Finance, Loan, Debt and Credit.

November 30, 2016

Mortgage Biweekly Payments

Filed under: Mortgage — Tags: , , — admin @ 12:47 pm

Almost anybody with a mortgage will tell you that they would do almost anything to have their mortgage paid off early. For this reason, many people choose to pay their mortgage biweekly instead of monthly. If you use this method you will spend less in interest and take years off of your mortgage term. How does something like that work?

When you pay your mortgage biweekly instead of in monthly instalments, you take the normal monthly cost and divide it by two, paying one half every two weeks. If your monthly payment was $ 1,000 then you would pay $ 500 every two weeks. You end up paying more per year, because instead of making 12 monthly payments, you are making 26 biweekly payments. You will pay $ 1,000 more per year and the total you paid per year would go from $ 12,000 to $ 13,000. If you use this method you can easily take years off of the end of your mortgage.

People also use mortgage cycling as a way to save a lot of time on their mortgage. This method is explained in great detail in “Mortgage Cycling Revealed”, but I will go over the basic idea of it with you. While you are paying your regular monthly payments on it, you should be saving extra money on the side. When that extra money gets high enough, you make a large lump sum payment onto your mortgage. If you continuously follow this cycle then you should be able to pay your mortgage off in as little as ten years.

Mortgage biweekly payments and mortgage cycling are both great ways to pay it off ahead of schedule. When the burden of your mortgage is gone, you will be able to use that money for other things like renovations, a new car, or schooling for your children.

New Credit Card Rules 2010

Filed under: Uncategorized — admin @ 12:47 am

August 22 Credit Card Rules to Protect Consumers

With concern growing over the high cost of penalties credit card holders have been required to pay, changes were recently implemented and mandated. The new rules are now in place whereby people actually have protection against late payment, over spending limit, and other credit card fees deemed ‘unreasonable.”

With these new rules, credit card companies are no longer permitted to charge anything over $ 25 when payments are received late. The only exception would be in extreme circumstances but even then, these companies cannot charge account-holders for not using the cards to make purchases. Additionally, any rate increases imposed on account-holders starting on January 1, 2009 would have to be reconsidered under the approved regulations established by the Federal Reserve Bank.

With this federal legislation now passed, credit card companies must adhere to new restrictions pertaining to interest rates and various fees on credit cards. Although a number of changes have been seen over the years specific to credit cards and usage, this new change is without doubt the most aggressive and comprehensive in history for the credit card industry.

In addition to credit card companies being required to make changes in response to this new law known as the Credit Card Accountability, Responsibility, and Disclosure Act of 2009, or CARD, the banking industry has also implemented necessary changes. As a whole, the banking industry has taken quick action to ensure every aspect of this law has been put in place.

Although banks and credit card companies have executed the requirements of the new Federal law, before the full scope can be realized it will take some time. However, changes will eventually become evident as consumers begin making different choices and gain more control over spending but also accountability and responsibility. All aspects of this new law are favorable for credit cards account-holders but the one that seems to be getting the most consumer interest is the potential for lower interest rates.

For banks, if the reasons that higher interest rates were imposed over the course of the past 20 months no longer exist, rate reductions would be mandatory. In addition, changes in credit cards’ interest rate will be the responsibility of regulators, making sure any reductions are fully enforced according to the Federal law. With this, it would be impossible for banks to slip through the cracks, meaning the changes would be required but also confirmed across the board for all United States banks.

From a consumer’s standpoint, the elimination of penalties being restricted to $ 25 or less would be noticed immediately. Keep in mind that although the United States Congress put the Federal Government in charge regarding the best way to implement, execute, and enforce this new law, the reduction of penalty fees imposed by credit card companies was a primary provision of the law itself.

With this responsibility, the Federal Government determined that in some situations, penalty fees could be higher than $ 25. For instance, in the case where an account-holder had made late payments repeatedly, or if the issuer of the card was applying a higher penalty fee in a reasonable manner to help offset costs it has to pay for associated with a repeat offender’s violations, the higher penalty fee would be approved by the Federal Government.

The way this new law is setup, any imposed penalty fees cannot exceed a dollar amount incurred by the violation of the cardholder prompting the application of the fee. As a primary example, if a cardholder were late making a minimum allowed payment of $ 20, the amount of the fee imposed could not be more than $ 20. On the other hand, for over the limit spending, if a cardholder were to go over this limit by $ 10, the penalty could not be more than $ 10.

With this, imposing several penalty fees for a violation on a single payment would no longer be allowed. This past June, new provisions under this law were announced, which support the rules implemented previously under the 2009 credit card law already being enforced. As of February 2010, card issuers were no longer permitted to increase interest rates on existing balances but only in situations where the cardholder was making all payments on time according to the agreement. In addition to this, cardholders would have to be notified a minimum of 45 days prior to interest being increased and fees being changed.

Another responsibility of the Federal government was to determine the most efficient way for penalty fees to be established following proportional and reasonable guidelines specific to the cardholder’s violation. Because the cap on fees is more than suggestions made by the Federal Government, consumers definitely come out ahead. For instance, the limit of $ 25 for fees would prove to be a significant financial savings to cardholders who were being penalized $ 39 or more previously.

Keep in mind that if a cardholder were late on a payment or spent more than the allowed credit limit within a six-month period, card issuers would have the option of increasing a second penalty for that person from $ 25 to $ 35. In fact, in some circumstances, the fee imposed could be more than $ 35 if the card issuer could justify the increased amount to regulators of the Federal Government.

Without doubt, the new laws associated with credit card penalty fees are being heavily enforced but another area that has not yet been resolved has to do with increased interest rates being imposed whenever the terms of a credit card agreement have been violated by the cardholder. In other words, while the amount charged for a penalty fee would be adjusted according to the new rules, the cardholder could still be charged a permanent interest rate increase for any purchases in the future.

Although the new rules under the Credit Card Accountability, Responsibility, and Disclosure Act of 2009, or CARD is a huge improvement from previous rules, which will save consumers money and make it possible for saved finances to be used for paying off debt, a number of financial institutions still have concern. One member of the Financial Services Roundtable, which consists of a group of lobbyists, a warning went out that putting a cap on the penalty fee amount would have a negative impact on the industry by limiting risk offset that some credit card account-holders would not pay on bills.

As this individual stated, restrictions on the rules established by the Federal government would make it more difficult for the credit card industry overall to set fair and uniform prices for this type of credit card risk. He went on to say that the net amount would actually decrease available credit. Today, some controversy still surrounds the changes made, which will need to be ironed out but it is clear to see that for the consumer, these changes are favorable.

November 29, 2016

Loan Modification NPV: Showing Cause for Foreclosure

Filed under: Loan — Tags: , , , , — admin @ 12:46 pm

NPV and Loan Modifications:

NPV is referred to in financial circles as Net Present Value. NPV is a calculation process used to evaluate business investment decisions. NPV is basically a measurement of future cash-flow or net benefits that can be derived from a particular investment, less the cost of the investment. A positive NPV indicates a sound investment. A negative NPV indicates the investment should not be pursued. Corporations tailor their NPV calculations, and NPV calculations are not easy to understand for non-financial people.

It is the goal of this article to provide awareness to the general public about the process of NPV as it applies to loan modification eligibility, and to remove the shroud of secrecy that allows a well-intentioned tool to be employed to fulfill one-sided agendas.

In the world of lenders, foreclosure and loan modifications, NPV plays a major role. The treasury provides an NPV model for banks to use as a way to determine whether or not modifying a mortgage is feasible. The design and intent was to protect the investment of both the lender and the borrower. But like so many inventions that were created for the good of mankind, loan modification NPV calculations can be skewed to achieve a personal agenda — not so win/win as win-huge/lose painfully as well.

NPV calculations are implemented as a part of the Home Affordable Modification Program. And other loan modification programs that are ‘in-house’ programs also may use NPV as a way to calculate risk. And on the surface that should be good news. But it’s only as good as the data used is valid and accurate.

This author is trying to avoid opinion, but a little research — or a lot of research better yet — will reveal a common thread in borrowers’ pursuit of loan modification. A mysteriously common phenomenon of documents that are commonly ‘misplaced’ by the bank.

With respect to an NPV calculation, strategically lose a few bank statement, string some low-income months together — and viola, you have an income too low to qualify and a very credible excuse to deem a deserving borrower as ineligible for a modification.

But if that is not enough, let’s consider this. One of the biggest services of sub-prime foreclosure mortgages today is JP Morgan Chase. And thousands of these mortgages came their way via the FDIC control of WAMU (A big player in sub-prime mortgages). They paid about 3-cents on the dollar for these mortgages. So they paid $ 9,000 for a a $ 300,000 mortgage. Good deal, huh? The acquisition of these mortgages by JP Morgan Chase was an even better deal than the way Ross buys close outs to sell cheap. But Ross passes the savings along to their customers. As we will see, Chase has another plan.

To make the treat even tastier for Chase, JP Morgan Chase acquired the right to claim as a loss up to 80% of the paper-loss on the sale of each foreclosed property: I.e., if they sell a foreclosed home with a $ 200,000 principal for $ 100,000, they can claim an $ 80,000 loss on their taxes.

Now let’s look again at the NPV calculations that Chase uses to cry to the government that offering a modification to these borrowers is unsafe and unfeasible:

NPV is designed to determine the soundness of an investment, and the resulting cash flow comparisons. Well if Chase uses as their investment value the FULL principal of the loan, then one would feel sorry for the bank and spare them from a risky relationship that would jeopardize this major investment. After all pulling $ 300,000 out of your pocket to give to a high risk borrower should entitle you to more interest so you can cover your loses from all of those similar borrowers who will default on their loans. BUT, only $ 9,000 came out of their pockets. Shouldn’t that figure be used to evaluate true risk as well as profit potential?

Well let’s play the devils advocate and say this: If Chase had the good fortune to buy valuable loans at three-cents on the dollar, why shouldn’t they be greedy and profit from them to the fullest. No one is doubting that if you pay $ 9,000 for a $ 300,000 mortgage and you throw the borrower and family out on the street, sell the house a second time and collect a tax benefit for your losses, you can make more money than if you modify a loan and keep a roof over a hard working, deserving family. Business is business and no one give out hand outs for free! But isn’t the bank (a much less needy recipient getting handouts on a regular basis by the plans in effect today. And ironically at the cost of the very homeowners that are having their homes sold out from under them

And as for the moral right to be living in the property: Many of these homeowners have been paying purchase deposits, interest to the bank for years and years, renovating their property and investing hundreds of thousands of dollars as compared to the $ 9,000 ‘investor’ who feels morally obligated to put families in shopping carts so they can sell the property a second time for even more profit!

Perhaps NPV should stand for Nice People Victimizer… Because in the hands of unscrupulous sub-prime mortgage lenders, that is precisely how it is used.

In the case of foreclosed homes, many scenarios exist. In the case of loan modifications many scenarios exist. But the purpose of this article is to disclose a common phenomenon, and pass no judgment upon it, but present some facts as food for thought. Because it is the opinion of the author that we need to be more observant, open minded and receptive to alternative approaches when the ones being used to date are failing.

Mortgages in default are at a record high, but they are not all equal. A very special part and large part of the homes facing foreclosure today fall under the category of sub-prime mortgages. These are mortgages offered to people who are considered higher risk. Higher risk doesn’t necessarily mean lower income, or morally challenged. Many of these borrowers were hard-working families who always paid their bills who happened to have sole proprietorship’s without W2 documentation for income, and many were, unfortunately targeted for these high interest loan and adjustable rate terms that were destined to fail simply because they were minorities. Not too many years ago businesses were built and grown around hard-selling sub-prime mortgages to high risk people. And in the course of doing so, very few rules were beyond breaking for the bottom line: get the loan approved!

And like many things that fall under the category of prejudice, if the rules apply to everyone, and are not changed in the middle of the game or changed for just some players, everyone is treated the same and who’s to complain?

But long before the foreclosure crisis reached frightening and foreboding levels, the financial makers and shakers knew that the bottom would fall out, and rather than sharing this information to avert families being thrown on the street, treated the situation as if it was an insider-trading tip and opportunity for those in the know — the small minority of people on the planet who need the money the least — to profit from the families on the planet who need the money (and roof) the most.

When a lender really reaches into its pocket to fund a loan, there is great incentive to convert a trial modification to a permanent one. There are these kind of lenders out there with 85% conversion rates. When a lender pays 3-cents on the dollar for mortgages, the incentive is exactly the opposite. There is no profit-motivated logic to a quick, interest-lowering permanent modification when the alternative is to put instant cash in the bank’s pocket and reap a tax benefit for desert.

So sub-prime borrowers are used to receiving letters like this after they conform to trial modifications for three months time after time: “Your request for a loan modification was deemed ineligible as a result of an NPV calculation as required by the Home Affordable Modification Program.

Yes, maybe NPV should stand for Nice People Victimizer… Because in the hands of unscrupulous sub-prime mortgage lenders, that is precisely how it is used. The value of the calculation is only as accurate as the figures entered by the underwriter and can be made to produce any desired effect.: positive or negative. But shouldn’t the risk be calculated in proportion to the size of the investment: $ 9,000 versus $ 300,000?

There are so many reasons why sub-prime lenders want to keep borrowers in trial modification limbo. Carrying a bank owned and managed property can cost tens of thousands each year. Having owner occupied care givers for property the bank intends to eventually re-posses is so much more cost effective (albeit immoral) plan! Then there are the technical aspects to the bank kicking these people out on the streets today. In many cases the bank can not even prove they are legally entitled to the property. The actually note often passes hands from one company to another without respecting the required signatures, paperwork and notary processes. So, the note may not even be in the possession of the bank that borrowers are paying each month. And buyers of foreclosed homes may find themselves without a legal title to the property they purchased.

So along with the letter telling the borrower that they were deemed ineligible for a permanent modification is an invitation to apply for a new one. This guarantees more interest payments for the bank, a free care-giver for the property, and avoids the tens of thousands the bank would need to pay to keep the property secure and maintained each year it goes unsold.

Like the ingredients in the food we feed our children, some things are safer disclosed: Let’s keep the banks honest. Let’s push for disclosure in NPV calculations:

What is the actual investment?
How are the calculations performed?
What are the documents used to derive the values?

With this information available to the borrowers, their representatives and the government agencies overseeing them, bank will be a lot more family and borrower-friendly.

Lenders are the recipients of tax payer bail-outs. And yet, they seem not willing to pass along even a minimum dose of the same sense of compassion to their borrowers in the form of reasonable interest rate? Are loan modification NPV showing cause for a lender’s decision to foreclose? Or are NPVs showing that lenders are foreclosing simply ’cause they are insatiably greedy?

Understanding Credit Report, Score and History

Filed under: Credit — Tags: , , , , — admin @ 12:47 am

There are a lot of persons who are wondering what caused a loan provider to reject an application made for mortgage, while others will provide you with credit without much hassle. But, most times the solution is right there in the credit reports with the exact scoring that is essential for the granting of loans. This means, those people who have no idea what is going on are still not aware of the importance of understanding a credit report.

The credit history will be a deciding factor which affects the granting of mortgages by the loan companies. A step in the actual pre-approval procedure by the lenders is to carry out a detail analysis of a person’s financial background where they would assess the payment patterns and investment. The financial debt ratios would then be compared to that of the lender’s recognized standard when making a decision regarding the mortgage loan authorization. The levels associated with financial debt or perhaps credit rating history will be considered as the factor for evaluating an individual’s capability to come up with the regular monthly payments.

The actual credit rating history that is displayed in the reports takes on the essential function considering that a few financial institutions might actually reject your application simply because of the inappropriateness with the credit requirements. Likewise, having a significant amount of debt, as well as a poor credit rating score will be a common cause that is cited when your application is turned down.

From time to time, a loan application might not really be declined completely, nevertheless a person might have to take a loan amount for much lesser than expected or desired. In addition, the terms and conditions that will be attached to this loan might not be worthwhile to you in terms of saving. However, all of this can be avoided if a little more care and awareness is placed on your personal financial documents that would be reflected in your record such as debts, monthly expenses and earnings.

Some of the factors that can seriously affect the scoring in your credit reports include the difficulties that you had that require the filing for bankruptcy; not paying your bills on time; the period of time that you will have outstanding debt; the methods that you have in place to make repayments and the amount that you have for credit limit.

On the other hand, if you are aware of the importance of a credit report, you should try to take some of the steps below to maintain your good ratings.

By paying all your bills in a timely manner and also in full, you can easily improve your credit.

Manage your spending, only apply for credit cards that you will need and also maintain good current accounts.

Although, most times the efforts that you make will go unnoticed, simply because of negative information in your reports which is not because of your mistakes, this should not be a deterrent. Whenever this happens, it is always a good idea to dispute the claims and clear your report of anything that will decrease your score.

In conclusion, having a good understanding of the things that can affect your prospective loans and credit reports is important. Therefore, it is necessary to improve your credit score, regardless of how long this will take and ensure that you secure the desired loans.

November 28, 2016

Mortgage Biweekly Payments

Filed under: Uncategorized — admin @ 12:47 pm

Almost anybody with a mortgage will tell you that they would do almost anything to have their mortgage paid off early. For this reason, many people choose to pay their mortgage biweekly instead of monthly. If you use this method you will spend less in interest and take years off of your mortgage term. How does something like that work?

When you pay your mortgage biweekly instead of in monthly instalments, you take the normal monthly cost and divide it by two, paying one half every two weeks. If your monthly payment was $ 1,000 then you would pay $ 500 every two weeks. You end up paying more per year, because instead of making 12 monthly payments, you are making 26 biweekly payments. You will pay $ 1,000 more per year and the total you paid per year would go from $ 12,000 to $ 13,000. If you use this method you can easily take years off of the end of your mortgage.

People also use mortgage cycling as a way to save a lot of time on their mortgage. This method is explained in great detail in “Mortgage Cycling Revealed”, but I will go over the basic idea of it with you. While you are paying your regular monthly payments on it, you should be saving extra money on the side. When that extra money gets high enough, you make a large lump sum payment onto your mortgage. If you continuously follow this cycle then you should be able to pay your mortgage off in as little as ten years.

Mortgage biweekly payments and mortgage cycling are both great ways to pay it off ahead of schedule. When the burden of your mortgage is gone, you will be able to use that money for other things like renovations, a new car, or schooling for your children.

Understanding Credit Report, Score and History

Filed under: Uncategorized — admin @ 12:48 am

There are a lot of persons who are wondering what caused a loan provider to reject an application made for mortgage, while others will provide you with credit without much hassle. But, most times the solution is right there in the credit reports with the exact scoring that is essential for the granting of loans. This means, those people who have no idea what is going on are still not aware of the importance of understanding a credit report.

The credit history will be a deciding factor which affects the granting of mortgages by the loan companies. A step in the actual pre-approval procedure by the lenders is to carry out a detail analysis of a person’s financial background where they would assess the payment patterns and investment. The financial debt ratios would then be compared to that of the lender’s recognized standard when making a decision regarding the mortgage loan authorization. The levels associated with financial debt or perhaps credit rating history will be considered as the factor for evaluating an individual’s capability to come up with the regular monthly payments.

The actual credit rating history that is displayed in the reports takes on the essential function considering that a few financial institutions might actually reject your application simply because of the inappropriateness with the credit requirements. Likewise, having a significant amount of debt, as well as a poor credit rating score will be a common cause that is cited when your application is turned down.

From time to time, a loan application might not really be declined completely, nevertheless a person might have to take a loan amount for much lesser than expected or desired. In addition, the terms and conditions that will be attached to this loan might not be worthwhile to you in terms of saving. However, all of this can be avoided if a little more care and awareness is placed on your personal financial documents that would be reflected in your record such as debts, monthly expenses and earnings.

Some of the factors that can seriously affect the scoring in your credit reports include the difficulties that you had that require the filing for bankruptcy; not paying your bills on time; the period of time that you will have outstanding debt; the methods that you have in place to make repayments and the amount that you have for credit limit.

On the other hand, if you are aware of the importance of a credit report, you should try to take some of the steps below to maintain your good ratings.

By paying all your bills in a timely manner and also in full, you can easily improve your credit.

Manage your spending, only apply for credit cards that you will need and also maintain good current accounts.

Although, most times the efforts that you make will go unnoticed, simply because of negative information in your reports which is not because of your mistakes, this should not be a deterrent. Whenever this happens, it is always a good idea to dispute the claims and clear your report of anything that will decrease your score.

In conclusion, having a good understanding of the things that can affect your prospective loans and credit reports is important. Therefore, it is necessary to improve your credit score, regardless of how long this will take and ensure that you secure the desired loans.

November 27, 2016

Loan Modification Confusion – Are Banks Delaying …

Filed under: Uncategorized — admin @ 12:46 pm

Trying to get a loan modification from your mortgage lender when you are facing financial hardship can cause a lot of confusion and frustration. Why do they make it so hard and how can they keep losing your paperwork over and over again? Is it possible they are that inept or is it something else? Some people think that the banks are stalling on purpose while they try to figure out the best way to hide the billions of dollars of non-performing loans from regulators or that the bank would much rather foreclose and collect the insurance money on the defaulted loan. If banks really wanted to help homeowners keep their home, then why make it so difficult to apply and qualify for a loan workout?

A loan modification should ideally be offered to distressed borrowers who can prove they fit into the guidelines within 30 days of applying. How often does this happen? How about, NEVER! It can take over a year to get a loan mod approved, if it ever does happen. Unfortunately the most recent statistics prove that less than 10% of eligible borrowers are offered a permanent loan modification. Why is this happening and is there anything at all that the average Joe Homeowner can do to gain their mortgage lenders cooperation?

The answer to why it is happening is pretty simple-banks will only do what makes them money, and modifying loans does not usually do that. Even with the federal stimulus funds and monetary incentives to modify loans, the total number of permanent loan modifications to date is only a fraction of what the fed had projected. It seems that while lenders were making those risky mortgage loans, they were also hedging their bets and actually insuring those same loans for failure. So, either way the bank wins.

Now, what if anything can the average guy to do convince their mortgage holder to give them a second chance with a loan modification instead of trying to foreclose on the loan? It may be an uphill battle and many times homeowners give up because they are simply tired of fighting, but persistence and knowledge can win the day when it comes to surviving the loan mod ordeal. How many times can you be told no before you go away? Well, it may take 8 or more times of applying before you get the result you want. That’s right-just because you are turned down once or even twice you should not give up!

But, the only way to get your lender to review your loan modification application again is to revise and update your information. Your financial statement which details your monthly income and expenses is changing all the time as you make adjustments to your budget. So whenever you submit new updated information it will be reviewed again for eligibility. Here’s the tricky part though, you must take the time to learn how to prepare your application so that you know it fits right into the approval guidelines if you hope to get a loan modification approval. Submitting the same, unacceptable information will not get you the results you want. You can use a software program that actually helps you prepare an accurate and acceptable application-all of the critical calculations are done automatically for you. Use this information on your updated application and it could be the difference between denial and approval.

Debt Consolidation: A Panacea for ‘Debt-Cancer’

Filed under: Debt — Tags: , , , — admin @ 12:46 am

Debt Consolidation is the tried and tested, and the most trusted method of debt management today. There is no denying the fact that with so much of temptations around in terms of good living products and our own desire to lead a comfortable life, we often tend to spend more than our income. And then to make ends meet, we end up borrowing one loan after another. And finally a day comes, when we cannot repay what we have taken, cannot borrow further and then declare bankruptcy. This not only has adverse effect on our credit history, but also leaves us without any self confidence to start a new life. Debt Consolidation has certain features which can help us a great deal to get out of these debt issues.

Low Interest Rate: The one most important feature of Debt Consolidation for which most of the people with debt problems use it in the first place is low rates of interest. This is because Debt Consolidation is done with the help of collateral. For example, a property of the debtor like his house or shop or any other property he owns is deemed as collateral and it would be foreclosed if the debtor fails to repay his loan on time. Since the creditor has the security as the collateral his risk of the non repayment of the loan reduces considerably. And he settles for a lower rate of interest from the debtor. Likewise, with the burden of interest reduced, it becomes easier for the debtor to pay his interest on time and hence, with some determination, is able to clear off the entire debt over time.

Serving One Creditor: Debt Consolidation frees you from the burden of repaying multiple loans at once. You may have credit cards from different companies and you may have additional debts from banks as well. Tackling all the debts at once can be a huge trouble, especially when you also have to concentrate on your work so that you can earn properly to get the money to repay the loans in the first place. And then of course, you have your family as well. Debt Consolidation, by combining all loans into one, releases you from these worries. And then you also do not have to handle the multiple phone calls as the Debt Consolidating Agency takes the responsibility of redistributing your interests.

With these advantages, it is obvious why people choose Debt Consolidation as the ultimate solution to their debt problems, and if you are unfortunate enough to have landed up in multiple debts as well, then it is most likely to work for you as well. So do contact your advisor today for the details.

November 26, 2016

Understanding Credit Report, Score and History

Filed under: Uncategorized — admin @ 12:46 pm

There are a lot of persons who are wondering what caused a loan provider to reject an application made for mortgage, while others will provide you with credit without much hassle. But, most times the solution is right there in the credit reports with the exact scoring that is essential for the granting of loans. This means, those people who have no idea what is going on are still not aware of the importance of understanding a credit report.

The credit history will be a deciding factor which affects the granting of mortgages by the loan companies. A step in the actual pre-approval procedure by the lenders is to carry out a detail analysis of a person’s financial background where they would assess the payment patterns and investment. The financial debt ratios would then be compared to that of the lender’s recognized standard when making a decision regarding the mortgage loan authorization. The levels associated with financial debt or perhaps credit rating history will be considered as the factor for evaluating an individual’s capability to come up with the regular monthly payments.

The actual credit rating history that is displayed in the reports takes on the essential function considering that a few financial institutions might actually reject your application simply because of the inappropriateness with the credit requirements. Likewise, having a significant amount of debt, as well as a poor credit rating score will be a common cause that is cited when your application is turned down.

From time to time, a loan application might not really be declined completely, nevertheless a person might have to take a loan amount for much lesser than expected or desired. In addition, the terms and conditions that will be attached to this loan might not be worthwhile to you in terms of saving. However, all of this can be avoided if a little more care and awareness is placed on your personal financial documents that would be reflected in your record such as debts, monthly expenses and earnings.

Some of the factors that can seriously affect the scoring in your credit reports include the difficulties that you had that require the filing for bankruptcy; not paying your bills on time; the period of time that you will have outstanding debt; the methods that you have in place to make repayments and the amount that you have for credit limit.

On the other hand, if you are aware of the importance of a credit report, you should try to take some of the steps below to maintain your good ratings.

By paying all your bills in a timely manner and also in full, you can easily improve your credit.

Manage your spending, only apply for credit cards that you will need and also maintain good current accounts.

Although, most times the efforts that you make will go unnoticed, simply because of negative information in your reports which is not because of your mistakes, this should not be a deterrent. Whenever this happens, it is always a good idea to dispute the claims and clear your report of anything that will decrease your score.

In conclusion, having a good understanding of the things that can affect your prospective loans and credit reports is important. Therefore, it is necessary to improve your credit score, regardless of how long this will take and ensure that you secure the desired loans.

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