How losing a job can affect your credit score?

Losing a job is one of the most traumatic events in life, right there with divorce, jail time and the death of a spouse. Unemployment can be even more stressful if you are a family host or primary breadwinner, perhaps worse if you are a single parent or sole income provider. Losing a job will affect a large part of your life, but it will not directly affect your credit score.

What affects your credit score?

What affects your credit score?

There are five key factors that affect your credit score: payment history, debt level, credit history, types of credit accounts, and questions about your credit report.

Your work status and earnings are not factors that directly affect your credit score. In fact, your creditors and credit bureaus may not even find out that you lost your job unless you tell them.

Your credit score may be due, indirectly, to losing your job

Your credit score may be due, indirectly, to losing your job

That said, your credit score could be indirectly affected by losing your job, that is, how you deal with credit and paying your bills during your unemployment period. Here are some of the events that affect credit that can occur as a result of losing your job:

  • You fall behind on your credit card or loan payment: after you lose your job, you may not be able to stay current on all your payments, it is understandable, since you have suffered a dramatic loss of income. However, payments within 30 days are still reported to the credit bureaus and will affect your credit score. Payment history is 35% of your credit score and the biggest factor affecting your credit. The further behind you will get your bills, the more it will affect your credit score.
  • Increase your credit cards or take out new credits to help you get the hang of it: you may have lost your job, but you still have bills to pay. If you do not have enough money in savings or if no unemployment benefits are enough to cover all your bills, you can turn to credit cards or loans to make ends meet. The problem is, an increase in credit card balances and high amounts of debt can hurt your credit score – your debt level is 30% of your credit score. On top of that, the more debt you have, the higher your monthly payment can be. This will further burden your ability to make ends meet.
  • Open a few new accounts to get paid to pay your bills: Opening new accounts can hurt your credit score in two ways. First, new accounts will reduce your credit life, which is 15% of your credit score. Second, additional credit report information – 10% of your credit score – will also earn you a credit score.

Collection of medical debt, bankruptcy, foreclosure, reimbursement, tax exemption and default on student loan are other events that hurt the loans during your unemployment period. These violations of your credit are much more and much harder to recover from a late payment or a high credit card.

Maintain a job search credit score

Maintain a job search credit score

It is important to keep your credit score intact even though you have lost your business. Many employers perform credit checks as part of the hiring process. Amazing credit history could cost you a potential job. You will face a dilemma faced by many other Americans: it takes work to pay your bills and improve your credit, but you still don’t have a job because of a bad credit history.

One in four unemployed people say a potential employer has asked for a credit check in the job application process, according to a Demos survey.

In the same survey, one in ten said they were not hired because of information about their credit report.

Obviously, the longer you are unemployed, the harder it will be to live off of your spouse’s unemployment, savings, or sole income. Do your best to maintain your credit standing so that they will not land on your next job.

How credit cards use the highest rate

The original rate is the interest rate that banks charge to their most favorable consumers. To get a basic credit course, you must have an excellent credit score.

The U.S. master rate is the national base rate published in the Wall Street Journal, which is calculated based on the highest rates from the largest banks in the country. The U.S. top rate is typically about 3% higher than the federal funds rate and is available on the Wall Street Journal website.

How Prime Rate Affects Your Credit Card

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Many credit cards base their variable interest rates at a base rate. A variable interest rate is one that changes based on another interest rate.

For example, credit card APR may be the primary rate plus 13%. The interest rate that the credit card issuer places on top of the main course is known as “spread.” In our example, the “spread” is 13%. If the base rate is 3.25%, the current APR on the variable rate card would be 16.25%. This means that the primary rate has a direct, but usually small, impact on the financing costs you pay on your credit card when you are able to make the balance. The higher the base rate, the more you will pay to get back to credit card status. You can avoid paying interest at all by paying your credit card amount every month.

If your credit card has a variable interest rate based on the base rate, the credit card interest rate will monitor the movement of the master rate.

If the primary rate goes up, you can expect the interest rate on credit cards to rise soon. On the other hand, if the primary rate goes down, the interest rate on credit cards should decrease.

Credit card issuers do not have to notify you about interest rate changes in advance if you have a variable interest rate.

You can keep track of potential interest rate changes by paying attention to interest rate news (interest rate changes are usually major news) or by looking at rates published in the Wall Street Journal. Your current interest rate is posted on your credit card statement. Keep a close eye on your statement to capture any changes in interest rates due to changes in the principal.

What if the Prime Rate goes up?

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When the primary rate increases, your interest rate will increase. To reduce the impact of increased financing costs, you can pay off your balance faster. Transferring your balance to a credit card with an introductory rate of 0% is another option. Finally, if you kept the card in good standing and have a good credit rating, the credit card issuer may be willing to lower the interest rate if you asked the question nicely.

Does your credit card use a premium rate?

Does your credit card use a premium rate?

Part of your credit card agreement called “How we calculate and set rates” will tell you how your credit card company determines your rate and how your credit card level will adjust if the base rate adjusts. If your credit card interest rate is based on a base rate, you will see a section with a language like “APR will differ from the market based on Prime Rate.”

Getting a Short Term Loan

 How to get a short term loan?

 How to get short term loan?

We all know that getting a short term loan is easier to get than most of us realize. But what are the different types of loans available, and how do you choose the right one for your personal situation?

 

For many people, getting a short term loan may be the easiest way to get a loan. Getting a loan at all can be difficult, and getting a short term loan may take longer than you expect. But when it comes to applying for a short term loan, there are many advantages.

 Advantages of taking short term loan

 Advantages of taking short term loan

The first advantage of taking out a short term loan is that it is easy to get. When you look online for the type of loan you want, you will find some lenders will charge you fees. While these fees are an added expense, they may be worth it if you have a higher credit score, have a more stable job or can prove that you are a lower risk candidate.

 

Some lenders do charge fees for things like special interest rates. While you may not be able to afford the cost of these fees, remember that there are other types of fees that you may be paying on top of these charges. While these fees may seem small, they add up over time, so you may want to look into getting a better rate of interest.

 

Another advantage of taking out a short term loan is that they are usually backed by the government. Since the government backs a lot of loans, it makes it easier for many people to get a loan. It also makes it easier for people to get the loan with little or no money down.

 

If you have bad credit, you may be able to qualify for a short term loan. Most lenders make it easier for people with poor credit to get loans because they are willing to accept less than it would cost to finance someone with better credit. However, before you apply for a short term loan, be sure to compare it to the normal application process so you will know exactly what to expect.

 

When you get a short term loan, you should have a plan on how you will pay it back. Most loans are made up of monthly payments that continue to roll forward, so you should find out how much you can afford to pay each month to avoid the bill piling up. You should also work out a payment plan with the lender, so you know how much you can afford each month to make your payments on time.

 

Even though you may want to take out a short term loan, remember that you are borrowing against your future ability to borrow. So, don’t take out a short term loan that you cannot afford to pay back. Keep your credit in good shape, and try to repay your loan on time every month, so you can improve your credit rating.

 

In addition to the disadvantages of a short term loan, remember that there are also many advantages. First, when you borrow against your future ability to borrow, you can get a lot of loans at a low interest rate, saving you money overall.

 

Secondly, a short term loan can give you the flexibility to use your own money to pay off your debt. In a worst case scenario, you will have the cash on hand to pay off the loan. This is especially important if you have a lot of debt with high interest rates.

 Final note

 Final note

Finally, a short term loan can give you the extra money that you might need. For example, if you are having a hard time making your monthly mortgage payment, you can take out a short term loan to help you make the payment. This type of money will help you maintain your current lifestyle.

 

In the end, it doesn’t matter how you got your loan, because you have the option to get a loan no matter how you got it. Just make sure you take your time and shop around and find the best loan available for your personal situation.

Payday Loan Debt Consolidation Companies – Legitimate Online Services

The payday loan debt consolidation is not easy, but it is also not impossible. Some experts say that the only way to get out of the mess is by doing it on your own. For others, it is better to ask for help.

You need to do some research to determine which payday loan debt consolidation companies are legitimate. Make sure that you do not take any loans from them until you have completely investigated their background. If they have been accused of taking loans from people who later had trouble paying back, then stay away from them.

 

Asking around can be a big help

Asking around can be a big help

You may find that there are only a few that have a good reputation and they will be your best bet. There is no harm in getting a second opinion. This will help you avoid problems with people who have not been approved.

One of the top providers of payday loans are credit unions. There are over three thousand credit unions throughout the country. They all have certain requirements that are needed before lending out money.

To ensure that you get the best loan consolidation deal, you need to apply to each credit union in your area. This ensures that you get the best interest rate possible and at the same time, it will eliminate the chance of you getting involved with a scam.

 

Debt consolidation companies offer are worth the extra effort

Debt consolidation companies offer are worth the extra effort

The costs of paying off credit cards and repaying loans can run into the thousands of dollars every month. In some cases, it can be a full time job to pay these bills.

These consolidation companies can help you move past your past credit issues and put you in a position to become financially stable again. You should only consider getting into a loan consolidation program if you are sure that the consolidation loan is going to be affordable and work for you. There are many different companies to choose from.

Remember that the best payday loan debt consolidation companies are those that are going to help you create a financial plan for your debts and a plan for future payments. They are going to help you manage your money so that you will not fall into the same pitfall as you did previously.

 

Credit score is a very important aspect of the process

Credit score is a very important aspect of the process

Do not just jump into the debt consolidation process without first thinking about it. Your credit score is one of the most important factors when it comes to getting a payday loan.

If you decide to go with a credit union, make sure that you check them out thoroughly. Talk to other customers and see what they think of the credit union. The more information you have, the better the decision that you will be able to make when the time comes to actually apply for the loan.

One of the best places to search for payday loan debt consolidation companies is online. You can easily compare the various companies and compare the fees associated with each company. Then you can make the best decision.

You can also look for credit unions that offer loans to help you get back on your feet. Not only will you be able to get a small loan but you will also be able to establish a credit history and get a credit card for emergency situations.

Advantages and disadvantages of cash refinancing

 

Cash refinancing can provide a significant amount of money at attractive interest rates. When you are short on current cash – but have equity in your home – financing provides money for home improvements, educational needs and other goals. But the strategy is risky, and it’s worth considering alternatives to see if there is a better option.

How Cash Refinancing Works?

How Cash Refinancing Works?

Cash refinancing happens when you replace an existing home loan by refinancing with a new, larger loan.

By lending more than you currently owe, the lender gives you cash that you can use for whatever you want. In most cases, “cash” comes in the form of a check or wire transfer to your bank account.

How to use money?

How to use money?

You can use the funds from your loan in any way. But the risk and cost cannot be ignored. The key is to use cash refinancing for things that will improve your finances and your ability to repay the loan. Some common uses for refinancing include:

  • Home Improvements : It is logical to use home equity for home projects. Strategic enhancements that increase the market value of your home will add to your equity, making it easier to recoup your investment when you sell your home. It’s best to use the funds for “safe” projects that future buyers – not just you and your family – will value.
  • Education Costs: Some educational programs can help you find a full-time job and earn more income. If you are convinced that a new degree or study program will benefit you, taking money from your home can make sense.
  • Business ventures: It is tempting to use domestic capital to start a business, and this is done with success, but it is also risky. With a high percentage of businesses failing, you need to evaluate how you will repay the loan and how your family will be affected if your venture does not generate income. After all, home loans can be cheaper than credit cards, and if you can absorb the losses, taking money out of your home can be an affordable option. Plus, banks may require you to use your home for a personal guarantee to get a business loan anyway.
  • Debt Consolidation? Paying off high-interest credit cards makes sense intuitively, but when you do, you add risk that didn’t exist before. Credit cards are unsecured loans, and lenders have no right to take your home if you don’t pay (all they can do is damage the loan and try to raise money). Once you put that debt on your mortgage, your house is fair game if you don’t pay it.

Although the above uses are popular, they are not always the best choice. Other types of loans may be better suited, and we will explore them below. But first, some pros and cons put those alternatives into context.

Advantages and disadvantages of cash refinancing

Advantages and disadvantages of cash refinancing

It is easy to understand why cost-effectiveness is attractive. When you can improve your existing loan at a lower interest rate than you already have – plus reach the goal – it’s tempting to look.

Advantages of adding capital to the domestic market include:

  • Big loans: Equity in your home can be in the tens (or hundreds) of thousands of dollars, so it’s an easy way to make a significant amount of money.
  • Relatively Low Rates: Because your home provides a loan, you enjoy relatively low interest rates (compared to credit cards and personal loans).
  • Potential tax breaks: Tax breaks are not as generous as they used to be. However, if you use the funds for “significant improvements” in your home, you can get a tax break that effectively reduces the cost of your loan. Ask your accountant for details.
  • Long repayment period: By replacing your existing mortgage with a new 30-year or 15-year loan, you can make your payment. But it comes at a price.

Cash deficiencies include:

  • Interest Costs: You will restart the clock on all your housing debt, so you will increase your living expenses (borrowing more does the same). To see how it affects you, check the amortization charts on your existing loan and your new loan. The thing about this is to use another mortgage instead.
  • Exception Risk: If you cannot repay your loan, you may lose your home. Unsecured loans are far less risky.
  • Closing Costs: Mortgage loans require significant closing costs. You always pay for those costs, whether you are crediting them, writing a check or receiving a higher rate. To close a loan, you spend between several hundred and several thousand dollars, and you have to add that amount to what you spend money on.

Getting approved

Equity: Using a cash refinancing loan reduces your equity so you need enough equity in your home to qualify. In other words, your home must be worth more than you owe on your mortgage. Most lenders are hesitant to devote more than 80 percent of your home’s market value, but government-backed programs allow you to borrow more. Just remember that the more you lend, the higher your risk and borrowing costs.

Revenue: Lenders must confirm that you have sufficient income to afford new monthly payments for your loan. This payment can increase as you borrow more, so check your debt to income ratio to see if you will be in the right range.

Credit: As with any home loan, your loans are important. With low scores and recent negative results in your credit history, you will end up paying higher interest rates, which can drastically change your costs.

When you take money in refinancing, instead of simply refinancing with the same balance, lenders are more at risk. As a result, they are a little harder to qualify for, and the costs tend to be higher for these loans.

How to Avoid Foreclosure VA Loans

The VA Foreclosure ratio for other types of default loans is very small. There are no sure things in the mortgage industry. The only sure thing is if you make a mortgage payment, you remain. If not, you won’t. But VA loans are almost close, as borrowers can somewhat hedge against default.

Following the subprime mortgage hypothesis, loans supported by the Department of Veterans Affairs continue to provide veterans with a secure way to fund home purchases.

These low-budget loans come with a rigorous and flexible buyout process that helped isolate veterans and their families from tainted liabilities and foreclosures.

VA Foreclosure rates

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In fact, VA loans have the lowest take-up rate of any major credit product available, according to the latest data from the Mortgage Bankers Association. Here’s an overview of the Q4 2009 opt-out rate:

  • Enterprise subprime loans: 15.58%
  • FHA Loan Write Off: 3.57%
  • Selling Credit Credits: 3.31%
  • VA loan withdrawal: 2.46%

Despite the success of the exemption, VA loans and veterans have not been fully immune to the economic crisis in the past two years. However, the Department of Veterans Affairs has worked proactively to keep veterans and active duty members from losing their homes.

Avoiding Foreclosure from a VA Loan

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The agency is urging veterans who make an effort to contact their lenders immediately and explore options to avoid foreclosure.

Loan repairers may be able to provide veterans with one or more of the following options:

  • Loan amount
    Veterans can get extra time to pay off their obligation.
  • Credit modification
    The borrowers are canceling the non-performing loan repayment and starting a new payment schedule.
  • Repayment mode
    Veterans pay a portion of unpaid payments each month along with their regular amount.
  • Short sale
    Borrowers can allow fighters to sell their home for less than the homeowner.
  • Deed-in-Lieu Foreclosure
    Instead of going through the exemption, veterans can transact assets through a loan service. Most lenders would prefer to avoid the costs and headaches that come with trying to formally stop on a property.

 

Veterans becoming delinquent on VA credit can use the services provided by the agency to address the issue. VA borrowers may also seek the assistance of a specialist at one of eight regional lending centers and two special service centers. To find your nearest mall, call.

Some veterans may also be able to qualify for protection by default under the Civil Aid Act of the Republic of Serbia or SCRA. Eligible veterans can receive a lower interest rate of up to one year and deduct property benefits or eviction for up to nine months from their military service period.

Veterans with non-VA credits

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Obviously, VA is limited in what it can do to intervene when veterans have mortgages not supported by the agency. Veterans may be able to refinance their existing conventional loan into a VA loan for up to 100 percent of the property’s value.

Veterans can also contact the HIPE NOW Alliance for help. This group of advisers, mortgage companies and other professionals provides literacy, counseling, and assistance to homeowners struggling to stay afloat.