The thing about which I’ve been thinking a lot is the effect of a foreclosure on a person’s credit score, due to its impact the whole housing crisis is taking place.
Frankly speaking it is one of the worst black marks you could ever get on your credit report other than bankruptcy, but the impact may not harm you going forward as much as it once was harmful in the past.
When you are going to apply for bad credit mortgage loans, you should first have knowledge about the FICO credit scoring system.
FICO Credit Scoring System
If you have a credit score that is in the range of 570 to 580, then on the property you may need to put at least 15 percent as down payment. If this is the scenario, then you will not be able to get an approval for 100 percent financing.
In order to avail home mortgage loan, those individuals who have credit score in the range of 585 to 599 are required to put 5 percent down payment. When your credit score is in the range of 600 to 620 you will surely get an approval for 100 percent financing. Having a credit score of more than 620, you can get bad credit mortgage at low interest rates.
Interest-only bad credit mortgage loans
An opportunity of paying only the mortgage interest is given by Interest-only bad credit mortgage loans. On a monthly basis you are required to pay the mortgage interest. Throughout the duration of the loan your interest rates are going to remain the same. When the term is completed then you can choose to refinance. Interest-only bad credit mortgage loans could be advantageous for you when you are suffering from bad credit.
Your credit score in some ways is meant to be a snapshot of your overall financial habits – especially your habits surrounding debts and other financial responsibilities. Developing some good financial habits can help your credit score by putting you in a good financial position.
Good financial habits will ensure that you don’t get into too much debt and that you are able to meet your financial duties easily. There are a few financial habits that are especially credit-friendly:
One of the biggest reasons that people develop poor credit is overspending. In many cases, this overspending is caused by a lack of budget. A budget can tell you how much you should be spending on each item in your life. This allows your financial life to stay nicely organized.
Contrary to popular belief, a budget does not have to be constricting or boring or complicated. Simply note how much you earn each month, and on a piece of paper, write down how much you really need to spend on savings, rent, utilities, food, personal care, transportation, spending money, entertainment, hobbies, education, and other items. Make sure that you account for every expense.
Then, simply commit yourself to spending that particular amount on each item on your list. Of course, some expenses on your list will change each month – you may spend more on heating bills in the winter than in the summer, for example – but estimating can help ensure that you can meet all your financial responsibilities.
Many people believe that if they only had more money, they would not have to worry about credit. In fact, this is not true. Many people who have money – or at least have all the trappings of money, including cars and nice homes – in fact have terrible credit.
The secret of this is that it is not your income that decides whether you are a good credit risk or a bad one but rather how you handle money. You could be earning $7 per hour and still paying your bills and meeting your financial responsibilities – in which case you will have terrific credit.
You could also be earning $300 000 a year and be in terrible debt and financial shape due to unpaid bills and excessive debt. The best way to ensure that you have a good credit rating – no matter what your income – is to spend less than you earn. That means living below your means. If you have a very small income, you may need to live with roommates in order to keep costs down. If you have a medium-sized income, that may mean saving more and entertaining less.
One of the most disturbing things I hear often is the statement being made by people:
My Credit Score Went Down, But Who Cares?
This cliche phrase sounds more like saying “Hey, we are all going to die some day” and “I am waiting for Govt.. to bail me out.” Although there is some degree of truth in those sentences but at the end of day it amounts to denial of responsibility.
In this post I wish to discuss the parts of your life that get very much affected by your credit score. It is not a small part. It affects the whole you. It hits your home, the card you can drive, the things you can buy and even the jobs you can get into. All spares of your life get affected by credit score.
If you ever want to move out of your parents home and get a decent accommodation of your own, you need a pretty good credit score. You will not be taken seriously by any landlord, mortgage broker, banker or a realtor(real estate professional) if you don not have a decent credit score. so next time when your citi bank credit card bill arrives.. pay it on time for the sake of good future home.
If you don’t care about your credit score, don’t complain when you have the same car payment as your neighbours while he drives a new Lexus and you own that rusting old Chevy. This might be an extreme example but missing one or two payments can cost you 4 , 5 and some times 8 percent on your next car loan. so be careful and pay on time.
