Should You Payoff Your Car Loan?

Paying off your car loan early might be a good idea in some cases. If you have money in a general savings account that is only earning 1% or less, and your car loan has a higher interest rate, it makes sense to use some of that money to pay down your loan and thereby reduce the amount of interest you are paying.

Some other things to consider before doing this would be: Are you going to be needing that cash for anything else in the near future? Do you have other loans with higher interest rates that you might want to put that money toward? Does your lending institution have a penalty for paying your loan off early?

One final thought: If you are trying to build up your credit score, it is wise to make payments on your loan for at least a year before paying if off in order to build up a credit history.

How to Get a Mortgage with Bad Credit?

If you have bad credit, it can be difficult to obtain a mortgage, but it’s not impossible.

The obvious solution is to improve you credit score. First pay off all you credit cards. Then use a reasonable amount of credit monthly and pay it all off every month. You are demonstrating your ability to pay bills on time, and this should improve your credit score. You can also get a copy of your credit score from AnnualCreditReport.com and make sure there are no errors which might be lowering your credit rating. (You can find out all about fixing such errors elsewhere in this website.)

Making a big down payment will help you get a mortgage. If you can put as much as 20 – 25 percent down or more, the lenders will look upon you in a more favorable light. You are less likely to default on your mortgage if you have a lot of you own money invested in the house.

You can also get a co-signer. This is someone (usually a relative) who will co-sign your mortgage and guarantee the payments. The co-signer is on the hook for the mortgage if you stop making your own payments. They have a heavy financial responsibility.

Apply for an FHA loan (www.fha.gov) They don’t actually give you the mortgage, but they will guarantee the mortgage, thus helping you get one from a bank.

Look into a bad credit mortgage, also know as sub-prime. These are mortgages especially made for people with bad credit, but be careful. They will charge you a higher rate of interest, and will foreclose on your house if you fall behind.

How to Improve Your Credit Score?

1. Pay down or pay off your credit card debt.
2. Pay off your debt, don’t just move it around.
3. Stop using your credit cards so much.
4. Check you credit card limits to make sure the credit card company is reporting the right amount.
5. Use an older card. The older the credit, the better.
6. Don’t apply for any new credit cards.
7. If you have a black mark against you in the past, ask the lender to have it removed. You will have to write asking for a “goodwill adjustment,” and it may be granted, especially if your recent payment has been good.
8. Ask for your credit account to be “re-aged.” This might eliminate an old black mark on your account.
9. Get a copy of you credit report from AnnualCreditReport.com and find any mistakes. Then ask that they be corrected. You can find out how to do this elsewhere on this site.

What is My Credit Score?

The three big credit rating companies have set up a system with which you can obtain your credit report. There are three ways to contact this free system.

  • Contact this website: AnnualCreditReport.com or
  • Call this number 1-877-322-8228 or
  • Mail in a form that is available at ftc.gov/credit
  • The law allows you to get one free credit report from each of the three big credit reporting companies annually. Just be aware that there are several look alike websites that may charge for this service. Only annualcreditreport.com is the official, free site.

    http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre34.shtm

    What is a Prepaid Credit Card?

    A prepaid credit card, also known as a secured credit card, is similar in concept to a debit card. Here’s how it works: you deposit money into an account. As you use the prepaid credit card, your money is automatically taken out of this account. No bills and no interest. However, you do have to pay a fee when setting up the account and additional fees every time you put money into it. If you have poor credit, it is regarded by some as a means of re-establishing good credit.