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June 5, 2018 by Greg Underwood

6 Ways That Your Credit Scores Impact Your Personal Finances

Your credit score shows your past interactions with credit and it tends to follow you over the years. To a lender, it serves as the point of reference that tells them how you handle credit and therefore predict your behavior if they do business with you.

Basically, a higher credit score means that you are attractive to most lenders and they will have no problem working with you. On the other side, people with low credit scores go through a difficult time when searching for financial products. However, credit scores don’t just affect your borrowing ability but also other areas of life that are critical to your personal finances.

Credit scores can influence your ability to save

When you decide to acquire a home or an automobile, your credit score will play a huge role in the deal you will get. The truth is that almost every lender relies on your current credit scores to determine your overall trustworthiness.

As such, you really need a good score if you are to get a favorable deal with creditors and insurance agencies. On the flip side, a poor credit score serves as a warning to service providers and it represents you as a risky client. As a result, you are likely to be charged a higher fee to access the services on offer.

People without credit history aren’t safe either. Generally, creditors don’t like going into business blindly and without a credit history, a creditor doesn’t know how you will handle the debt. Therefore, the only thing they can do to safeguard their business is charging you higher interest rates.

When you are paying more than ideal fees on these services, it can lower your propensity to save since you’ll be spending the cash you’d have stashed away.

The score can have an impact on your career

Today, prospective employers are conducting credit checks on job applicants. To them, this is a way of understanding your trustworthiness and discipline with money. This practice is most prevalent in high job positions that involve top-notch responsibility or where you’ll be handling huge amounts of cash.

However, it has a lot of influence on how an employer perceives you irrespective of the position you are seeking. There is an ongoing debate on the fairness of this practice that has become the norm with employers.  The fact that it’s happening means that you can be disqualified from a lucrative job position if your credit scores show you’ve struggled with debts.

It affects your insurance premiums

Vehicle and home insurance service providers tend to rely on your insurance scores when making a decision. Basically, this is a scoring system that relates the credit scores of a prospective customer to the risk presented to the insurance company.

While a low credit score won’t prevent you from accessing insurance services, you will definitely be paying higher premiums. On the other hand, having an impressive credit score can help you get an insurance deal with low premiums.

Utility companies will be concerned

Today, most utility companies providing gas, phone, and electricity tend to review your credit profile in order to determine if you will be a reliable client or not.

If your credit scores are suffering, it doesn’t mean that a utility company will lock you out of their service. Nevertheless, it’s highly likely that you will be asked to give some deposit before being allowed to use their services. The total amount required will be determined by your scores. As such, the lower the score, the higher the deposit amount you’ll have to pay.

Refinancing options depend on credit scores

Having a home is a dream held dear by many people. But at times, you don’t get the house at favorable rates or something can happen in future and you realize that you need to refinance the mortgage.

Whether you’ve been diligent in making the mortgage payments or not, as long as your credit scores are below average, getting a refinancing deal can be daunting. In consequence, you might end up paying lots of money over the years. On the other hand, stellar credit scores will help you get a great refinance deal which can reduce the cost of your fastest nation 21 loans.

Your personal relationships could suffer

When you have a low credit score, there is a high possibility that your relationships will feel the pinch. In order to have a fulfilling life, maintaining good relationships with people close to you is quite important.

Basically, people will be wary of lending you money given your previous behavior with credit. Most importantly, it can prevent you from going into partnerships with critical individuals who would have helped you generate tons of wealth. Lastly, having domestic conflicts resulting from financial issues can curtail your ability to pursue your future goals.

Final words

At the end of the day, a credit profile is part and parcel of your everyday life. While different people have unique situations, you should make a decision to improve your scores as soon as possible. The more you postpone the goal, the longer you will continue getting deals that are less than ideal.

May 3, 2018 by Greg Underwood

The Most Important Credit Management Tips You Need to Know

Taking good care of your credit score is important, and it’s easy if you know what to do. Here are 10 important credit management tips you need to know about.

Maintaining a good credit score is important to your financial health. Without good credit, you could pay thousands more in interest on home and auto loans, not to mention personal loans.

And, it’s nearly impossible to convince a credit card company to extend credit to you if you can’t prove that you’ll be able to make payments on time.

But, how can you know where to start with credit management practices, especially if you’re just establishing credit for the first time? Maintaining good credit goes beyond making your payments on time, although, that’s a good place to start.

If you’re interested in credit management tips to help you maintain or improve your credit, then you’ve come to the right place. In this article, we’re discussing ten tips that will help you stay on track and get you moving forward. Keep reading to learn more.

Know Your Credit Score

One of the most important things you can do to maintain good credit is to know your credit score at all times. It won’t do you any good to stick your head in the sand because if something changes on your credit report that affects your score then you need to be able to react in a timely manner. You can review your credit score for free online with credit management tools like those offered at Credit Karma or other credit management sites.

Credit Management

While sites like Credit Karma are good for periodically reviewing your credit score, you should obtain a free copy of your credit report at least once per year. You can do this by contacting the credit bureaus directly. It is suggested that you ask for one credit report from each agency, Experian, Transunion, and Equifax, quarterly so that you can see changes in your credit report.

Make sure that all of the information is accurate and if you find discrepancies attend to them right away. Don’t allow things to linger on your report or it could be more difficult to have them removed later.

Accuracy

When applying for new loans or credit cards, it’s important to make sure that the information you provide is 100% accurate. This information will report to the credit bureaus and errors could cause damage to your credit score. It’s also important to keep in mind that you should update address and employment changes as they occur to prevent inaccurate reporting.

Budget

Credit management goes beyond your actual credit report and score. You should also maintain a monthly household budget that outlines expenses and income so that you know what you can afford. Be sure not to use credit to overextend yourself or you could find yourself in a financial situation that’s difficult to get out of.

Make room in your budget for unexpected expenses as well. It’s a good idea to have at least three to six months living expenses saved up in case of a gap in employment or other pitfalls that may occur.

Credit Accounts

Creditors look at your credit history to gain a better understanding of your financial capabilities. You need to have some credit, but not too much. Remember, don’t overextend yourself.

The rule of thumb is to have no more than two or three credit cards like those offered at Bonsai Finance and one loan, such as an auto loan or personal loan. You may also have a home loan which will help prove financial stability as long as you’re making payments on time.

Pay Bills on Time

Late payments will impact your credit score negatively and could prevent you from obtaining new credit in the future. Make sure you pay your bills on time and it’s never a bad idea to pay in advance if you can afford it. You can also set up recurring or automatic payments to be deducted directly from your banking institution to ensure that you don’t forget.

Mix it Up

A good mix of credit accounts will show that you are responsible handling multiple accounts. Credit cards are a good option for people that are just starting out, but it’s also a good idea to have a personal loan or some other loan type revolving so that creditors can see how you manage different types of credit.

Keep Credit Card Balances in Check

Don’t go over your balances on your credit cards. In fact, you should do your best to keep each balance below 30% of your total credit line. This shows lenders that you aren’t tempted to charge more than what you can afford.

High, outstanding debt will affect your credit score negatively because it will make you appear to be a high-risk borrower. Keep those balances low.

Closing Accounts

Be cautious when closing accounts because it could result in an increase in your overall credit utilization rate. Also, closing accounts that are in good standing can affect your credit report negatively if you haven’t had credit for very long. If there are no balances, you may be better off leaving them alone until you can establish a longer credit history.

New Accounts

Only apply for new accounts as necessary. And, if you’re rate shopping, say for an auto or home loan, make sure you have separate lenders pull your credit within 30 days of each other. This will result in one hard hit on your credit instead of several over a period of time.

Final Thoughts

Credit management is all about being as responsible as you can with your finances. You need to monitor your credit frequently and be cautious with your spending in order to maintain a good credit score.

It’s also important to be aware of identity theft. Criminals are constantly looking for ways to hijack your good credit and make use of it for themselves. Make sure that you keep important information about yourself confidential and only use your social security number as required for loan approvals or similar functions.

Keep these tips in mind in order to ensure that your credit stays in good standing. And, if you run into a hiccup with your monthly payments, make sure to contact your creditors and keep them informed. Some lenders will allow complimentary payment arrangements to help keep you on track.

For more help to stay financially healthy, check out our blog for more posts today.

April 17, 2018 by Greg Underwood

10 Must-Read Tips to Get Your Loan Application Approved

Ready to apply for a loan and buy your dream home? Plan ahead to increase your chances of success! Here are 10 tips to get your loan application approved.

The fact of the matter is that, for most people, it’s impossible to buy a house without first securing a loan. Unfortunately, securing a sufficient home loan is far from a given.

It’s for this reason that you need to take the loan application process very seriously. If you’re going to have your loan application approved, you’re going to have to have your ducks in a row.

Here are ten must-read tips to get your loan application approved.

1. Have a Down Payment Available

When applying for a loan, a down payment is an absolute necessity. Different loans require different sized down payments, but in most cases, it’s required that between 5% and 20% of the listed price of the house is paid upfront.

To save up for a down payment, it’s recommended that you put monthly portions of your income into a savings account. The more money you can put down for a down payment, the better chance you’ll have of your application being accepted.

2. Ensure that Your Credit Score is Suitable

Just as a larger down payment increases the success rate of securing a loan, a higher credit score ups the success rate as well. Before you even think about applying for a loan, you need to make sure that credit score stands a chance.

At the very least, you’ll want to have a credit score of 600. The higher your credit score is, the lower your interest rate will be.

3. Have Your Debts Paid

Any unpaid debt which you’ve accumulated will affect your ability to have a loan application accepted. For this reason, you want to make sure that all of your debt is paid before applying for a loan.

It’s also important that, during the loan process, you don’t apply for any additional loans or credit cards. This can hurt your credit, affecting your chances to get the loan that you desire.

4. Get Pre-Approved

When searching for homes, it’s a good idea to get pre-approved for a loan to understand what type of loan you can expect to apply for in the future. To become pre-approved, all you have to do is submit some of your financial information.

If you’ve been pre-approved for a loan, you stand a much better chance of securing the loan you actually want when application time comes.

5. Be Realistic

One of the biggest problems people run into when they’re trying to have their loan applications accepted is that they apply for too big of a loan. This occurs because they’re attempting to buy a house that they can’t pay for.

It’s important that, when entering the loan process, you have a deep and realistic understanding of your financial situation. The size and quality of the loan you secure are directly affected by the amount of money you make, and the amount of credit you’ve built up.

If you apply for a loan that is not accommodated by your income and credit, you stand very little chance of your application being accepted.

6. Have Steady Employment

The two biggest factors which affect your ability to secure a loan are your finances and your credit. The third biggest factor is your employment. If you’re going to have your loan application accepted, you’re going to have to show that you’ve got steady employment.

It should also be noted that, if you’re thinking about changing occupations during the loan process, you should refrain from doing so. Changing jobs at such a time can affect the lenders perspective of you, preventing you from securing the loan that you desire.

7. Make Use of a Mortgage Calculator

If you’re going to take out an appropriately sized loan, planning is absolutely vital. How do you get a good idea as to what type of loan is available to you? By using a mortgage calculator.

Mortgage calculators allow you to enter different down payments, home prices, and interest rates, all the while showing what your monthly payment would be for each. Being able to play around with the numbers allows you to understand what loans are available truly.

8. Compare Loan Types

There is far more than just one type of loan available. FHA loans, USDA loan, and jumbo loans are just a few of the many mortgage loans around on the market today. It is your duty to research so you can decide which one is best for your purposes.

Some loans have lower upfront costs, but higher interest rates. Some loans have gradually increasing or decreasing interest rates attached to them. You can view here for more information on different types of loans available.

9. Maintain Close Communication with Your Lender

Just because the initial loan application has been submitted doesn’t mean that your job is over.

Once an application has been submitted, it must be combed over by your prospective lender. It is vital that you maintain close communication with this lender until the fate of your application is revealed.

Your lender may require additional information, without which the application process can’t continue. Prompt and clear communication will help to get you through your loan process in a quick and (hopefully) successful manner.

10. Keep Your Credit Steady During the Loan Application Process

The best practice when applying for loans is to apply for only one loan at a time. Applying for several loans at once can cause a lender to think twice about whether or not you’ll be responsible for your future payments.

The key is to keep your credit as steady as possible during the application process. Make sure that your monthly payments are being paid, and that you’re not doing anything else to negatively affect your credit score. You want to be on your best financial behavior when trying to secure a loan.

Looking for Other Useful Information?

If you’re trying to get approved for a loan, you’re likely in search of a great deal of other information. Fortunately, we here at AMillionLives.com have that information.

Whether you’re seeking out information related to money, travel, business, technology, or otherwise, we can help you.

Have any questions? Contact us today!

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