Margin Trading: What is Margin Lending

Before we talk about the advantages and disadvantages of a margin loan, it is important to fully understand what is margin lending. Margin loans are investment loans which are backed by the client’s securities or investments. In margin trading, typically, clients offer their investment portfolio as collateral and can borrow funds against that for a wide variety of purposes ranging from buying additional securities, to paying off bills with higher interest rates or mortgage loans for real estate and purchasing new assets such as artwork or holiday homes etc.

Margin loans gained a lot of popularity prior to the dot com era crash as it enabled consumers to purchase investments beyond what their own capital would allow them to afford. With the market seeming to raise again, margin lending once again seem to be gaining ground. A lot of brokerage houses encourage their consumers to obtain margin loans and pay down debt with higher interest margin rates as high value margin loans can be obtained for cheaper interest margin rates than most available rates in the market.

Margin Lending Rates

Margin lending rates have been know to vary between single figures for margin loans with a value of more than $1 million plus o a bit over 10% margin rates on margin lending less than $25,000. Just to give consumers an idea of margin loan rates, a large investment firm might offer margin loans at a margin interest rate of 8.0% for variable rates and from 7.9-7.95% for fixed margin rates.

Margin Trading: Advantages of Margin Lending

Obviously, margin trading is and has been very popular among consumers. Margin lending has a lot of advantages; a few of these are listed below:

• Accelerate you Wealth Quickly: Margin loans allow investors to quickly accelerate their wealth in a rising market as the value of your portfolio increases with market increases. Moreover margin lending enable investors to invest more than they have at their disposal.

• Variety Of Uses: Funds from a margin loan can be used for a variety of purposes, such as paying off bills, buying real estate and other assets or decreasing debt at a higher interest rate. Being able to decrease existing debt ensures that your credit history looks better and also reflects well on your repayment capacity.

• Lower Interest Rates: Margin lending offers margin rates on certain larger amounts that are cheaper than most other interest rates available in the market.

Margin Trading Disadvantages of Margin Lending

While margin loans have numerous advantages, margin trading also comes with its fair share of disadvantages:

• Margin Calls: The biggest disadvantage margin loans have are margin calls. Most margin loan facilities require your portfolio to be at a certain predetermined level. If owing to a fall in market your portfolio falls below a certain level, the margin loan provider can either ask you to put cash back in your portfolio or provide additional security as collateral or in a worst case scenario might sell down your portfolio to recover funds.

• Deceleration of Wealth: In a falling market margin loans can very easily increase your losses drastically. This is owing to the fact that margin loans are directly linked to your investments and they need to be paid back to the lender.

Margin Trading: Impact Credit Report

Adding further to the points stated above, although margin loans are believed not to have any direct effect on your credit report, they might have an indirect effect. If after selling down all your securities and assets, you are still unable to pay off the margin loan provider, the margin loan lender might issue a default against you or might be even declare you bankrupt. This needless to say has a very damaging impact on your credit history as it can set your credit report back by anywhere between 130-280 points back depending upon the type of charge issued on the account and rebuilding a credit report can be a tough job.

It is essential as it is with any investment to weigh your options out before making an investment decision about margin lending. One must remember that while margin loans have a lot of potential advantages they also come with their fair share of drawbacks. Investors must remember that there might be long term damage to their credit history should they be unable to pay back their margin loan obligations. Adjudicate your financial health and credit status before making decisions as it is always beneficial to have a good clean credit report.

References:

1. Margin Trading: The Dreaded Margin Call – Investopedia
2. Margin Loans Make A Comeback – The Wall Street Journal

Home Foreclosure Help: Define Foreclosure

Before we start off, it is important to define foreclosure. If a consumer is behind on his/her mortgage payments and has not made any attempt at resolving the situation or catching up on the payments, you can be rest assured that the financial institution will be sending you a foreclosures USA statement pretty soon. In the event of a foreclosure, the mortgage company with which you have your home loan, steps in and takes over your property and sells it at the sheriff’s auction, similar to the process discussed for timeshare foreclosures. This event then becomes a matter of public record and can stay on your credit report for up to 7 years, therefore causing a negative mark on your credit history.

Foreclosures in USA: Statistics

Here are some statistics on US home foreclosures:

• 1 out of 300 homes is likely to be a foreclosed home
• Nearly 250,000 families every 3 months enter into a foreclosure.
• Owing to the falling market conditions, certain homeowners who opted for variable interest rates find that their homes are no longer growing in value and at the same time their mortgage adjusts higher and as a result of this refinancing is no longer an option.
• Nearly 6 out of 10 mortgage owners wished that they had understood the terms of their mortgages better. At the same time another 6 out of 10 mortgage owners are unaware of the services their mortgage companies can offer them in the even that the are struggling with their home loan repayments.

Home Foreclosure Help: Impact On Credit Report

A foreclosure is probably one of the most adverse things that can happen to your credit report and you will definitely need home foreclosure help if you are in a similar situation. Owing to the fact that USA foreclosures are a matter of public record, it can negatively impact your credit by nearly 130-180 points. A foreclosed home can stay on your credit history for a period of as long as 7 years. Even after 7 years credit providers can check the public records and might find the foreclosed home listing against your name, in which case obtaining credit will become extremely difficult. Even after years, when you have a god job and are on top of your bills, a previously foreclosed home listing on your credit report can come back to haunt you.

Foreclosures In USA V Bankruptcy

While bankruptcy can be the worst thing on your credit report, foreclosures in USA are not far behind. While bankruptcies can be on your credit report for a period of over 10 years, a foreclosure remains for a period of 7 years or more. Bankruptcy charges can negatively impact your credit history by nearly 230-280 points while a foreclosed home can have an impact of 130-180 points. It however must be noted that both bankruptcies and US home foreclosures are a matter of public record and are viewed extremely negatively by finance providers. It is in the best interest of consumers to avoid either of these situations as far as possible.

Home Foreclosure Help: Disadvantages

When seeking home foreclosure help, it is very important to understand the disadvantages of a home foreclosure. Some of the disadvantages of a foreclosure are listed below:

1. US home foreclosures can set your FICO score back by as much as 180 points.
2. Mortgage US home foreclosures are viewed extremely negatively by lenders and can make getting credit in the future very hard and very expensive.
3. A foreclosure usually stay on your credit history for as long as 7 years or more.

Home Foreclosure Help: Avoid Foreclosures In USA

If you are behind on your mortgage loan payments and feel that a foreclosure in USA is imminent, try some of these alternatives instead to avoid irreparably damaging your credit history:

1. Speak to your mortgage lender and temporarily reduce your mortgage repayments.
2. Capitalize the unpaid amount and increase your existing payments slightly to cover the deficit.
3. Most mortgage lenders allow their customers who are facing home loan repayment difficulties to enter into payment plans to cover the deficit.

It is always a good idea to consider all your options prior to getting a foreclosure. Many consumers are unaware about the help their mortgage companies can offer them. Seek legal and professional advice before making decisions regarding a foreclosure. It is absolutely essential that consumers completely understand their situation before making any decision because consumers must remember that a  foreclosed home can cause irreparable damage to your credit history.

References:

1. Foreclosure Statistics – Federal Deposit Insurance Corporation
2. Facing Foreclosure? 9 Options – Money Central, MSN

Get Free Credit Report – Quick Consumer Credit Guide

Every US citizen is entitled to free copy of their annual credit report from each of the three credit bureaus. This can be done in three ways:

1.      ONLINE: Visit the website www.AnnualCreditReport.com. Please be aware that this is the only authorized website through which consumers can access their credit report for free and others are likely to be “free” credit report scams.

2.      PHONE: You can call the hotline at 1-877-322-8228. However please bear in mind that free annual credit report requests over the phone take about 15 days to process.

3.      MAIL : If you wish to order your credit ratings history by mail, complete the Annual Credit Report request brochure and mail it to Annual Credit Report Request Service, PO BOX 105281, Atlanta GA 30348-5281

Please remember that consumers are entitled to only one free credit report each year and each additional request incurs a charge of about $10.00. In addition to this, please also keep in mind that approaching a consumer credit agency directly will also incur a charge.

Order Free Consumer Credit Report – Advantages

Even though it is free, many consumers do not order their free consumer credit report because they believe it is pointless. However, regularly checking one’s credit rating history has several advantages, some of which are:

• Credit Report Errors: Viewing your free annual credit report regularly will allow you to pick up on any discrepancies and credit report errors that might have crept in to your credit report such as:- Payments not being credited to your accounts
  - Incorrect defaults shown on your account
  - Credit applications or enquires not applied for
  - Incorrect bank judgments and defaults, etc

• Viewing your own Credit Ratings Score: Obtaining your own credit ratings history enables you to view your own credit score and thereby see your credit standing

• Identity Theft : Viewing your annual credit report frequently could protect you against identity theft. Identity theft has been growing at an alarming rate in the country and it might be a good idea to ensure that you are not a victim. In fact, identity theft victims legally qualify for free credit reports at any time of the year.

Adverse Circumstances – Obtain Free Consumer Credit Ratings History

Apart from identity theft, certain other adverse circumstances qualify a consumer for a free credit report which can help them view and if necessary, improve their consumer credit history.

• Negative Outcomes: If you have been denied credit or employment based on adverse comments in your credit ratings report, you can obtain a free credit report within 60 days of receiving notice of the action.

• Unemployment: In case of unemployment, consumers are entitled to a free credit report within 60 days from the date that they lose their job. Under these circumstances you are only allowed one per year.

It is recommended that consumers review their credit reports quarterly or half-yearly as it has been found almost a quarter of all consumer credit ratings reports contain errors. By regularly obtaining and viewing your free annual credit report, you can prevent and rectify errors in your credit ratings history to improve your personal credit ratings history and maintain a healthy credit standing.

There are many who want to know how and what companies report to credit bureaus. If you also one of these seekers, mind it these credit bureaus are private firms that keep the record of your credit history. They are mortgage companies, banks, stores and some other creditors who provide information about you to credit reporting agencies.

Your date of birth, address, income, Social Security number, payments details, employment record, court cases, bankruptcies, collection accounts and lots of other details are available on your credit report and credit bureaus get these information from other departments and companies. But it is also a fact that sometimes credit bureaus get wrong information about you from different companies that can be very damaging for your credit score.

Your credit report reflects all what you have done regarding credit management in the past. Whenever you apply for some loan or job, your worthiness and employability are judged with your credit report. You can easily get some loan if you have a sufficient income and sound credit report. But if you have a shattering credit history, it would badly impact your credit report and you wouldn’t be able to get further credit.

If some creditor rejects your loan, you can ask it to tell on which information it has done so. Your creditor should inform you about the bureau that has given that disputing information. According to laws, credit bureaus are bound to share all the information that exists on your credit report.  Your credit report serves as a lifeline for your financial well-being and that’s why it is quite important to give proper consideration to this serious issue of your life.

There is only limited data available on some employment report that potential and current employers use to make promoting and hiring decisions. It has the same information about your credit cards and loans that is listed in your credit report, but it doesn’t contain information like date of birth, marital status and account numbers.

Usually, employers want to gather from your credit report how responsible you are, as many employers reckon employees credit check a must if they are considering him/her for jobs related to handle or distribute money. Employers correlate high debt with embezzlement possibilities.

Your credit history serves to tell a lot about your different qualities that relate to your financial status including debt load. Similarly, your credit report can be helpful for your potential employer to find out what sort of financial problems can affect your performance during the job.

The employment credit report can also reveal about bankruptcies, collections accounts, mortgages, loans and your punctuality to make different payments. Your potential employer may also get information about your previous employers from this report.

You must keep this fact in mind that it’s not mere applying for a car or house loan, your credit report can also play an important role in your job hunt. That’s why you must give consideration to improve your credit scores if not for lenders, at least for your employers as they may decide about your future considering what exists on your credit report. What you need to do is to get a free copy of your credit report and find out what kind of negative information exists there. Sometimes people have to pay the price for those mistakes that they do not commit, as often your credit report consists of wrong information. Such people are definitely responsible for such wrong information which exists on their credit report, as they overlook and do not check their credit report thoroughly. They repent for their negligence when they have to pay the price for others’ mistakes.

To get a good credit report, earning more credit scores is a must. More credit scores can be earned by on-time payments. Credit scores or FICO scores depend upon various factors other than timely payments, though it is the base of earning credit scores. Credit scores earning can depend on amount owed, an opened account’s time span, and credit history. Credit scores vary from bureau to bureau because their evaluation comes as a result of a lengthy and complicated accounting procedure, but generally fall between 350 to 900 points.

A bad credit or a negative mark sits on a credit report for 7 years. It is necessary to keep an update of your credit report regularly. To keep a track record of your credit report through the year, it is handy to keep in touch with all the three credit bureaus and ask one of them for your credit report after every 4 months turn by turn. In that way you will be able to see whether there is any lingering on account that can be troublesome or not.

Credit reports should hold up to date information to portray exact picture of your financial standing and responsible nature. Ensure that the bureaus close the long unused accounts that are appearing as active accounts onto your credit report. Many times it also happens that your credit report has ‘missing accounts’; items do not appear onto your credit report and are missed. The reason being, not all the creditors report your credits to the bureaus as the Fair Credit Reporting Act (FCRA) do not force any creditor to report its accounts.

It is wholly solely the businesses choice to report your credit to the bureaus or not. Mostly people misunderstand the credit process and start sending their credit track records to the credit bureaus straight away. The credit bureaus however do not add any information provided by the debtor himself. An account is added only when the creditor provides the credit record to the bureau.

Also, the bureau cannot ask on its own to the creditor to provide their accounts to update an individual’s credit history. The credit bureau can only ask a bank for updated account history, and that is also, if the debtor is using an American Express or Visa Card.

The way to report your credit is to ask the creditor to do you a favor by sending your credit information to the credit bureau. In many cases, it works, but in many, it doesn’t, as many businesses do not opt to provide account details to the bureaus; many small retailers are not into account update practices. In such a case, you can shift yourself to a creditor who regularly updates its account information at the credit bureaus and can update your credit report avoiding missing accounts. In a way you are reporting your own credit to the credit bureaus to get updated accounts history.

If you want to get a free copy of your annual credit report, you can get through some online sources that allow you to download your annual credit report from all three major credit reporting agencies. Similarly, you can also write a letter to these credit report agencies for the free copy of your annual credit report.

But when it comes to the FICO score, you can’t get it in the same way, as you have to pay for getting your FICO score. Usually, when you sign up for your annual credit report from different credit reporting agencies, you are also asked whether you would like to buy to FICO score, and you have to pay nearly $10 to $15 to get this score.

However, if you want to save this meager sum, you can also get the FICO score free, all you need to do for this is to sign up some kind of trial credit monitoring service, but there are many people who don’t like this, and it’s on you whether you pick this option or not. But if you pick that option and sign up for such kind of services and then you feel that they don’t deserve to get paid monthly, you have the option to cancel it at anytime even during the trial period.

FICO credit scores have utmost importance for your possible financial opportunities, as your lenders first look at your FICO score and credit report before approving any kind of loan for you. Your FICO scores reflect how punctual you are in paying your bills. If you have higher scores, it means you will repay the received loan in time without creating much fuss. Similarly, lenders love giving to them who have good credit score and always reward them with lower rates of interest and friendly terms and conditions. That’s why it is quite important to keep your credit score high.

Now you are quite well-aware how decisive the FICO scores are for your financial well being and how important it is to get your FICO score. There are various online sources that you can make the most of regarding your credit reports and FICO score. They are so much in numbers that sometimes it becomes quite difficult for you to choose the one. Most of these sources also offering their services regarding credit repair and you can utilize these sources to improve your credit record. Your credit report and FICO score serve as a life line for your financial well-being and that’s why it is quite important to give them their due.

There are many online sources which offer business credit reports without charging a penny, and you can easily obtain your small business credit report by just providing some basic information like address of your business, name, social security number and some other details. If you find any problem or confusion related to these credit reports, many of these sources also provide services to fix these credit reports related problems. There are several advantages of having a good credit history as it enables your small business to get your loan approved and make your small business big. One can also utilize these loans in initial funding.

It’s not so that your business credit report is just a help to get a loan approved, they can also serve your business in many different ways, as with the help of your business credit report you can easily monitor the trends in your business and can judge the current standing of your business. Tran Union, Experian and Equifax are three major bureaus that keep track of your business credit reports. These online sites can provide you the reports from all these bureaus. According to the Fair Credit Reporting Act, all these credit agencies are bound to provide business credit reports without charging any amount. But sometimes, you need these credit reports for more than one time during a year, and in such cases you have to pay some amount to these credit reporting agencies to get another copy of your business credit report.

Those small businesses that quite frequently check their credit reports online, they can easily find out where they improve further and what mistakes they should avoid. There are many businesses who sign contracts with some credit companies to get their credit reports with continual interval of 30-60 or 90-120 days. These businesses get their credit reports through e-mail they are also allowed for further discussion through phone or e-mail.

You might have found yourself in a situation when a better credit score could do a lot for you, but you failed to reap the benefits because of low credit score and bad credit history. But you must remember that it depends a lot on your efforts that you make to keep your credit score sound and impressive. If you show negligence and don’t pay proper attention to things like credit report, you often have to pay the price in the form of upsetting interest rates and refusals for applied loans.

You are allowed to get a free copy of your credit report every year, but still if you want to keep a closer watch on how things going, you can get another copy of your credit report by paying a small amount.

A report suggests that nearly 64% people check their credit report very year, while 16% people check their credit report even after more than year and same number of people told that they never checked their credit report.

If you are using some sort of credit, you must check your credit report once in a year. There are many online services which allow you to get a free copy of your credit report from all three credit agencies.

Aside from yearly financial maintenance, there are many other important times when checking your credit report can prove quite beneficial. For instance, if you want to apply for a car loan or a mortgage, you can avoid the embarrassment of turning down your request by checking your credit report at such important times.

The three credit agencies who produce these credit reports receive your financial information from different sources and it often happens that some wrong information are  put in your credit report. Inaccurate creditors reporting, identity theft, confusion regarding names, incorrect recoding of the credit bureau, unlawful credit inquires are some common mistakes that can be seen in credit reports.

These credit report errors can badly affect your credit score and credit history and you have to pay the price for the mistakes that you haven’t committed, but if you give a close look to such issues, you would find your mistakes standing before you somewhere and these mistakes may relate to your negligence in checking your credit report.

To begin with, these agencies that they obtain the credit scores from are paid by the creditors to pull out your credit history. In addition, there are no great incentives given to these credits reporting agencies are fairly negligible. Hence they do not make special efforts to ensure that the reports are correct. The creditors as well as the agencies do have an obligation to correct the report in case of errors but it will be you who would have to take the initiative.

Secondly, creditors make it extremely simple to get the credit and they make sure that you keep the credit for long. If we trace what has happened in the United States of America over the past few years then we see that a majority of people have got the credit cards and the bankruptcies. Credit card companies were making money initially, however things started to change when the number of bankruptcies started increasing. According to the newer law through Congress in 2005, it made it harder for the masses to file for a personal bankruptcy.

Lastly, there are a lot more things that you can do in order to better the credit score. This information will not be given out by your creditors. It is important to know that there are different types of consequences attached to the different types of credit cards available in the financial market. Even though the primary 10% discount may sound lucrative, but the do not fall for the departmental credit cards. They are looked across against your favour in the credit report by all the lenders since these cards are issued to anybody who has a social security number. Always get a Visa or a MasterCard from one of the trusted banks or financial institutions. These are the cards that will help you improve your credit history and scores. However, make sure you do not use more than 75% of the credit in one go and pay them off regularly every month. It is imperative to restrict yourself to a maximum of three to four cards.

Make sure that you do not cancel your credit cards once they get old. A portion of this credit score is built on your credit history and when you cancel this card; your history goes with it. If the credit card companies try to charge you an annual fee for keeping the old credit cards, you can simply inform that you need to cancel it. A majority of the credit card companies will just end up waiving the charge.