Monday, May 6, 2013

Simple Tips to Repair Bad Credit Rating

In today's downward spiralling economic condition and skyrocketing prices, it is easy to fall into the muddle of bad debt. Dealing with bad credit can be a harrowing experience, but with sound strategy and die-hard dedication, you too can repair your bad credit score. There might be several reasons why you found yourself with a bad credit score, including downsizing of workforce, legal lawsuit, spending beyond means or heavy medical bills stemming from an accident. Repairing bad credit score is a long haul procedure that requires significant amount of your time, effort and most importantly fundamental changes in your spending habits. Listed below are tips that will help you repair your bad credit score.
Credit report
Until and unless you have not improved your credit score, you limit your chances of ever securing any loans from a lender, be it home loan, auto loan or a general loan. First, get your copy of credit report from your credit bureau and carefully review your existing debts. If you see any errors in your credit report, correct it immediately before it has any adverse impact on your credit standing. You can also contact your creditor regarding the error mentioned in the reports, who will in turn get in touch with the bureau to immediately rectify it.
Outstanding debts
If your credit report is showing bad score due to outstanding debts, try repaying them as soon as you can. Pay off those debts first that commands a higher interest rate.
Automatic bill payment
Habit of paying your bills late can also have adverse impact on your credit score. Set up for automatic bill payment option through your bank; the setting will enable you to pay your bills on time excluding the burden of remembering tiresome due dates or writing checks. You will be surprised how the minor change can radically improve your credit score overtime.
Contact creditors
If your debt is piling up and you are unable to see any way out, try contacting your individual creditor. Request your creditor to modify your repayment plan in a manner so that it is better manageable for you. Give assurance to your creditor that for all intents and purposes you are planning to repay the entire debt owed to them to the best of your capability.
Also, call up all your credit card companies and request them to slash down on the interest rate applied on credit cards. Most of the companies will oblige you; use the reduced interest rate to pay off your outstanding debt as soon as possible.
Budget your expenses
Collect statements about your quarterly, yearly and monthly bills. Carefully analyze the statements based on which to create a budget and try adhere to the allotted budget as long as you can. Try not to spend beyond your means; the budget will help you realize your actual financial position consequently aiding you in coming up with ways to save money.
Keep your account open
Many people believe that quick fix to bad credit is closing the account permanently. Cancelling your credit cards is not going to be of any assistance in repairing your bad credit score. On the contrary, the credit history will eventually help improve your credit standing. Aged accounts are very helpful in achieving your long-term credit goals.
The aforementioned points will only help in improving your credit rating up to certain extent. To completely alter your bad credit histories seek counselling from a reputed credit expert.

Exploring The Four Most Important Criteria Before Applying For A Loan

If you are considering applying for a personal loan, then it is important to consider three different factors:
1/ The APR (Annual Percentage Rate) of the Loan
This is the aspect of the loan that is the most important. It determines how much money you will end up having to pay back, and can vary dramatically depending on the type of lender.
A loan needs to be viewed from the perspective that you will eventually have to pay the money back, and so you should really try to shop around as much as possible for the lowest interest rate before proceeding.
The lower the rate, the less you will pay. A Payday Loan for example could have an APR of thousands of percent, and a loan for a few hundred dollars could end up costing you thousands over the lifetime of the loan.
Avoid Payday Loans whenever possible. They make it easy to borrow money, but their rates of interest are crippling.
A simple rule of thumb to consider is that the easier it is made for you to take out a loan, the more crippling is likely to be the interest rate that is being charged. So, don't be put off if your bank or potential lender makes you jump through a few more hoops to get a loan. It probably means that you are getting a better deal and that they are simply checking to make sure that you are a good risk.
2/ How Quickly Does the Loan need to be repaid?
It is also important to factor in how quickly any loan that you do take out will need to be repaid.
Even if a loan has a lower APR, this won't necessarily do you any good if you need to repay the loan too fast.
So, you also need to look at the repayment period and see whether or not it is actually realistic for you to be able to pay back the loan over that period.
If it isn't then you can either have a chat with your existing lender to change the period over which the loan needs to be repaid. Or you can find a new lender who will allow you to have the extended repayment period that you are seeking.
3/ Can you get the amount of money that you need?
Different lenders will also have different rules about how much money they will actually lend you. So it is important to check with a number of different loan companies about the particular rules that they apply before lending.
4/ Research different loan offers carefully
It is important when you are considering getting a loan to also factor in the time that it will take to research the offers. The fact is that most people assume that they will be able to find a good deal very quickly, when the reality is that it is a drawn out process and needs careful analysis and care before proceeding. It is all too easy to get caught up in the trap of thinking that you can very quickly find a deal that offers good value, when in actual fact you really do need to shop around to make it happen. This is what some unscrupulous companies count on, particularly payday loans companies, who draw you in with promises of quick money in the next 15 minutes. This is true, but you pay for that speed and convenience with crippling interest rates that can leave you trying to pay back the loan for years to come. So beware of "Quick!" and "Easy!" Offers.
It is a good idea to ask questions of your loan company about all of these four factors before you proceed with any loan.

Do You Know What a Bail In Is?

Most of us are familiar with the term "bail out", as we have watched governments give almost endless amounts of money to large (too big to fail) banks to avoid them from becoming insolvent. Large bets made and balance sheets that are leveraged 40 to 1, in some cases, have destroyed the books of many large financial institutions. Much of that is hidden from the public due to the absolute panic that it would cause among the population.
Well, if you don't know what a "bail in" is, this would be a good time to become acquainted with it. The reason is because of what happened in Cyprus recently. How does a bail in work and who will be affected by it, is the question at hand.
For this example we will use an account balance of $150k. $250k is the current FDIC insurance amount in the US, but that was only done during the financial crisis of 2008 so that it would calm the fears of large account holders and not start a rush of money out of those accounts. Traditional FDIC has been $100k and that is the case for most of Europe. The $100k number will be coming back, make no mistake.
Okay, so you have $150K in a bank account, and the insured level of that account is $100K. You now have $50K in that bank that is above the insured limit. The not so unthinkable happens and your bank is found to be insolvent or bankrupt. What happens?
In some cases the bank would be flushed down the toilet, accounts would be transferred to other banks that would buy them, and the FDIC would cover the rest of the money exposed. Recently the government chose to extend credit or a loan (TARP) to those banks to make them whole again (bail out). Taking the example in Cyprus which has already been used and was explained by the Dutch Finance Minster as the new template going forward, this is what you should expect.
Of the 100 percent of money that is above and beyond the $100k, in this example $50K, 37.5% of that money would be taken from your account and converted into class a shares of stock in the bank itself. You just received stock in a bank that failed so what that is worth is basically nothing. Another 22.5% would have been held as a buffer for possible conversion to stock at a later date. An additional 30% percent would then be held as a frozen deposit, meaning it will show on your statement, but you cannot touch it. If your money is frozen in an insolvent bank, it is gone for the most part.
So 90% of your $50K is gone. Sounds bad right, but what if you had $300k or more in the account. Some of the depositors in Cyprus had hundreds of thousands and some millions or more. All gone. You now have $100k in your account and a boat load of worthless stock. That is the basic parameters of a bail in. The idea is that the depositors will now share in the loss that the banks have incurred due to bad investments on their part. This is what happened to the people of Cyprus.
The next question would be what if that amount of insured deposits is lowered? What then? Now, it is understood that you run a risk when you put more money into an account than it is insured for, but when did we get to the point when your money could be removed or frozen and that was that.
Remember this happened almost overnight in Cyprus, and even though there were signs of it coming. Many account holders that inquired about the instability in the system were told that there accounts were safe and that they had nothing to worry about. A complete bold-faced lie just days before this took place.
This legislation has been slipped into the system in many countries including the US and you have not heard a word about it. They call that a media blackout on the subject.
This may only affect a small portion of personal account holders. However, what about business accounts holding that much money and more? One must keep in mind the term "slippery slope" and how your relationship with your bank is changing by the day. Banks were once safe havens for depositors, but it would seem those days are over.

How to Become a Financial Planner

Yesterday I went to an optometry store and had an eye test done, so I had a chance to talk to one of customer representative while waiting. One interesting topic we were talking about is "how to become a financial planner". As there has been quite some people asked me this question before, I think it makes sense for me to spend some time to write about it as it was a goal I planned to achieve a few years ago.
First of all, you want to work in the financial industry. As financial planners are usually working for banks, credit unions, investment firms, I will suggest you to start with applying for a job in those types of companies.
Once accepted, you can begin with some work positions in entry-level such as administrators or tellers to communicate with customers on regular base, because this is a foundation. Financial planners need to ask proactive questions to customers about themselves and their family in order to better understand their whole financial picture and determine the financial needs from the customers, so excellent communication skill is a must.
While you are getting familiar with your daily job, learn more about the company structure and talk to your peers to gain chances to job shadow a financial planner. This serves as a basic understanding of what the job is about and you will see if it's a good fit to yourself. At the same time, you need to get some credentials done in order to earn a title called Certified Financial Planner (CFP), which is an industry standard to be eligible for this job. For detailed information about the designation, I will suggest you to check out the institution who is offering the relative education. Here in Canada, we use a website,
In order to become a financial planner, you need to first be licensed to sell mutual funds and/or other investment products in your area. This will give you more opportunities to employ more tools in the future to manage the overall financial affairs. Secondly you need to life insurance licensed to sell financial products to protect potential loss that has huge impact to life.
In a nut shell, financial planning can be divided into a few steps:
  1. Saving - this is about to manage your budget and save the extra income for rainy days
  2. Investing - once saved up some money, to invest them smartly for a better return and also deal with inflation risk for a long time period
  3. Protection - protect yourself from disability and protect you family for loss of income if something happens to you
  4. Plan for future - To manage your goal for retirement and prepare for your estate as well.

How To Take Advantage Of Low Interest Rates And Refinance For Renovations

The ongoing process of paying off a mortgage can make it difficult for homeowners to put their hands on extra cash they'd like to have to cover renovations to their homes. If you are a Canadian homeowner, however, you may be able to flip that equation on its head by refinancing your mortgage to pay for home renovations in the country's current low-interest rate environment.
How The Process Of Refinancing For Renovations Works
To put things in extremely simple terms, when you think about your mortgage, odds are you think of some combination of the following three numbers:
• Your mortgage interest rate;
• The dollar amount you borrowed to pay off your house;
• The duration of your mortgage.
These are the three numbers that went into calculating your monthly mortgage payment.
Now, when interest rates fall, many homeowners find it worth their while to refinance their mortgage because a lower mortgage rate will enable them to shorten the duration of the mortgage or owe a lower monthly payment (or both). However, one often-overlooked advantage of a mortgage refinancing has to do with that other number: how much you borrow.
Say you have $10,000 worth of home restoration you would like to undertake but you don't have the cash on hand and don't want to run up your credit card debt. Refinancing at a lower rate may allow you to take out a mortgage for that $10,000 on top of what you owe on your home, taking the money as cash, potentially without increasing your monthly payments or duration of your mortgage at all. (Record-low interest rates such as those Canada is currently enjoying may even make it feasible for you to reduce your monthly payment and/or duration as well.)
Low Interest Rates Could Disappear Any Time
The important thing to understand about these low interest rates is that they have no set expiration date: rates go up when the Bank of Canada says so, and although the Canadian central bank has never been easy to handicap, its immediate future is volatile given the upcoming retirement of Mark Carney, Bank of Canada governor. In fact, certain economists believe that, by 2016, rates could see a jump of up to 60%. As a result, the only time at which a homeowner who is hoping to refinance for renovations can definitely take advantage of these record-breaking low interest rates is now.