Why do I have a bad credit score and how to improve it?

It isn’t nice being rejected by a lender. You may have set your heart on a holiday or new car, or simply want to roll all of your monthly payments into one, but your plans could be wrecked if you have a bad credit score. When you get that credit rejection, it’s highly likely that there’s something the bank or other lender is seeing on your credit record which is acting as a big red flag. This can seem like the end of the world: a big setback that has wrecked your plans and put you back at square one.

But it doesn’t have to be like that. Hundreds of thousands of people in the UK suffer from poor or bad credit records and many of them have been able to take concrete steps to fix them. And once you have put yourself back on a sound footing with your credit record, it’s just a matter of discipline to ensure that you continue to manage your finances wisely and ultimately get access to more mainstream credit again.

What is a bad credit score?

The three major UK-based credit reference agencies – Experian, Equifax and CallCredit – maintain data on every borrower in the country as well as records on utility and insurance accounts as well as mobile phone contracts. The information held on each person includes a list of existing and past addresses, the history of payments on each credit account going back six years and whether those payments have regularly been made on time. If a person has any defaults registered against them, county court judgements (CCJs) or bankruptcies, this information will also be recorded on his or her credit record.

Anybody has the right to see their credit record. An individual can can apply to one or all of the reference agencies for a copy of the record in return for a small fee. Alternatively, all three of the agencies offer online subscription services where you get access to your credit record as it is updated every month. Once you get hold of your report, you should be able to spot exactly where you’re having trouble and what constitutes a bad credit record.

While you will be able to see immediately where your payments have been late or you have defaulted, figuring out how the agencies and lenders use the data can be more difficult. These organisations use a credit score – usually a figure between 300 and 900 although this can vary – which represents the risk that a particular individual might pose to a lender. In short, the lower the score, the higher the risk, while those with the best credit scores will have higher figures registered against them. Furthermore, that degree of risk might be expressed by one or more of the agencies as ‘very poor’, ‘poor’, ‘fair’, ‘good’ or ‘excellent’. If you have a rating of somewhere between 300 and 400 then this might be classed as ‘very poor’ or ‘poor’ while those with scores of between 650 and 900 may be judged to be ‘good’ or ‘excellent’ risks.

If you are in the bottom categories, then you may well find it difficult getting accepted for most mainstream forms of credit. These include loans, bank account overdrafts, mobile phone contracts and credit cards. In some circumstances, utility companies may be reluctant to set up new contracts and offer you pre-paid accounts instead.

There are some lenders who will offer credit to people in these categories but these may come with higher interest charges, lower capital sums and, occasionally, conditions about security or guarantors.

If your score is somewhere north of 400 but below 600, you will probably be classed as a moderate risk by lenders. That means that you will have access to loans and credit cards but you will probably face higher interest rates and lower credit limits than people with good or excellent records.

Those with the best credit records will be accepted for most or all loans that they apply for and will benefit from the lowest interest charges.

How to Improve Things
It is eminently possible to repair a bad credit score given time and good financial management. While there is no magic bullet, the experience of thousands of other people proves that even those with the worst credit records can find themselves back in the ‘excellent’ category within one to two years if they stick to some fairly simple steps:

    1. Always repaying on time, every time

Financial mistakes don’t stay on your record forever. They only last for a maximum of six years and so long as you make your repayments on time from this point on, this will start to outweigh any of the negatives on your record which will gradually get pushed down the list over time.

   2. Close accounts that you don’t use

Paying off loans or credit cards when you can afford to is sound financial management. It’s no good saving money if you have got debts that you can afford to clear. Rather than spending money on something you don’t actually need, look at the cards that you may have reached your credit limit on. If you pay these off or substantially reduce them, this will reduce your debt to income ratio and this is one of the most effective ways of improving your credit score quickly.

   3.  Consider a guarantor loan

While it may not be obvious, a guarantor loan is a great way to rebuild a bad credit record. It works because a borrower uses the good record of somebody else to borrow the money they need – be that person a family member or friend. This guarantor is the security that the loan will be repaid and will be liable to make repayments if the applicant slips up. But the great thing about guarantor loans is that every time the borrower makes a repayment on time, this goes on his or her credit record and will gradually improve even the worst record.

   4. Choose the right credit card

There are plenty of credit cards out there designed specifically for people with poor or bad credit records. These may be advertised as ‘credit builder’ or ‘credit repair’ cards. They are generally offered with higher interest rates and lower credit limits than other, more mainstream cards, but they give people the opportunity to build up a record of financial discipline by making repayments on time.

Article provided by Mike James, an independent content writer working together with technology-led finance broker Solution Loans, who were consulted over the information in this post.

source: 20smoney.com

Will a Change in FICO Make it Easier to Get a Mortgage?

Somehow it doesn’t seem fair that so much can depend on a single number. Your credit score, whether from TransUnion, Experian or Fair Isaacson Corporation (FICO), can make the difference between owning your own home and renting. It can also cost (or save) you tens of thousands of dollars on interest, since lenders set your rate to reflect the quality of your credit score.

When it comes to mortgages, FICO is the score that matters most. Fannie Mae and Freddie Mac set standards like credit requirements, and since they prefer FICO, lenders comply. It also helps that these two government-chartered companies have programmed credit score requirements into the automated underwriting programs they provide to lenders.

What many borrowers don’t realize, though, is that the algorithms behind their credit scores are not static. They are updated from time to time, and those updates can impact your mortgage.

The Process of Modernizing Credit Reporting

In recent years, as credit reporting companies have improved and updated their models to reflect how consumers use their credit, Fannie and Freddie have been slow to comply, in part because of the difficulty and cost of changing their automated underwriting programs.

Fannie balked at using the newest model, FICO Score 9, which was introduced 2014 and provides fairer treatment for those consumers whose scores have been lowered by medical bill collection accounts in their credit files or who have files with scant information because they make little or no use of the traditional banking system. According to Fair Isaacson, which owns FICO, applicants whose only major negatives are medical collections stand to see their FICO scores improve by a median 25 points.

Pressure is mounting on the two companies to modernize their credit standards, both from Congress and a directive from the federal agency that oversees Fannie and Freddie. Look for these changes in the near future.

How Trended Credit Data Will Save the Day

By mid-year 2016, Fannie Mae will begin incorporating trended credit data into its automated underwriting platform. No longer will lenders be limited to making an approval decision on the basis of a single score.

Trended credit data will enhance the static snapshot of a consumer’s credit balances with 24 months of historical data, such as payment and balance. It will help lenders examine and consider how consumers are managing their credit accounts over time. Today, lenders can see consumers’ existing balances on accounts and whether they have paid their bills on time; however, they cannot tell if consumers are consistently carrying debt loads on revolving accounts such as credit cards, or whether they pay their balances in full every month.

For example, a consumer with a large credit card balance who pays it off in full every month could be a better credit risk than a consumer with a large credit card balance who makes only the minimum payment each month. And for consumers who don’t have a large amount of available credit, but pay their balances every month, trended credit data may help originators determine if they are a good credit risk and better their ability to obtain a mortgage loan.

“For some consumers who don’t have a large amount of available credit, but pay their balances every month, trended data may potentially improve their ability to obtain a mortgage by providing lenders with a more complete picture of their credit behavior over time,” Crabtree said.” said Craig Crabtree, General Manager of Equifax Mortgage Services, which will provide the trended data.[1]

Alternative Credit Scores May Be an Option

Legislation was introduced late last year by two powerful members of the House Banking Committee that would require federal regulators and the GSEs to adopt alternatives to FICO that are more inclusive and updated models that incorporate non-banking forms of credit, such as rent, utilities, and cellphone payments to supplement a standard credit file.

If passed, the legislation would allow lenders to use scores from FICO’s competitor, VantageScore, which claims it can provide scores on as many as 35 million consumers, many of whom didn’t have enough credit history to have a score. Many are young, just starting out in their careers. Disproportionately, they are minorities.

Even if the legislation doesn’t pass, it will put serious pressure on the GSEs to modernize their credit reporting policies in the near future.

source: totalmortgage.com

Buying Your First Home in 2016? Start Now.

There are some very good reasons to buy a home in 2016. Mortgage interest rates are on the rise and leading economists predict that the longer you wait, the higher they will go, toping 4 percent by the fourth quarter. Home prices are also expected to continue their upward climb in the year to come, but at a slower pace than in 2015.

The State of the Real Estate Market

First-time homebuyers found the pickings to be slim for affordable starter homes in 2015, especially in hotter markers like Denver, Portland, Dallas, Seattle and much of California. Slim pickings in their price range kept thousands of potential buyers in rentals for another year. Will 2016 be any different?

New home construction is expected to improve considerably over last year as builders respond to rising prices. The will put the new-home market on track to reach 91 percent of its average norm by 2017, according to the National Association of Home Builders.[1] News homes are generally priced higher than first-timers can afford, but the new construction will still make a positive contribution to the inventory shortage.

More import is the outlook for existing homes. Supply of entry-level homes has been constricted by the unwillingness of current owners to sell and move up the housing ladder to a more expensive home, but that may change in 2016.

“Sales activity in 2016 will once again be primarily driven by the ongoing release of more pent-up sellers finally realizing their equity gains and using it towards the down payment on their next home,” says Lawrence Yun, chief economist for the National Association of Realtors. Yun predicts home sales will finish 2015 at a pace of 5.30 million and grow three percent next year to around 5.45 million.[2]

However, 2015 is ending with a question mark about the inventory outlook. Both NAR and Redfin reported that in October total homes for sale were down 4.5 percent from 2014[3] and NAR reported the inventor of unsold homes in October stood at a 4.8-month supply, below six months considered normal.[4]

When the spring season opens, one thing is certain. Inventories will be much larger than in the late fall, with fresh, new listings for sale. Again, the early birds will get the worms.

 How to Get Started

If you’re serious about becoming a homeowner in 2016, you need to be getting ready now. Here’s a checklist to get you started.

Get your credit in order. If you haven’t been managing your credit before, it’s too late to do much about big problems like bankruptcies or tax liens.  You should , however, still order reports from three top credit reporting agencies (Experian, Transunion and Equifax) to look for any errors or questionable calls that you might challenge. Here’s a list of credit do’s and don’ts:

Do:

    Pay all your bills on time
    Pay down as much debt as you can, especially smaller amounts on high interest cards. That will reduce your minimum monthly payments.
    Consolidate high interest credit card debt with a lower interest card or personal loan. Again, you will reduce your minimum payments, which lenders total to determine your debt-to-income ratio.

Don’t:

    Make any large purchases on credit.
    Open any new credit card or store credit accounts. Too much credit can be a negative and every time you apply for new credit, your rating takes a small hit.
    Cancel your oldest credit card. Lenders like to see a long history of good credit.

Get a down payment strategy. To buy a home, you will need cash for a down payment and closing costs, which roughly will come to about 3.5 percent of the total cost of your home. Of course, there are options to consider.

You don’t need 20 percent down for many mortgage options; the average down payment in 2014 was only 10 percent and among first-time buyers, only 6 percent.[5] That’s because most first-time buyers are using FHA financing these days to take advantage of its 3.5 percent down payment requirement. Look into your down payment options, including:


Down payment assistance with a low or no-down payment loan from a state or local housing authority. Feel free to contact us for information if you’re looking to buy a home in Connecticut—we’re kind of experts.

You can’t take out a loan for your down payment, but you can receive assistance from parents or relatives.

Both Fannie Mae and Freddie Mae initiated new loan down payment programs early in 2015. Fannie’s program is limited to qualified first-time buyers and requires a down payment as low as three percent and requires private mortgage insurance or other risk sharing.[6] Freddie Mac’s program also requires only 3 percent down but first-time buyers must complete a home education course, like Freddie Mac’s online CreditSmart course. Minimum credit scores for either program is 620.

You can qualify for a VA loan, which has no down payment requirement if you have 90 consecutive days of active duty service during war time, 181 consecutive days of service during peacetime, or 6 years of service in the Reserves or National Guard. You can also qualify if you are the spouse of a veteran who died in the line of duty, the spouse of a service member who is a prisoner of war or missing in action, or the surviving spouse of a disabled veteran whose disability may or may not have been the cause of death.
Get your documentation in order. Having your paperwork in order when you apply for a loan speeds the approval process along.

If you are emplolyed full-time, let your human resources office know that you plan to apply for a mortgage so that they will be ready to get you the right paperwork.

If you are self-employed, part-tine or seasonally employed or rely on income aside from full-time employment such as alimony, child support, royalties, sales commissions, dividends, etc. you will need documentation and at least three years of tax returns.

source: totalmortgage.com

5 Tips for Refinancing Your Home With Bad Credit

If you want to refinance your property, having a poor credit history doesn’t necessarily mean you’ll be ignored by lenders, but applying for a home loan with bad credit can be slightly more complicated than a normal refinance. Taking some time out to review your finances and accepting the inevitable–that you’ll likely have to pay a higher interest rate–can take the stress out of the home loan application process.

Here are five tips to make refinancing your property with bad credit a little easier.

1. Check your credit history.

If you have a less-than-perfect credit history, you should pull your credit report from each of the main credit reporting bureaus for closer inspection. Remember, this is the same information that lenders have access to; obtaining your report will give you an indication of what a lender takes into account before they approve an application. You’ll be able to examine the credit card and loan agreements that you currently have, as well as any late payments that have been reported.

2. Improve your credit.

Even if you have defaults registered on your credit report, it’s never too late to turn things around. If you are thinking about refinancing your home, it’s imperative that you start making loan repayments and bill payments on time. Lenders will then be able to see that you are taking proactive steps to pay off your debts. Also, don’t make any new applications for credit cards, because rejected applications will show up on your credit report. You will also want to refrain from spending too much on your current cards, which will only increase your debt.

3. Explain your circumstances.

Being honest with your lender about your financial history can help you bolster a spotty credit check during the home loan application process. Explaining why you have bad credit–and more importantly, the steps you have taken to resolve the situation–can sometimes provide lenders with a more accurate overview of your credit history than a computerized scoring system.

4. Prove you can pay.

If you are able to do so, placing a considerable amount of money in the bank or proving that you have other assets can show your lender that you have the ability to repay the home loan. This could lower the interest rate on your loan significantly and suggests to the lender that you are a lower risk than it appears.

5. Find someone to co-sign.

Asking someone to co-sign your home loan might be something you are reluctant to do; however, a co-signed loan could assure the lender that repayments will be made on time because someone with a good credit history is also responsible. The co-signer should understand that it is his or her responsibility to make repayments towards the loan if you are unable to do so.

The Bottom Line

Refinancing your home can provide you with access to the equity in your home, but there’s a lot to consider if you have a bad credit history. Before you make your application, review your credit report and try to budget more responsibly if you are overspending. If you have been rejected by a lender in the past, there’s no need to panic. Refinancing your home with bad credit is certainly possible, even if you have to work a little bit harder.

source: totalmortgage.com

What is a Mortgage Broker?

At some point in the mortgage process, you might find yourself wondering what a mortgage broker is, and why you might choose to work with them.

Who they are

Put simply, a mortgage broker is a middleman between the borrower and the bank or mortgage lender. They’re kind of like a borrower’s Sherpa, leading them to the summit of the perfect loan.

It doesn’t matter if a client is looking to refinance or purchase a new home, the mortgage broker will do their part to help them qualify. Just remember that since they are a middleman with no affiliation to anyone except themselves, they will inevitably take their slice of the pie (more on that later).

What they do

The first thing they will do is gather all of the necessary information. That means income, asset, and employment documentation, plus a credit report. The mortgage broker will then look over all of the borrower’s information and decide what the best way to obtain financing will be. This means, they’ll advise the borrower on the loan amount, the loan-to-value ratio, and the type of loan.

When the specifics of the loan have been decided on, the broker will submit the loan to a lender they work with to gain approval. Throughout the process, the broker will talk with the bank and the borrower to make sure both parties are on the same page.

Pros

One of the major benefits of using a mortgage broker is that they can shop around with multiple banks and lenders to find the best rate/loan program. This is in contrast with a loan officer, who’s confined to the lender they work for, so if you get declined that’s the end of the road.

With a mortgage broker, if a borrower gets declined they’ll just move on to another lender. It’s also possible that a mortgage broker will be working with fewer clients, and will therefore be more available for any questions/concerns a borrower might have.

Cons

In reality, there’s no guarantee that they’ll search high and low for the best loan. It’s entirely possible that they’ll steer the borrower toward a loan that makes them the most money.

It’s important to ask for multiple quotes from as many lenders as possible. Of course, the only way a borrower can be sure they are getting the best deal is to do their own research.

How they make their money

There are a few different ways a mortgage broker can get paid. Typically, they charge loan origination fees and/or broker fees. This usually amounts to 1-2% of the loan, and can either be paid up front or added into the loan. Because of the Dodd-Frank Act—no hidden fees are allowed—the broker must be willing and able to tell you exactly what each and every fee is for.

source: totalmortgage.com

Rebuilding Your Credit in 10 Simple Steps

No one wants to have bad credit. A lot of doors will close on you financially. You might not get qualified for loans and in some cases, employers check credit reports before deciding to hire you. Rebuilding your credit doesn’t have to be complicated and along with a little patience and some planning, you can obtain an excellent credit rating. To make a little improvement on credit scores, we’ve come up with a few guidelines to walk you through and bump up your score to the “good range”.

Here are 10 simple yet effective steps on rebuilding your credit score:

1.    Watch out for those credit card balances and make payments on time. It is best to always double check your statement when your bill arrives to ensure that the charges are correct and accurate. Check out and see if the credit card issue will accept multiple payments throughout the month if you’re able to. Making payments on time may seem the most obvious out there but be aware that late payments are the most negative information that can appear on your credit report. It’s essential that you at least pay the minimum amount in a timely manner, without exceptions.

2.    Keep your credit balances low. Your credit cards, as well as your payment history on those credit card accounts impacts your score. Prove that you are actively reducing the balances while being a responsible card user.

 3.   Leave “good” old debt on your report. Once you have paid off the balances on your debt, don’t go and hurriedly call to close off and have it removed from your credit report. This is considered good debt and it’s good for your credit. The longer the history of good debt you have, the better your credit score is.

 4.   Apply for credit only if it’s needed. It might be tempting to open up a new charge or credit card account when you go shopping for big items and they would offer great financing deals on large purchases with that retailer. Think this thoroughly because each time you apply for a credit, it could cause a small dip on your score that lasts a year because if you make multiple applications for credit, it means that you want to use more credit.

 5.   It’s best to separate accounts after a divorce. The information on each person’s credit report will impact their spouse’s and when the divorce proceedings move forward, make sure that everything is paid off and close all joint accounts or have one name removed from each account. As long as both names appear on the account, both parties are still responsible for its activities.

 6.   Make sure old information is removed and correct inaccurate information on your credit reports.

 7.   If possible, avoid bankruptcy at all cost. This should be considered as the last and final solution if everything did not work out at all. It’s one of the worst things you can do to your credit and it will continue to haunt your credit report up to 10 years even if you would have recovered already.

 8.  Don’t risk it. Missing payments and paying less or charging more than you normally do could sink your credit score.

 9.   Avoid excessive inquiries. Each time you’d apply for any type of loan or a credit card, potential creditors will inquire on credit reporting agencies about your status. Having multiple inquiries in a short amount of time can drastically reduce your credit score.

10.  Negotiate with your creditors. A lot of creditors are willing to understand your situation as it also impacts their business. It never hurts to ask and they could offer you a resolution that’s acceptable and within your financial means.

Don’t obsess. Just be focused on your score when you know that you’ll need credit. As long as you are being financially responsible and diligent in making payments up-to-date and learn from your previous mistakes, you’ll be on your way to financial stability and managing your credit properly. Should you need any further assistance in working on your credit score, you can go to Trust Deed Scotland and let them help you in rebuilding your credit.

source: everybodylovesyourmoney.com

How to Simplify the Home Buying Process

As a first­-time home-buyer, the home buying process can be intimidating and stressful. This is brand new territory for you. And since you don’t know what to expect, you might not realize how slow and complicated the process can be.

But even if you’re new to the “home buying game” and slowly learning the ropes, there are simple ways to streamline a purchase and minimize stress.

1. Organize your documents ahead of time

 

When you apply for a mortgage loan, the first thing a lender will do is request financial documents. This includes your tax returns from the past two years, recent paycheck stubs and copies of bank account statements.

If you’re not organized, finding these documents can be tedious and time-consuming. So make sure you have a system where all your financial information is located in one place and easily accessible.


The sooner you locate and forward these documents to the mortgage lender, the sooner the bank can process your application and get you approved for a loan.

2. Get pre­-approved before shopping

 

Some first­-time home-buyers don’t understand the importance of a mortgage pre-approval. Pre­approvals aren’t required to make an offer on a house, but they can streamline the process since you’ll already have financing in place. 

A pre-­approval involves completing an official mortgage loan application and going through the underwriting process, with the lender checking your credit and verifying your employment and income.

 

Once you’re pre­-approved, you know exactly how much you can spend on a property, plus you know your estimated mortgage rate before shopping for a home.

3. Check your credit beforehand

 

You might think you have excellent credit, but your credit report can paint a different picture. To avoid any surprises when applying for a home loan, check your credit report beforehand.

You can order a free report each year from AnnualCreditReport.com. Check the report for errors and unfamiliar account activity which can be a sign of identity theft. Mistakes on your credit report can lower your credit score and jeopardize qualifying for a mortgage.

4. Know what you’re expected to pay a lender

 

Speak with your mortgage lender to find out how much you’ll need for a down payment. Down payment minimums vary depending on the type of mortgage.


For example, a conventional mortgage loan requires a down payment between three percent and 20 percent, whereas an FHA home loan requires a 3.5 percent down payment.


You will also need cash for closing costs, which can be as much as two percent to five percent of the sale price (unless the seller agrees to pay all or a percentage of your closing costs).

5. Make sure your realtor understands your needs

 

Be as specific as possible when speaking with your realtor. If your realtor understands exactly what you’re looking for in a property, you won’t waste time looking at homes that don’t meet your needs.

For example, how many bedrooms and bathrooms do you need? Are you seeking new construction or a resell? What type of square footage do you have in mind? What’s your price range? Do you prefer a specific neighborhood or school district?

Bottom Line

 

There’s nothing more thrilling than buying a home — especially if you’re a first-time buyer. But the stress of getting a mortgage and negotiating a purchase can overshadow the excitement. The above tips, however, can reduce the risk of setbacks and speed the process so you can quickly move into your new place.

source: totalmortgage.com

6 Reasons Your Mortgage Was Rejected

You might be eager to jump into homeownership. Unfortunately, several things can derail a home purchase.

A mortgage rejection is frustrating and discouraging, but it doesn’t mean you’ll never be able to buy your own place. Here’s a look at six of the biggest threats to homeownership.

1. Co-Signing loans

Whether it’s your child, your sibling or your best friend, cosigning a car loan, a student loan or any other loan for another person can threaten homeownership. This is because the loan shows up on your credit report and you’re listed as a joint borrower.

Understandably, you’re not the primary account holder. However, you are held responsible for the loan if the primary borrower defaults. Cosigning a loan increases your debt-to-income ratio, and unfortunately, the more debt you have in your name, the less you’re able to borrow when buying a home. And sometimes, cosigning a loan can push your debt-to-income ratio over the limit allowed by a mortgage lender, which means you’re unable to get a mortgage until this debt is no longer in your name.

2. Job hopping

You might be a free spirit who

3. Not having a large enough savings account

Nowadays, lenders don’t only ask to see paycheck stubs and tax returns. They also request bank account statements. They’ll look at your savings accounts and other assets to see whether you have enough funds for a down payment and closing costs. And unfortunately, if you don’t have a sizable savings account, a lender might reject your application until you’re able to build your fund.

4. Not enough credit activity

If you get a credit card to build your credit history, make sure the bank issuing your card reports to the credit bureaus on a regular basis. When applying for a mortgage, the bank will check your credit history. And if you have non-existent credit, this can be just as damaging as having bad credit. Before applying for a credit card or any line of credit, speak with creditors and make sure they’ll report your credit activity to the bureaus every single month.

5. Credit report mistakes

The worst thing you can do is fully trust your creditors to report accurate information on your credit report. Creditors make mistakes, and sometimes they report a late payment or a collection account in error. So you need to check your own credit report at least once a year for accuracy.

If you notice an error, contact your creditor immediately to resolve the issue, or file a complaint with the credit bureaus. Credit report errors can reduce your credit score. And depending on the severity of an error, your credit score might be too low to qualify for a mortgage.

6. Poor credit habits

Mortgage lenders have relaxed their guidelines, and you can get a conventional mortgage with a credit score as low as 620 and an FHA mortgage with a credit score as low as 500. But although lenders have lowered their credit score requirements, your recent credit activity must be positive. For that matter, some banks will reject your mortgage application if you have more than one or two late payments in the past 12 months.

The Bottom Line?

Buying a home is a major accomplishment. Instead of wasting money on rent every month, you can start building equity and increasing your net worth. However, several things can put the brakes on buying a house. If you can identify potential threats to homeownership, it’ll be easier to make decisions that will help you reach your goal.

loves to change jobs every six months to 12 months. But unfortunately, job hopping is a sign of instability. And from a lender’s viewpoint, you’re not stable enough to buy a home. Lenders want to see steady income and employment. Ideally, you should stick with the same employer for at least 24 months before applying for a mortgage. If you must switch jobs, remain in the same field. Additionally, your new income must remain the same or increase.

source: totalmortgage.com

Taking a Loan to Finance Your Business Project

There is more to embarking on a project, it is not just about having a good and pragmatic business idea, a person venturing into business must also know where to find resources most especially capital. Knowing where to obtain capital resources is what i consider as the greatest talent of a successful entrepreneur. This Article would discuss the stages involved in a Successful loan application to enable you finance your business project. This Article would also discuss how to repay your loan to enable you qualify for another loan in the future.

1. Upgrade and repair your credit report

Your Credit Report is your Credit history; it is the record of your attitude as regards borrowing money and repaying at the right time. Order a free copy of your Credit Report and search for negatives. The most common negatives are late payments, repair this negatives by paying the necessary penalties.

2. Justify a stable source of income

There is a popular saying that people who fail when confronted with little challenges would most certainly fail when confronted with major challenges. You cannot persuade a lender to give you a loan except you can persuade such a lender that you have an existing source of income that will ensure that you repay the loan as at when due with or without the success of the project you intend to embark on. This must be contained in your loan application if you are to get approved.

3. Ascertain the amount of money you need to borrow

The amount of money you need to borrow would help you ascertain who would be your most likely lender. It may also influence the type of loan you would choose to apply for.

4. Research loan types (secured/unsecured)

A loan may be secured or unsecured. Secured Credit are credit advanced with the deposit collateral security documents. Failure to repay the loan as at when due will give your lender ownership of such collateral security. Whereas an Unsecured Loan does not involve collateral security. Secured loans always have lesser interest rates than unsecured loans. They also have a longer time frame for repayment. Unsecured loans are beneficial to people without collateral security or if your investment is an high yield venture that will enable you repay your loan within a short period of time. You need to determine which of these types of loans is best for your business.

5. Apply to the right lenders

When making a loan application, consider two major financial institutions. Banks and Credit Unions. I would recommend a Bank. When making your application, apply to two or three banks. You will most certainly be approved by each of the banks you apply to if you have taken time to prepare very well for your application. You are however to receive this Loan from only one of the banks. The reason why i would suggest you apply to more than one bank is that it gives you the benefit of choosing which bank has the best loan terms that is convenient for you.

6. Pay origination fees on time

When you have received your loan, take note that some banks would require you to pay origination fees on the total sum to be repaid to the bank. Origination fees do not apply to all kinds of loans and when they do, they are always very small and unharmful to your purse. Endeavour to pay it on time as doing so will improve your Credit rating.

7. Pay back your loan as at when due

Never disappoint your lender; you may need them again in future. Keep to payment schedules and never miss a deadline. It will give you a positive credit score and ensure that you are automatically click here to approved when you submit your next loan application.

source: everybodylovesyourmoney.com

Credit Card Mistakes That Can Keep You From Getting a Mortgage

If you’ve worked consistently for the past two years, and you’ve been saving your pennies for a downpayment and closing costs, you may feel nothing can stand in your way of qualifying for a mortgage. And in all likelihood, you’re the ideal candidate.

However, what you may not realize is that certain credit card habits can stop a mortgage approval in its tracks. Not to say you can’t get a loan, but a bank may hold off approving your application until you get a handle on your credit cards. Here’s a look at five credit card mistakes that hurt your chances of buying a home.

1. Maxing out your credit cards

Unfortunately, making minimum credit card payments might not be enough to qualify for a mortgage loan. The lender looks at your entire credit history, and if you have maxed out credit cards, this raises your debt-to-income ratio and impacts whether you’re able to qualify for a mortgage, or how much you receive from a bank.

Basically, the bank calculates the percentage of your monthly debt payments and compares this figure with your gross income. If your credit card payments are higher due to maxed out accounts, your debt-to-income ratio may exceed what’s allowed by the lender, and the bank may not approve your application until you’ve paid off some of your accounts.

To avoid this problem, pay off credit cards every month, and make sure your balances do not exceed 30 percent of your credit line.

2. Past due accounts
You credit history might be stellar today, but if any credit card accounts have been 30 days or more late in the past 12 months, a mortgage lender may not approve your application at this time. It only takes one or two recent delinquent accounts to delay a home purchase.

Lenders are cracking down on late payments, and they typically allow no more than one or two 30-day late payments in a 12 to 24-month period (based on the type of mortgage).

3. Closing credit card accounts

If you’re weaning yourself off credit cards, you might close accounts to avoid additional debt. In hindsight, this is a good plan. But unfortunately, closing a credit card account can increase your credit utilization ratio, which can also drive down your credit score.

Credit utilization ratio is your total available credit in relation to your total credit lines. Let’s say you have two credit cards each with a $1,000 credit line (a total credit line of $2,000). One credit card has a $1,000 balance, and the other card has a zero balance. In this case, your credit utilization ratio is 50 percent, since you’re using half your total available credit.

In an effort to control spending, you might decide to close the account with a zero balance. Unfortunately, closing this credit card account increases your credit utilization from 50 percent to 100 percent — in other words, you’re now using 100 percent of your available credit, and your credit score will suffer as a result. The way credit scoring models work, the wider the gap between your balances and available credit, the better. Even if you decide not to use a credit card, it’s often better to keep accounts open.

4. Applying for too many accounts

Applying for too many credit cards doesn’t look good from a lender’s standpoint. When lenders check your credit history, the bank also looks at your number of recent credit inquiries. If you’ve applied for multiple credit cards in the span of just a couple of months, the bank may think you’re experiencing some type of financial hardship and in desperate need of credit.

Plus, each inquiry can reduce your credit score by approximately two to five points and they stay on your credit report for two years.

5. Being an authorized user

As an authorized user, you have permission to use another person’s credit card. The problem is that this credit account also appears on your credit report. Any action by the primary accountholder person—whether good or bad—affects your credit.

So, if the primary account holder pays the statement late or maxes out this credit card, this can hurt your credit score and make it harder to qualify for a mortgage. If you’re thinking about purchasing a house, request to have your name taken off any accounts where you’re an authorized user. Unfortunately, this doesn’t work if you’re a joint owner on the account.

The Bottom Line?

Buying a home is a big step. If you’ve spent years preparing for this move, don’t let bad credit card habits wreck your dream. If you use credit wisely and avoid maxing out your accounts, you’ll have a better chance of qualifying for a mortgage.

source: totalmortgage.com

Building Credit for Dummies

Whether you’re just starting to build credit or you’ve taken a hit or two to your credit score and now you’re trying to build it back up, there are a few things you can do to make sure you’re doing everything you can to better that score. Take a look at a few of the most important things you can be doing to get your credit on the right track.


Avoid late payments at all costs. Late payments are a quick and easy way to send your credit score plummeting. When you pay a bill late, it’s listed on your credit report and simply paying it off won’t stop the damage from being done. If paying bills late is a problem for you because you’re forgetful, set yourself reminders or pencil in your due dates on a calendar to help you remember. Paying bills late because you’ve found yourself fallen on hard times is a little bit trickier. If you’re short on cash, payday loan options are available. Of course I (and any other advisor on personal finance with their head on the right way) would never recommend you take out one of these loans unless you really are out of other options – but if you’re stuck between that rock and hard place I recommend you do yourself a favour and go with one of the really public providers like Wonga. Larger brands like these guys have invested a lot in their customer service and are keen to mitigate the volume of negative PR directed at the Wonga brand – so you can be sure they’ll be giving you a better service than you’re like to get with smaller providers. The point of this of course is to make sure your bills are paid on time so they don’t fool around with your credit score. The loan application is done online and the funds are deposited to your bank account the next business day. That means when a bill sneaks up on you, you can pay it off quickly without the extra charges and collateral damage to your credit score (you will be paying back a sizeable chunk on your payday loan however so take care of that ASAP and don’t let that repayment run over-due either or you’ve accomplished nothing!)


Open a bank account. If you’re searching for easy ways to build and establish credit, a bank account is the first place to start. Simply opening an account won’t help you tremendously, but keeping it open and in good standing can do wonders in the long run. Just be wary about your spending habits when you finally start an account of your own as you can just as easily find your credit score slipping if you frequently overdraw your account or make any number of other common mistakes. The longer you have your account, the better your credit report will look. And be sure to go for quality over quantity because opening multiple accounts and never making use of them can just as easily cause you problems. 



Sign a lease (or get your name on one). If you’ve never signed a lease, it’s time to get started. If you’re renting on your own, you’ll have no choice but to sign a lease (and you’ll probably also have to get someone to cosign for you because of your lack of credit). By paying your rent on a regular basis, on time with no complications, you’ll be establishing a healthy credit history. If you can’t afford a place on your own, look into finding a roommate. But be sure to get all parties’ names on the lease. Not only will it help you all establish credit, it also saves you from being solely responsible for damages or late payments if your roommate doesn’t turn out as well as you’d hoped. Make sure you’ve got yourself covered, legally.



If you’re unsure about where you stand as far as credit goes, do yourself a favor and obtain a credit report with your score. This will let you know where you are and what you can do to get to an even better position.

Pablo is 26 and based out of Barcelona, he’s been blogging for over 6 years in the financial industry, offering advice to people on money management and how to build successful financial portfolios.

source: 20smoney.com

Quick Fixes for People with Bad Credit

Do you have bad credit?  If you do, then you’re not alone.  Indeed, having bad credit is not a good thing and no doubt, you want to get yourself out of it as soon as possible.  The good news is, there are positive steps that you can do to improve your credit. Consider these quick fixes:

Know where you stand.  Have you checked your personal credit report? If you have not yet requested your free credit report for this year, you can go to www.annualcreditreport.com to order.  You can order all your three reports from the three major credit bureaus at once so you can be sure that all versions of your report contain accurate information.

Checking your report will
to achieve a high score.

What’s most important is how you pay off your credit card balance.  It’s best to pay off your full balance each month so you don’t incur interest rate fees.  Use your credit card for a small purchase so that repayment need not be a burden.

Avoid hard inquiries.  If you need to acquire a new credit card or a loan, do not submit multiple applications to different lenders at once.  Doing so will only damage your credit score even more.  What you want to do is spend time comparing your options and once you have the right lender, that’s the time you can submit an application.  Don’t forget to check the lender’s credit requirement to avoid unnecessary rejections as this will also pull down your score.

Keep credit usage minimal.  You want to use your credit regularly but you should keep it as minimal as possible.  In fact, you should not use more than 30% of your available credit if you want to see an improvement in your rating.

Apply for a small loan.  Aside from revolving credit, adding other types of debt to your name is a great way to improve your credit score.  An installment loan whether a personal loan, student loan or a car loan gives you the chance to prove your creditworthiness through timely submission of your monthly payments.

Acquire a small loan with just the right period of repayment.  Choose a lender that offers a reasonable deal.  Furthermore, make sure that the loan provider reports to the three major credit bureaus.  As you submit your monthly loan payments, you will strengthen your credit history and add points to your score.

source: creditcreators.com

Five Easy Steps to a Better Credit Score

Improving credit score is not really a rocket science.  Check out these five easy steps on how you can get a better credit score:

Apply for a credit card if you don’t have one.  Using a credit card regularly and paying off your monthly charges on time is a great way to boost your credit score.  This does not mean you should spend a fortune on credit card shopping.  You can use your credit card to pay for a small purchase so repayment can be easy.

Choose a credit card with a low rate and with features that matches your lifestyle.  Read and understand the fine print before submitting your application.  Make sure that your payments are reported to the available credit to maintain a high score.  If you own a credit card or credit cards, check your balance first and plan your spending ahead to avoid maxing out your limit.


Manage different types of accounts.  It’s not enough to have a credit card or multiple credit cards in your name.  You can further improve your credit rating by acquiring different types of debt such as a personal loan, a student loan, a car loan, or if you possible, a mortgage loan.

Lenders who check credit history are interested in how capable you are of manage debt and credit.  If you have a credit card, and at least two different loans in your name, this will surely strengthen your credit standing.  Of course, it’s important for you to submit your monthly loan payments on time to protect your personal credit.

Check your credit report regularly.  Consumers are entitled to one free report from each bureau every 12 months or annually. You can visit www.annualcreditreport.com to order your free report for this year.  You may choose to request all your three reports from the three bureaus at once or you can order one report from one bureau throughout the year.  If you want to directly order from a credit bureau, there is a fee of $9 to $12 per report.

Checking your credit report will give you the chance to examine it for possible errors. In case you find an incorrect detail, you can send a dispute letter to the bureau that issued your report.  You must also ensure that all your account activities are accurately recorded.

source: creditcreators.com

How to Achieve Comprehensive Bad Credit Repair

Are you interested to know how you can attain complete bad credit repair? If you are, then we suggest that you read the rest of this article. In the succeeding paragraphs of this piece, we have enumerated and discussed five tips that can help you succeed in your quest not only to rebuild your credit history, but also to recover your overall financial well-being.

Helpful Pointers for Credit Consumers

Pay off your debt. There is no better way for you to fully regain your creditworthiness other than paying off your credit obligations. So, to succeed in gradually paying down your debt, you need to closely examine your personal finances. Try to identify expenses that you can eliminate to free upon delinquent borrowers and credit cardholders.



Use your credit card wisely. Keep in mind that your credit card activities are being monitored and reported to the three credit bureaus. And the employees of the credit reporting agencies use your credit and payment transactions in computing for your credit rating. So, if you are serious about your desire to cause dramatic improvements to your credit history, then you need to use your credit card wisely. Make sure that you pay your credit charges on time and in full each month. And see to it that you don’t max out the spending limit set on your card account. In so doing, you can gradually push your credit score up, until such time that you can fully regain your credit reputation.

Order copies of your credit report on a regular basis. In some cases, your poor credit standing can be attributed to the outdated and incorrect entries found in your credit report. After all, the system used for updating your credit and payment transactions is not perfect and prone to human error.

This is the reason why finance experts encourage consumers, like you to regularly order copies of their credit files from the three credit reporting agencies – Equifax, Experian and TransUnion. This way, you will have the chance to determine what your latest score or rating is, and to validate the accuracy of the transactions listed on your credit report.

 Read, read, and read. We also suggest that you look for excellent sources of information that can help you achieve your goal of attaining thorough bad credit repair. You can visit the professional blogs and websites of finance advisers where you can obtain expert opinion on how you should manage your lines of credit. You may also take financial literacy courses online so that you can receive practical suggestions not only on how you can regain your credibility as a borrower, but more importantly on how you can responsibly manage your personal finances.

source: creditcreators.com

5 Ways Taxes Can Affect Your Credit

Tax time can be stressful enough without worrying about whether your tax issues will spill over to your credit reports and affect your scores. The good news is that simply filing an extension or finding that you owe the IRS a chunk of money come tax time shouldn't affect your credit reports. It's only when you don't have the money to pay what you owe that it can affect your credit.

Following are five ways that your yearly payment to Uncle Sam can affect your credit.

Going Into Hock to Pay Taxes
Many years ago, in my first year of self-employment, my accountant calculated my estimated taxes but forgot about the "self-employment tax" -- the portion of taxes that cover Medicare and Social Security.
As a result, I learned on April 14 (!) that I owed a much bigger tax bill than I expected. At that time there was no option to pay by credit card, and I didn't want to drain my savings entirely to pay it. I ended up taking out a personal loan from my bank at a low interest rate and paid it off fairly quickly.

It worked out OK. The loan, however, did appear on my credit reports. It didn't create any problems for me, but if you are going to borrow from another source such as credit cards or a personal loan to pay your taxes, keep in mind that debt can affect your credit scores. How much it will hurt (or help) your scores depends on everything else in your credit reports. Keep it in perspective, though. After all, you may find it's better to owe a credit card issuer than to owe the IRS.

Another option is to enter into an installment agreement with the IRS where you pay them monthly until your balance is paid off. In most cases, these payment plans don't appear on your credit. However, if you owe a large amount, you could wind up with a Notice of Federal Tax Lien filed against you, and that will definitely affect your credit. (More on that later.)

Quick Refund Woes

If you need your refund fast, you may be tempted to take advantage of a "refund anticipation loan." Often marketed as "instant" or "rapid" refunds, these short-term loans basically advance you your refund, usually at a very high cost. Whether or not this will show up on your credit reports depends on the lender's policies.

For example, H&R Block (HRB) currently offers a refund anticipation check, and its website says that this is a "bank deposit, not a loan." But it also offers a line of credit called Emerald Advance and that does impact the taxpayer's credit. Their website says, "If you apply and qualify for an Emerald Advance, H&R Block Bank may report information about your account to credit bureaus. Late payments, missed payments, or other defaults on your account may be reflected in your credit report."

Also understand that if your refund takes longer than expected to arrive -- or doesn't come through at all -- you may wind up falling behind on this loan and that can end up on your credit reports. Don't think that won't happen to you. Tax-related identity theft is a large and growing problem I'll discuss in a moment.

The New York Department of Consumer Affairs warns:

    A RAL can damage your credit report ... If you're unable to repay the lender (usually a bank), the bank will report the unpaid debt to a credit agency which will negatively affect your credit report.

Tax Liens
If the amount of taxes you owe is large enough, or if you don't resolve your debt quickly with the IRS, you could find yourself with a tax lien on your credit reports. Tax liens fall in the "seriously negative" category with items like collection accounts or bankruptcy.

Fortunately, the IRS has become more lenient in their policies regarding tax liens in recent years. The threshold for automatically filing a lien has risen from $5,000 to $10,000. In addition, the IRS has a relatively new policy that allows taxpayers to request that lien be withdrawn once the debt has been paid in full. (After it has been withdrawn it can be removed from credit reports as well.) And finally, taxpayers who owe $25,000 or less and enter into a direct debit installment agreement may be able to get the tax lien withdrawn after a few monthly payments have been made.

If you do wind up with a tax lien on your credit reports, take the time to find out whether you can get it removed from your credit if you resolve the debt. If you're successful, your credit scores could rise significantly, provided the rest of the information in your reports is positive.

If you think your taxes may have impacted your credit, you can check your credit scores for free with the Credit Report Card.

Going Bankrupt Because of Taxes

If you simply can't pay, tax debt can force you into bankruptcy. You may have to file to get rid of other debts so you can pay your taxes, or you may have to file to discharge some or all of your tax debt. Either way, the bankruptcy will be a serious setback for your credit and will remain on your reports for seven years if you file a Chapter 13 case or ten years if you file under Chapter 7.

The reason you filed -- even if you believe the taxes were improper or unfair -- won't matter as far as your credit is concerned. All bankruptcies are treated the same when credit scores are calculated.

Identity Theft

If you file your tax return expecting a refund, but are told by the IRS that your refund has already been issued, you may discover that you are a victim of tax-related identity theft. It's a problem that's expected to reach $21 billion during the next five years and the IRS is not doing a lot at this point to protect taxpayers.

While the fact that you have been a victim of this type of fraud won't automatically affect your credit reports, you'll probably want to place a fraud alert or credit freeze on your credit reports. And that will make applying for credit or other services such as a cell phone, utilities or insurance, that much more of a hassle. According to Identity Theft 911, it can take you up to a year to get your refund. So if you were counting on that money to pay off holiday debt, think again.

[Note: Remember, we are all entitled to one free credit report -- though not credit scores -- each year from each of the three national credit reporting agencies at the AnnualCreditReport.com website. Second, Credit.com's free Credit Report Card provides access to two of your credit scores, and, because credit reports can be difficult to understand, it breaks down the information in your credit report in an easy-to-understand way, using letter grades.]

source: dailyfinance.com

5 Store Credit Cards That Can Really Pay Off in Savings

"Would you like to save an extra 10 percent today?"

We've all been offered store credit cards in exchange for an instant discount. For years, my answer was an automatic no. Who needs all those extra cards cluttering up their wallet ... and their credit report?

But it turns out that some of these cards really can be worthwhile for frequent shoppers, with many offering extra savings, lots of rewards, and perks like free shipping on online purchases.



Good credit, plus the ability (and discipline) to pay the bills in full each month, are the key to getting the benefits out of these cards -- otherwise their higher interest rates will quickly erase the savings. And even if you possess both of those attributes, you don't want to go crazy signing up for store cards; it's best to choose just one or two from stores you shop at often enough to rack up real savings.

So if, like me, you find yourself at Target (TGT) every weekend, are all too familiar with Amazon's (AMZN) one-click buying option, and have kids who outgrow their Old Navy jeans every six months, then consider these store-branded card options.

Note: Credit card companies are wily, and sometimes offer different deals to different customers, depending on factors like whether you're a current customer or how often you visit the store's website. The information below is based on the offers we received; if you see less favorable offers, give the company a call and ask for the better deal!

source: dailyfinance.com

Time to Spring Clean Your Finances

Spring is almost here. So if you engage in an annual spring cleaning ritual, make sure you take the time to get your financial house in order, too. Here are six things you should do to tidy up your finances.

Clear out your flexible spending account. By clear out I mean use whatever 2012 money is left if your employer gives you until March 15 to use last year's funds. If there's any money left over in your account after that deadline, you'll lose it. See Last-Minute Ideas to Beat the Flexible Spending Account Deadline for tips to help you use your FSA funds.



Eliminate overwithholding of income tax. If you received a hefty tax refund -- the average check last year was about $3,000 -- consider adjusting your tax withholding so that you get the money when you earn it. Sure, it feels great to get a big check you can use to pay down debt, fund a vacation or add to a retirement account. But it means you’re handing over too much money to Uncle Sam – money you could use each month to pay bills, buy groceries, invest in stocks or whatever. Use our Tax Withholding Calculator to see how much you can add to your paycheck by adjusting your withholding.

Ditch unnecessary tax documents. After you complete your tax return, take some time to clean out your files. See Which Tax Records to Keep and Which to Toss for specific guidance. In general, hold on to all of your tax documentation at least three years beyond the filing due date. To reduce piles of paperwork even further, consider creating a digital archive of your tax records.



Freshen up your insurance coverage. While you're digging through old documents, pull out your insurance policies to review your coverage. See 10 Reasons Your Insurance May Need a Checkup to find out whether you need to update your policies.

Tidy your credit report. If you haven't checked your credit history lately, find time to do it. A recent study by the Federal Trade Commission found that one in four consumers had errors on their credit reports that might affect their credit scores, and, in turn, hurt their ability to borrow money or get new credit. See Why You Should check Your Credit Reports Each Year and visit Annualcreditreport.com to get a free copy of your credit report from each of the three credit bureaus -- Equifax, Experian and TransUnion.

Unclutter your home. By cleaning out the closets, attic or basement in your house, you might be able to improve your financial situation. See Clear Your Clutter to Reap Financial Benefits to find out how you can put more cash in your pocket or take advantage of tax breaks by getting rid of things you don't need.

After you've made these moves, see our Spring Home Maintenance Checklist for 18 steps you should take to save money on energy bills this summer and ward off big-ticket repairs.

source:  kiplinger.com

How to Get a Truly Free Credit Report

The federal Fair Credit Reporting Act (FCRA) entitles every American to a free credit report each year.

So, how do you get your free credit report? Should you go to GoFreeCredit.com or some other site with a catchy jingle?

Nope. There's a better way. Your truly free credit report comes from AnnualCreditReport.com.

How Do Those "Free" Credit Report Sites Work?

Chances are that you have seen a commercial on TV or a clever ad on the Internet directing you to check your free credit report by visiting a specific website — usually something with the words "free" and "credit" in the URL.

Technically, your credit report is free, but you often have to provide your credit card before accessing your credit report. This is because your "free" credit report is a "reward" for signing up for some sort of credit monitoring service or some other credit-related product.

In many cases, your sign up is treated as a "free trial." You provide your credit card number and agree to a 7-day or 14-day free trial. At the end of that time period, if you haven't canceled, then your card is charged the regular fee for the product. The company hopes that you will forget about canceling your trial, and that you will allow your card to be charged.

Another variation of this type of product is that receiving your free credit report is contingent upon signing up for credit services that alert you to negative items on your credit report and then automatically dispute them. These programs charge your credit card only when a dispute is lodged with the credit reporting agency. However, any negative item is often disputed. Unfortunately, if the negative item is accurate, it won't be removed from your report. So you might end up paying for a useless dispute.

What About Free Consumer Credit Sites?

Another way to access your free credit report is to make use of free consumer credit sites. These are sites like Credit Sesame, Quizzle, and Credit Karma that provide you with some consumer credit information for free.

Sesame and Quizzle are associated with Experian, so you can get a look at your Experian credit report free of charge with these sites. You can review items on your TransUnion credit report when you sign up with Credit Karma.

These consumer credit web sites don't ask for your credit card information, and you won't be charged for looking at information related to your credit. However, the information might not be updated as frequently as you would like, and you are limited as to what information you receive — and you won't get a free credit report from each of the three major credit bureaus. You only receive information that is on the report compiled by the sponsoring credit agency.

Consumer credit sites make money by providing leads to financial product providers. So, while you aren't charged directly by the site for viewing your credit information, these are still portals designed to make money for the credit agency. If you click on an ad for a new credit card, or indicate that you are looking to refinance, the consumer credit site gets a kickback if you go through with your transaction.

Visit AnnualCreditReport.com for Your "Official" Free Credit Report

If you want an "official" credit report free of charge, your best bet is to visit AnnualCreditReport.com. This site is maintained by the three major credit bureaus (Equifax, TransUnion, and Experian) in accordance with the FCRA. Using this portal, you can get one free credit report from each of the bureaus every year.

You don't have to enter any credit card information, and your information isn't used to try to sell you other financial products and services. It's fairly easy to get your credit report.

1. Select the state you live in from a drop down menu, and then click the "Request Report" button.
    
2. Fill in the identifying information on the form. This information includes your name, birth date, Social Security number, current address, and a previous address if you haven't been at your current address for at least two years. Fill in the CAPTCHA, and you're on your way.
    
3. Choose which credit report you would like to view. You will be taken to the site of the credit bureau providing the report. You might have to answer additional identifying questions before viewing your credit report.
    
4. When you are done, you have the option to return to AnnualCreditReport.com and select another credit report.

Stagger Reports for Free Credit Monitoring

Some consumers prefer to receive their free credit reports individually, rather than all three at once. It's possible to decide to get a different report from a different agency every four months. This way, you can monitor your credit situation without having to pay the "reasonable" fee that you can be charged to view your credit report if you have already seen your free report for the year.

While this can be an attractive tactic, it's important to understand that the three credit bureaus don't always have all of the same information. So information that is accurate on one of your credit reports might have a mistake on another report. On top of that, one credit bureau might have record of a fraudulent account, while another agency might not have the information.

How Else Can You Get a Truly Free Credit Report?

Finally, you can get a free credit report if you have a negative outcome on a credit application. If you are denied credit, or if you are ineligible for the best interest rate on a loan, you are entitled to a free credit report. You are also entitled to a free credit report if the information used results in a higher insurance premium.

However, you can only get the report used by the creditor or other financial services provider to make the decision. So, if an insurer pulled your Experian report and decided to give you a higher premium, you will only be entitled to the Experian report. You have to send the credit agency in question a request for your report in writing within 60 days of the negative action to receive your report.

Bottom Line

There's no reason to pay for extra services through a "free" credit report site with a catchy jingle and fine print requirements. You are entitled to one free report from each of the bureaus every year. On top of that, it's also possible to pay between $7 and $15 for a credit report if you have already exhausted your supply of free reports.

There's no reason to sign up for a "free trial" that turns into a credit black hole.

source: wisebread.com

Five Key Facts About Credit Ratings

Having a good credit history is very important when it comes to making an application to borrow money, and most people agree that credit ratings are extremely important. However, very few people actually know precisely what a credit rating is and how they’re constructed, so we’ve pulled together five key facts that will give you a much clearer idea about everything concerning credit.



A lot of people say “it’s too complicated to check my credit history” but it’s actually very easy with companies like CreditExpert and time extremely well spent. You have the right to see your credit rating and to make sure that any errors that are on it are corrected immediately. Most of the time the credit companies will do amend any errors for free. Bear in mind that simple things like old mobile phone contracts that were never fully cancelled can have an effect, so it’s good to do a spring clean at least once a year.

Black Lists Don’t Exist

Each lender has their own criteria of what represents the perfect customer, and it might not necessarily be the same from lender to lender (in fact, the odds are that it’s not). So, just because you’ve been turned down from one bank doesn’t mean that you’ll get turned down by another. However, it’s a good idea not to make too many applications in quick succession, as each time you do a ‘search’ will be carried out on your credit rating, and too many searches in a short period could raise the alarm.

Profit Is More Important Than Risk

Most people assume that the banks decide who they’ll lend to on a basis of risk. If you’re not likely to pay back any debt in full, they shouldn’t lend. Unfortunately, that’s not the case, if you have a perfect credit history, never have credit card debt and pay everything off in full as quickly as possible you could still be rejected because you won’t make the bank very much money. This is rare but it does happen.

Use Your Rights

As mentioned above you can correct any errors on your credit report simply by writing to the credit agency concerned, however, sometimes you may have to talk to the company who filed the report, rather than the credit agency. There are a whole strings of rights attached to credit reports, and you should never have to pay to have something amended. If you’re having real problems, you can always talk to the Citizen’s Advice Bureau.

Your Credit Score is Not Fixed

You may have seen adverts for products that will ‘repair your credit score’ and these will usually cost you money without making any difference to your score. However, there are a whole list of things you can do to improve your credit rating, whether it’s something simple like getting on the electoral roll, or cancelling an old phone contract. So, if you do check your rating and it’s not so good, there’s no need to fear the worst.

source:  christianfinanceblog.com