Personal Finance guide

These days most of us avail loans to buy a land, set up a business, or buy a car. Many students take loans to pursue their education. How soon the loan is sanctioned, the rate of interest, and the amount sanctioned will all depend on your credit score which is based mainly on your credit report. People with scores of 700 and more than are the beneficiaries of lower interest rates and avail quick sanctions.

Imagine if your score is greater than 700 and another person has a score of 698 then the person with score 698 will have to pay interest that is higher by one-half percentage point. And, this means over a year a person with a lower score will pay USD 19,000 and more as interest on a loan of say USD 165,000.A credit score takes into consideration: payment history, current earnings, current debt, length of credit history, types of credit utilized, and your new credit. If two or more members of your family are earning then apply for a loan jointly.

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These days most of us avail loans to buy a land, set up a business, or buy a car. Many students take loans to pursue their education. How soon the loan is sanctioned, the rate of interest, and the amount sanctioned will all depend on your credit score which is based mainly on your credit report. People with scores of 700 and more than are the beneficiaries of lower interest rates and avail quick sanctions. Imagine if your score is greater than 700 and another person has a score of 698 then the person with score 698 will have to pay interest that is higher by one-half percentage point. And, this means over a year a person with a lower score will pay USD 19,000 and more as interest on a loan of say USD 165,000.A credit score takes into consideration: payment history, current earnings, current debt, length of credit history, types of credit utilized, and your new credit. If two or more members of your family are earning then apply for a loan jointly. You can take a few easy steps and ensure that your credit score is higher than 700.Sustain a long healthy credit history. Keep alive your oldest credit card and be sure to pay all bills in time. Never keep bills pending over a 30 day period. If you are in a financially tighten position at least pay the minimum debts. Do not use too many credit cards. Learn to say “NO,” to offers of free credit cards. And, manage a good credit limit. Avoid using all the available credit on the cards. Make sure that the credit report you have is accurate and that there are no clerical errors or otherwise. Plan your finance such that it is healthy. Consider debt consolidation. Never suddenly close or open accounts. This leads to doubt that you are trying to falsify your credit report. If you are having problems speak to your creditors well in advance and work out a stage wise repayment. Request the creditor to refrain from reporting the late payment. Late or delayed payments drive your score down so always pay bills dead on time. Keep a tab on due dates and ensure that all bills are paid. Learn all about credit reports and scores and keep the criteria in mind while managing your finances. Maintain the debt-to-credit limit ratio and, as per need you can take the help of a finance planner. Even if advised refrain from filing for bankruptcy. All you need to do is to lessen you expenses, plan income-expenditure , and avoid spending what you have not earned.

Most of the people acquire loans to fulfill their needs. There are many people who take multiple loans and at time of repaying back they forget or skip the installments. Due to these habits, people spoil their credit status and get themselves tagged with numerous names like CCJs, IVAs, late loan payers, arrears, defaults etc. So, it is necessarily for bad creditors to rebuild their credit score. There are numerous ways to bring the credit score on track. The bad credit credit cards for instance, are available in the market that fulfill the need of people with not so good credit score and by repaying it back on time they can rebuild their credit rating. Basically, credit cards are categorized into two forms namely secured and unsecured credit cards. Out of these, you can select the best card to meet your needs.

Before choosing the best card for you, you must be aware about the features like the rate of interest, annual fee etc. Every credit card and its limits are different from another card. Some cards require money in your account, before using it. These kinds of cards are called secured cards. On the other side, unsecured cards are totally different from secured cards. There is no requirement to put money in an account before swiping the card. Out of these two, you can choose the card according to your needs to improve your credit rating.

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Do you need to find a lender who will finance your automobile purchase, but have a less-than-perfect credit score? You are not alone. There are a growing number of people who find that a lot of banks will not lend money to them because they have subprime credit scores (usually a score of 620 or less). But never fear – there are plenty of lenders who are willing to give you the second chance that you need that can quickly put you behind the wheel of your new car!

There is a multitude of creditors who actually specialize in subprime lending – and they are eager to loan money to individuals who have bad credit. Of course, there are penalties for being a subprime applicant – including higher interest rates than buyers with flawless credit scores. However, securing your automobile loan is a great first step in repairing lower credit scores, which makes the higher interest rate more appealing than a future of bad credit.

Know Your Credit Score Before You Apply

Before you approach a potential lender, know that facts on where you stand. Check your credit report for accuracy. Any discrepancies in items reported should be addressed with the credit bureau that is holding the report. By contacting the credit bureau in writing, you can make a formal denial of any unfamiliar or incorrect items that you find. Get your report and score. For a small fee, most credit reporting agencies will not let you know your score. This gives you a better feel of where you actually stand when it comes to financing your automobile.

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Excellent credit begins with how well a consumer handles all financial aspects of life. Responsibly managing a mortgage, credit cards, auto and personal loans and even their cell phone service will add depth to an individual’s credit history and increase their credit score. Credit scores influence whether a loan or line of credit is approved, the higher the score the better the chance of securing a mortgage, loan or credit card.

One common misunderstanding of establishing excellent credit is that zero balances on your credit accounts will earn an excellent credit score. Lenders want to know that you can actually manage your account and, as grand a gesture is of paying off the balance every month, it doesn’t convey the ability to handle debt in the midst of financial uncertainty. So, even if you have the financial stability to pay off the balance, allow one or two accounts to carry a small balance each month.

Good credit comes from handling a variety of loans and credit accounts, not only how you manage revolving credit card debt. It’s also affected by how you handle fixed payments, like your car and mortgage payments. But when it comes to credit cards, there are several points that need to be addressed to help secure a healthy score and credit history:

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With tighter budgets and heavier financial burdens, especially around the holidays, credit card companies have come up with an offer that they say will lighten the burden. They’re often called ‘payment holidays’ and have a high acceptance rate by consumers. But, ‘buyers beware!’ (Keep in mind that credit card companies are in the business of making money and not saving you money.) Be suspicious of any offer that sounds too good to be true.

The typical holiday payment offer includes a message of sympathy for the financial burdens of the season and a ‘kind’ gift for you to skip a monthly payment on your credit card balance. Most of us consider a gift as something free but this is not the case. The offer is genuine but it’s not free–it will cost you!

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Thanks to Federal laws and credit card company policies, losing your credit cards doesn’t mean extensive losses to your bank account or damage to your credit score. Federal law caps your liability at $50 in such an event, but most credit card companies have a $0 liability clause, if you call within 24 hours of the loss. If a thief uses your card before you report it missing, the most you will owe for unauthorized charges is $50.

If you report the loss before your credit card is used, the card issuer cannot hold you responsible for any unauthorized charges. And if you report fraudulent activity within 60 days from the first billing statement it appeared on, you won’t be responsible for any of the charges above $50. Also, if the loss involves your credit card number, but not the card itself, you have no liability for unauthorized use.

But it’s critical that you report the loss or theft of your credit card to the card issuers, as quickly as possible. And remember, it’s much easier and less traumatic to cancel a card that you find later in the week, then to risk the hassle of a thief running amok with your credit card and racking up thousands of dollars of debt on your account.

If you notice questionable charges on your statement, call your credit card company immediately to begin an investigation. Many companies have toll-free numbers and 24-hour service to deal with such emergencies. Pick up the phone and contact the fraud department of your credit card company and be prepared with your account number and when you first noticed your card was missing. Be sure to get the name of the representative you speak with and any reference numbers that may apply.

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Using a high interest credit card is like throwing money down the drain! If you’re wasting money with a high APR, you should consider applying for a low interest or 0% APR credit card instead. Although your credit score will ultimately determine your interest rate, apply for a lower APR and you could save a ton on interest charges. Here’s an example of how much you can save just by reducing your current APR:

Your current credit card has an APR of 14.99%. But you’ve been pre-approved for a credit card at 9.99%. Over the course of a year, you could save 5% on interest charges. How does this add up?

Save with a Low APR:

Assume you have a balance of $5,000 on your credit card:

OLD CARD: 14.99% = $ 749.50 per year in interest charges

NEW CARD: 9.99% = $ 499.50 per year in interest charges

In this example, you could save up to $250 per year! If you had a balance of $10,000, you could save twice as much! This extra money could be used to pay down your current credit card balances or used to make cash purchases and avoid increasing your existing credit card debt.

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