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Avoiding Payday Loans for Credit Repair
If you are trying to make ends meet and have past due bills,
piling up the last resource is taking out a payday loan to pay
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Extending Credit in Your Home Based Business
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How to Write a Credit Policy for your Business
A new book says it’s different for every business. According to a new book by Michelle Dunn, writing a credit policy is a daunting task but if you don’t have one, it can cost you sales. The book, “Become the Squeaky Wheel,” by New Hampshire author...
Unsecured Loan UK Personal Loan Best Unsecured Loan Home Owner Loan Bad Credit Loan Personal Loan Car Loan Home Loan
Unsecured loans
An unsecured loan is a type of personal loan for which the
borrower does not have to put up any asset as guarantee against
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Why Bad Credit People Pay Higher Rates
Why Bad Credit People Pay Higher Rates by Dave Czach
Let's face it. People with credit problems pay higher rates for the same reason people pay higher auto insurance premiums - risk. Virtually everyone knows if you receive a traffic ticket, you get points on your driving record and an increase in your insurance premium. Why? Because the traffic ticket has created an emerging pattern of risk. If you got one traffic ticket, the chances of receiving another one are now greater than when you had no tickets. Therefore, there is a greater likelihood of you filing a claim in the future. A speeding ticket can lead to accidents, property damage or even vehicular manslaughter. All of which pose a real risk of the insurance company paying a claim. The more claims the company pays, the less money they have to pay other claims and make sound investments to pay future claims. The credit world is similar. If you pay your bills late, your credit score decreases and the interest rate on your next financing increases. Why? Because the late payment has created an emerging pattern of risk. Whatever the reason for your late payment is the basis for future late payments. For example, if you have been living beyond your means buying items on credit because you can't afford to pay cash, this causes larger monthly payments. When it gets to the point of causing a late payment, it's most likely to continue because you have demonstrated you don't have enough money to pay your bills. Hence, there is a greater chance of frequent or severe delinquency in the future. But the real world credit market differs from the insurance comparison due to one more factor - opportunity. Lenders are not required to loan you money. Afterall, from their perspective, they are comparable to annuity investors. That's right - investors. Suppose you were buying an annuity that would pay you monthly for 30 years. You could choose Annuity X that pays in full and on time every month with a rating of "A." Or you could select Annuity Z that sometimes pays late and sometimes misses a payment completely with a rating of "B." As an investor who may not get paid entirely by choosing Annuity Z, it's only fair that you require a
higher yield - or return on investment - in exchange for accepting the extra risk of losing your money. If the investor is not comfortable with the added risk, they could exercise their right of opportunity and choose Annuity X. It pays a lower yield. But they are relatively assured they will receive all their money in full and on time. Now let's flip the perspective back to lending. In the above investor example, replace the words investor with lender, yield with interest rate and annuity with mortgage loan. Now we see a more clear picture. Borrower A who pays in full and on time every month is a low risk and receives the lower interest rate because the lender is relatively assured of receiving their money. Borrower B is a much higher risk and pays the higher interest rate because the lender is accepting the chance they may not be repaid all their money. Now let's take it a step further. Imagine you had $100,000 to invest and had to choose between Borrower A and Borrower B. Which one would get your money? Moreover, why not loan $100,000 to Borrower B at the same rate as Borrower A? Afterall, "B" borrowers often claim they no longer have the same problems that caused their delinquency. "They turned a new leaf." Yet, they haven't proven it. They still pay their bills late. Would you take them at their word and give them the same rate as Borrower A? A true investor would not. In conclusion, it's as simple as risk and opportunity. Contrary to the divisive manipulation of data from the media and organizations with an agenda, people with credit problems pay higher rates because they are a higher investment risk - period. It has nothing to do with race, religion, ethnicity or national origin. From my experience in the mortgage business, loan officers only care about one color - green! © 2003 SonicPoint.com
About the Author
Dave Czach has 12 years experience in the mortgage business plus a Bachelor's Degree in Real Estate.
This article may be reprinted without compensation provided there are no changes whatsoever to the article, the copyright notice and the complete Editor's Note. Any reprinting or duplication without these conditions is copyright infringement.
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Credit Reports - Credit Cards - Car Loans - Home Loans - Credit.com |
Credit.com offers a variety of credit related products and services including credit reports and credit scores, credit cards, car loans, home loan and ... |
www.credit.com |
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Equifax Personal Solutions: Credit Reports, Credit Scores ... |
National consumer credit reporting company that offers credit reports, FICO(R) credit scores and identity theft protection products to consumers and small ... |
www.equifax.com |
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The FTC's web site on Credit |
Credit is much more than a piece of plastic, and the resources on this site can help you become a more savvy consumer. You’ll also find compliance ... |
www.ftc.gov |
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Federal Trade Commission - Consumer Credit Center |
Features an assortment of helpful articles related to credit issues. |
www.ftc.gov |
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AnnualCreditReport |
Site set up by the big three credit reporting agencies in the United States, to furnish free annual credit reports, as required by federal law. |
www.annualcreditreport.com |
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Springboard - Non-Profit Consumer Credit Management |
Our mission is simple: To offer education on the wise use of credit. ... SPRINGBOARD has been approved to provide credit counseling services and issue ... |
www.credit.org |
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myFICO - FICO Credit Scores, Online Credit Reports and Identity ... |
myFICO.com: Get your Free credit report and Free credit score with a 30-day trial of Score Watch. All three FICO Scores and Credit Reports Available now ... |
www.myfico.com |
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Credit Suisse Global |
Credit Suisse Group is an international financial services group. - Shares part of SMI. |
www.credit-suisse.com |
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Experian: Free Credit Report and Credit Score, Credit Check ... |
Credit referencing and consumer targeting for the USA and other countries. |
www.experian.com |
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National Credit Union Administration - Home Page |
An independent federal agency that supervises and insures 7152 federal credit unions and insures 4240 state-chartered credit unions. |
www.ncua.gov |
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Credit - Wikipedia, the free encyclopedia |
Debits and Credits, a type of bookkeeping entry; Credit (creative arts), acknowledging the ideas or ... Retrieved from "http://en.wikipedia.org/wiki/Credit" ... |
en.wikipedia.org |
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Credit (finance) - Wikipedia, the free encyclopedia |
Any movement of financial capital is normally quite dependent on credit, ... Sometimes if a person has financial instability or difficulty, credit is not ... |
en.wikipedia.org |
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The National Foundation for Credit Counseling |
DebtAdvice.org is a service provided by the Members of the National Foundation for Credit Counseling (NFCC), most of them known as Consumer Credit ... |
www.nfcc.org |
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FreeCreditReport.com | Free Credit Report and Credit Score Online ... |
FreeCreditReport.com: Free credit reports and credit scores from Experian. Get your free credit report and credit score now. It's free, fast, and easy! |
www.freecreditreport.com |
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Compare credit cards | apply for a credit card | 0% balance ... |
Compare over 300 credit cards, including 0% offers and balance transfers, and make a credit card application online... |
www.moneysupermarket.com |
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Ford Credit - Auto financing for Ford, Lincoln and Mercury cars ... |
Ford Credit provides auto financing to finance a lease or purchase a car or truck through Ford, Lincoln or Mercury dealerships. |
www.fordcredit.com |
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The Credit Card Prank |
In my lifetime, I have made nearly 15000 credit card transactions. ... Credit card signatures are a useless mechanism designed to make you feel safe, ... |
www.zug.com |
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Credit magazine, corporate bonds, derivatives, structured credit ... |
Credit magazine provides information on the international credit markets for credit investors, issuers and market professionals. |
www.creditmag.com |
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CUNA: The Credit Union National Association |
News and resource directory about credit unions. |
www.cuna.org |
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Credit/Debt Management - Tools and Advice for Managing Credit and Debt |
Drowning in debt? Trying to improve your credit score? This is the place for you. Get real world information and tips, as well as the legal low down, ... |
credit.about.com |
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