Some Credit Card Basics

Some people get in trouble with credit cards because they don’t completely understand how the card is supposed to work. They only know that a piece of plastic comes in the mail that they can use it in stores and pay the bill later. Knowing how credit cards work can assist you use them sensibly.

Credit card companies make money when you pay them interest. The company determines the sum of interest you pay each month by using the annual percentage rage, or APR. A fixed APR doesn’t vary much over time. Should your credit card company change the APR, they must inform you before it is enlarged. The variable APR can alter from time to time. You can find out which kind of APR you have by reading your credit card application.

The grace period is the number of days that you can pay off your credit card balance without getting a finance charge. Most of the time, the grace period only applies to new transactions. If you already have a balance on your credit card, new purchases will not have a grace period. Your grace period is usually written on your credit card report.

Your credit card may have certain fees linked to it. The yearly fee is a fee you must pay for having the credit card. The late-payment fee is incurred when your payment is received after the due date. If you get a cash advance you can be charged a fee that is either a flat fee or a percentage of your cash advance. A fee is incurred when you transfer a balance from another credit card. Should you go over your credit limit you will be charged an over-the-credit-limit fee.

Some credit card companies offer incentives for using their credit card. The most common incentive is a refund on the purchases you have made. This refund is sometimes is made by check or as a credit to your account. Frequent flier miles, car rental insurance, and travel accident insurance are some other offers.

This entry was posted on Wednesday, August 22nd, 2007 and is filed under Credit Cards. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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How Credit Scores Affect Mortgage Applications

With a good credit score an applicant will receive prompt response from many lenders, all of them offering low interest rates and low down payment options. The loan amount offered also may be high. On the contrary a low credit score would result in a lot of rejection from various mortgage financers. Because creditors wouldn’t come forward easily to give credit to individuals that have a history of difficulty in repaying existing loans. After all, creditors take risk when they finance mortgages against the credit history of a debtor. Naturally, they will wish to remain on the safe side and pick up less risky ones that have good credit histories. A good credit score means less chance of missing on payments and therefore less risky.

But there are some real risk takers that will come forward to finance mortgages for individuals with bad credit scores. They would charge high down payments and always high interest rates though. They may also fix additional charges for every little paper work and may charge high closing rates. The loan amount offered will also be considerably less. The individual with poor credit scores will not have much choice but to accept the terms and conditions as there are no other alternatives. This is a tight situation and to avoid this you must have a good credit score.

People with bad credit may fall in to the trap of ’secured loans’. Secured loans are the ones where the loan applicant offers an asset as collateral security. The lender becomes secure about the repayment of the loan and not the borrower. Securing a loan with bad credit score becomes easy only when the applicant is willing to offer some asset as collateral security. This again is a very dangerous situation where an individual runs the risk of losing his entire collateral asset in case of failing to pay the loan installments in time. An individual should always avoid such type of a loan.

Resort properties normally require large amounts of finance which a person with bad credit may find it difficult to obtain. So it is always advisable to keep your credit score high. Incase the credit score becomes low due to unavoidable financial reasons it can be improved upon. There is no need to lose hope simply because a person has a low credit score. If the property that he intends to buy has good equity he should go out and try to obtain finances for it. There are many sub prime lenders willing to offer their services.

For a review of your credit report as it relates to a mortgage loan and a consultation on the best loans available to you, give us a confidential, no obligation and no cost call.