papers, you are required by law to repay every dollar you have borrowed.

Simple Interest Loans

These loans are for people who have a little more money and are able to pay more than their standard payment every month. The interest on these loans is calculated daily on the balance of the loan. This is similar to how a credit card works. Borrowers then save money by paying more than they owe every month and paying the principal down quickly. Some customers will opt to make payments every two weeks rather than once a month in order to pay the loan off faster.

Car Equity Loans

These loans are often short term. This type of loan can only be obtained if your car is paid off and you don’t owe another institution money on the car. With a car equity loan, you are able to borrow a portion of the value of the car to use for other purposes. These loans are best for emergency situations when you must come up with cash quickly.

Lease Buyout Loans

When you purchase a car from a dealer that was being leased, you will obtain a lease buyout loan. Most often, these loans are handled through the dealership that originally handled the lease. Many dealerships will not allow banks or other financial institutions to buy out their loans.

Auto Title Loans

An auto title loans is made by a small finance company that essentially borrows you money in exchange for the title to your car. Lawmakers who are concerned that customers are being taken advantage of have recently scrutinized these loans. These loans should be avoided if possible. When you buy a car, you will most like obtain a pre-computed loan from your financial institution, but it’s important that you know your options and explore them all before you make your final decision and sign on the dotted line.

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Chris Stevenson writes articles on behalf of Credityes.com, a bad credit auto loan company.  It is our goal to better inform the public about their credit options and how best to get an automobile with bad credit.

What Are The Different Types Of Debt Consolidation?

Debt consolidation could be a great option for many people who are deep in debt. Many people have too many debts than they are able to manage, and they have a difficult time making their monthly payments. Maybe all of the interest rates have added up to be too high, and they need an option that could lower their interest rate. And maybe the stress of dealing with all of those different debt companies has gotten to be just a little too much to handle.

Whatever your reason is for considering debt consolidation to help you with your monthly loan and/or credit card payments, one thing’s for certain: you should know all of your options before you proceed.

It’s true, debt consolidation can help to relieve stress (it’s much easier to manage one payment each month than fifteen), and many times it can lower the interest rates, and sometimes even in turn lower the monthly payments that you are making each month. But if you want to go forward with debt consolidation it is important to understand all of your options, so that you can choose which option is the best for you.

Here are the different types of debt consolidation:

Keep in mind that most of the debt consolidation options work essentially the same way: you take out a loan to pay off your other debts, and then you start making one payment each month to the company that you received your loan from.

Consolidation Loans

One of the most common ways of performing debt consolidation is to go to a bank or finance company to take out a debt consolidation loan. If the bank that you have your checking account with offers consolidation loan options, this may be a great choice for you. If you set up an automatic deduction from your bank account to make your monthly loan payment, you may be able to qualify for a lower interest rate than you would receive from most of the other options on this list.

If you are not able to qualify for a consolidation loan through your bank, then you can go to a finance company and work to take out a consolidation loan with them. You will have higher interest rates than with a traditional bank loan, but it is easier to get qualified for a loan with a finance company than it may be to get qualified through your bank.

Home Equity Line of Credit

Many mortgage lenders offer Home Equity Lines of Credit, or HELOCs. With a HELOC, you will essentially take out a loan against the equity in your home. You then use that loan as your consolidation loan. HELOCs are great because of the low interest rates you can get on these type of secured loans. But be careful and understand that you are putting your home up as collateral on the loan you are taking out.

Credit Balance Transfer

You can also consider transferring the balances on all of your current credit cards to a new credit card. Many credit card companies will send out transfer balance offers, where they will offer you a very low interest rate (sometimes even a 0% interest rate) for a limited amount of time if you transfer the balances of your other cards to this new card. Just like with the other debt consolidation options, this option helps you to consolidate all of your monthly credit card payments into one simple payment. And if you can get the balance paid down quickly you can save yourself quite a bit of money by taking advantage of the introductory low interest rates. Just make sure you are aware of all of the terms and what your interest rate will go up to after the introductory period is over.

Borrowing Against Your 401k

Some people even choose to borrow against their 401k and use that money to pay off debts. Most people don’t consider this a smart option because you are taking away money from your future retirement. So obviously it is up to you to weigh out the pros and cons of this option.

Peer Lender

A great option for debt consolidation is to find a peer lender. There are many different peer-to-peer lending groups that you can seek out. They are great, because they typically have much lower interest rates than you will find with other more traditional lending options.

Consolidation Companies

And of course, there’s always the debt consolidation company. Most people turn to a debt consolidation company if their credit is too low to allow them to qualify for one of the other debt consolidation options. Consolidation companies are willing to work with people that have poor credit, but of course they will charge a fee for their services of helping you out with your debt consolidation efforts.

Chase Sagum is the author of this article. You can see more of his articles at www.lexingtonlaw.com.

When Is The Best Time To Refinance?

Home refinance becomes an attractive option to most people whenever the chance to lock in to a lower interest rate arises; but it’s important to remember that this doesn’t actually reduce the total amount you have to pay – it just restructures the loan so you can pay a lower portion back now. Determining the right time to refinance your home is actually an involved process; and having the right hand to walk you through it can make all the difference if you don’t want to leave a trail of closing costs behind you.

With that said, both the time and the specific need(s) are the primary considerations for home refinance. You might need to lower your monthly payments by choosing a longer repayment term, obtain cash from your home equity, or simply opt for a fixed interest rate. A recent increase in your credit rating, for example, is another good reason to refinance your home – precisely because you are generally eligible for a lower interest rate mortgage.

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Benefits of a Loan Agent and Financial Advisor

Seeking good advice is the backbone to determining the right time to refinance your home. A loan agent or broker can apprise you of your options after taking notice of your intentions and financial situation, to help you make the best decision – and save literally thousands of dollars or more with the refinancing option. If the economic situation suddenly becomes such that local or national interest rates rise dramatically (or unsustainably for you), then you may find yourself in a situation where you don’t have any liquidity because your money is tied up in your mortgage payments. Refinancing would help such a situation tremendously by freeing up some cash.

Low Interest Rates Don’t Necessarily Mean Refinance

So, just because lower interest rates become a reality, doesn’t mean it makes sense for you to refinance – it depends on the totality of your situation. For example, if you are in a particular residential area because you have kids in college who are graduating soon, or for any other largely temporary situation, then refinancing might not be such a good idea – you generally want to plan to be stable in the home you are considering refinancing for the foreseeable future, because of your commitment to repay the closing costs of having a new mortgage instituted. A finance professional can take all of these things into account, and lead you on the best path to the decision you really want to make, so that you don’t end up paying more for it than you intended.

Lastly, it usually isn’t the best time to refinance your home if you’ve already done it in the past, because of piling financial responsibilities directly related to continually restructuring a mortgage. Again, the problem of closing costs rears its head here: you’ll be beset with them if you refinance too soon after your last restructured mortgage, or too many, period. Good advice is always worth its weight in gold, and the resources are available to help you make the right decisions.

How To Payoff Debt Without Consolidation

Learning to payoff debt without consolidation is a major step towards financial health and stability. While debt consolidation can be beneficial in certain circumstances, it shows up on your credit report and can leave a lasting impact for as long as 7 to 10 years. These simple steps require a little time, patience, and diligence – but your hard work will pay off when you watch your total debt decrease while your credit score moves steadily upwards.

Simple Steps to Payoff Debt Without Consolidation

  1. Get organized. You knew that was coming. Sometimes we hide in the fog of debt because we are so afraid to see the actual Grand Total. But this just means we spend a longer period of time feeling overwhelmed by the fog. Make a list of every credit card you have, your balance, the interest rate and the minimum payment amount. Having a clear sense of what you are working through will help to form a solid picture of where you are headed (debt free!) – and how to get there.
  2. Call your credit card companies. If you haven’t done so already, give your credit card company a call and see if they are willing to work with you on your payoff plan. If your card has an annual fee, they may be willing to eliminate it. One of the most cost effective things you can do is ask them to lower the interest rate. Credit card companies make their money from the interest you pay them. However, if you have been with a company for a while, they may be willing to reduce your interest rate. Even a small adjustment can wind up saving you thousands of dollars in the long run.
  3. List your monthly expenses. Now it’s time to take a good look at what you actually spend each month on everything. That includes the pack of gum here, the coffee there, and those occasional dollar menu items from the drive-through. You may be surprised how much money you spend – in small intermittent increments – every month. By whittling them down, you can scrounge up “Bonus Money” to put towards your total debt payoff. Good places to start saving:
    • Dining expenses
    • Drinks
    • House cleaner/dog walker/etc.
    • Coffee runs
    • Grocery bill (cutting out unnecessary food items is often beneficial for your financial and physical health!)
  4. Calculate your payoff terms. Once you have organized your debt totals and have (potentially) adjusted your interest rates, you can use an online credit card calculator
    to create a payoff schedule. You have the option to see how long it
    will take to pay it off using the minimum payment amount OR you can
    select a desired payoff date to see how much it would take per month to
    pay it off in a predetermined amount of time. Keep a record – or print it out – for
    each credit card. Remember that you want to pay the largest portion towards the highest interest credit cards first. This will also save you money in the long run.
  5. Extra income potential. If you’re already working full time, or have a family, this might not be an option. However, accessory money can be used to help pay off debt quicker. Think of it as a short-term investment which will have a major long-term (literal) pay off. Consider things like holiday gift wrapping, weeding/yard work, or organizing garages or offices. You can even run an add offering your service(s). A few odd jobs a month can make a considerable difference.

The best part of learning to payoff debt without consolidation is that you’ll learn healthy financial habits which will continue into your future.

Prequalifying for a Mortgage

Buying a home is a very big investment and you need to be fully prepared so that you get the best deal both on the price and the house itself. To ensure you don’t make a mistake, you need to be ready when the time comes for you to buy your house. The first step to getting your dream home is by mortgage prequalification.

What is mortgage prequalification?

The process whereby you work out with your potential lender or a broker whether the loan you are hoping to get will be adequate to cover the budget you have set for the house.

You can perform pre-qualification calculation by yourself by downloading and using a mortgage calculator. When you calculate the amount you expect to pay, you end up knowing in advance what problems you will encounter according to your situation.  Getting a loan for your mortgage will be affected by the level of debt you are experiencing and your credit rating.

When you know what will potentially affect your qualification of the mortgage, you can go the extra mile to make the changes necessary in your financial profile to so that you are ready for the formal process when the time arrives. There are several reasons why you should pre-qualify for a mortgage. These are discussed below.

Benefits to you the buyer

As the person going for the mortgage, you need to be the one to benefit more from the prequalification, but the question is how do you benefit from this informal process? As a potential homeowner, you need to know the home you can afford. Conventionally, you have so many variables to consider when calculating the amount of money you need for your home. Some of these variables are:

  • Your credit history
  • Your monthly income
  • Any debt you are have
  • The different mortgage programs

When you go for prequalification, you will provide a lot of information which can be used later in the formal process of applying for the mortgage. This will make the actual process to be faster.

Prequalification will give you more bargaining power with the seller. There will be many offers for the particular house you have picked on. With prequalification, the seller will more likely consider your offer as compared to a buyer who does has not undergone the process.

As a buyer, you need a simple process for coming up with an estimate for your budget. With the prequalification, you will know the direction you need to follow so that you get the best deal on your prospective home.

Benefits to the agent

When you as the buyer comes up with an estimate, your agent will know what type of house to look for specifically. In other situations, the agent will spend time following dead ends while at the same time charging you for the services. The prequalification process will make the agent come up with solid prospects for your interest.

Benefits to the seller

As a seller, you will have an easier time selecting between bids for your house. You will know that a person is seriously considering the purchase if they are already prequalified. Even if the buyer is offering less money, you will be more attracted to their offer knowing you are most likely able to close the deal with them.

Mortgage Modification Programs: How to Identify the Scammers

The wave of unprecedented foreclosures in the last few years has created opportunities for unsuspecting homeowners to fall prey to unethical and dishonest scam artists out to make a fortune. The risk of losing your home will definitely cause you a lot of distress and looking for an alternative to foreclosure is a natural and understandable reaction.

One of the available options for struggling home owners is mortgage modification programs. However, there are so many programs out there, that distinguishing between the legitimate ones and the scams can be difficult. The following are some of the common pitfalls you should avoid when it comes to illegitimate programs:

High Upfront Fees

You should never have to pay any upfront fees for services you have not received. Many con artists will demand an upfront fee of 2,000 dollars, for instance, to get your mortgage modification, and this could even go up to 5,000 dollars or more. Any fee above 1,000 dollars is simply absurd and a legitimate program is unlikely to require an upfront fee before receiving assistance. Some scam artists take a different approach by saying that you require a forensic audit of your original loan – the cost for the audit is usually in the thousands.

Transferring Your Property or Redirecting Payments

An individual or company asking you to transfer your property deed or title to them is probably illegitimate. In addition, if you are required to make payment to anyone other than your lender in order to get assistance, this is enough reason to walk away. For instance, you could be asked to sign over your deed to the company or individual and in exchange, you are allowed to live in your home as a renter, making monthly rent payments. As soon as you fall behind on payments (which will likely happen), you are evicted, losing all your equity in the process.

Easy Prey

It is worth noting that lenders file a Notice of Default as soon as you fall behind on your mortgage payments. This means that your mortgage situation and the property address go on public record, significantly exposing you to scammers. As such, do not assume that the knock on your door from someone offering mortgage modification assistance is a sign that your guardian angel is looking out for you.

What you should do?

If you are not sure about what to do, it would be best to contact your lender directly and ask for assistance. Your lender might be willing to take a smaller loss on a home by reducing the mortgage than a bigger loss from a short sale or foreclosure. On the other hand, even if you are unable to come to a working agreement with your lender, it would still be better to sell your home at a loss than lose a lot of money as well as your home to a conman.

Alternatively, you could contact the U.S Housing and Urban Development Office of Housing. It is responsible for providing access to more than 2,000 qualified counseling agencies with adequate experience in loan modifications for distressed homeowners. Ultimately, a good mortgage modification is possible if you act smart and avoid the scam artists.

An Introduction To The HARP 2.0 Mortgage Program

HARP (acronym for Home Affordable Refinance Program) is a mortgage program dedicated to those who are unable to obtain classic refinancing simply because the value of their property has declined throughout the years. Just as its name suggests, HARP mortgage program is an affordable and stable type of mortgage which is designed to benefit not only homeowners, but also house markets and government enterprises.

A Deeper Insight Into HARP

Basically, HARP was announced three years ago, back in March 2009. Its main purpose is to help homeowners refinance into a new loan that has a lower monthly payment. The initial program did not work, given the fact that the homeowners have encountered different problems that didn’t allow them to get the mortgage (one of the main problems was that HARP was dedicated only to those with a LTV between 80 and 125%). However, the new HARP program (also referred to as Harp 2.0) is very promising: it comes with an extended deadline, modified fees and no underwater limits whatsoever.

Am I Eligible For The HARP Program?

Despite the fact that HARP is very accessible, not everybody is eligible for it. In a nutshell, here are some of the main criteria that will help you make an idea whether you can obtain a HARP loan:

  1. One of the main conditions is not to have any late payment within the last 6 months, or more than one late payment within the last year. If you had more than one late payment, you are not be eligible for this program;
  2. Another condition is that your mortage must not have been previously refinanced through the HARP mortgage program. There is one exception, though: you can get the HARP mortgage if you had a Fannie Mae loan which underwent a Harp refinance back in 2009 (between the months of March and May)
  3. Moreover, the mortage must be either owned or guaranteed by Fannie Mae or Freddie Mac – this is another highly important criteria that applicants must take into account before applying for this type of mortgage
  4. The LTV ratio (LTV stands for “Loan-To-Value” ration) needs to be higher than 80%.

Steps To HARP Mortgage

First and foremost, you must determine whether your loan is guaranteed or owned by Fannie Mae or Freddie Mac. Afterwards, you must see if are eligible for the program by checking the list of conditions and see if you meet all the criteria.

Once you have completed this step, the next thing you have to do is to get in touch with your current mortgage service to get detailed information regarding the HARP program. If you think about getting this type of mortgage, you must know that being informed about the program is of utmost importance.

The last step is to check the rates and prices practiced by similar mortgage companies before you decide on a particular mortgage. The Internet can be very helpful in this situation, since it allows you to easily compare prices before making your choice. A mortgage is a long-term commitment, this is why you need to take your time in order to choose the company that best meets your needs!

To sum up, this is what you need to know with regards to the HARP program. It is a well-designed program and hundreds of thousands of homeowners have benefited from it over the past three years. You can be one of them too!

How To Repair Your Credit In Just 5 Steps

People who need to repair their credit may feel tempted to take up some credit repair companies on their offers of removing their short sales and bankruptcies. The problem is that the Federal Trade Commission (FTC) states that these companies that make outrageous claims such as these are not legitimate credit repair companies. The truth is that if what a creditor has reported is true, the consumer will not be able to have it removed from the report.

Sometimes, the information on a consumer’s credit report is inaccurate. These are the items that consumers can dispute, and they can hire a company to do this for them. It’s not necessary to pay these companies to perform this work for them because the Fair Credit Reporting Act (FCRA) states that consumers have the right to repair their credit on their own at no charge or for a small amount.

Obtain the Three Credit Reports

The first thing that consumers will need to do to is obtain their credit reports. They can request their credit reports easily by placing an order at AnnualCreditReport.com. They will be able to see their reports immediately online at no charge from the three major credit bureaus Equifax, TransUnion and Experian.

Read the Reports

Consumers will need to read these reports carefully to make sure that everything is accurate. The credit bureaus do not ensure that everything on a consumer’s report is correct, so there is a very good chance that there are errors on most people’s credit reports.

Disputing Incorrect Items

Once consumers have pointed out the errors, they can dispute and then document them. Each credit report will come with a dispute form. Consumers can fill this form out or they can write a dispute letter.

The credit bureaus will have 30 days to open an investigation as to the accuracy of each disputed item. If these items cannot be verified as correct, they will be removed from the report. Consumers will receive another report with the inaccurate items removed free of charge.

Reduce All Debts

Once consumers have three accurate credit reports, they will want to begin to decrease their debts. They can do this by setting up a budget that they can remain on or by calling their creditors and setting up a payment plan.

Begin to Use Credit Responsibly

The last step will be to show that they can handle credit responsibly. It will be easier for people with lower credit scores to obtain a store credit card. Once they have this card and pay their monthly bills on time for a period of time, they will show that they can use their credit wisely.

Wedding Loans: Financing For Your Perfect Day

The average wedding today costs anywhere from $15,000 to $30,000 so is it any wonder that people are starting to take out wedding loans? ?These days, who has that much money just lying around? ?Yet you also don’t want to skimp on the most important day of your life. Let’s take a look at some of the major expenses involved when you’re planning a wedding.

The venue – This can be one of the most expensive items on your wedding checklist. Even if you hold your wedding in your backyard you’re going to want to clean up landscaping, plant a few shrubs and flowers, rent at least one tent and plenty of chairs and tables. You’ll need to decorate, too. You might want a trellis and lots of twinkling lights. And let’s not forget a dance floor.

The clothes – Another major expense. You might be able to find a dress on sale for $100 but then you’re going to have to have it cleaned and altered. And it’s highly unlikely that you’ll find something for less than $1,000 that you really like. Now, you’ll also need a tux for the groom and tuxes for all the groomsmen and dresses for all the bridesmaids. Your cost for wedding attire will be well over $2,500.

Flowers – A wedding isn’t a wedding without flowers – lots of flowers. Flowers for the church, flowers for the reception hall, flowers for the bride and her attendants, boutonnieres for the groom and his groomsmen, flowers for the mothers and fathers, the guestbook attendant, the soloist, the person who serves the cake, and on and on and on. The average cost for wedding flowers is $1,500.

The reception – Depending on how elaborate you want your reception to be, this could end up costing you more than everything else combined. The average cost for a reception for 200 guests is more than $9,000. Even if you prepare most of the food yourself, you’re still going to have to consider the cost of all of the ingredients. And do you really want to be spending the night before your wedding making a fruit salad and rolling beef medallions?

Entertainment – Even if all you do is play CDs you’re still going to need someone to man the equipment – hauling it in, setting it up, organizing a playlist and then tearing everything back down again is a lot of work. Plan to spend at least $1,000 just for a DJ, more if you hire a band.

Wedding stationery – You can’t have a wedding without sending invitations, and RSVP cards and Save the Day cards, and wedding programs and Thank You cards and menus and place cards. Whew! Who knew there was so much paper involved in a wedding? And who knew all that paper would run you at least another grand?!

As you can see, a wedding is an expensive affair. But it’s worth it, isn’t it? Women start planning their dream weddings when they’re still little girls and it’s the most memorable day in their lives. Don’t pass up all the ribbons and lace and flowers and lights just because you a little short on cash. A wedding loan allows you to have the wedding of your dreams, one you can remember for the rest of your life.

Personal loan, debt consolidation, Wedding loans

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