by Adam | Apr 19, 2016 | Credit Repair
A charge-off occurs when a creditor determines that a debt is unlikely to be paid. If a debt is unpaid, usually for 180-days or more, it will probably be declared a charge-off. This allows the creditor to write it off as a tax deduction, since the loan is no longer considered an asset for them. But this doesn’t mean you are off the hook for repaying the loan. On the contrary, your debt is owed until it is paid, and a charge-off is the worst thing you can have on your credit report. If you were under the impression that your debt would just go away if you didn’t pay it, you were sorely mistaken. Not only will you have to repay it, but you will probably have a hard time getting any kind of credit in the future. After all, the purpose of your credit report is to show lenders your ability to repay debt. A charge-off shows them that you’re their worst nightmare – a borrower who will not repay. What can I do about charge-offs on my credit report? The charge-offs will stay on your credit report for seven years, until they must be removed under the Fair Credit Reporting Act. However, some states do not have a statute of limitations for debt collections efforts, so you could find yourself being hassled by collectors and even facing lawsuits years after the delinquency date if you fail to pay your debt. The best thing you can do if you have a charge-off on your credit report is to make a plan to pay it as quickly as...
by Adam | Apr 12, 2016 | Credit Repair
Illness, losing your job, or having another expensive emergency come up can all result in lacking the funds needed to make your car payment. Before you panic and assume that your car will be repossessed, know that you have some options available that can help you keep your car without damaging your credit, depending on your payment history and credit score. Before Your First Missed Payment The worst thing you can do is ignore your problem. No matter what, you must call to discuss that matter with your lender. The sooner you call the more options you’ll have. Repossession is the last thing you and your lender want – it’s a lose-lose for you both. So just know up front that your lender wants to help you, so let them. So when you crunch your numbers and realize you won’t be able to make your monthly car payment, call your lender first thing. They may allow you a grace period, called forbearance, that allows you to skip your payment for a few months. This means they’ll usually just extend your loan period and tack on the missed periods at the end. You may also be able to refinance your loan to lower your monthly payment, but you’ll need to have a pretty good credit score to refinance. If You Have Already Missed a Payment If you missed your payment completely, you can expect a call from the lender inquiring as to what happened. Then they’ll probably begin discussing your options, as mentioned above, but are more likely to charge you a late fee. The good news at this point...
by Adam | Apr 7, 2016 | Credit Repair
Car title loans are financial products that allow you to borrow money using your car as collateral. Usually this means that you’re in a crunch and need some money quick, so you hand over the title of your car and a spare set of keys to the lender to use as collateral. You still get to drive the car in the meantime, assuming you’re paying back the loan on time. Which is very difficult to do. Astronomical Interest Rates The truth is most people have a hard time paying back what they borrowed from a title loan because the interest rates are ridiculously high, and the repayment period is too short. Chances are if you didn’t have the few hundred dollars to cover whatever bill you’re trying to with the title loan, then you’re not going to come up with that amount plus the interest to repay the loan in just 30 days. In states where title loans are unregulated, interest rates range from 30 to 36 percent monthly, which comes out to be 360 to 432 percent APR. In practical terms, this means that people who take out the average amount from a title loan, about $950, end up paying $2140 in interest by the time they finally repay the loan. Paying over $2000 to borrow $900 doesn’t sound like such a good deal, does it? Car Repossession Remember, you put your car up in order to get this loan. So if you somehow don’t come into all of that extra cash during your repayment period, the lender can come take your car. And they will come take...
by Adam | Mar 22, 2016 | Credit Repair
When you’re preparing for a big purchase, you might start worrying about your credit score and what could bring it down. There are quite a few factors that go into calculating your credit score, but some of the omitted factors may surprise you. Here is what you can expect to be considered when calculating your credit score, and also what’s NOT considered. Your Credit Score There are five main components that make up your credit score. These include: Your current debt, whether it’s from credit cards, auto loans, or student loans. Your payment history and whether you’ve consistently made or missed those payments. What types of credit you utilize. The type of loan will be listed and is important, because some types aren’t actively being repaid, such as student loans. The length of your credit history, because a very high score from someone who hasn’t had a credit card for more than a few months does not reflect their ability to responsibly handle debt. New forms of credit you’ve opened, because recently opening a bunch of credit cards or personal loans is a bad reflection of your financial responsibility if you’re applying for a mortgage or other large loan. What’s NOT Considered Now that you know what factors definitively make up your credit score, here are some factors that do not go into calculating your credit score, and some might surprise you. Your income. Although the lender of a loan will ask what your income is, it is not used to calculate your credit score. Interest rates. Although these are often determined by your...
by Adam | Mar 15, 2016 | Credit Repair
If you’re sick of renting and are ready to put those monthly payments toward your own investment, then purchasing a home of your own may be in your near future. However, it’s not as easy as walking into the bank, applying for a loan, and being handed the keys. Why Credit Matters Usually the purchase of a home requires that you make a down payment equaling a certain percentage of the cost of the home. The amount you are required to put down often depends on several factors, including your credit score. In addition to the down payment, your credit score could affect your interest rate and whether or not you’re approved for a mortgage loan at all. It’s important that your credit is in tip-top shape before you apply for a home loan and begin the process of purchasing your home. Review Your Current Credit Report The first thing you must do is review your credit report and assess your current situation. You are entitled to a free copy of your credit report every year from the three credit bureaus. Look it over thoroughly and make a note of anything that seems out of place. Incorrect information is not uncommon on credit reports, and you don’t want any misreporting to bring your credit down. Fortunately, you can dispute anything you think is incorrect and have it removed, and this will improve your credit score immediately. Ask For the Removal of Small Mistakes While reviewing your credit report, pay special attention to the “adverse accounts” section to see what may be bringing your score down that is within your control. If...
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