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Nail
Down Credit Details Before Applying for a Home Equity Loan
(ARA) - In spring, young thoughts may turn to love, but for many homeowners,
their thoughts turn to a room addition or a kitchen renovation. And as
low interest rates and rising real estate prices help more homeowners build
equity faster, many are using that equity to make home improvements. Borrowing
against the equity in your home makes sense for many reasons, but you should
consider all your options carefully before making a decision.
Home equity loans can be more attractive
than other kinds of credit because, in many cases, you gain some tax breaks
on interest. Additionally, because the loan is secured by your home, it
will likely have a lower annual percentage rate. However, home equity loans
aren’t right for everyone or for every situation, so make sure you carefully
weigh the pros and cons before putting your house on the line. “You’ll
also want to be sure your credit report is in good shape before you apply
for a loan,” says Maxine Sweet, vice president of public affairs for Experian,
a global information solutions company.
There are two basic types of home
equity loans: lump sum loans, which work like second mortgages, and home
equity credit lines, which work more like credit cards. In both cases,
the amount you can borrow is limited by the equity you have accumulated
in your home. You can calculate your equity by subtracting the unpaid balance
of your mortgage from the fair market value of your home. “Other factors,
such as your credit history, income and current financial responsibilities
are also taken into account,” says Sweet.
To make sure your credit history
won’t hold you back from qualifying for a home equity loan, visit an online
credit reporting service such as www.experian.com to quickly and easily
access your credit report. Make sure all the information on your credit
report is accurate. It is not unusual to have variations in your name or
address. The important facts are whether all the accounts being reported
are yours and if the payment histories reflect the way you have actually
made your payments. If you notice anything questionable, deal with those
issues before applying for a home equity loan.
Making the Right Choice
With a lump sum home equity loan,
you receive the full amount of the loan when it is opened, and pay it back
in fixed monthly installments over the life of the loan. This type of loan
can be good for debt consolidation, buying a car, education fees, major
home improvements like additions, or paying large, unexpected bills.
A home equity line of credit allows
you to draw off your loan as you need it, usually by writing a check. Your
monthly payment is usually a percentage of the total outstanding principal.
This type of loan offers lots of flexibility, because you can borrow (and
pay interest on) only the amount of money you need at the moment.
Here is a checklist of items to consider
as you shop for a home equity loan:
* Make sure all costs, fees, terms
and charges are disclosed.
* Find out the variances to your
interest rate, if applicable, including the “cap,” or ceiling, and the
amount of the margin.
* Look into all conditions that may
apply to your credit line, such as a minimum amount per withdrawal.
* Find out your repayment options.
Make sure you have all the facts
before making your decision. Remember, your house is being used as collateral,
so be certain you are able to make your payments on time, or you risk losing
your home.
For more information on checking
your credit report, visit www.experian.com.
Courtesy of ARA Content
Protect
Your Family from Identity Theft
(ARA) – We protect our families in so many ways. We make sure our smoke
detectors are working, ask everyone to buckle up, and encourage the kids
to wear sunscreen. But have you thought about credit protection?
The Federal Bureau of Investigation
reports that one in five families is a victim of identity theft each year.
Baby boomers caring for aging parents or with teen dependents attending
college should be particularly attentive to family credit protection. As
graduates leave the nest, increased credit activity makes them easy targets
for identity theft. In addition, an increasing number of perpetrators have
launched scams particularly targeting older Americans.
Identity thieves are not always strangers
but can be friends, roommates, co-workers and sometimes even relatives
who capitalize on their relationships to commit fraud. Unfortunately, they
have an even greater chance of successfully assuming an identity because
of the amount of personal information they have access to through connections
with their victims. One of the best ways for individuals to combat this
threat is to regularly check their credit report.
According to Robin Holland, identity
theft expert and senior vice president of Consumer Services for Atlanta-based
Equifax, “Identity theft is a reality that consumers can easily protect
their loved ones from experiencing.” Last year, families spent $5 billion
dollars and 300 million hours resolving identity theft related issues.
These out-of-pocket costs and time burdens decrease significantly when
the crime is caught early and prevention tools are in place.
“It is imperative that consumers
take the same proactive approach to credit health that they do to ensure
the physical health and well-being of their families,” said Holland.
Top Five Tips for Protecting Your
Family
Use a Credit Monitoring Service
You can sign up for a service such
as Equifax’s Credit Watch Family Program that alerts users to activity
indicating possible identity theft The program features e-mail alerts within
24 hours of any suspicious activity and monthly “no alerts” to reassure
you that your credit file is safe. The service also features $20,000 in
identity theft insurance for each membership as well as one-on-one victim
assistance with an identity theft specialist.
Lock It Up
Make sure your family keeps all financial
information and personal records locked at all times especially if you
have a housekeeper, babysitter or guest in the house. Remind teens that
this practice is especially important when living on college campuses.
Watch Your Mailbox
Criminals can gain most of the information
they need to commit identity theft right in your mailbox. Use a locked
mailbox and pick up your mail promptly at all times.
Shred it to Protect Your Credit
Be sure that your family shreds all
sensitive documents before disposing of them.
Don’t Let Hackers Crack Your Credit
Code
Be sure the virus protection software
on your family computer is current and never open attachments from strangers.
Other safety tips include using firewall programs and secure browsers with
high-level encryption and password protecting any sensitive documents stored
on your computer. Also, never discard a computer without “ghosting” it
-- using a wipe program to eliminate personal information.
The experts at Equifax have developed
the following quiz to determine your family’s risk. Answer the questions
below to determine your family’s score:
* Do you care for an elderly family
member? Add 5 points.
* Did a teen dependent recently move
away to attend college? Add 5 points.
* Does your teen dependent have a
roommate? Add 10 points.
* Has your immediate family ordered
credit reports during the past two years? If not, add 10 points.
* Do you believe that people look
through trash for credit or financial information? If not, add 10 points.
* Are elderly family members aware
of the risks associated with giving personal information, particularly
their Social Security Number (SSN), over the telephone? If not, add 10
points.
* Do your teen dependents keep their
financial information under lock and key? If not, add 10 points.
* Is the identification number provided
on a member of your immediate family’s driver’s license a SSN? If so, add
10 points.
Scoring
40 points or more -- high risk.
Between 15 and 40 points -- your
family’s risk is average. The risk is higher if your family’s credit scores
are good.
15 points or under -- congratulations,
your family has a high identity theft IQ. Keep up the good work, but don’t
let your guard down.
For more information about identity
theft prevention and credit education, contact Equifax at www.equifax.com.
Courtesy of ARA Content
Credit Tips for
Newlyweds
(ARA) - Figuring out finances may not be romantic, but discussing your
views on money and your fiscal fitness before getting married can save
you and your spouse some unpleasant confrontations down the road.
“People have different relationships
to money,” points out Maxine Sweet, vice president of public affairs for
Experian, a global information solutions company. “Talking openly about
things like spending vs. savings ensures that both partners share the same
financial goals.” She recommends having a personal finance “date” each
month to pay bills and discuss finances -- whether it’s setting up a household
budget, paying off credit cards or figuring out how to save for a big-ticket
purchase like a house or car.
One topic that newlyweds need to
discuss is credit, especially if one partner has a less than stellar credit
history. The first step in this discussion should be reviewing both of
your credit reports for any inaccurate information. Web sites like www.experian.com
give you quick and easy access to your credit report and an opportunity
to purchase a credit score to learn what positive and negative factors
are affecting your credit risk.
Check pertinent information such
as your name, previous and current addresses, Social Security number and
account details. If you find any inconsistencies on your report, this is
the time to dispute them -- before you apply for an important loan.
Credit reporting agencies maintain
separate files on each individual, so credit histories will not be combined
when you marry. Only jointly held accounts or accounts for which one spouse
is an authorized user on the other’s account will appear on both credit
reports. Your individual accounts remain your own.
When you apply for credit jointly,
both of your reports will be reviewed during the application process. Even
then, however, information from each report, while it may affect the outcome
of getting the loan, will not become a part of the other person’s individual
credit history. “This can work to a couple’s advantage in certain instances
where one person’s credit is less than perfect,” says Sweet.
If either you or your spouse-to-be
has had trouble getting credit alone, try setting up a joint account to
capitalize on your shared income and one person’s stronger history. This
is especially important for women; every year, women who have never paid
a bill late are denied credit because they have no credit history in their
own names.
While we’re on the topic of names,
if you change your name when you marry, be sure to notify your creditors;
so they can start reporting information to the credit reporting agencies
under your new name. Your new name will be added automatically to your
credit report.
Keep on Top of Your Credit History
Sweet offers these tips to ensure
that your credit record will be in good shape when you need it:
* Pay your bills on time -- Creditors
look for good credit risks. By regularly checking your credit, you can
make sure your bill-paying efforts are being accurately recorded, so creditors
and lenders can see your responsible credit habits.
* Keep your debt load reasonable
-- If a large portion of your income each month is already committed to
paying off other debt, lenders will wonder if you may have trouble paying
back an additional loan. As a rule of thumb, financial experts say that
non-mortgage debt payments should not exceed 10 to 15 percent of your take-home
pay each month. If your debts are currently too high, consider ways to
pay some down before you apply for new credit.
* Open at least one revolving account
like a department store card or bankcard -- Unlike an installment loan,
such as a car loan where you pay a fixed amount each month, you must personally
manage a revolving account. You determine how much you charge each month
and how high you let your balance build. How well you manage it is a great
indicator of how you will manage other new debts.
* Avoid unnecessary inquiries --
Whenever you authorize a creditor, employer or other business to check
your credit report, an “inquiry” is added to the report itself. An inquiry
usually stays on your report for two years. Lenders may interpret a large
number of inquiries occurring in a short period of time as a sign that
you are overextending yourself by taking on more debt than you can actually
repay (checking your own credit report does not impact your credit rating).
* Think twice before closing old
accounts -- You should look at other risk factors on your credit report.
Closing accounts may hurt your credit score, as this may increase your
debt-to-credit limit ratio. However, closing accounts could improve your
credit score if you have too many open accounts giving you high potential
debt.
These simple steps will ensure that
your credit history will speak in your favor when you need it.
For more information on checking
your credit report, visit www.experian.com.
Courtesy of ARA Content
