credit Archives - Page 5 of 9

Prepaid Cards are on the Rise

Despite all the complications that come with them, prepaid credit card use has been on the rise. These cards are usually given to people who cannot qualify for a basic credit card– either because of low credit, no credit, or other circumstances. They’re generally frowned upon by financial experts, because of the extremely high interest rates and extra fees. But, according to Bill Hardekopf at The Dollar Stretcher, the amount of prepaid cards in use has skyrocketed, because of how little regulation is applied to them:

Consumers loaded approximately $57 billion onto prepaid cards in 2011, and loads are projected to reach approximately $82 billion in 2012, $117 billion in 2013, and $167 billion in 2014, according to the Mercator Advisory Group.

However, the lax regulations may face some changes:

Currently, there are no government regulations and consumer protections on prepaid cards. Debit and credit card rules and regulations do not apply, but that may soon change. The Consumer Financial Protection Bureau is investigating the fees and practices of prepaid cards and seeking input on ways to enforce safety for consumers

Photo Credit: Robert Scoble

Shares 0

Mortgage Help for Retirees

by Kathy T.

Retirement seems like the perfect time to buy a home. You’ve had your entire career to build up the perfect credit score, you’ve saved and saved for a sizable down payment, and you have your whole retirement fund to pay the mortgage. What could possibly go wrong? Well, according to RealtyPin.com, buying while retired has some extra difficulties that working people don’t usually face. Banks usually like to see some sort of fixed income. Even if you are getting plenty to make payments, you can still be seen as potentially tricky. Here’s how to avoid this major pitfall:

1. Know what to expect Unfortunately, you can’t assume that your credit and savings alone will get your approved for a loan.

2. Analyze your finances Once you retire, your income tends to be fixed. So if you are considering a new mortgage, it’s important to sit down and really analyze how much you can afford, and how much income you can rely on in the next few years

3. Start early Start the mortgage process at least six months in advance before you want to move into a new home. That may seem excessive, but it can easily take that long from start to finish.

Photo Credit: Carlton Browne

Shares 0

5 Signs You Should Wait to Get a Mortgage

by Kathy T.

Having a mortgage is pretty bittersweet. On one hand, you finally own your own home and have the freedom to do whatever you want with it. It’s a major life accomplishment and is definitely something to strive for. On the other hand….you have to pay a mortgage every month. So how do you know if you are ready for the added responsibility? Should you get a mortgage? Scott Sheldon at ABC News lists five times when you should probably hold off:

Your Debt Is Too High If more than 10% of your monthly income goes to liability payments (car loans, credit cards, other debts), not only will these liabilities hurt your ability to qualify, they limit how much house you qualify for.

Your Income Is Too Low. Maybe your income is just not high enough to support a house payment for the price range you desire.

You Don’t Have a Down Payment or Closing Costs. You’ll need at least 3.5% of the purchase price for a down payment.

Your Employment is Not Stable. Possible change of careers? How about a job gap? These situations not only can hurt your potential ability to qualify for the loan, but it raises the question of whether or not you can support a house payment.

Your Credit is Less than Stellar. Do you have derogatory items on your credit, like a bankruptcy or short sale, or even a foreclosure? It’s an automatic 2- to 3-year wait to re-enter the market.

Photo Credit: Lisa Yarost

Shares 0

Boosting Your Credit Score: 5 Fast Ways

by Kathy T.

Not everyone has perfect credit. We’ve all missed a payment or two, or been a little late with the rent. But, if you’re trying to restore your credit in order to make a big purchase (or qualify for a big loan—like a mortgage) there are steps you can take that will boost your score in a matter of days.

Here are the “Fast Five” ways to improve your credit, from Ginger at Pounds to Pockets:

Reduce your credit card balance – Pay down your outstanding balance to below 50 percent of the credit line.

Pay Off Smaller Debts Now – This reduces your debt to income ratio and increases cash flow.

Check Your Credit Report – Check to make sure that there are no incorrect late payments as this can cause your score to drop.

Avoid Debt – If you are trying to get a loan, the last thing you want are new purchases added to your charge accounts.

Photo Credit: Chris Miller

Shares 0

Tips on Building Credit from No Credit

by Kathy T.

If you’re a first time home buyer, you may run into a problem that many young adults face: having too little or no credit history. This can be a huge issue when applying for any sort of loan or credit card. But how do you build up credit from scratch?

Bethy Hardeman at Businessinsider gives some valuable tips for people who are just starting out:

1. Keep up with cell phone and utility bill payments. Paying bills early and on time is the easiest way to keep your credit score from plummeting

2. Get a co-signer. While obtaining a credit card is difficult for younger consumers, being responsible with one is the best way to build credit from nothing. Getting a co-signer will help, since it is their credit score the creditors will examine.

3. Consider a secured credit card.Secured cards use a cash deposit as your credit limit, and are great “training wheel” cards to build on poor or no credit.

Photo Credit: Stockmonkeys

Shares 0

Freddie Mac offers CreditSmart

by Kathy T.

If you’re considering buy a home, Freddie Mac is now offering an online program called CreditSmart that helps would-be buyers understand their credit and take some of the other financial steps necessary to make that big purchase. From Freddie Mac,

CreditSmart has a lot to offer. It can help you build or repair credit, create a budget, decide if owning a home is right for you, make sound financial decisions, and avoid costly scams. You’ll learn what types of mortgages are available and how to shop for a home loan. You’ll even get tips on finding a real estate agent who’s right for you.

Working with a good agent, making sure you know how to challenge a false credit report, and so much more is available through the free service. Check it out!

Shares 0

Home Equity Loans Making a Comeback

by Kathy T.

I am one of those homeowners who is upside down on my house – I owe more than I believe it would sell for at this time. This is primarily because I have some big repairs to make, including a new roof, gutters, and painting the wood around windows and other trim. This work would put me in the position where we could possibly break-even on the home if we decided to sell, but then there’s the question of paying back the money it cost to make the repairs. We’ll be here for a long time, I expect!

However, if you do have some equity built up in your home, you could qualify for a home equity line of credit. These loans are making a comeback according to MSN Money,

Lenders are starting to make equity loans again, especially where home values are rising. Discover Financial Services, which also offers the Discover card, announced in March that it will offer fixed-rate home-equity loans of $25,000 to $100,000, initially to current customers and eventually to others.

But you won’t be able to borrow against every last cent of your equity. Lenders may be slow learners but they have noticed that their bubble-era practice of lending on 100% of a home’s value left them holding the bag when those homes suddenly were worth a lot less than the loans.

I applaud lenders for remaining cautious in not lending 100 percent of a home’s value, but also glad to see that people are again looking at home projects. This will definitely spur the economic recovery as home stores see an uptick in sales.

Photo by Cara Fealy Choate.

Shares 0

Credit Score, Schmedit Schmore

by Kathy T. Leave a Comment

People who are halfway conscious about their personal finances know that their credit score is important. A good score allows buyers to purchase on credit at lower interest rates when financing things like furniture and cars. Without a good score, you probably won’t be buying a new house or investment property.

We’ve also all seen the advertisements to see what your credit score is FREE. Or so we think. Actually we are offered a copy of our credit report free. But if you want your credit score, you’ll probably be paying. But if you do actually get a free credit score, how accurate is it? Miranda Marquit of The Coupon Shoebox has some thoughts about it,

The next thing you have to worry about is whether or not the credit score you receive is an “official” FICO score. The FICO score is still the most widespread score used, and the one most likely used by lenders making decisions about your loan.

However, most free sites don’t offer you a true FICO score. There are truly free sites that don’t require your credit card number. Quizzle, Credit Sesame, and Credit Karma all provide you free access to a credit score. However, it’s important to realize that the scores offered to you aren’t the same scores that lenders look at when making decisions about you.

Be careful out there. It’s your money and your financial reputation, so take care.

Shares 0

More People Getting Jumbo Loans

by Kathy T. Leave a Comment

Jumbo loans are the product used by people to buy homes that cost more than $417,000. If you are borrowing that kind of money, you’ll have to meet very specific eligibility criteria. And now more people are again applying for jumbo loans as the economy makes its slow recover. From NBC News.com,

Jumbo loans are returning to the mortgage market after almost disappearing entirely in the wake of the credit crisis of 2008 and the real estate meltdown. Most lenders stopped making new jumbo loans when the private secondary market dried up in the credit crunch.

Now the credit markets are comparatively stable. Lenders, who are only making these big loans to the most highly qualified borrowers, now see jumbos as a safe and profitable way to make money on their low-cost deposits. And secondary market investors are starting to regain their taste for these comparatively high-yielding loans.

We look at this as another positive sign that the economy is in recovery mode!

Shares 0

Credit Reports: Half Full or Half Empty

by Kathy T. Leave a Comment

The Federal Trade Commission has released its study on the accuracy of consumer credit reports and the question that begs to be answered: Is the cup half full or half empty? According to the FTC, 5 percent of all reports have inaccuracies. According to the credit industry, 95 percent of all reports are correct.

From NBC News,

Consumer groups responding to the study said it indicates a need for reform of the credit reporting industry.

“It’s unconscionable that 40 million American have errors in their credit reports, and that 10 million have errors grave enough to cause them to be denied or charged more for credit or insurance or even be denied a job,” said Chi Chi Wu, staff attorney at the National Consumer Law Center.

Lesson learned is to keep an eye on your credit report and be willing (and aggressive) in addressing the problems!

Shares 0

« Previous Page