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How to rebuild credit after having bad credit or after bankruptcy
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Is credit counseling really necessary
Not everyone has a positive experience with credit counseling. Potential creditors often frown upon consumers who are going through credit counseling, denying them credit or sticking them with elevated interest rates on new lines of credit.
Some consumers, who have found themselves in this situation due to credit counseling, would tell you that you can accomplish the same things on your... Read credit counseling article
Low Credit Score Secrets
If you have a low credit score, well below the national average of 723 then that low score will cost you plenty over time. Loans will be difficult to obtain, but if approval is given you will pay a higher interest rate than someone with good credit. Think that a low credit score can't hurt you? Well, it not only can it can make your life downright miserable.
The results of our actions a... Read credit counseling article
How to rebuild credit after having bad credit or after bankruptcy
What's the real reason behind bankruptcy? Are easy credit cards to blame? Good enough, credit after bankruptcy can be rebuilt over again once a debtor receives his discharge. Yet, it could still take several years before one can get back decent interest-rates on a credit card, mortgage, or car loan, and debtor cannot spoil credit after bankruptcy - not this time. It could take another 8 long-years before a person can file for another personal bankruptcy.
There's a good reason why the current bankruptcy law requires filers to undergo a financial-management or credit-counseling course. This rule not only places emphasis on debtors avoiding bankruptcy, but also helps debtors learn how to manage their credit and debt in the future. The bankruptcy record could stay in a person's credit statements until 10years; and if the ex-bankrupt ever wishes to buy a $150,000-house or get a $75,000-job then the bankruptcy note could hang about for the record, and with the up-to-date record-keeping technologies used by credit-agencies, the bankruptcy record could settle - forever. So what else could be done about credit after bankruptcy?
It's still possible to get credit again. (If someone's that good in filing bankruptcy then he must also be good with credit.) Banks and mortgage or credit institutions have become better at cooperating with people who have gone through a personal bankruptcy. They now hand ''secured' credit cards that the debtor (with deposit and guarantee) can use to begin his process of credit restoration. Within as-little-as 2 years banks can start giving regular credit again. It can't be tarnished though. This time it's a ''secured credit' - difficult for a next bankruptcy. The debtor must now ensure that his credit card billing-statements include information on how long it takes to pay off the credit card balance at a certain interest-rate if making only minimum payments. A credit card is still one of the tools that can be used in the creation of a financial future.
Any transfer of financial capital is quite dependent on credit, and this in turn is dependent on the reputation or creditworthiness of the holder who takes responsibility for the funds. Credit after bankruptcy is especially helpful (like loans) in building a positive financial history anew. Credit cards can enhance the debtor's ability to receive a private loan, buy a car, rent an apartment, get a job, and eventually try to buy a house. It also holds the advantages of securing emergencies and cash backs. Above all, it gives the holder an enhanced personal responsibility and independence.
Yes, credit can grant loans, yet it can also give debts. The time to worry about debts is now! Re-building credit after bankruptcy is a must. Re-build, cut, save, stick with. You don't want to end up in the same situation and have to file bankruptcy after rebuilding your credit.
Dean Shainin offers online Bankruptcy and debt advice. For more information, articles, current news, tools and valuable resources on bankruptcy and debt solutions, visit this site: Bankruptcy Loan
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How good is your credit
False:
An impressive salary doesn't translate into a good credit report or good credit score. It's true that a lender will look at the amount of money you make to determine your ability to make your monthly payments on the loan but, that's as far as it goes.
Your credit worthiness is based upon your credit history, not your salary. Creditors use a FICO score to determine if you are qualified to get a loan, and at what interest rate that loan needs to be paid back at if you are approved.
FICO scores range from 400 to 850 points. The higher your score, the lower your interest rate will be and the easier it will be for you to obtain credit. Here is how your FICO score is calculated:
35% - Payment History - This is the bulk of your score but not the end all, cure all. If you just make timely payments, that doesn't mean you will have a good score but it most definitely dramatically effect's your score if you don't.
30% - Amounts Currently Owed - The FICO system takes into consideration the amount of existing lines of revolving credit you currently have.
It calculates the percentage of available credit on those existing lines. For an example: You have 3 credit cards with $2,500 limits on each of them. That gives you $7,500 worth of existing credit. You currently carry $2,000 balances on each one ($6,000 total). Take the $6,000 and divide it by $7,500. You will end up with an 80% utilization rate and a lower score because of it. Most lenders like to see this utilization rate below 30% so, pay your existing debt down if they are above 50% to give you a better chance at getting approved for a new loan at a good interest rate.
15% - Length of Credit History - The system will take into consideration the length of time you have had your existing lines of credit.
The older the account the better rating it gets (as long as it is in good standing). The longer you've been paying your bills responsibly and on time, results in a good track record that lenders will feel comfortable with in giving you those "big ticket" loans; home, auto, etc. It will also translate into a better interest rate for you, saving you thousands of dollars in the long run.
10% - New or Recent Credit Lines Opened - Don't be too quick to open or apply for so many credit cards or loans at any given time. It can indicate to a lender that you are desperate and in dire need of a credit line. It also can result in multiple lenders pulling your credit report in a short period of time. These inquiries also affect your credit score.
You can pull your own credit reports anytime you want to and that will not affect your score.
10% - Types of Credit Cards used - Contrary to popular belief, a debit card with the Visa or MasterCard logo isn't a credit card and does not help your credit profile. The FICO system calculates revolving credit cards (Visa, MasterCard, Amex, etc.), department store credit cards (JC Penney, Mervyn's), Automobile Loans, Mortgages. Each type of line of credit has a different value assigned. A good payment history on a department store card doesn't have the same weight as someone who is making payments on a mortgage or auto loan.
So, how does your FICO score translate into the interest rate you can expect on a loan (if you qualify)? Here is an example using a $216,000 30-year, fixed rate mortgage:
760 - 850 5.74% $1,260
700 - 759 5.97% $1,290
680 - 699 6.14% $1,315
660 - 679 6.36% $1,345
640 - 659 6.79% $1,406
620 - 639 7.33% $1,486
As you can see, a person with a FICO score of 620 will pay an additional $226 per month on the same loan that someone with a FICO score of 760 has. That translates into an additional $81,000 in interest payments over the life of the loan.
To learn more about your options and managing you debt, log onto www.debtreliefoptions.com.
Jon Noble
Staff writer
Debt Relief Options
asktheexperts@debtreliefoptions.com
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