High Yield Savings Accounts

With an increasing number of households across the US experiencing financial difficulties, bankruptcy no longer holds the social taboo that it did in the past. But is there ever any way back once you have been declared as insolvent?

Bankruptcy is undoubtedly a serious step and there are many different options to avoid bankruptcy which should be considered before deciding there is no other way to free yourself from debts. Consolidating is a possibility and loans can help to identify the right type of finance.

However, if you opt to take the plunge and file for bankruptcy, it is important to know that not all debts are wiped out by the order. Student debts, for example, are exempt from bankruptcy and must still be repaid in full.

Other types of credit will be covered by the bankruptcy, such as the kinds of loans at moneysupermarket as well as credit cards and overdrafts.

Creditors will in all probability shut any existing accounts, even if the balance is zero to prevent you running up any further debts.

It can be difficult to obtain credit with a bad credit score, and a bankruptcy can make things worse. It is likely to be very difficult to obtain credit for at least 10 years and to stand any chance of rebuilding your credit score, it is imperative to ensure any credit entries are positive. Any sign of ongoing financial problems will just exacerbate the situation even further.

Can You Get Credit After Bankruptcy?

Although it will be very difficult to get credit and it is probably not a good idea to jump right back into borrowing again anyway, it is important to get some entries on your credit record to counterbalance against the bankruptcy.

Repaying student debt installments is one way to help build up some points without borrowing more money.

It is also essential that your credit file be updated to reflect the debts that were included in your bankruptcy petition. Unfortunately, this does not always happen automatically even though it should and showing undischarged debts can impact a credit file even more.

Once the credit files have been updated, it may well be possible to qualify for a high interest credit card with a small limit. Even if no finance is needed, it can be a good idea to get one of these cards, ensuring you pay off the entire balance each month so you do not pay high interest charges.

By doing this, you are demonstrating to creditors that you can be relied upon to make repayments as and when due, despite the issues you may have had in the past.

Surprisingly for many people, it is possible to get a mortgage after being declared bankrupt, providing it was over six months ago, as a general rule.

Of course, you would not qualify for the most competitive rate and your lender will need you to have some kind of deposit, but getting a home loan is likely to be easier than finding a new credit card.

The good news is that mortgages build credit ratings back up very rapidly, which is the one essential thing after a bankruptcy.

Those individuals who have gone through the bankruptcy process and are trying to rebuild their credit rating should be wary of bogus firms that either offer to ‘repair’ a credit file or offer a guaranteed loan.

There are a number of fraudulent firms that prey on individuals who have been made bankrupt, as they know they will be more vulnerable due to their lack of options.

photo credit: Images_of_Money

While it seems likely that a bad credit rating can prevent you from the ability to obtain a loan, this is not necessarily the case.

The first thing you should do is determine exactly what your credit score is. This can be done by getting a free copy of your credit report from one of the three credit bureaus: Experian, TransUnion, or Equifax.

Legally, you are permitted to one free copy of your credit report annually. This is something that every consumer should take advantage of.

Verify all the information contained on your credit report. If any of the information is incorrect, or invalid, contact the credit bureau immediately.

The item or items on your credit report that you dispute must be submitted to the credit bureau in writing. The credit bureau is permitted to take up to 30 days to investigate your dispute.

If there are no errors on your credit report, or after the disputed items have been removed, look for your credit score. This is the same number that credit lending agencies will examine.

Lending agencies are looking for the highest possible credit score. A lower score may reflect a higher risk, in their eyes. A score of 700 or higher is considered a good credit score.

If you have a credit score lower than 700, don’t despair. It is still possible to obtain a loan.

Lenders will simply adjust the interest rate on the loan you seek to be slightly higher than it would be if your credit score were higher. Generally, the lower your credit score is, the higher your interest rate will be.

If you are attempting to obtain a credit card, rather than a loan, the same rule applies. There are credit cards available if your credit is less than stellar.

Bad credit credit cards, are simply credit cards that have some sort of built in protection for the bank that offers the card. Some of these bad credit credit cards are secured cards.

With secured credit cards, you deposit a certain amount of money and you use the credit card as you would use any card, with the charges being debited from your initial deposit.

For example, you deposit $500 towards your secured credit card. You charge $100 at a gas station, that $100 is debited from your deposit, leaving you with $400 left on your credit card.

These secured credit cards are a very good way to rebuild your credit if you’ve had credit issues in the past. Secured credit cards do not show up on your credit report as anything other than a credit card. There is no differentiation between a secured credit card and a regular credit card on your credit report.

Don’t look at your bad credit as a deal breaker. If you have trouble obtaining a loan, consider hiring a loan broker. Loan brokers are often able to obtain loans for those with less than perfect credit.

Photo credit: TrinityCreditServices

These days having a credit card is an almost essential accessory to being able to access the best deals, with cash and checks often seen as a outdated way of paying for purchases of any value.

The reliance on plastic has seen a vast number of providers spring up; a simple check on credit cards at any comparison website will provide a long list of potential lenders.

A recent trend has also been towards holding more than one card, but how many credit cards should you have? Is it a good idea to have many credit cards, or is this an indicator of underlying money problems?

In the past, most people opted to have just one credit card, increasing their limit if they needed to up their spending power. However, nowadays it is far more common to have an array of plastic to pick from.

One of the reasons for this is not just because borrowing has become more prolific and card use more mainstream, but because there are many different kinds of cards on the market that are better suited to different uses.

As an example – what kind of cardholder are you? Do you pay off your balance in full every month? Or do you scrape by with just the minimum, paying off large purchases over several months?

If you are the former, a credit card with either a low or 0% APR will be of little value to you, as you will never pay any interest on your purchases.

A far better card to look out for would be one that either provides cashback or a good reward program, as this would actually mean you end up in profit when making purchases.

If you fall into the latter group, whilst cashback or rewards would undoubtedly be a nice aside, they should not be the primary focus.

Cardholders who opt to pay off the balance over longer periods of time are far better off looking for a card with a competitive interest rate that is held at a low level for a long time.

However, in reality, many people are a combination of the two extremes, paying off smaller purchases in full but spreading out larger costs over longer periods of time.

This means that a single card is unlikely to provide the best returns, as those with the best cashback or reward programs seldom offer a competitive interest rate too.

It is therefore necessary to have different cards for different purposes – some with a low interest rate for long term spending and another with a better package for balances which are paid off in full each month.

Another strategy that people adopt is to split their spending onto different cards; one for every day bills, another for auto expenses and so on.

Whilst this takes some organization to set up, some people find it a better way to manage their finances and keep track of how much they are spending on everything. Another advantage of this is that it can make tax returns easier to do if you haven’t kept track of your costs properly throughout the year.

Whilst it can undoubtedly be of real value to hold more than one card, just adding to the collection because there is not enough money in the checking account is not a good reason and holding several cards with them all maxed out will act as a red flag on your credit file that there may be problems ahead.

Photo credit: Andres Rueda

You need good credit to survive in today’s economy. It is so easy to fall behind on bills and watch your credit score drop. Sadly, many people don’t even realize the impact that a bad credit score has on them.

Those with poor credit have probably noticed their interest rates have increased. Did you know that someone with a credit score of 630 may end up paying over 1.5% more than someone with a score of 760? Now imagine having a credit score of 539. Poor credit costs you a lot more in the long run. Also, you will be turned down for many great discounts if you don’t keep your credit score up.

Having to pay high interest rates on your loans isn’t the worst thing you have to worry about. A poor credit score may keep you from being able to get a loan at all. Most people can’t buy a new car or house with cash.  If you can’t take out a mortgage for a new house, you will be stuck renting until your score improves or $100,000 suddenly falls on your lap.

Of course, renting will cost you much more in the long run. Over the long run, a homebuyer with average credit can save $2,500 every month. The first time you are denied a loan, you know you have a problem. It’s time to fix your credit score ASAP.

Paying higher interest rates and getting turned down for loans are problems people with bad credit may expect. However, there are additional disadvantages they may never have considered. These include:

1. You might not get an apartment. Most people expect poor credit will get in the way of their dream of owning a house. They never consider that they won’t be able to get approved for an apartment. Many landlords conduct background checks and will turn away applicants they feel won’t pay up on time.
2. You can’t get a job. Landlords aren’t the only ones who do credit checks. Many employers want to know your credit as well. One employer has actually been quoted as saying that there are two things he looks for when he considers an applicant: their character and their credit score. You can actually get yourself in a viscous cycle of financial hardship if you can’t improve your credit score because you don’t have a good job to support it.
3. You pay more for electricity and cable. These companies also get nervous with customers who have not proven themselves to be responsible. They may require larger security deposits.
4. Insurance premiums skyrocket. The insurance industry also doesn’t hesitate to run credit checks. They aren’t so concerned that you won’t pay your bills on time. They adjust their premiums to customers who are more likely to file a claim. Those with low credit scores are statistically about twice as likely to file a claim and may have to pay an additional $150 a month.

Having a poor credit score can cost much more than you would expect. It doesn’t only result in higher rates on your credit cards. A bad credit score can literally ruin your life. Get caught up on your bills and start managing your money more effectively.

Americans can learn a thing or two about what not to do when trying to get their financial house in order by listening to the wrangling of our elected officials in Washington. It’s shameful to see our legislators bandying around the idea as a political maneuver, when it should be standard practice for corporations, individuals and ruling bodies to secure responsible money management.

If you reap only one benefit from the federal debt dilemma, it should be the importance of establishing a debt ceiling…a personal debt ceiling. Yet, many debt-ridden Americans borrow like Uncle Sam and never put in place spending limits or a budget to rein in their out-of-control behavior. But if you’re hoping for a better life, here are some ways you can begin to attack your debt troubles, slash spending and put in place your own personal debt ceiling:

Educate Yourself

The process of becoming proficient at money management requires that you understand why your credit history is so important and then put into action the necessary steps to bring it under control. Having a poor history will have a significant negative impact on your credit score and make it difficult to buy a home, rent an apartment and even may keep you from some great job opportunities.

Putting Controls in Place

Like the Feds, there is a limit to the amount of money you can bring in. Even the wealthiest among us needs to balance their income and expenses to be able to effectively manage their money. It stands to reason that getting debt under control requires spending less than the income that is earned. This is the control that is referred to by a ‘debt ceiling’ and is the benchmark for your personal debt limit. To be most effective, an actual figure that you won’t exceed needs to be put in place as your personal debt ceiling.

Your personal debt ceiling should be no more than 40% of your gross income. For example, if your annual gross income is $40,000, your debt ceiling should not exceed $16,000. According to the Federal Reserve, households that spend more than 40% on debt repayment each month are considered in financial distress.

For people who have reached the maximum income in their field, the expense side of the balance sheet needs to be considered to stay under their debt ceiling. With thousands of debt management articles giving advice and tips on personal finance and debt problems, there is bound to be some ideas that you can work into your way of life. Make one change in how you spend money each week and you’ll begin to have more available income to pay down credit card debt or make a larger payment on your mortgage or auto loan.

photo credit: Kevin Krejci.

If you aren’t a financial expert, as most of us aren’t, you may be confused when it comes to all the different credit cards that are available. Different credit card companies will offer you different deals, each promising something that seems too good to be true. And when it seems too good to be true, it often is. If you’ve been offered a credit card with no preset limit, remember that there is plenty of fine print that you need to read before committing. Here are a few things to consider before jumping on the no preset-limit credit card bandwagon.

The Truth about Credit Cards with No Preset Spending Limit

1. Credit utilization affects your credit score.

Credit utilization is a fancy term that credit bureaus and financial services use to describe how much credit you have used out of the amount of credit that is available to you. Credit scoring companies determine your credit utilization by percentage for each account. For example, if you have a credit card with a limit of $5,000, and your balance is $500, then you have a credit utilization of 10%. The lower your credit utilization rate, the better your credit score.

2. NPSL credit cards can effectively ruin your credit score.

The biggest problem with no preset-limit (NPSL) credit cards is that credit bureaus and scoring companies often make the mistake of completely misreading your credit utilization rate. Because many NPSL credit cards have no revealed set limit, many creditors will report your credit utilization rate as 100%, whether or not you are using 100% of your credit. As such, NPSL credit cards can be risky, especially if your credit score is already average or low.

3. There is no such thing as a true no-limit credit card.

Even if you did want to take the risk of harming your credit score with a NPSL credit card, you should also know that “no limit” is a misnomer. Every card does have a limit; it just isn’t one that is revealed. For example, one type of NPSL credit card is a purely charge card, meaning that there is a limit, it is just undisclosed. Any remaining balance must be paid by the end of the month. Another NPSL card is a credit/charge hybrid card, in which the limit is revolving, and credit companies actively encourage their customers to pass the limit, as long as they can pay the balance at the end of the month, too. As they say, there is no such thing as a free lunch.

Of course, there may be certain circumstances under which you would be interested in getting an NPSL credit card. At the same time, however, the most important thing to do is to look at all your options, including other credit cards or not getting a new credit card at all, before making any final decision.