NEWSLETTER
SPOTLIGHT:
Debt Free in 2003 ?
5 steps for a financially
healthy New Year
Five Steps for a Financially
Healthy New Year.
OF THE MONTH:
Get your New Year's
resolution started with
pocketbook and your peace of mind. Make
a pledge to reduce your debt and boost
& Analysis
ASK AUDREY:
Good intentions
gone bad
significantly improve your credit profile, reduce the loan rates you
could receive and save you a lot in interest payments. It just takes
a few easy steps and a little dedication to take charge of your
debt.
credit information and go over the records with a fine tooth comb.
Write down the monthly payment, debt amount, interest rate and
term of each debt on a sheet of paper. Next, write down your total
monthly income and list your estimated monthly expenses. Order
your Credit Report and Credit Score online to get a baseline for
tracking your improvements.
paying each debt and how much interest that debt collects per
KnowYourLoanRate
Web site. We are
considering buying a
home, so I signed up
for this service. Indeed
it is very useful.
debt and small loans should probably be paid before low-rate
student loans and home loans. A "yes" answer to any of the
questions below is a red flag for accounts that need immediate
attention:
Your service may prove
to save me thousands
of dollars since my
current mortgage broker
Are there accounts above 50% of their credit limit?
Do you have any debts that are close to being paid off?
Which debts have the highest annual fees?
mortgage rate almost
2% higher than your site
suggests I might be able
to qualify for!"
~ Michael M.
3. Negotiate and Consolidate ? Start working on those
high-interest credit card debts first. Call your creditors and
negotiate lower interest rates or move your balances to less
expensive credit cards. Accounts that are above 50% of the
available line of credit can harm your credit score; pay off or
move some of the balance to a different card. If you have a credit
card debt that is too large to handle, consider taking out a
personal loan from your bank for the amount. Your bank can
probably give you a much lower rate and a more lenient payment
schedule.
4. Refinance ? After taking control of your credit
card and small debts, take a look at your major loans. Would it
make sense to refinance your mortgage? You can calculate the
benefits and costs of refinancing online at
KnowYourLoanRate.com. Could you consolidate some of
your other debts into the loan? What about cashing out some home
equity to pay off a high-interest debt?
5. Stick to the Plan ? Now that you have lowered your
rates and refinanced your loans, create a payment schedule and a
monthly budget. See exactly how much you can afford to pay each
month by subtracting your expenses from your monthly income.
Divide the remaining amount between the accounts, paying the most
to the debts with the shortest terms and highest interest rates.
Create a payment calendar with the due dates and the payment
amounts you just calculated for each bill. Sign up for automatic
bill payment through your bank or register for online payments to
keep you on schedule. To continue to keep your credit on track,
register for Credit Monitoring online and you'll receive quarterly
credit reports, credit alert emails and trending charts that
outline how much your credit improves over time. Set goals for
yourself and don't forget to celebrate when you reach debt-removal
milestones!
Score & Analysis!
TrueCredit wants to help you be Debt Free in 2003! For a
limited time, receive a FREE Credit Score & Analysis packed
with helpful tips for improving your creditworthiness when you
purchase a 3-in-1 Credit Report online. Watch your credit score
improve in 2003 as you reduce your amount of debt and improve
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Make a New Year's resolution to take charge of your credit. Start
today with a FREE Credit Score and Analysis. Click here to
learn more >>
A few years ago, I allowed a coworker to "take over payments" to
purchase a vehicle that I was making payments on. I was trying to
help her get out. Now I realize this was a big mistake.
I have recently found out that quite a few payments were
significantly late. Of course this is now on my credit rating. I
moved from the local area and was not contacted by the bank until
a payment was three months behind.
Do you have any suggestions of how I can get this removed from my
credit rating? This was a very important lesson for me to learn! I
will NOT do this again!
Joe B.
Dear Joe,
It seems that your good intentions to help a friend may be leading
you into a fiery inferno of financial woes. Because the loan is
registered under your name, you are responsible for repayment and
therefore the late payments will be recorded on your credit report
for up to seven years. You may have a much bigger problem looming
though. If your friend continues to have payment problems, the car
could be repossessed or the loan foreclosed causing serious
damage to your credit.
My best advice is to straighten out this messy situation as soon
as possible. You need to contact an attorney for help with the
legal details. It is likely that your original auto loan included
a clause prohibiting the transfer of the loan to a third party.
The violation of this clause could have triggered a "due on sale"
status that leaves the vehicle open to repossession.
Your options may be limited. Along with your attorney, try to find
a solution that either returns the car to your possession or
legally transfers the car and the financial obligation to your
friend. With a little legal help and some smart decisions you
should be able to have this problem cleared up before more damage
is done.
Have a question for Audrey? Simply reply to this
newsletter. Frequently asked questions will be featured in future
editions of TrueCredit Wire.
Until next month,
audrey@truecredit.com
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