Credit Secrets & Tips Blog

In the past nine months change since I started this blog, I’ve written a lot about credit repair, debt management, money savings and other related topics.

While I’ll always have plenty to say, I want to make sure this blog is both helpful and interesting for you.

So, what would help you the most on this blog?  Is there a topic I’ve covered that you want to learn more about? Do you have an idea for something I haven’t discussed yet?

Send your suggestions to support@insiderguidetocreditrepair.com!

Advertisements for easy terms loans are tempting. They can be good deals, but you must read the fine print very carefully before you sign up.

1.  “Zero Percent Financing” on auto loans

Often these loans are for 12, 24 or 36 months, not the 48 or 60 months many people choose to keep monthly payments down.

If you opt for a shorter loan term, be sure you can make the monthly payments. Also look for any hidden fees.

2.  “Zero Percent Interest” on a credit card

These offers usually are for limited purposes and time periods, such as no interest charges for three months on new purchases or on any balance you transfer from another credit card.

This may be a good option, but you’ve got to read all the documentation and do the math.

For example, if you don’t pay the balance by the due date, you will incur interest. Also find out if there’s a balance transfer fee or an annual fee.

These charges could be so high, in fact, that the zero-percent offer may cost more than a card with a higher interest rate but not the other fees.

3.  “Add the Closing Costs” to your mortgage

You’re not getting out of paying the closing costs they’re added to the loan balance, so your monthly payments will increase plus you’ll be paying interest on the closing costs.

And, if adding the closing costs to the loan balance results in a down payment on the loan of less than 20 percent of the home’s value, you will have to purchase private mortgage
insurance (PMI), which protects the lender if you stop making mortgage payments.

PMI can cost $80 to $120 per month for the typical mortgage loan.

PMI be cancelled when built-up equity equals at least 20 percent of either the purchase price or the original appraised value, whichever is less.

4.  “No Payments on Merchandise Until Next Year”

Even though you won’t make payments for several months, if interest is being charged from the date of purchase, as is often the case, you can end up paying much more for an item than you expected.

Also, if you don’t pay for the merchandise in full by the end of the specified period, you may be charged interest from the date of purchase.

Predatory lenders do not have horns and tails.  They seems like nice, friendly, helpful people.  They are trained to gain your trust. So how will you know one?

1.  None of your questions get answered, or the answers don’t really make sense.  A good lender can explain your loan in everyday language. 

2.  The lender pressures you to sign things before you’re ready or rush you through the paperwork.  A good lender won’t pressure you. 

3. The ledner doesn’t explain or tell you about all the costs for getting a loan. A good lender will explani the costs and the service you’re geting. 

4. Things change at the closing. You’re not getting the loan your were promised.  A good lender will honor their commitments. 

5. The ledner wants you to borrow more money than you need.  A good lender will let you decide how much money you borrow. 

6. The lender makes you feel like you don’t ave other choices, as if other lenders won’t give a loan.A good lender will let you know you have other options. 

7. The lender gives you a quick yes, but it may not be the best loan for you.  A good lender will take time to explore your options with you. 

8  You have a feeling somethings just not right.  Follow your instincts.  A good ledner makes you feel informed and confident.

Don’t let a predatory lener pressure you into a costly loan. The best advice is walking away from those lenders.   If you have questions about your loan, visit www.dontborrowtrouble.com for free advice.

1. Use them carefully 

Credit cards offer great benefits, especially the ability to buy now and pay later. But you’ve got to keep the debt levels manageable. If you don’t, the costs in terms of fees and interest, or the damage to your credit record, could be significant.

2. Choose them carefully

Don’t choose a credit card just to get freebies (T-shirts or sports items) or because there’s no annual fee. Look for a card that’s best for your borrowing habits.

Example: If you expect to carry a balance on your card from month to month, which means you’ll be charged interest, it’s more important to look for a card with a low interest rate or a generous “grace period” (more time before your payments are due).

3. Pay as much as you can to avoid or minimize interest charges.

If possible, pay your bill in full each month. Remember, paying only the minimum due each month means you’ll be paying a lot of  interest for many years, and those costs could far exceed the amount of your original purchase.

4. Always pay your bill on time

You’ll avoid a late fee of about $29 or more. But more importantly, continued late payments on your credit card may be reported to the major credit bureaus as a sign that you have problems handling your finances.

And if your credit rating gets downgraded, your card company could raise the interest rate on your credit card, reduce your credit limit (the maximum amount you can borrow) or even cancel your card.

Late payment on your credit card also can be a mark against you the next time you apply for an apartment or a job.

5. Protect your credit card numbers from thieves

Never provide your credit card numbers - both the account numbers and expiration date on the front and the security code on the back - in response to an unsolicited phone call, e-mail or other communication you didn’t originate.

When using your credit card online make sure you’re dealing with a legitimate Web site and that your information will be encrypted (scrambled for security purposes) during transmission.  Click here for more tips about how to protect yourself when you shop online.

Major credit card companies also are offering more protection by providing “zero-liability” programs that protect consumers from the unauthorized use of their card.

In general, only give your credit card or card numbers to reputable merchants or other organizations purchase.

Consider carefully before taking out a home equity loan.  Although This type of loan might let you take tax deductions you could not take with other types of loans, they can
reduce the equity that you built up in your house.  And if you are unable to make payment promptly, you could lose your house!
 
Home equity loans can either be a revolving line of credit or a one-time, closed-end loan.   Revolving credit let you choose when and how often to borrow against the equity in your home.  In closed-end loan, you receive a lump sum for a particular purpose, such as remodeling or education tuition.
 
Apply for a home equity loan through a bank first.  Bank loans are likely to cost less than the loans offered by finance companies.
 
When comparing loan offers, read all materials and ask following 7 specific
questions before you sign up:
 
 1. What is the minimum monthly payment?
 
 2. What is the annual percentage rage (APR)?
 
 3. If the interest rate is adjustable, how much can it increase at one time?
 
 4 What is the maximum interest rate?
 
 5. What are the annual and transaction fees?
 
 6. If the loan is for revolving credit, how large a credit line is available?
 
 7. What are the initiation fees for a closed end loan?

“Cash Advance” loan, often called “payday loan” comes with extremely high price.
Here is how it works: let’s say you wrote a $330 personal check to borrow $300 up to 14 days. The lender would agree to hold check until next payday. 

In this example, the cost of initial loan is $30 and interest rate for 14 days is 10% (=30/300), So APR is 260.7% (=10% * 365/14)!

Now multiply 260.7% by the $300 loan, 2.607 * 330 = $860.31.  That is total interest charges you pay for in one year. If you add this charge to the original loan amount $330:
$330 + 860.31 = 1190.31.  That is way TOO MUCH!

If you find yourself need extra cash from the lender, consider these possibilities as alternatives to the payday loan:

1.  When you need credit, shop carefully.

2.  Compare the APR and finance charge (which includes loan fee, interest and
other types of credit cost) of credit offer to get the lowest cost.

3.  Ask your creditor for more time to pay your bills. 

4.  Make a realistic budget, and figure your monthly and daily expenditures.

5.  Find out if you have, or can get, overdraft protection on your checking account. 

6.  Contact with your local credit counseling service, if you need help working out
a debt repayment plan with creditor. 

If you cannot avoid taking out a payday loan, borrow only as much as you can afford
to pay back. Payday loan roll-overs can lead to a vicious cycle unending debt. 
It could turn your temporary setback into major financial crisis.