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Installment Debt April 8, 2011

Posted by CredZoo - Tame Your Credit in New Credit Information, Tips For Good Credit.
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Part II in our “How to Manage Debt & Credit” posts: What is installment Debt? Is it good or bad?

Debt comes in many forms, and most types help us in our daily lives — when used responsibly. Most people cannot buy a home without some financial help, and many cannot buy a car (especially a new one) without some sort of financing. The money borrowed to purchase large-ticket items is called installment debt: The debtor pays a portion of the total at regular intervals over a specified period of time. At the end of that time period, the loan with interest is paid off.

Installment debt allows you to purchase items at a competitive interest rate: for example, 5% to 7% for a 30-year home mortgage and 8% or 9% for a car loan. The loan is paid back on an amortizing schedule, monthly payments of a fixed amount that remain constant over the life of the loan. At first, most of the monthly payment consists of interest. In later years, principal begins to be paid down.

Installment debt is easily budgeted and the debt is eliminated on a predetermined date. Even for those who may actually have the cash to purchase the desired item, installment debt can make financial sense if you can earn a higher return (after taxes) on your investment of cash than you must pay on your installment debt.

Having an installment loan can also help an individual establish credit. One factor considered by credit reporting agencies when calculating credit scores is how many types of debt a consumer has utilized. If a person has made timely payments on both a credit card and installment debt, he will receive a higher score than if he his only obligations have been revolving credit. While it is good to be cautious before entering into any loan agreement, an installment debt may be a good option. Handled properly, it is a way to acquire a large ticket item through budgeted payments. The lower interest rate and set term can be an attractive alternative to large credit card purchases.

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Managing Debt and Credit April 5, 2011

Posted by CredZoo - Tame Your Credit in New Credit Information, Tips For Good Credit.
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Credit was once defined as “Man’s Confidence in Man.” But in fact, the definition of credit today is more like “Man’s Confidence in Himself.” Using credit today means you have confidence in your future ability to pay that debt. Forty years ago, your parents may have paid cash for their homes and their cars, a largely unheard-of event today. If they borrowed money at all, chances are it was from a relative or friend, and not a financial institution.

Today, debt and instant credit are part of our everyday lives. The convenience of instant credit, however, has taken its toll. Many individuals use credit cards to spend more than they earn, and a few of these people actually build themselves a debt prison from which some never emerge. On the other hand, those who never use credit can be denied a loan or credit when they have a justifiable need or use for it. Using credit establishes a history of financial responsibility: Until you establish a credit history, your chances of qualifying for an important loan, such as a mortgage, are greatly reduced.

What is the balance between using credit wisely and staying out of overwhelming debt? Our next posts will look at the facts and some pros and cons. Stay tuned! Subscribe to our blog to read the upcoming topics including:

  1. Managing Debt and Credit
  2. Installment Debt
  3. Revolving Credit
  4. Using Credit Wisely
  5. Eliminating Credit Card Debt
  6. The Role of Debt
(Thanks To Yahoo Finance)

The Basics For Getting A Car Loan March 30, 2011

Posted by CredZoo - Tame Your Credit in Tips For Good Credit.
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Borrowing money to buy a car isn’t hard if you have two things – sufficient income and a good credit rating.  As we showed you last time, if you qualify for a car loan with subprime credit, you are most likely, paying between $4,000 and $10,000 more over the course of the loan just for having credit score issues! So, this makes the first step for getting a car loan getting your credit repaired with CredZoo!

Things you’ll need:

  • Kelley Blue Book
  • Consumer Reports
  • Consumer Reports
  • Internet Access
  • Car Insurance
  • Car Loans
  • Kelley Blue Book
  • Consumer Reports

 

 

The Basic Steps For A Loan:

    • 1
      Choose your new set of wheels and negotiate a price with the seller
    • 2
      Research interest rates. Several Web sites, such as Bankrate.com, publish surveys of loan rates across the United States. Compare the rates with those offered by your local bank, credit union or car dealer.
    • 3
      Find out what your current car is worth as a trade-in. Research values in the Kelley Blue Book Used Car Guide, available at the library, your bank or on the Internet.
    • 4
      Determine how much of a down payment you can make. Use your trade-in value and cash – or just cash – to come up with the standard 20 percent usually required. Talk with the car dealer that has the new car you want.
    • 5
      Apply where you find the best rates, and the length of the loan and monthly payment fit your budget.
    • 6
      Consider saving more for a down payment or choosing a less expensive car if you don’t qualify.
    • 7
      Build a better credit rating if that’s what causes you to be turned down. Try again after six months of paying your bills on time.


(Thanks To EHow.Com)

How Much Does Bad Credit Cost? March 22, 2011

Posted by CredZoo - Tame Your Credit in About CredZoo.
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The cost of credit repair is small compared to the cost of living with bad credit. Below are a few examples from CredZoo.org of the cost of bad credit:

Auto Loan

If you are making vehicle payments, you are, most likely, paying between $4,000 and $10,000 more over the course of the loan just for having credit score issues. This added interest shows up every month in a higher payment.

Example: Car Loan $23,000 Vehicle Financed for 5 Years

Credit Status Rate Payment Interest Paid
High Credit Score 3% $413 $1,796
Slightly Damaged 9% $477 $5,646
Damaged 18% $584 $12,042

Home Loan

Damaged credit on a vehicle is nothing compared to the effect of damaged credit on a home loan. A typical home can cost between $180,000 and $300,000 more in interest of the 30 year loan, if you are buying the home with damaged credit.

Example: $120,000 home paid over 30 years:

Credit Status Rate Payment Interest Paid
High Credit Score 7% $798 $167,410
Slightly Damaged 9% $966 $227,596
Damaged 13% $1,327 $357,878

$190,000 home paid over 30 years:

Credit Status Rate Payment Interest Paid
High Credit Score 7% $1,264 $265,066
Slightly Damaged 9% $1,529 $360,361
Damaged 13% $2,1202 $566,640

What Is The National Association of Credit Services Organizations? March 9, 2011

Posted by CredZoo - Tame Your Credit in New Credit Information.
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First, you can call it NACSO for short. You may have heard of this organization recently in the news as NACSO officials recently met with members of the US House Financial Services Committee. It was reported that at the meeting representatives on both sides discussed the importance of accurate credit reports and how it relates to access to affordable consumer credit.  “Removing inaccuracies on credit reports and improving scores is critical to consumers often achieving the American Dream,” said NACSO Board Member Doug Parker and CEO of RMCN. “It was refreshing to hear from Congressmen and Senators who appreciate the role of the industry and how we benefit consumers.”

On it’s website, NACSO explains that the “National Association of Credit Services Organizations advocates industry standards and ethical business practices for the credit repair industry. Founded in 2007, NACSO services to streamline the industry through our Standards of Excellence seal. NACSO members promote compliance throughout the industry on national levels.

National Association of Credit Services Organizations’ members go through a certification enrollment process to aid in the prevention of fraudulent activity throughout the credit services industry. NACSO’s Standards of Excellence goes further than the Credit Repair Organizations Act and touches on items essential to the honest growth of this industry.”

CredZoo is proud to be a member of the National Association of Credit Services Organizations!

The NACSO Standards of Excellence is an honor – and not every company is eligible.  To read more about the Standards of Excellence requirements, click here. To learn more about how CredZoo applies these standards to helping our clients, click here.