All Articles Tagged "credit"
Cosigning on a loan for a family member or friend can take just a few moments to do, but can take years to be undone. Under federal law you have to be given a notice that explains the details of cosigning a loan at the time of the agreement, but most people probably never read it. It states:
“You are being asked to guarantee this debt. Think carefully before you do. If the borrower does not pay the debt, you will have to. Be sure you can afford to pay if you have to, and that you want to accept this responsibility.
You may have to pay up to the full amount of the debt if the borrower does not pay. You may also have to pay late fees or collection costs, which increase this amount.
The creditor can collect this debt from you without first trying to collect from the borrower.* The creditor can use the same collection methods against you that can be used against the borrower, such as suing you, garnishing your wages, etc. If this debt is ever in default, that fact may become a part of your credit record.”
Why Cosigning is a NO NO
This notice pretty much explains how bad things can get, and I believe deep down most people are reluctant to cosign. However many grudgingly choose to do so, feeling guilty after their family member begs and explains that they must have that shiny new lemon parked at the dealership.
The only reason a person would need a cosigner is because they have bad or no credit. So if the person is not creditworthy or has no credit history, why would you want to put your credit on the line to back them?
The Federal Trade Commission states that 75 percent of cosigners are put on the hook to repay loans that have gone into default. In most states lenders can start attempting to collect from the cosigner immediately after the primary borrower misses their first payment. And any negative impacts from the loan will directly affect cosigner’s credit.
Until the loan you have cosigned is paid off, it will linger on your credit report. Even if the person is paying on time, cosigning a loan can prevent you from attaining your own financial goals. For example, if you already have one mortgage in your name, lenders may think that a second mortgage will make your debt to income too high and deny you for your loan.
The Only Time to Cosign
With many African Americans getting hit the hardest by the subprime mortgage crisis, having a family member in need of your signature may occur more frequently than in the past. So if your kid needs you to cosign for a student loan or your mother wants you to cosign on a car, you may feel obligated to do so. But you should only act if you can afford the payments. This way if the primary borrower defaults it won’t ruin your credit.
Also, make sure you keep tabs on the loan by getting copies of all the important documents and having statements sent to your address as well. In addition, before you sign, be sure to check with your state to learn about your rights as a cosigner.
And if you can’t afford to cosign, just say NO. The only way you can really help your family and friends is by being in a position of power. If you are in the same boat they are in, strained and stressed by bills and bad credit, then you won’t be able to lead by example. Keep away now and extend the resources you do have if they really need you in the future.
Too often at the beginning of a New Year, we don’t address one of the biggest problem areas in our lives: our finances. Instead of striving to be financially fit, our physical fitness is more important. While health and wellness should be a main priority in our lives, our finances should also take some type of priority as well. And as 2013 approaches, striving to be more wealthy should be another resolution to put on our list.
If you are looking to make a few changes in your financial part of life this New Years, here are a few suggestions of resolutions for your finances. Get in better financial shape in 2013!
Not all aspects of finance will ever apply to you but personal finance is something you have to deal with everyday–whether you think you are or not. It’s important that you know some personal finance basics so you understand what’s going on with your money. Here are seven very basic terms that everyone should know:
Your personal net worth is the difference between your assets and debt. A positive net worth means you have more cash flow from your resources than liabilities. A negative net worth means you owe more than you bring in.
Loan applications are denied every day, but the fact that those applications are being filed in the first place shows just how many people thought they were completely qualified to borrow money, and were not. It’s common misunderstandings like these that put that shocked and embarrassed look on someone’s face when the bank associate comes back with your application in his hands, shaking his head.
There are three agencies.
Although we say “credit report,” there are actually three different reports from three different agencies: TransUnion, Experian and Equifax. A potential creditor can pull any one of these reports or all of them. What’s on one agency’s report may or may not be on another one because just as your potential creditors can pull any or all reports, anyone reporting on your finances can report to any or all of the agencies.
You get a free report from each one every year.
Federal law requires each of the credit bureau agencies to provide you with a complimentary report each year. You can order through the government sponsored website www.annualcreditreport.com. You can also request a report individually from each of the agencies separately. If you want to, you can ask for a free report from one of the three agencies every three months so that you get regular reports throughout the year.
The roll-off date is from your last account activity.
For most negative marks on your credit report, the roll-off date is seven years. For bankruptcies, it takes ten years to roll off your report. One thing to remember is that it’s not seven years from the date from your account opened. It’s seven years from your last activity on the account. So if your account is five years past due and you make a payment on it today, you now have to wait seven more years for the account to come off your report.
It’s better to know than to not know.
Too many of us believe that not knowing what’s on your credit reports is better than knowing. They assume that it’s bad and leave it at that. But, everyone should know what’s there and consider handling any problems they may find there.
Whether you learned as a young child from your parents or you didn’t get the memo until you were grown and on your own, eventually we all realize just how much a personal credit score matters. But, did you know that credit doesn’t just affect your ability to rent a home, buy a car or open a credit card account? It also affects your ability to get a job in some cases. Many companies hiring anyone who works with sensitive information, handles large amounts of money or has access to extensive company resources require a decent credit background.
Your credit report is part of some employers’ due diligence background check, especially positions that have allow you extensive unsupervised responsibilities. The idea is that those with bad credit are having money problems, which makes them more likely to mishandle money or private information. Some organizations see it as an accountability issue because not paying your bills is a sign you don’t keep your commitments. Others just see it as evidence you’re bad with finances. While a damaged credit report won’t always exclude you from the job, you will certainly have to provide an understandable reason for your negative entries. And if it’s between you and another candidate with a higher credit score, the other guy is probably getting the position.
You won’t be asked to fill out a credit disclosure form for every job you apply for but the higher you climb up the career ladder, the more likely you will. If you’ve got a few blemishes on your report, consider being proactive about them. Get a copy of your credit report from each of the three reporting agencies: Experian, Equifax and TransUnion. Once you know what’s on your report, you can take steps to remove the negative marks by paying the debt off or entering into a payment plan with the creditor. And remember that most negative accounts stop showing up on your report seven years after your last payment on the account but bankruptcies take ten years to roll off.
(Bankrate) — Have you ever wondered about zero percent financing or deferred-interest plans offered by some retailers? If you’ve made a big purchase in the past few years, chances are you’ve been offered a deferred-interest plan along the lines of “no interest if paid in full in 12 months.” The programs are common in stores that sell high-dollar merchandise such as furniture, electronics and other pricey goods. They’re even popping up in doctors’ and dentists’ offices. What you may not realize: That offer is probably a credit card, says Chi Chi Wu, staff attorney with the National Consumer Law Center. Play by the rules, and you get a no-interest loan. However, if you go too late on a payment, misinterpret the payoff date or lose your ability to pay, you could end up with a hefty interest rate plus retroactive interest added to the bill.
(Black Enterprise) — If you’re struggling to keep up with your credit card payments, credit counseling is probably one solution you’re considering. However, you might hesitate to seek help because you believe one of the many myths floating around about what can happen to your credit if you talk to a credit counselor. Read on so you can separate fact from fiction.
FICTION: Credit counseling will hurt my credit score.
FACT: Credit counseling has no effect on your score. You won’t be penalized for getting the help you need. What’s more, not getting assistance could do more harm than good. If you continue to let your situation spiral out of control, you’ll be in a much worse position.
(Daily Finance) — If your child didn’t get accepted into their college of choice, the fault may not fall solely on their shoulders. It could have everything to do with your bank account. The takeaway from the newly released 2011 Inside Higher Ed Survey of College & University Admissions Directorsis that who gets in where is increasingly about the money, honey.
(CreditCardGuide) — 1. Toshl Finance by 3fs: “Track, Analyze and Save” is the mantra of Toshl Finance, an app for iPhones, droids and Blackberries. The app bills itself as an easy-to-use, fun and fast expense tracker that makes it easy to track expenses on the go. If you’re the type of consumer who wonders where all your money went at the end of the month, this is the app for you. Simply enter the amount that you just spent, tap on the right category and voila, Toshl’s has you covered. Toshl’s goal is to help you see what you’re really spending money on — without long, tedious spreadsheets or expensive accounting software. It also helps you visualize and analyze your spending patterns — making it easier to determine where you can afford to cut back. In addition, the app helps you control expenses by letting you set up a budget. Better yet, it will nudge you when it’s time to stop shopping if your budget for that category is running on empty. For some consumers, this may seem too much like having your spouse constantly looking over your shoulder. However, for others, it could be a great aid in helping you achieve your financial goals. And unlike your spouse, the app will congratulate you when you do stick to those money goals.