Start Being Wary of Your Credit Now

It is vital that you get to make it a yearly habit to log in www.annualcreditreport.com or call 877-322-8228to get a copy of your credit report from Experian, Equifax and TransUnion. Most especially, you have to keep a close eye on possible typo errors or transactions you have already settled because these mistakes in the recording often result to bad credit for most people.

You probably already know that bad credit prevents you from buying that car you always wanted, it is difficult to get a loan for student aids or for starting a business, and most especially it is difficult to get a great deal for a house or an apartment. It does not stop there; bad credit also affects what kind of job you can get.

No one is safe from bad credit, even if you are among those individuals with spotless credit because you can manage to pay your liabilities without delay and you think it would be pointless to check on your credit report because you have been a good client. But that is a very bad assumption. The credit reporting companies may make mistakes in their reporting; they may even fail to record your payments in some bills. Or worse, you might be an unknowing victim of identity theft. If you do not check your report you may find it out too late and you will suffer the consequences.

If you find any errors in your report here is what you should do:

Send a letter addressed to the record company, in the letter include what errors or problems you have and politely ask for the company to correct them. You must encircle the item you believe may be incorrect and include a copy of a receipt or any evidence showing that you have cleared this. Never forget to include a return receipt request.

Judge Fails the U.S. Government’s Student Aid Loan Standard

Just a few days ago, the Education Department announced that for-profit students who are loaning are having extreme difficulties in paying back their federal loans. And a federal judge has given a reason as to why that is so: he says that the measure of prepayments is of failing standard.

United States District Judge Mr. Rudolph Contreras based in Washington believes that the minimum loan standard of the government in their repayments of 35 percent is subjective and illogical.The statement of the judge was given as a reply to a lawsuit of national association of for-profit colleges which has a member of 47 schools across Minnesota; the association is gravely against the “gainful employment” test.

This three-pronged test’s main purpose is to make certain that for-profit college students would be able to get work which the salary is enough to pay off the college loan they have.The government is now threatening to take away the loans from the for-profit college if they fail to comply with the guidelines. A billion dollars is on the line for these schools every year, this money includes most of the income of private companies and are operating for these for-profit colleges.

The ruling of Judge Contreras highlighted two elements of the test that was the standard of measuring the loan payments of the applicants in relation to their total and subsidiary income. According to the law, individuals should not pay more than 12 percent of the total accumulated earnings or an amount above their 30 percent discretionary income. But both of these were connected to the repayment test and Judge Contreras felt it was only right to cast them off.

This loan standard was brought up for the reason that for-profit colleges are more expensive than public colleges and they have higher student loan default rates than other colleges. Association of Private Sector Colleges and Universities better known as the APSCU has claimed victory over their case. According to their president Steve Gunderson, the only alternate action acceptable for these colleges is to have a single definition for their educational instruction.

Mortgage Terms Restricted Further by The Bank of Israel

According to information from reliable sources, the Bank of Israel is planning to release, for the second time, macro-prudential measures in real estate, so as to avoid formation of a real estate bubble due to mortgages brought about by the most recent expansionist monetary policy. In the previous year, the Bank of Israel decreased the interest rate for the month of July to 2.25 percent.

Moreover, two measures are actually being planned by the Bank of Israel. First, immediately limit the loan-to-value (LTV) of mortgages to 33-40 percent. Second, raise the banks’ requirements for mortgages, to decrease their motivation to approve new mortgages.

In addition, the sources said that the monetary council talked about the two measures during the meeting last Monday. The council’s decision is to decrease the interest rate once again.

As a result of lower interest rates, it is more sensible to invest in real estate and less sensible to invest in financial assets. Because the monetary council was disturbed by the mortgage data released by the Bank of Israel, they decided to include it in the agenda of the meeting.

Based on the data from Bank of Israel, the new mortgages increase 35 percent to NIS 4.1 billion during the month of May from NIS 3.02 billion during April. Also, new mortgages were at its highest point at NIS 4.8 billion during May of the previous year. While mortgages by investors were up by 30 percent during May compared to April, 40 percent of new mortgages were created at 60 percent LTVs and the share of these mortgages also increased significantly.

Although Bank of Israel believed that the mortgage figures for the month of May were for only one month, assessment of the figures indicates that there is a trend. The sources added that the officials at Bank of Israel gave a warning to Governor Stanley Fischer that the existing macro-prudential regulations were not enough.

3 Tips on How to Assist Your Child Build Credit

Most parents would probably just ignore the topic of credit, but there are some parents who value the significance of assisting their child build their credit. The following are three tips on how parents can help their child build credit.

First, open a debit card and checking account. Although having a checking account and debit card will not technically increase the credit score of your child, the first thing to building a good credit score is having solid money management skills. When your child understands how to use their money wisely and to keep away from declined debit card charges, they have learned the fundamental skills of reliable credit card use.

Second, parents can put their child as an approved user of their credit card. It will have no effect in your credit score, however, provided that you keep low credit utilization and make on time payments, the account will also appear on the credit report of your child and increase their score. While you can opt not to permit your child to use the credit card to buy things, but at least teach them that it is important to make full monthly payments.

Third, assist your child in applying for a student or secured credit card. Even if the most recent financial policies have become stricter in giving credit cards to young adults, having an appropriate part-time job and the support you’ve given by adding your child as an authorized user of your credit card, your child will be able to look for the best credit card and even without your co-signature, get approved.

Both student credit cards and secured credit cards are good options for those who just started building their credit because the two cards are intended for those with imperfect credit histories and there is a higher possibility of getting approved. Preferably, get a credit card with no fee to pay every year.

Five Ways That May Decrease Your Credit Score

People with low scores usually tend to pay higher interest rates on their loans. However, a lot of people are not aware of what actions are good or bad for their credit scores. The following are five ways that might have a negative impact on your credit score.

First is avoiding credit in general. Although it makes sense not to have debt, lenders actually want to see that you have experience in terms of handling debt, specifically, that you can keep up with the monthly payments, prior to giving you their approval for the loan.

Second is closing your credit card accounts. In reality, lenders want borrowers with experience in long-held accounts. Keep your paid-off credit cards because it shows that you can handle credit even for a long time.

Third is decreasing your credit limit. Spending your credit up to its limit reflects that you are not credit-worth because you are using your total available credit.

Moreover, having your overall debt near the credit limit might decrease your credit score. On the other hand, people with high credit scores only use more or less 10 percent of their total credit limit.

Fourth is opening a new retail card account. While it might a good idea to get a department store card in order to have a 10 percent discount, it can mean that you are dealing with excessive debt. As a result, lenders might reject your loan application.

Fifth is keeping a small credit card balance every month. One of the reasons for more debt, together with interest and fees, is paying the least amount on a credit card, or not paying in full. It’s better to pay your debt on time and in full.

It is important to be aware of these misconceptions so that you will not be confused about your credit report. According to a survey conducted by ING Direct, only five out of 1,042 parents know that some actions, such as closing credit card accounts and having zero credit, as harmful to credit scores.