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Attempting to refinance your mortgage after your credit score has taken a nosedive into the “poor” category can be a very difficult task to accomplish.  Many lenders will not refinance the mortgage if the person’s credit score is below a certain level and the ones that will refinance the mortgage will do so at a much higher interest rate than they would charge to someone with a better credit score.  There are a few things that should be kept in mind when refinancing a mortgage with a bad credit score to help you get the best deal for the best price.

Shop Around For Rates

Many people that are attempting to refinance their mortgage with a bad credit score make the mistake of accepting the first offer extended to them because of the difficulty of refinancing with a poor credit score.  Don’t let the fact that you have a low credit score prevent you from shopping around for the best offer.  Although the interest rates for the refinanced mortgage will be higher across the board, the offers from some lenders may be several points lower than the deals offered by some others.  This can translate to a savings of thousands of dollars over the life of the mortgage loan.  By carefully considering multiple offers from different lenders, you should be able to find a better deal than if you went with the first offer extended to you.

Look Out For Scams

As the fallout from the housing crises continues, more and more lenders offering amazing deals on refinancing continue to appear around the country.  Although most of these lenders are genuinely trying to help people that have found themselves in a difficult situation, there are a few that exist solely to prey on unwary individuals during a desperate time for them.  It is best to keep the old saying in mind “If it seems too good to be true, then it probably is too good to be true.” If something seems wrong about the agreement that you are being offered, it is best to ask for independent opinions before signing your name to any document offered to you.

Examine All Documents Carefully

One of the biggest reasons that people get into problems with their mortgage is because they didn’t understand all of the terms used in the mortgage agreement or that they neglected to read all of the documents carefully and missed a vital piece of information.  It is very important to read all of the documents presented to you and to ask questions about anything included in the documents that you do not fully understand.  If the lender seems reluctant to discuss any of the issues that you bring up in the documents, it may be an indication that something in the agreement will not be beneficial to you.

Every year, people find themselves falling into unmanageable debt because they have not been able to manage their money properly.  Money management is not a task that many people feel comfortable with because they have never been taught the proper ways to manage their money and make common mistakes through ignorance.  Managing your money effectively may seem like a difficult task, but it is possible to take control of your finances and make it work for you by following a few simple tips.

Make Savings A Priority

Many people make the mistake of putting their spending first and making saving for the future one of their last priorities.  This short-sighted spending plan often results in the person not having enough money available to take care of financial emergencies, which typically leads to creating debt that must be paid off at a high interest rate.  By having savings available to handle these emergencies, a person can avoid going into debt if unexpected expenses occur. 

The easiest way to ensure that your savings account balance grows is to place money into your savings account every time you get paid before you start spending.  By removing the money from your checking account first, you reduce the risk that you will spend the money that you intend to save on unnecessary or frivolous purchases.  This will help ensure that your savings account will grow more quickly than using nearly any other method.

Keep On Top Of Your Credit

Letting your credit usage get out of control is one of the easiest ways to create insurmountable debt levels.  If you are maxing out your credit cards every month or obtaining new credit cards because you are close to the maximum debt level on the cards that you already have, you need to take a step back and seriously reevaluate your spending habits.  In many cases, the only option that you will have is to drastically cut your spending and try to find new sources of revenue, like a second job, to quickly pay down your debts.

By keeping your credit card usage in check and constantly monitoring the percentage of your credit that you are using, you can avoid creating large amounts of debt that will have to be paid off at interest rates of 15% or more.  It is easy to over spend with a credit card, but a good thing to keep in mind is to spend no more than you would be able to pay off in a month.  That way you will not be carrying a balance on the credit card that would be subject to fees and interest.

In the last decade, many credit card issuers have found college campuses to be very lucrative to their business.  Many campuses had their students flooded with credit card offers from credit card companies across the nation and large numbers of students applied for credit cards to assist them in paying for everyday purchases and entertainment around town.  When the new credit card rules issued by the federal government went into effect, the methods that credit card companies were allowed to use to market on college campuses and to students changed dramatically.

No Direct Marketing On College Campuses

In the past, students that were signing up for classes or attending orientation could walk past a credit card marketer set up in the hallway of the school dispensing brochures and applications to any student that was interested.  Some companies even used free sandwich coupons and free t-shirts to lure more students to their tables to complete their credit card applications.  A student interested in a credit card could sign up on the spot and expect to receive the credit card in the mail within the next two weeks. 

The ability of credit card companies to market on college campuses has been severely limited in the new rules taking effect.  Credit card marketers can no longer set up shop in the campuses areas frequented by students, such as outside the cafeteria or in front of the student union building, to entice the students on campus to sign up for their credit card products.  The new rules do not restrict the mailing of credit card offers to students living in campus dorms.

Restrictions For Those Under 21

There are also new restrictions in place for the issuing of credit cards to individuals under the age of 21.  In the past, any person over the age of 18 could apply for a credit card simply by filling out the application and returning it to the credit card company.  Now, all applicants for credit cards that are under the age of 21 will have to meet more stringent requirements in order to obtain the credit card.

The first new requirement is that applicants under the age of 21 must have an independent source of income that is verifiable that can be used to pay for the charges made on the credit card.  In the past, the only thing that the credit card companies asked for on the applications was the household income of the person that was applying for the credit card, which may or may not have included the personal income of the person applying for the credit card.

If the student applying for the credit card does not have an independent source of income for paying the credit card, then they must have a parent co-sign for the credit card, which makes the parent equally responsible for ensuring that the credit card payments are made.  If the parent has co-signed for the credit card, then their written permission will be needed for any credit limit increase that is authorized for the credit card.

Over the past year, negotiations have occurred and laws have been passed dictating what would be fair and equitable practices by the credit card issuers and the people that use their products.  Now, some of the changes discussed over those long months are beginning to take effect.  Although the majority of the changes will be phased in at intervals to prevent a dramatic upheaval of the credit card industry, the changes that are taking effect now should help begin leveling the playing field between the credit card issuers and the consumers holding the credit cards.

Interest Rate Limits

One of the changes currently taking effect is the new implementation of a federal law limiting interest rate increases.  In the past, any credit card issuer could raise the interest rate of any customer for any portion of their credit card balance at any time.  This ability was typically spelled out in tiny print in the middle of long, confusing credit card agreements and was generally ignored by the card holders until they found the interest rate for their credit card dramatically raised with no explanation.

Under the new rules in effect, the credit card issuer must now give you 45 days notice of their intent to raise the interest rate on a portion of the balance or the entire balance of your credit card.  If you decide that you will not accept the interest rate increase, you have the right to refuse the increase and pay off the balance of the credit card under the old terms, although you will no longer be allowed to use the credit card for new purchases. 

There are some exceptions to this rule.  The credit card company does not have to give the required 45 day notice if they are raising your interest rate due to a payment default on the credit card.  Many credit card companies have reserved the right to raise the interest rate charged on the balance of the credit card account if the account holder is late with or misses a monthly payment for the credit card.  Other exceptions to this rule include the expiration of an introductory interest rate or if the credit card has a variable interest rate tied to an index.

Interest Rate Increases

The credit card companies are now barred from raising the interest rate on the credit card within the first calendar year of the account holder opening the account (unless it is a variable rate credit card or the card holder is in default of the credit card agreement).  This would prevent the credit card companies from using a low teaser rate to entice customers to sign up for their credit card products then dramatically increase the credit card rate soon after the person begins using the credit card.  If an introductory interest rate is offered, it must be clearly communicated as an introductory rate and must be in place for at least 6 months before the interest rate can be raised to typical market rates.

Interest Rate Application

One change to the interest rate rules that many credit card account holders are applauding is the changes to how an interest rate increase is applied to the balance of the account.  In the past, the credit card companies could significantly increase the interest rate charged to the account and apply that interest rate increase to the entire balance of the account.  Now, any interest rate increases will apply only to the new charges made after the increase has been implemented, with the previous balance of the account paid under the interest rate that was in effect when the charges were made.

Although checking your credit report is one of the best and easiest ways to keep more of your own money in your pocket, many people neglect to check their credit report at all.  In fact, as many as 50% of people that have a credit profile have no idea what information has been added in the last three years and this is one of those cases where what you don’t know can hurt you. 

The most common reasons for neglecting to check a credit report is the cost of obtaining the actual report, believing that what is in the credit report is already known, and believing that knowing what is in the credit report will not be of any benefit because the information included cannot be changed.  Most people would be surprised that none of these reasons are completely accurate and are no excuse for not learning what has been reported to the credit bureaus and entered onto their credit report.

Reason: Cost Of Obtaining The Report

Many people do not check their credit report because they believe that it will cost them money to obtain the report or that they will have to pay for some type of service in order to view their report.  The truth is that every person is allowed to access their credit reports from the three major credit bureaus for free every year. 

Government legislation has dictated that each of the major credit bureaus (Experian, Equifax, and Trans-Union) must provide one free credit report each year to any consumer that requests the information.  This allows the consumer to see what is contained in their credit report without having to spend a dime of their own money.

Reason: Already Aware Of What Is In The Report

Some people believe that they already know what is in their credit report based on their memory of how they have conducted their financial transactions in the past.  Unfortunately, experts estimate that nearly 25% of all credit reports contain incorrect information and fraudulent transactions. 

If mistakes have been made on your credit report or someone else has been using your personal information to obtain credit fraudulently, you will never know until you have your credit history pulled.  Many people only learn of the incorrect information on their credit report after they have applied for additional credit and have been denied, causing a financial headache for the consumer as these mistakes can be difficult to correct after an extended period of time has passed.

Reason: Information Cannot Be Changed

Many people believe that there is nothing that they can do to change the information that has been reported to the credit bureaus for inclusion on their credit report, so obtaining their credit report would be a futile pursuit.  The truth is that federal legislation has made it possible for any consumer to challenge the information in their credit report if the information is inaccurate and the credit bureaus are required by law to investigate any allegations of inaccuracies in a credit report.

These rules prevent the consumer from being denied credit because of mistakes in their information or deliberate attempts to ruin their credit rating by third parties.  The credit bureau will request information from both the consumer and the creditor for review and will make a determination as to whether the information included in the credit report is correct.  Any inaccurate information must be removed from the credit report as quickly as possible.

There are many simple things that you can do to begin saving more money immediately.  A lot of these simple solutions are so simple that many people do not think about them when they are thinking of ways to save more of their paycheck each month.  Although making big changes that save lots of money may have more impact psychologically, small savings can add up quickly and will not be as disruptive to your everyday life as larger changes would be.

Brew Your Own Coffee
Did you know that for the price of a single large cup of specialty coffee at one of the leading coffee shops you could purchase an entire canister of coffee that can be brewed to your personal tastes at home?  In general, anything purchased at a grocery store for home preparation will be much less expensive than purchasing the same item at a restaurant or convenience store.  By sacrificing a small amount of your time instead of paying for convenience, you can easily save hundreds of dollars per year.

Kick The Habit
Cigarette smoking is one of the most expensive habits to have, mainly because of the sheer number of cigarettes that many people purchase to keep up with their habit.  For example, a pack a day smoker can spend more than $2500 per year on their habit, depending on which brand they buy and which area of the country they live in.  By kicking the habit, that money could be put towards paying down bills or saving for emergencies.

Drink Alcohol At Home
The cost of an alcoholic beverage at a restaurant, lounge, or bar will cost you at least twice as much as if you purchased the same item at your neighborhood spirits retailer.  Wine is heavily marked up, with a bottle that costs $12 in the store priced at $26 to $30 in a restaurant.  Beer is not much better, with two beers at the bar costing as much as an entire 6 pack at the store.  Choosing to drink alcoholic beverages at home will not only save you money, it can also save you embarrassment and an expensive traffic ticket for driving home under the influence of an intoxicating substance.

Many potential homeowners know that having to obtain a subprime mortgage loan will make paying for their home more difficult but a lot of these homeowners that must obtain a subprime mortgage loan are unaware that they will only qualify for a subprime mortgage because they have no idea that their credit history is as bad as it is.  A credit history is not one of the things that is seen on a frequent basis, so it is difficult for many to determine whether or not they fall into the good or poor credit categories.  There are several different ways that a homeowner can use to determine their credit worthiness.

Estimating Your Credit Score

The first way to determine whether you will need to obtain a subprime mortgage loan is estimating the credit score.  Using this method, the individual reviews their debt levels and their financial actions to determine whether these have led to a credit score increase or decrease.  An individual that paid off their credit cards, put money in savings, and have not been late on any bills can expect to have a credit score increase while individuals that have missed some payments and have used more than 50% of their available credit can expect a decrease, resulting in the need to settle for a subprime mortgage.

Although this method of determination is imprecise, it will provide a reasonable estimate of what the credit score will be.  As long as the information is remembered accurately, the person may be able to correctly judge their credit score and whether they must obtain a subprime mortgage loan.  There are even some credit history calculators available on the internet that will take this information and calculate your credit score online.

Reviewing Your Credit History

Another method of determining whether you must obtain a subprime mortgage loan is to obtain your actual credit history and score from one of the three major credit reporting companies; Equifax, Experian, or Transunion.  This can be difficult because the homeowner will need to verify their identity to the company before their credit information can be released.  In some cases, it can take up to two weeks to obtain the information because of the number of requests that these companies handle every day from businesses and individuals.  If there is a problem with the information that is submitted, it can take even longer to find out if they must obtain a subprime mortgage loan.

American consumers are urged to review their credit report at least once per year. In fact, every consumer has the right to access their credit report from each reporting agency free of charge once a year. This means every person has the opportunity to pull their credit report three times per year without paying a single cent by visiting www.AnnualCreditReport.com. Reviewing my credit report on a regular basis by checking your online credit report is one of the best ways to spot inaccurate information or signs of identity theft and credit card fraud. With this in mind many consumers are beginning to take the advice of financial experts and stay atop the information that appears on their credit report.

Knowing this, there are companies currently advertising free credit reports to consumers, however they are not truly free. Consumers are confused by advertisements and often sign up for a free credit report only to find out later they have unwittingly enrolled in some other service subscription. As a result several states have asked the Federal Trade Commission to tighten the rules governing the ads that are causing the problems. New York has recently joined these states and asked the FTC to consider requiring all advertisements to include a disclaimer of sorts.

The New York State Consumer Protection Board (CPB) feels consumers are being mislead by the advertisements currently circulating on television and printed publications. They suggest the FTC prohibit the use of the word “free” in these advertisements. They also suggest the addition of language which relays to the consumer the fact that the advertised credit report offer is not the same as the free credit report made available by Federal law.

Unless or until these changes are made, consumers are on their own in spotting misleading advertisements. The best and easiest way to avoid being charged for a free credit report is by not giving any billing information in the first place. Most of these advertisements are offering a free credit report which you can receive after entering credit card information. When you do this, you are enrolling in a monthly service which will be charged to your credit card if you do not cancel within a predetermined period of time. If you come across any company offering a free credit report yet requiring credit card information in order to receive the report, do not enter the information and move on. Remember the free federal website www.AnnualCreditReport.com or call 1-877-322-8228 for your free credit score online.

The accumulation of significant amounts of debt has almost seemed to be the national pastime of many Americans over the last decade.  Bombardment with advertisements to buy, buy, buy and the availability of easy credit made it possible for many people to spend way above their means and now those bills are coming due.  Eliminating a large debt balance can be difficult, but by following these four tips, you can make debt elimination much faster and easier.

Stop Using Your Credit Cards
The balance of your credit card debt will not go down if you continue to use the credit cards to make purchases.  While attempting to eliminate your debt, you should not be using your credit cards for any purpose that is not an immediate emergency situation.  Any large purchases or vacations that would normally be placed on the credit card should be postponed until after you have gotten out from under your debt load.  Remember, it was spending money before it was made that got you into your debt situation in the first place.

Document Your Spending
You will never figure out where your money is going each month if you do not document what you are spending your money on.  Documenting your spending habits will help you identify areas where spending can be reduced to save more money to put towards paying down your debts.  Every area of spending should be documented, from major monthly bills to shopping trips to the money spent in the vending machines at your job.  This will help you see where your money is benefiting your lifestyle and where money is being wasted.

Reduce Your Expenses
After you have tracked what you are spending your money on each month, you will need to identify areas where you are spending too much and cut that spending to reflect how much you are actually able to spend.  For example, if you have a high cellular phone bill or cable bill, you may want to examine what you are actually paying for and eliminate any additional services or features that you do not use on a regular basis.  By stripping these obligations down to the basic package available, you may be able to cut these bills in half and still have many of the services that you desire.

Be Serious In Your Efforts
No debt elimination effort will be successful without a determination to see the process through to the end and achieve the complete elimination of debt.  Half attempts and occasional reductions in spending can do much more harm than good as the person will become overconfident of their minimal successes in debt reduction and will overspend in celebration of their achievements, small as they may be.  This can result in an overall debt balance that is even higher than when the debt elimination efforts were begun.  To eliminate your debt, you will have to be focused on the task and complete the entire process to achieve the desired results.

One of the most devastating and damaging things that could happen to affect your financial future is to experience a dramatic drop in your credit score.  In most cases, the points deducted from your credit score can take many years to correct and rise back to its previous acceptable levels.  A bad credit score has the ability to affect many different areas of your life and can make it impossible for you to do many of the things that you desire.

Where You Work

Many people do not know that having a bad credit score can affect the places that they are allowed to work and the positions that they will be allowed to hold within their company.  Many businesses have begun to use pre-employment credit checks to determine whether the applicants for their open positions will be trustworthy and responsible individuals.  The common belief is that trustworthy, dependable employees will be responsible with their money and pay all of their bills on time, resulting in a higher credit score.

Some specific employment positions require the interviewer to review the applicant’s credit score.  These positions are generally positions of trust, such as management or security positions, or positions where the employee will have access to company money, such as a bank teller or a cashier.  The rational behind this practice is that applicants that have a higher credit score will be less likely to succumb to temptation and use the company’s funds to repair their credit situation or pay off their obligations.

Where You Live

A bad credit score can also affect where you will be able to live.  Most people understand that a bad credit score will prevent them from being able to obtain a mortgage loan to purchase a home, but many do not know that a bad credit score can prevent them from being able to rent a home or an apartment.  Rental companies and homeowners that are renting out their homes use credit checks to determine whether they will have an issue with a potential tenant paying their rent.  If an applicant’s credit history shows many missed payments on bills and an inability to use their credit wisely, it is a red flag to the owner that they may not receive all of their rental payments in a timely manner. 

A bad credit score and spotty credit history can affect many different areas of your life in ways that you may not realize until you have experienced the effects for yourself.  The only way to avoid these issues is to ensure that your credit score remains in the acceptable range by making all of your payments on time and using your credit wisely.