Beware of debts and credit you don’t use

Beware of debts and credit you don’t use

It is easy today to apply for a store credit card that you forget all about in three years - but that account will remain on your credit report and affect your credit score as long as it is open. Having credit lines and credit cards you don’t need makes you seem like a worse credit risk because you run the risk of “overextending” your credit.

Also, having lots of accounts you don’t use increases the odds that you will forget about an old account and stop making payments on it - resulting in a lowered credit score. Keep only your used accounts and make sure that all other accounts are closed. Having fewer accounts will make it easier for you to keep track of your debts and will increase the chances of you having a good credit score.

However, realize that when you close an account, the record of the closed account remains on your credit report and can affect your credit score for a while. In fact, closing unused credit accounts may actually cause your credit score to drop in the short term, as you will have higher credit balances spread out over a smaller overall credit account base.

For example, if your unused accounts amounted to $2000 and you owe $1000 on accounts that you have now (let’s say on two credit cards that total $2000) you have gone from using one fourth of your credit ($1000 owed on a possible $4000 you could have borrowed) to using one half of your credit (you owe $1000 from a possible $2000). This will actually cause your credit risk rating to drop. In the long term, though, not having extra temptation to charge and not having credit you don’t need can work for you.

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Are There Really Unsecured Bad Credit Loans?

By Jess Peterson

Unsecured loans carry a great risk for lenders and thus, increasing the risk by lending to those with bad credit is definitely not a smart thing to do. However, in the financial market all is possible provided there is a fair price for it. Thus, you can find unsecured loans for people with bad credit. But, at what cost? This seems to be the main issue of unsecured bad credit loan financing.

Collateral And Bad Credit

The use of collateral reduces the risk involved in any financial transaction. Thus, secured loans are a lot easier to qualify for since the lender doesn’t fear default or lack of repayment because he knows he will be able to recover his money one way or another. Eventually, if the borrower doesn’t honor the agreement he can repossess the property used as collateral.

Thus, those with bad credit are more likely to get approved for a loan if they can offer some sort of collateral in order to guarantee repayment. That’s why unsecured bad credit loans are rare and not as easy to qualify for as secured personal loans. The risk that lack of security represents is aggravated if the borrower has a poor credit score and history.

Interest Rate Charged

Moreover, due to the high risk involved in a transaction that lacks collateral and in which the applicant has bad credit, the interest rate that will be implied in such loan will be too high. And someone who is deep in dept won’t be able to afford the monthly payments that such high interest will involve.

The interest rate charged for unsecured loans is already high and if the applicant has bad credit, the interest rate is almost doubled. Thus, even if you obtain finance for people with bad credit on unsecured loans, you need to have a good income to afford them and you won’t be able to obtain high amounts either.

Pay Day Loans

Truth is that with rare exceptions, there are no personal unsecured loans for people with bad credit for high amounts and with simple approval processes. The only loan types that are unsecured loans, are processed within a short period of time and are easy to qualify for are pay day loans and cash advance loans.

Sadly, these loans don’t come with high amounts and sometimes, the interest rate is so high that in order to conceal it, it is presented as a fixed fee. This fee sometimes represents an interest rate of 40% or even more.

Thus, if you look for unsecured loans with bad credit, you’ll need to be patient and look around for offers. Unsecured personal loans for people with bad credit are rare and thus, highly requested.

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Jess Peterson writes finance articles for Yourloanservices.com where she shares her knowledge about how to get money for a starting-up business, consolidating any kind of debt, repairing a home even with a bad credit history and other financial subjects.

Article Source: http://EzineArticles.com/?expert=Jess_Peterson

Get Your Finances Back on Track With Bad Credit Loans

By Mary Wise

There are times when some people can’t put their credit and funds in order and get negative comments on their credit reports. Lenders who use credit reports to determine approval would then decline loan applications. In order for these people to get approved, special loans have been tailored that provide the necessary financing for borrowers and compensate the higher risk for lenders.

Bad Credit Personal Loans

Bad credit personal loans are the loans that can be utilized by people having bad credit for any personal use. These loans can change the lives of the borrowers in a very positive way. If you have encountered bad credit ratings in the past, you have a way out by using bad credit personal loans.

Bad credit personal loans help you to take control of the situation. The process of obtaining bad credit personal loans is an easy one. There are firms that can aid you specifically to obtain bad credit personal loans.

Bad Credit and Approval

You may find yourself in a situation where you may be in need of immediate cash or money. Bad credit may hamper your chances of getting a loan. You do not need to think of your poor credit history to avail bad credit personal loans. People, who have already incurred in delinquencies and have too much debt, need a second chance. With Bad Credit Personal Loans they can actually work towards improving their credit record.

A good way to improve your credit is to consolidate your debt with the money from bad credit personal loans. It is difficult to deal with creditors and pay their bills round the month. But, when debt gets consolidated, you can easily pay off your debt and make one payment towards the loan each month. The process of debt consolidation helps in rebuilding your credit. Once your payments get settled, the ratings in your credit report will increase automatically. This is known as debt management.

Secured Credit Cards

Under bad credit personal loans, you can use a secured credit card for bad credit. To get a secured credit card, you need to open a savings account in the credit card company that is giving you the credit card. Then you need to put money in the account that equals your credit card limit. You can easily utilize the services of your credit card without worrying about your bad credit ratings.

Bad Credit and Bankruptcy

Bad credit personal loans can also be availed by people who are on the verge of bankruptcy, or who have experienced foreclosure on their property, apart from those with a bad credit history. Bad credit personal loans give you the opportunity to improve your credit, but at a high interest rate. The risk involved in the transaction is very high for the lenders; to compensate for this situation they offer only high interest loans.

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Mary Wise, a professional consultant at Badcreditloanservices.com with twenty years in the financial field, helps people in the process of securing personal loans, mortgage, refinance or consolidation loans and preventing consumers from falling into the hands of fraudulent lenders. You will find more useful tips and interesting articles on this subject and other financial related topics by clicking Here

Article Source: http://EzineArticles.com/?expert=Mary_Wise

Credit Card Debt for College Students

Credit Card Debt for College Students

College students are running up an alarmingly large amount of credit card debt these days and it is only increasing with the passage of time. The average undergraduate student carries $2,500 in credit card debt and by the time they graduate from college, they are beginning their new lives in the “real world” with debt that they can’t pay.

Students figure: I'll live like I want to now and then when I get a job it will be easy to pay it back. This is often not the case. Lower-than-expected salaries, plus higher-than-expected living expenses and hefty student loan payments, make handling credit card debt all the more difficult for students and recent grads.

And the worse part about college students having so much credit card debt is that it takes so long to pay it off. Even if they are able to make the minimum payments, by sticking to minimum payments it would take a student more than 12 years and $1,115 in interest to pay off a $1,000 bill on a card with an 18 percent annual rate. If students fall behind in their payments, they get slammed with high late fees. And it's easy for things to get out of hand.

Of course, there are two sides to this story. Most college students start out with little and even no credit, so having a credit card seems like a good idea so they can start building a credit history in anticipation of owning a new or better car and even, someday their own home. Except for if they haven’t been warned of the dangers of using credit cards or are especially naïve, this could be a bad move.

Credit card debt for college students affects many, many aspects of their college lives. They can’t pay their bills regularly and find themselves short of cash. Plus, it can affect their ability to secure a student loan which can be crucial with ever-rising tuition rates. And parents should beware of putting their college student on their own credit cars as an authorized user as the same debt can pile up under the parents’ names and cause some serious credit problems.

Armed with the right information, many students are able to establish credit and steer clear of card debt. Even though college students do carry credit card debt, 54 percent of college students pay off their credit card balances every month.
Most tend to be responsible and use the card wisely.

However, some of them don't and they're getting into trouble. If a person makes it through 18 years of life without any financial wherewithal, it's very difficult to change their behavior and that's why it's so important that parents speak to their children about money management. To keep a college student out of credit card debt, the key is teaching students money management skills before handing them a credit card.

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2007 Tim Watson