When is The Best Time to Refinance Your Auto Loan?

When is The Best Time to Refinance Your Auto Loan?

When is The Best Time to Refinance Your Auto Loan?


If you are not happy with your auto payment monthly, you might have thought of refinancing your auto loan. If you feel that your auto loan interest rate is not perfect, it is time to give refinancing a look. Just like you can consolidate credit cards or refinance mortgage, you may change your auto loan and terms through refinancing. You can be saving lots of money every year and there are times that your savings could be close to thousands of dollars throughout your loan.

But, when is really the best time to refinance your car? Well, below are some of the instances you must consider refinancing auto loan:

  • Your Credit Score Has Improved

If your credit score improves, it is a chance to reassess the current loans you have to know how you could save money. If you’re in the process to get your auto loan, you had several issues on your credit report, concerns that prevented you from getting better interest rates but you required that vehicle. Today is a good time to go back and see the ways on how you can lower the rate. If you are paying auto loan on time, it can improve your credit score and expect that you will be rewarded with low monthly payment.

  • Auto Loan Interest Rates Have Reduced

If you’ve found that interest rates have reduced a couple of points since you have made your vehicle purchase, it could be a good idea to look into the options available as far as low payment. When looking at various kinds of loan options, it is essential to remember that if you bought a brand new vehicle and refinancing that, the car will be considered as a used car. Therefore, make sure that you’re looking at the right interest rates when you are comparing lenders.

  • You Did Not Get the Best Rate for Auto Loan

If you bought your vehicle, you might got caught up with your words, zero financing, and you thought that it’s your lucky day. You would not wait to sign papers, yet you forgot to read fine print, which says for 6 months only. Now you are hit with interest rates you did not see coming. It means that you have to refinance auto loan. It can be simple to get caught up at a dealership with the excitement of purchasing new car that sometimes you overlook fine print.

  • You Have Had Financial Setbacks

Maybe several financial setbacks came up like you have lost your work or you had a raise in rent. The last thing you like to do is default on car payment, yet it would surely be nice if you lessen your payments. Refinancing auto loan is a good way to help provide you extra cash. Frequently, you may select a 72-month car loan rather than 36-month car loan and it will let you save on payments monthly and provide you extra money for such financial setbacks.

Refinancing auto loans can be done at any point in your loan’s period. Stop stressing over your monthly payments, stop throwing away your money, and start talking to an auto loan provider regarding the options available once you refinance auto loan.

The post When is The Best Time to Refinance Your Auto Loan? appeared first on Creditmergency.

Bad Credit - Pinterest

What Is Bad Credit and How Can It Affect You?

Bad Credit - Pinterest

Bad credit is something we all fear, but what is actually considered poor credit and how could it affect you? In addition to explaining what bad credit is and why you need to avoid it, we’ll also provide some strategies in this article to help you fix bad credit.

What Is a Bad Credit Score?

The definition of “bad credit” varies depending on which credit scoring system you are talking about. Since FICO 8 is the scoring model most widely used by lenders, we will focus on FICO when discussing the question of what is considered bad credit.

The FICO 8 credit scoring system assigns consumers a number to represent their creditworthiness, with the lowest credit score possible being 300 and the high end of the scale being 850.

A high credit score shows lenders that they can be fairly confident that a consumer will repay debts because they have demonstrated responsible behavior when it comes to credit in the past.

A low credit score, on the other hand, means that someone represents a higher risk to lenders because they are thought to have a higher probability of defaulting on a loan.

According to Credit Karma, a FICO score between 300 to 579 is considered a poor credit score, while a fair credit score is between 580 and 669. In contrast, an excellent credit score is between 800 and 850.

Credit scores between 300 and 579 are considered poor credit.

Credit scores between 300 and 579 are considered poor credit.

What Gives You Bad Credit?

As we mentioned, having a bad credit score means lenders perceive you as a high-risk borrower. Therefore, what causes bad credit is poor management of credit and risky behaviors that indicate that you may have a higher probability of default.

For example, being late on payments or missing payments altogether can really hurt your credit because payment history is the most important factor of a credit score.

High credit card utilization can lead to bad credit.

High credit card utilization can lead to bad credit. Photo by Natloans

What causes bad credit specifically? Here are some more examples:

  • Late or missed payments
  • Defaulting on a loan
  • Charge-offs
  • Collection accounts
  • Judgments
  • Settlements
  • Bankruptcy
  • Foreclosures or repossessions
  • Maxed out or high-utilization credit cards
  • Too many inquiries at one time
  • Too much new credit

Sometimes people have bad credit because of things they can’t control, like having a medical emergency that leads to huge hospital bills that they can’t afford to pay. In fact, the majority of consumer debt in collections is medical debt, according to Magnify Money.

Bad Credit Loans

If you have bad credit, you’re likely going to have a hard time getting loans with favorable terms or possibly even getting approved for a loan in the first place. Since a bad credit score represents a high risk for the lender, loans for people with poor credit typically have higher interest rates and may require collateral or a down payment—if the lender is willing to approve the loan at all.

Those with bad credit might turn to payday loans, which can come with interest rates of up to 400%.

Payday loans can come with interest rates of up to 400%. Photo by Aliman Senai.

Personal Loans for Bad Credit

Personal loans for bad credit may be few and far between. Usually, at least a fair credit score is needed to be considered for a loan.

Bad credit loan lenders may charge very high interest rates since they are taking on a lot of risk by lending money to someone with poor credit. These higher interest rates may translate into thousands of dollars of additional interest payments over the term of a loan.

Very bad credit loans such as payday loans often have astronomical interest rates of up to 400%, which makes it nearly impossible for many consumers to get out of debt.

Bad Credit Car Loans

Bad credit auto loans, also known as subprime auto loans, are often considered “second-chance” loans because they are typically the next option for those who have been rejected for traditional auto loans. Although there is not necessarily an official dividing line between which credit scores are considered prime and subprime when it comes to auto loans, credit scores below 620 tend to be considered subprime.

Bad credit car loans can have triple or more the interest rate as prime auto loans.

Bad credit car loans can have triple or more the interest rate as prime auto loans. Photo by QuoteInspector.com.

Car loans for bad credit, similar to personal loans for bad credit, are associated with much higher costs than prime auto loans. Since lenders of second-chance auto loans are taking on additional risk, these loans often have significantly higher interest rates and more fees than auto loans for consumers with good credit. Additionally, car loans for bad credit may come with penalties for paying off the loan early.

According to Investopedia, “While there is no official subprime auto loan rate, it is generally at least triple the prime loan rate, and can even be five times higher.

Credit Cards for Bad Credit

If you have bad credit, your options for getting a credit card will be limited, and you will most likely not be able to get the perks associated with premium credit cards, such as low interest rates, high credit limits, and rewards. Credit cards for poor credit may also come with annual or even monthly fees.

Subprime credit cards often require you to make a deposit with the lender as collateral. These cards are known as secured credit cards since they are secured by your deposit, which the lender can keep if you fail to make payments on the card. Sometimes, the lender may be willing to switch you to an unsecured card after you have shown a history of consistent on-time payments.  

As we’ve seen with loans for bad credit, credit cards for bad credit, whether they are secured and unsecured, may have high interest rates, sometimes as high as 30% or more.

How to Fix Bad Credit

Having a bad credit score is expensive. It makes getting any kind of credit more difficult and more costly because bad credit lenders tack on high interest rates and fees to compensate for the higher financial risk of poor credit loans.

Having bad credit doesn’t just dramatically increase the cost of credit. It can also affect other aspects of your life, such as your insurance premiums, your ability to find housing, and even your job, since many employers now check prospective employees’ credit reports. Therefore, most people with bad credit want to fix it as soon as possible.

Here are some strategies that you can try if you need to fix bad credit.

Credit Repair

If you have bad credit as a result of identity theft or extensive errors on your credit report, you’ll likely need to undergo credit repair in order to clean up your credit file.

Some people opt to try their hand at DIY credit repair, while others may prefer to hire a trusted credit repair company to get help with the dispute process and potentially faster results.

Either way, it’s important to be aware of best practices when disputing credit report errors. It’s best to submit your dispute by sending a letter along with documentation to verify your identity and support your claim. Trying to dispute errors online or over the phone may not yield the best results.

In addition to disputing inaccurate information with the credit bureaus, it’s also important to contact the company that is furnishing the data so that the error doesn’t get reported again in the future.

Rebuilding Credit

Improving bad credit takes time and patience. While credit repair companies may claim to have tactics that can boost your credit fast, the reality is that these tactics are usually limited to removing inaccurate information from your credit report. If you remove everything from your credit report, what are you left with?

The best way to fix bad credit, beyond correcting inaccuracies, is to rebuild it with more positive credit history over time. In other words, you need to add more positive accounts to your credit profile and keep them in good standing while they age. At certain age levels, these accounts should begin to boost your credit profile with that positive payment history.

Rebuilding credit with positive credit history helps to fix bad credit.

Rebuilding credit with positive credit history helps to fix bad credit.

One option that can help people re-establish credit is opening a credit-builder loan, which works in the reverse order of a traditional loan. Instead of receiving the loan amount upfront and then making payments to the bank to pay off your debt, with a credit-builder loan, you make all the payments first and then receive the funds after you have finished paying off the loan.

Since these loans are much less risky for lenders, they can be offered to those struggling with bad credit or lack of credit history.

Generally, though, building credit by opening new accounts can take at least two years to see much of a positive effect. The best way we have seen to bypass this two-year waiting period is by piggybacking on the good credit of others.

Have you been affected by bad credit? What did you do about it? Tell us your story in the comments.

Credit Freeze

What To Do If Your Identity is Stolen

Identity theft is a crime that affects millions of Americans every single year. It’s painful to suffer through, and it’s difficult to recover from. What’s worse is that no one is truly safe. Check out Identity theft is a crime that affects millions of Americans every single year. Check out these identity theft recovery steps on what to do if your identity is stolen.

But if you find that your identity has been stolen, you will find that you CAN recover. Here are some simple identity theft recovery steps you must take to ensure that you can get yourself back in order after dealing with identity theft.

Things to Do After Your Identity Is Stolen:

Step 1: Freeze Your Credit

The first thing you should be doing is making sure that no more damage can be done to your credit.

To initiate a credit freeze, contact each of the credit bureaus and let them know that you want to put a credit freeze on your accounts. Read out what is a credit freeze?

Credit Freeze

What this will do is ensure that potential lenders cannot get access to your credit reports, and this will not allow them to complete the loan application process. Keep reading the other steps on what to do if your identity is stolen.

Step 2: Check Your Bank Accounts and Credit Cards for Unauthorized Transactions

If identity theft has occurred, it’s possible that the fraudster has gotten access to your money. This is the first thing you want to check under identity theft recovery steps.

To find these transactions, go back as far as you can & see if there are any transactions that seem odd, or are particularly large.

How Credit Cards Can Destroy Your Credit

If you catch it too late, this won’t help you as you won’t be able to view transactions that happened long ago. Same way; you need to know: how far back does your credit report go?

Step 3: Get New Credit & Debit Cards.

If fraudsters have access to your credit accounts or your debit cards, you need to make sure that they cannot use the cards or card numbers they have.

It’s super simple to get new cards: contact your bank, report the cards as lost or stolen, and they will immediately cancel those cards and send you new ones. One of the reason why credit cards are safer than debit cards.

New Credit

In this process, you will also need to cancel all your automatic debits that originate from debit or credit cards. Otherwise, the payments will not go through and you could lose your subscriptions or worse, see an effect on your credit report. Keep reading the next steps on what to do if your identity is stolen.

Step 4: Get Your Credit Reports From All 3 Credit Bureaus & Review Them

There are 3 credit bureaus: Equifax, Transunion, Experian. What you’re looking for are loans that you don’t recognize or credit accounts opened in your name that you don’t have access to.

Credit Bureaus

Finding these will assist in the following steps, and will allow you to prove that identity theft has occurred.

Simply noting an odd change in your credit score is not enough to prove that fraud happened. You need to prove that accounts were opened in your name and that you were not the one who opened them.

Step 5: Contact The Police

The local police departments have fraud divisions that can help deal with cases of identity theft.

However, there might not be anything they can do to help you. They may be able to, though, as the most common sources of identity theft are relatives, employees that take your personal information, and skimmers that take your credit card info.

Contact The Police

They can’t help you if the crime originated on the Internet, however they may be able to initiate an investigation.

It doesn’t hurt to contact the police, and it might help you get closure. There are couple of other things to do after your identity is stolen and mentioned below.

Step 6: Put a Fraud Alert on Your Credit Accounts

A fraud alert will let credit bureaus know that there is potentially suspicious activity on your account. This is not the same as a credit freeze.

Fraud alerts are sent to institutions that request your credit report, letting them know that the applicant’s identity may be compromised. This could prevent a lot of damage done, but it can also slow down your own attempts to get loans.

Things to Do After Your Identity Is Stolen

They can stay on your account for up to a year, giving you peace of mind for a good amount of time. Read how to protect your credit from fraud.

Step 7: Tighten Your Security

Security is paramount to making sure identity theft doesn’t happen again. To tighten your security, you will want to follow these steps:

  • Unique passwords on all websites you visit. We recommend using a password manager like Lastpass or Dashlane.
  • Don’t click on suspicious links sent to your email that look to be from your financial institution. If you’re unsure, give them a call or visit the branch.
  • Use a VPN when in a strange location. NordVPN is a popular VPN service provider that can help protect your Internet info while you browse in an insecure location such as a hotel or restaurant.

All above are the top things to do after your identity is stolen.

The post What To Do If Your Identity is Stolen appeared first on The CreditPros.

Top Five Ways to Avoid Credit Card Debt

Top Five Ways to Avoid Credit Card Debt

Top Five Ways to Avoid Credit Card Debt

Anybody with credit cards risks carrying a lot of credit card debt. Once you have accumulated too much debt on credit card, it might take years and a lot of sacrifices pay for it. As you use credit cards, you should keep these 5 ways in mind to avoid credit card debt:

  • Pay Bills in Full

Using credit card to pay for budgeted items may be a convenient and safe way to handle your money. You do not need to worry about losing money that cannot be replaced and you do need to experience the hassle of writing on a check. See to it that you pay off purchases you make at the end of the month. If you carry a balance, do not extend it out for more than 3 months. You should know when your grace period ends. If you pay your bill in full, you do not incur debts.

  • Make Your Own Workable Budget

Knowing how much money that comes in and out is important when managing your finances. Workable budget is like a monetary crystal ball as you can find. Your budget will show you how much money available, when to expect to have more, when bills are due, and so on. It will also tell you how much money you’ve left over at the end of the month. Budget enables you to plan your purchases instead of reaching for plastic if you feel the impulse.

  • Charge Durable Goods Only

The golden rule is not to use credit card to purchase items that will not exist by the time your bill arrives. You can use debit card or cash to pay for movie tickets, eating out, and gas. You can save your credit card for emergency situations. Once you use credit card for major expenses that you will not be able to pay off within the grace period, include repayment expense in your budget.

  • Read Fine Print

It is important to look at the conditions and terms of credit card offers always. Never assume that introductory interest rates are permanent. The offers that you get in mail could not be credit’s actual terms. In many cases, such offers are based on the best-case scenario. If you do not have a perfect credit, your terms might be different.

  • Employ Cool-Down Strategy

Other people freeze their credit cards in blocks of ice, so they need to wait for the ice to melt before they can use the card. The idea is that if you need to wait for several hours before you could make a purchase immediate lust has time to pass. Then, you can calmly assess whether the product is worth putting your credit card. While freezing card could be a little extreme, you require some type of cool-down trigger. Try knowing your personality in terms of money. Others are more prone to impulse buying compared to others. If you are one of them, consider keeping your credit card in a secure and safe place once you go shopping so you aren’t tempted to use it.

The post Top Five Ways to Avoid Credit Card Debt appeared first on Creditmergency.

This Is How a Rapid Rescore Can Boost Your Credit Score Fast - Pinterest

This Is How a Rapid Rescore Can Boost Your Credit Score Fast

This Is How a Rapid Rescore Can Boost Your Credit Score Fast - PinterestIf you’ve just resolved some errors on your credit report or paid down your balances and you’re wondering how to update your credit report information fast so that you can improve your credit rating quickly, you may be interested in something called a rapid rescore. You can find the answers to all of your questions about rapid rescores in this article.

What Is a Rapid Rescore?

A rapid rescore is a process that mortgage lenders use to manually update your credit report information with the credit bureaus so that your score can be recalculated quickly. Instead of waiting for your creditors to report your information to the bureaus periodically, your mortgage lender can provide the information to the bureaus and request that they update your credit report right away. 

When Would You Need a Rapid Rescore?

Since mortgage loans are time-sensitive, a rapid rescore can definitely be a useful tool in certain situations. If you are in a situation where there’s been a change to one or more of your tradelines that has not yet been reflected in your credit report, and you need to rapidly increase your credit score in order to qualify for better mortgage terms, you may want to consider requesting a rapid rescore.

Rapidly increasing your credit score before getting approved for a mortgage could mean qualifying for a lower interest rate and therefore huge savings in interest over the term of your loan.

For this reason, the best candidates for a rapid rescore are consumers who have credit scores between the mid-600s and the 720s who are five to 10 points shy of their target score, according to Bankrate. The maximum benefit of a rapid rescore is gained by borrowers who are able to get bumped up to the next credit score “tier” in order to qualify for a lower interest rate, which can ultimately save them thousands of dollars over the course of the mortgage.

If you have recently paid down some of your revolving balances, a rapid rescore could get your credit score to reflect your lower credit utilization sooner.

If you have recently paid down some of your revolving balances, a rapid rescore could get your credit score to reflect your lower credit utilization sooner.

Of course, it’s always best to plan ahead well in advance of applying for a mortgage so you have plenty of time to get your credit score in great shape first. However, sometimes situations may arise in which a rapid rescore would be beneficial. Some examples of situations that might call for a rapid rescore include:

  • If you have recently received a credit line increase
  • If you have just paid down the balance of an account
  • If you have been added as an authorized user to an account in good standing or removed from a derogatory account
  • If you need to dispute inaccurate negative items on your credit report, such as late payments that were being reported in error

Remember, credit utilization makes up 30% of your credit score, so any action you take to improve your credit utilization ratio, such as paying down account balances, may help boost your score and get you a better deal on your mortgage.

How to Get a Rapid Rescore

If you need to know how to improve your credit rating quickly through a rapid rescore, keep in mind that not just anyone can request one. Rapid rescores are only offered by mortgage lenders, so, unfortunately, you cannot get a rapid rescore on your own. If you are in the process of applying for a mortgage, ask your lender if they can complete a rapid rescore for you.

How Long Does a Rapid Rescore Take?

The great thing about a rapid rescore is that it can get the credit bureaus to update your credit report within just a few days, instead of waiting for weeks or even months for it to happen automatically. Once your mortgage lender submits all the necessary documentation to initiate the rapid rescore, you should see your new results in three to seven business days.

A rapid rescore can update your credit report in days instead of weeks, which can be useful when applying for a mortgage.

A rapid rescore can update your credit report in days instead of weeks, which can be useful when applying for a mortgage.

How Much Does It Cost to Do a Rapid Rescore?

According to creditcards.com, the cost of a rapid rescore typically ranges from around $25 – $30 for each account that needs to be updated. However, the mortgage lender should be paying for the rescore, not the consumer. 

The reason for this is that a rapid rescore is considered an expedited dispute process, and the Fair Credit Reporting Act says that consumers cannot be charged to dispute inaccurate information.

Does Rapid Rescore Really Work?

When it comes to rapid rescore results, they will likely be the same as if you had gone through the normal channels to submit a dispute. Remember, a rapid rescore is essentially an accelerated credit report dispute. The rescore itself is not guaranteed to make your credit score increase.

If you are using the rapid rescore to remove inaccurate information that has been dragging down your credit score, then you should see positive results from the rescore.

However, just as in traditional credit repair, a rapid rescore cannot be used legitimately to try to remove information that is accurate. If the derogatory items on your credit report are accurate and timely (from within the past seven years), then a rapid rescore won’t be able to help you.

Rapid Rescore Companies

Companies that offer the rapid rescore service to borrowers include mortgage lenders such as banks and credit unions. Not all mortgage lenders offer the service, though, since it can end up being expensive and lenders are not allowed to charge borrowers for a rapid rescore.

If you are getting ready to apply for a home loan and you think you may want to have the option of doing a rapid rescore, ask the banks or mortgage lenders you are interested in whether the companies offer the rapid rescore service to borrowers.

If you find any rapid rescore companies advertising their services to individual consumers, use caution and watch out for possible scams.

You can use our tradeline calculator or a credit score simulator to get a general idea about whether a rapid rescore could benefit your score.

You can use our tradeline calculator or a credit score simulator to get a general idea about whether a rapid rescore could benefit your score.

Rapid Rescore Calculator

To calculate your rapid rescore results, you don’t need a specific rapid rescore simulator. Just use your favorite credit score simulator and plug in the numbers that make sense for your situation.

If you are planning to do a rapid rescore after paying off $5000 in credit card debt, for example, you could enter that information into the credit score simulator to calculate what the results of your rapid rescore might be. You could also try our Tradeline Calculator to see how your credit utilization ratios would change as a result of paying down some of your accounts or transferring balances.

However, keep in mind that any credit score simulator is likely not going to produce the exact same results that your lender will see. Online credit score calculators typically use simplified credit scoring algorithms to produce estimates, which may not always match up with the numbers the mortgage lender sees when they pull your FICO scores.

How to Do a Rapid Rescore Yourself

Unfortunately, it’s not possible to do a DIY rapid credit rescore on your own, since only mortgage lenders can perform this service on your behalf. 

What you can do is prepare thoroughly to ensure your dispute will be accepted. As with a normal credit report dispute, you’ll need to provide proof to support your claim. This often means obtaining a letter from the creditor verifying the change that you can then provide to the credit bureaus.

For example, if you have just paid down the balance on one of your credit cards, you can ask the credit card company to send you a letter verifying the updated tradeline information. Your mortgage lender can then submit this to the credit bureaus to get you a rapid rescore.

How to Update Credit Report Information

To update your credit report information yourself, you can obtain a letter from your creditor and forward it to the credit bureaus.

To update your credit report information yourself, you can obtain a letter from your creditor and forward it to the credit bureaus.

Although you can’t officially do a DIY rapid credit rescore yourself, you can trigger a manual credit report update by submitting your documentation directly to the credit bureaus. However, your tradeline may not be updated as quickly as when your mortgage lender pays for the privilege of an expedited update.

To summarize, follow these steps to manually update tradelines in your credit report:

  1. Contact the creditor and request that they send you a letter that verifies the updated account information.
  2. Send this letter to the credit bureaus and request that they update the information in your credit file.

Once they receive your information, the credit bureaus should then update the information for that tradeline in your credit profile.

In addition, some banks may report a tradeline in the middle of a reporting cycle if you pay down the balance to zero.

Rapid Rescore Success Stories

If you’re interested in reading some rapid rescore success stories, you can find plenty of them online. Try searching in some online credit forums to see the rapid rescore results other consumers have been able to achieve.

Some consumers may see a credit score boost of up to 100 points after a rapid rescore, although results vary widely based on what information is being changed.

Some consumers may see a credit score boost of up to 100 points after a rapid rescore, although results vary widely based on what information is being changed.

Some sources say they have seen credit score increases of up to 60 points after a rapid rescore, while others claim that a rapid rescore could potentially boost one’s credit score by up to 100 points. However, keep in mind that the result of a rapid rescore is going to depend on what information in your credit report is being updated and how severely it had been affecting your score.

Conclusions on Rapid Rescores

Although a rapid rescore won’t necessarily raise your credit score per se, it can be a very useful tool if you need to get your credit report and credit score updated within a few days rather than waiting weeks or even months for the credit bureaus to update your information normally.

When applying for a mortgage, a rapid rescore may be used to increase your chances of getting the best possible rate on your loan by getting positive changes to reflect on your credit report and in your credit score quickly.

Only some mortgage lenders offer this service, so check with your lender to see if they provide rapid rescores to their clients.

In addition, it’s a good idea to check your credit reports several months in advance so that you have plenty of time to correct any errors and pay down your balances. That way, you can decrease the likelihood that you will have to rely on a rapid rescore when applying for a mortgage.

For more tips on how to prepare to buy a home, check out “What You Need to Buy a House in 2020” from Redfin.

Over to you: have you ever used the rapid rescore tool to rapidly increase your credit score? What did you learn from this article? Let us know below!