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Credit Scoring - Truth Revealed
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How To Repair Your Bad Credit
Today, good credit is essential in our society. Any person who has bad credit, is probably finding himself at a serious disadvantage unable to buy a home, obtain credit cards, buy a new car and other big-ticket items.
A bad credit report can adversely affect your ability to get loans, credit cards and the like. If you have bad credit, you can clean up your bad credit and rebuild your cr... Read credit counseling article
Consumers guide to credit counseling
Randy is deeply in debt and desperate. He's seen all the television ads from credit counseling services that promise to help him, and he's also been approached by a company that assures him it can painlessly make his debts go away. Is this, he asked me in an e-mail, too good to be true? Often, the answer is yes.
Randy's thinking of entering a world that's fraught with fraud, misrepresen... Read credit counseling article
Credit Scoring - Truth Revealed
Credit scoring is system that most creditors and business use to determine if to issue credit cards or loans to an individual. When you apply for credit, creditors reserve the right to administer a full credit check thereby checking your past credit history. Various factors help creditors determine if to issue you credit or not. Your income bracket, total bills, credit card balances and much more determine if your are a good candidate for credit or not.
The credit scoring system awards points are awarded for each factor toward your credit worthiness. Using this system, creditors can then offer credit to individuals with the most points. For example earning over $1,200 per month gives you 15 credit points whereas earning $800-$1000 per month gives you only 12 points. Age is also a factor 21-28 year old gives you 11 points whereas 28-35 gives you only 5 points. The age discrepancy stems from the fact that most people in their thirties and forties generally have high amounts of debt already. Also having a telephone registered in your name and also in the directory earns you more points. In this day and age many more factors contribute to credit scoring sometimes as many as 15-20 factors can contribute to this, many of these factors are also variable and can be manipulated by the consumer to earn the best credit rating possible.
Credit score cannot legally discriminate on race, sex, national origin as many people would assume but the cumulative factors can exclude many groups of people therefore creating a general trend toward certain groups. In fact some creditors will even use factors like ownership of a car title and the age of the car. The fact is if you know all the cumulative factors that go toward earning a good credit score you should be able to sort out the variable factors and let them work to your advantage.
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Get An Auto Loan If You Have Bad Credit
Are you in need of a new car, but are afraid it's impossible because of your bad credit? Well, the fact is that, today, consumers with bad credit have a wide variety of options available to them in regards to bad credit auto loans. In fact, it can be very easy to get the money you need, but it is important for you to do your research before getting a loan.
If you have bad credit, the first thing that I would recommend is to find out more about your own financial situation. What is your exact credit score (FICO) with the three credit agencies (Experian, TransUnion, and Equifax)? One place that you can find this information is the free credit report service at www.AnnualCreditReport.com At this site, you can place an order for a free yearly credit report. The credit report has everything but the credit score. You have to pay extra to get the scores, but it is worth it. It is valuable information to have on hand in your search for the best auto loan deal. With this information, you can do quite a few things to help yourself. The first thing you need to do when you examine your credit report is to look for errors. Correcting errors can help bring up your credit score some. Another way to increase credit score is to have a friend, or relative, with good credit add you as an authorized user to their credit cards. This connects their good credit history to yours. If you simply don't know what to do, there are credit repair companies that can help clean up your credit report. I have used a credit repair company in the past and was very pleased with the results.
I definitely don't recommend getting a bad credit car loan from the local car dealership where you buy your car. You will definitely get charged a very high interest rate (APR), and will most likely be fed a load of bull about the bank "requiring you" to buy extras like the extended warranty, glass VIN etching, credit life insurance, etc. etc. The list goes on. One trick that they also do is to say that your credit score is lower than it is just to justify higher interest rates. You just need to know that information anyway. If you don't, it can really cost you in the long run. Let's use an example. Lets say that you're getting 12% APR (could be higher) bad interest loan from a dealership instead of a normal 6.25% APR car loan you might find elsewhere. True, the monthly payment is only about $40 higher for the bad credit loan per month, but over the life of the loan (generally 60 months), high interest really adds up. In the end you pay an extra $2,500!
Keep in mind that bad credit auto loan lenders usually require that you have steady employment and a favorable debt-to-income ratio. Of course, if you cannot demonstrate employment, you are dead in the water anyway. But what the bad credit borrower needs to understand is the fact that this kind of loan can come at a high price, and it pays to research several options before buying. One of the best places to find a bad credit lender is online. There are hundreds of them there out there. Shop around. Simply google "bad credit auto loan" and several will come up. I would try to go with a well known, established auto loan company. Check out its background with the Better Business Bureau. Be sure to read the fine print and know what the exact terms of the loan are. Another place to look for automobile financing is your local bank. Sometimes when it is hard to get a loan anywhere else, you can get the money you need from this traditional source. If nothing else, you can get someone else with good credit to co-sign the loan with you. The co-signer assumes equal responsibility for the loan, so it is best to have an open line of communication with the co-signer about your credit situation. On any loan, also be sure that there is no prepayment penalty in the fine print so that you can pay it off early or refinance easily.
When it is all said and done, a person with poor credit does have many options available. It is just a matter of doing the research and keeping an eye out for the best deal available. Your dream car is within reach, and having bad credit shouldn't hold you back.
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