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Archive for February, 2012

Understanding Credit Unions

Written by admin on Feb 29th, 2012 | Filed under: credit score

As questions continue to develop around the major banks’ decision to raise their variable interest rates despite the Reserve Bank of Australia deciding to hold rates steady, more and more individuals and businesses are turning to alternative types of financing. More specifically, many customers are turning away from the big four when it comes to mortgages and loans, looking towards smaller lenders.

Also gaining attention in the news headlines is the important role credit unions play in the financing mix. Credit unions have always been an integral part of our nation’s history and may be re-emerging as a critical player in today’s economy.

Whether you’re looking to make a future home purchase or are seeking out for alternatives to small business finance, it’s worth investigating the role of credit unions as a potential provider of your finance needs.

What is a credit union?

Credit unions are established to serve its members and customer base, instead of standard financial institutions that are owned by shareholders. A very similar type of structure exists for community based building societies which are also member run. Both credit unions and building societies are generally classified as non-profit, which means that all revenue generated by the business is used for operation or development purposes, instead of being paid out as dividends to shareholders.

Building societies were first established in 18th century in the UK. It was a simple arrangement where local townsfolk met in taverns and coffee houses and paid a monthly fee to a central pool of funds that would then be used to finance the construction of houses for its members (hence the name of the term). The first building societies in Australia were founded in the 1850s to serve similar purposes. By the 1940s, credit unions had been introduced into the financing mix, with the first official credit union, Universal Credit Union established in October of 1946.

The formation of credit unions surged globally and the number of registered Australian institutions peaked at 178 in 1985. Many of those remain in operation today.

Are credit unions a good finance option?

Credit unions are certainly worth considering as a finance alternative to the big banks for those concerned about rate rises and fluctuations. Due to their limited size, scope and niche interests, credit unions and building societies can often be more competitive when it comes to their lending rates.

Since 1999, Australian credit union and building societies report to the Australian Prudential Regulation Authority, the same as the major banks, so their activities are subject to the same regulations and monitoring.

And because credit unions tend to rely on deposits for their funding as opposed to investments, credit unions have actually been shielded from the effects of the economic downturn to small degree, making them a healthy industry in the current market.

It’ll be worthwhile to consider a credit union in your research to finance your next purchase. Credit unions can be a great option for households looking for a mortgage or businesses seeking commercial finance.

Author Bio: Paige writes on small business and commercial finance for entrepreneurs and owner-operator establishments. She is based in Sydney.

Looking To Refinance Your Mortgage Loan?

Written by Toi Williams on Feb 28th, 2012 | Filed under: loans

With the amount of housing value that has been lost in recent years, trying to refinance a mortgage loan has become a popular way for a person to reduce the interest rate or monthly payment for their mortgage.  There are many different companies that will offer a loan to people that are looking for a mortgage and these loans are different in various ways.  When trying to find the best way to refinance a mortgage loan, there are a few loan features that are important for you to review.

Interest Rate

One of the most important items to review before deciding whether to refinance a mortgage loan is the interest rate that you will be charged for the loan.  The higher the interest rate, the more you will pay for the mortgage.  The interest rate for the loan is typically based on the amount of mortgage loan and your credit score when you apply for the loan.  Be sure to review the interest rate to be sure that you are getting the best deal.

Additional Fees

You should also review what additional fees you have to pay to obtain the loan prior to refinancing a mortgage loan.  These fees could include charges for collecting information, paperwork charges, and administrative charges.  It can be difficult to find a company that will not charge you for these additional items, but the best refinancing companies will have very few of these fees, saving you hundreds of dollars.

Compare Loans

When trying to find the best way to refinance a mortgage loan, it is important to shop around and get information about several different types of loans from a few different companies.  Many companies offer these types of loans and each company can vary widely in the fees charged for their services.  By following these few tips on how to find the best way of refinancing a mortgage loan, you will make sure that you are getting the best deal available to you, which will save you a great deal of money in the long run.

Finding Great Debt Management Programs

Written by Toi Williams on Feb 26th, 2012 | Filed under: debt relief

In recent years, many people have found that the amount of debt that they are carrying has become unmanageable and they need to reduce their debts quickly to restore their financial stability.  This has made using debt management programs a popular way to reduce or eliminate debts.  Many people have successfully used debt management programs to map out a debt management and savings strategy that can get them out of debt and create lifestyle changes that will prevent the accumulation of debt in the future.

There are many different debt management programs available to individuals that have accumulated large amounts of debt and each of these programs are different in subtle ways.  When looking for debt management programs, there are a few important features to look for that will indicate the best programs for your needs.

Program Pricing

One of the most important items to review before deciding whether to use a debt management program is the price charged for the service.  Prices can vary widely across the spectrum for similar services and program designs.  The cheapest program may not always be the best choice, but reviewing the prices of several different debt management programs will help you determine a fair price for what you need.

The price for the debt management program is typically based on the complexity of the programs, with basic programs available for little to no cost and highly detailed programs costing hundreds of dollars.  The higher the price charged for the program, the more you will pay to reduce or eliminate the debt that you have accumulated.  Be sure to review the prices of several debt management programs to be sure that you are getting the best deal available.

Additional Fees

Another thing that should be reviewed prior to deciding which debt management programs to use is whether the cost of the program includes any additional fees that must be paid to participate in the program.  These charges may include fees for contacting lenders, copying paperwork, or other common tasks that are routine.  It is possible to find a program that does not charge you these fees, so be sure to look for programs with the lowest amount of additional fees charged because these programs will cost you less in the long run.

Improve Your Life By Eliminating Your Debt

Written by Toi Williams on Feb 25th, 2012 | Filed under: debt relief

Paying off your debt can be very important to your future happiness.  Paying off your debt can positively affect many areas of your life and result in better opportunities in the future after you have completed the process of getting out of debt.  Paying off your debt can improve your credit score quickly and help you get the things that you desire for yourself and your family.

Approval For Additional Credit In The Future

Paying off your debt will give you opportunities to be approved for additional credit in the future.  Being approved for credit is very important if you ever need a new car or want to obtain a mortgage to buy a house.  Paying off your debt increases your chances of lender approval as they see that you are capable of repaying your debts.

Paying off your debt will also result in approval for higher credit limits than lenders would offer if you were still carrying debt.  This allows you to have enough credit available for any financial emergencies that may arise.  If you are successful at eliminating your debt, you may qualify for personal credit at low interest rates after a few years of demonstrating good financial responsibility.

Lower Interest Rates

Paying off your debt will help you qualify for lower interest rates on different types of financial products.   People that have demonstrated a determination to pay off their debt and shown financial responsibility afterward qualify for low interest rates because they have shown the lender that they will repay their debt obligations.  These people are not considered to be a credit risk for the company.

Paying off your debts encourages the company to give you a lower interest rate because there is a very good chance that they will be receiving their money back in a timely manner.  The ability to qualify for a low interest rate for different financial products can save you hundreds of dollars in interest payments each year.  It is much easier to complete the process of paying off your debt when you have the determination to get out of debt, so it is very important that you do all that you can to get out of debt completely and follow through on your goal.

Interested In Using Debt Elimination Programs To Repay Your Debts?

Written by Toi Williams on Feb 20th, 2012 | Filed under: debt relief

Many of the folks that would like to find a debt elimination program to help them repay all of their debts and avoid all future debt do not appreciate the importance of understanding how the debt elimination programs operate.  There are hundreds of types of debt elimination plans available across the country and each one offers debt repayment solutions that can be very helpful for removing the person from a difficult economic situation.  Choosing a good debt elimination program is very important for being able to repay all debts and repair your credit.

Providing Economic Assistance

The details of the debt elimination programs will explain different types of repayment techniques that the individual can use to eliminate their debts.  The individual using the debt elimination program should know about the different techniques available and the requirements for each one before determining which techniques will be the best for them.  The moderators of the program can answer any queries that the individual may have about what they need to do for the repayment plan and help them find the right repayment techniques for their current economic situation.  In some cases, the debt elimination programs may be able to suggest ways to save cash by using some of the lesser known tactics of the financial industry.

Outlining The Steps Needed

Debt elimination programs can provide an individual with the steps that will be needed to repay all of their debts and repair their credit score as quickly as possible.  Most folks do not use these types of programs on a regular basis so they may not understand all of the terms involved.  Some debt elimination plans have many requirements to follow so the programs can accurately determine what will be needed for the individual to repay their debts in a way that will not dramatically affect their lifestyle or financial stability.

Bad Financial Habits You Need To Break

Written by Toi Williams on Feb 15th, 2012 | Filed under: mindset

Nearly everyone has bad habits when it comes to finances and spending and most do not realize the damage they are doing to their financial future every time they perform one of these actions.  Each of these habits can create a number of problems that can be difficult to extract yourself from, but breaking these habits can save you hundreds of dollars each year.  Each of the habits can be difficult to break, but once you have broken them, a little dedication and forethought will prevent you from readopting these bad habits.

Neglecting To Check Your Credit Report

Not checking your credit report for inaccuracies on a regular basis is a very bad habit that can cost you a lot of money.  Reviewing your credit report allows you to see if any creditors have mistakenly reported negative information about you to the credit monitoring bureaus or if an identity thief has opened accounts in your name.  Current law requires the credit monitoring bureaus to investigate any errors that are reported to them and correct any mistakes that are found in your credit report. The removal of inaccurate items can increase your credit score and allow you to obtain lower interest rates on loans.

Not Following A Budget

Creating and following a budget can be difficult, but it is a very important part of being responsible with your money.  Creating a budget ensures that you are not spending more money than you can afford and that you have put money aside for your important expenses and savings goals.  A budget can help you take control of your finance and see what you are spending your money on each month.  Following a budget can also help you increase your savings by helping you identify unnecessary spending and trim expenses to a more reasonable amount.

How Can I Tell If I Need Credit Counseling?

Written by Toi Williams on Feb 11th, 2012 | Filed under: credit score

Needing credit counseling can affect your life in negative ways but a lot of the individuals that need credit counseling are unaware that their credit score is as bad as it is.  Your credit history is not one of the things that you see on a frequent basis, so it can difficult for you to determine where you fall on the credit scale.  If you think you need to enlist the services of a credit counselor in order to improve your credit score, there are several different ways you can use to determine your credit score and where you fall on the credit worthiness scale before you call.

Credit Score Estimation

One method to use to determine where you fall on the credit score scale is credit score estimation.  Using this technique, you take the amount of debt carried and your financial actions over the last several years to determine whether your actions have led to your credit score increasing or decreasing.  If you have been able to pay off your credit cards, put money into savings, and have not been late on any of your bills for the past several years, you can expect a credit score increase.  If you have missed some payments and have used more than 40% of your available credit, you can expect your credit score to decrease.

Some credit score calculators available on the internet will take your estimated information and calculate what range your credit score is likely to fall into.  Although this method is imprecise, it will give you a reasonable estimate of what your credit score may be.  As long as you are honest about your actions over the past few years, you may be able to correctly judge the credit score level that you are at currently and whether you need credit counseling.

Credit History Reviewing

Another method of determining whether you need credit counseling is to obtain a copy of your credit history and score from a credit monitoring company.  You will need to find good companies to obtain your credit history from and, after you have verified your identity to the company; your personal credit information will be released to you.  It can take two weeks or more to receive the information due to the large number of requests that these companies handle each day from businesses and individuals.   If there are issues with the information submitted, it can take even longer for you to find out if you need credit counseling.

A Money Management Program Can Improve Your Life

Written by Toi Williams on Feb 8th, 2012 | Filed under: mindset

Many people do not understand how important a money management program can be to your future happiness.  A money management program can have an effect on many different areas of your life and create better opportunities in the future once you have completed the program and repaired your credit.  Completing a money management program can help you repair your credit more quickly and go a long way towards helping you get the things that you want in life.

Future Credit Approval

Completing a money management program will give you a good chance of being approved for additional credit in the future.  Being able to receive approval for additional credit can be important if you ever want to buy a new car or get a mortgage to buy a home.  Repairing your credit with a money management program will give you a much better chance of getting approval from the lender or the credit card company that you would like to do business with.

Completing a money management program encourages future creditors to approve you for a higher credit limit than they would if you had a low credit score.  Access to additional credit allows you to have enough credit available to handle any financial issues that may occur.  People that have used a money management program are often qualified for personal credit at reasonable rates within a few years of completing the program with the continual demonstration of financial responsibility.

Lower Interest Rates

People that have completed a money management program will typically qualify for a lower interest rate on their credit products than a person that is having trouble repairing their credit.  People that have learned good money management and have demonstrated financial responsibility are not viewed as a credit risk for lenders and they can authorize a lower interest rate because they know that they will be receiving their money back in a timely manner.

How Does A Debt Relief Company Reduce My Debt?

Written by Toi Williams on Feb 6th, 2012 | Filed under: debt relief

Many people looking for relief from high debt levels are reluctant to contact a debt relief company because they are unsure of what the company would be able to do to reduce their debt.  There have been news stories about debt relief companies who scam their customers rather than help them with their financial issues and these news stories have made some people wary about contacting a debt relief company.  The truth is that there are many different things a debt relief company can do to reduce your debt and because the people that work for these companies are trained to get results, they may be more effective at reducing your debt than you would think.

Contacting Lenders

One of the main purposes of a debt relief company is to contact lenders on the person’s behalf to negotiate a deal where the person pays a portion of the amount that they owe the lender to settle the account.  The lender may be more willing to listen to a debt relief company representative that they have a good relationship with than deal with the person holding the credit card account directly.  The representatives of a good company will continue to negotiate with the lenders until they have gotten you to best deal possible.

Reduction Amounts

The amount that the debt relief company will be able to reduce your debts will depend on your debt situation.  In some cases, the lenders may not be willing to compromise so the debt relief company will not be able to do much at all.  On the other hand, if the lenders have a good relationship with the debt relief company and are willing to negotiate a deal for the repayment of the debt, then the debt relief company may be able to reduce the amount that the person owes by up to 35%.  A debt relief company will try to help the person as much as they can, but the results can vary from situation to situation.

Sure Signs You Are Facing A Difficult Financial Situation

Written by Toi Williams on Feb 4th, 2012 | Filed under: debt relief

When you have financial difficulties, it’s a stress marathon. Right now, there are millions of people who are in, heading into, or slowly climbing out of a difficult financial situation.  Some people purchased houses they can no longer afford.  Others have lost their jobs.  There have been some that are facing a divorce or a death in the family. In many cases, the financial issues are due to circumstances that they didn’t see coming, or are beyond their control.

If you’re facing financial difficulties, chances are that you have been doing everything you can just to keep your bills paid.  Once your housing payment is made, you may have to choose which other bills are paid that month.  You’ve cut your budget to the bare minimums, sold things, or do without necessities and are barely treading water. You’ve had to become an expert in sales, budgets, and determining the difference between a want and a true need to make it through each month.

The first thing you should do when facing financial difficulties is to immediately write up a new budget that reflects your current financial situation.  Sit down with your spouse and decide on a reasonable budget that takes care of necessities for yourselves and for your kids.  It may take a while to happen, but your situation will get better. You or your spouse may find a second job or find a better-paying primary job and your current austerity will help you spend less and save more so that you will not find yourself in this position again.

Your goal should be to not have to obsess about every penny that goes into or out of your checking account.  When you work for so long just to keep your head above water, there can be a big temptation to forget your willpower and freely spend when life finally takes a good turn. Some people are so relieved to not have to worry about money that they overcompensate and begin to overspend.  To avoid this problem, make specific decisions about what will be bought and where the money will go and put some of your money toward an emergency fund that you can use if you ever face financial difficulties again.