Credit Score the Key Factor of Your Personal Finance

The recent economic problems that have hit every country have meant that households have often been faced with financial problems, often unemployment and sometimes repossession. No one saw the problems coming in an environment where real estate value was rising and credit easy to come by. As it turned out this complacency was soon shattered.

While there continues to be demand for finance those who defaulted on any debt during recent years will only qualify for bad credit loans because those defaults hit the individual credit score by which the vast majority of applications are judged.

There is money available with many internet lenders happy to look at individual cases and provide bad credit loans as long as the applicant can show how he or she will pay the monthly installments. That is primarily by proof of employment, earnings and recent bank checking account statements which will show recent credit history.

Everyone’s aim must be to improve their credit score which can be done by paying off any bad credit loans promptly.  As the credit score improves and it will improve not only by prompt payment of bad credit loans but also of utility bills or store card payments, then the interest rate on any future borrowings, including possibly a mortgage will come down. Every percentage point on a large loan like a mortgage can mean a considerable difference in the repayments.

It is worth asking for details of a credit score; sometimes there are errors which can be removed if there is evidence that can be shown. One thing that must not happen in the future is late payment so setting up automatic repayments, or getting auto reminders of when payments are due is advisable. While an automatic payment of the minimum on a credit card avoids a default it is still poor money management just to do that and extra repayment should follow.

There is nothing wrong with credit cards used responsibly; even multiple cards but those which have a facility but are not used will be closed eventually by the credit card company and that can adversely affect a credit score because it may just be marked closed, and that can create uncertainty therefore be an unnecessary black mark. Using a fairly dormant card periodically helps.

A credit score is affected by the amount owed against the overall facility a person has. That means reducing debt while still maintaining a high facility, for example with credit card limits, will be favourably interpreted in a credit score. Bad credit loans can gradually become a thing of the past.

Some things can stubbornly stay part of the detail that calculates credit score for some time but other responsible financial activity that is current can gradually improve the credit score. When interest rates and approvals are so dependent on a credit score repairing any damage is very important particularly for someone young who may not have yet applied for their first mortgage.

The financial environment is slowly improving. Improve with it!

Why the New Mortgage Rules are not all Bad News for Canadian Investors

Earlier this year on July 9th, Finance Minister, Jim Flaherty announced new changes to the mortgage rules. The new measures included shortened amortization periods (30 to 25 years), lowering the maximum amount Canadians could borrow against their home when refinancing (85 to 80 percent), fixing the maximum gross debt service ratio (39 percent) and limiting government backed insured mortgages on homes over $1 million. The main objectives for these changes were to stabilize the housing market and reduce the increasing homeowner debt throughout Canada. After the announcement, many homeowners and property investors were left wondering how these changes were going to affect their investments. Below is an examination of how the new mortgage rules truly affect Canadian real estate investors.

New Mortgage Rules will only affect CMHC Insured Mortgages

First of all it is interesting to note that the majority of Canadians will actually not be affected by these mortgage changes. This is because the new mortgage rules only apply to CMHC insured mortgages and non-bank lenders who use CMHC rules on conventional mortgages. The truth is that the majority of Canadian real estate investors are not taking out CMHC insured mortgages, in fact, only a mere 11% of all Canadian mortgages were insured by CMHC in 2011! There are still a number of 30+ year amortizations (not backed by CMHC) that are available for Canadians.

New Mortgage Rules will benefit the Rental Market

Although there is much concern and speculation surrounding the new mortgage rules, the new changes are actually great news for the rental market. With less people being able to afford a property, more people will be looking to rent, leading to an increase demand for rental property and an upward pressure on rental rates to increase.

Vacancy rates will also go down and real estate investors will enjoy an increase demand of renters. With more people renting, investors can get a steady supply of income from their investment properties. Rental duration is also set to increase, as an increasing amount of renters will be forced to rent longer while they save for a bigger down payment.

New Mortgage Rules will reduce homeowner debt

Lowering the maximum amount Canadians can borrow when refinancing is often left out of the conversation when it comes to the new mortgage rules. Capping financing at 80%, down from 85%, will mostly affect first-time homebuyers and buyers looking to upgrade their current homes. These individuals may no longer be able to afford the more expensive properties, and instead, will have to choose properties that are more within their price range. This will restrict and hopefully reduce the growing homeowner debt problem in Canada.

New Mortgage Rules will increase Canadian Home Prices

The new mortgage rules will have an impact on overall Canadian home prices, especially on its affordability. It is important to note that homebuyers and investors don’t judge what they can afford based on the price of the house, but rather on the monthly payments. With a shortened amortization period of 5 years, monthly payments will increase by roughly 1%. This puts pressure on housing prices to come down in order to balance out the rise in monthly payments. The 5- year change on the amortization period will require (roughly) a 10% decrease in market prices. Below is an example of this:

Say the price of a home is $400,000. Monthly payments on a 30-year amortization will be $1,910. With a 25-year amortization however, monthly expenses will jump to $2,110, an 11% increase in monthly payments. A couple that could afford a mortgage of $1,910 might not be able to afford the new monthly payments of $2,110. Therefore, in order for the monthly payments to stay at $1,910, the price of the house needs to come down by 10%, to $360,000.

How to Do Your Taxes Yourself and Save Money

It is said that the only two unavoidable things in life are death and taxes. Doing your taxes correctly is one of the biggest pains people suffer from every year. You can hire a professional to file your federal income taxes for you, but that will end up costing you a lot of money. Avoiding the stress and frustration of filing your taxes on your own comes down to being well organized and know what you are doing.

The first thing that you will need to do is to gather all of your necessary tax paperwork including your tax forms, a 1040, W2’s, 1099’s (if you are self employed), and any other important files. It is important to keep records of all of your finances, such as receipts and possible tax write-offs, during the year so it is easier to file your taxes and make sure everything is correct and up to date.

You should also educate yourself about what you can deduct from your taxes. If you are self-employed and have to travel for work, keep a log of how many miles you drive.

Another important thing is finding the proper type of software to help you file your taxes. There are a lot of online tax filing websites that will lead you through the process step by step. You can also opt to buy software at a computer store. The software will ask you a series of questions to help you not miss any tax credits, bank account data reimbursements or deductions that you might qualify for. Some of these questions will include your average total income and some personal information. Tax software is also great because it allows you to file your taxes right in your own home. This means that you’ll be able to do it at your leisure and even file them early.

Be sure to submit your completed tax form well before the April deadline to ensure that it arrives on time. If you file your taxes online, you can receive an email declaring that the IRS got it safely. If you mailed it, try to get a receipt for it so you can track your package.

Filing your own taxes is a time consuming task, but after you do it once it will get easier for you. You will also be able to save a lot of money in the long run.

How to Deal with Creditors’ Calls

You’ve stopped answering your phone. You’ve cut it off even. You just can’t take the creditors telling you that you owe them more money. What will you do? It’s time take control of the situation, and get those creditors’ off your back.

Give Them Money – Any Money

Creditors know that you can’t pay your bills. They wouldn’t be calling if you paid your bills. So, when they call, talk to them about how bad your situation really is, and then ask if you can send in a certain amount.

The amount you tell them might not make them happy, but they will enter into the computer that you said you would be sending in some money, which makes them stop calling for at least the rest of the month. Just be sure to send the amount you promise them.

Be Polite – No Matter How Rude They Can Be

While creditors aren’t supposed to be mean to you on the phone, some of them can’t help it. They hate to call number after number being hung up on or shouted at for eight hours a day. You don’t have to give them sympathies, but do remember that their job is difficult, and all they are doing is trying to get the company they work for the money they deserve.

Speak to the creditors slowly and politely. Tell them that you know that you are behind on bills, and that you really wish you were in a different financial position. Ask the person if there is any way that he or she can help you. People naturally want to help, so this invites them to do exactly what they want to do.

If the creditor is extremely rude to you, don’t be shy to ask for respect. Explain that you know his or her job is difficult, but you will not tolerate being treated so poorly.

Ask for a Supervisor for More Help

If you can’t get the creditor on the other line to help you at all, ask to speak to a supervisor. Often times, the person with the most power in the office can give you the power of control over settling your debt.

Ask the supervisor how you can get on a payment plan that works for you. You may even mention that if you were able to reduce your debt by as much as 10 percent, you may be able to pay on it much more easily. The supervisor may just surprise you with a debt settlement that will get those creditors to stop calling.

The More You Avoid – The Faster They Come

You may not want to deal with creditors, but dealing with them is the only way to get them to stop calling you. They want to talk to you, and they will not stop before they do. So, just pick up the phone and face it. You’ll find that it’s not as bad as you think it will be, and you may just end up feeling as though you’re gaining control of your finances.

10 Credit Improvement Tips to Up Your Financial Standing

Low credit point reveals your inability in money management. Not only that, it also obstructs in obtaining bank loans.

Let us now guide you through some credit improvement tips.

Credit Improvement Tips

Ask for your credit report copy

This is the foremost thing you should start with. You can start working on credit repair only when you have the details in regards to your credit record. Take a hard look at it; you will surely have some bad accounts that are spoiling the entire matter just like a fly in the ointment. There are three major credit bureaus and get report from each of them. Mark the areas which need immediate attention.

Remove the erroneous entry

Have you found any wrong entry in your credit report? If yes, then write to the credit bureau regarding the wrong listing and ask them for its removal as early as possible. An inaccurate entry brings your credit score down by more than 50 points. Once it is erased, a good aftereffect will show in your credit chart.

Pay back previous dues on credit card

Do you know how much your dues affect your credit history? More than 35%! More dues, more damage – it is just a simple equation. Your creditors directly repot the credit bureau regarding your dues and it hampers your status. Meet your credit card issuer and convince him to re-age the account. It will show that you have always been regular as far as timely payment is concerned.

Don’t apply for new credit cards

When your credit record is undergoing repair, don’t try for another credit card. Further credit inquires will negatively impact your score. Furthermore, a new card will curtail your credit age, implying a disadvantage for your already ailing credit record.

Pay off debts

Unpaid loans affect 30% of your credit score. So, clear them in full. If you can’t afford to pay back all dues, sell some of valuable possessions. It is a worth sacrifice to enjoy financial freedom through credit rank improvement.

Say no to new credit card buy

Credit card purchases will up the ratio of balance on credit card and credit limit. Higher balance will affect your credit rank more and more. So, make it a habit to pay in cash at least until the time your credit is back on the line.

Make sure to have accounts open

Closing even a delinquent account may infuse negativities into your credit record instead of improving the rank. So, don’t be in such a hurry.

Consult a professional

When you are at a credit mess, professional help can successfully get you out of the trouble. An expert will give you a complete guidance how to come out of troubles and not to slip into it any further. You may want to read Credit Zeal’s review of Sky Blue Credit who are one of the reputable credit repair companies in the industry.

Talk with your lenders

To your utter surprise, you may get the most valuable guidance from them. They even go far to reduce the monthly payment until you stand on your feet once again.

Have some patience

Nothing will change within weeks. At least six months – yes, that is the minimum time to pull out your dipping credit status. Be patient to witness a rosy picture in future.

Pre-planning Your Funeral, a Wise Financial Decision

 Some people will avoid this subject like the plague, but planning ahead is often the most financially responsible decision you can make. Many people may think their life insurance policies are enough to cover these final expenses. This is not always the case, and planning ahead spares bereaved families from dealing with minute details.

Life insurance policies rarely pay out in time for families to cover funeral costs. Making funeral arrangements in advance allows families to pay for these services when they can afford them. Sometimes, payment schedules are available for families who are on a budget. When all of these details are discussed ahead of time and everything is planned, there are no surprise expenses. Deaths can occur when families are unprepared, adding on more stress to grieving loved ones. Depending upon how elaborate they are funerals can cost tens of thousands of dollars. Having these arrangements made prior to a death is a great way to spare a family serious financial hardship and unnecessary grief.

Many people may not feel comfortable making these plans ahead of time, but try to keep in mind that getting all of these arrangements planned actually gives families a little peace of mind. Not having to worry about final expenses takes a lot of stress out of families who are already dealing with other difficult situations. Families do not usually have an extra $6000 in the budget when an unexpected death occurs. Paying for these services ahead of time takes this added stress out of an already difficult time.

Pre-planning a funeral also gives people the option to shop around for different rates on cremation services and funeral homes. In many instances, following an unexpected death, families are distraught and unable to make good financial decisions. Having a clear mind to make financial decisions ahead of time saves families money. Most funeral homes even offer specials on paying for services ahead of time. Having a plan in place makes the bereavement process go so much smoother and families can focus on emotionally supporting one another.

Planning ahead of time also gets you what you want out of your own funeral. Often times family members have a difficult time deciding what their loved you would have wanted. Having a plan already in place takes all of the guess work out of the situation. Pre-purchasing funeral services leaves the decisions to the person who is planning the event. Many families will mistakenly pick out the most expensive casket because they are not sure what their deceased loved you would have wanted. Pre-planning can eliminate this type of unnecessary expense. This can save the family a lot of money in the long run.

It’s obvious that most people hate to deal with this subject, but funeral costs are too high to ignore. Making a plan for this expensive service helps to save families hundreds, if not thousands of dollars. Pre-planning ultimately gives you peace of mind. Not worrying about final expenses makes the business of living so much easier. Financially, pre-planning your funeral is an incredibly smart decision. I know we’ve beaten this topic hard enough, but I just can’t say enough that in addition to saving money, this can greatly reduce added stress to a family in mourning.

Pre-planning your own funeral may seem like a morbid task, but there are so many benefits to exploring cremation services and funeral homes before it is too late.

Investing in Buy to Let Property in the UK

Buy to let was coined as a term in the UK in 1995, but the practice of taking out mortgages on a property with the express intention of privately letting it had existed for some time before then. The 1988 Housing Act introduced ‘assured shorthold tenancies’ and overrode much of the legislation contained in the Rent Act eleven years earlier, reducing security of tenure for tenants and removing many restrictions on landlords. The prospect of becoming a landlord became more attractive and the number of buy to let mortgages has since increased significantly.

Lending peaked between 2006 and 2008, but the subsequent shrinkage of the market has not been indicative of lack of returns – simply of stricter lending criteria curbing the abundance of loans. Recent years have seen a small but steady growth, as demand from both buyers and renters continue to push house prices and rent up. This progression is particularly prevalent in the capital; Rightmove’s October 2012 House Price Index notes a 6.2% increase in house prices in London over the past year (comparing against a regional change of 1.5%; all regions have demonstrated an increase since September, with only the South East and Yorkshire-Humberside showing a decrease since October 2011). The popularity of buy to let can be attributed in part to its potential yield in both the long and short term; with rent set at 125% of the interest-only aspect of the mortgage repayments, landlords can generally make a profit through rental income (the margins increasing in line with the size of the property portfolio) before selling the property after it has appreciated in value.

As of 2012, the number of buy to let loans in effect stands as 1.4 million (up 17% from last year). Detractors of buy to let argue that the number of properties being bought for private rental is a contributory factor to the continued rise of house prices, but the ratio of buy to let investors to first time buyers over the last decade is less clear-cut in determining a causal relationship; high demand for the relatively low supply of properties in the UK is likely the largest determining factor. Those who support buy to let claim that a greater profusion of rental properties gives tenants a wider choice, and thus higher quality, of properties; this also means that landlords have it easier to attract the ‘right tenants’ for their property.

The average gross rental yield for UK property currently stands at 5.4%, ranging from 3.9% (in Belfast) to as high as 8.4% (in Liverpool). Whilst these figures might not represent as high a return as other investments, property is certainly performing better than the equity market, and demand is unlikely to decrease in the coming years. This means that rent will likely continue to appreciate in line with inflation.

This return is in addition to the tax breaks that buy to let landlords in the UK can enjoy. The UK is very popular with both local and overseas ‘jet to let’ investors because many expenses incurred in the running of a property can be offset against their income tax bill, including professional fees (letting agents, solicitors and accountants, for instance), travel, insurance premiums, mortgage interest rates, repairs and maintenance and losses on the sale of the property.

However, one should bear in mind that property is far more ‘hands-on’ than many other types of investment. Thorough research of an area, including development and local rates, is required, as is knowledge of the target demographic. A sound marketing strategy and an idea of projected monthly income and outgoings are advised. Whether or not a letting agent is employed in the day-to-day running of the property, a landlord needs to be well-versed in relevant legislature and know their rights and obligations.

Written by Brian Godfrey on behalf of TurnKey Landlords, the specialist buy to let mortgage arm of TurnKey Mortgages. TurnKey Landlords provides an expert buy to let mortgage brokerage service and a dedicated advice and guidance resource for landlords in the UK.

Prepaid Cards vs. Credit Cards

New technologies have changed not only the way we live, but the way we work, and the money we use. It seems just yesterday, that cash was the norm checks and money orders were the only ways one could transfer funds. Today, it is credit cards, not cash which makes up the bulk of money in purchases.

With so many companies now accepting credit cards instead of cash, it is more important than ever to possess one.  For newcomers however, the credit card market can be confusing. With so many different types, all with their names, promotions, interest rates, fees, and repayment schedules, it can be overwhelming to attempt to process all the necessary information. In these situations, taking a comparison approach can help decrease the confusion and help guide you to the best financial situation for your needs.

First, one should understand the options available: the prepaid card and the credit card. These two cards both work anywhere credit cards are accepted. Both are valid currency, and both have protections that cash and checks do not.

Even with their similarities, prepaid cards and credit cards have their differences.

Prepaid Cards:

Prepaid cards are available from many retailers. As the name indicates, a prepaid card is filled with money before it is used. Cash can be added to the card at kiosks and retailers that are participating. First, you choose how much you want to put onto the card, paying a small fee to add money. You can then use your card to pay your bills, shop online, or any other purpose. Each transaction can carry a small fee for the processing of the transaction, though this varies among card companies.

When the balance on the card is empty, the card will stop allowing you to spend money. Although you cannot spend more than what is loaded onto the card, in most cases, you can continue to load money in them for as long as you want.

A prepaid card also does not require a credit history. Anyone can purchase and load a prepaid card, even if they do not qualify for regular credit cards, checking accounts, or debit bank accounts.

Credit Cards

Credit cards are issued through banks and have a preset limit. The lenders will then check credit histories, job histories, income levels, and credit scores to determine interest rates and lending amounts. This leads to many applicants being denied credit cards due to their past mistakes or lack of a credit history.

Credit cards will often allow a user to go beyond their credit limit. In exchange for this service, a fee is added to the balance of the account. A user will pay interest for carrying a balance of purchases from month to month.

If someone loses their credit card, they can report the card lost or stolen. This process freezes the card and opens up an investigation about purchases from the time the card was lost. If the card is used without your permission or knowledge, you are not liable for those purchases.

Understanding the similarities and differences between regular credit cards and prepaid cards can improve your decision making. Selecting the right card for your financial needs can help save money today and in the future.

Affordable Moving Tips

Moving can be more than a physical pain the neck, it can be a pain on your wallet as well. After all, the cost to get your car transported, hire a moving company to help you pack up your stuff and get it to your new destination is rarely an inexpensive endeavor. With that in mind, it is important to save money where possible, so that moving doesn’t break the bank. There are a number of ways to move affordably, with a little creativity and industry known-how.

Hire a company well in advance: Like airline tickets, the closer you get to the moving date, the more expensive all related services are going to be. For instance, if you are planning to have your vehicle shipped to your new home ahead of the big move, if you book your services far enough in advance, you are more likely to be able to save some money over the increased costs of booking at the last minute.

Bundle your services: Where possible, bundle moving services like auto transport and moving company offerings. Oftentimes, if you purchase both sets of services, you are more likely to save a few bucks than you would if you were to book these services separate of one another. Ask the company in question if it offers any discounts on services for bundling; even if it isn’t advertised, they might be willing to work with you. A1AutoTransport.com is usually a good place to find bundled services.

Don’t take on extra costs: For instance, if you are willing to ship your vehicle open-air, then the cost is going to be lower than container shipping. If you know you can pack yourself, then you are going to save a ton of money hiring the company just to do the heavy lifting for you. If affordability is a factor, then don’t take on extra costs if they aren’t necessary. Do some of the work yourself or be flexible on your choice of services, and you might find that your wallet is the one thanking you in the end.

Shop around: The best way to make any moving-related service affordable is to shop around and make sure everyone knows it. If a company knows that you plan to get quotes for auto transport and general moving services from a slew of different organizations, they might be more apt to make you a deal and help save some money in the process. So be vocal about the fact that you getting quotes from various sources and then let the company’s competitive nature do the rest.

Remember, moving is rarely an inexpensive endeavor, so you need to do everything in your power to save money on the process. From getting the costs down on auto transport to doing some of the work yourself, every penny counts. After all, there are generally more costs to be had upon arriving at the new location, so anything you do to save before you even leave the old one will go a long way towards an affordable move and greater financial stability when you get to wherever it is that you are going.

3 Things You Should Know About Credit Card Balance Transfers

Credit card balance transfers refer to the act of transferring the outstanding balance of one of your credit cards into another card with a lower interest rate. Pretty simple concept, right?

Many people think of balance transfers as very beneficial in their attempt to reduce their monthly payments and get themselves out of debt. Which it can be. However, it’s not always a positive step. Just like most debt reduction plans, it will work for some situations, but not others. So consider all the benefits and drawbacks before you use balance transfer as your debt reduction strategy.

First, you should not just transfer the balance of one of your credit cards into another card that has low introductory rate without reading the fine print. This means that you have to be careful in choosing a credit card company that allows you to transfer your credit card balance to ensure that you will be getting a good deal. You need to consider the fees for making the transfer. Usually its worth it if the low interest period is at least 6 months. But it’s a good idea to figure out how much you will be paying, how much you will be saving each month, add it all up, and make sure you will be coming out ahead.

Second, you need to make sure you are able to pay on time. Usually you lose the low interest rate if you are more than 30 days late on one or two payments. If you tend to miss payments frequently, then you lose the benefits of the balance transfer. And the new rate may end up being higher than your old rate. So make sure that you have a system for paying on time so you don’t end up on the wrong side of the equation.

Third, it is also important for you to remember that credit card balance transfers don’t get rid of all your debts on their own. The concept behind the transfer is to lower your interest rates. And that can be a big savings, especially over the course of several months. But you are still required to keep paying your balances. So you need to write down all of your debts, factor in the new interest rates, and come up with a plan for paying them all off.

In your search for the best balance transfer card, it is important for you to read the agreement first so you know exactly what you are getting into. Check out the length of the introductory rate period, the annual percentage rate, the annual fees, the balance transfer fees, and the penalties if your payments are late.

If you want to get the best balance transfer card, then it is advisable for you to go for one with a zero percent balance transfer period. But sometimes you can get a slightly higher rate, for a slightly longer time period. So once again, write down all of your debts and do the math to figure out which option is better for you.

Finally, make sure to know when the low rate will end, so you keep transferring balances if needed, and save the most amount of money!