Australian banks could survive an economic contraction the size of the 1990s recession, the Australian Prudential Regulation Authority (APRA) has revealed. According to reports, APRA chairman John Laker ordered a stress test to be conducted to determine what would happen if there was a three? year deterioration in global economic conditions. The
Reserve Bank of Australia and New Zealand’s central bank also took part in the examination. Laker told The Australian Financial Review the results showed Australian banks had the capital resources to weather such a contraction. In fact, none of the 20 banks tested would have failed or even fallen below the minimum amount of top?rated assets on their balance sheets. However, he warned banks not to get complacent and take part in the high-risk activities that caused the economic downturn overseas.

Share This

By David Zwierecki 

Rebuilding or reestablishing your credit after a foreclosure is similar to trying to rebuild your credit after a bankruptcy. Actually, the majority of people who have a home foreclosed on them, also file bankruptcy as well so that they can truly try to get a new fresh start again. The steps that you will take to rebuild your credit will be one in the same whether you have had a home foreclosed upon and/or you have filed a bankruptcy.

The first and most important thing for you to do to re-establish your credit is to review a copy of your credit report. You can obtain a free copy of your credit report once per year from each of the 3 credit bureaus by visiting annualcreditreport and following the simple instructions. By reviewing your credit you can see what exactly is reporting in your credit report. It is important to see where you are at so that you have something to work with, you have a starting point and so you know what items need to be paid, what items need to be corrected and what items are not important. Correcting your credit report is of the utmost importance, especially after a bankruptcy. It is very important to make sure all accounts are reporting with 0 balances or that they were paid through the bankruptcy.  {continued}

(more…)

Share This

by David Zwierecki
Building and Rebuilding your credit does not have to be nearly as hard as it sounds. In order to maximize your credit scores and build or improve your current credit you need to first understand how the credit scoring system works.

Here are some quick tips on improving your credit score that you can do all on your own:

# This is the most obvious of all of the tips but you need to start with making all of your payments on time. Make sure you pay your co-pays for insurance bills at the doctors office and/or hospital so that they do not eventually find themselves in the collections department and reporting as a blemish on your credit report. This is one of the most common types of collections that report to consumers credit reports.

# Never borrow over 50% of the maximum credit limit on your credit cards. It is even better if you can keep the balances under 30% of your maximum credit limits. Maxing out your credit cards, or even worse, going over your credit limit can have almost as negative affect on your credit report as late payments.

# Maintain a good balance of credit. For example 1 auto loan, 2 credit cards and 1 mortgage loan would be a good balance of credit. If you were to have 10 credit cards only and no other credit, this would not be a good balance/mixture of credit usage.

# Limit the number of total inquiries you have against you. This simply means do not apply for every type of credit that you can. Do not sign up for new credit cards at every sporting event or mall kiosk that you see so that you can get the free gift. Too many inquiries can have a negative impact on your credit score.

# Try piggybacking credit off of a friend or family member. This is a method of having a friend or family member add you one (or more) of their credit cards as an “AUTHORIZED USER,” not as a co-borrower and you can instantly gain their credit history from that credit card. Not all credit card companies will report this to your credit but many of them will. You must make sure the individual has a good payment history and is not over-extended on that credit card themselves for you to receive maximum benefits from this. Also a credit card with a long history will be much better for you to be added to.

If you are new to credit the easiest credit cards to obtain are usually department store credit cards, such as JCPenny, Sears, Kohl’s, etc… Also, Capital One and Household Bank are very easy to obtain credit cards through as well.

Therefore, just because you have credit cards does not mean you need to use them. Use them very sparingly and preferably only once in awhile to demonstrate a responsible payment history. Follow the tips above and the tips on the link above in order to improve or build your credit.

About the Author

The author of this article, Dave Zwierecki, has over 10 years of experience in the credit and mortgage lending fields. http://www.gofirstsecurity.com

Here is a great link on credit building/rebuilding and how credit scoring works: http://fshomeloan.com/index_files/mortgageblogger.htm

Share This

by David Zwierecki
Which mortgage program is right for me? This is a very common question asked by many consumers. There is no one answer fits all type response that can be given. Each and every individual person has their own specific financial situation and their own financial goals and dreams. With the number of mortgage programs out there to choose from being in the hundreds and maybe even the thousands, this can be a difficult decision trying to figure out what is going to be best for you. There are interest only loans, ARM loans, Pay Option ARM loans, balloons, fixed rate loans, extendable balloons, conventional loans, FHA loans, and many, many others to consider. Therefore, so what do I need to think about when choosing a loan program then?

Some of the main factors that you will want to consider when choosing which mortgage loan is right for you are: how long will you live in your home, do you have any children attending college currently or within the next few years, is this a starter home, will you have a pre-payment penalty, are you expecting any new family members to be added to your family, how much do you have in liquid assets, are you self-employed or do you work for someone, how much longer until you plan on retiring, do you have enough money for retirement, do you have many other financial obligations besides a mortgage, do you own any other property, and many, many others. Answering these questions, or at least thinking about them before you are ready to finance a home mortgage loan can help to greatly improve your chances of finding the right mortgage loan to meet your demands.

A fixed rate mortgage is always going to provide the most stability in the long run, however since most Americans sell or refinance every 4.6 years a fixed rate does not always make the most sense. An ARM loan can provide a cheaper payment and a lower interest rate upfront for a certain number of years, but there is a lot more risk involved obtaining an ARM loan because of the uncertainty of what will happen after the fixed rate period expires on the ARM. Interest only loans are good for real estate investors and consumers who need the flexibility of being able to make only the interest portion of the monthly payments. Pay Option ARM loans can be a great way to maximize cash flow, especially for self-employed and commissioned borrowers. However, Pay Option ARM loans can incur negative amortization, which is when your balance increases instead of decreases. There are a lot of items that you need to make sure that you understand before entering into a Pay Option ARM loan. FHA loans are usually better for homebuyers, especially first time who may not have the best credit or the best overall financial situation.

Thus, find a good mortgage professional and keep him or her for the rest of your days. The more you work with one person the more familiar they will be with your situation and be able to understand where you are coming from and where you want to go. This will help to insure that you find the proper mortgage loan for your situation.

About the Author

The author of this article, Dave Zwierecki, has over 10 years of experience in the credit and mortgage lending fields.

http://www.gofirstsecurity.com http://www.nomoneydown123.com/Florida/mortgage_programs.htm

Share This

by David Zwierecki
Credit scoring is a complicated process and each of the 3 major credit repositories have their own credit scoring models in place to determine a borrower’s credit score. The 3 main credit repositories are Equifax, Experian, and TransUnion. Equifax has credit scores that range from a lowest possible score of 300 and a highest possible score of 850. Experian has a range of 340-820 and TransUnion 150-934. Just like computers have upgraded operating systems over the years such as, Windows 98, Windows 2000, and Windows XP, the credit scoring system versions update periodically also. Not all lenders use the same version or the most updated version when obtaining a credit report and credit score for a borrower. Therefore, this is one reason why you may have varying credit scores between one lender and another.

There are five major components or factors that help to determine your credit score. Roughly 35 percent of your credit score is derived from your payment history, 30 percent from how much you owe compared to how much you have available, 15 percent comes from length of credit history, 10 percent from new credit and recent inquiries, and the final 10 percent comes from various other items such as the mixture of credit you currently have. Next we will discuss each of the five components in further detail and explain the basic principals as to how credit scoring works. This information is to be used only to help educate and as a guide to assist with the basic ideas involved in credit scoring.

Payment History (35%) Your payment history is the most important factor of credit scoring. Bankruptcies, collection accounts, slow pays and late payments, foreclosures, judgments, and liens can negatively affect your credit score. However, an established history of on-time payments and a clean credit history will positively impact your credit scores and help to increase them over time. The older any negative credit history or adverse credit factors are, the less they will negatively affect your credit score. Therefore, recent late payments or other derogatory credit will negatively affect your credit much greater than aged bad credit.

Revolving Credit Balances to Maximum Limits (30%) The second biggest factor in credit scoring comes from how you utilize your revolving credit. The credit scoring models are going to look heavily upon how much revolving credit you have available compared to how much you have used. For credit scoring purposes, having all revolving credit or credit card accounts maxed out to their limits is not a good thing, nor is it going to help better your credit scores. You don’t want to pay off all of your revolving credit accounts because that will not show the credit bureaus how well you manage your credit. Your ideal credit ratios should be roughly 20-40 percent usage. What this means is that if you have a credit card with a $1000 limit you do not want to max. out the credit card balance, but you would want to maintain a balance between 200 and 400 dollars. If you do realize that you have borrowed more than 50% of your available credit limit on your card or your balance is getting close to your limit, you should either try to pay your balance down to the 40% mark or call your credit card company and see if they are able to raise your limit. The biggest mistake you can make is to let your balance exceed your maximum credit limit. This will negatively affect your credit score a great amount.

Length of Credit History (15%) The longer and more established your credit history is, the better and more positive of an impact it can make. Someone who pays their bills on time for a 10 year period of time is a much better risk than someone who only has a 1 year history of paying their bills on time, even if they both carry the same credit score. When you pay off credit card accounts do not close them, keep them open and use them periodically in order to continue to build an established length of credit. Closing your accounts can actually have more of a negative affect on your credit score due to limiting the length of time that particular account was open for. The longer you have established credit accounts, the better it is for you. It is possible to still have a good credit score with a short credit history; however lenders may not approve you for optimal financing options due to the lack of history still.

New Credit and Inquiries (10%) The amount of new credit you have opened, will have somewhat of a minor impact on your credit scores. If you have numerous inquiries resulting from applying for a lot of new credit and add many new trade-lines in your credit report, this can have a damaging effect on your credit score. First, it may negatively affect your scores because you have a lot of new, un-established accounts. Second, it can negatively impact your score because you have a lot of inquiries with various lenders for various types of financing over a short period of time. Credit inquiries can affect your credit score, not a ton, but enough to lower your score. This is not to say don’t shop around or don’t have more than one firm pull your credit when looking to buy a car or a home. You definitely should use due diligence and shop between a couple of lenders to make sure you are getting a good deal. When you are comparing quotes however, you should try to do all of your shopping within a 30 day max. period of time. All inquiries that are made when applying for an auto loan or a mortgage loan are treated as only one inquiry when they are done within a 14 day period of time. Therefore if you are ever told to not have anyone else pull your credit or else your scores will lower, this has little truth to it. There is only one type of credit inquiry that counts toward your credit score. That one type of inquiry is when you are making an application for credit: such as a home loan, auto loan, credit card, etc… When you pull your own credit, a creditor you already have an account with pulls your credit, and/or a prospective employer pulls your credit, these do not have any impact on your scores. Understanding this can help you make sure that you do not fall victim to all of the urban myths regarding credit inquiries.

Types & Mixture of Credit (10%) Having a mixture of the various types of credit will have a small impact on your credit scores. For a person who has a good mixture of credit such as a home loan, auto loan, 2-4 credit cards and maybe a personal loan this could be deemed a good mixture of credit versus a different person who has 15 credit cards and no other credit. The ideal number of credit cards to maintain is 2-4. Also, other types of liabilities are important to have, such as installment loans and a mortgage loan.

“Knowledge is power” and the most important step to applying for a loan is to understand your credit report, your credit scores and how credit scoring works. It is highly recommended that every person checks their credit report at least once per year to help protect themselves from inaccurate information and from identity theft. A new law was recently passed that permits a borrower to have access to their credit report one time each year for no charge to allow them the opportunity to review their credit history and verify the accuracy of all items listed. You are permitted to obtain a credit report from each of the three credit repositories, TransUnion, Equifax, and Experian. You can obtain your free report by logging into the annual credit report and following the directions. When you obtain your free report it will not contain your credit score, but you can pay a small fee if you would like to find out what your score is when you are ordering your free report. It is also highly recommended that you pull a report from each repository individually as opposed to all of them together so that you can dispute any erroneous information to each bureau separately. If you report a problem to only one of the bureaus it will not be fixed among all three of the bureaus. Remember the bureaus are separate of each other and have no communication amongst each other either. Some creditors report to only 1 bureau, some report to 2 bureaus, some report to all three bureaus and some don’t report to any. This is why you must make sure that you check all three credit repositories when you are utilizing your free annual credit report. In conclusion, your credit is very important and understanding the basics of how your credit scores are obtained is equally as important.

Credit scoring is a complicated process and each of the 3 major credit repositories have their own credit scoring models in place to determine a borrower’s credit score. The 3 main credit repositories are Equifax, Experian, and TransUnion. Equifax has credit scores that range from a lowest possible score of 300 and a

Here is a quick contact list for the 3 main credit repositories:

Equifax Credit Bureau P.O. Box 740241 Atlanta GA 30374-0241 * (800) 685-1111 http://www.equifax.com

Experian (Formerly TRW Credit Bureau) P.O. Box 949 Allen TX 75013-0949 * (888) 397-3742 http://www.experian.com

Trans Union Corporation (Credit Bureau) Consumer Disclosure Center P.O. Box 390 Springfield PA 19064-0390 * (800) 916-8800 * (800) 682-7654 * (714) 680-7292 http://www.transunion.com

About the Author

The author of this article, Dave Zwierecki, has over 10 years of experience in the credit and mortgage lending fields. http://www.gofirstsecurity.com http://fshomeloan.com/index_files/mortgageblogger.htm (credit help blog)

Share This