Debt to income is a ratio of your total monthly debt payments to your total monthly income expressed as a ratio or percentage. It is a rather simple calculation but it can be deceiving unless you include all debt and all income in the calculation.The calculation of your debt to income ratio is a straightforward one. You simply divide your total monthly debt payments by your total net income (that is your income after taxes). While some debt is unavoidable and may even be desirable for achieving your financial goals the real question is how much debt is too much; just where do you draw the line. Obtaining credit is often a function of a loan officer calculating the debt to income ration as a way of determining your ability to meet new obligations. Too high a debt to income ration will also have a negative impact on your FICO score, often making credit obtained more expensive than it needs to be. Below I suggest categories for inclusion in calculating your debt to income ratio to see where you stand.Monthly Debt Payments to Consider:Mortgage or rent paymentsPayments on a home equity loanCar paymentsStudent loan paymentsMinimum credit card payments times 2Other outstanding loan amount paymentsChild support paymentsMonthly Income to Consider:Total net or take-home payChild support or alimony payments received1099 Income after taxes divided by 12Other monthly incomeNow add up debt and income and divide.The above list is only a guideline for gathering personal information. It may include every possible aspect of your debt/income but you may need to add categories or not use some of the categories in your calculation. If you add lines to your debt calculation do not include bills for services or products unless you have placed such bills under a payment plan such as establishing a fixed payment plan with your dentist. Under income do not include windfalls such as one time gifts, an insurance settlement, an inheritance or lottery winnings.So now you have made the calculation. How can we answer the question how much is too much? When applying for credit, the loan officer will look at your debt to income ratio as one factor in making a decision but it will not be the only factor considered. The same debt to income ratio may be great for one family but may have a negative impact on another. Debt to interest ratios in the end are a subjective tool for loan officers to make decisions about your ability to meet a new obligation. There are some general guidelines, however, that will give you a reasonably solid picture of where you stand in the eyes of a loan officer.30% or less is generally considered as an excellent ratio by the vast majority of loan officers20% - 36% is a good ratio and will most likely not cause any problems with loan officers or have a negative impact on your FICO score36% - 40% puts you on the edge of the limits of acceptability. Most lenders will ask for an explanation for why your debt to income ratio is so high. In addition, a debt to income ratio in this range begins to have a negative impact on your FICO score so lenders look to other strong numbers before making a decision to loan more money to you40% or higher sends up red flags with lenders and your FICO score. Often, this high a ratio will be a deal killer with most lendersBy calculating your own debt to income ratio you begin to get a handle on your own financial situation. If the ratio is too high it tells you you are too deep in debt and you must do something to reduce debt. Of course, if it is very low then you need do nothing. For most lenders and the impact of debt to income on your FICO score a positive reduction in the ratio is presumed to be a sign of a healthy financial condition and goes a long way in enhancing your credit history. Source: http://www.articlecircle.com/ - Free Articles Directory
About the AuthorRoger Passman is President of WDC Financial Services, Inc. His firm helps consumers repair damaged credit by building a bridge to a secure financial future. Visit WDC on the web at WDC Financial Services
Friday, January 11, 2008
Thursday, January 10, 2008
Tips and Hints for Choosing the Right Credit Card to Help You Rebuild Your Bad Credit
Sometimes life gets you down. Here are the secrets from the pros for choosing the credit card that's going to help you get back up!
Bad things happen to good people. I know that. You know that. Unfortunately, the credit reporting bureau doesn't seem to know that. If they did they wouldn't have trashed your credit report the way they did! Fortunately, there are a number of easy ways to help rebuild your bad credit, including taking the leap and getting a credit card intended for just that purpose.
The question is, what credit card should you get? Which one is going to help you rebuild your bad credit as opposed to dragging it down further? What do you need to know to make an educated decision when it comes to the world of credit and high finance?
Underneath are the secrets given by the pros for people who are trying to get back up after they've fallen off the good credit wagon. It doesn't matter why it happened, or how it happened. The question is, how can you fix it?
1) Steer clear of cards that advertise their availability for bad credit. Although these cards aren't always the worst of the worst, the terms you are going to be expected to meet are usually not anything you'd touch with a ten foot pole if you weren't desperate. If you wouldn't get it when your credit was good, you probably don't want it now.
2) Read the fine print. It isn't the interest rates on a credit card that get a person in trouble, it's little things like annual fees, cash withdrawal fees, monthly maintenance fees, late payment fees, APR after the initial introductory period...you get the idea. Be sure that you know EXACTLY what you are going to be paying for before you sign on the dotted line.
3) Check out the card's reputation. There are a number of sites online that post reviews of credit cards by their reviewers, and it can give you an excellent idea of exactly what you're going to be in for. Remember, while one bad review does not a poor credit card make, if all you see are bad reviews you probably want to stay away.
4) Consider a secured line of credit rather than an unsecured one. A secured line of credit is one that is guaranteed by your assets. The company has some method of recompense if you default on your "loan", and as a result you may be able to find one with better terms.
5) Don't go home with the first credit card that comes to call. Do your homework to find one that is going to give you the best chance to rebuild your bad credit rather than sink you farther into debt.
There are a number of things you should be aware of before signing on with a credit card company to rebuild your bad credit. If you are careful you will find that you are easily able to leave your past behind you. If you are not...well, let's just leave it at that.
Gust A. Lenglet is an accomplished author and financial advisor in the field of personal finance and creating a personal budget. He is President and CEO of Crown Financial Concepts, Ltd. and offers online budgeting software as well as articles and information for creating a budget and debt reduction.
Article Source: http://EzineArticles.com/?expert=Gust_Lenglet
Bad things happen to good people. I know that. You know that. Unfortunately, the credit reporting bureau doesn't seem to know that. If they did they wouldn't have trashed your credit report the way they did! Fortunately, there are a number of easy ways to help rebuild your bad credit, including taking the leap and getting a credit card intended for just that purpose.
The question is, what credit card should you get? Which one is going to help you rebuild your bad credit as opposed to dragging it down further? What do you need to know to make an educated decision when it comes to the world of credit and high finance?
Underneath are the secrets given by the pros for people who are trying to get back up after they've fallen off the good credit wagon. It doesn't matter why it happened, or how it happened. The question is, how can you fix it?
1) Steer clear of cards that advertise their availability for bad credit. Although these cards aren't always the worst of the worst, the terms you are going to be expected to meet are usually not anything you'd touch with a ten foot pole if you weren't desperate. If you wouldn't get it when your credit was good, you probably don't want it now.
2) Read the fine print. It isn't the interest rates on a credit card that get a person in trouble, it's little things like annual fees, cash withdrawal fees, monthly maintenance fees, late payment fees, APR after the initial introductory period...you get the idea. Be sure that you know EXACTLY what you are going to be paying for before you sign on the dotted line.
3) Check out the card's reputation. There are a number of sites online that post reviews of credit cards by their reviewers, and it can give you an excellent idea of exactly what you're going to be in for. Remember, while one bad review does not a poor credit card make, if all you see are bad reviews you probably want to stay away.
4) Consider a secured line of credit rather than an unsecured one. A secured line of credit is one that is guaranteed by your assets. The company has some method of recompense if you default on your "loan", and as a result you may be able to find one with better terms.
5) Don't go home with the first credit card that comes to call. Do your homework to find one that is going to give you the best chance to rebuild your bad credit rather than sink you farther into debt.
There are a number of things you should be aware of before signing on with a credit card company to rebuild your bad credit. If you are careful you will find that you are easily able to leave your past behind you. If you are not...well, let's just leave it at that.
Gust A. Lenglet is an accomplished author and financial advisor in the field of personal finance and creating a personal budget. He is President and CEO of Crown Financial Concepts, Ltd. and offers online budgeting software as well as articles and information for creating a budget and debt reduction.
Article Source: http://EzineArticles.com/?expert=Gust_Lenglet
0% Interest Credit Cards - Fact or Fiction?
Credit cards with a 0% APR are being touted on the news, but are they telling you the whole story?
As interest rates steadily climb an increasing number of consumers find themselves leaning towards 0% interest credit cards in an attempt to keep their debt to a minimum while still enjoying the benefits of a line of credit. The question being raised by many, however, is what aren't they being told about these miracles of modern credit?
On the surface a card with a 0% APR looks like a great opportunity. 0% interest credit cards? Yeah, I've got one. Doesn't everyone? The chance to shop without tallying up huge amounts of interest is an opportunity that can appeal to even the most tight fisted of consumers.
To sweeten the pot, many credit card companies will throw in other benefits along with their stellar interest rates. 0% interest credit cards and the opportunity to earn double frequent flyer miles after your first $200 in purchases. Free balance transfers. Reward points. Anything to attract the unwary consumer.
READ THE FINE PRINT! These offers are not all they appear! First and foremost, you usually aren't going to be getting a credit card with a 0% APR. What you're going to get is one with an introductory period 0% APR. This means that after the first thirty days your interest rate is going to fly up-usually in excess of 20%. That's how companies manage to keep a full clientele despite their outrageous rates. They lure them in, and by the time they realize what's happened they're already paying on a huge balance.
Late payments can also have an impact on your APR, although that usually affects the permanent APR more strongly than it does the 0% interest. If you have a late payment your interest can go up as much as 10%. Miss a payment? Keep going up. You'll be paying on that bill for the next twenty years if you're not careful-which presents another problem associated with 0% interest credit cards.
It's very easy to get caught up in the excitement of a 0% interest credit card. That excitement usually leads to a little too much retail therapy-perfectly acceptable during that 0% introductory period but hard on the pocketbook when the interest rate goes flying back up. Suddenly you find yourself holding the bag for hundreds of dollars of interest on purchases you really didn't need and never would have made otherwise.
The bottom line is that you should approach 0% interest credit cards with caution. If it sounds too good to be true, it probably is. Don't allow that introductory period to convince you to sign on the dotted line. Judge a 0% interest credit card on the same criteria that you would anything else. You'll never be disappointed-in your credit card, anyway!
Gust A. Lenglet is an accomplished author and financial advisor in the field of personal finance and creating a personal budget. He is President and CEO of Crown Financial Concepts, Ltd. and offers online budgeting software as well as articles and information for creating a budget and debt reduction.
Article Source: http://EzineArticles.com/?expert=Gust_Lenglet
As interest rates steadily climb an increasing number of consumers find themselves leaning towards 0% interest credit cards in an attempt to keep their debt to a minimum while still enjoying the benefits of a line of credit. The question being raised by many, however, is what aren't they being told about these miracles of modern credit?
On the surface a card with a 0% APR looks like a great opportunity. 0% interest credit cards? Yeah, I've got one. Doesn't everyone? The chance to shop without tallying up huge amounts of interest is an opportunity that can appeal to even the most tight fisted of consumers.
To sweeten the pot, many credit card companies will throw in other benefits along with their stellar interest rates. 0% interest credit cards and the opportunity to earn double frequent flyer miles after your first $200 in purchases. Free balance transfers. Reward points. Anything to attract the unwary consumer.
READ THE FINE PRINT! These offers are not all they appear! First and foremost, you usually aren't going to be getting a credit card with a 0% APR. What you're going to get is one with an introductory period 0% APR. This means that after the first thirty days your interest rate is going to fly up-usually in excess of 20%. That's how companies manage to keep a full clientele despite their outrageous rates. They lure them in, and by the time they realize what's happened they're already paying on a huge balance.
Late payments can also have an impact on your APR, although that usually affects the permanent APR more strongly than it does the 0% interest. If you have a late payment your interest can go up as much as 10%. Miss a payment? Keep going up. You'll be paying on that bill for the next twenty years if you're not careful-which presents another problem associated with 0% interest credit cards.
It's very easy to get caught up in the excitement of a 0% interest credit card. That excitement usually leads to a little too much retail therapy-perfectly acceptable during that 0% introductory period but hard on the pocketbook when the interest rate goes flying back up. Suddenly you find yourself holding the bag for hundreds of dollars of interest on purchases you really didn't need and never would have made otherwise.
The bottom line is that you should approach 0% interest credit cards with caution. If it sounds too good to be true, it probably is. Don't allow that introductory period to convince you to sign on the dotted line. Judge a 0% interest credit card on the same criteria that you would anything else. You'll never be disappointed-in your credit card, anyway!
Gust A. Lenglet is an accomplished author and financial advisor in the field of personal finance and creating a personal budget. He is President and CEO of Crown Financial Concepts, Ltd. and offers online budgeting software as well as articles and information for creating a budget and debt reduction.
Article Source: http://EzineArticles.com/?expert=Gust_Lenglet
Wednesday, January 9, 2008
10 Steps To Tackling Your Credit Card Debt Problem
First of all, you can take comfort in the fact that you are not the only one fighting credit card debt problems. There are hordes of people who have even worse credit card debt problems when compared to yours; all of them seeking an effective way to eliminate the credit card debt. So what is the solution to your credit card debt problem?Well, the solution really is to smash the credit card debt with full force and eliminate it completely. Now how do you do that?There are many ways in which you can solve your credit card debt problem. Different people suggest different ways of tackling it. However, here is a simple step by step account of what you can do to get rid of your credit card debt.1. Take stock of the situation i.e. draw up a table with the following fields – Credit card name, balance, payment due day (the day of the month by which you are required to make payment of your credit card bill), APR, reward points earned, redemption offers applicable for your reward points balance, remarks.2. Fill the table up with data from your various credit cards.3. Check if any reward points that you may have accumulated can be used to make partial payments or cover any kind of fees or even if the points can be bartered for something you need.(spending less means preventing the credit card debt problem from getting worse).4. If you have any available credit on any of your credit cards it would worth your time to call those credit card companies and check on the availability of lower interest rate balance transfers. If they offer reduced interest rate balance transfers, it would be wise to transfer any balance of a higher interest rate credit card.5. You may also consider applying for another credit card (I know, I know, your trying to eliminate your credit card debt, not create more.) Hear me out first. If you can get a lower interest rate balance transfer credit card that you may be able to consolidate one or more of your credit cards into one, this would allow you to do two things: first you can eliminate at least one (hopefully more) of your higher interest rate cards. Second, it will cause your required monthly payment to be lower allowing you to pay a larger amount towards your principal, not just your interest.6. First eliminate debt on the credit card contributing the most to your credit card debt problem i.e. highest APR (interest rate) and highest balance. Start with one. Pay the minimum required monthly payment on all the other credit card while applying the most money you can afford to the credit card first on your list to pay off. This will allow you to reduce the balance faster and to break the cycle of the never ending balance payoff.7. Once you have eliminated the debt from one credit card, do yourself a favor and destroy it. In todays day and age it is almost a necessity to have a credit card, but you only need one and if you have to use it, you should pay the balance off completely every month.8. Practice controlled and healthy spending habits (after all you are looking to get rid of credit card debt problem for good and not just temporarily.9. Look for alternative means of adding to your income (more money means earlier termination of credit card debt.)10. See your debt reduce with time and celebrate the day when you finally put an end to your credit card debt problem.Remember,it is ultimately up to you to make a change in the way you use and percieve credit cards and credit card debt. You CAN take control of your financial future and put and end to credit card debt forever.Source: http://www.articlecircle.com/ - Free Articles Directory
About the AuthorAt http://www.creditcardrecap.com it is our mission to not only provide you with the information you need to accurately compare and apply for a variety of quality credit cards, but also provide online resources for all of your credit card matters. For more credit card information and online resources, simply go to http://www.creditcardrecap.com
About the AuthorAt http://www.creditcardrecap.com it is our mission to not only provide you with the information you need to accurately compare and apply for a variety of quality credit cards, but also provide online resources for all of your credit card matters. For more credit card information and online resources, simply go to http://www.creditcardrecap.com
Getting a Credit Card If You Have Poor Credit
In today's world getting a credit card when you have poor credit doesn't take a rocket scientist. The fact is, a lot of companies are still willing to issue a credit card to you even if you have poor credit. The catch is, they are going to charge you an arm and a leg in interest payments. If you're not interested in paying 23% or even more for the privilege of carrying a small piece of colorful plastic in your wallet or pocketbook, you'll be happy to know that there are several simple alternatives.
One of the most common alternatives, and certainly one of the simplest, is to apply for a secured credit card from Orchard Bank or Capital One or any of a number of other banks that offer such cards. With a secured card you deposit a certain amount of money into a (usually) interest-bearing savings account. Your bank then issues you a standard-looking credit card with a credit line equal to the amount that you have on deposit. You may not withdraw money from the savings account that secures your card as long as you have an outstanding credit balance unless you wish to close your account.
With a secured credit card you are treated in virtually exactly the same way as you would be if your account were not secured. You are still subject to late fees, penalties, overdraft fees...the lot. For this reason it is very important for you to pick and choose your secured card just as carefully as you would any other credit card.
And the best way to do that, of course, is to find a website with plenty of choices and which allows you to compare lots of different cards side-by-side so you can make an informed business decision as to which one is right for you.
One thing you do not want to do is to think that you have to come crawling, hat in hand to the credit card companies and simply take the first thing they offer you just because you have had trouble with credit in the past. There are lots of secured cards out there for you to choose from. All you need is a good site where you can easily compare them and then cherry-pick the best one.
My Recommended Site:
For The Largest Possible Selection of Credit Cards At The Best Rates This is My #1 Recommendation
Article Source: http://EzineArticles.com/?expert=Larry_Parr
One of the most common alternatives, and certainly one of the simplest, is to apply for a secured credit card from Orchard Bank or Capital One or any of a number of other banks that offer such cards. With a secured card you deposit a certain amount of money into a (usually) interest-bearing savings account. Your bank then issues you a standard-looking credit card with a credit line equal to the amount that you have on deposit. You may not withdraw money from the savings account that secures your card as long as you have an outstanding credit balance unless you wish to close your account.
With a secured credit card you are treated in virtually exactly the same way as you would be if your account were not secured. You are still subject to late fees, penalties, overdraft fees...the lot. For this reason it is very important for you to pick and choose your secured card just as carefully as you would any other credit card.
And the best way to do that, of course, is to find a website with plenty of choices and which allows you to compare lots of different cards side-by-side so you can make an informed business decision as to which one is right for you.
One thing you do not want to do is to think that you have to come crawling, hat in hand to the credit card companies and simply take the first thing they offer you just because you have had trouble with credit in the past. There are lots of secured cards out there for you to choose from. All you need is a good site where you can easily compare them and then cherry-pick the best one.
My Recommended Site:
For The Largest Possible Selection of Credit Cards At The Best Rates This is My #1 Recommendation
Article Source: http://EzineArticles.com/?expert=Larry_Parr
How Do You Know Which Credit Card is Best For You?
Choosing a credit card can be almost as important as choosing the proper mortgage or the right car loan. Believe it or not, if you want to save money and get the most value from that little piece of plastic in your wallet you really need to give some thought as to which credit card is right for YOU.
The right credit card for you might not be the right one for someone else. How can that be? Because different people use credit cards in different ways and for different purposes. The WAY you use your credit card determines which card will save you the most money.
For example, if you obsessively pay off your balance every month without fail then you may very well need a different card from someone who carries a high balance every month and only pays the minimum due. Let's take a closer look at this so you can understand why.
If you pay the total balance due on your card every month then the interest rate that your card carries is of no concern to you whatsoever. What is of concern to you is the grace period that your card offers between the time that you make a purchase and the time that interest begins accruing, and, quite possibly, the other perks that your card offers.
In other words, if you always pay your card in full every month then you need to find a card with the longest grace period possible and you would want to look for a card that has other perks that you could use such as car rental coverage or bonus points that could be redeemed for cash or gifts at some point or low fees for cash advances.
On the other hand, if you habitually carry a balance on your card from month to month then the grace period that a card offers is meaningless to you (there is no grace period if you carry a balance from one month to another) and what you need to search for is a card with the lowest possible interest rate.
In either case the most important thing you need when looking for a credit card is CHOICE. You need to be able to see the features of dozens of cards side-by-side so that you can pick and choose which card has the best interest rate, grace period and other features that make that card a perfect fit for you, your lifestyle, and for your particular financial situation.
My Recommended Site:For The Largest Possible Selection of Credit Cards At The Best Rates This is My #1 Recommendation
Article Source: http://EzineArticles.com/?expert=Larry_Parr
The right credit card for you might not be the right one for someone else. How can that be? Because different people use credit cards in different ways and for different purposes. The WAY you use your credit card determines which card will save you the most money.
For example, if you obsessively pay off your balance every month without fail then you may very well need a different card from someone who carries a high balance every month and only pays the minimum due. Let's take a closer look at this so you can understand why.
If you pay the total balance due on your card every month then the interest rate that your card carries is of no concern to you whatsoever. What is of concern to you is the grace period that your card offers between the time that you make a purchase and the time that interest begins accruing, and, quite possibly, the other perks that your card offers.
In other words, if you always pay your card in full every month then you need to find a card with the longest grace period possible and you would want to look for a card that has other perks that you could use such as car rental coverage or bonus points that could be redeemed for cash or gifts at some point or low fees for cash advances.
On the other hand, if you habitually carry a balance on your card from month to month then the grace period that a card offers is meaningless to you (there is no grace period if you carry a balance from one month to another) and what you need to search for is a card with the lowest possible interest rate.
In either case the most important thing you need when looking for a credit card is CHOICE. You need to be able to see the features of dozens of cards side-by-side so that you can pick and choose which card has the best interest rate, grace period and other features that make that card a perfect fit for you, your lifestyle, and for your particular financial situation.
My Recommended Site:For The Largest Possible Selection of Credit Cards At The Best Rates This is My #1 Recommendation
Article Source: http://EzineArticles.com/?expert=Larry_Parr
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