Most of us are concerned about our physical health, sore joints, bad back, and general heart conditions, but you can’t forget about your financial health. To maximize your financial health it’s important to know how Lenders make decisions when determining if you’re fit for a loan or lump sum.
Here are the top 8 factors that are taken into account the most.
- Payment history – Do you pay your bills on time or are you constantly late or in default?
- Current debt – Do you have too much debt, can you take on more?
- Collections – Have you defaulted on your obligations and now a collection agency is handling the issue of collecting a debt?
- Public records - Have you had any bankruptcies or liens? Sold structured settlement payments in the past?
- Types of credit – What kind of accounts have you signed up for? (credit card, auto loans, mortgage, etc.)
- Credit history – Have you established a credit history and how long is it?
- Recent activity – Have you been actively seeking a loan or lump sum, how many new credit inquiries have you had?
- Credit score – What is your credit score? Your credit or FICO score can range from 300-850
These factors are all important and are often used by lending institutions when considering your application.
Your FICO credit score is important to your overall financial picture. The higher the score the more likely a lender will feel you are likely to pay them back and not default. It tells lenders how you’ve managed your accounts in the past and whether they should have any concerns. You are entitled to a free credit report once a year from the credit reporting agencies, you can obtain a copy by visiting www.annualcreditreport.com
To achieve peak fitness for your financial health, be mindful to:
- Pay your bills on time. Nothing hurts your credit score the most than late payments, being reported to collection agencies and bankruptcies.
- Get your free annual credit score. Like a visit to the doctor check your credit periodically, if there are any mistakes or red flags notify the credit agencies immediately.
- Control your debts. Don’t run up your credit card, it’s easy to swipe it and forget it, review your activity weekly and stop using it if you are getting close to the max
- Build your credit history. Start to build up a credit rapport responsibly. Begin having some bills put in your name and pay them on time every time. If you get a credit card pay more than the minimum every month and use it sparingly.
- Avoid too many inquiries. Every inquiry on your credit report is recorded, lenders may often be leery if you’ve had to many inquiries in a short period of time indicating you are taking on too much debt
Get financially healthy. Here are some tools to help you out
How lifestyle changes can improve your bottom line
Another year comes to an end and many of you are starting to think about 2012. Perhaps you may try to come up with resolutions like getting out of debt, quitting smoking or losing weight. Every year approximately 45% of American adults will make 1 or more resolution. However within 6 months almost half of those resolutions were abandoned.
There are many reasons why these resolutions fail including unrealistic goals, not having a plan in place goals that are too broad and no accountability. According to some experts, resolutions are about taking something away, leaving a person feeling deprived. By accentuating the positive you change the whole mindset. Instead of making a resolution, make a commitment to change in the New Year.
Whether it is looking better, feeling better or breaking the cycle of debt you need to look at what are the underlying cause of the problem and address it first. By breaking habits such as shopping when you are depressed, not taking account small daily purchases and stop impulsive spending you will be headed in the right direction.
Another issue is that consumers are often too optimistic about potential earnings. For example, relying on a tax refund, future raises or selling future annuity payments to pay for items later can be dangerous to your finances. If you do not get the amount of money you need to pay off your purchases you leave yourself open to huge interest rates or penalties.
So maybe you decided you want to make a change but you’re not sure how to get started. The best way to start is to define what you want to accomplish and make a plan. Make sure you develop obtainable, measurable goals and develop rewards for when you accomplish your goals. Below are some suggestions on how to get started.
- Define your financial goal. Whether it is to become debt free by 2013, create an emergency fund or go back to school put it in writing.
- Determine what is holding you back from accomplishing those goals. Is your spending getting in the way of your dreams, perhaps you are not sure.
- Create a spending diary to see where your money is going. Track every purchase you make no matter how small it is. Identify places you can make small changes that can really add up.
- Create a budget and stick to it. Don’t forget to save money too. It will help you avoid the debt roller coaster when emergencies happen.
- Reward yourself. Give yourself little treats that won’t derail you when you hit milestones.
- Don’t let setbacks derail you. If you have a setback, don’t quit trying to obtain your goal. Just regroup and move on.
- Change your relationship with money. Avoid triggers like shopping your way out of a better mood and spending mindlessly by developing better habits such as exercising when you’re depressed or leaving your credit cards at home.
- Get organized. Late fees and penalties waste money and they are damaging to your credit score. Develop a system that works for you and pay your bills on time.
- Get professional help. Sometimes you are in over your head. Perhaps you need professional credit counseling or financial advisors who can help you develop a system that works for you.
- Keep your options open. Sometimes your financial situation requires a more drastic approach such as selling some of your future annuity payments to avoid foreclosure or to pay off high interest debt. Remember to research all your options and don’t make hasty decisions.
If you have periodic payments from a structured settlement annuity, a divorce settlement, a single premium immediate annuity, life insurance policy, inheritance, royalties, or even a pension and you want to know more about selling some your future payments, call Rescue Capital at 866.688.3532. With today’s lower rates, your future payments could be worth more than ever before.
Little things can add up. Try these tips to improve your financial outlook.
- Don't be late-With bill reminders from Mint.com you can organize all your bills in one place, set reminders and stop racking up late fees.
- Avoid debit card fees-4 Ways to beat debit card fees from Wisebread.
- Save money on groceries-You don't need to clip a single coupon to save money on groceries.
- New savings on mortgages-Lenders currently have incentives to entice new borrowers.
- Low mortgage rates-Mortgage rates drop below 4%.
Another rainy Friday in Philadelphia. Perhaps these stories will spread a little sunshine.
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