Debt Consolidation Loans

Archive for the ‘Debt Ratio’ Category

Are you one of those people who pay off your entire credit card balance each month? Do you carry zero balances on credit cards? Do you have credit cards that you do not use? If so, you probably think that you are doing your credit score a favor, but you are not. Thirty percent of your credit score is calculated and formulated according to your debt ratio. In order to have a debt ratio, you have to have open accounts with balances on them.

Why? Lenders look at several things when you ask to borrow money. First and foremost, they make sure that you pay your bills on time. Secondly, they look to see how well you pay off debts over the course of time. You see, lenders make money from the interest payments that you make each month. They want to see that you have made regular, timely interest payments in the past. If you pay off your balances each month, you are not paying any interest.

Now before you go wild and max out your credit cards, you should know that balance is the key to maintaining a good debt ratio on your revolving credit accounts. A good debt ratio is between 10 and 25%. This means that a credit card with a $1,000 limit should only have a balance of $100 to $250.

Following are some tips to help you improve your debt ratio:

* Multiple Cards – Carrying a small balance on multiple cards is better than carrying a large balance on one or two cards. If you only have one or two credit cards, apply for another and split your balances evenly. Be careful not to make additional charges. Keep your debt ratio less than 25%.

* Open Accounts – Do not close old credit card accounts. Keep them current by charging a small amount on them every six months.

* Credit Increases – Ask for credit increases on your credit cards. This will improve your debt ratio immediately if you do not charge anymore than your current balance on your card.

* Business Accounts – Pay attention to business accounts. Credit reports do not distinguish between personal and business accounts. You can use this to your advantage by maintaining a good debt ratio on business lines of credit.

So, what should you do if your debt ratio is higher than it should be? Open up new lines of credit and distribute your debt evenly. Be careful not to tap into your new credit lines. The goal is to improve your debt ratio NOT increase your spending limits. You should view your credit increases as mere numbers on your credit report rather than money that you can spend.

If your debt ratio is still high or if you do not qualify for additional lines of credit, pay more than your minimum payment each month until you get your balances down. Continue to make consistent payments on your credit cards each month and freeze spending until your debt ratio is less than 25%.

Sometimes while managing your finances, you might face some glitch that occurs due to your bad credit phase. Normally with a bad credit, you have to struggle a lot while meeting your needs. Lenders tend to reject your loan application form due to the high risk involved. So in order to help you out, lenders in the financial market have come up with Bad credit loans. These loans not only help you to meet your needs but also assist you to get out of the credit lurch.

These loans are designed for the sole purpose of providing you the much needed monetary assistance, even with a bad credit tag. In fact the amount derived can be used to serve a number of purposes such as covering expenses on home improvement, purchasing a car, consolidation of debts, wedding expenses etc and so on.

As per your need and requirement, you can avail these loans in secured and unsecured form. Secured form of the loans are collateral based and lets you obtain a bigger amount for a large repayment tenure. Due to the presence of collateral, interest rate levied on the loans too are low. Unsecured form of the loans, on the contrary can be availed without pledging any collateral. A limited amount is approved for a short term period. However the interest rate for the loans is high due to the absence of collateral.

With the assistance of these loans, you can further resolve a series of credit impediments such as CCJs, IVA, arrears, defaults etc. By doing so, you get a chance to improve the credit score, which will eventually to derive future finances with low rates. Always try to avail these loans with feasible interest rate. In this regard, you can take a proper survey of the market to locate lenders offering the loans with negotiable interest rates. Further on comparing the rate quotes, you can to select the best deal available.

Prefer to avail these loans by applying online, as it enables you to access the loans without personally visiting the lenders. All that you have to do is to fill a simple application form and the approval comes instantly

Plan Your Credit Repair Effort

Are you planning to make an effort at credit repair? Make sure to do it right. An informed effort will produce amazing results, and subtle details can make a world of difference. Take a bit of time to plan your attack and you will prevail. Here are my five favorite credit repair tactics proven to produce solid and significant results.

1. Don’t Wait to Rebuild Your Credit

If a stretch of hard times have left you with no open accounts it is tempting to postpone rebuilding credit until your credit repair project has borne fruit. You may think that if you wait until your credit is clean you are less likely to get denied. Unfortunately, the logic is flawed. Your credit scores will not recover if you don’t have active accounts. And new credit takes time to yield positive credit score results. If you put off opening new accounts you will be disappointed with your credit repair project. Now is the time to start rebuilding. Open two secured credit cards. Do it today. Once you receive them, use them, and keep them active. But be careful to manage the balances properly.

2. Manage Your Revolving Balances

The FICO scoring model places great weight on the relationship between your credit card balances and your card limits. This factor receives extra weight on accounts that are less than a year old. So if you have recently opened new secured credit cards as part of your credit repair strategy this issue is extra important. Your credit score will be rewarded if you keep your balance low, and conversely you will be punished if your balance drifts upward. Optimize your credit score by keeping your balances under 20 percent of the cards total limit. For example, if you have a three hundred dollar limit, keep the balance below sixty dollars.

3. Dispute Intelligently

If you are going to manage your own disputes instead of hiring one of the available credit repair services there are some caveats. Keep your disputes simple. The credit bureaus do not want to hear your story. Limit your communication to the bare minimum. If you have found an account on your report that does not belong to you, just list the account and say that the account is not yours. One more strategic pointer; don’t give up. If you do not get the response you want the first time, dispute again. This time state clearly that you are not happy with the first results and you demand that they have the creditor research the account. Stand your ground.

4. Learn Your Reporting Period Limits

When you review your credit reports and are planning your credit repair effort you must examine the reporting dates. Derogatory information, in general, can report for seven years. But there are exceptions and specific ways of counting the dates. Understanding the rules will give you the edge you need to succeed. Many people are not aware that the reporting period clock starts ticking on the date of the original default with the original creditor. Reporting periods never start with the reporting date of subsequent collectors. There are many cases where you will need to calculate your dates very carefully. Take nothing for granted.

5. Challenge Collectors

The most egregious offenders of credit reporting rules are collectors. You must examine all collection accounts as part of your credit repair effort. Don’t believe your eyes. This is a case where skepticism will pay dividends. Collectors buy and sell debt on a regular basis. Did you know that if a collector sells a debt to another collector or returns the account to the original creditor they are supposed to withdraw the account from your credit report? In fact, this rarely happens and non-compliant collections linger on your report for years depressing your scores needlessly.

And When in Doubt

If you are too busy to give your credit repair effort the careful attention that it deserves, just reach out for help. There are many legitimate credit repair services that will insure that every possible method of improving your credit is explored and implemented. Credit repair is a detail business, but you don’t need to be intimidated. Whichever route you take help is nearby if you need it. Good luck!