Work on your emotional response to debt and money in general. Most of us carry a lot of emotional baggage with us when it comes to money. We see money as a measuring stick for success, or we see money as a way of making ourselves feel better, and these attitudes lead us to much of our financial and credit problems.
If we rely on money to make us feel successful, then we are apt to overspend. If we fear money - or the lack of it - we are unlikely to save it or make investments with it. We need to be aware of the ways we respond to money and the ways that those responses shape the ways we deal with money.
Some financial experts recommend that clients keep money journals, in which they record their money hopes, their money fears, and their responses to spending and money. A money journal can help you by showing you how you feel about spending and about money. If you can isolate the emotions that influence how you spend money and how you make your money decisions, you will be well on your way towards fixing your financial problems.
Meaning Of Credit Score
Representing an estimate of a person’s credit report appraisal value as calculated by a statistical model is referred to as credit score meaning. It attempts to measure the comparison of a potential borrower who fails meeting the deadline in payment or following other satisfactory responsibilities. In other words this is what lenders and creditors use to determine whether or not you are willing to repay your debts.
The credit score meaning is basically grounded on the information in a person’s statement of account. It is where institutions who allow loans get the factors in denying or approving the application. It's also where they use to manage the risk in their service. In determining a loan, they consider likes of assigning an interest rate, organizing open bills and tasking appraisal limits.
Use of credit score meaning is prior to the authorizing admission or granting appraisal is an execution of a trusted system. In engineering, it is where you are left with no other options but just that. In financing especially in the United States, the most trusted is FICO, acronym for Fair Isaac Corporation which is the brain- child behind such software applied since the 1960’s. There are also others including NextGen and Vantage but the three major reporting agencies, Equifax, TransUnion and Experian, have been adopting it for several years.
FICO credit score meaning ranges from about 350 to 850. It is deemed extremely high risk at 350 and tremendously low hazard at 850. Having 850 is the top possible but according to Craig Watts, consumer affairs manager of Fair Isaac Corporation, there is no need to aim for such. He added that it is unrealistic for anything better than the middle of 700’s is already fine and it is where the best interest rates will be knocking right into your doorstep. The range between 720 to 725 is where the median score usually falls. It indicates that half are higher than the point and the other half are below.
If you are eager to know where you exactly stand, you can visit one of many websites like www.creditreport.com or www.myfico.com and others to get your scores. The report contains your FICO score with its appropriate explanation of the codes that show your weakness and several advices in improving your status. If you are in the process of purchasing a home or refinancing a mortgage loan, you can always obtain a copy of your credit report from your loan officer.
For more information on credit repair please visit our website www.credtek.com.
5 Ways to Manage Your Payment History
Since your payment history affects 35% of your credit score, it is easily the most important part of your credit profile. It is also one that you can control. Clearly, the best way to achieve a high credit score and a positive credit report is to maintain a flawless record of full payments, made on-time, over the course of years.
However, for those people who live in the real world, things happen. It is easy to confuse dates, forget to mail a check, or come up short on funds. The important thing is to know what to do and how to manage those small mistakes, before they sink your credit entirely. Here are a few tips on how to manage your payment history:
If you shy away from automation, or have cash flow issues, companies will often work with you to move your payments around. If you get paid at the end of each month, schedule your phone, cable and credit card bills to come due the first week of the month, when you have the most money in your account. Also, you can work to stay ahead of the payment curve by making your payments as soon as the statement becomes available, usually 30 days prior to the due date. That way, in case an emergency comes up or you miss a payment because you are out of town or short on funds, you have created a 30 day cushion.
2. If you are having a rough financial month and have to miss a payment, make payments on the largest accounts, like your mortgage first. Missing a $50 credit card payment will hurt you less in the long run than a $500 car payment.
3. If you have made the rare late payment on an account in the past, call and ask them to remove the late payment as a courtesy for being a loyal or long-term customer. Point out your history with the company and recent on-time payments, and ask them to consider the late payment as an exception to the rule. If they say no, call back and try to get a different representative on the phone. Lather, rinse and repeat.
4. Check your credit report for any accounts that are marked PAST DUE. These are the accounts that are doing the most damage to your account. When working your way through your financial payments, start here.
5. If you have collection accounts, pay off the most recent accounts first, starting with the largest. Any account older than 4 years can be moved to the bottom of the priority pile, since those creditors can no longer file a lawsuit against you to reclaim their money.
Protect Yourself from Credit Repair Scams
Every disaster seems to breed its share of con artists and scammers trying to make a buck off the misfortune of others. America’s financial meltdown is no exception. Shady outfits advertising fast, cheap credit repair on radio spots and late-night television ads are preying on Americans who are smothering in credit card debt or who are on the verge of losing their homes to mortgage default. Desperate to find a way out of the financial quagmire in which they are mired, these people are easy prey for shady operators posing as legitimate credit restoration agencies.
A constant stream of ready customers for credit repair con artists is ensured by still high unemployment rates and undervalued real estate markets. Savings dwindling or gone and bills piling up, Americans at the end of their financial ropes are lured by the hollow promises debt repair scammers make to get them off the hook with creditors. The National Foundation for Credit Counseling advises consumers to verify the credentials of a credit repair agent or business before providing any personal information or paying for any services. Despite their claims of stellar track records, less than 10% of late night credit repair advertisers actually help customers repair poor credit ratings or manage debt.
Scam techniques that should raise red flags and send consumers running are:
A constant stream of ready customers for credit repair con artists is ensured by still high unemployment rates and undervalued real estate markets. Savings dwindling or gone and bills piling up, Americans at the end of their financial ropes are lured by the hollow promises debt repair scammers make to get them off the hook with creditors. The National Foundation for Credit Counseling advises consumers to verify the credentials of a credit repair agent or business before providing any personal information or paying for any services. Despite their claims of stellar track records, less than 10% of late night credit repair advertisers actually help customers repair poor credit ratings or manage debt.
Scam techniques that should raise red flags and send consumers running are:
- Scammers tell you to stop paying creditors and deposit money into a special account while the credit repair agent negotiates settlements with your debtors.
- The hook scammers use is the promise to settle debts for considerably less than the actual balance due.
- The rationale used for depositing money into an account scammers set up is that the consumer will be able to pay off the entire negotiated debt in one lump sum.
- The reality is that scammers will withdraw 20% or more of the funds deposited as “service fees” without making any contact with your creditors.
New Regulations Created to Protect Consumers and their Credit
While the credit crunch and consequential economic recession has taken its toll in many ways, the one silver lining may well be the resulting lessons learned. Many practices that once were common among banks and creditors have now been deemed misleading and detrimental to the individual and congress has started to take action to protect consumers, and ultimately the economy as a whole.
To help consumers avoid mistakes of the past, The Consumer Financial Protection Bureau has been conceptualized to look out for the financial wellbeing of consumers rather than just banks. This agency was founded by Harvard professor and consumer advocate Elizabeth Warren and aims to essentially cut out the fine print and act on behalf of consumers to bring full clearer disclosure to the credit and lending industry. The bureau will be housed within the federal reserve and enforce new regulations for banks, mortgage lenders, credit card, and private student loan companies, as well as payday lenders. Small businesses will sit on panel within the group in order to ensure that new rules will not have any unintended and unjust consequences for small businesses. The bureau is already beginning to see that regulations surrounding credit cards, debit cards, mortgages, and credit scores are being met. Some of the recent policies to be enforced include:
Credit Cards: Congress has imposed a maximum of $10 for credit card companies to impose minimum card use. Merchants are no longer able to charge different prices according to use of different credit cards even though they are allowed to charge different rates for cash versus credit.
Mortgages: Lenders have to check borrowers income and assets thoroughly during the approval process.
Credit Scores: Credit scores are now free once a year for all Americans and can be accessed on annualcreditreport.com. The report includes each of the three credit reporting bureaus: Equifax, Experian, and transunion.
Auto dealers, stock brokers, and annuity salespeople are exceptions many consumer protections rules. Individual consumers still need to watch their own credit – if there are any blemishes on your credit report, a CredTEK trained professional can assist you in repairing your credit.
To help consumers avoid mistakes of the past, The Consumer Financial Protection Bureau has been conceptualized to look out for the financial wellbeing of consumers rather than just banks. This agency was founded by Harvard professor and consumer advocate Elizabeth Warren and aims to essentially cut out the fine print and act on behalf of consumers to bring full clearer disclosure to the credit and lending industry. The bureau will be housed within the federal reserve and enforce new regulations for banks, mortgage lenders, credit card, and private student loan companies, as well as payday lenders. Small businesses will sit on panel within the group in order to ensure that new rules will not have any unintended and unjust consequences for small businesses. The bureau is already beginning to see that regulations surrounding credit cards, debit cards, mortgages, and credit scores are being met. Some of the recent policies to be enforced include:
Credit Cards: Congress has imposed a maximum of $10 for credit card companies to impose minimum card use. Merchants are no longer able to charge different prices according to use of different credit cards even though they are allowed to charge different rates for cash versus credit.
Mortgages: Lenders have to check borrowers income and assets thoroughly during the approval process.
Credit Scores: Credit scores are now free once a year for all Americans and can be accessed on annualcreditreport.com. The report includes each of the three credit reporting bureaus: Equifax, Experian, and transunion.
Auto dealers, stock brokers, and annuity salespeople are exceptions many consumer protections rules. Individual consumers still need to watch their own credit – if there are any blemishes on your credit report, a CredTEK trained professional can assist you in repairing your credit.
Home Foreclosures Decimate Credit Scores
Caught between a rock and a hard place, homeowners are being squeezed. The financial hardship of long-term unemployment and the toll it takes on credit scores, coupled with banks’ unwillingness to modify mortgage loans, is forcing many long-time American homeowners into foreclosure. With unemployment rates expected to remain high for at least the next year, possibly longer, real estate industry experts say the problem is only going to get worse.
“There’s nothing happening right now in terms of foreclosures that makes me think there’s and end in sight,” Ken Gold, director of the Center for Real Estate Education and Research at Ohio State University, recently told The Columbus Dispatch. “It’s now being driven by unemployment and by what’s happened in the past with the banks. And it’s supply and demand: There’s plenty of supply and little demand for homes.”
According to the Mortgage Bankers Association, national mortgage delinquencies reached record levels in the first quarter of 2010. More than 10% of homeowners had missed at least one mortgage payment, a 10% increase over the previous quarter. Nearly 4.3 million U.S. homeowners – 8% of all mortgage holders — are in foreclosure and the number is growing.
Though battered and beaten, homeowners’ financial woes may not end when they hand their deed over to the bank. In an effort to recoup the money they’re losing on short sales and foreclosures, some banks are hounding borrowers to cover the loss. In June, The Washington Post recounted the experience of a Virginia homeowner whose bank billed him $148,064 to cover the shortfall when his foreclosed home sold for less than the amount due on his mortgage loan. With no resources to pay the debt, the homeowner was forced to file for bankruptcy protection.
Before the housing bubble burst, foreclosures were low and banks seldom chose to pursue deficiencies, but times have changed and banks are getting aggressive. What most over-stressed homeowners don’t realize is that there are other options to foreclosure that can allow them to keep their homes and minimize damage to their credit score. We’ll talk about those next time.
How Will a Short Sale or a Foreclosure Affect my Credit?
How Will a Short Sale or a Foreclosure Affect my Credit?
As of this week, a recent study by the real estate data provider, CoreLogic, has revealed that about 11 million US homes are occupied by owners who owe 15% or more than the current appraisal value of their home. This amounts to an alarming 23% of American home owners. This tells us that an even larger number of Americans are “underwater” on their mortgage in some capacity.
Amidst the recent real estate bubble, millions of Americans have found themselves facing the question of whether to fall into foreclosure or attempt to sell their property through a short sale. The next question is usually “which is better for my credit?” First, It is important to know the difference between the two processes. Although there may not be one with any ultimate advantage over the other, this will help you decide which process which is right for you.
A short sale is only possible when your lender agrees ahead of time to accept less than the amount owed on the loan. Not all lenders will agree to negotiate a short sale, especially if you are not currently very behind on your loan or have other cash assets. If you know your loan will become delinquent in the future, (i.e. unemployment payments running out, job ending)having a short sale in anticipation could be helpful - but depending on your individual situation, a short sale could be just as damaging to your credit as a foreclosure.
A foreclosure will occur when you are indeed behind on mortgage payments. The amount of allowed payments missed before the final foreclosure will vary according to your state. These late payments can very negatively affect your credit and regulations state that you’ll likely need to wait 24-72 months to apply for a new home loan. (One advantage for short sellers is only needing to wait about two years to re-apply for a mortgage loan.)
There is some debate about whether short sales will harm your credit any less than a foreclosure, but the fact is, neither will help you to obtain good credit. Bad credit can get in the way of renting a new apartment, buying a newer downsized home, or even getting a new car or new job. In order to secure your future after a short sale or foreclosure, it will be imperative to assess your individual situation with complete financial and credit counseling.
As of this week, a recent study by the real estate data provider, CoreLogic, has revealed that about 11 million US homes are occupied by owners who owe 15% or more than the current appraisal value of their home. This amounts to an alarming 23% of American home owners. This tells us that an even larger number of Americans are “underwater” on their mortgage in some capacity.
Amidst the recent real estate bubble, millions of Americans have found themselves facing the question of whether to fall into foreclosure or attempt to sell their property through a short sale. The next question is usually “which is better for my credit?” First, It is important to know the difference between the two processes. Although there may not be one with any ultimate advantage over the other, this will help you decide which process which is right for you.
A short sale is only possible when your lender agrees ahead of time to accept less than the amount owed on the loan. Not all lenders will agree to negotiate a short sale, especially if you are not currently very behind on your loan or have other cash assets. If you know your loan will become delinquent in the future, (i.e. unemployment payments running out, job ending)having a short sale in anticipation could be helpful - but depending on your individual situation, a short sale could be just as damaging to your credit as a foreclosure.
A foreclosure will occur when you are indeed behind on mortgage payments. The amount of allowed payments missed before the final foreclosure will vary according to your state. These late payments can very negatively affect your credit and regulations state that you’ll likely need to wait 24-72 months to apply for a new home loan. (One advantage for short sellers is only needing to wait about two years to re-apply for a mortgage loan.)
There is some debate about whether short sales will harm your credit any less than a foreclosure, but the fact is, neither will help you to obtain good credit. Bad credit can get in the way of renting a new apartment, buying a newer downsized home, or even getting a new car or new job. In order to secure your future after a short sale or foreclosure, it will be imperative to assess your individual situation with complete financial and credit counseling.
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