Archive for June, 2011
There are a lot of things you need to worry about when you are getting divorced, both legal and otherwise. Even though it might not be the most important thing, especially if you have children, the financial situation you will be in after a divorce is definitely one of the more complicated things that you are going to have to resolve. Many people do worry about their financial futures and their credit scores after divorce, because they know that great change is coming, and that untangling the complicated financial web that you and your former spouse created will take a lot of work.
Without a doubt, divorce can definitely have a great effect on your credit history. Once the divorce has been finalized legally, you need to start working right away on becoming financially independent again and preserving for financial reputation and good credit score.
Most people who get married merge all of their finances – they open up joint bank accounts, joint credit cards, they pay the mortgage together, buy a new car together, and all these other things that make them financially codependent.
The thing is, if you do not take care of this and get rid of all of these joint accounts, you could be responsible financially for what your former spouse is doing with their money in the future. For example, if your ex-wife goes on a spending spree with her credit card after you have gotten divorces and you have not made sure to get your name off of that credit card, you will be responsible for that debt and you will have to pay it in order to maintain good credit.
However, there are things that you can do in order to protect yourself financially after a divorce.
- First of all, it is of utmost importance to dissolve all of your joint accounts. You should either remove one person’s name from the accounts or just cancel the accounts entirely. Usually the first option is preferred, because the cancellation of an account with hurt your credit, so it is important to talk this over. Perhaps all of the accounts can be divided equally. Both of you need to participate in the process and cancel the accounts together. All checking and savings accounts need to be dissolved and split up. You must split up the property too, and if you are taking the car, make sure that your spouse’s name is no longer on the lease.
- If you have a house together, you should also consider selling it. It might seem right to give the spouse the house, especially if kids are involved. But honestly, it will be much easier for everyone involved to sell the house and then divide up the money and move on. You cannot account for the other person anymore and you must protect your own credit. Sometimes people leave their houses to the spouse, and the spouse does not pay the mortgage regularly, causing a foreclosure and a severe dent on your credit score. That is why it is better to resolve all of these issues immediately.
You might be asking yourself why exactly credit reports are important for college students and why they need to learn about them. Well take this one bit of information into consideration – 40 percent of employers run background checks on prospective employees. That means that they will know your financial history as well. Now do you think that you should start paying attention to your credit score? If you have a poor credit report, the employer might skip you, even if you are qualified for the position on paper. Why is this? Because having a bad credit score at such a young age usually means that you are bad with handling money, and above all, you are not responsible. The boss might think that since you are not financially responsible, you might not be responsible for other things as well, and that is why you will not get hired – because you present yourself as a risk right off the bat. Also, i you have a bad credit report, you might not be able to the loan you need to pay for school and you might have a huge interest rate when paying back the loans if you get them. Also, if you are looking to buy a new house or a new car after college, once you get a job, don’t expect to have many banks offering you good loans if your credit is terrible. We know that college is difficult and very exciting and there are many other things that you focus your attention on. Do not obsess over your credit, but do not neglect it either and do not be careless, because this can get you in trouble. There is nothing worse than digging yourself a financial hole as a young man or women and then having to climb out of it.
Also, if you have good credit, there will be many opportunities opening up for you. You will be in a better situation for tackling many important life decisions that will be coming up. For example, if you are going to need a loan to buy a new car or home, you will get a much better deal if you have good credit. If you have bad credit you might not get a deal at all – you might just be rejected for a loan completely. If you are a college kid with credit cards and bills, you need to make sure that you are paying them on time. This is how college kids get hurt the most. They do not pay attention to these things, and then late fees start to add up, and your interest rate starts to increase, and before you know it, you are in serious debt but not college degree yet. If you have a credit card, use it wisely. Keep your balances low and make sure you are paying every month. If you do have a bad credit report, it is bad, but it is surely not the end of the world – it is something you can come back from. Plus, the bad credit report goes away after 7 years like it never happened.
Just like anything else, there are tons of myths that are related to credit reports and scores. And just like all myths, you hear them constantly and there are so many people who talk about them that you actually believe them to be true. Well, now it is time to dispel some of the most common myths about credit reports that you have been hearing all of these years. One thing that you’ve probably heard a lot is that pulling your credit report will hurt your credit score, and that is not true at all. When you are pulling your own report to educate yourself about your financial situation, it is a “soft inquiry” and these do not effect your overall score. However, when a lender or a creditor is pulling your credit report to look at it, that is a completely different story. That is considered a hard inquiry and it will surely have a negative impact on your credit score. Another myth is that if you close one of your credit cards, your credit score is bound to improve. This is not true at all. This might actually hurt you. When you close a credit card, you are damaging your credit utilization, which is the score of how much credit you have an how much of it you are using. When you close an account, this decrease the amount of credit that is available to you, which will probably hurt your credit utilization numbers and therefore damage your credit score as well. People also believe that their salaries play a large part in determining their credit scores and that is not true either. People who make a good living do not always have good credit, and vice versa, so salary is not really something people will look at when determining your credit score. Also, many people think that there is one, definitive credit score that everyone uses, and that is not true either. There are many different ones that are available and there are also many different credit reports given on which these varying credit scores are based.
People also think that they are in the clear if they pay all their bills on time, but that is not all you have to do to have a good credit score. You should always be checking your credit score, to see if its accurate. Just because you pay all your bills on time does not mean that you should ignore it. Mistakes are made all of time, and if you don’t catch them in time, they can hurt you. So, not only should you check your credit score regularly, but you should also look at it very closely as well. It is recommended that a person check his or her credit report every half a year or so. The more you know and the more regularly you check, the better you will be prepared to take care of any inaccuracies that might occur eventually, therefore, keeping and eye out on these types of things is essential.
Do not think that a bad credit report cannot hurt your retirement plans, because it surely can. However, do not feel bad if you are having credit problems in your old age, because there are millions going through the same thing as you. A lot of people tend to overlook the fact that a bad credit score can have a negative effect on the retirement planning process, because retirement is usually something that is not on anyone’s mind. People are usually thinking about more immediate financial problems and sometimes forget to worry about their retirement plans until it’s too late. It is important to clean up your poor credit rating if you are looking to retire in success and have a healthy amount of money for enjoying your retirement in the end. If you are planning on buying a home when you retire, bad credit might prevent you from doing so, or at least give you a really hard time. The amount of value lost during the housing collapse recently has been enormous. However, building equity in your resident is an excellent way to build towards the net worth that you are aiming for. If you do have problems with poor credit, there are two factors that you will have to take note of now. These are two factors that could potentially prevent you from building up a healthy amount of equity in a home. One is that the poor credit report will stop you from being able to refinance a mortgage. This means that this will cost you a lot more each month to pay off your mortgage than you previously expected. Also, bad credit scores will also not allow you to even purchase a home in some cases. This leads to throwing money away on rent, which is money you could have been using to either own your own place or at least set aside for retirement.
Usually, when you are have low credit score, that means that you are in over your head as far as debt is concerned. Having a large debt load is probably the worst thing for anyone who is trying to maintain a healthy credit score. This is especially true for people who have acquired large amounts of debt on their credit cards and are paying off their debts with seriously high interest rates to boot. When you have a lot of debt on credit cards, and when the interest is high, it can take you years and years to pay all of it back. Also, to make things worse, many people are only paying the minimum payment amounts every month, which makes it an even longer and more pain-staking process to return these debts. When you are paying off debts for long, you are definitely not saving for retirement. And what’s worse, many of these debts will last so long that you will be paying them off still well into your retirement years. There really is nothing worse that having to use the money you set aside for retirement in order to pay back debts for things you bought decades ago.
It is funny that the IRS recommends that you pay your taxes with a credit card, because they say that it is both a convenient and safe way to pay what you owe to the government. What they fail to mention, however, is that it is an extremely expensive way to pay your taxes as well. Why shouldn’t you pay your taxes with a credit card? First of all, you are not really making the payment directly to the IRS, for starters. The IRS is using a third party service provider, who is charging a convenience fee that can be as much as four percent of the amount that you are paying to the IRS. This means that if you are paying a bill of $2,000, you can expect to pay at least $50 in convenience charges. Do you really want to loss an extra $50 if you don’t have to? Probably not. If you really are having money problems and you do not want to risk a bad credit report by not paying for taxes, then you might have to go with the option of paying with your credit card. The convenience fee is actually tax deductible,so if you are willing to put the effort in, you can get those fees deducted. Also, if you pay your taxes with a credit card and then you are not able to pay the credit card bill in full before the grace period ends, that means that you will end up paying interest on your taxes. If the card has an APR of 15 percent and you paid off $2,000. The monthly payment would be $185 and you would be paying $170 in interest. This means that you have paid $2,217 in total to the IRS, not $2,000. And now that you have paid this off, it is once again the end of the year and that means that it is time to pay the taxes again. This could become a very dangerous and expensive cycle for some. Also, paying with a credit card might have a negative effect on your credit report as well.
If you are paying your taxes with a credit card, it might seem like you are hard up for money and you are desperate, even if that is not the case. The payment of you taxes will also significantly decrease the amount of money you have left on your card’s credit limit. All these things put together can lower your credit score. This might look like you have money problems, and then the issuer of the card will be worried about whether or not you will be able to make regular payments. This can turn into decreased credit limits, increased APRs and other bad financial consequences for you. So if you are going to use your credit card for paying your taxes, you really have to focus on paying the credit card bill off as swiftly as possible in order to let the credit card company know that you are a responsible client.
A lot of people think that if they give a teenager a credit card, they are helping to teach the child about financial responsibilities and preparing them for the real world. However, most teenagers will not see it that way, no matter how you explain it to them. That is why teenagers are targeted to often by credit card companies, because they are not financially responsible. In reality, give your teen a credit does exactly the opposite – it teaches them how to be financially irresponsible. As soon as you turn 17 or 18 you will probably get a credit card in the mail with your name on it. Credit card companies prey on teenagers because they know that they need money, and that they are not responsible with it. Teens often work part-time jobs when they are in school. This actually teaches them to be responsible with money, because they only earn a set amount of money a week and they need to learn how to make the most of that money. When you give a teenager a credit card, regardless of what you tell them and how you explain it to them, most of them will still see it as free money, because they have absolutely no life experience with debt and paying for things with money that they did not earn. Did you know that over 80 percent of graduating college seniors have serious credit card debt on their hands even before they get their first job? The credit card companies have done a fantastic job with their marketing ploys, and they have made credit cards seem like a rite of passage – a necessary thing that you will need in your transition from adolescence to adulthood. To many teens, having a car, a credit card and a cell phone equates with freedom and independence. You do not have to ask your parents for a ride, you can talk to however you want, whenever you want, and you do not have to ask for parents for money when you need it.
If you are giving your child a credit card, you are not doing them and favors and you are not helping yourself either. In the best case scenario, they will not max out the card, but in the worst case scenario, you might have to help them get out of debt, or if they leave your house after college and continue living off credit card debt, they can have seriously bad credit and very lousy credit report before they reach the age of 30. Credit cards are especially bad for college students who are living on campus and away from home. The credit card companies market their products very aggressively on college campuses because most of these kids do not have jobs, but need money. They will be very tempted to get credit cards because they are still financial irresponsible and are doing a poor job of managing the money that their parents are sending them every month or week. Because of this, they turn to credit cards to support their spending habits and get themselves into enormous amounts of debt.
It is important to know what the best time is to refinance a mortgage so that you get the most out of it. There are times at which you are offered a lower interest rate, and that will surely get your attention and make you start to think about refinancing, but that is not always the best time. You really need to think about the decision and weight all of the consequences before you decide to finally refinance. When you are financing multiple times, this can have a very negative effect on the overall financial benefit that you are receiving. These people who take every opportunity to refinance are called refinancing junkies, and they keep migrating to the next low rate offer that they get, which turns out horribly for them in the end, because they are constantly paying new closing costs. Sometimes it makes sense to refinance your mortgage, but other times it is way better to just stick it out. before making a decision on refinancing your mortgage, you need to ask yourself a couple questions. First of all, you need to determine what it is exactly that you are trying to accomplish. It is important to understand what refinancing is. This is not a way to get some debt paid off for free – the debt you have is the same, it is just restructured to make it easier for you to pay. Usually you will either be given a lower interest rate or different loan terms to abide by. Reducing the interest is usually the main reason why people choose to refinance. However, some will even extend their loans back up to 30 years, which will increase the amount of time that it will take to pay back the loan, but it will decrease the size of the monthly payments that you are making.
Another common goal of refinancing is debt consolidation. If you are two mortgages, say a first mortgage and a home equity mortgage, you can combine the two into one fixed-rate mortgage in order to make the payment process easier. if you are going to refinance your mortgage, do it once and then don’t do it anymore. After you are sure of the reason that you are choosing to refinance, you must then see whether the timing and circumstances make it the right time for you to do so. If you know that you want to be living in this house for a long time and everything points to the fact that you will be living here for a long time, then it is a good idea to refinance. Closing a loan can be very expensive. If it is a loan of $200,000 you will be expected to pay more than $3,000, for example. This fee is just the fixed survey, without any taxes included, or any insurance or prepaid items like prorated interest or homeowner association dues. When you are looking into refinancing, you are going to need to do some math first. Stop for a minute and tally up what you are doing. You need to consider how many months of lower payments it will take for you to get back the money that you will have to pay when closing out a mortgage and starting up a new one.
Non-payment or late payment of loans is considered negative for the credit score and they reduce the credit score. Individuals facing this problem try to get rid of the problem by paying off debts. Most of the people repaying loans think that it improves the credit score immediately. However, this is not true and it takes long time to improve the credit score.
Why to Pay When Accounts are removed after Seven Years?
It is known universally that negative accounts are removed from credit reports after a period of seven years. You must be thinking why to pay the loans if it would be removed automatically after seven years.
Well, paying off the loan is always better in comparison to never paying the amount. When the individuals do not pay the amount then you should stay away from any kind of financial activity for seven years. However, by paying debt you can be assured that credit score would improve in less than seven years. In addition, you can carry out activities that help in boosting the credit score. As a result, you would come out of this challenging situation soon.
Paying off Debt is Essential for Mortgage
If you plan to mortgage house in near future, then paying off debts is mandatory. Most of the mortgage companies ask customers to clear their pending debts before their mortgage application can be selected. Thus, try to repay the loan amount at the earliest possible if you wish to continue enjoying lower interest rates and credit of course.
Ways to Pay Pending Debts
Paying off old pending debts is not easy task and it might become a nightmare for you. However, you should not be scared of such situations and handle them smartly.
One of the ways using which you can repay the loan amount is paying it altogether. It is considered the best way of paying loans and improving the condition of credit report. However, if you cannot pay the amount in lump sum then do not panic at all.
Another way using which you can pay pending debts is through settlement. Large numbers of people in the world rely on this method and you can do the same without thinking twice. In this method, the customer and the credit company settles on an amount that should be paid to the company.
Surely, with consistent and smart efforts you would improve the credit score without taking much time.
Everyone knows that dealing with creditors is a drag, but the bottom line is that creditors are not something that you can avoid forever – you have to deal with them eventually. Many people avoid creditors because they do not have the money that the owe and they cannot afford to pay them. First of all, do not avoid them. It is a natural thing to want to avoid someone who you owe money to, especially if you don’t have that money. However, avoiding creditors is a mistake. If you are avoiding them, that means you are usually not answering your phone, or pretending it’s a wrong number, telling them that you have move, you are backing them in a corner and then they will not have many choices. This puts both you and them in a weird situation that will not be comfortable for anyone. You will not be able to hide forever, and the more you avoid them, the more adamant they will be in their search for you. Also, it is not a good idea to refuse to give the creditor details. When they call you, they will be probably asking questions related to your financial situation, your job, your expenses, bills and other personal questions. Instead of lying to them or refusing to answer them, it’s a good idea to explain to them what your situation is currently. If you do this, they might have more understanding for you, which means that they might give you better rates for paying back the money that you owe. They might also offer you other benefits if you talk openly with them, they could offer you smaller minimum payments and help you to settle the debt in an easier manner.
You should not think about your creditor as the enemy. You and the creditor have many of the same goals – and the main one is that both of you want to make sure that you do not go bankrupt. Also, neither of you wants the situation to end up in court and you both want to find the best solution that will allow you to pay the money back. The creditors will often work with you and listen to your problems. They will want to reach an agreement, so they will offer you options and let you pick what the best system would be for allowing you to pay the money back in time. And if you end up making an agreement with the credit, make sure to respect it. Do not try to trick them. If they gave you a smaller interest rate or minimum monthly payment, then respect that. If you do not respect that, they will probably reconsider and make it hard for you again. The more you look like you are trying to dodge paying your debt, the worse off you will be in the end. If you have already reached an agreement, keep at it, make the payments on time and work with the creditor. This increases his faith in you, and it can also lead to even more benefits for you in the end.
Most of the time, when you have poor credit, it is really hard to get a bank loan to start a business. However, there are alternatives to bank loans and options that you could explore if you have bad credit and need to take out a loan. However, it should be stressed that these are only alternatives, they are not sure ways to get a loan. But, if you are rejected by a bank, then at least you know that you have other options to explore and look at if you are in dire need of a loan and you have a good idea for starting a business and getting yourself out of credit trouble. One of the best options is trying to get a business cash advance. This is used a lot by people who are looking to start of a new business, but have been rejected by the bank when asking for a loan. The principle of this is to get a cash advance that is a purchase or your business’ future credit card sales. This is a good way for people who have bad credit and want to start a business to get a lump sum of cash to work with. The loan will get repaid through a fairly small percentage of the businesses’ credit card sales. It is much easier for people to qualify for this than a bank loan. . In order to be eligible for this, however, you need to have opened up your business already for six months, and you need to have processed at least $5,000 of monthly credit card sales and have at least another year on your business lease. It is also a fast way to get some money for your company. If you are approved for this business cash advance, you can get it as soon as 48 hours after your application has been approved.
A credit union can also help. It has been the experience of many small business owners looking for loans that credit unions are willing to give out loans because they usually have more money to give than banks. You must meet pre-recession bank loan requirements, however, if you want to work with a credit union. Fundraisers are another good idea. You can organize fund raisers in your area to see if people are interested in giving you money to start up your business. You don’t even have to work locally anymore, you can even start fundraisers online for your business. If you have a business idea that you believe that a lot of people will be interested in, and you believe that there are a lot of people that can benefit from your business, then start a fundraiser. Present to the community your ideas, what kind of business you are starting, why you are starting it, and what you believe it will do for them and what they can gain from it. If you have a good idea, then there will be people who will appreciate it and stand behind it.