Lessons from a Loan Shark
You have to pass a test to drive, but there are no courses to provide you with the financial route in life. And sadly, financial collision is difficult to recover from. It leaves trend marks for 7 years or longer.
The key to remember ~ credit is a loan. It's not free money.
Let’s call it by the real name, it’s not a Credit Card, it’s a Debt Card. Sort of makes the pill a little harder to swallow, doesn’t it?
Some hard facts: The credit card industry earned $1,200,000,000,000 last year. That is $ 1.2 TRILLION in profits. 14.8 BILLION of it came from late fees.
Did you know that the company can raise your interest rate if you’ve made a late payment on any of your other cards, including those issued by other companies – it’s called the Universal Default Clause.
You also have to be careful of the unused credit cards! I was sent a notice that if the credit card did not get a minimum of $ 1.25 per month in interest that they would charge my account that amount each month! I’m talking about a credit card that I paid off but didn’t close out. So, in other words, the credit card Company wanted to make money when I wasn’t using their service. Amazing!
Wondering how long it will take you to pay off a credit card if you only make a minimum payment? Here’s a site that can help you figure it out, click here.
I read recently that a woman had an excellent credit history, was never late with her payments, yet she received a notice that her interest rate tripled. It's scary right now, the mortgage companies are facing foreclosures and passing the buck to the credit card carriers.
It seems that money is no longer the root of all evil, credit is.
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2. Pay your bills on time
3. Don’t max out your credit cards you loose the most points here. Keep credit balances no more than 1/3 of total credit limits.
4. Don’t close out old credit cards. These are old pieces of credit. If you close them, then they do not count in your credit profile and can lower your score.
5. Pull your CBR once a year to make sure all information is correct. It is easier to correct something that popped on this year than something that has been there forever.
6. Limit credit inquires as it drags down your scores
7. Too much credit is bad—A nice mix of revolving and closed end are good
8. CCCS, BK, F/C kill your credit score by up to 100 points
9. Don’t open too much credit in a short period of time.
KRL
KRL
When you take a risk with a customer and you make the higher interest rate, you have to be able to take some delinquency and also be able to collect on it.
That's the risk and it appears the mortgage companies weren't prepared. They didn't mind the rates, but can't handle the results.
And it's only going to hurt the middle class consumer now that the requirements are tightening up.
Instead of validating information and making wise choices ~ now we have to pay the price.
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KRL
The thing that people grapple with, fight over, struggle with - so often in life is finances.
If we can educate the younger generation early on, then not only will it help them in the future years, but maybe even help the financial health of our country!
Wary banks revert to strict lending standards.
Banks and mortgage insurers, which have lost billions because of bad bets made during the housing boom, are now reverting to strict lending standards not seen in nearly 20 years.
http://www.msnbc.msn.com/id/23731299/from/ET/
Just thought you'd like to know about the changes to the FHA products effective tomorrow.
The last day to lock loans under current guidelines is Tuesday, March 25 (today). Locks will be honored up to the expiration date, but extensions will not be allowed. Starting Wednesday, the new guidelines (outlined below) will apply to all FHA loans. Also beginning Wednesday, all loans that have a borrower or co-borrower without a FICO score will be subject to a 3.0 adjustment (excluding streamlines).
Minimum FICO 580 for all manually underwritten loans
Minimum FICO 550 for all loans receiving DU Approve/Eligible or LP Accept/Eligible findings
I know this does not mean anything to you, but let me explain. Right now you need a 680 to buy mortgage insurance for loans greater than 80% financing in the conventional world. So, everyone has been burying the dogs in the FHA product which has no credit score requirement but DTI ratios. Now, look at the changes to the FHA program below. Nobody wants the weak borrower's anymore.....
KRL
It makes me wonder how long the middle class will survive or how long the middle class will allow the burden to continue. Let's not even get politics going!