CREDIT REPORT SCORE

Payday loans: what you need to know

2007-09-01T23:31:00.000-04:00

If your car is sitting in the driveway leaking vital fluids, you may not even have to leave home to get a payday loan as many purveyors of the service are now online.

How a payday loan works

Before you rush to do a search for “payday loan online” there are a few things you should know about how these types of loans work and what alternatives are available. A payday loan is a short term small-balance loan that is intended to tide you over till your next payday arrives. They can be conveniently obtained as payday loans do not require a credit check.

In exchange for these high risk loans, payday lenders charge a fixed fee for a fixed period, usually fourteen days and if you happen to miss the fourteen day deadline, there’s a penalty fee that is added to your charges along with another set of fees to roll over the loan through another period.

Rapid escalation

In short order, if you borrowed $500 for an emergency situation, you could end up owing as much as $700 if you miscalculated your cash flow and were forced to take a payday loan for a month. That equates to 480% or so per year and on the face of it, looks like a dreadfully large price to pay for a small amount of money. So payday loans are usually a good idea only when you have run out of options entirely.

What can go wrong?

You run the risk of miscalculating your budget and getting into a cycle of using one payday loan to pay the other. The Center for Responsible Lending, a Durham, North Carolina non-profit, reports that the vast majority of payday loan borrowers do five transactions a year, while more than half of all borrowers take twelve or more loans per year. If you get into a cycle of dependency on payday loans, it may be hard to wean yourself from the habit.

The alternatives

Realistically speaking, if you had good credit or a reasonably well-off family member, you would probably not be in the market for a payday loan. So your only reasonable alternative may be to minimize the damage. Searching for a payday loan online may be your best option for finding a reasonably low interest rate. But you must brace yourself for prompt repayment in order to avoid getting on the lender’s treadmill. Once you have lined up a reasonable rate and obtained your cash, you should start planning how to avoid becoming repeat business.

Breaking the cycle

A great place to start would be to learn how to make a simple personal budget so you can put aside small amounts of cash each payday for an emergency fund. If budgeting does not work for you, consider joining a credit union before your next crisis occurs. Credit unions now offer a nifty device called a Salary Advance Loan Program. State Employees Credit union in North Carolina has one of those. They will lend you up to $500.00 at 18% and with no fees attached and they allow borrowers to set up a loan by phone. They require that you have a direct deposit account with the credit union, into which your paycheck goes.

But what if you don’t work for the state of North Carolina? The National Credit Union Administration has a nifty web page where you can search for credit unions by type and state. This is pretty useful because some credit unions will allow you membership just because you live in a particular city or county

Otherwise

If you absolutely, positively cannot find a credit union near you that offers salary advance loan programs, try to minimize the damage by shopping around for the best possible rate, before you run into an emergency.

For more tips on credit matters visit www.my-credit-report-score.com

Debt Consolidation can it work for you?

2007-08-26T19:31:00.000-04:00

Ever get offers in the mail that promise to cut your debts dramatically and make you debt-free in only 48 months? I get them weekly and I am fascinated by the magnitude of the offers. Debt consolidation offers usually come in three different disguises all with variations on the theme. Let’s look at how you can use either of these three debt consolidation methods to your own advantage and let’s examine some of the shortcomings of each.

Credit card offers

You should know that credit card deals that offer balance transfers usually come with a few strings attached. Most cards require you to make all your transfers at the time you take up the offer. Another drawback is that most offers are made “up to” $5,000 or $10,000. You never know what you are getting until after the credit card company has run your credit, so don’t be surprised if you are unable to consolidate all your outstanding debt in one go. You must make sure to pay on time as credit card issuers will raise your rate on a zero percent card to the default rate if you miss a payment date.

High interest rate loans

Debt consolidation offers are often made by finance companies who offer the prospect of lowering your monthly payments. For some people, the thought of writing one check instead of keeping track of four or five separate debts is very attractive. It saves them the burden of remembering separate payment dates and amounts and they get to keep a little extra money in their pocket. The drawback, of course, is that finance companies and their like may charge you as much as 21% or higher to consolidate your credit card debt into one payment.

Debt consolidators...some do some don’t

Most debt make a living from charging you ten percent of the payments you are consolidating, while others collect a percentage from the credit card companies with whom the negotiate on your behalf. Debt consolidators however, don’t do an awful lot that you couldn’t do yourself.

Creditors tend to favor dealing with debt consolidation companies because of the promise of a steady stream of payments they offer. Unfortunately, that steady stream could become a late stream if you run into a debt consolidator with shady practices. If they happen to miss payments your credit report score could at risk if you are reported to the credit bureaus for a late payment.

Do it yourself with equity

You can become your own debt consolidation expert using one of two approaches. Let’s assume you own a home and have substantial equity in it. Negotiating a home equity loan to pay off your debts could be a wise move as you will likely get one at a much lower rate than the rate on the debts with which you are now struggling. You can then decide to pocket the savings but a better idea would be to keep your payment level same as when you were paying multiple debts and pay off the home equity loan faster.

Refinancing your home to pay off credit card debts is also an option but you must resist the temptation to start using your credit cards again.

Do it yourself without equity

If you do not own a home or if you have very little equity in your property, there are steps you can take to become your own personal debt consolidator. The first and simplest approach would be to get a personal loan from your credit union. Rates are likely to be much lower than the credit card rates you are currently paying and you will be able to tackle your debt without the use of collateral.

Pick up the phone and call your credit card companies and ask for a better interest rate. If you have a windfall around tax time you are the debt consolidation king! Call and negotiate a settlement yourself. And make sure you get these settlement offers in writing.

Another strategy is to pay the minimum payment on all your debts except one. Use the money you saved paying minimum payments to tackle your highest interest rate debt with the most money you can spare. Having seen off that debt, move to the next one with the same strategy, adding the payment you were making on debt number one to the minimum payment on debt number two. Rest assured, you will eventually dig your self out from under your debt mountain.

For more tips on credit matters visit www.my-credit-report-score.com

Your Credit Report Score and what to do about it.

2007-08-26T12:42:00.000-04:00

If you are concerned about your credit report score and wondering what to do about it, read the following tips on taking charge of your credit future and raising your credit report score.

Paying on time

Late payments on regular monthly bills will quickly reduce your credit report score and should be avoided at all costs. Bank loans and credit card debt are probably the easiest to miss paying as they are not as life-threatening as forgetting to pay the electricity or gas bill. If you are internet savvy, one of the best ways of avoiding late payments is setting up automatic payments through your financial institution’s website. Credit unions are perhaps the most amenable to this form of bill payment as some banks may charge for the service.

Closing Accounts

Credit scoring companies put a lot of weight on the length of your credit history. Closing newer credit accounts may well improve your score by reducing the amount of credit you have available and the chance that you may go out on a shopping spree. But closing your oldest accounts reduces your credit report score because it removes you longest history of payments from consideration when your score is compiled.

If you have moved recently, or are planning a relocation, make sure your utility or cell phone provider has a forwarding address. I closed an account in December with my natural gas provider, only to be surprised by a residual bill the following March.

Credit card imbalances

Let’s says you have three credit cards with limits of $10,000, $5,000 and $4,000 each and you are carrying balances on all of them or are about to make a large purchase using one of the cards. You would assume it may be best to use the card with the lowest interest rate and this may be the one with the $4,000 limit. But your credit report score could take a hit while you are trying to minimize interest charges. That’s because your score can be adversely affected by having a high debt to credit ratio on one of your credit cards. If your big purchase cannot be avoid, use the card with the higher available total credit to lower the impact on your credit report score.

Paying down your debt

If you are running on fumes from month to month, as I have done at some point in my life, you know it will take serious discipline to chip away at your debt. One of the most obvious ways to reduce your monthly outlay of cash and thus provide more funds for your debt-reduction plan is to avoid recurring expenses like the plague. And the ugliest of recurring expenses can be that old staple, the car loan. I have avoided paying a car note since 1982 by buying a succession of modest used cars that I have rigorously maintained. You could save yourself one or two hundred dollars each month by switching to a used car and purchasing an extended warranty.

Goosing your credit report score

What if you are fresh out of college or just stepped off a plane and have no credit? If you have made it though college while avoiding the credit card trap to which many college kids succumb, one of the easiest ways to jump start your credit report score is by applying for a secured credit card. You can do this by depositing some cash in a restricted account.

Most banks will issue you a credit card with a limit set by the amount of cash you have deposited. If you use the card regularly and pay on time, they may then lift the restriction on your deposit and change your account to a non-secured designation. After you have developed a feel for paying your credit card on time, it may be a good idea to call your credit card issuer and ask them to raise the limit.

Avoid card collecting sprees

I have seen many instances of consumers carrying credit cards from several well known department stores and electronics and computer manufacturers and retailers. You should avoid a proliferation of credit cards with small limits like the proverbial plague. And be very careful what you sign up for, whether on the internet or at in-store promotion booths.

Paying off old debt

I am reluctant to advise you to avoid paying off old debt as I am a stickler for living up to my personal obligations. This may become a matter of personal choice for you but you should know that paying an old debt that has languished on your credit report for years, revives the account as a current collection activity, a certain means of lowering your credit report score. Better to boost your score, sign your loan, then pay off the old debt.

All this sounds simple enough but can be difficult to put into practice. Remember that there is no quick fix for boosting your credit report score. It will take discipline and patience and will create some annoyances in your life, but in the long run it can save you bucketsful of cash.

For more tips on credit matters visit www.my-credit-report-score.com

How to shop online...safely

2007-08-19T22:45:00.000-04:00

Shopping online has become something we take for granted in the years since Amazon, Buy.com and Yahoo Shopping hung out their online shingles. I have found some great bargains online but like you, I sometimes wonder whether the site I am using is completely safe. Here are a few things I do to make my online shopping as safe as I possibly can.

Stick to the familiar

I tend to buy from a short list of sellers where I have found the shopping experience to be easy and the service prompt. My purchases include items from auction sites and I limit them to sellers who have 99% or above approval ratings. Any seller with a lower rating prompts me to look at the complaints from previous shoppers. If too many online buyers grouse about delivery times, return policies and charges to their credit cards, I usually move on to the next seller.

Sweat the details

You may also want to read the return policy of some shopping sites as you may end up paying a restocking fee if the order you placed was not what you intended. Make sure you understand the charges for shipping and handling just in case the total bill turns out to be less than the stellar bargain you envisaged.
You may want to pay attention to the site’s security measures. Look for a padlock display in your toolbar to tell whether the seller is using secure server technology to protect your credit card information before you enter it. It also helps if the seller displays endorsements from security rating providers at the bottom of the page. While security measures do not guarantee your private information won’t be hijacked in transmission, they do offer some measure of protection.

Privacy issues

Some web merchants will sell your information to affiliate companies so you may want to read their privacy policy before you hit the send button. Most reputable sellers tell you up front that they will not disclose your information to a third party. Others make you wade through their site to find their privacy policy. If you are uncomfortable with what you read, move on as there is all likelihood that the product you want can be had elsewhere.

Paying by credit card

Some protection is offered from deceptive sellers if you pay by credit card as you are usually only held liable for the first $50 of your purchase. Your credit card company will investigate any complaint you may have with respect to charges or deceptive representation of goods you bought. I prefer to use an online payment site as a proxy for my purchases from new sellers. I am fairly confident in the measure of protection they offer and I haven’t been disappointed yet.

Registering with a seller

Most online stores require you to register before you make a purchase. If you don’t want to be nagged by emailed offers later on, look for the opt-out box that most sellers provide. I have found it useful to use an email address that I call my junk box and that is usually loaded up with nonsense offers from sellers of all types.
Whether you are likely to return to the site or not, make sure you use a reasonably secure password made up of both numbers and letters. You never want to assume anything when shopping online. If you find yourself in a predicament call the Federal Trade Commission or visit their website and fill out a complaint form. As in the brick and mortar world, it pays the buyer to beware.

For more tips on credit matters visit www.my-credit-report-score.com

Credit card deals: how to choose the best

2007-08-17T15:23:00.000-04:00

Every body is jumping on the credit card bandwagon these days and that’s good news for consumers. With a little effort you can find yourself a pretty decent credit card deal whether its from your bank, credit union, department store or shopping club. Depending on what your needs are. There are deals out there that offer combinations of low introductory credit card rates, cash back offers, reward programs and other features.

Balance Transfers

First you must wade through the maze of offers to determine what’s right for you. If transferring a balance is important to you, have a close look at cards that offer a low transfer rate with the longest time span for which that rate lasts. But before you chose, read the offer carefully to determine how much that rate will increase once the offer period ends.

Some credit card offers will allow you to make more than one balance transfer although others will restrict the allowable transfer window. Try to decide on all your transfers at once as restrictions could limit you to the initial sign-up period only. And you will want to compare fees charged for balance transfers. The usual rate is three percent of the total amounts being transferred although some companies may offer free transfers or a fixed fee. And if you are using an existing card to transfer a balance, know that your monthly payment may be applied to the original balance you had on the card until that’s paid off, before being applied to the items you transferred at the supposed balance transfer rate.

Annual percentage rates

Introductory rates can run from six months to a year and most cards will then go to a rate that is a few points below what you may be paying now. Again, restrictions apply. Read the fine print on the back of the credit card offer to see what your rate may be should you fail to make a payment on time. You may be surprised to find this could zoom to 25% should you miss a due date or two. Introductory APR’s are not always what they may seem.

Rewards programs

Oil companies tend to favor rewards programs that may include a rebate on your gasoline purchases of one to five percent. These cards are handy if you are already loyal to one particular brand of gas and don’t have to drive out of your way to make a purchase. Oil companies may offer you a debit card, a check in the mail or a set of gifts you can “purchase” with your reward points. Since gas cards are a regular-use item they can be handy for building a track record on your credit report. Most oil companies report to the credit bureaus but you may want to make a call to their customer service line to double-check this.

Store cards

In-store shopping with a branded credit card from a major retailer or shopping club usually comes with an up-front discount on the day you sign up. The drawback is you must make a quick decision while you are in the store, never a good idea at the best of times. I would suggest you check out store and shopping club deals on their web sites prior to going shopping.

As always, buyer beware is the safest method of approaching credit card offers. Start by doing your research online at web sites that feature comparison guides to credit card offers. Some regional financial institutions and small credit unions may be the best way to go, while online banks could make you a sharp offer. College students in particular should be careful of what offers they jump at as their mailboxes are always full of these. Careful decision making is the best way to go.

For more tips on credit matters visit www.my-credit-report-score.com

The basic principles of budgeting.

2007-08-15T05:44:00.000-04:00

The love of money is the root of all evil but money is the most essential commodity in today’s environment. It determines how well we function in obtaining the basic human needs of food, shelter and clothing as well as achieving the greater needs of self-improvement such as education, our overall well-being and the finer things of life.

So why is it that most of us never have enough money to even provide the basic needs? How can we navigate through the forest of commercialization, unharmed and financially sound, with our credit report score intact, and have money in the bank to provide for a rainy day? Wouldn’t it be fantastic if we all had the ability to pay our bills and have money left over for the finer things in life? The answer lies in two basic principles: self discipline and creating a budget and sticking to it.

What is self-discipline?
It is the act of consistently doing the things that will create a desired outcome until it becomes the normal behavior pattern.

What is a budget?
A budget is a list of all anticipated income minus all anticipated expenditures. The desired result is to have the net effect being zero or greater than zero. For every purchase you make, ask these: do I need or want this item?; can I afford this item?; did I budget for this item?

Unless it is an absolute emergency, you should avoid confusing wants and needs, especially if your intended purchase was never budgeted for. If these three questions become a part of your everyday purchase decision, then you will be well on your way to achieving financial discipline.

Setting up the budget
There are several factors that must be considered in creating a budget; they are:

1) A budget must be reasonable and reflect a true picture of your anticipated net income.
2) It must be achievable and reflect a true picture of your most important fixed and variable expenses. Important fixed expenses are those payments that remain the same, month after month.
3) The difference between your anticipated income and anticipated expenses should always be zero or greater than zero.
4) Check up on your expenditure patterns by saving all receipts and bills for the next two These receipts can then be categorized into various types of expenditures and inserted into a sample budget to get a picture of your past expenditure habits and the impact on your zero budgeting approach.
5) The principle of paying yourself first is vital. This will ensure that you have started to develop equity in yourself. Do not compromise on this issue as it’s your ticket to financial independence.
6) If item 5 causes your net income /expense to fall into a negative state then you must seek additional income (part time job /overtime if available)
7) It is always better to understate your anticipated income and overstate your anticipated expenses.
8) Any surplus funds from the difference between your anticipated income and anticipated expenses should always be used to pay down high interest rate credit cards or loans first before you add it to your savings.

9) If you use your credit card to pay any item that is included in the budget, that item should be removed from the budget for that month to avoid double counting as the cost would end up appearing in the monthly minimum payment for the credit card.

How do I manage large unexpected important expenses?
The most important thing to remember is that large, unexpected expenses should never interfere with your current budget. Use your credit card or seek a short-term loan to cover the expense and then set up the minimum payment or adjust your monthly credit card payment on your next month’s budget, but be prepared to limit your credit card use only for emergencies or very important expenses that would otherwise limit your ability to function productively if those expenses were not paid.

A living, breathing budget
Finally, always remember that a budget is an interactive document that you should look at daily or at the very least weekly; you must update your expenditures regularly in order to be able to determine if you are on track with your budget or if you need to take corrective action. To achieve an effective budget you must practice financial discipline. The consequences of financial indiscipline can eventually lead to helplessness and poverty. Remember the three question rule: do I need or want this item?; can I afford this item?; did I budget for this item? These questions combined with creating a written, workable and achievable budget is the easiest way to effectively manage your money.

How to get a personal loan

2007-08-12T16:50:00.000-04:00

Life provides small emergencies that can strike at any time and when they find you without a ready supply of cash, these small emergencies can loom large. Say your transmission went out on your car or the dishwasher has suddenly gone silent while your credit cards are maxed out. What do you do? You may be in the market for a personal loan.

Credit cards as short term loans are risky business for consumers as we tend to make the minimum payment, locking ourselves in for an extended period of time and extended interest payments. On the other hand, personal loans have fixed pay-off periods and (usually) lower interest rates.

Going shopping for a loan

Your first step is to decide how much you really need and you will want to pare this down to the absolute minimum as this type of loan should be treated as an emergency situation only. Then start your search for a loan with a suitably low interest rate or upfront fees. There are several online services that allow you to compare rates for personal loans and may even offer instant approval.

Micro loans

I tend to favor credit unions as almost all of them offer short term loans without the security requirement and many will offer loans as small as $500. The non-profit nature of credit unions will likely allow them to offer friendlier terms as well. If it’s close to tax time, some lenders will look favorably at your likely tax refund based on two years’ history. And, of course, make sure you have two recent pay stubs handy.

If your credit report is in such bad shape that a credit union won’t touch your application, you may be left with no choice but to approach a payday lender. If that’s the case, read the terms and conditions very carefully to make sure you understand every charge on your loan documentation.

What does this cost?

Your loan shopping should entail more than comparing interest rates to determine if you are getting a good deal. Lending institutions typically charge fees for loan origination, document prep and the loan insurance. Make sure you understand the nature of these fees and are in agreement with them.

Be prepared to walk away if you don’t like the terms you are being offered. And make sure your questions are being answered up front prior to allowing several lenders to pull your credit report as this can have an immediate negative effect on your credit report score, and consequently, the rate you end up paying.

Paycheck advances

In the good old days you could ask for, and be fairly sure to get, a salary advance. Many small companies still continue this practice. Ask your payroll or H.R. department about salary advances as they may be still a part of many companies’ employment policies

Family loans

Most people would say these are to be avoided like the plague as they could put a strain on family relations for years to come. You may want to approach rich aunt Alice as a last resort and if you do, treat it like a visit to a lending institution. Draw up a simple promissory note that lays out the amount you are borrowing, the interest you will pay and the time period of the loan.

Even if you don’t have an emergency, now may be the time to look at your options, particularly if you have limited savings to drawn down in the event of a disaster. You never know what will come up and you can’t be too prepared.

For more tips on credit matters visit www.my-credit-report-score.com

How to handle debt collection calls

2007-08-07T02:32:00.000-04:00

At some point in our lives unplanned for events befall the best of us and some can have far-reaching consequences. Take the loss of a job for instance. That’s a near certainty to occur to us a least once in our working lives and one of the consequences is likely to be falling behind on our bills. Unless you happen to leave your job with a generous severance package and have large pools of savings to draw on, chances are there are going to be some late payments ahead for you. Rather than cringe in fear waiting for the collection calls to come, you may as well buckle up and make a pre-emptive strike.

Making the call

Assuming you have the means to make some kind of payment, round up all your statements, list the balances and minimum payments along with the phone numbers and prepare to start calling. Bear in mind that you are going begging essentially and assume the humble position. If the account rep can’t suspend your payments, ask in the nicest fashion if they think a supervisor would be willing to bend the rules. That’s music to your account rep’s ear as they often are not paid well enough to go out on a limb and will be more than willing to pass you on to someone higher up.

Talk to the right person

Should you be unfortunate enough to get the village crank on the other end of the line, wait a couple of hours or until a shift change is likely after 5pm and call again. The next account rep you get may treat you completely differently. Sate your case plainly, emphasizing that you are willing to pay but you are between jobs. And ask for the moon. Some auto credit companies may have programs that suspend your payments for as much as three months while most will do at least two. Cell phone and credit card companies may agree to a two month grace period, but you will never find out until you pick up the phone.

Settling your debts

Rebuilding your credit report score should become a top priority once your cash flow position improves. Start by getting a copy of your credit report to see who has reported your missed payments and get a total of what you owe. You are now going to make a different type of call entirely; once again, politeness is the key. You can choose to pay in full or you can ask for a settlement but not one so outrageously low that you start off on a bad note with the account rep on the other end of the line.

You may even go so far as to ask that the settlement be split into three or four equal payments. If your debt is a year or older, many companies will agree to a sharp bargain rather than sell the debt for 10 cents on the dollar to a collection agency.

Get it in writing

And should you be skillful enough to reach an agreement with which you can live, ask for the settlement agreement in writing. Once you have secured the promise of a settlement letter, humbly ask if you will be able to get a paid letter at the end of the exercise and if they will be reporting to the credit bureaus after you have paid. If they tell you they do no issue paid letters, politely ask to be excused and call the next creditor in line.

Repeat the call

Repeat the process until you have your offers in hand and you paid letters secured in a safe place. Then check your credit report a month or two after you have paid the debt to ensure they have updated your record. If nothing has happened, your paid letters will be proof to the credit reporting bureaus that you have paid or settled your debt and they are required by federal law to upgrade their records.

For more tips on credit matters visit www.my-credit-report-score.com

How to buy a car

2007-08-06T23:35:00.000-04:00

One of the easiest ways of throwing away your hard earned money, next to taking a trip to Las Vegas, is buying a car. The auto retail industry is one of the greatest money traps ever devised and the average consumer has little hope of beating the odds when purchasing a car, whether new or used. Here are some tips on how to avoid losing your shirt at the dealers table next time around.

Doing your research

Never walk into a dealership before researching your intended purchase by talking to friends, your neighborhood mechanic or trolling the internet. There are many internet sites that offer free information on prices for the basic car, and in particular, option packages. Markups on some of these packages can run as high as 100%. Having narrowed your choices to a few models you may want to start thinking about the long term effects of what you are buying.

Start by gathering information on reliability issues and repair costs. This can save you some grief later if anything breaks just outside of the warranty period. You may want to think about buying an extended warranty while you are doing your research and now is the time to start adding that figure to your total purchase price. If you intend to keep the vehicle for the life of your loan and beyond, an extended warranty could save you gobs of cash should your transmission or engine give out. Many vehicles come from the factory with expensive navigation and audio systems installed so make sure your intended warranty covers those as well. And never, ever purchase an extended warranty from the dealership as the price will include their markup too.

Gap insurance

Here’s where you can avoid a nasty surprise. Let’s say you bought a car for $20,000 and after two years you are broadsided at an intersection by the town drunk. You would expect to call your insurance company who would cut you a check for the value of the car so you could pay off your note and go buy another car. But you may be surprised.

After two years, you may owe $15,000 say on your car loan. But as car values often plummet 25% in their first year, by year two your vehicle may be worth only $12,000. Guess how much money you will recover from your insurance company? You will find yourself on the horns of a dilemma as you are $3,000 short of paying off your loan. Of course, this is a rough example and gaps may vary. Gap insurance covers the difference between the insurance valuation and the remainder of your loan. And, as before, don’t buy this at the dealership either.

The fine print

Having done your research and walked the gauntlet at the dealership, you will be invited into the inner sanctum of the finance office. This is where the dealership often recoups what they lost on the sales floor in order to make the deal. And this is where the numbers often do not add up. The finance office makes its money by selling you extras that don’t come from the factory, such as the aforementioned extended warranty and gap insurance deals. The markups can often be more than they made selling you car itself. Then there’s the paperwork.

Quite often you have been left in a weakened state sitting in the sales office for three or more hours. I have a friend who spent 7 hours in a dealership buying her dream car and was very groggy by the time she got to the finance office. She did, however notice that the finance manager was offering her a 10% car note despite the fact that her credit score hovered around 750. This is the point at which your laptop or financial calculator becomes your friend.

Add the numbers

Make sure you inspect, then add the numbers on the contract and ensure they add up correctly. You would be surprised! Your next step is to run the numbers through a financial calculator or downloaded program that will tell you whether the cost of the vehicle plus junk fees at the quoted A.P.R ends up at the monthly payment you expected to find. A ten dollar difference over the life of a 73 month loan means a whopping profit for the finance office, on top of the markup they made on the car, the dealer junk fees and the check the manufacturer mails them as part of their incentive program. But you knew about those checks didn’t you?

If you suspect the numbers are not adding up you may want to consider walking away. Remember, no matter how much you love the car, there’s another one very much like it on the way from the factory to the dealer down the street. Now is a good time to visit your bank or credit union with the negotiated price of the vehicle in hand. I prefer credit unions whose rates are often the lowest available. Arrange your financing there and return to the dealership with your check in hand. You may find that you have saved yourself several hundred, and sometimes, several thousand dollars over the life of the loan.

For more tips on credit matters visit www.my-credit-report-score.com

College students and credit

2007-08-05T05:00:00.000-04:00

If you have a son or daughter on their way to college or currently enrolled, now is the time to start thinking about how they will handle issues related to credit. A good credit standing can have a positive impact on their job search when their college years are over. Unfortunately, most students don’t realize how crucial this can be and oftentimes they cruise their way into a bad credit spiral.

Most major companies run credit checks on potential job candidates as a matter of course these days, so it is important that your offspring pay careful attention to their credit report if they hope to land that all-important first job.

Credit Union sign-up

I would recommend you enroll your son or daughter in a credit union as early in the game as possible. Most credit unions allow membership to families of credit union members while a few actually take “walk-ins.” If you have a family member who works for federal, local or state government, or who is a teacher, it is likely he or she belongs to a credit union and can sign you up for membership.

Credit Unions are great places to start a savings account. They also tend to offer free checking accounts and fairly gentle terms for car loans. Credit Union auto loans are often three to five percent below bank auto loans and are usually available after 6 months of membership. Rather than buy a car under your own name for a student going off to college, apply for an auto that you co-sign at the Credit Union. Even if you are the only one making the loan payments, at the end of four years of college, your child will have developed a track record that will show up as more than a blip on their credit report score.

Secured Credit Cards

Your offspring may choose to establish credit with a secured credit card or risk the commercial credit card offers that flood students’ mailboxes. Witxh secured cards, after three to six months their financial institution will convert the secured credit card to a regular card provided the payments have been made on time. Most credit card offers trumpet zero percent offers for six to twelve months. Even experienced adults have a hard time looking past the zero in bold type and reading the print on the back of the offer. And astoundingly, some of these back pages are printed in lighter colored ink! Quite often, the zero percent rate will jump to 5 or 10 percentage points above the prime rate if you miss a payment, and may thereafter rocket to 25 percent and beyond.

Incentive Program

If your college student has lost a job and is temporarily unable to pay their credit card bill, be prepared to step in and help out. And in order to ensure that you do not topple under the weight of their monthly payment, set up an incentive program before they go off to college. Draw up an agreement with your student that says you will pay $100 per month for two years on their credit card bill if they can prove they did not miss a payment through college. If they missed a payment, drop your offer to $50.00 per month, and if they missed two, your offer goes down to $50.00 per month for one year. Withdraw your offer if they have obviously made a hash of it throughout their college life.

Of course, it’s never to early to teach your children about the vagaries of credit and it’s best they learn at home, under supervision.

For more tips on credit matters visit www.my-credit-report-score.com

What’s in your Credit Report?

2007-08-05T02:16:00.000-04:00

If you have less than perfect credit and are thinking that you may not qualify for a mortgage, car loan or credit card, think again. Rather than listen to what friends and family may be telling you, find out for yourself what your true circumstances are. Start by getting a copy of your credit report from Equifax, Experian, or Trans Union, the major credit bureaus.

You may be thinking “What’s in my credit report and how does my credit report affect me?” The answer to both is “a lot.” Your credit report is a compilation of records of all the credit items you have had and a history of your record of payments.
Detailed Records

Your credit report starts with a record of your social security number, current address and telephone numbers and may contain your spouse’s name and social security number and your date of birth. Any public records linked to your name will be displayed on your credit report, including bankruptcies, judgments against you and the like. Next up are detailed records of your credit cards, mortgages, student loans, car loans and most other credit items. Utility companies, rental properties and many other types of creditors may report to the credit bureaus as well.

Most entries on your credit report will show the date the credit item was opened, the credit limit of the account, the highest balance you have used and the monthly payment due. A date next to each item shows the last date you paid and another entry shows whether the account was paid, charged off or still active.

Signs of trouble brewing

Your credit report is your financial scorecard and can make all the difference in your being turned down for a loan, credit card, insurance or employment. Late or unpaid items on your credit report indicate to a potential lender that you may represent a risk at some future date, as indicated by your past behavior.

Paying a higher interest rate on a car loan is a painful reminder that you may have been a little careless in the past. But higher interest rates are only a part of what you may pay. Your insurance application could be turned down and so could your job application as many employers now treat poor credit as a predictor of job performance. Rental and utility companies frequently run credit checks before allowing you service and a spotty credit record may mean hefty deposits on your part.

Errors on your report

It is possible that your credit report contains erroneous information meant for someone with a closely related social security number, a similar name or a nearby address. Even errors in addresses could cause good credit information to be left off your report, and that can have as much effect on your credit score as bad news. Should you find any errors on your credit report, send a formal request to the credit bureaus and have the incorrect information removed.

You are allowed by law to request a detailed statement substantiating your debt from any company that posts information to your credit report. The Fair Debt Credit Reporting Act requires creditors to give you a response within 30 days of your request, otherwise they must remove the item from your credit report.

Start now by calling the three main credit-reporting agencies: Trans Union (800-916-8800), Equifax (800-685-1111) and Experian (800-682-7654) to get a copy of your credit report.

For more tips on credit matters visit www.my-credit-report-score.com