|
People sometimes use the terms “credit
card” and “charge card” interchangeably. However, they are
different animals, and their differences should be clearly understood
by any business owner searching for new credit.
More....
Tips For
Restoring Your Credit In The Aftermath Of Foreclosure
Copyright (c) 2009 Fred Vanhoosen
With foreclosures hitting record levels, many people are having to sit
down today and wonder how they should go about restoring their credit
in the aftermath of a foreclosure.
I am not going to lie to you. It will not be easy, and it will
take some time to work out, but it can be done.
Most people simply file bankruptcy and wait ten years for that
foreclosure and bankruptcy to drop from their record. At this point in
this article, it is very important to note that you just cannot wait
for the for foreclosure and bankruptcy to drop off your credit report.
The law says that after ten years, the credit bureau must drop those
records from your credit report, but they will not do so unless
requested to do so by the consumer. So when your time comes, be sure
to get in touch with the credit bureaus and request for them to drop
the records that will hamper your credit status.
Secured Credit Cards
One of the easiest methods available to help people rebuild their
credit starts with a savings account. With as little as $300 in hand,
one can go to companies such as the Bank Of America to request a
savings-backed credit card.
The Bank Of America Secured Visa Credit Card required a minimum
deposit of $300 and a maximum deposit of $10,000, and it requires a
$29 annual fee.
In essence, you will deposit money into a Bank Of America
security deposit account, and BofA will make available to you a credit
card that has a maximum limit equal to the amount of money you have in
your BofA security deposit account.
You can use your BofA Secured Visa Credit Card as you use any credit
card, to make purchases at stores or to get a cash advance from an ATM
machine.
Keep in mind that Bank Of America will not draw money from your
security deposit account to make your monthly payments. You will still
be required to make the minimum monthly payment each month that you
have a balance, and your security deposit account only exists to
ensure that BofA will be paid in the event that you default on your
secured credit card.
Although you are only required to make the minimum payment each month
on your secured credit card, BofA recommends that in order to rebuild
your credit more quickly, you should pay your payment in full each
month.
The Bank Of America Secured Visa Credit Card is one of the most
recommended secure credit cards available in the marketplace, although
it is not the only one.
Another popular secured credit card is the one issued by the New
Millennium Bank, which you can learn about here:
http://www.creditcardnewsroom.com/brand/
new-millennium-bank/secured/black-diamon\
d.html
Secured Bank Loans
Back in the 1980's, I had built my credit using a process that was
recommended in a book.
I started with a cash deposit of $1000 at a local bank. I then
acquired a loan from that bank, secured by the savings account that I
had opened there.
I took that money borrowed from the first bank, and deposited it in a
second bank. From that second bank, I obtained a second loan secured
by my second savings account.
With the money acquired from that second loan, I set up a savings
account at a third bank, and then I left that money alone.
You can trail this process out as far as you want, but I only did it
with two loans myself.
Each month, I paid my loan payment when it became due. If I was short
cash that month to pay both of my bank loans, I would take money from
the third savings account to make that payment. Otherwise, I would
just pay the loan payments out of pocket.
For what amounted to be a few dollars interest, I managed to pay off
two $1000 loans in one-year, at two different banks. At the end of the
cycle, I repeated the cycle, letting my first bank keep the cash on
hand, and the third bank to become a new lender.
Of course, I had managed to save some money over that first year, so
when I repeated the process in the second year, I did it with $2000
instead of the original $1000.
By the end of the second year, three banks were offering me loans and
many credit card companies were also looking to loan me money.
Bank Loan Advice
The trick to borrowing from a bank is to pay off your loans over the
stated term of the loan. If you take a one-year loan and pay it off in
a couple of months, then you will have gained no positive favor on
your credit report. The reason why paying early does not always
benefit the borrower, is because the bank was not able to see that
loan payments can be paid "on time".
Whatever loans you may take from a lender, you should always maintain
payments for a minimum of six months, before paying off that loan. To
do otherwise will not yield a positive mark on your credit report.
So long as you keep your loan running for a minimum of six months,
there is no problem in paying off your loan early. Some people get
ahead on their credit reports by paying double payments each month.
As recommended by some economic guru's, you may also consider making
thirteen payments a year, instead of the standard twelve payments per
year. If you think about that, all you need to do is to make one
payment every four weeks, as opposed to making one payment each
calendar month. This works really well towards paying down your
principle on a home mortgage or car loan.
Another recommendation that many guru's suggest is to make
semi-monthly payments - payments every two weeks. This is beneficial
in that it reduces the overall interest you will have to pay over the
life of the loan, since interest is always calculated against the
amount of principle due on payment dates.
Small Loan Companies
In the small consumer loan market, there are a lot of loan
choices available to the consumer.
Of course, there are the loan companies who specialize in loans that
can be used to purchase furniture or consumer electronics.
There are also loan companies that specialize in loans of up to $500.
With these types of loan companies, the same rules apply as
recommended above. Also with these loan companies, if you ask them to
do so, they will report your positive payment history to the credit
bureaus.
There are also the loan companies that specialize in what is called
payday loans or cash advance loans. With these companies, you are in
effect getting a loan that will come due on your next payday, hence
the description - payday loans.
Payday loan companies should not be employed to build credit, as it is
the most expensive type loan you can acquire. You can use it when you
are meeting a cash shortage to help you get over that next hump, but
you should only borrow from the cash advance company when you know for
certain that you will be able to pay the loan back on your next
paycheck.
Rebuilding Your Credit
Rebuilding your credit requires determination, dedication and
discipline. You have to start small and work your way up the credit
ladder.
I know that what I am getting ready to tell you is going to be hard to
believe, but my hand on my heart honest, it is God's honest truth.
A couple decades back, I knew a kid - I say kid, but he was in his
twenties - who worked for minimum wage as a dishwasher in a
restaurant.
This lowly dishwasher had better credit than I did; he even had better
credit than the guy who managed the restaurant - I was friends
with the restaurant's manager. This is true... I swear.
This young man lived within his means and paid all of his bills on
time, and in full, every month.
Soon, he started receiving credit card offers, which he accepted. With
his credit cards, he played by the same rules. He lived within his
means, and paid all of his bills in full and on time every month.
After about five years, he bought a motorcycle to help him meet his
transportation needs. Of course, he made those payments on time and in
full every month.
Soon, he was able to finance the purchase of a home. And as you would
imagine, he always made his house payment on time and in full every
month.
When I last chatted with him, he was still working as a
dishwasher for a bit more than minimum wage. He owned his own
transportation and his own one-bedroom house, and he had credit cards
in his pocket that he could tap any time he wanted to do so that in
total offered him a credit line of - get this - $120,000!
This lowly minimum wage employee had a credit line large enough to buy
the best stuff money could buy, but he maintained the lifestyle that
he was accustomed to living - living within his means and never
spending more money that he could afford to pay back.
Now, that is discipline. He has the credit available to run out and
buy a nice big screen television, yet he would not do so, because he
knew his finances would not let him pay that money back quickly.
I learned a lot about credit in having known that young man. I hope
that you have also learned something by knowing his story.
---------------------------------------------------------------------
Fred Vanhoosen writes about the payday loan / cash advance industry
for http://www.fastcash4all.net/
To learn more about these loan products, we recommend reading the
following:
http://www.fastcash4all.net/payday-loan-overview.php
http://www.fastcash4all.net/advantages-payday-loans.php
|
|
Credit Card Myths
1. Myth: If you pay more than you owe, you improve your credit score. Not
true.
2. Myth: You need to carry 4 different major credit cards to make sure you
can use at least one of them. Not true. Two major cards should be
enough.
3. Myth: Good debit card management helps your credit score. Not so.
Although it is a good idea to handle you debit card responsibly, it
does not affect your credit score.
4. Myth: If you send credit card offers back to the company with "take
me off your list" written on them, you will not receive any more
unwanted mail. This does not work. You need to sign up for a credit
card opt-out service. Call 1-888-5-OPT-OUT or go to OptOutPrescreen.com
5. Myth: Merchants may ask for additional ID information to process a
charge. Not true. The agreements specifically forbid that practice.
6. Myth: American Express does not issue regular credit cards that allow you
to carry your balance plus interest. American Express now offers those
cards.
7. Myth: If you pay off your credit card in full each month you do not have
to worry about your credit score. Actually, if you use up too much of
your available credit you could be penalized. For example, if you have
a credit limit of $5,000 on a card and you have a balance of $4,000
you credit score could suffer. If you get your limits raised then you
relieve the pressure. Using another credit card to spread the balance
also can help.
8. Myth: Credit card companies cannot change your rates. Yes they can and
with only 15 days notice.
|
Click
HERE to Read the Credit Secrets BibleMint Condition
|
How do I get a
free credit report?
The three nationwide consumer reporting companies have set up a central website, a toll-free telephone number, and a mailing address through which you can order your free annual report.
To order, visit http://annualcreditreport.com
, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. The form is on the back of this brochure; or you can print it from ftc.gov/credit. Do not contact the three nationwide consumer reporting companies individually. They are providing free annual credit reports only through annualcreditreport.com, 1-877-322-8228, and Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
You may order your reports from each of the three nationwide consumer reporting companies at the same time, or you can order your report from each of the companies one at a time. The law allows you to order one free copy of your report from each of the nationwide consumer reporting companies every 12 months.
Source: Federal
Trade Commission
How do I figure out how to pay my
credit card off in 12 months?
I found an easy to use a calculator at this link:
http://www.java-scripts.net/javascripts/Credit-Card-Payoff-Calculator.phtml
I did a calculation for $1,000 with 18% interest for you and obtained this answer:
It will cost $91.68 a month to pay off this card and will cost you a total of $1100.16.
This gives you a rough idea of how much it would cost each month if
you just multiply the $91.68 times the amount of your balance (cut off
the zeroes)
|
My mortgage refinance
journey
Last Thursday, December 18th, 2008,
I brought some of my personal financial information to my local bank.
My mortgage gal from the bank told me she could "lock in"
5.375% interest for a new mortgage.
I was told that at a minimum I would get
the 5.375% rate with not points applied OR I would get 4.875% with
one mortgage point.
A "mortgage point" is a payment made to the mortgagor to
obtain a lower rate on issuance of the loan. So, for a $300,000
loan, for example, with a 30 year payout, a point would cost me $3,000 in addition
to the normal closing costs.
She told me she would "try her
best" to get me a lower rate since the feds recently reduced the
overall credit rate.
Her bank associate told me she had locked
in a mortgage for 4.5% that day. This made my mouth water for the
possibility of a lower rate for me. I did not ask if there were any
mortgage points included in that lock in. At 5.375% there were no
points.
I also obtained a quote from my friend
and State Farm insurance agent for 5.1% with no points on December
19th, 2008.
What does it mean to "lock in"
a mortgage loan?
Here is some info
about lock ins.
Update 12.31.08
I received the papers for the lock-in a few days ago. My banker
locked us in at 4.875% on 12/12/08 for a 30 year standard mortgage.
This translates to 5.018% Annual Percentage Rate (APR).
I've watched the rates since I received
these papers. At this time, the rate offered is still very good
(cannot find a lower rate somewhere else). I did discuss my situation
with two other major banks.
The total estimated closing costs are
$5,415.00 as shown in my Good Faith Estimate.
Some of the fees to process this loan
are:
Appraisal fee: $400
Credit Report: $16
Processing fee: $300
Underwriting review fee: $150
Administration fee: $250
Document Preparation fee: $55
Title charges: $1115
Total estimated closing costs: $5,415
After much haggling and searching I nailed down a mortgage at 4.25%.
My credit rating may have had something to do with the final result.
Click
here to read my blog about the final result!
|
|
|
