1) Know your financial worth. It’s impossible to plan and stay on a budget if you don’t know how much money you have to work with. Know the source of all your income, and have a tax planning strategy in place.

2) Get a tight grip on your expenses. Analyze your spending habits, and keep track of where your money goes. No more impulse shopping! Include savings and / or 401(k) as an expense within your budget to help you save for retirement.

3) Paying off high interest debt first. Think about consolidating high interest loans into one low interest loan or personal line of credit. Both usually carry lower interest rates, and have one monthly payment to worry about. Try calling a low interest credit card company to transfer the balance of all your other credit cards to them to reduce interest costs. Sometimes card companies will offer lower interest rates on the portion you transfer in to them to compete for this business.

4) Don’t keep your credit cards maxed to their limits. While it may be tempting to pay only the minimum payment each month on your credit card, try paying off the entire balance to avoid interest charges. Keep a separate monthly list of who you pay interest to and how much, and see how quickly your concern grows to pay it off.

How Your Credit File is Rated

Here are the rating codes typically found in a credit file. The credit grantor (bank, department store, or oil company) issues the rating and not the credit bureaus. These are the credit bureau codes that define your relationship with each creditor you have on your file.

R0 – Too new to rate; approved but not used.

R1 – Pays within 30 days of billing; or pays back as agreed.

R2 – Pays in more than 30 days, but not more than 60 days; or is one payment past-due.

R3 – Pays in more than 60 days but not more than 90; or two payments past-due.

R4 – Pays in more than 90 days but not more than 120, or is three payments past-due.

R5 – Account is at least 120 days overdue, but is not yet rated an R9

R6 – (This rating has not been assigned)

R7 – Making regular payments under a consolidation order or similar arrangement.

R8 – Repossession

R9 – Bad debt account placed for collection.

There is more information on your credit report then repayment history alone: collection items you paid or neglected; every time you change your address; when your credit report is assessed by a lending institution, that company’s name is always logged.

The more companies that access your credit report in the same period of time actually hurts your chances of getting approved. Don’t become known as a “credit seeker”. As you shop at each bank for the best loan rates, each preform a “data pull” and review their copy of your credit report. They also know all the bank’s you apply to, and are not able to determine if you’re shopping for rates, or desperately need money, and are applying everywhere. This is known as “shot gunning” for a loan and is not a good practice.

As your credit agency report builds and updates with new information, a special model (Fair Isaac or FICO) takes all the available data when requested and creates a score. Every time you move, apply for credit, miss payments, etc., your score may be affected. The poorer the score, the more risk is seen by financial institutions when lending to you so the more you shop for credit, the less chance of getting approved. An ugly Catch-22 right?

Some lenders electronic application processes have built in filters that reference the bureaus’ score for you in the application process, thus directly influencing the success of your application, though the score is not the sole factor influencing the success of your application.

A creditor reviewing your credit report, after seeing a few credit inquiries listed around the same time, may wonder why you were never approved. Perhaps this lender wonders,  “were they missing something that the others didn’t”. As well, there is the risk that a few loans could be granted all at the same time in isolation from each other. That is to say that the other creditors were unaware of the other applications status (approved / declined) and you could very well be leveraged beyond your limits if all those loans were approved. Some people do this, and not only hurt themselves, as they can’t repay their commitments, that their credit score and file will now be compromised due to their own poor judgment as a borrower the next time they need financing.

As discussed before in this series, a credit card provider that regularly increases your limits ties up your borrowing power. Sometimes on your credit report, your credit card limit is not reported – only your highest balance. This means that if you have a card approved maximum limit of $10,000 and have never put more than $4000 on it, the trade line could actually be read as having a $4000 credit card. If you only use $4000 on your card, then reduce the limit to be the same and formally free up your borrowing power for future needs.

Continued in the Carol’s Borrowing Series Category of Clf.

It is prudent to tell the truth early on in your discussions with banks, to establish trust in your relationship with them. Revealing all unknowns in your relationship upfront provides continual comfort going forward for financial institutions, referred to as “knowing” their client. Small details, later on at times, can be overlooked when they know you. (There is a great disadvantage to revealing all, which we will discuss later on in this series).

When you are offering your home as collateral security there is a title search performed. If you have lied about not having a mortgage (or bent the truth in any way if that sounds any better to you) it will be discovered and your relationship with the bank will be permanently compromised. You likely will be asked to find another bank for all of your needs. When trust has been compromised, they likely will not do business with you again.

Bnaks are not allowed to share what they know about you to other banks, or lending institutions. Your file is confidential to them, as they report your repayment history to the credit bureaus only. Many people don’t fully understand this, and will complain that the banks act as a collective “big brother” who is watching everyone – this is not true and the only information they share is with the credit bureaus regarding your credit limits and your repayment history.

This means that if you have a poor relationship with one lending institution, they will not be allowed to spread this information and share it with other banks to warn them of a possible high risk client walking through their doors. This also provides a second chance for you to start fresh with a new bank if you’ve had some problems with the one you are dealing with now.

I don’t recommend anyone lie, or distort the facts. That doesn’t do anybody any good. I share these uncommon facts to illustrate that while most banks rely heavily on information your credit report file contains about you, sometimes it works against them through its incompleteness as much as it works against you when the information on your file is false. Though credit report information is weak at times, they are still the only regulated financial repayment history that modern banking systems have to rely on, that is arbitrarily collected from various sources.

The credit bureau was not designed to be a summary of all of your loans, credit cards or bank accounts. It was designed to simply act as a reference for would-be creditors to review what other lenders have experienced with you as their client. Banks still depend on their own ability to encourage you to “spill the beans” on all of the remaining details regarding your financial status, as they can’t review a complete picture solely from the credit agency reports. They need to get behind the information on the credit bureau agencies reports, while discovering the reasons behind the numbers that are only available through you, and what you say about them.

In a sales environment within a bank, it is also likely that they would not perform any extra diligence to search the title of your property to support your comments that you own it clear-in-free. They would simply make a note in your credit application that it was an earlier inheritance gift from your baby boomer parents (or whatever reason you could think of) and it is likely not to receive further attention so long as you don’t attempt to use the real estate as collateral.

Credit Agencies are Evolving in Modern Times

Records from a variety of businesses and their information are gathered by credit agencies. Financial institutions, retailers, and other credit issuers pay fees to belong to a credit bureau. They supply information about consumers as well as consult records of the bureau when considering their own applications for credit.

Credit bureaus such as Experian, Equifax, and TransUnion do not make the decision about whether a consumer receives credit of course. That’s up to the lender. Credit agencies only provide a historical picture, organizing all of the reported repayment history available on individuals, which has been collected over the years. Information can remain up to 20 years depending on what kind of information it is.

Their systems have evolved to include unbiased predictive scores to project a client’s future credit risk, or potential fraud. These predictions are driven by the information their file(s) contains on you. It also considers the number of times your file has been requested by creditors, how often your address has changed, your employment history, and any formal credit collection, judgment, or bankruptcy issues. They do not collect or exchange information regarding criminal records or charges (just in case you were wondering).

As credit bureau systems and filters continue to evolve, lending institutions depend on them more and more when making decisions in their own lending processes. Also, keep in mind that it doesn’t matter what state you live in, or move to. There is only one file with each credit bureau agency that contains your personal information. Any address changes you have made will be immediately be noted on their reports for all lending institutions to see next time you request more credit.

Credit agencies provide information to qualifying companies after being paid their fee. In some states auto insurance companies that request a copy of your credit bureau report to determine if they should raise your premiums or not each year, or even keep you as an insured driver. By doing this they are making the assumption that if you poorly manage your credit rating, something extremely valuable to the health of your financial future, then perhaps you are an irresponsible driver and are at greater risk of causing an accident. If the information was incorrect on your credit report, or out of date, your auto insurance rates could increase because of it. You must remain remain on guard that this type of financial profiling is not detrimental to you.

How to Get a Copy of Your Credit File (Report)

Unless you request your own credit file report and verify each trade line how can you be sure your credit history is accurate? A great question, is it not. Now I would like to speak a little bit about how to get a copy of your credit report from the agencies we have been discussing.

To obtain a copy of your credit file place a call to the primary bureaus or visit their webpage for further information on your file. In some states, your credit file information can be given out over the phone or received by mail. The local bureau’s telephone number is usually listed in the white pages of the telephone book. You will need proper identification and may be required to make your request in writing to assure your file is kept confidential. In most cases a copy of your credit report is available free of charge. If you’re not comfortable understanding how to read the information it contains, call to arrange an appointment by phone to review your credit file with a representative of that bureau. It is important to review and proof the information it contains regularly. This helps prevent people with similar spellings to your name having their credit information mixed in with yours. Believe it or not, this does happen from time to time.

Personally, I would stay away from companies who advertise their services as Internet-based credit report trackings which supposedly monitor your credit rating for you. These services charge a fee for them to access and monitor your credit report for changes. If a change occurs you are notified by e-mail. You are able to monitor your report personally for changes any time you want during the period of time you have paid for through their website.

I prefer to call the credit agencies myself, and monitor from the source. This way, I’m not completing personal information on the web site of a service provider I know nothing about. It would be hard to prove if these are legitimate companies. Inaccurate information collected from creditors will not be corrected on your file until you initiate the investigation – that is something you need to understand – fully and completely.

Continued in the Carol’s Borrowing Series Category of Clf.

In the first article on micro-loans we discussed what to do if you need a $5000 loan quickly. There’s been thousands of borrowers on that particular lending product informational – all looking for some quick funding for various different reasons. Usually these borrowers are needing between $3000 and $4000 dollars to pay off some debts or get a vehicle of some sort – whatever it is they need the loan fast and they don’t want any hassles regarding their credit score [rating] or their employment history. This is where is gets dicey.

$3000 Dollar Loans with Bad or Poor Credit

Most often then not borrowers who need a $3000 loan need it quickly (like today or yesterday) but the normal short-term lenders are scary propositions. These would be the payday loan and cash advance lenders we hear so much about, charging upwards of 300% to 500% interest, not withstanding the possible late payment fees and roll over fees. Luckily for most borrowers, these high interest rate, short-term lenders don’t provide loans as high a $3000 – they max out at $1500 usually.

Having a poor credit rating (or a seriously bad credit rating) is what usually drives borrowers to the payday loan and cash advance lenders in the first place, so “here in lies the rub – the question” ;

Where do I go when I need a loan for $3000 dollars when I have a bad credit rating

And furthermore, “who lends these kinds of micro-loans out for a reasonable interest rate and they do it in the same day of applying.” All of us who write for CLF have owned financial product web sites in the past and we have seen for years the first hand how hard it is to find a fast loan online that doesn’t involve ridiculous predatory lending rates. Usually these lending companies will never lend out $3000 cash money into your bank account the same day you apply, and they certainly won’t do it when you have a bad credit rating. So what are your options you ask? You still need the loan – right? Read on.

Depending on how much interest you are willing to pay on this micro-loan, you will be restricted by time, so before I go any further, we have to discuss the time factor.

Need a $3000 Loan Today?

Then there is the other factor – time. Most borrowers requiring (needing or wanting) a $3000 dollar loan need it fast. This means ASAP, pronto, right now, today, yesterday, quickly! These borrowers are highly motivated with a sense of urgency that borders on desperation. If this describes your current state of mind, and/or your current personal financial situation, then take a deep breath and calm down. There are is only two ways to get a loan for $3000 quickly.

The first place to go if you need a $3000 loan quickly is to borrow it from a family member or friend. This is an option that most borrowers are not interested in for two primary reasons – 1. they won’t ask family and friends for the money because of pride and; 2. they have already asked family and friends for a 3000 dollar loan and they have been turned down. This option is the most undesirable to discuss because it’s a pride issue, but it is the least expensive form of borrowing. Parents and/or siblings often don’t ask for interest on their loan as long as they get the money repaid within a reasonable time period. However, these kinds of loans between family members often have “strings attached”. I avoid family loans like the plague. Some of your reading this come from family backgrounds that have very little money in the first place so a family loan is simply out of the question. Keep in mind that this is usually the fastest possible way to borrow $3000.

The second place to go if you need a $3000 loan quickly is to borrow it as part of a larger loan. So instead of borrowing a measly $3000, you borrow $10,000 against some sort of asset. The asset can be real estate (property of some sort that you own), or a vehicle, etc. These loans are usually high-yield loans for the lenders in that they charge high interest rates and they are guaranteed to get repaid using your asset collateral. This the option I have usually chosen. Sometimes just getting a HELOC is a good way to go because of the lower interest you pay, but alas – some borrowers just don’t have any kind of realistic asset to use as collateral. When you don’t have any assets the bank considers valuable enough to secure a loan, you are in a tight spot.

The third place to go if you need a $3000 loan quickly is to borrow two payday loans for $1500 each. Most ALL payday loan and cash advance lenders use a tracking system called Teletracker to track whether or not you have borrowed and money from other payday loan companies, and whether or not your name is attached to a bad loan or a charge-off. The snag here again is the interest rates you are going to be paying. Whatever you do don’t be delinquent on these types of short-term micro-loans because you will be paying a huge penalty for it. NEVER roll these loans over. You have to be very careful with these kinds of loans, but at the same time, it is possible to get the loan in your bank account the same day – sometimes within an hour.

The fourth place to go if you need a $3000 loan quickly is to pawn some valuables. I know that this option is ugly and we’re scrapping the barrel here – so to speak, the but the fact is that these kinds of loans can happen very quickly as long as you have some valuables that a pawn shop dealer considers to be worth $3000. You will likely have to visit a few pawn shops to get a full $3000 out of these tight-wads. The deal here is simple. The pawn broker(s) will give you $3000 on a “pawn-note” and you will have to pay back the money in full within a agreed upon period of time, or your items will be sold by the pawn broker for whatever they choose to sell them for. You can be sure that the pawn shop owner will make more than $3000 by the time all of your items are sold.

Calculate The Interest on a Quick $3000 Loan Today

So let us do a quick calculation of a $3000 personal cash loan using 3 different sets of terms and interest rates – shall we? Fo these cost of borrowing (COB) calculations we’ll use our free loan calculator below. You can use this personal financing calculator as much as you want.

Ok, here are three different scenarios;

1. 8 percent over one year for $3000 Loan

1. Loan amount = 3000
2. Interest Rate = 8 percent
3. Length of loan term = 1 year
4. Period between payments = 30 days (monthly)

Loan Calculation Results
Total Amount to be payed: $3129.98
Total amount of interest $129.98
Payments: $257.26

2. 15 percent over two years for $3000 Loan

1. Loan amount = 3000
2. Interest Rate = 15 percent
3. Length of loan term = 2 year
4. Period between payments = 14 days (monthly)

Total Amount to be payed: $3458.65
Total amount of interest $458.65
Payments: $66.33

3. Payday Loan for $3000 Rolled Over Late For a Year

Here you can see why you must be careful who you borrow money from. Furthermore it shows you NEVER roll over your loan payment on a $3000 micro-loan (short term high interest personal financing)

1. Loan amount = 3000
2. Interest Rate = 400 percent
3. Length of loan term = 1 year
4. Period between payments = n/a

Loan Calculation Results
Total Amount to be payed: $9498.78
Total amount of interest $6498.78
Payments: n/a