The loss of property is a devastating blow, both emotionally and financially. As those who have been victimized by wildfires this summer have learned, the immediate threat of safety may overshadow the need for monetary recourse. However, the wake of the fires has left many bouncing from hotels to shelters to homes of relatives, running out of cash along the way. The result has produced a new kind of safety concern: the health of family savings and financial security. When disaster takes your home, is it possible to prevent credit damage as well? Read on to implement your own safety measures.
News, Information, and Perspectives on Credit Repair
Taking up residence in a new country requires a lot of planning. Securing the right work visa, finding places to live, buying a car, etc., are all necessary evils of relocation. The bad news? Even if you are a model U.S. citizen, your creditworthiness may not follow you beyond the border.
Contrary to popular belief, a credit score is not universally recognized. Credit bureaus and scoring companies that predominate in one country may be a minor player — or even a nonexistent one — in another. So, for example, while Equifax, Experian and TransUnion are the dominant credit bureaus in the United States, this isn’t always true everywhere else. This revelation can surprise many relocators and presents a number of important questions:
Savings and credit repair go hand-in-hand. Resources in the forms of time, money, and credit score points will aid your financial stability and keep your reputation in fighting form. For those pursuing credit repair, acquiring the skills of budgeting and saving are imperative. Along the way, keep the five factors of credit scoring in mind and use your newfound abilities to conserve and redistribute funds. Deliberate planning leads to deliberate results.
• Payment history and debt
A cash surplus can breathe new life into a flailing credit score. The ability to cut back on everything from monthly food costs to inflated bills will add to your bank account and provide instant flexibility. Utilize your financial leeway by focusing on payment schedules and overall debt reduction for credit cards and other revolving credit balances. Save more money by paying down those cards before associated interest accrues. If you carry a mountain of revolving debt, reduce your credit utilization ratio by setting an end goal and increasing your monthly payments. Remember that credit scores are highly impacted by how maxed out your cards are.
Poor health choices can affect more than your blood pressure. Wasting money on unhealthy habits can take a toll on your annual budget. Less money equals fewer options when it comes to credit repair. Do your body and your wallet a service by kicking these habits and redistributing the wealth. A little change could make a big difference.
The decision to cosign is a complicated one, since the desire to be supportive of a friend or family member sometimes conflicts with financial common sense. Offering help can be risky, especially if clean credit is on your list of priorities. Consider the points below before lending a hand.
1. Credit cause and effect
Many people do not realize the financial effects of cosigning a loan. Just like any other debt, a cosigned account is likely to appear on your credit report, causing a change in your “utilization” ratio (an indicator of how maxed out you are with revolving credit accounts). A sudden rise in your utilization ratios can affect your personal finances in many ways, including lowering your credit score and therefore your ability to secure your own personal loan (e.g., auto, mortgage, etc.). It can also affect the type of interest rates you receive. To make matters worse, non-payments and late payments, even if made by a friend or relative for whom you’ve co-signed, have the power to hurt your credit as well, even though you are not the primary borrower. Remember that the way they handle the cosigned account will appear on your credit report as your responsibility as well. Placing the fate of your own clean credit in another person’s hands is usually a bad idea—a fact learned too late by many cosigners.
2. Facing the burden
A cardinal lesson in borrowing money is making sure you can repay it. This lesson is an important one for cosigners as well. Before agreeing to cosign for your cousin’s auto loan, ask yourself the following question: “Can I handle the payments if he doesn’t?” Make no mistake, lenders want their money, and they will hold you responsible if necessary. Assess your own finances and decide if you could handle the expense on your own. The answer to this question will tell you if cosigning is an option.
3. Responsibility and the unknown
Whatever the circumstance, the #1 reason lenders require a cosigner is this: the primary borrower is considered a risk. While some are risks due to less-than-clean-credit, others don’t yet have the credit history to support their application. Remember that cosigning effectively means that you are vouching 100% for the debtor in case they cannot (or decide not to) repay the loan in accordance with the agreed-upon terms.
4. Relying on other options
Who says cosigning is the only way to be supportive? Putting your own credit on the line isn’t the smartest choice, so why not find another way to help your friend? If you have the means, offer a cash gift in lieu of a loan signature. If your college-bound sister needs money for room and board, offer the spare bedroom in your home, access to the washer/dryer, or even the occasional lunch and dinner. Caring doesn’t have to mean leaving your financial fate to chance.
5. Preserving your relationship
Money is a swift and sure way to divide relationships. Consider how you would feel upon receiving a call from your cousin’s bank informing you that the auto loan you cosigned is in default. Suddenly, an act of kindness on your part has become a breeding ground for tensions, resentments, and overall heartache. Do yourself a favor and protect your relationship by finding other ways to offer support. While your friend or family member may be hurt in the short-term, you are more likely to ensure a lasting relationship.
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*Important: While the testimonials and other information on this website may be exciting, Lexington Law promises only to perform the steps we've agreed to in each client's case and to charge each month only for steps already completed. As with any legal work, no outcome is promised. Your results will vary. **The number of items removed represents the combined removals for all three credit bureaus. For example, if a single questionable negative item is removed from all three credit reports, it is counted as three separate removals. REF# Confirm