Top creditors to suspend poorest countries' debt payments, France says

PARIS - Major international creditors have agreed to suspend debt payments owed by the poorest countries this year, throwing a financial lifeline to help cope with the coronavirus crisis, France's finance minister said on Tuesday.

Some 76 countries, of which 40 are in sub-Sahara Africa, were eligible to have debt payments worth a combined $20 billion suspended, out of a total of $32 billion the countries were to spend on debt servicing this year.

"We have obtained a debt moratorium at the level of bilateral creditors and private creditors for a total of $20 billion euros," Bruno Le Maire told journalists.

The government creditors, including not only the Paris Club but also China and other members of the Group of 20 economic powers, are to suspend $12 billion under the agreement, which remains to be finalised on Wednesday.

Separately, a senior German official spoke of a debt moratorium by official creditors worth up to $14 billion.

"We're glad in particular that China agreed to participate in this moratorium. All that will free up money for the countries that need it the most," Le Maire said.

China has become a major creditor to developing countries, especially in Africa, but there is little transparency about how much they owe.

Private creditors have agreed on a voluntary basis to roll over or refinance $8 billion in debt, a French finance ministry source said.

Of the total $32 billion due this year, the remaining 12 billion euros is owed by multilateral lenders, mainly the World Bank, Le Maire said, urging such lenders to join the debt relief initiative.

The World Bank and the International Monetary Fund called last month on government creditors to give debt relief and the IMF said on Monday it would do so for 25 countries under its Catastrophe Containment and Relief Trust, which has about $500 million in resources on hand.

French President Emmanuel Macron said in a television address to the French nation on Monday that African countries should be helped by "massively cancelling their debt".

Le Maire said that at the end of the year outright debt cancellation should take place on a case-by-case basis and in coordination with multilateral lenders depending on the economic situation of the countries as well as developments in commodity markets and capital flows. 

-reuters-

COVID-19 cases and deaths rising, debt relief needed for poorest nations: WHO

GENEVA -- The head of the World Health Organization voiced deep concern on Wednesday about the rapid escalation and global spread of COVID-19 cases from the new coronavirus, which has now reached 205 countries and territories.

WHO Director-General Tedros Adhanom Ghebreyesus said that his agency, the World Bank and the International Monetary Fund backed debt relief to help developing countries cope with the pandemic's social and economic consequences.

"In the past five weeks there has been a near-exponential growth in the number of new cases and the number of deaths has more than doubled in the past week," Tedros told a virtual news conference at the organization's Geneva headquarters.

"In the next few days we will reach 1 million confirmed cases and 50,000 deaths worldwide," he said.

China, where the coronavirus outbreak first emerged in December, reported dwindling new infections on Wednesday and disclosed for the first time the number of asymptomatic cases, which could complicate how trends in the outbreak are read.

Asked about the distinction, Dr. Maria ver Kerkhove, a WHO epidemiologist who was part of an international team that went to China in February, said the WHO's definition included laboratory-confirmed cases "regardless of the development of symptoms".

"From data that we have seen from China in particular, we know that individuals who are identified, who are listed as asymptomatic, about 75 percent of those actually go on to develop symptoms," she said, describing them as having been in a "pre-symptomatic phase". The new coronavirus causes the respiratory disease COVID-19.

The outbreak continues to be driven by people who show signs of disease including fever and cough, but it is important for the WHO to capture that "full spectrum of illness", she added.

Tedros praised India's $22.6 billion economic stimulus plan - announced after a 21-day lockdown imposed last week - to provide free food rations for 800 million disadvantaged people, cash transfers to 204 million poor women and free cooking gas for 80 million households for the next 3 months.

"Many developing countries will struggle to implement social welfare programs of this nature," he said.

"For those countries, debt relief is essential to enable them to take care of their people and avoid economic collapse. This is a call from the WHO, the World Bank and IMF - debt relief for developing countries," he said.

But debt relief processes are lengthy, Tedros said.

"What we are proposing together with the World Bank and IMF is an expedited process to support countries so their economies will not be getting into crisis and their communities will not be really getting into crisis," he said. 

source: news.abs-cbn.com

EU members won't agree to pooled debt

ROME - The European Union's economics commissioner said Monday that member states would never all agree to mutualized debt, but that a compromise with Germany was key to Europe surviving the coronavirus crisis.

One way to finance the massive effort needed to shore up Europe's economy during the crisis "is to issue bonds, but not generically to mutualize the debt, which will never be accepted," EU Economics Commissioner Paolo Gentiloni told Italy's Radio Capital.

Ongoing disagreements among member states on what policy to take risked splitting and dooming the European project, added Gentiloni, a former prime minister of Italy. 

Gentiloni's comments came after Italy and other southern countries lobbied unsuccessfully last week for so-called "coronabonds," which would allow for pooled debt shouldered collectively by eurozone members.

On Thursday, Germany and other northern EU states rejected a proposal backed by nine countries, including Italy, Spain and France, for such mutualized debt issued in the name of the eurozone as a whole -- a long-established red line in Berlin. 

Gentiloni said he had expected that reaction by Germany, calling it a "long-standing vision that we know by heart".

Germany has repeatedly dismissed the idea of mutualized European debt as an attempt by over-spending southerners in need of economic reforms to take advantage of the cheap borrowing rates enjoyed by states with balanced budgets, without being subject to fiscal austerity measures.

Also on Monday, Italian Prime Minister Giuseppe Conte said Europe needed to deliver a "decisive blow" in face of the crisis. 

"No one is asking Europe to assume sovereign debt, only to be capable of delivering a decisive blow to be able to get out of this socioeconomic tsunami," Conte told Spain's El Pais newspaper. 

"Italy isn't asking that its accumulated public debt be shared," he said. "This debt will remain the responsibility of every country."

"Now is the moment to introduce a common European debt instrument that allows us to win this war as fast as possible to revive the economy," he told the paper. 

Conte said the dismantling of restrictive measures in Italy, such as the closing of most businesses and the quarantine of citizens, would be assessed only when the "curve" began to fall, cautioning that such loosening of restrictions would be gradual.

DYING OUT 

Gentiloni told Radio Capital that without cohesion in its response to the coronavirus crisis, "the European project is in danger of dying out." 

"It is clear that if the economic differences between European countries, rather than shrinking in the face of a crisis like this, instead increase... it will be very difficult to keep the European project together," he warned. 

Without Germany, he added, "we cannot find a compromise".

European member states should "start with the common objectives" in order to break the standstill, he said.

"We need a new unemployment guarantee instrument, a business support plan and we need the "Green Deal" development model to not be forgotten," he said.

In addition to his skepticism over the viability of coronabonds, Gentiloni said he was "not very optimistic" about continued discussions over the possible use of the European Stability Mechanism, which normally attaches strict fiscal conditions to its emergency borrowing. 

Some say that mechanism, set up in 2012 during the European sovereign debt crisis, would in the current coronavirus crisis unfairly punish already highly indebted countries such as Italy, imposing new and unattainable conditions for fixing its public finances.

Comparisons with past crises were unhelpful in confronting the challenge posed by the coronavirus pandemic, Gentiloni suggested, a view also voiced by Italy's minister for European affairs.

"It's a new crisis, it's not comparable to the crisis of 2008, there is no guidebook, there are no clues that leaders recognise from the past," European Affairs Minister Vincenzo Amendola told journalists on Monday. 

"When we think about the sacrifices of the people, it's a huge, extraordinary novelty with dramatic consequences, and leaders must respond to the challenge."

source: news.abs-cbn.com

How to get rid of personal debt

Incurring personal debt is among the problems hounding some Filipinos as the new year approaches. But a financial advisor reminds the public the cycle of borrowing can be overcome.

source: news.abs-cbn.com

Chile's middle class takes to streets over crushing debt

It is not poverty that is driving Chile's middle class into the streets to join massive protests: it is debt, brought on by sky-high private health and education costs that have created an economic fragility many find unbearable.

That is why so many have taken part in two weeks of social upheaval, protesting against the economic policies of Chile's ruling elite.

Chile has an economic record that is the envy of Latin America: poverty has never been lower, dropping from 40 percent to less than 10 percent in 30 years, and transforming this country of 18 million into one where middle class citizens are the majority.

But for many, the ultra-liberal economic model inherited from the Augusto Pinochet dictatorship (1973-90) -- which privatized water, health, education and pensions -- has generated a "permanent worry" about unexpected expenses.

Nicolas Achondo, 33, was forced to close his restaurant.

After paying bills, wages and taxes, he had nothing left for private health insurance.

A motorbike accident left him owing thousands of dollars for treatment.

"I couldn't pay, they put me on the debtors list. That closes all doors to you: you can no longer get a bank loan or rent an apartment," he said.

"I no longer had access to credit and my business started generating debts. It's very unfair."

Thanks to help from his family, he managed to pay off his debts but has no capital to relaunch his restaurant business. He now wants to emigrate to Canada.

"We don't get state subsidies. The only thing we can do is access bank loans to pay for housing, health, education, clothing," said Achondo.

His parents suffered the same fate. They owned a video store in the 1980s-90s but fell victim to evolving technology.

They managed to pay for their two eldest children's private education without needing loans, but could not afford the same for their younger two children, both of whom are in the vastly inferior public school system.

- 'With or without uterus' -
Marisol Berrios, a social worker, took out loans to pay for her two children's higher education.

"Now they're both university professors but they have insecure contracts. They receive the minimum wage and have no health care."

In a model with minimal state intervention, profitability is king.

As is often is the case, women are the hardest hit. They have to pay up to three times as much as men for health insurance when they want children.

"There are 'with uterus' contracts and 'without uterus' contracts that are cheaper. You pay a higher percentage when you're fertile," said Berrios.

Women also pay more in old age, says the 59-year-old, who admits to fearing retirement.

"I will retire in one year and my pension will be 170,000 pesos ($230)," said Berrios, who currently earns 1.2 million pesos ($1,620) a month.

"I went into depression about it this summer."

Health, education and pensions may be the biggest worries but on top of that are increases in electricity costs, a proliferation of motorway tolls around Santiago and an unregulated medication market.

For fed-up Chileans, it's this accumulation of expenses that weighs so heavily.

It was against this backdrop that a seemingly innocuous 3.75 percent hike in the price of a metro ticket lit a fuse under decades of pent-up frustration.

In a bid to douse the flames of discontent, conservative President Sebastian Pinera announced a raft of social measures: suspending a 9.2 percent hike in electricity bills and an annual 3.5 percent increase in toll charges.

But that didn't calm the public.

"Chile has awoken," has become one of the main slogans of anti-government protesters since October 18.

"We've woken up to the brutality of the system," said Berrios.

source: news.abs-cbn.com

Trapped in debt? Here are 7 steps to free yourself

MANILA - Do you feel like you're drowning in debt? If you are, and you think there is no way to escape the debt trap, don't despair. With good planning, discipline, and a measure of sacrifice, you can retire your debt and be free from its burden.

Before you address your problem, try to look back and see how it started. You may be among thousands of Filipinos who are saddled with debt accumulated slowly over the years. This may be the result of living beyond one’s income, lack of planning, or sudden emergencies that force one to borrow, among many other factors.

For many, debt can creep up unknowingly. A personal loan here, a mortgage there, plus months of just paying the minimum amount due on your credit card, could add up until you one day find it beyond your control.

Whatever the cause, what’s important is that you take immediate action before debt paralyzes you financially and even legally. Your action will have to be on two levels – behavioral and financial – so that you can effectively cut down your debt.

 Here are seven steps to help you surmount your mounting debt:

1. Take a hard look at your finances.



This step is necessary since retiring debt calls for a sound plan that you can implement. Try to determine what you are paying for and how much. Just knowing how much you owe can surprise you. By doing this, you will also be able to determine which debt you have to prioritize, e.g. those that cost the most to maintain. You would like to retire the debt that charges you 20 percent a month ahead of the debt that charges you 12 percent a year. Understanding your finances will also allow you to come up with a workable solution.

2. Restructure the most expensive loans.

Today is a great time to restructure loans, given the low-interest rate environment. Are you paying credit card debt? Possibly with more than one credit card company? You will never get out of debt if you do not manage this. Talk to your credit card providers about restructuring the loan. You may also get a personal loan at a lower interest rate to help bring down your interest costs. Study all options available to you, while taking note of penalties and transaction fees.


3. Slash, not just cut, your monthly expenses.

Look at your lifestyle to find out where you can scale back. If you spend so much on entertainment, then cut this drastically. No more expensive night outs or fancy dinners for the time-being, unless you can find more affordable alternatives. Forget expensive vacations. Turn off the aircon and use an electric fan instead. Skip the expensive hair treatments. The cutbacks you can make will all count.

4. Sell assets. Raise cash to retire your loan by selling off assets, big and small.

Do you really need two cars? Do you need to stay in that very expensive house or would a smaller unit in a less luxurious part of town suit your purposes? Those diamond rings sitting in the closet may be your ticket to debt freedom. Even those expensive bags you picked up in your shopping sprees could fetch a fortune in the second-hand market. Selling off assets could help you bring down debt levels drastically.

5. Find additional income sources.
Find other cash sources so that you can put this toward retiring your debt. Are there additional projects you can take on or other jobs you can hold? Try tutoring children in your spare time, or baking cookies on weekends. Your creativity is your limit. This new income source will give you the elbow room to wiggle out of debt.

6. Live below, not just within, your means.

Sometimes you have to change your lifestyle drastically. You may need to dress simpler, consume less, and live a less luxurious life. You may look into selling your car and going back to taking public transportation to work, if your car loan is the cause of your debt burden. If living independently is causing you to bleed financially, think about moving back to your parents. Perhaps the kids could go to a less pricey school. The situation varies per individual, so take what is most appropriate for you.

7. Pay off as much as you can.

Try to retire as much debt as you can, to keep interest costs low and to hasten the debt retiring process. Pay more than the minimum amount due on your card. The longer you are in this situation, the more stressful it can get for you. Bite the bullet now and embrace the inconveniences and hardships it brings, knowing that this is necessary on your way to getting out of debt.

In all these, do not forget to stay focused. Don’t lose sight of your goal, which is to free yourself from debt that can affect you for life if you do not act on it now. By staying focused, you will be less tempted to spend on unnecessary items or to slack off in your debt retirement efforts.

Have a spreadsheet to help you monitor how close you are to your targets. Stay positive and remind yourself that freedom from debt will soon be at hand.

source: www.abs-cbnnews.com

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

Qualifying for a Mortgage When You’re Self-Employed

When John Kennedy observed that “life is unfair,” at a press conference in 1962 he wasn’t referring to the challenges self-employed workers would face getting a mortgage fifty years later—but he would have been right.

If you are one of the 14.6 million people in the US[1] who make a living working for yourself—about 10 percent of the total workforce—you don’t fit neatly into the profile of borrowers whose income can be easily documented for a mortgage application.

Tax returns don’t tell the whole story

It’s not impossible to get a mortgage if you are your own boss, but you’ve got to jump through some extra hoops to qualify.  That’s because self-employed borrowers typically have to provide two years’ worth of tax returns, which lenders will want to obtain directly from the IRS.

Yet tax returns often don’t accurately reflect their take-home pay.  Self-employed people typically take advantage of a slew of tax deductions related to their businesses, from retirement plans to home offices.  These reduce their taxable income, but they also reduce their adjusted gross income, which is what lenders look at for proof of income.

In some cases, mortgage lenders will allow certain deductions to be added back to the income such as depletion, depreciation or a large, nonrecurring item.

Plan ahead if you can

One solution is to plan ahead and write off fewer expenses for the two years leading up to applying for a mortgage, a strategy that could either cost you significantly at tax time or require you to refile you taxes after your mortgage is approved.

Another suggestion is to separate your personal funds from your business by using a credit card devoted to your business expenses, then convince a lender that the debt isn’t against you because it belongs to the business.  Finding the right lender could still be difficult, and you could still miss some of the most popular deductions, such as home businesses and cars used for business.

Timing is also important.  Self-employed workers typically have highly volatile businesses.  By using income averaging over 24 months, borrowers can avoid declines in income from one year to the next.

Reduce debt to improve your chances

The reason lenders want to see your income is because they need it to determine whether you have enough income to make you monthly debt obligations, a calculation expressed as your debt to income ratio. The median DTI for recurring debt on closed conventional purchase loans today is about 35 percent for recurring debt payments.[2]

By reducing or eliminating your recurrent debt payments, such as your car or student loans, you can reduce your DTI ratio, which will help you qualify for a larger mortgage.

source: totalmortgage.com

How to live a debt-free 2016

Everyone's circumstances when it comes to being in debt are different but you should eliminate all your debt as soon as you can.

Here are tips to living a debt-free 2016:

To read more information on personal finance, head on to MoneyMax.ph.

Mobile users can view the desktop version of the slideshow here.

 

source: www.abs-cbnnews.com

A Different Way to Look at Debt

There’s often conversations about debt being good or bad. But really, debt is just debt. It has no emotions and you’re the person who’s in control of it.

I read a comment recently that rephrased this good vs. evil debt mentality in the most perfect way: debt is not good or bad – it is profitable or unprofitable.

Student Loan Debt
I’ve personally never had any student loan debt so I don’t know what it feels like it to have it hovering over my head. But going through the theory of profitable vs. unprofitable debt student loans could fall into either.

Your student loan debt is profitable if:

    Your degree helps you land a job that pays higher than you could get without a degree. (Because we know that not all degrees are going to score you a high paying job.)
    You use your student loans to pay for tuition and related expenses.

If you’ve used your student loan debt to finance a lifestyle that you shouldn’t be living right now then your student debts are not profitable.

Use your student loans to advance your career, earn decent money, and only use them to pay for necessary college expenses and you’re looking at profitable debt.

Consumer Debt

Consumer debt is the absolute most unprofitable debt that you can have. If you’re using credit cards and other personal loans to finance your life you’re living beyond your means and are setting yourself up for financial disaster.

Stay away from this type of debt.

Mortgage Debt

Mortgage debt is a big toss-up. If you plan on living in one place all of your life, purchasing a house may save you money in the long run over renting.

However, if you’re not staying in one place forever and at some point need to sell your home you could lose a lot of money if housing prices drop. OR you could make a small profit when it came time to sell.

Mortgage debt is one that comes down to individual circumstances although I would argue that it definitely leans more toward the unprofitable side of the equation.

Investments

Debt becomes the most useful when it comes to investing. Many investors have built their wealth by leveraging debt and purchasing real estate.

Other ways to use debt to its advantage is when you’re investing in yourself in a way that produces tangible results or using that money to grow your business.

Bottom line: debt isn’t good or evil. When you intentionally use it to its advantage it can be a tool for building wealth. If you use it in an irresponsible way it can be a path to financial disaster.

source: everybodylovesyourmoney.com

Do You Really Need to Take Out Life Insurance in Your 20s?

When you’re in your 20’s you have your whole life ahead of you. Most people in this age bracket are care free and don’t worry about more serious issues in life. Taking out life insurance is the last thing on most people’s minds when they’re at this age. However, many older people will tell you that not taking out life insurance at a younger age is a big mistake. The earlier you take out this type of insurance, the better. These are some of the most important reasons you should seriously consider taking out life insurance in your 20’s.

Saves You Money

Most insurance companies offer better life insurance policy terms to younger people. As you get older the premium rates increase. The earlier you take out a life insurance policy, the cheaper it will be and you will be locked in at a cheaper rate. These policies can be taken out for many decades to come. You could receive cheaper insurance for the rest of your life, compared to those who take out insurance when they’re older. Over time this will save you a substantial amount of money.

Pay Off Outstanding Debts

Many people take out various loans at different stages in their lives. Student debts, car loans and other debts are a major concern for the person taking out the loan. However, they can also be a huge problem for other people close to you too. These debts build up and some may have been co-signed by other members of your family such as your parents. If something happens to you and you don’t have the appropriate insurance, these family members may have to pay off these debts for you. This is definitely not something you want to burden those closest to you with. Taking out your own life insurance policy as soon as possible prevents this unnecessary stress from happening to your loved ones.

Some loans such as mortgages are much larger and leave behind even bigger problems if you die and you’re not insured. Mortgage insurance products are designed to pay off the balance of your mortgage if this happens. Anyone in their 20’s who is a homeowner or intends to buy a house is always advised to take out this type of insurance to avoid serious complications later.

Protects You from Unforeseen Events

Different life insurance products are available to individuals under 30. When life insurance is mentioned, most people think of death benefit and leaving money for those close to them after they’ve died. However, there are certain policies that also help you while you’re alive.

As you get older, the risk of health problems also increases and this can be extremely costly. Various policies are designed to aid anyone who suffers from certain medical problems or injuries later in life. Taking out a life insurance policy in your 20’s provides you with a safety net in case you become ill and cannot work to provide for yourself and family members.

Provides a Safety Net for Others

Some people in their 20’s are married and have a family. Others plan to marry in the future. This means you have more responsibilities and more people to take care of. An accident or illness can have devastating effects on those around you. It’s often left to those closest to a person who gets sick or injured to pick up the pieces. However, the burden on those around you is eased if you have taken out the appropriate life insurance. It protects your loved ones and can help you recover without having to worry about any financial problems that may arise if the worst happens.

Peace of Mind

Life today can be hectic. You may have financial pressures, family pressures and other concerns. For many, the unknown can be frightening. However, sitting down with a trusted financial advisor and finding out all the facts about life insurance will put your mind at ease. It’s not as expensive as many people think it is and it’s definitely something everyone in their 20’s should consider.

When you’re young you feel invincible and life insurance is something that doesn’t even cross the minds of most twenty-somethings. However, it’s never too early to plan for your future, especially when it comes to this type of financial product. Taking out life insurance in your 20’s can have a huge effect on your life and the life of those around you in later years, making it one of the most important financial decisions you’ll ever make.



source: 20smoney.com

A Few Easy Ways for You to Improve Your Credit Score

Few people truly understand credit scores. This isn’t surprising, since the algorithm used for the calculation of a credit score are so complex that only a computer can perform them. Most people want to figure out how to improve their credit score, and this leads to a number of questions. Those questions (and their answers) are below, as well as five great ways to help you improve your score.

Questions (and Answers) People Have about Improving Their Credit Score

• Should I hire a credit repair company in order to improve my score? No, you can do it yourself and save money.
• Will my score improve if I get married? No, your score is personal.
• Will my score improve if I make regular payments on time? Yes, this is one of the most important ways to increase your score.
•  

Let’s take a look at some of the ways in which you can improve your score.

1. Get Rid of Any Issues

This is a slightly sneaky trick, but if it works, it’s worth it. Ask for a copy of your credit report and officially file a dispute against each of the negative marks on there. Chances are that the credit of at least one of them will not respond, which means the credit bureau will remove it. Of course, do also check whether there are any marks on there that actually need contesting.

2. Ask for an Increased Credit Line

If you have a higher credit line, then your credit utilization ratio will also improve. This is because you will use a smaller percentage of your actual limit. As a result, your credit score will improve. With credit cards, you can usually request an increase without them checking your credit score. It is always worth asking, therefore. However, if they want to do a credit check, cancel your application because that will give you a new negative mark.

3. Pay Your Debt

You have to make sure you have as little debt as possible on your file. The less debt you have, the better your credit utilization ratio. The best way, but not the quickest way, to achieve this is by paying your debt. Always pay the debt with the highest interest rates first, as that will improve your credit utilization ratio the quickest.

4. Use the Credit Card as Little as Possible

You may think that you are doing the right thing by always paying off your credit card, but your score is calculated on your balance once a month. If that happens to be the day before you pay your balance, it will actually look bad on you. Hence, use your credit card as little as possible so that your balance is good.

5. Keep Your Eye on New Tips

There are always new tips out there and you should check them out. Follow things like https://123moneyhelp.com/blog to be kept up to date with these new tips. All in all, this will help you improve your score.

source: marriedwithdebt.com

Seven Ways to Lower Your DTI

Your debt-to-income (DTI) ratio is one of the three most important factors that lenders look at when deciding whether or not to approve you for a mortgage (the other two? Your FICO score and the loan-to-value ratio, which varies with the price of the house you plan to buy).

DTI is considered especially important in determining your ability to repay the mortgage.

It is computed with your total monthly debt payments and gross monthly income (before taxes are taken out). It is expressed one of two ways, either including your estimated monthly mortgage payments (”back end”) or your debt obligations before you take out the mortgage (“front end”).

In 2014, an important new rule promulgated by the Treasury Department had a major impact on DTIs. Known as the QM Rule and designed to toughen ability-to-repay requirements, it had the effect of limiting DTIs to 43 percent. That means borrowers with DTI’s above 43 won’t get loans.

In practice, lenders are actually even more conservative; the median back-end DTI is about 37 percent for approved mortgages. That means most monthly debt payments including mortgage payments total no more than 37 percent of total monthly gross income.

DTI can be a killer for young adults making sizable student loan payments or for consumers who have run up debt. However, even those with long-term debt payments like student loans, auto loans, or back taxes can get a mortgage if they improve their DTI.

Here are five steps anyone can take to lower their DTI.

1. Pay off your smallest debts first.

Even a hundred dollars on a credit card requires a minimum monthly payment, which will increase your DTI. Pay these off in full. Dollar for dollar, you will get more debt reduction with this tactic than any other.

2. Refinance high APR credit card debts with a low APR card.

APR means annualized percentage rate—the actual interest you pay over a year. It’s a way to look at the interest you are paying without focusing on special introductory rates, which can be misleading. Many lenders offer cards with very attractive APRs to customers who have good credit ratings.

If you have cards that are past their introductory period, though, you may be paying a higher APR than you need to. Contact one of the major credit card lenders to see what they will offer in the way of a lower APR card. When you find one, consolidate your high APR debts under your new low APR card. You will reduce your monthly debt load and pay at a lower rate of interest. In a year, review where you stand. If the marketing rate that made your new card attractive has expired, consider finding a new one and consolidating again.

3. If you thought you outfoxed the dealer and got a great deal on a new or used car, check again.
You might be paying interest at a rate much higher than you need to. The median APR for car loans today is 4.38% for a 60-month loan (five years) on a new car and 5.2% on a 36-month loan a (three years) for a used car. Refinance your car with the most competitive rate you can find from an online lender.

When you refinance, you can increase the length of time of the loan if you have had your car for a reasonable length of time. Lowering the interest and stretching out the principal over a longer period of time could significantly reduce your monthly payments.

4. Refinance long-term debt to lower your monthly debt payments by stretching out the term of your loan and take advantage of lower rates.
If you graduated more than three years ago, chances are good you can find a better interest rate today, depending on your credit rating. Remember, if the interest rate is the same, when you refinance a loan to lengthen its term, you will be paying more in interest over the long term than you would have if you had not refinanced.

5. Borrow from your 401K retirement plan at no interest to pay off smaller debts or pay down larger ones.
As you make future monthly contributions to your plan, a portion will go towards paying off the amount you withdrew. You will also have to pay taxes on your withdrawal. Repay the withdrawal as soon as you can to keep your retirement savings on track.

6. Get Government help.

In an effort to encourage new renters to convert to buyers, several government programs exist to help. Federal Housing Administration (FHA) loans allow borrowers to get into a home with a high debt to income ratio, allowing for a slightly higher mortgage payment amount than the buyer might normally qualify to pay. Veterans may be able to get assistance through a Veterans Administration (VA) loan, which allows the total amount of housing expense plus recurring debt to be as much as 41 percent.

For homeowners interested in refinancing, the government offers help through the Home Affordable Refinance Program (HARP). Before seeking this type of loan, borrowers should gather as much information as possible to help prove they’re working hard to pay down all debts. You’ll also need to have been on time for all of your payments for at least the past year and have credit in good standing. HARP primarily targets homeowners who have a small amount of equity in their existing homes or who currently owe more than their home is worth. Borrowers may have to check with several lenders to find one who offers HARP as a refinancing option.

For those with high debt-to-income ratios, landing a home loan may be challenging, but it’s far from impossible. By lowering debt and working directly with lenders to learn about all the options available, borrowers can get into a home and begin to work on paying off all of those debts to make the next purchase easier.

7. Increase your down payment.
While this may not be a viable option for someone with a high amount of debt, you can boost your chances by putting up a large down payment. The less you have to borrow, the less strict the requirements, increasing your chances of success. A large down payment shows the lender that you’ve invested in the property, as well, reducing the risk that you’ll abandon the property before the mortgage is paid in full.

The bottom line

Take a hard look at your debt situation before you start applying for a loan. Compute your DTI. Count only income you can document with pay stubs or tax returns.  If you find yourself close to the 37 percent threshold, take steps now to reduce your monthly debt payments.

source: totalmortgage.com

Is a Second Mortgage a Good Idea?

To many home buyers the idea of taking out two mortgages on the same house sounds frightening. However, a second mortgage—also known as a second trust junior lien—makes good sense in the right circumstances and can actually save you money.

A second mortgage is simply a loan secured against your property as collateral. The term “second” indicates that the loan does not have priority on your home in case you default. Should that happen, your first mortgage has priority and that loan would be paid off before any funds go towards the second mortgage.

As a result, second mortgages come with higher interest rates than first mortgages. Second loans require fees and closing costs, just like first mortgages. You may also be required to pay points (one point is equal to one percent of the loan value) which could make the loan less attractive. You’ll need a good credit score and documentation for enough income to make the payments.

Three popular ways buyers and homeowners save money with second mortgages:

Avoiding private mortgage insurance. Buyers lacking a large down payment can use a second mortgage to qualify for their first mortgage without having to pay expensive private mortgage insurance.

Staying within GSE loan limits. With prices rising in the nation’s more expensive markets, buyers can buy a home that exceeds the limits for a loan to be bought by Fannie Mae, Freddie Mac or Ginnie Mae without incurring the higher interest rates of a jumbo loan. That translates into a significantly lower rate of interest on the primary loan.

Consolidating high interest consumer debt. Some homeowners pay off high interest short term debt like credit cards with lower interest, long term debt through a second mortgage.

Additionally, taxpayers in higher tax brackets get to deduct the interest they pay on both mortgages on their federal and state returns.


However, second mortgages have their risks:

• By taking out a second mortgage, you are adding to your overall debt burden. Anytime you add on to your overall debt burden, you make yourself more vulnerable in case you then experience financial difficulties that affect your ability to repay your debts.
• If you cannot repay, you could potentially lose your home because you are using the equity in your home as collateral.
• If you are consolidating debt, it’s not wise to substitute short term debt for long term debt if you end up paying more over the life of the second mortgage.

 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

The Indisputable Benefits of Debt Consolidation

Surviving in the modern economic environment
 
On a regular basis, we hear about people who are simply no longer able to manage their finances effectively. Among those people, it is especially people who are struggling with medical debt which they have not willfully chosen that are to be pitied the most compassionately. The reality is that no sane person willfully chooses to become ill and this is exactly why it simply does not seem to be fair that medical debts should be treated in the same harsh manner as other kinds of financial debt such as credit cards and financial loans. Fortunately, there has been some changes in the way in which fico scores are awarded, especially as they apply to medical debt. This is providing people who are struggling with medical debt with at least some relief. The reality is that an increasing number of people are facing this problem each and every day. Living costs have escalated sharply over the last couple of years and especially so since the latest recession, which has caused a lot of problems for millions of people. There are also those people who are struggling to repay a mortgage while at the same time, they simply are not able to sell their home because of reduced property prices. It seems that a very large number of people are finding themselves in a situation where they simply can no longer cope with the current economic conditions.


The same thing applies to vehicle finance

For many people, reliable transport is critically important in order to successfully execute their duties, but just like everything else, the prices of motor vehicles have increased sharply and this requires a substantially larger loan when such a vehicle is purchased. However, especially after the recession when thousands of jobs have been lost because most corporations were left with no other choice but to reduce their labor force in order to survive under difficult economic conditions. This has resulted in the inability of many vehicle owners to afford the payment of those vehicle loans. Now, they are forced to deal with those outstanding loans and they are left with no other choice but to find an alternative way to resolve those problems. A large number of consumers struggle when they are presented with such a stressful situation and then they make very foolish decisions which often results in an even worse financial situation.

Consolidation makes a lot of sense

It can be very stressful when you are contacted on a frequent basis by various creditors, all of which are determined to collect unpaid debts. You have barely gotten off the phone with one creditor before you are forced to repeat the whole process once again with another creditor. This can drain your personal energy very quickly and can leave you with a sense of hopelessness regarding your situation. However, if you could manage to consolidate all your debts so that you are only required to deal with one creditor, that would significantly reduce the amount of stress to which you are exposed. This will lead to significantly higher energy levels which could then be utilized to effectively concentrate all of that energy on finding a way to resolve your debt problems as quickly as possible. Debt consolidation is genuinely a solution which holds many benefits for persons who are struggling with large financial debts.

source: 20smoney.com

How to pay off debt in 7 smart ways

MANILA - Do you think you are carrying too much debt? If your bills are piling up, and you are also getting calls from creditors, you should be alarmed.

Having too much debt can be stressful. While overcoming your debt problem may not be easy, especially if you are relying on a limited income, it can be done. You will need discipline and sacrifice and we have charted a road map for you below.

Here are seven debt-defying steps to set you on your way to financial freedom:

1. Know how much debt you have. When you are struggling with too much debt, you may forget how much you really owe and the details of the debt you’ve accumulated. List down all your debt, the interest rates of each, and the minimum monthly payments required. This information is essential to help you make a workable debt strategy. It also allows you to better track the payments you have to make, and know your real debt situation—which may be much better or much worse than you realize it is.

2. Choose your debt pruning strategy. It is necessary to have a good and realistic battle plan that you can implement. First, identify which debt you should pay off first—the one with the highest interest rate or the one with the lowest balance (you will save more if you retire the debt that charges the highest interest rate.) What works for one person may not work for another, so weigh your options. Once you’ve decided, make additional payments on this debt until it is totally wiped out.

3. Find ways to make additional payments. Study your income and spending patterns to find where you can get the additional money that can go toward debt servicing. This might mean either cutting back on your usual expenses, or finding new sources of income. You’ll have to make some sacrifices—bring down your entertainment budget, eat at restaurants less often, or maybe even postpone that planned vacation. New income sources can come from taking on a part-time job or selling off some stuff you’re not using.

4. Find lower interest rates. Check the interest rates you are paying on your debt. Consider taking out a lower-priced loan from other sources—possibly the bank, or even your office cooperative—to shave off the debt with the highest interest rate. Another option is to negotiate the interest rate with the lender, which you can do by writing a letter to your bank or lender. It won’t hurt to try.

5. Set realistic targets and deadlines. Let’s say you owe P100,000 on a salary of P25,000 a month. Don’t target paying off the P100,000 in four months—you can’t live on zero income and you will only set yourself up for failure. Study your needs and your cash flow to know what is realistic before you set a deadline. Giving yourself a deadline helps define your goal, which allows you to create a strategy and gives you motivation.

6. Don’t take on new debt when you’re managing existing debt. When you are struggling with debt, the worst thing you could do is to borrow some more. This will only push you deeper into the hole you’re in. Work with your creditor and explore other ways for you to manage your debt, as most of them will be more than happy to assist you. For example, they can convert your balance into a friendlier installment scheme that will make it easier for you to be up to date with your payments.

7. Reward yourself. Keep yourself motivated during this time by rewarding yourself once you’ve reached milestones—reaching the halfway mark, wiping out the largest debt, etc. After all, getting over your debt problem is a great achievement that is worth celebrating. It goes without saying, of course, that your choice of reward for yourself should not plunge you deeper into the debt hole. Try declaring a “do nothing” day or spending the day with a friend who makes you laugh the hardest, As the saying goes, the best things in life are free.

Conquering debt requires both a financial and a psychological strategy. Remember that short-term sacrifices could yield long-term benefits, and what can be a better reward than to gain financial independence and freedom from creditors? With discipline, commitment, and good planning, you can overcome your debt woes.

source: www.abs-cbnnews.com

What Does It Mean to Be Pre­-Approved for a Mortgage?

Wouldn’t it be nice to know what you can afford before shopping for a house? With a mortgage pre-­approval, this is exactly what happens. Getting pre­-approved for a mortgage isn’t required to look at properties or bid on a home but there are advantages to meeting with a lender beforehand.

Pre-approvals help eliminate the guesswork when shopping for a property. Mortgage lenders can determine early on whether you qualify for a home loan and how much you can afford. Therefore, you don’t waste time looking at houses outside your budget.

A pre­-approval also tells realtors and sellers that you’re a serious buyer. It might come as a shock, but some sellers will not accept offers from bidders who are not pre-approved. Since sellers are eager to sell their homes and move on, they don’t want to take a chance with someone who might not be able to get financing.

Pre­-Qualification vs. Pre-Approval

It’s important not to confuse a pre-­approval with a pre-­qualification. Both are preliminary steps in the mortgage process, but there are differences.

A pre­-qualification is an initial assessment of whether you meet the qualifications for a mortgage, but it doesn’t guarantee financing. Pre-­qualifications are based on the information you provide on a pre-­qualifying form, which only asks for basic information like monthly income and an estimation of your credit score.

Understand, however, you can’t get a mortgage off a pre-­qualification. A pre-qualification says you might be a good candidate for a mortgage. A pre-approval, on the other hand, goes a step further. Getting pre­-approved for a mortgage involves completing an official loan application with the bank and going through the underwriting process.


Get started with your pre-approval today

What a Mortgage Pre­-Approval Entails?

With a pre-­approval, the mortgage lender will pull your credit and carefully scrutinize your credit activity and debts. You’ll have to submit your recent paycheck stub and tax returns from the past two years, plus provide copies of bank statements and disclose any assets you have.

Based on all of this information, the lender decides whether you’re eligible for a mortgage, and determines how much house you can afford. A pre­approval letter is the official green light to start looking for a house. If you must choose between a pre-­qualification and a pre-­approval, go with the latter. Unlike pre­-qualifications, pre-­approvals are practically written in stone, providing your credit, job status and income doesn’t change prior to closing.

Avoid Jeopardizing a Mortgage Pre­-Approval

It’s important not to make any significant changes to your personal finances after getting pre-­approved for a mortgage. Something as simple as getting store financing or financing a new automobile can jeopardize a mortgage approval.

This mortgage approval is based on your debt and income at the time of applying for the pre-­approval. Getting a new auto loan or acquiring some other type of debt before closing increases your debt­-to-­income ratio. And with a higher debt-to-­income ratio, there’s the risk of being disqualified for the mortgage. So wait until after closing to apply for financing.

The lender will check your credit about one or two days before closing to ensure no changes to your credit history and score. If everything checks out fine, you can proceed with closing and get the keys to your new house.


source: totalmortgage.com

How Does Student Debt Impact Your Mortgage?

Let’s say you’re a recent college grad. You’ve landed your first real job (or maybe you’ve been working it for a while already) and after years of dorms and apartments, you’re realizing you might as well start building equity in a place of your own.

You wouldn’t be alone. Though you’ll see articles all over the place insisting that millennials just aren’t interested in buying homes, a closer look at the data says the opposite is true actually true.

However, there’s one small hiccup: student loan debt. In 2013, the average student borrower graduated $28,400 in debt, which will almost certainly lead to problems when they try to qualify for a mortgage. So what can you do if all this describes you?

First, let’s take a closer look at the why of this problem.

How does student debt interfere with getting a mortgage?

When lenders do all the math to figure out whether or not you’ll be able to make your monthly payment, they take special care with something called a debt-to-income, or DTI, ratio.

This is almost exactly what it sounds like—it allows banks to get a feel for how much of a borrower’s income is already accounted for by other debts. Ideally, your DTI ratio should be 43% or below, as that’s the cutoff point most banks will use.

Even if your loan is still deferred, which means you haven’t begun payments on it yet, lenders will still estimate monthly commitment from you, though it may be even higher than the standard minimum payment.

What can you do?

Well, there’s the obvious, solution: pay down your debt before applying for a mortgage. Of course, obvious doesn’t always mean easy. Paying off your student loans will take time and careful budgeting, especially if you’re trying to save up for a down payment at the same time. That may mean some serious cutting back on living expenses or avoiding big purchases.

Of course, the other way to improve your DTI ratio is to increase your income. Earning a raise, moving on to a better paying job, or even taking on a part time one are all ways to do just that. Make sure you do so several months before applying, though, or your lender may not count the income.

If neither of those options work for you, you can always try to consolidate your student debt, or convince a parent to co-sign with you. Whatever you do, though, make sure to keep your credit in good standing, or you’ll have to add “bad credit” to your list of problems to fix.

source: totalmortgage.com

How a former 'credit card-aholic' got out of debt

MANILA – When a bank offers you a credit card with a P200,000 credit limit, annual fees free for life, and only proof of employment as requirement, will you accept it?

For then-office employee Aldwin Tanjutco, who admitted that his salary wasn’t enough to buy the things he wanted, the decision was easy.

“I felt empowered because I’ll be able to buy already the things that I want to buy even without earning money first. It gave me the illusion of cash, cash that I don’t even have — unlimited cash. With the card, I just spend and spend and spend,” he told ANC’s “On The Money.”

Tanjutco said he had second thoughts on using his credit card for purchasing items, but he gave in to the temptation to spend.

The high credit limit, unfortunately, became a spending target for Tanjutco.

“I thought about it, but the temptation of spending overcame the intention on how I’m going to pay for it,” he said.

In just five months, Tanjutco maxed out his credit card and found himself in huge debt. He also started to incur a large amount of interest because he wasn’t able to pay his monthly dues.

“I am spending more than I’m earning, so I wasn’t able to pay it in full, in fact I was only paying the minimum. Sometimes, even below the minimum. So you can imagine just how much interest they are charging,” he said.

He began paying off a chunk of his debts with mid-year and Christmas bonuses, and when he felt that he could handle his debt, he asked the bank to increase his credit limit.

His credit limit was increased to P230,000, which for Tanjutco, meant he could spend more.

When Tanjutco again found himself struggling to pay off his monthly bill, collecting agents began calling him, which made him realize the serious situation he put himself in.

Tanjutco said he was given a 25 percent discount to make it easier for him to pay off his debt in a 12-month period.

He learned that credit cards can be your friends, if you know how to use your credit wisely.

The next time Tanjutco applied for a credit card, however, he was denied because of his bad credit.

To clear his bad record, he sought the help of the Financial Consumer Affairs Group of the Bangko Sentral ng Pilipinas (BSP).

“I felt relieved because finally there was hope that I can clear my bad record in terms of credit score. After a day of two, a BSP director emailed me and forwarded my letter to the concerned bank,” Tanjutco said.

“I realized that I shouldn’t spend what I couldn’t pay for. I should spend below my means. If I have debts, 20 percent of what I earn, I just maintain it at that level so that I can manage it,” he added.

Tanjutco, who is now a business owner, admits that he still has debt, but now he knows how to manage it well.

“I felt empowered. I cannot say that I am 100 percent financially free, but I feel that I am moving towards what my goal is,” he said.

Abraham Co, board member at Credit Information Corp., advised consumers that being aware that there is consequence to how you behave financially, will change behavior.

“If you think that there is no consequence and you can get away with this, then you will continue your bad habits. But if you value your future, and know that there would be consequence, then that will change behavior,” he told "On The Money."

Credit Information Corp. board member Suzanne Felix, meanwhile, said credit card owners should be more responsible in their spending to protect their credit record.

“It’s about time as borrowers that we develop that sense of responsibility. The banks are doing their part, so the borrowers should also be doing their part,” she said.

source: www.abs-cbnnews.com