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Consumers are of the opinion that once that after filing bankruptcy, it spells the end of the road for them. This however is not true. There is life after bankruptcy and it can be full of the same if not similar opportunities prior to filing for bankruptcy. [...]

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With the rising costs of tuition fees a higher education student loan might be the only way to invest in your future. However if these college student loans are not managed efficiently and your student loan debt is not paid back promptly it can negatively impact your credit report. There are a variety of student loans available, but it is up to the consumer to decide which is best suited to their circumstances.

College Education Loan: How Do They Work

Higher education student loans are, as is obvious from the name, a way to pay for your higher education. No matter what your circumstances, college student loans can be the light at the end of the tunnel when there is no other way out. In order to get a college education student loan, clients need to fill out what is called an FAFSA (Free Application For Federal Student Aid) form and submit it with the possibility of correcting any details later. Students should then aim to visit their respective school’s student centers and try and gauge the kind of assistance they might be capable of getting.

Nowadays Perkin Loans are very popular owing to their lower interest rates.  As long as students are enrolled at least at a part-time status they can defer the repayments on their student loan debt.  Once students graduate they enter what is known as a “grace period”. This is generally 6-12 months long and allows students the time to find employment. Once this is over, the repayments on the college student loan (the principal plus the capitalized interest) comes due. At times, when consumers experience tremendous financial difficulty they can temporarily defer paying student loans without hampering their credit reports.

The Student Loan Types

The student loan can be of various different types, each designed to serve a specific purpose. A student must choose their higher education loan depending on their needs.

• The College Student Loans Made Directly To Students (Federal): These higher education loans are quite similar to the ones described above. As long as the student is enrolled at least in part-time status the student loan debt repayments do not come due. However, if the student falls below part-time status they enter the grace period which can be waived once they enroll again as part-time at least. In the event the student falls below the part-time status again the grace period cannot be re-instated and repayments for the college student loan are due.

• The Student Loans To Parents (Federal): These loans are directly made out to parents. However the interest rates on these college student loans are much higher and the repayments fall due immediately.

• The Private Student Loans: These higher education loans are usually used as supplements to federal student loans owing to the fact that the federal loans are sometimes insufficient to cover all expenses. These loans usually have higher limits and the student loan debt repayments are deferred until after graduation.

Paying Student Loan: Impact On Your Credit Report

Student loans are usually one the first credit agreements people enter into. It is essential that this credit contract is managed efficiently or else it can hamper your overall credit score and it can be default to improve your credit score after these defaults. Irregularities on paying student loans will sit on your credit report for as long as 7 years in certain cases, hence it is of utmost importance that consumers try and repay student loan debt as soon as possible and in a timely manner. Below a few tips to help you manage the student loan better:

1. Pay Off Your Loan: It is in the best interest of consumers to pay off their college student loans as soon as possible. This creates good repayment history and at the same time boosts your credit score.
2. Interest Payments: In the event that you have a non-federal higher education student loan, ensure that you are making the interest payments regularly. Your expenses schedule should include all these expenses and your interest payments should be a part of your calculations.
3. The Grace Period: If you have been able to find a job before the expiry of the grace period, accumulate a fair sum of money and deposit a large amount into your college student loan. This will help you stay on top of your student loan debt repayments and ensure that you do not fall behind.
4. Defaulting is Not An Option: For those who are wondering what the consequences on defaulting on a college student loan are, the answer is an unequivocal “severe”. Even in the event of filing for bankruptcy, college student loans are usually still required to be paid. Moreover bankruptcy will sit on your credit report for a period of 10 years and will put your FICO score behind by about 240-280 points and this is always a matter of public record. If you have defaulted on your student loan debt, prepare for a barrage of collection agencies hounding you. In certain cases your employer may use part of your salary to pay off these college student loans and also use your taxation refunds for the same purpose.

Now that we have established the effects student loans can have on our credit report, consumers should be careful while managing this credit contract. It is always best to shop around and look for option that suits you best. Essentially you should factor your college student loan repayments into your expenses and make sure that you work with the view to paying it off as quickly and as smoothly as possible. These few simple steps should ensure that you have a blemish free, goodcredit report.

References:

1. Ensuring Continued Access to Student Loans – Federal Student Aid
2. New changes will do you good if you have student loans -USA Today

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In the wake of the global economic crisis, a lot of consumes are feeling the pinch of the financial crunch. In times like these financial planning tools can help maintain a blemish free credit record and help you stay on top of your finances. Using a personal financial planning software can have many advantages and help you manage your credit report better. In fact, by keeping good track of your finances, you can even avoid credit report errors.

Managing Personal Finances With Tools

Budget planning tools are financial planning/budgeting applications programs and software that are a great help in managing personal finances. Most personal financial planning software nowadays is extremely detailed and can help you manage a range of your personal finances ranging from your mortgage, taxes, investments, insurance and all the way down to your daily household budget. These accounting personal software tools and applications can help consumers determine whether they are slipping or have a firm grip on their finances.

Budget Planning Tools – Types

There are various kinds of budget planning tools and accounting personal software programs available out there, depending on what you need.

• Personal Financial Planning Software: These personal financial planning software programs allow users to compare their projected budgets to their actual budgets to determine variances in spending. In addition they also allow users to monitor their assets and liabilities. Consumers often use these personal accounting softwares to create financial plans for themselves and also use it for retirement planning, taxation planning and analyzing investment portfolios. An example of such a financial planning tool is Quicken and Managing Your Money.

• Financial Planning/Budgeting: This is another extremely powerful financial planning/budgeting tool to help keep your finances on track. You can simply create a budget for yourself by using spreadsheet software like Microsoft Excel. An easy way to create to create a budget on a financial planning tool is by starting out by listing your exact income. Then list out all your expenses and compare them to your income for variances and for places where you might be over spending or might be able to cut back. A example of a budget worksheet is as below:

  

• Personal Accounting Software: Personal accounting software can be very essential in helping you stay on top of your finances. It is beneficial to be able to see all your financial information in one place. These personal financial planning tools can help you see your finances and help you pay bills on time and avoid any sort of late fees or bank charges. Common examples of these a personal financial planning toll or accounting software are Microsoft Money and Quicken Personal Finance.

• Online Financial Tracking: If you have been feeling inundated with paper bills and repayment statements and feel that it would be better to be able to view all your expenses and payments online then online financial tracking might be the answer for you. Online financial tracking software like Quicken Online, Equifax Debt Wise and Mint.Com allow user the capabilities to track their finances online and get rid of messy paper trails.

Managing Personal Finances

We have already stated established that there are numerous ways to help you do a better job of managing personal finances. Consumers can download many free and trial versions of financial planning tools or online tracking software. These personal financial planning tools and software work with the sole purpose of helping consumers to get on top of their finances and maintain good financial health. By investing a little bit of effort consumers can go a long way towards ensuring that they are always in control of their bills, expenses and finances and can these personal financial planning tools can be of great help for rebuilding a credit report.

It cannot be emphasized enough how important keeping tabs on your finances is. Ensuring that you keep up with your bills and are on time with your payments will ensure that your FICO score does not drop on that account and will in fact improve your credit report owing to better repayment history and timely payments. Moreover users must remember that nothing looks worse on a good credit report that late payments or nominal bank charges for payments that were a day or two late. Financial planning tools will help you keep on track with your payments and finances and at the same time will ensure that you maintain a good credit report.

Reference:

1. Budgeting – the Cornerstone of Personal Financial Planning – Financial Planning Advices

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Margin loans are extremely powerful investment tools which can help investors accelerate their wealth in a rising or bullish market. However, just as all good things have a down side margin loans have one too and this may affect your credit report.

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

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As the pressure on financial markets increases, consumers are feeling the global economic crunch. Of late the numbers of US home foreclosures have increased dramatically and have caused tremendous damage to a consumer’s credit history. Through the course of this article we will look at the impact a foreclosure can have on your credit history and the possible solutions or alternatives to a foreclosed home.

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

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In case consumers are wondering whether the foreclosure of a timeshare contract will affect their credit report, the answer is an emphatic YES. A timeshare contract is like any other formal credit contract whereby the consumer is bound by a promissory note. The funder of the timeshare contract works with the assumption that the consumer will be paying back the funds borrowed for the timeshare along with interest. In the event of a timeshare contract foreclosure the lending authorities lose out on money just as they would in case consumers foreclosed their mortgage contracts. Hence it is essential that consumers understand the ramifications of a timeshare contract foreclosure. It is important to manage a timeshare contract just as well as managing a mortgage loan for a good credit report.

Timeshare Foreclosure Sales: The Process Involved

Just as a mortgage foreclosure, timeshare foreclosure sales are also carried out at the Sheriff’s auction whereby it is sold to the highest bidder. Once the consumer wishing to foreclose his/her timeshare contract notifies the lender of their intention, the lender will obtain the timeshare contract and will present the same at the auction. Owing to the fact that the timeshare foreclosure is a public matter it is handled by the legal system and becomes a matter of public record. Consumers must be aware that the three credit agencies, Equifax, Transunion and Experian rate the clients based on the records of public courts.

Timeshare Arrears & Defaults

Arrears on a timeshare contract are the same as a default on any other consumer credit loan. The timeshare default will affect your credit score negatively. In the event that you are no longer able to afford your timeshare and are looking to foreclose your timeshare contract, the following is a likely outcome:

1. Owing to the fact that the lender will report your foreclosure, it will appear on your credit history, thereby making it very difficult for you to be able to obtain credit and even if you do it will be at a much higher rate until you rebuild your credit report.
2. Once the timeshare financial institution is sure of the foreclosure they report the mater to the IRS. This will culminate in the remainder of the timeshare contract debt being shown on your credit report along with the value of the property at the time the timeshare contract was foreclosed.

Timeshare Foreclosures: Impact on your FICO score

Owing to the fact that the timeshare contract is a matter of public record and is regarded as a court judgement, the timeshare contract foreclosure will impact your credit score negatively by 240-280 points. The timeshare foreclosure is usually visible on your credit report for a period of about 7-10 years. On close inspection companies can access this information for a period of up to 10 years thereby making credit extremely difficult to obtain. In certain situations consumers try and short-sell their timeshare contracts. This too negatively impacts your credit score and puts it back by anywhere between 80-120 points and is visible on your credit report for a period of at least 7 years.

Consumers should be aware that like all consumer credit contracts timeshare credit contracts are to be taken seriously. Blemishes on timeshare contracts like all others have a direct negative impact on your credit score. Remember it is prudent to only get that debt which consumers know they can afford and are comfortable paying off. In a strict credit environment where we are experiencing credit contraction like never before it might be wise to ensure that you do everything possible to maintain and improve a good and healthy credit report.

Reference:

1. Timeshare Foreclosures and Your Credit Score – RCI VIP

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Paying off your credit card debt soon is likely to have a big impact on your credit report. This statement holds true especially in this economic climate where lenders prefer to grant new credit to consumers who have minimum credit and good repayment capacity. Hence paying off your credit card debt might be a good credit card debt solution before applying for a new credit facility like a home loan or a vehicle loan.

Pay Off Credit Card Debts – Advantages

Paying off credit card debts definitely has its advantages, all of which together can contribute greatly towards improving your credit report

• Decreased Credit Card Debt:The biggest and most obvious advantage of paying off credit card debts is of course that it reduces your credit card debt  and reduced debt is a financial situation everyone wants to be in.
• Increase Your Spending Money: Making more credit card repayments, means only one thing, you have lesser money in your hand to spend. Paying off your credit card debt will ensure that your spending money in hand increases.
• Impetus To Your Credit Score: The lesser the debt you have the better the chances of improving your credit report. As you are aware, paying off your credit card debt proves that you have good payment history and also reduces your overall debt. This can greatly help boost your credit score.
• Better Serviceability For Future Loans: Paying off your credit card debt, will ensure that your serviceability (the ability to obtain credit) on future credit contracts improves. Lenders look at applicants with minimal debt favourably and hold clients with prompt and good repayment history in high regard.
• No More Interest Payments: When you buy something on your credit card, you are liable for an interest payment on the value of the item purchase. Regular credit card repayments is a good credit card debt solution and this will mean that you will now be able to purchase goods without having to pay extra in the form of interest.
• Surplus Funds For Investments: While a credit card account can be helpful to build good credit, by paying off credit card debts, you are not only increasing your spending money but will also have surplus funds to contribute towards investment accounts or retirement savings accounts.

Credit Card Debt Solution How Tos
Paying off credit card debts is a great solution and some of these credit card debt tips might help to get you started on your mission to pay off credit card debts.

1. Monitor your spending habits and ensure that you are only spending on what you need.
2. Switch to using more cash. Most consumers find it rather difficult to carry cash around, but when you are trying to pay off your credit card debt this can really help.
3. Calculate your payments and always ensure that you have sufficient monies in your account to cover the payment.
4. Create a budget for yourself and use any surplus funds that you might have towards paying off your credit card.
5. Freeze your credit cards. This means literally freeze them. Do not use your cards if you are trying to pay them off. You might even want to cut up your credit cards to ensure that you do not use them.
6. Try and consolidate your credit cards. Instead of having numerous credit cards with small balances, it might be better to just have one credit card with a larger balance. This will help you keep track of your payments and in turn you will be making one payment instead of many. This will also be particularly helpful when you are making increased contributions.

Based on the above facts consumers can conclude that paying off your credit card debt not only has a positive impact on your credit score but also means that you can use those surplus funds towards obtaining more desirable credit e.g. a mortgage. Consumers can also use these surplus funds towards retirement contributions or even towards starting a savings pattern or reducing other debt you might have.

Reference:

1. Tips for Paying Off Credit Card Debt – Credit.com

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While bankruptcy is often a fresh start for debtors it is not free from consequences for your credit score rating. Prior to filing for bankruptcy it is essential that consumers fully understand their legal position and obligations and the effect of bankruptcy on their credit report. Bankruptcy should be considered only as last resort as it could have a major impact on your credit score rating and if possible, a bankruptcy alternative should be considered. [...]

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Credit experts always advise consumers to get a copy of their free annual credit report but many often ignore this advice. If you are thinking about getting a home loan, car finance or even a credit card, it might be prudent to view your own credit ratings history before you apply. With credit policy being tightened across the board, financial institutions find themselves more inclined towards turning down average or below par applicants with poor credit ratings.

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Credit scoring reports are determined based on several different factors and your credit card balance is one such factor. Factors such as late payments, too many credit inquiries, defaults on repayments, bankruptcy etc; all influence your credit score. To build good credit and a high credit score it is important to keep all these factors in check. While the balance of your credit card accounts do impact your credit rating, if all the other factors are fine, your credit scoring report will not be heavily impacted by your credit card balance.

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