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Mind Your Business

Mind Your Business Week of 3-12-2014

Credit is the Key

The thoughts of being financially independent is something most people think about daily. Being a person who thrives on being independent always feels they are put in the position where they have to do it, because no one else has done it.

Some are not so lucky and have to depend on their parents or kids to do everything for them. But in life we must have someone that we may need help from or to lean on for support.

Banks gives loans for almost anything you need, home improvement, cars and yes even buying a house. Smaller loans may be done by applying for a credit card, no matter what you want to do in life you need money.

When applying for a bank loan with bad credit it is pertinent that you discuss your situation with the loan officer upfront. The chances that they can help you secure a bank loan will greatly improve if they know in advance that you are aware of your bad credit mistakes and that you have learned your lesson and desire a second chance.

While many bad credit loans are conducted online, you are much better off to consult a loan officer in person. When meeting the loan officer be sure to have all the necessary documents and information with you. 1. Bring your Driver's license for identification. 2. Have your social security card with you. A bank cannot loan you money without your personal Social Security number. 3. You should bring any documentation that will serve as evidence of assets you may have. This proof of ownership may help you secure the loan as it could stand as collateral. Sources of this proof of ownership include property deeds and vehicle titles. 4. It will be vital that you are able to prove any primary and secondary income. 5. You should also bring proof that will explain your previous bad credit. The better you can explain your previous mistakes the better chance you will have of securing a bank loan despite bad credit. When re-establishing bad credit through a bank loan it is of the utmost importance that you do your best to negotiate the best interest rate to assure that your monthly payments are affordable. Be sure to examine the terms of the loan before signing the application, be sure that all of the terms of the loan are the terms you agree to so there are no surprises later.

Now one thing for sure you need to understand not all banks work the same, some may accept you with a 600 – 620 credit score, other banks may need a higher credit score. When I was working with reviewing credit applications at the bank I would see many in trouble for not even paying their cell phone bill.

Once you get credit like a home loan or a credit card the most important thing is to keep control of it, so you can achieve your financial goals without getting too far into debt. Most heard that from your parents already, but not many young people are following that rule these days because they buy everything with cash.

When I was growing up the American dream was to buy a house so you could stop renting, now more people are opting out of the purchase of a house and many have even walked away from a house for various reasons.

When you get credit, you still have to be careful. Your available credit is how much credit you have left on a line of credit or credit card; it is your credit limit minus your outstanding balance. Be careful to keep your spending below this amount. Following the “20/10 Rule,” it is a good practice not to let your credit card debt exceed more than 20 percent of your total yearly income after taxes. And each month, don't have more than 10 percent of your monthly take-home pay in credit card payments.

A lot of people are now using the internet to pay for their bills. You can also use automatic loan payments from your checking account is a simple, convenient way to regularly make your payments. Be sure to schedule them according to your pay schedule to ensure you have sufficient funds for the payment when it is drafted.

So make sure you help keep things in order by managing your money and make sure to mind your business.

Follow me on twitter @JimmyWadeIII

Write Wade at the Call & Post, 11800 Shaker Blvd., Cleveland, OH, 44120, or e-mail him at jwade@call-post.com.