Filing Bankruptcy is Not A Hindrance to Improve Your Credit

How would your credit appear after you have filed for bankruptcy? You are fully aware that having bad credit means that it would make it difficult for you to get a new credit card in the future and if ever you are able to get it, the new credit card would be more expensive in terms of interest rate on loans. However, there are ways to improve your credit even if you have filed for bankruptcy.

Why file for bankruptcy?

You filed for bankruptcy because your income was unstable and your creditors knew it .In fact, they were the ones who forced you to make that move. Your creditors were pressuring you to pay your bills and the only way to get out of debt is to file for bankruptcy. But after filing for bankruptcy, another bankruptcy cannot be filed up to seven years.

Once you are out of debt after filing for bankruptcy, see to it that through your income you pay all your current expenses. Control your spending by purchasing only items that are necessary so that you can pay all your bills on time.

Make a good budget

Business world today is spending billions of dollars for advertisement to entice people to spend and spend. Discipline yourself to buy only the essentials. Do not engage in impulsive buying if you want to fix your credit. Start saving. You can fix your credit on your own to avoid fraudulent companies that offer credit repair services.

Apply for a Secured Credit Card

Through the official site of AnnualCreditReport.com, you can monitor your credit report to check its accuracy. You can also get a free copy of your credit report through the same site.

By controlling your spending, you can start saving for future emergency needs. And once you have saved enough, you can apply to get a secured credit card which functions like a debit card. In order to get a secured card, you need to deposit a certain amount to the card issuer. For example, if the amount deposited is$500, the credit limit is equal to that amount.

After having used your secured credit card for a period, you can apply for a regular credit card but it may charge you a high interest. The high interest, however, should not matter. What is important is for you to use the card for essential purchases only which you are capable of paying at the end of the month. Eventually your credit rating will improve if you can sustain your discipline in spending for what is only needed.

Credit Score Road Map: What Affects Your Credit Rating?

It has always been a misinterpretation among the populace that when the interest has fallen in the market more people will have the opportunity to get great interest deals. FICO, the company that measures credit scores has estimated about 50 percent of the American population has a score lowers than 699 at the end of last year.

A low credit score means one has limited financial options and must be given high interest rates; this will also mean more losing more money. When you are facing this current dilemma, it can be quite difficult to look for help. However, the first step in effectively repairing your credit is to get educated. If you understand the system and the regulations on how to get a good or bad credit then you can adapt and start correcting your errors.

Here are some factors that have an impact in your credit scores: first is your history of bill payments which can account 35 percent of your score. This reflects your credibility as a payer. This will also tell lenders if you are a responsible client, they would check how consistent you are in paying your bills, your collections, and your tax records. This just means that you should clean up your history and start with a clean slate.

Second, how frequently you use your credit. This would account for about 30 percent of your score. This includes the amount of loans you have, and your total liabilities with the credit cards you currently have. In order to make a better image of yourself in this category, you should be focused on having long term loans and repair your credit standing. Keep your spending impulse away and always keep in mind that a little debt can be good.

Third, credit history length, this represents 15 percent of your credit score. A long history can be positive because it would show that you have lots of experience. To make this work for you, remember to always keep your credit card active and make sure you do not inactivate it by not using it.

Fourth, new credit accounts this consists about 10 percent of your score. This however can be negative because short-term accounts can be very deadly to your score. If you apply in too much credit card loaners at once it can be risky and hard to control. So a useful tip to consider is to repair your credit and set your priorities straight before you plan to open a new account.

Finally, the type of cards that are currently under your name, this consists another 10 percent of your score. This is not about the debt that each card has but how it is diversified among different loans like student loans, apartment lease, car loans and mortgages. It would be smart to take in different types of debt in order to expand your prospects.

Guaranty Bank Facing Guaranteed Loss

The ninth largest bank the Guaranty Bank has been facing a challenge with their financial status for five years now. The amount of their losses accumulates to about $20 million; this is according to their annual monitoring data.

By the end of the first quarter of this year, the bank had another loss of about $ 5.7 million. Furthermore, its capital which protects the bank from loss from its loans is quickly slipping away.David L. Donihue, a consultant from the bank said that they are currently facing a very hard phase.

But Doug Levy, the chief executive of Guaranty says that they are progressing into a better loan portfolio, and the bank is looking for more investors to uplift and recapitalize their finances.

The largest loss of the bank was back in September 2009 when many Americans were falling into the recession and there was massive unemployment. The losses amounted to about $ 52.3 million this is according to their Federal Deposit Insurance Corp. records. The bank has belonged to the Levy family for decades and so far no one has set their eyes on purchasing the estate from them.

During their second set or mortgages a major loss has been inflicted in the bank’s portfolio. The bank has about 160 branches in Wisconsin, Georgia, Michigan, Illinois and Minnesota. Most of the branches across these five states are found in grocery stores and operate in lengthy hours, which according to Donihue is expensive for the bank.

The Guaranty has increased another $10.6 million to its loan-reserves in order to cover for their doubtful-debt accounts.

Levy says that the bank still expects to eventually regain its loss from their loans. The recession and the financial crisis have made it compulsory for banks to have more capital.The chief executive said that Guaranty has been making efforts to retrieve their old status in their financials. They are dedicated in trying to make these efforts work, though Donihue admitted that it’s not going to be easy.

More Questions for Mortgage Applicants

It is normal that lenders would require financial statements and paid bill receipts from their clients who would want to avail a loan, however nowadays; these institutions are requiring more than just financial information.

According to Frank Donnelly, the current president of the Mortgage Bankers Association of Metropolitan Washington, there was a recent case of abnormality in one of their borrower’s bank account;the woman had to explain a deposit of $200 in her account. She explained that the money belonged to her ex-husband that she has been raising a child with.

The loaning party required for a copy of her divorce papers even if she and her ex-husband have been separated for 17 years. Borrowers who have been processing for long term loans know how closely these institutions are watching their clients’ ability to payback their mortgages.

Lenders are taking strict measures because they want to prevent buying back loans if the loan fails. Customers will have to face tougher security and submit more supporting papers to answer the questions of the consumers.

For some these procedures that lenders are taking are too much, but for a lender’s point of view, they are trying to save themselves from the casualties incase all-else fails. Not only are they afraid of buy backs or failure on the loans, the Consumer Financial Protection Bureau, the government agency in chargeto investigate these institutions are very critical and strict in their guard against rule breakers.

But Stella Adams, a fair-housing advocate in North Carolina, said lenders are going too far. She said banks should use “solid, old-fashioned underwriting,” such as the guidelines used before the housing boom. Right now, lenders are making it too difficult for people to get financing, she said.

But Christie Alderman, a vice president of a loaning industry defends their side from scrutiny. According to her, the system they are imposing is their way to defend themselves from scams and deceit from consumers.

Bill Proposed to Eliminate Credit-card Interest Limit Could Help Huntington

If a bill is passed to eliminate the limit on Ohio’s credit –card interest rates, it would greatly help expand Columbus-based Huntington Bancshares in central Ohio.

There are two small Ohio banks which are in favor of the passage of the bill. This includes the Credit First National Association in Brook Park. The bank issues cards for Firestone Complete Auto care.

Huntington officials are supportive in the passage of this House Bill 322. They believe that the passage of this bill would create more jobs in the Columbus region where 8,100 employees are employed by the bank.

In March, the bill passed the house and is expected to be in the senate early this week. Currently the cap on Ohio’s credit card is 25 percent. If the bill is passed, it would allow Ohio chartered financial institutions to have the same interest and fees charges that out –of – state banks are charging Ohio customers.

The banks based in Ohio are at disadvantage because the banks based in other states could disregard the Ohio’s interest-rate limit. Most banks have no usury limits.

Kenny Mcdonald, the chief economic officer for Columbus 2020, said that the cap on Ohio’s credit card is a big obstacle for job creation. He also believes that the passage of the bill would create job opportunities in addition to the 69,000 jobs the financial-service industry. Similar laws have been passed already in 31 states.

He further said that the passage of the bill would attract more financial services to operate in Ohio if the credit limit is eliminated.

Matthew Samson, the spokesman of Huntington, has no comment as of the moment on the link between the bank’s plan and the passage of the bill. Currently the bank does not offer a credit card but it is working on developing credit cards for both consumers and business customers by mid 2013.

Huntington is committed to expand its business in Ohio. The bank supports the passage of the Bill, Samson said. It will make Ohio attract more investments and become more competitive.

Consumers are not favorable on the proposal but they think that it would create not so much negative impact because majority of credit cards are having no interest limit any more. Credit card experts are doubtful whether the passage of the Bill would create appositive impact in Ohio because other major card issuers have already established themselves in other states.

Senator Jim Hughes, chairman of the Senate Financial Institutions Committee, said that lawmakers would see to it that the bill would apply only to credit –card rates.