Have you noticed how many individuals are now having to file bankruptcy as a means of getting out of their financial struggles? They see that they have no other way out and as a result the only other option they have to file bankruptcy.
Some of these individuals are filing Chapter 7 bankruptcy while others are having to file Chapter 13 bankruptcy, but either way they are having to declare bankruptcy. However, these same individuals who were in such financial disarray only months before you will soon see cruising around town in a brand new car. Do you ever wonder how they could have filed bankruptcy due to having so much debt against themselves, then turn around and be driving a brand new car when you are still driving a ten year old clunker with bad credit?
“Well, the truth of the matter is in knowing the right type of lender to deal with in which to get a car loan!”
Of course, the majority of lenders are not going to touch an individual who has had a recent bankruptcy nor a repossession for that matter, but there are lender who will deal with individuals that have filed for bankruptcy every day. This is what they do in order to help individuals re-establish their credit standing. The majority of these lenders are based on-line and will help you get pre-approved in a matter of minutes with much better interest rates than any other lender can provide you with.
Sub-prime lenders, who are also known as secondary lenders, help individuals with undesirable credit get financing for car loans. Beware, because there are some legitimate lenders available and some that are not, which is why to check out the company prior to doing business with them with the Better Business Bureau on-line to be sure they are registered with them.
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Here’s some more information about credit scores…
A credit report score is the basis used by lenders to determine if your loan application will be approved or not. If your credit report score is above 700, there won’t be any problems and your loan will be granted with low interest rates. If however you score below this figure, you will be charged a higher interest rate and in the most extreme cases, they will not approve your loan application.
But how do creditors come up with this figure? Basically, they do this by reviewing credit related information such as your payment history to find out if you have ever had any late payments or filed for bankruptcy. They will also check how much money you owe not only on your credit card bill but also outstanding loans.
They will also take into account the length of your credit history. Also, a lot of people apply for new credit and a few other minor factors that could bring up or down your credit score.
What is not in your credit report scores is your color, gender, marital status, national origin and religion as this is not relevant. Creditors do not also consider if you are receiving public assistance or any consumer rights that are under the federal Equal Credit Opportunity Act or the Fair Credit Reporting Act.
You can get a copy of your credit report score so you know what where you stand. You can get this from one of three credit reporting agencies namely Experian, Equifax or Transunion. Consumers are advised to get a copy at least once a year since it changes annually.
If you credit report score is not satisfactory, you must do your best to improve it. Some of the things you can do include paying your bills on time, contacting your creditor regarding your situation so an arrangement can be made and seeing a non profit credit counselor who will help you manage your finances.
As much as possible, you must never file for bankruptcy because it will be very difficult to achieve a good standing.
When you happen to see errors in your credit report and believe that there is a mistake, you must write a letter immediately to the agency where you got this document so this can be corrected. You must state the issue and any supporting paperwork to strengthen your claim. Never send the originals so have something to hold on to and if this is sent by a courier, make sure that you get a copy of the return receipt so you can follow this up with whoever got it.
The reporting agency will then conduct an investigation by contacting your creditors. If the creditor cannot verify their entry, they have no choice but to remove this from your record and you will receive a free copy of the revised credit report score. The same goes when an error has been made and a copy of this revised version will also be sent to other credit agencies.
Now that you know what a credit report score is, it is time to find out what is your standing. This should be good at all times so you get the best deals when you have to apply for a loan to pay for college tuition, buying a car or a new home.
Credit Score Scale
The credit score scale is an indicator used by lending institutions to find out if you are credit worthy. This could be from 340 to 850 and the higher the score, the better off you are.
You can get a copy of your credit score scale by getting a copy from an accredited credit agency by giving them a call or requesting for one through their website.
These three credit agencies are namely Expedia, Equifax or Transunion and you can get a copy from one or from all three at the same time or after a few months.
Majority of Americans get a score 700 or higher on their credit score scale. Sadly, there are a few who score lower. How this is determined is based on 5 factors.
The first is your credit history. This includes the number of loans that were approved or disapproved, your credit card transactions and other financing which you may have acquired over the past 2 years.
The creditors will also review if you have had any late payments in the past. If you have always paid this one time, then that is great.
Another indicator will be the length of your credit. If you have had this for years, then you have an advantage compared to someone who is just building up their credit. New credit is also a factor together with a few other things that could make the scale go up or down.
If you happen to be delinquent in any of them, you must do whatever it takes to correct it so there will be an improvement in your credit score scale.
You can start by cutting down on your expenses and using the money saved to pay off the debt.
For those who have a lot of credit cards, you should pay off first the one that has the highest interest rate then work on the rest. The objective is to be debt free and only have 2 credit cards left in your wallet.
Worse case scenario if you don’t have the money is to sell some valuables so you pay it off without worrying anymore of the growing amount due to interest.
If you can’t handle the situation, get help from a financial advisor. This person ma help you negotiate with creditors as to how this problem can be solved.
Only when you are debt free can your credit score scale ever improve. You should know that this is not going to be easy and this could take months before things look better but if you put in time and effort, there is no doubt that you will be able to apply for a loan once again.
There are some who say getting a new credit card will help just make sure that this one offers low interest rates and that you only use up to 30% of the maximum limit at times that is just about right.
The credit score scale changes so it is best to get one annually. It can go up or down depending on your behavior so if you keep your nose clean, there won’t be any red flags on your record. You should also remember that sometimes, it is not your fault if it goes down which is why you should check if there are any errors so this can be corrected.
Posted by admin on December 27th, 2011 :: Filed under
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