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*******CREDIT ANALYSED********
Credit rating may be defined as an individuals ability to fulfill his or her financial obligations based on past performance or activities.It is therefore the reputation you establish as a new borrower.It is extremely important to build and maintain good credit in today's society as the ability to obtain loans, financing,mortgages etc may be significantly affected by your failure to do so. It could also be the difference between having to pay a high interest rate as against a lower interest rate.Obviously if you are seen as a risky client based on your credit rating then to protect themselves against that risk, financial institutions will charge you a higher interest rate.
The Do's and Dont's if you want to create and maintain good Credit.
Do's
1.Try to monitor your own credit report frequently and check for any discrepancies or concerns that may occur on your report.It is always beneficial to discover and investigate issues with alacrity as the probability of it been corrected significantly decreases with time elapsed.The credit bureau should investigate any concerns you have and make the necessary adjustments if necessary.You may actually request your own credit check online free of cost in some cases or for a small fee.Requesting your own credit does not constitute an inquiry and will not be counted as a hit on your credit score.The main credit bureaus in the United States and Canada are Equifax, TransUnion and Experian.
2.It is important to pay all your bills on time as late payments affect your credit score negatively.One way of ensuring that you pay on timeis to set up automated payments from your account.This way you won'thave to worry about forgetting to do so as it is automatically withdrawn from your account at specified dates.
3.Ensure that you sort out all outstanding debts before you decide to close out an account.Too many times we see individuals failing to make sure that everything is paid off even if it is a very small amount and believing that by closing the account everything would be ok.The outstanding amount may show up on your bureau in the future as an uncollected amount which ofcourse hurts your rating.
4.Ensure that you at the very least pay the minimum payments due oncredit cards on time.That way even if you still have a balance on thecard then there will be nothing reported as late payments.
Dont's
1. Do not actively seek credit too aggressively as this will show up as inquiries on your credit statement and may be interpreted as desperation on your part.Sometimes if an institution sees that you have applied to several other institutions in quick succession and have not been successful then chances are they will wonder why and may also turn you down.It's like a cycle or domino effect in some instances so avoid applying for too many credit cards in a short time period.
2.Try not to own too many credit cards.It is ok to have a few but having too many may lead to mismanagement of your payment obligations or you maybe deemed to have too much credit.
3.Try not to keep your cards too close to the limits.Maxed out cards or balances too close to your limits may be interpreted as overusage of credit and may affect your credit score negatively.
Strategies for new credit builders
It may be particularly challenging for newcomers to a country or for new credit seekers trying to establish credit in the initial stages.A very short credit history may also affect your credit score.Sometimes it may even take a while for anything to show up and you may see messages such as "no financial history found" appearing on your statements. In these cases it is very important to remain patient and not become too discouraged. Here are a few strategies that you may use to start on the path towards establishing good credit.
1.If you can't obtain credit on your own then it may be a good idea to consider asking someone with established credit to cosign with you.Keep in mind however that if you default on your payment obligations then the cosigner may have to clear up your mess and this will also affect not only your credit score negatively but also theirs.So if someone does you the favour of cosigning with you then the best way to say thank you is to manage your obligations effectively and efficiently.
2.You may apply for a small installment loan and make regular, periodic and timely payments on this loan.After about 3 months then this will start showing up on your credit bureau.Effectively managing your loan will surely help your credit score.
3.You may apply for department store cards and use them effectively to help build credit.These cards are sometimes easier to obtain than the traditional credit cards from the financial institutions and are a decent credit building tool.Try not to have too many department cards though as these usually charge a higher interest rate and having too many may actually hurt your credit score.
4.Consider obtaining a secured credit card.A number of financial institutions are offering cards secured by deposits from the card holders.This deposit will be used to mitigate against the risk of you not being able to fulfill your payment obligations.At the end of a certain time period if everything is well then you will be reimbursed the funds that you gave as security.
Other factors that affect your credit.
1.Your job stability or employment status.People who are employed and demonstrates job stability are more trusted to repay their bills on time.
2.Reasonable credit usage and definitely not too high.
3.The length of your credit history will affect your credit.
4.Bankruptcy will ofcourse affect your score negatively.
5.Frequent Address changes may also affect your scores negatively as this may imply that the person is a bit unstable.
6.Foreclosures will also impact your credit score negatively
*******OPPORTUNITIES AMIDST THE RECESSION CRISIS********
We are all being affected in some way or another by the downward spiraling economies of a number of countries worldwide primarily due to what is happening in the United States of America.The United States is going through one of it's worst recession in years and inevitably this is affecting a lot of other countries worldwide.
The United States is arguably still viewed as a world leading country and if they are struggling then a lot of countries that trade or carries on other business with them will also be significantly affected. This is why even in Canada some analysts are also predicting doom and gloom as they believe a recession is inevitable since the economies and trading relationship are so closely tied. A lot of us are surely feeling the pinch as a result of the recession.There are significant job cuts and job restructuring occurring. Companies are closing down,with a few filing for bankruptcy.The stock markets worldwide are down,portfolios and investments value have declined drastically.Spending habits have changed considerably resulting in slow sales.Foreclosures continue to increase and the list could go on and on.People are worried, some feel hopeless.
Some are angry that they have worked so hard in their lives and to see their hard earnings dwindle in front of their very eyes is a hard pill to swallow.But folks, the recession is already here and we all have to deal with it or be consumed by it.I prefer the latter and I trust most of you concur.
All is certainly not lost, as within every crisis there are opportunities.Step out of the chaos for a moment and observe from the outside. Look at the wider picture and ask yourself this question.Where will I be when this recession comes to an end? Will I emerge from this crisis better off, worse off or in the same position I was in when it started? A lot of people are so devastated by the current situation that they are paralyzed with the fear of making any further decisions which may ultimately benefit them in the future.The ones who will prosper are those that are foreseeing the silver lining behind the dark cloud.They are looking to seize opportunities available today which would have been unheard of a couple years ago.It's all a cycle folks as things won't always be good and things can't be bad forever.
It is often through down and challenging times that wealth is created as it is normally at this time that opportunities are available on sale.Look at the major stock markets in the US,Canada and Europe for example.Quite a few of these stocks have seen their prices plummet considerably. Some, not because of any changes in company fundamentals,but simply because of the general fear and the rush to sell and get out as people start to panic. So what does this mean? If there is nothing wrong with the company and it remains a fundamentally strong organization with good leadership then inevitably these stock prices will go back up once things turn around. This represents good value stocks and these are the stocks that presents excellent opportunities to investors today. If you are still concerned about whether or not the markets have bottomed out , then you may practice dollar cost averaging where one simply purchases a dollar amount every month for a certain time period.This way if you purchase say $2,000 worth of stocks this month at $10 dollars each, and next month you purchase another $2,000 worth at $8.00 each, then in essence your average price would have been$9.00.You would have taken advantage of the downward price swing in the market which was a better choice than purchasing $4,000 dollars worth all at once at the $10.00.
Hence if you are unsure but feel the current prices are reasonable enough to start purchasing then this may be the way to go.What you shouldn't do is to wait until the prices start to increase then join the mad rush to get those stocks.In a way it's human nature to be this way but that's what determines how profitable your investments are.Try being a bit more proactive rather than reactive,and a bit of calculated risk sometimes never hurts, depending on your level of risk tolerance of course.
House prices,vehicle prices,mortgage rates and prime lending rates have all dropped, representing again great opportunity for persons looking to acquire real estate or for those seeking to borrow. Cheap loans are readily available and house prices are significantly lower. How long will it last? Nobody knows for sure, so you might as well take advantage of it while it lasts. A few years ago the housing market was a sellers market, now it is a buyers market. Surely it will be a sellers market again in the future. Need I say more? For those who took out a mortgage at the higher rates then they can in certain cases seek to refinance their loans, so all is not lost. It is also a good time for borrowing at these lower rates to consolidate debts. It's always a good option to have all your debts merged into one payment plan making it less stressful and more manageable.
So there are indeed excellent opportunities amidst the crisis .We justneed to have a more positive outlook on things and make wise,calculated and prudent decisions.We should try to become a bit more involved inour investment decisions by doing more research and educating ourselves about the different options available and also consider aligning ourselves with good financial advisors.This is not the first recession and it certainly won't be the last in our lifetime, but what is important is how we handle the situation and how we emerge from these challenges.
