The Difference Between Good and Bad Debt

There are some people that feel that all debt is bad and some that feel it all has its place, however, many people do not know the difference between good and bad debt. If asked, perhaps many may say that credit cards, overdrafts and short term loans would be bad debt and mortgages good debt, but it is not so easy as that to classify debt.

Good Debt – This is debt that will give you positive results. A mortgage would normally be good debt as it will pay for a property that should increase in value more than the cost of the debt. A student loan could also be in this category as it should enable the borrower to get higher wages as a result and it will also be written off after thirty years even if none has been paid back. Repayments have to only be made if earnings are above a certain amount.

short term loans uk

Bad debt – This is debt where you borrow money for no good reason. This might be where you have a store card or credit card and accidentally forget to pay off the full balance and so end up paying interest in it. It could be using an overdraft when there are cheaper alternatives and things like that.

However, with many types of debts, it is not easy to classify them. A loan to buy a second hand car could be frowned upon, but if that car was to take someone to work each day and without it they would have no salary, then it may be seen as good. Normally with all borrowing there is good and bad things about it.

Obviously the cost and commitment are disadvantages but the freedom that it can give you can make it worth it. Each person considering a loan will need to consider their own situation and whether that particular loan will be good for them. It is therefore a decision that will take a lot of thought. Even a seemingly good loan may not work out as if you cannot keep up the repayments then you will get in to difficulty. They also cost money, even if they are competitive and you get more in return than you would have without the loan. So there is always going to be an element of risk and you need to decide whether that risk is something that you are prepared to take or not.

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Credit Counseling Should Include Both Spouses – Here’s Why!

Are you looking at trying to make a big exchange this spring? Do you want to improve your finances? Could you see yourself having a better credit rating than what you do now? Are you committed to making this a reality? If you answered yes to all of these questions, you’re in great company. This is usually the time of year where people really start thinking about how to turn their lives around. There’s nothing that says that you have to wait on anyone, but if you really want to make sure that your changes stick, it would be wise to include your spouse.

The biggest reason why you want to make sure that you include your spouse is because they can feel like they’re purposefully being left out of something important. When people feel neglected, they tend to act out in a wide variety of ways. You have to make sure that you’re thinking ahead of all of these things so that you don’t put yourself in prime position for an argument. When people feel like you’re not paying attention to what they want out of life, their resentment levels can skyrocket. So it’s up to you to balance your need to get out of debt with the need to remind your spouse that you care about them.

Mature couple talking to financial planner

There’s something to be said about credit counseling. It’s a good way to really make sure that you get the education in personal finance that you really need. We’re not trying to be rude, but it’s pretty safe to say that you didn’t take personal finance lasses in school. It’s hard to learn about debt when you’re trying to learn about everything else you need to do to keep your life running smoothly. You’re going to feel like you’re being stretched at both ends but the educational experience it not one to miss.

Building your goals together can take time. Sitting down and having a discussion about finances that is non confrontational can be harder than you expect. This is because as a society, we’re conditioned to see money as a wedge that divides rather than joins. We’re not taught that money is just a tool. Money can’t think and money can’t feel. You have to do the thinking and you certainly have to deal with your emotions. Some people have a hard time stripping their emotions away from things. In the case of credit, people feel that they need to go out and spend they’ve had a bad they. They feel that they need to go out and just be in the club with all of their mates. They feel the need to cheer themselves up after a breakup. You can’t think like that when you’re trying to build something different with your spouse. You do, however, have to keep a clear mind.

Your spouse will probably want things that you don’t. Instead of shooting them down directly, make sure that you acknowledge that you at least heard them. That’s the only way that you’re going to get anything tied up nicely. It would be better to do this than to find that you just can’t seem to come to an agreement. The credit counseling is good because it provides a 3rd party solution. You have a 3rd party who doesn’t have anything invested in the situation. This means that they can correct your spouse about things that they don’t know without it feeling like a rejection. If you were to just correct them, they might feel like you’re just trying to sound smarter than they are. (more…)

Stop the Presses – Secured Credit Cards Are Back!

If you’re trying to bring your credit score back to life, don’t worry — we know exactly where you’re coming from. The economy has gotten worse and worse, and it’s no secret that people are having a hard time making ends meet. This also means that credit is harder to maintain because there’s not a lot of excess cash to go about. So this means that you have to make some pretty tough decisions. Do you take care of your family, or do you feed the credit card bill? In times where things get really tough, you might find that you just aren’t able to take care of your credit like you used to. But that was then — this is now. If you’re trying to get on your feet and you want to rebuild your credit, you might find that lenders aren’t lining up to give you credit anymore. Once you’ve had credit problems, the interest rates get higher and the level of rejection gets bigger as well. You have to make sure that you’re covering all of your bases as much as you can. This is where the secured credit card comes in.

Now, you might assume that a secured card won’t help you much. That’s just not the case at all. You’ll actually discover a lot of goodness within the world of secured credit cards. The real question is whether or not you’re really willing to enjoy the secured credit card or if you’re going to only see negatives in it.

This is a card that you have to fund yourself, usually with a low deposit. This is so that you have a buy in with the lender. In order to get them to trust you again, you have to take matters into your own hands. You have to show them that you’re willing to put some of your own money on the line to get this line of credit. You’ll still have a certain amount that you can charge each month, but it’s going to be backed by your deposit. So if you walk away from the card and refuse to make payments, the secured side kicks in and your deposit is forfeited. But the good part about this is that it’s only up from here.

Secured Credit Cards

That’s right — you won’t have to be stuck with a secured card forever. You actually get to show that you can handle credit again. This means that if you make all of your payments on time, you’ll be given the chance to convert your credit card into an unsecured card again. The deposit would be refunded back to you, or applied to your bill. But it’s really important to make all of your payments on time. Even if you’re a day late, it’s still going to count against you.

If you’re interested in secured credit cards, you really want to make sure that you’re going with one that reports to all of the major credit bureaus. This will mean a raise in your credit score, as you’ll be making great payments.

Bad credit doesn’t stick around forever. You might be tempted to just get out of the credit game completely, but that’s actually a worse idea than going with secured credit cards. If you drop out of the credit game, the lenders will have no idea whether or not you’re a good credit risk or not. If they can’t tell the difference between a great borrower or not, they’ll opt for just rejecting you rather than being unsure. Now, if they see that you had credit problems in the past but you took responsibility and started from scratch that tends to look a lot better on your side.

Why not check out the wide range of secured cards today? When you really start seeing your credit score climb, you’ll truly be glad that you did!

Spring Is Here – New Credit Cards After Bankruptcy Is a Reality

Focusing on credit cards after bankruptcy might sound odd. After all, isn’t that what got you in trouble in the first place? However, hear us out. We think that credit can indeed be a good thing as long as the mind has shifted. If you assume that credit is a bad thing, then you’re going to automatically move away from it. But what about the good things that credit can get you? If you’re dreaming about owning your own home someday, you’re going to have to get over your fear of credit. You’re going to have to embrace it. Lenders need to realize that you’re a good credit risk again. If all they have to look at is your bankruptcy, then you’re in trouble!

What we need to do is get fresh credit, fresh financing instead of dwelling on the bankruptcy. Keep in mind that these steps need to be taken only after your bankruptcy has fully discharged. This means that you get the “fresh start” and your debts have been dismissed.

Getting secured credit cards might not be your cup of tea, but it’s possible to get them quickly. When it comes to getting a fresh start, you really do need to go with something that can be obtained very quickly. You want to get secured credit cards for another reason: it makes the lender realize that you’re serious. When you are showing how serious you are, it helps to put your own money on the table. A secured credit card is “secured” by the money that you place on it. Many credit card companies even allow you to set your “credit limit” based on your deposit. So if you’re in the UK trying to start over, you’ll find that you can get a secured card with a limit of 1,000 GBP if you’re willing to put up 1,000 GBP of your own money. This might not work out for people that haven’t gotten their savings back into place, but if you have the money set aside, why not put it to good use?

It’s very important to make sure that you are paying every signal credit card on time every single month. If you know that you’re not going to be able to handle your obligations, you need to let the credit card company know as soon as possible. Remember that after you get out of bankruptcy, you will not be allowed to seek that type of debt relief again. This means that you will have to be on your best behavior far more than someone that can still declare bankruptcy. (more…)

Applying for a bad credit loan is simple

If you’re one of the many people harbouring a fear of applying for a bad credit personal loan, there are easy ways to overcome your phobia. Many people have the same problem, but to overcome it, you must first recognize and address your fear, namely find out what it is you fear about the process of applying for a loan that is geared to your credit score and history.

High Interest Rates Top the List of Fears

For most people the biggest fear they have of applying for a bad credit personal loan is high interest rates. They know they are going to pay higher interest than those with good credit, but they have been scared either by advertisements they have seen or heard or by people they know who have obtained a bad credit personal loan in spite of having bad credit.

The one thing people need to understand is that not everyone is going to face the same obstacles and not every lender charges the same interest rate even for people who have good credit. Though interest rates are tied directly to the strength of your credit, they will vary among lenders and even individual circumstances.

Credit Is Not the Only Factor Lenders Review

Although credit is a major rating factor for lenders, there are also other things they consider. Certainly a lender’s decision weighs heavily on your credit score, but for lenders that are willing to service all credit types, there are other issues they review as well.

Although the other items a lender reviews before approving a loan exist for those with both good and bad credit, there is more emphasis placed on those factors when the borrower has less than perfect credit. Some of the other factors the lender may consider include some of all of the following:

• Longevity of employment

• Bank account experience

• Type of residence (lease or own)

• Disposable income

• Investments you may have

• Stability of current employment and position

Certainly these are not the only factors lenders consider, but they are important ones. Not all lenders will consider these factors, but most lenders will at least consider some of them before approving a loan for someone with bad credit.

Be Knowledgeable about the Lender’s Requirements

You can ease your fear of applying for a bad credit personal loanif you make it a point to look at the lender’s requirements before you think about filing an application. If you know what to expect from a lender, there will be less need to be afraid to apply for a bad credit personal loan.

When you feel at ease, you are more likely to take the time to research lenders more thoroughly in order to find the one that meets your needs. Fear can cause you to make wrong decisions or fail to find out information that would otherwise make the process easier and allow the transition to move much smoother.

Bad Credit Loans

The issue of bad credit loans is of course one that has plagued the West in recent times and indeed internationally as well. One aspect of bad credit loans has become ubiquitous namely “subprime lending”. Bad credit can also be known as ‘adverse’ credit history, ‘non-status’ credit history, ‘impaired’ credit history, additionally ‘poor’ credit history and and indeed ‘negative’ credit rating. By having a negative credit rating, this may be considered as less preferential to lenders and they may be wary of such types of loans.

Furthermore, the loans may be at a higher interest rate and thus the person with the lower credit score may find that they have to pay more in the shorter term and generally overall. In terms of subprime lending (which can also referred to as near-prime, non-prime, and second-chance lending), this issue has been very much in the news recently because of the disaster in the US and other countries where people were issued with mortgages where they had little likelihood of being able to pay them back – in a downturn many of these people were then found to be in an unstable situation.

The process for ascertaining a credit rating in the US is done by a consumer’s credit history and is made by certain reporting organisations. Certain data that may be provided is the high and low balances that were available in borrowing and for instance any actions that were undertaken to recover money. If one is looking for a loan with a bad credit rating many of these and other issues may be taken into consideration as well as your present level of salary and monthly outgoings etc.. A credit score will be an approximation for one’s appropriateness for a loan. Scores may normally be based on numbers which could range from 300-850 for the US and the statistical analysis would be an attempt to forecast your worthiness as a borrower.

The higher the score when taking a loan with a bad credit rating, the higher will be the likelihood that you will be chosen to take out a loan. Issues that might significantly affect a credit rating for instance might include repeated missed payments and adverse legal judgements etc.. The three major agencies that will participate in producing a score are Equifax, Experien and TransUnion. It should be noted that for instance in the UK Experian is also a big player etc..

Thus, it is apparent that the issue of credit rating is very important in regard to loans. By having a bad credit score this might mean that one will not in the first place be able to take out a loan. Furthermore, it might be apparent that even if one is able to get a loan, that one might then have unfavourable terms that one is taking out. Of note that it is not the actual agencies themselves that will determine what is adverse – rather it will depend on the lenders’ particular policies.

Tips for Tacking Your Bad Credit

If you’re suffering with bad credit, it can be hard to get back on track. Bills go into collections and this is what really hits your credit the hardest. There are a number of people that are using credit counseling and this is a great place to start. Here are a few other tips that can really benefit you and your credit.

Credit Consolidation

One great place to start if you are just in over your head is with credit consolidation. These companies aim to gather all of your debt into one lump sum and divide it into monthly payments. Rather than paying each debt, you’ll be making one payment to the consolidator and they split the money between all debtors. Also, the collection calls stop which is going to be a huge relief.

Lower Credit Lines

While it’s tempting to use your credit cards to pay all of your bills, this can actually cost you more money. You’ll have higher monthly payments and higher interest rates in some cases. Call the companies and ask them to decrease your available credit line. This can help you resist temptation better and can help prevent any future debt.

Pay Your Bills on Time

If you’re trying to maintain your credit and increase your score at the same time, make sure you are paying your bills on time each month. If possible, pay them early to avoid late fees and to make sure they are covered. This avoids something happening and then you not having the funds available.

If you find you’re in a hurry to build up your score fast, buy something using one of your credit cards and pay back the amount to your card as soon as you can. This can show companies that you are responsible and can pay your bills on time.

Spend Wisely

The mistake a lot of people make is they buy things without considering what they need to cover their bills every month. This leads to late fees and cancellation of some services. If you don’t have enough money to pay your bills, don’t spend on anything else. Make sure your bills are paid for the month before you make any purchases.

Call Your Creditors

You might even consider calling your credit card companies and try to talk to them about making some sort of payment arrangement. Nowadays, they are more willing to work with you as long as the lines of communication are open. Rather than ignoring their calls, answer it and just explain your situation. Tell them what you can afford to pay, and 9 times out of 10 they are going to accept it as long as you are paying something.

Avoid getting any new line of credit. This opens up the door to temptation and you’ll only create more debt. The point of improving your credit score is to wipe out debt you currently have. This means when you get the offers in the mail, send them straight to the trash rather than applying.

Valuable Tips for Maintaining Your Credit Score

Having good credit is something that many people earn. It’s not something you’re given and nowadays seems to be harder and harder to maintain thanks to a falling economy. Millions of people are losing their jobs, and it has become a spiraling effect. Job loss equals no money coming in, and in turn bills cannot be paid. Over time collection agencies start harassing you and your credit begins to suffer. However, there are a few tips that can help you maintain your credit score to keep it from falling any lower.

Learn to Manage Your Money

It seems many people have more than one credit card, and this leads to temptation. Nowadays, saying “charge it” seems to be a common phrase, and is what keeps getting you in trouble. Credit cards should be used for emergency purposes and you want to consider a way to use them as little as possible.

Rather than paying the mere minimum each month on your cards, consider paying a little more if possible. Getting that balance down quicker can help your credit score, and quit accepting the offers you get pretty regularly in the mail. The more plastic you have, the worse off your credit can become even if you don’t use the cards.

Monitor Your Credit and Take Control

Nowadays, checking your credit and monitoring it regularly has become essential. More and more people are becoming victim to identity theft, and this is something that is easily done for criminals. You need to make sure everything that’s being reported to your credit is your doing.

You are entitled to see your credit report once a year by all 3 major credit bureaus. When you get your report, you want to make sure everything is accurate. There have been studies done that have shown 1 out of 4 reports contains errors of some sort. If there is inaccurate info on your report dispute it before it does any more damage to your credit.

Control Damage

We all hate the collection agencies once they begin hounding you with phone calls 10 times a day. However, you can simply answer the call and talk to them about your situation. Rather than putting it off and accruing an even higher balance with the agency, see if they are willing to develop a payment plan that you can afford. This helps get your debt under control and can start getting you back on the right path to repairing your credit.

Stick to the Due Dates

When you have credit cards that are due, always make the payments on time. This helps keep things balanced out and can avoid your credit score from dropping with each month you miss. The same goes with your mortgage, rent, utility bills, and even cell phone bills. If you’re going to be late, make sure you communicate with the loan or debtor so they know to expect a late payment. There may be cases where they can eliminate the late penalty fee.