Monthly Archives: January 2008

Theres a way to improve your credit score

For a person with an adverse credit history, securing a bad credit loan has never been so easy ever in the past. There are some advantages that a bad credit mortgage has over the conventional ones.

To start with bad credit mortgage allows a person to build equity wealth even if he / she might be having a credit or bankruptcy issues in the past. With the interest rates only a few hundred basis points above the normal rates, it gives the borrower an option to get into a home without much with little down payment. Add to this the benefits of tax deduction and the fact that you have the ownership of your home.

Sub prime mortgage lenders are the main support of such lending system. You could secure a loan even with a 30, 60 or 90 day delay in your repayment schedules. Although the amount of equity you would qualify would go down with the amount of late payments you get into.

With an easy availability of bad credit loan, the borrower has every opportunity to improve upon his credit score. But utmost care must be taken while selecting your lender, because one more wrong move and you would find yourself deeper into the pit.

The APR angle to your loan

Never since the invention of credit card in early late 1890s have the fee structures and interest rates been so confusing for its users. There are multiples charges and interest rates levied on the card and on the top of that there are multiple ways of calculating the same interest rate. As to if this was not enough every card has its own terminology and its own meaning.

A lot of information is available on the internet for credit cards but it is equally confusing. Sites like credit cards club do attempt to simplify the information on the cards and their types and the process of choosing upon your cards. One of the most common charge or interest rate levied upon the transaction is the APR – Annual Percentage Rate.

An APR does not have a direct impact on your monthly installments. But it does reflect the true measure of the any / all of your credit card transaction cost. The APR generally includes basic interest rate, initial charges/fees, any other interest rate fixed charges etc. There are low intro APR credit cards in the market along with the regular and high APR credit cards.

There’s also the variable APR concept which indicates that the interest rate and the charges defined in the charge clause could change without prior approval or notice. There is however no thumb rules for comparing an APR charge of one loan with that of the other. For example, a 15 year amortized loan might have a lower interest rate but a higher APR because of the fact that that loan fees are amortized over a short period of time compared to the 30 year amortized loan.

Glance at the Personal Loans

If you are in need of cash to take care of some unexpected expenses, looking to start your own business, do home improvement, pay for college, or seeking debt consolidation then taking a personal loan may be the right option for you.
Usually there are two main types of personal loans, namely secured personal loans and unsecured personal loans.

A secured personal loan is a loan that an individual gets that is secured against collateral. This collateral can be anything of value like a car, house, stocks, and financial instruments. Secured loans are better for persons who find themselves in need of a large amount of money to borrow, are unable to get an unsecured loan, looking for debt consolidation, have bad credit, or seeking a long payment period.

Unsecured loans are not taken against any collateral. This puts the lender at a greater risk and because of this they tend to charge higher interest rates. A form of unsecured loan is cash advance loans. With cash advance loans the lender lends money against the borrower’s pay check. The payment period for unsecured loans is usually very short. If the borrower is unable to pay the loan the lender can take legal action to recover their money.

Loan disciplines

A payday loan is a short term loan which is granted by the financial institutions against your paycheck. In other words your paycheck is your collateral to the payday loans. Most of the lending financial institution’s credit policy required that you are employed and have a checking account. In most of the cases you would be required to authorize the lender to get your account debited by a fixed sum of money on an interval of regular weeks or months.

Since these loans get you cash in advance, they are also referred to as a cash advance loan. They are ideal if you are short of cash during the interval period of paychecks.

Some of the common used of payday loans are:

·        Medical bills

·        Car repair

·        House repair

·        Emergency bills arising out of unforeseen events

If used wisely, the payday loans are a wonderful tool to keep your finances in shape. You must ensure that

·        You should pay your loan in full by your next paycheck

·        Understand your cash flows, do not borrow more than what you can pay

·        Do a cost-benefit analysis, take a payday loan if the late payment charges of your bills exceed the amount of interest you would pay otherwise on you payday loan

·        It is not a long term financial management tool

How to use the credit card debt consolidation to your benefit

Debt consolidation put in simple terms is a big loan that can be used to pay off all your other short loans. They can be of good benefit to the borrower if taken judiciously.

Credit Card Debt consolidation loans are quite fit for some circumstances. If you are planning to do away with several small loans, your finances would become more manageable. There’s then only one monthly one repayment schedule to be taken care of.

Another point worth noting is that if you stretch your debt consolidation loan for a longer period your debt payments would gradually decrease.

An enticing and at times worth the risk is the strategy to use the debt consolidation tool as a means to manage a range of high interest rate revolving credits and debts.

Another benefit of consolidating all your debts and bills into one would be that you would not have to dodge your creditors every now and then. Because you would be dealing with only one creditor, any issue resolution would be much faster and smoother for you.

Some of the loans that can possible be consolidated from your credit card debt consolidation:

·Medical / health bills

·Personal loans

·Credit cards

·Utility bills


Timely payments to the creditors could also help in improving the credit ratings gradually.