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Archive for the ‘Credit’ Category

How to Negotiate Lower Interest Rates

Brought to you by: The Frugal Buzz On February 21, 2011 No Comments

Consumers carry a lot of weight when it comes to interest rates.  It can sometimes be a lot more straightforward to negotiate on interest rates than people think. 

Consumers can negotiate with lenders on some financial packages before they sign on which happens a lot with mortgages.  Mortgages are often flexible packages that can be negotiated to beat competitors etc.  Credit card deals may be harder to negotiate lower interest rates before you sign because they are generally fixed packages. 

However, after signing it is almost the reverse.  A mortgage company is less likely to change the interest rates because the effect it has on the return on their investment is very significant.  However with credit cards and small loans consumers may find they can negotiate lower interest rates.

Negotiating lower interest rates is easier when you have a good credit history.  This is because you have established that you are responsible with your finances, and it looks less likely that you are trying to get out of paying money.

It costs money to take consumers to court for failing to repay their credit card loans and if legal proceedings take place, it is likely that the consumer will repair the amount over a period that suits the financial situation. 

This is the reason why it’s so easy for consumers to contact their credit card company and try to negotiate lower interest rates.  And remember, it is very easy to get a different credit card and transfer the balance.  So the credit companies have two options, lose your custom or lower their rates. 

Tips for negotiating

It is always better to write letters to negotiate because conversations are worth nothing if things turn nasty and it goes to court.

You must avoid being confrontational or nasty because this simply gives the impression you are not taking responsibility of yourself and that you’re not trying to resolve the issues properly.

You must be fair in your negotiations.  Individuals can’t make huge demands on the big companies because they are likely to be ignored.

Don’t threaten them with non-payment or filing for bankruptcy.  These are not good ways to approach your creditors and they are likely to simply prove in court that you were not wiling to take responsibility of your own finances.

When you negotiate, try to be realistic but also try to lean things in your favor.  If you negotiate interest rates, try to negotiate fixed rates with realistic payment periods.

If you negotiate a change in your interest rates and your creditor accepts, you must make sure that you stick to your new commitment.  If you fail to keep up with your new payments then it makes things harder for you if your creditor takes you to court. This is why it is important to be realistic in your negotiations.

Coming Up: Tips for creating a budget and sticking to it

Frugally yours, Mary

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How to Get a Free Credit Report

Brought to you by: The Frugal Buzz On February 16, 2011 No Comments

If you are thinking about fixing bad credit or you want to know what your credit history is like then it’s a good idea to take a look at your credit report.  Looking at your credit report gives you an idea of what a lender will see the next time you apply for a loan or mortgage.  

The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months.

The Federal Trade Commission (FTC) Bureau of Consumer Protection Website (http://ftc.gov), the nation’s consumer protection agency, has prepared a brochure, Your Access to Free Credit Reports, explaining your rights under the FCRA and how to order a free annual credit report. 

Please take the time to visit FTC’s website to learn the full details about your rights under the FCRA and the Fair and Accurate Credit Transactions (FACT) Act, which established the free annual credit report program before ordering your credit report.

A credit report is a register of a person’s credit history and is made up of four categories of data:

Identification Data – also known as the credit header data, this part includes name, address, social security number, and date of birth.
Credit History – this contains a person’s payment history and shows account status, credit limit or credit balance, monthly payment information etc.
Public Records – this part of the report contains data on court judgments, tax liens, bankruptcies, and collections.
Inquiries – this section contains information about all other organisations or individuals who have looked at the file and for what purpose in the past six months.

How you can get a free credit report

The three nationwide consumer reporting companies have set up a central website, a toll-free telephone number, and a mailing address through which you can order your free annual report. To order, visit annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. The form is on the back of this brochure; or you can print it from ftc.gov/credit. Do not contact the three nationwide consumer reporting companies individually. They are providing free annual credit reports only through annualcreditreport.com, 1-877-322-8228, and Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

You may order your reports from each of the three nationwide consumer reporting companies at the same time, or you can order your report from each of the companies one at a time. The law allows you to order one free copy of your report from each of the nationwide consumer reporting companies every 12 months.

Important

Annualcreditreport.com and the nationwide consumer reporting companies will not send you an email asking for your personal information. If you get an email, see a pop-up ad, or get a phone call from someone claiming to be from annualcreditreport.com or any of the three nationwide consumer reporting companies, do not reply or click on any link in the message. It’s probably a scam. Forward any such email to the FTC at spam@uce.gov.  Also, to ensure that you are visiting the legitimate site, type https://www.annualcreditreport.com directly into the address bar on your browser and do not link or access the site any other way.

There are also a few other ways you may be eligible to obtain a free copy of your credit report.  These include:

Under federal law, you can get hold of a free copy of your credit report if you have been recently turned down for credit, insurance or employment and you ask for your report within 60 days of receiving notice of the action. The notice will give you the name, address, and phone number of the consumer reporting company. You’re also entitled to one free report a year if you’re unemployed and plan to look for a job within 60 days; if you’re on welfare; or if your report is inaccurate because of fraud, including identity theft.  Be cautious (and truthful) if you are using fraud as an excuse to get a copy of the report because every time you do it a note goes on your report.

Otherwise, a consumer reporting company may charge you up to $10.50 for another copy of your report within a 12-month period. To buy a copy of your credit report or to report innacurate information (which must be done directly in writing to the reporting agency), please use the contact information below:

Coming Up: Steps to Repairing Your Credit

Frugally yours, Mary

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How to Get a Loan With Bad Credit

Brought to you by: The Frugal Buzz On February 15, 2011 No Comments

Finding a loan with bad credit

If you have bad credit then getting a loan can seem like a nightmare.  Dealing with lenders when you don’t have credit is not easy.  The result of bad credit is usually loans with high interest rates, bad terms or both.

The truth is you will only know what type of mortgage you can secure once you start shopping around for loans.

One thing to keep in mind is that there are many people with bad credit out there.  So don’t think you are a small group who doesn’t deserve a bit of attention from a lender.  The other thing that you should remember is that there are a lot of lenders out there that are all competing with each other so don’t think you can’t bargain a little on interest rates and terms.

On the other hand, you have to be realistic and remember that people with good credit will get better loans than people with bad credit.  So bearing this in mind the only thing is to shop around and talk to several lenders.

Where to find a lender:

You will find lenders in the traditional banks and finance companies that advertise in newspapers, flyers, on the internet and many other places. 

You should visit your local bank first who will give you the street average on what you should expect to get.  If a bank is not prepared to give you a loan because of your credit then you will have to go to other financial companies that will try to charge you much higher interest rates to cover the risk of lending money to someone with bad credit.

One of the best places to find a lender is through truly independent financial advisors.  Financial advisors, whether these are on the internet or in the telephone directory, will almost certainly make a commission on referring someone to a lender. 

The highest commissions are made on the lenders willing to pay the highest fees, and these are usually the ones that end up taking the most money from you so be careful if an advisor is particularly keen on referring products from one particular lender. 

The best way to use advisors is to get them to compare lots of different packages for you or tell them to find a lender that will match your terms and conditions i.e. size of monthly payments, interest rates etc.

Finally be extra careful if you are just looking for quick money and not interested in the terms and conditions.  Lenders love people like this and will quite happily let you enter into a loan contract that forces you to pay lots of money to them because they gave you money very quickly without asking too many questions about your credit situation. 

If you find yourself doing this then ask yourself if you really need the money and is this going to help you or actually make the situation worst.

Frugally yours, Mary

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