Finance Guide

In order to purchase a house, car, boat, or other major item, you need credit, unless you are lucky enough to have a huge bank roll. Most people don’t. In order to get credit, you will need to have nearly perfect credit history. This is especially true when buying a house. Ever since the credit crisis pulled down the economy, lenders are using more rigid testing procedures to determine who they lend money to.

It used to be a credit score of at least 700 could get you credit easily. Not anymore. The market no longer does that. Unless you have dealt with a bank many times in the past, and they know you well, or you have good verifiable income, along with excellent credit history, you may just find a “reject” stamped on your loan application.

Although having a FICO score of 700 is good, it isn’t great. A higher FICO score is needed to qualify for loans. Many lenders are requiring you have to have higher FICO score of at least 720. This is if you want to get the lowest interest rates possible.

It would be a good idea to get a copy of all three of your credit reports, as well as to check your consumer credit score. Look at your credit report to determine why your FICO score is so low. You know a higher FICO score is needed to qualify for loans, so you should find every possible account that you may have forgotten about, or that may be keeping you from obtaining a high score. Maybe you have too much open debt. Maybe you have a habit of paying your bills late. What about your credit cards? Do they have high limits on them?

It is obvious having a higher FICO score is needed to qualify for loans. It will be up to you to investigate your credit to see where you stand. This way you can take the steps to raise your credit score, especially if it is below 720 (if this is the level that lenders are requiring).

Do your homework. If you are diligent in finding your FICO score and credit history, you can take the necessary steps to correct it. FICO has recently revised its scoring formula, so it’s a good idea to check out your score if you haven’t for awhile. Knowing where you stand means you have a better chance of getting a loan.

Credit score gets affected by every single credit transaction you do. Yes its right, even if you apply for credit card, personal loan, mortgage loan or try any debt instrument, your credit score gets affected. Even if you pay your installments or dues on right time then also your credit score gets affected. In short you can say that your credit rating gets updated with any kind of transaction you do, if you dont pay your dues on time then you get bad rating and if you pay as per schedule then you get positive rating.

Now, you might be wondering how debt consolidation or debt counseling can affect your credit score. Well it affects your credit score in two ways, If you have debt consolidation loan which allows you to pay your debts in full then it affects adversly and your credit rating improves whereas if your debt consolidation loan which does not allows you to pay your debts in full then your credit score is affected negatively.

Credit Score is very important factor as most financial instituitions use it to determine your loan application. If you have good credit score then you can get loans easily and also at very affordable interests rates, whereas if you have bad credit then you might need to pay more interest on your loan.

Debt Settlement or Debt Negotiation is a process of negotiation in which the lender and borrower agrees to settle debt for certain amount which is lower than actual debt amount. The process of debt negotiation is usually implied for pending payments of old invoices,  credit card debt, lawsuits, utility bills etc.

The creditor usually does not agrees to negotiate if the consumer pays his debt or installment on regular basis. They only act when the consumer is unable to pay regular installments because consumers balance keeps growing due to ongoing interest and late fees charged. 

Many online websites provides complete information about debt settlement and debt negotiation. With the help of Do-It-Yourself Debt Settlement guides one can approach on their own. For debt settlement and negotiation you can hire a lawyer or debt settlement companies which are expertise in this field. The debt settlement company negotiates your debt on your behalf with the creditor so that you can have the best comforting deal. However, these companies charge a certain amount of fees for their service.

One thing to keep in mind that the process of debt settlement hurts your credit report which is used by creditors to judge the performance so that they can decide whether the applicant meets up their criteria of lending.