Did you have problems repaying your credit card bills on time? You’ve got plenty of credit card companies to split your payments; it is most likely that you will soon start defaulting on them as your monthly income level may not be high enough. There are possible ways in which you can save your dollars by boosting your credit score. Read the rest of this entry »
Noel Whittaker FCPA FAIM FTIA AFPA, writes for established reputable newspapers, has made tv appearances, and broadcasts on ABC radio. In 1998, he was awarded the title of Australian Investment Planner of the Year. In his international best seller “Making Money Simple”, Whittaker explains using simple easy-to-understand language on Credit Ratings.
“When lending organisations are considering making a loan they look carefully at the applicant’s ability to repay it. It is not their business to be taking risks with their shareholders and depositors’ funds and there are certain areas they will look at critically before making a decision.
These include:
- Length of time at the present address and at the present job – stability is preferred.
- Level of income – obviously the applicant must be able to afford the loan repayments.
- Marital status – stable people have proven to be better payers.
- Asset accumulation – people who have built up considerable assets are proven better credit risks.
- Type of employment – in occupations (such as commission selling or small crop farming) where income can be uncertain, borrowers may have trouble making repayments.
- How the applicants have repaid previous loans – lenders have found that good payers tend to stay good payers – bad payers also tend to remain bad payers.
Credit ratings and credit history come into importance when the last item is being considered. When making a loan application the client will be asked details of any previous borrowings and whether they are still current or paid off. Normally staff of the loans approval department will then telephone the other lenders and ask for details of how the applicants have conducted their accounts. If they hear comments like “slow payer” or “never pays until final notice is sent” the chance of getting a loan lessens. No lender wants the bother of borrowers who have to be chased continually for money.
This is what happens when a lender calls the credit bureau.
- The lenders code is asked for and verified. This prevents unauthorised persons from obtaining information.
- The applicant’s full name, sex, date of birth, driver’s license number, occupation and last two addresses are given. These items are included to ensure proper identification.
- The enquirer is asked what the person is asking for. This is recorded on the applicant’s file.
- In exchange for this information the credit bureau advises details of all other information on file. This includes all other application for credit and detail of any “delinquencies”.
A “delinquency” is something that indicates a past problem. It could be a judgment, repossession, bankruptcy or the fact that the person had “skipped” – owing money without leaving a forward address.
Note the file contains only applications for credit and details of any delinquencies. It does NOT state whether any of the recorded applications were approved, declined or proceeded with. The file merely shows that, at some stage, the applicant was considering getting a loan.
You can now see there are two elements that make up this term “credit rating”. One is the history of the way in which loans have been repaid in the past – this is available only from those lenders the applicant has dealt with. The other is details of applications for finance, and delinquencies that come from the credit bureau”. Whittaker, N. (2003). Making Money Made Simple. Australia: Simon and Schuster.
Submitted by Karen Colquhoun-Smith for www.HowTo-BuildCredit.com
In February of this year American government and census data determined that that the average adult in the US has $3,752 in revolving credit card debt. This is truly a decline from July of 2009, when the average credit card debt per adult was estimated at $4,013. The entire credit card debt of the average entire household in the United States is $7,394 down from $7,861. Obviously the US consumers have actually wised up to their credit debt spending ways.
There seemed to be another intriguing data published by the Federal reserve board as well. One of the surveys taken suggested that 75% of all Americans have one or more credit cards. This is actually surprising since it suggested that 25% of household do not have any credit cards of any kind at all.
This data is truly very encouraging for my overall perception of the spending habit of Americans. What this data suggests is that there’s a nice percentage of the population that’s fully aware of how costly having credit cards could be. I would be curious to see how this 25% without any credit cards at all breaks down demographic wise. Basically I hope that the 25% does not just account for people who are under the age of 18 and simply can’t get a credit card yet.
I would really like to believe though that the recent credit crunch is in fact teaching useful lessons to people who spent in great amounts during the economic boom but are now low on cash and so are finding methods on how to eliminate credit card debt. The raging economy prior to the start of the recession was too easy to get money with. I had so many friends who were mortgage brokers who could get someone approved for a loan that was a “no doc” loan. What this signifies in simple English is that one didn’t need any kind of documentation to get the loan. One of my closest friend told me that he was able to approved a guy with his driver license ID.
People spend a lot of money everyday, but now there’s no more money to spend and jobs are much tighter then they have ever been. Companies are cutting back which has led to less people having jobs or even if they have jobs they most likely are not getting the hours that they once had. In fact, those people who were already loaded with credit card debt prior to recession were seen looking for credit card debt settlement such as Indiana debt relief or Virginia debt relief.
The conclusion that I draw from the apparent decrease in the total amount of revolving debt is this. There was clearly an increase in credit card debt at the time the economy took a quick turn south. This was mainly because some of us don’t have jobs and have no choice but to rely on a credit cards. The improvement can be based on both the economy slowly improving in conjunction with the reduction of consumer spending on their credit cards.
Many people are looking at a home mortgage refinance as an easier way to be able to make their payments. You have to find a way to make sure you are able to stay in your house so the world of home mortgage refinance. The concept of mortgage refinance is something that can truly benefit millions of homeowners out there. The benefits may not end up being achieved unless you happen to be dealing with a fairly capable banking agency. You want to make sure that the bank understands the terms associated with your loan. The question of what kind of terms the consumer wants to pay on their loan can make a huge difference in whether or not they are properly able to pay off the mortgage.
People need to be able to find a way to pay off their mortgages. There are so many other costs out there that can impact the world and whether or not you can end up impacting whether or not you are able to pay your mortgages. There are a lot of mortgages out there that may need to be refinanced because you happen to live in a very tough region of the country. There may have been a lack of economic growth in the area where you happen to live.
You have to find a way to assist people in being to pay off mortgages if you happen to be in the banking industry. You have to find a way to be able to make sure that homeowners can be supported on a regular basis. The homeowners have to have some sort of natural self reliance. A business owner may be able to hire more people if they happen to get their mortgage paid off in times. You can find a number of corporations out there who can help with these matters.
Trying to cover all bills and credit card and loan repayments can be financially disabling and this means that 1000s of individuals are forced to declare themselves as bankrupt each year. Around six years ago in fact, my own mother had to do this herself.
The status of bankruptcy is partially ignored by most credit driven businesses after a period of 7 years duration which should see your credit rating improve one day. Although the status of “bankrupt” will not completely destroy your life, it will sometimes make living it that little bit harder. Here’s how…
The Christmas period has been harder to get through in more recent years, as buying gifts via credit from catalogues was no longer an allowed in the wake of credit blacklisting with 7 children living in our house , this had become the standard way of dealing with the children’s Christmas lists (explains a lot, huh?) Purchasing goods or paying bills online became extremely difficult task as my mother’s bank refused to let her have an account with even a debit card attached, let alone an actual credit card.
It was really helpful that my mum was able to get a Vanquis visa card during her (imminently ending) period of bankruptcy, so her ability to buy and pay online was not limited too much.
Recently, my mum decided that she would apply for a 24 month contract with a popular network provider in order to get her hands on the latest smart phone. The application was rejected however once the network had completed a check on her credit history so she has no option but to use her old Alcatel mobile phone for the foreseeable future.
My mum has vowed to never again borrow on credit a good thing too considering the increased rates of interest for those with poor credit usually in place!
