Understanding Your Debt to Income Ratio

When developing your debt reduction plan or seeking new credit for a large purchase, you must determine not only how much debt you can afford on a monthly basis, but a safe level of debt dependant upon your income level. There are no black-and-white guidelines to follow for this purpose, but there are a few points to take note of before taking any action that affects the level of your debt.

Every credit card offer you receive in the mail is based on complicated computations considering your credit history, current interest rates and any past defaults. Any granting of credit is based on whether the lender considers you a good calculated risk for repayment.

When applying for credit, you need to consider your personal situation with a little more care and control. You are likely to be much more conservative than the credit card companies, but will put you in a better position in the long term.

Besides factoring in the estimated payments into your monthly budget, you need to consider your net worth and long-term wealth building. This means that your assets should always exceed the amount you owe to creditors, including your home and auto.

If you have a negative net worth, this is not good! Obviously, the larger your net worth is, the more comfortable you will be able to live on a daily basis and in the future.

The other reason this number is important is that if you should lose your income or fall on hard times, you will still be able to sell all of your assets to pay existing creditors. Although you may not be left with much, you will still be in the black and not have to file for bankruptcy – always the best option!

Some experts suggest that your debt to income ratio should never exceed 1:2. This number, however, would exclude your mortgage or auto loan; it is assumed that these debts are less than what the security is actually worth should you need to sell it.

This means that if you have student loans and credit card balances, the total of these should not exceed 50% of your annual income. If you make $50,000 per year, your outstanding balances on these types of debt should be less than $25,000.

On the same note, consider this number before ever applying for new credit or a new loan. If you are already at the 1:2 ratio level, pursuing additional loans is not advised until some of the existing debt is paid down. This will increase your chances of being approved, the likelihood that you can pay the debt, and result in a lower overall interest rate.

Using these considerations can significantly reduce your impulse buying habits that result in high credit card balances and added hardship in the future. When considering buying an item, it’s best to force yourself to wait for a week or two before moving forward. If you find that you stop thinking about it or find something else you’d rather have, you probably never needed it in the first place!

Student Loan Refinancing-Paying for Your College Education After College

Getting into a good college can be hard enough. Paying for a good college education can be harder; this is especially true for the financially challenged. A common way to go if you really want to pursue a college education but lack the monetary resources is to go for a student loan. This will enable you to pay college tuition at present and mind about it later. For some people, this arrangement works just fine. For some, it doesn’t.

Finishing college and having a degree can’t guarantee financial stability, much more success since it doesn’t work that way in the real world. There is always the possibility that paying for a student loan previously availed can be hard. However, there is a way to ease the burden of having to pay a considerable amount of money in a considerable amount of time. Although it doesn’t erase your loan altogether, it can allow you to pay a favorable amount of money in a favorable amount of time. It’s called refinancing, and refinancing student loans is possible.

Refinancing is basically taking out a loan to pay for an existing loan. While it sounds that you will just be prolonging debt and be adding more burdens, student loan refinancing actually is a viable option and is one that could potentially save you tons of money. The advantage of refinancing is that it can offer significantly lower interest rates than regular loans. This means that you’ll be shelling out less money and can even extend the duration without bloating the total cost of payments.

A good thing to do when deciding on refinancing student loan is to compare offers from different companies. This will enable you to pick out the best refinancing deal which can add to your savings. A common blunder people make in deciding for a refinancing company is taking the first offer available. While it may seem to be the best deal out there, refinancing quotations are made to look good because they are. There are just companies that offer better deals than others and having a little more patience in looking for one can help you in obtaining bigger savings.

It is also wise to clean up your act in the form of improving your credit rating. There is no exaggeration of what a good credit rating can do. Its most positive effect on you is that it can give you access to better credit terms and lower interest rates. It is also important to know that refinancing companies actually offer incentives that can improve savings further. Be sure to be on the lookout for these incentives like early payment and on-time payments to be able to take full advantage of it.

Education is an investment, a really good one at that. And just like any investment, it can require a serious amount of money. Loans are sort of a norm in order to get over the financial obstacle associated with college education. Student loan refinancing, in a way, further makes it easier for people to finance their education in the long term. It allows for a lighter obligation that will surely not get in the way big time in the real world.

Small Business Finance Resources

If you wish to be a personal small business, but have absolutely no idea where you can get the small business finance resources that you need to being, then you should take several options under consideration to aid your current situation.

Go to your local government agency to see if they have government small business loans on offer. Several government small business loans can be applied to on different levels (local, state, or federal) in order to receive business loans for you to begin with. You can even avail of micro loans or disaster relief loans to build up your business after a natural disasters has occurred or basic short-term lending business loans.

If you are a veteran of the military who once served in the army, you can be granted veteran small business loans. Simply go to your local veteran’s chapter to find out if you are qualified for business loans to begin your business.

If you are qualified for business loans, you can avail from small business loans from the Small Business Administration (SBA0. The SBA works with private financial institutions and offers these business loans with a minimum interest rate for those who qualify for them.

If your business deals with agriculture, then you can be granted small business loans through the USDA. Their website can help you find all the things you need to know on small business loans, along with what you will need for the application thereof.

A lot of small business loans cater specifically to the female gender. Various states offer these business loans via small organizations, non-profits, and business corporations.

Other small business loans are also provided for minority groups. The MBDA, for examples, caters specifically to minorities and takes a look at their situation to see if they qualify for small business loans. They may even give resources and tips to help start your business.

Small business loan grants can also be offered by corporations, non-profits, or the government. This kind of business loan does not need to be re-paid; however, there are some grants with certain rules on how the money is allowed to be spent.

Various small business loan resources are available for various situations. Simply take a look at all of your options to find out the ideal resource for your needs and wants.

The Correlation of Credit History and Student Loans

A lot of ordinary student loan programs are not credit-based. Stafford student loans and Perkins student loans focus solely on students’ needs and do not even do credit checks. However, not everybody will be able to qualify and those student loan programs never completely cover the entire amount needed, most of all since the cost of education is quite high in our generation.

To work around this, a lot of students and their families wish to supplement them with credit-based student loans. When doing so, they must submit a good credit report to student loan evaluators to get a better edge at receiving the student loan, with great interest rates, to boot.

As with any student loan based on credit, bad credit student loans do not necessarily make things impossible, but they do make things much more difficult and usually come with a much higher interest rate.

Bad credit loan students can therefore make or break the decision of receiving student loans or even be the cause of more repayments than you would have had with good credit. But what does ‘good credit’ and ‘bad credit’ mean?

The first thing that student loan officers take a look at is the student’s FICO score. This is a number that credit agencies calculate based on a secret, proprietary formula. The exact equation is not known to the public, but there are several criteria that are known and relate to common sense.

FICO scores basically focus on the person’s debt and defaults, the amount of his late payments and how late those payments were, the credit available, the amount of recent credit inquiries, etc. All of these factors are weighed and weighted in various ways.

A lot of students don’t even have a FICO score yet because they do not own credit cards or have other forms of loan that would generate FICO score data. Because of this, students are mostly judged by the credit history of their parents, when it comes to granting student loans. Student credit history may be important, but it is the income and credit history of the parents that will really count in the final decision of granting student loans.

It is ideal for both students and parents to have good credit history. The higher the FICO score, the better. Having a low FICO score will make getting a student loan next to impossible and may trigger the submission of more information to influence the final decision. Getting this extra data to those involved is not exactly easy.

FICO scores aside, there are also other factors that prospective borrowers may take into consideration.

Making timely payments is always important. If you have a slew of late payments in your history, you will look like a bad credit loan student in the lenders’ eyes. Staying within the specified credit limits is also important. Try not to go over the limit to avoid penalties, and when you do, accept the responsibilities that come with it. Creditors do not just judge numbers, but characters, as well.

Make sure you meet all credit obligations and keep student loans at a modest level at all times to ensure that you give off the vibe of a good student loan candidate.

Bad Credit Personal Loans–Options for People with Bad Credit

In this modern world we’re living in, it is very likely that some of us might experience financial difficulties at one point in our lives. This may be a result of bad choices we have made regarding our finances. In these desperate times, it might be wise to consider getting a personal loan to possibly alleviate the problem.

However, some of us might have a history of a bad credit car loans or bad credit home loan. Unresolved or bad credit records can impact on personal loan applications that you will make. Fortunately, there is still a way to get loans for people with bad credit.

Bad credit personal loans will definitely come in handy for those people who desperately need money immediately but have a bad credit standing due to delayed or even defaulted payments. With such loans, these people still have a chance of rebuilding their damaged credit record and stabilizing their own financial condition.

At times, bad credit personal loans are used in emergency situations or to pay off multiple debts that are proving to be difficult to pay off. Bad credit personal loans can have flexible repayment methods or options to suit everyone.

There are two types of bad credit personal loans that a person with bad credit can choose from. These are the secured and unsecured bad credit personal loans. Secured personal loans require certain collateral to have access to the desired amount. Usually, the collateral should be in equal with the amount to be borrowed. The main advantage of the secured option is that this bad credit personal loan has a low interest rate as compared to the unsecured one; making this option quite appealing to most borrowers.

An unsecured personal loan, on the other hand, does not require any collateral. This personal loan with bad credit category is also good to the borrowers as it doesn’t require the borrowers to put in place anything to set as a form of security. This personal loan is quite risky for the lending company, though, and hence naturally, this form of loan has a way higher interest rate compared to the secured one.

Another disadvantage of such loan is that the amount to be borrowed is only limited on a smaller scale. Usually, the amount is set only at less than $25,000. Some companies don’t even offer personal loans of more than $1,500. The credit limit is primarily based on the company’s discretion.

There are a lot of lending companies in the market that can give you a personal loan even if you have bad credit. You may find them online or you can go directly to their office branches to apply for a bad credit personal loan. Do try to check the legibility of the company before applying for such loan. Conditions differ from company to company, so it would be wise to check on what each company offers you before proceeding with getting your bad credit personal loan.

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Bad Credit Personal Loans–Getting a Loan despite an Unimpressive Credit Standing

Money is one of the major needs of this modern age. You can’t do anything without it. Nowadays, people are accustomed to borrowing money through credit cards and some other financial loan firms.

Today, many people have credit cards, and the bigger your credit limit is, the better. Your prompt payment and clean credit records will make it easier for banks and loan firms to lend you money. However, what if you have a bad credit record? Will there be loans for people with bad credit?

Fortunately, there are still some agencies which will help with your bad credit personal loan. The first step towards getting a bad credit loan is to establish your credit status. Typically, you are primarily asked to fill out an application with your name, address, social security number, your income and pretty much, every financial information you have.

Following this, the loan officer will need to review some things before going ahead with your bad credit personal loan. One thing that he might check is that if you have a steady job. This will show if you have been employed in a certain job for a long time and not jumping from one job to another in a short span of time.

Once approved, your money will be deposited in your checking account within the next 24 hours. However, most personal loans with bad credit are only limited to not more than $1500.

Bad credit personal loans really work out quite well in times of emergency. The payment schedule is quite flexible. Although there is a minimal payment amount every month, it would be a good idea to pay much higher than that if can afford to.

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Business Insurance–The Different Policy Types Your Business Deserves

Business insurance is a broad concept that can be subdivided into 9 types of policies. To know which one best fits your business, you have to be aware of the coverage of each type of business insurance. Below is a short rundown of the types of business insurance as well as some information on the things they cover.

Property Insurance

The location and contents of the business are the main interests insured by property business insurance. This can include even the properties owned by other people but are in your control and possession. Thus, the property insured may be owned, rented or leased. More specifically, it may be pointed at a particular risk. For instance, fire and tornado insurance policies insures against fire and tornado losses, respectively. There are insurers who combine property and casualty insurance. This type of business insurance is usually the best business move a businessman can make.

Liability Insurance

This type of business insurance takes care of liabilities arising from the business due to employees’ negligence. In other words, it insures your business against torts and damages.

Commercial Auto

The vehicles covered by your personal automobile policies do not include the vehicles you use for your business. Thus, commercial automobile coverage comes in to insure you against damage done to your business vehicle or to others’. This is something that you need especially in states where business vehicles are required to be titled.

Workers Compensation

You are responsible for the on-the-job injuries sustained by your employees. That is the main reason why you need to insure them. Most states have a system of worker’s compensation in place wherein employees will not sue their employers if an on-the-job injury happens. Instead, the latter must participate in an automatic payment system to the employee for medical treatment and damages due to injuries. Meanwhile, there are also states that give employers the option to opt-out of the workers compensation system provided they self-insure their business with private insurers or other state agencies.

Business Interruption

Loss or damage to the business’ cash flow and profit due to business interruptions is what is being insured against by business interruption insurance. This peril usually occurs when the business is unable to operate. A very simple example of this is when essential machinery is struck by lightning. The repairs may also be covered by property or casualty insurance. You need this coverage to so you can get replacement of your income even after 3 months.

Health Insurance

Businesses, in order to be competitive in hiring the best employees, need to offer health insurance. This is one of the many benefits that workers are looking for in prospective employers. This type of business insurance can even include you.

Life and Disability Insurance

Key employees are very valuable to the company that the latter would even go through great lengths to insure them against death or disability. For instance, the company may take a business insurance policy on the life of one of its partners with the company itself as the beneficiary. Upon the untimely death of the insured partner, the proceeds of the policy can be used by the company to take control of the deceased partner’s interests.

Nowadays, it is very easy to do a comparison of all the business insurance available through online business insurance quotes. A person who has worked hard for his business to grow will never go wrong with getting a business insurance for it since it definitely pays to be protected in times of uncertainties.

Credit Card–The Pros and Cons

Credit cards have been a part of our modern culture. The purchasing power it gives the cardholder is substantial and is indeed of good value.

Credit card application is easy and this gives its holder the power to do quite a number of purchases without having disposable cash. Like other things, there are a lot of advantages and disadvantages of having a credit card. Having a basic knowledge on these things might help you while you’re planning to apply for a credit card.

There are a lot of things which give credit cards its popular stature today. Its most attractive feature is the ease of purchase and the increase in purchasing power.

Another great advantage of having a credit card is that some companies don’t accept cash in their online transactions – hotels, airlines, car rental agencies and some other online shops require you to have a credit card instead to process your payments.

In times of emergency, credit cards offer you an irreplaceable source of money. This could fill in if you’re in a situation wherein you really need money. Meanwhile, some credit card companies also offer rewards and large discounts for their long time card holders. They may come similar to the concept of airline miles or travel discounts.

Another important feature of having a credit card is the protection of your purchases. They give you additional protection from defective, stolen or lost products that you may have recently purchased. If you’ve lost your original receipt, your credit card statement can prove to be a valuable resource since it can vouch your purchase. Over time, you will be able to build a good credit line record if you pay your credit dues on time. This credit line can later be used during loan application, rental application or in some cases, job applications too.

Credit cards also have their own share of disadvantages. The most common of such is that it encourages the holder to spend a lot. If you’re not careful on your credit card expenditure, you can end up overspending and getting to your credit limit – which means you will owe your credit company a large amount of money.

Credit cards interest rates are high, and their penalt interest rates are higher if you’re not able to pay your bill on time.

Another thing you have to look out for is that if you lose your card, it is imperative that you report this to the credit card company as soon as possible to avoid fraudulent use of your card.

Having a credit card certainly is certainly an advantage for you if you know how to control your expenditure. However, credit cards can be costly if you do not control your spending.

The only thing you have to remember when using a credit card is to set limits and be a responsible cardholder. Control your expenditure, pay your credit card bill on time and you won’t have any problem.

Equity Loan Basics

Equity loans are low risk loans because there is collateral involved, hence, the low interest.

Often, people use their homes as equity to secure financing for various purposes. Be it for long term functions such as home improvement, buying a car, or for short-term needs such as a vacation or medical emergencies, applying for an equity loan can be relatively fast and easy.

The most important step in applying for an equity loan is ensuring an accurate valuation of your property. The value of the property will, to a large extent, determine the amount you can take out on a loan. Normally, a clean property with no liens will get an equivalent home equity loan amount of 80% of its appraised value. Thus, a property appraised at $1,000,000 will allow the borrower to take out as much as $800,000. Generally, companies will have their own appraisers visit your property. The appraiser will look at the general condition of the house and the neighborhood. Prevailing market value of adjacent properties will have a big influence on the valuation of your property. You can get the services of a professional agent to help you evaluate your property so that you can be reasonably assured you are getting the best home equity loan available.

When you apply for a home equity loan, the lending company may run a credit history check on you. A history of bad credit can seriously affect your eligibility to secure an equity loan or the lending company could charge you with relatively higher interest if you are considered a high risk borrower. As such, it is always best to maintain a good credit standing to increase your leverage in financial matters.

Deciding on how much to take out on a home equity loan should be done with a great deal of restraint. Often, people are tempted to take the maximum loanable amount offered by the lending company. However, remeber that this is a loan and you will be paying for it for some time. As such, you should be very careful and ensure that the repayment scheme is something you can manage.

Resist the urge to binge on high end materials for your home improvement. Always bear in mind that the new Jacuzzi will not pay for itself. Exercise caution because, although an equity loan can give you a windfall of ready cash, it can leave you homeless as well. Remember that the lending company will not think twice of foreclosing your property should you default on your payments.

When getting an equity loan, bear in mind that you are putting a lien on your property. As such, you will need to commit on ensuring that you will be able to pay off the loan in time. Be sure to make an informed decision because your future and that of your family can be severely affected by an equity loan gone bad.

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Home Equity Loans–The Pros and Cons of Home Equity Loans

A home equity loan may be the best option when looking for a source of funds for home repairs, costly purchases, or financial emergencies. Generally, an equity loan will allow you a bigger loan at lower financing charges compared to personal loans or credit cards. For whatever purpose you may be contemplating a home equity loan on, it is important to be aware of the basics to help you make an informed decision.

Many home equity loans fall into what is generally termed as a “standard home equity loan” wherein the lender gives you a certain amount of money corresponding to the value of your property. The money is a lump sum amount which you will then have to pay in fixed amounts for a certain period of time. Often, borrowers choose this type of home equity loan because of the simple, upfront transactions. You know how much you are going to pay and you will find security in knowing that after the fixed period of repayments, the lien on your property will be removed.

Another less popular type of home equity loan is the home equity line of credit. The difference of this type of equity loan is that, rather than giving you a lump sum amount as loan value, you will get a line of credit from which you can withdraw funds for your various needs. This is relatively more complex because the interest rates are not fixed and the repayment arrangement is not fixed. This type of home equity loan requires a greater degree of monitoring on your part but will actually pay off better when managed well.

When deciding on a home equity loan, you need to be armed with the right information because there are many deceitful groups preying on hapless borrowers. There are telltale signs of a corrupt company and often these are disguised as well-meaning “help” to get you the best deal out of your home equity loan. Some of these unscrupulous acts include unbelievable high loan offerings. While this maybe very tempting, consider the risks. A big loan amount will mean bigger amortization. If you get an amount higher than the actual fair market value of your property, you cannot enjoy appropriate tax deductions.

Another scam to watch out for is stripping. Corrupt home equity loan agents may encourage you to lie about your true income and actually help you facilitate securing documents showing an inflated income to allow you a bigger loan takeout. Again, while this may be tempting, consider that taking out a home equity loan that is more than your capacity to pay will only bury you in debt sooner or later. In short, they are not helping you get a good deal out of your equity; they are setting you up for foreclosure – and then your property is theirs.

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