Should you attempt to refinance your present mortgage or seek a new mortgage, your credit score has become more critical to your loan approval.

Can it make a difference? Yes, it can make a significant difference in payment.

Fair Isaac, an acronym for Fair Isaac Company which is the most recognized authority in determining your personal credit score, gives this example of how your credit score can affect your monthly payments based on a 30-year fixed-rate mortgage for a $300,000 home loan:

A FICO score of 760 to 850 gets an interest rate of 6.298% and a monthly payment of $1,857.

A FICO score of 700 to 759 gets an interest rate of 6.520% and a monthly payment of $1,900.

A FICO score of 660 to 699 gets an interest rate of 6.804% and a monthly payment of $1,957.

A FICO score of 620 to 659 gets an interest rate of 7.614% and a monthly payment of $2,121.

A FICO socre of 580 to 619 gets an interest rate of 8.932% and a monthly payment of $2,399.

The difference between the best rating and the worst rating increases your monthly payment by $542, you pay $2,399 rather than $1,857.

A credit score is a mathematical model that analyzes information in your credit report. Lenders use credit scores to gauge the likelihood that you will repay your debts.

So what determines your credit score? Payment history is 35%, the amount you owe is 30%, the length of credit history is 15%, new credit is 10% and the types of credit you are using is 10%.

You can obtain all three of your credit reports from Equifax, Experian and TransUnion at:

http://www.annualcreditreport.com

You are entitled to a free copy of your credit reports annually but will not receive your credit scores for free. You will be pitched to pay for the right to receive your credit scores from the agencies.

Many of the sales pitches for free credit reports at other web sites are no more than high pressure attempts to get you to pay for the report by subscribing to any number of services that you neither need nor want.

Should you type in http://www.freecreditreport.com, for example, you will be taken to an Experian web site that will give you a free credit report for their service only IF you are willing to be subscribed to a service they offer for $14.95 a month. Experian invites you to "Join Over 20 Million Customers who have already checked their FREE Experian CREDIT REPORT."

Multiply $14.95 per 20 million per month and it adds up to $299 million in monthly revenue if the cardholders continue the service. Multiply $299 million in monthly revenue times 12 months and it adds up to $1.588 trillion in annual revenue for Experian.

There are two things very wrong with Experian's offer. First, and foremost, the credit report IS NOT FREE unless you subscribe to a service I would neither need nor want.

Experian's marketing formula for writing a sales pitch is hardly unique. Almost any marketer can open his or her e-mail tomorrow and read the same formula repeated in 100 different sales pitches for another opportunity to provide a product, service, or attend a seminar. The pitch will be in English, the language will be in doublespeak.

Second, the large headline above the button to get your report says "GET YOUR FREE CREDIT SCORE AND A WHOLE LOT MORE!" The inducement is misleading. It does not say get your free credit report, it says get your free credit score. You get your report and your credit score and some other services only by agreeing to sign up for the $14.95 a month service.

Someone eager to get their free report will hit the button for their free credit report and unwittingly subscribe to a service they neither need nor want. You must read the fine print on the page to know the difference.

This kind of inducement by Experian is hardly clear, straightforward, honest, ethical or anything else good; it is bad and wrong. The fact that advertisers can even do this legally is disturbing and obviously not regulated.

Do not, I repeat DO NOT, respond to any other online pitches for your free credit report other than http://www.annualcreditreport.com (this is the government-mandated site) or you may be ripped off by an industry that is neither helpful nor trustworthy. Credit card reporting agencies are always giving poor, difficult customer service, making shyster offers and responding poorly when removing incorrect information from your credit report.

They are paid by businesses to only find and record any negative information about you. They could care less whether you drop dead on their front steps as long as they relieve you or your money first.

The basics

Simply put, debt consolidation is the process of taking one loan so that you may pay all of or at least some parts of your other existing loans. You can do this by first pulling together all the unsecured loans that you have and then creating a single loan out of it. To be granted that new loan as part of debt consolidation you need to place collateral with the lending institute and most commonly it’s the house which is mortgaged.

The advantage

The advantage of debt consolidation is that the interest rate can often be lower than the many interests you were previously paying. This is so because the lending institute already has collateral, such as a house and hence a very low risk of losing its money even if the borrower goes bankrupt.

Research and implement

These days, you can even go online to find a variety of online services that will help you calculate the interest after debt consolidation so you know in advance if it is worth it or not. In fact, offering a “low interest rate loan” after debt consolidation is also one of the most common email scams. But here are things you can do to ensure that debt consolidation will be a safe path for you.

For example, if you are a home owner then you can take out a home equity loan. The advantage of the home equity loan is that the interest on it is tax deductible and the interests are already low to begin with. These fixed rate loans run for 15 years and have some fees in the initial process. If a person has managed to maintain a fairly good credit history, then there is the possibility of qualifying for debt consolidation through credit unions. While the interest rates might still be high, chances are they will still be lower that what you may have been paying the credit card companies. And believe it or not, many customer service agents at credit card companies actually have the authority to even reduce interest rates when speaking with you just over the phone! So sometimes, asking nicely or negotiating a better interest rate just might do the trick.

However, debt consolidation is by no means a magic wand that can salvage you from your financial crisis. Often companies that claim to take care of all your debt problems at a lowered interest rate might not be the best option. So keep a sharp eye out for conditional or hidden fees. Just keep in mind that the best way to really cut down on your debts is to cut down on all extra and unnecessary expenses while trying to clear all your dues on time.

The application processes, approval, dispatch and disbursal of unsecured personal loans is far faster than the that of secured loans. Unsecured loans are swift because of the following reasons:

 No property valuation
 No legal formalities
 No lengthy paper work
 No delay in approval
 No delay in transfer of cash

So, the borrower is at great mental comfort since he doesn't necessitate to risk his fixed asset and gets the loan swiftly too. However, the debtor is at high risk since he has nothing to seize in case the creditor fails or defaults on the loan. The lender compensates for the risk involved in the unsecured loan deal by charging a high interest rate.

Fast unsecured loans are preferred most by the borrowers since the secured ones take around one to two months to get approved and transferred to the borrower's account. Moreover, the increasing number of home repossessions over the last two years has shifted the tide in favour of unsecured loans. Brits in the UK fear opting for the secured loans. Unsecured loans on the other hand are gaining a strong foothold in the UK loan market because of the following reasons:

 Low risk involved
 Quick processing of the loan
 Fast transfer of the loan amount
 Available to those with adverse credit
 Easy and simple documentation

Sub-prime lenders are also offer bad credit unsecured loans to those who neither have a good credit records nor any security to pledge.

Thus, borrowers have got many options to choose from, unsecured loans being their number one choice. If the UK loan market continues to diversify in reach and products, borrowers can even hope for low interest rates on unsecured loans.

Finding a Needle in a Haystack

How do you choose a lender for your loan when every lender says they have the lowest interest rates? Here are some tips.

• Established firms can offer better security for their clients although they may be pricier.

• If you are considering a non-profit lender, look for the lender's interests in your loan terms and make sure that you will receive quality service. You have to question why the company would perform these services as a non-profit lender.
• A company should have a good success rate for solving client problems. A reputable lender may let you question previous clients although for protection of the privacy of their clients, this is not always possible. Search the internet for experiences that other people have had with the lender.
• Be wary of the balloon loans, also known as loophole loans. You end up making such low monthly payments that only the interest is covered on your total loan payments so that in five or ten years, you are still greatly in debt.

Knowledge is Your Best Tool for Choosing a Lender

Do not sign the loan contract until you completely understand the terms of the loan and payment schedule. It is also important that you calculate the total payment amount that will be paid to the lender when the debt is paid in full. Your debt consolidation loan company will be able to clarify any questions you have about the terms and should do so before you sign the contract. A misunderstood detail could cause problems later.

Before you decide on one lender for your needs, it is important that you have done sufficient research about what to expect. When you are knowledgeable about the lender and what you are signing, you will know you have made the best choice for your debt consolidation loan company.

How do I Find the Debt Consolidation Loan that is Right for Me?

A secured loan however is easier to apply for and be approved for due to the fact that you have to put your home up as security against defaulting on the loan. This means that if you default on the loan repayments then the lender has the right to seek possession of your home in order to get the money back that you owe on the loan. For this reason it is essential that you make sure you can repay the loan and know the total amount that you have to repay before committing yourself.

Providing your circumstances meet the lenders criteria and you have enough equity in your home then you are able to borrow a much larger sum of money than with a personal loan, you are also able to take out the loan over many more years than with a personal loan.

If your credit rating is very low then this will reflect on the amount of interest that you can expect to pay, however a specialist website will be able to get you the best deal and the lowest APR on a bad credit secured loan. The APR is the amount of interest that you will pay and the correct name is annual percentage rate.

A bad credit secured loan might be your only option and a specialist website will be able to get you the lowest APR but it is essential that you ensure you can continue to pay the repayments over the entire term of the loan which could be as long as 25 years.

Well,………You Shouldn’t!!

Why Not?

1. Second Mortgages usually have an interest rant that is twice or even three times as high as your first mortgage rate. You can refinance instead and keep a very low rate. In the long run a second mortgage will just cost you money in interest charges.
2. Home equity lines of credit are designed for mortgage account executives (salespeople) to sell you on using it like a credit card attached to your home. They will try to convince you to use it over and over again.
3. A refinance loan is better for the equity in your home. Very few companies will refinance your home at 100% of it’s value without forcing you to take out a second mortgage. You don’t want to use 100% of your equity because that means you no longer have that equity to fall back on in emergency situations.
4. Second Mortgages and Home Equity lines of credit are designed to provide account executives (salespeople) with another tool to sway you into putting another commission in their pocket.
5. Your equity is a precious thing and should not be used for unnecessary add ons or impulse buys. If you don’t need it and there is even a slight chance you can’t afford it, then don’t get a second mortgage to buy it.

The only reason that I would ever recommend a second mortgage or a home equity line of credit is in an emergency situation. Only when there is no other option and you must take out a loan would I recommend either one of these options.

A debt consolidation loan replaces several small and big debts that a particular person might have incurred. Under this arrangement, a single loan is used to repay all debts of the borrower. Since the loan taken at this instance is not immediately repayable, borrowers get enough time to prepare for repayment.

Borrowers are referred to as bad credit when they have defaulted on debts in the past. Mortgage arrears, County Court Judgements, Individual Voluntary Arrangements, all count towards tarnishing the borrowers’ credit history. Credit history of borrowers is referred to in order to get data about the credibility that a borrower enjoys. A bad credit history would thus imply that the borrower has lesser credibility and thus make him a bad case for debt consolidation loans.

This however is not so. Borrowers with bad credit history are also considered for debt consolidation loans. The logic behind this is that by taking debt consolidation loan, the borrower with bad credit history is making positive efforts to change his/ her credit status. Thus, debt consolidation loan is readily available to people with bad credit history.

A slightly higher interest payment is what you are required to make on the debt consolidation loan if you have a bad credit history. You however need to distinguish between lenders who are charging the justifiable rates of interest and those who aren’t. The task is not as difficult. Just see what other lenders are offering to borrowers with similar circumstances. If that is not enough, you can request a select group of lenders to send their debt consolidation loan quote. The quote provides information about the rate of interest that will be charged, the period for which the loan will be offered and other important terms on which the loan will be granted. It is certain that on comparison, a few quotes will be rejected and some will be selected for further screening through several processes.

Once a debt consolidation loan provider is selected, the process of eliminating debts is initiated. The first step in any debt settlement process will be to make a list of the debts. The list must be as exhaustive as possible so that all debts are included.

The list of debts with the persons to whom each debt is due and the interest rate that each carries will be supplied to the loan provider. Debt consolidation loans have a special feature that borrowers are guided in the debt settlement process. The guiding principle of every debt settlement process is to save maximum for the debtor. Only through a proper negotiation can creditors be forced to write off a particular debt or a part of it. Borrowers do not have the necessary time and skills to make this happen. Thus, the service of the debt consolidation loan provider becomes necessary.

Whether you have experienced some problems with credit in the past or your credit report does not clearly or truthfully represent your credit history, a less than flattering credit report may mean the you are denied credit altogether or will be asked to pay a significantly higher rate of interest than someone with a higher FICO credit score.

There are some very simple things that can be done to improve one's credit score that require little or no effort on your part. For example:

• Avoid overspending by establishing a realistic and manageable budget
• If your debt to income ratio exceeds 25% take steps to reduce that ratio. Try to keep your debt to income ration under 15% thereby allowing a cushion for emergency needs.
• If you haven't done so, establish a savings account, an investment account and begin to build a financial cushion. Even when money is tight, one can save a minimum amount each paycheck. If you can save through tax sheltered savings through your employment all the better. The point is save for your future.
• Get regular copies of your credit reports. Read and understand those reports. It often helps to consult a professional in the field to help you interpret what the reports mean. If you discover errors on the report, and the probability that you will is high, get them fixed immediately. If you don't know where to start, consult an expert.
• Don't avoid your creditors. If you have come on hard times the worst thing you can do is avoid your creditors. The bottom line is they want to get paid without having to take drastic steps to collect what is due them. Talking to the creditor, negotiating a deal you can live with, and making the agreed upon payments goes a long way to add positive information to your credit report.
• If your credit report is less than perfect it helps to get positive information added to your credit report. If you don't know how to do this, consult an expert in the field.
• Finally, protect your Social Security number at all costs. Don't give the number out to anyone but a trusted person. Don't ever fill in your SSN on an unsecured web site. When asked to verify your SSN ask the person to read it off to you and you will tell them if they are correct. If they won't do this you are being scammed. Ask if you can just verify the last four digits of your SSN. If this is not acceptable then you are being scammed. Ask if there are alternate identification numbers you can use other than your SSN. If not, then you must conclude that you are being scammed.

This advice is simple to follow. The consequences for not following these simple suggestions can be devastating. One client I am currently working with is paying over 20% interest on a car loan because of errors on his credit report. His car payments include over $300.00 of interest each and every month he makes a car payment. If he cannot refinance this car he may pay up to $15,000 extra in interest over a 60 month period than if he were able to finance the car at a reasonable rate through a prime lender. Your credit report tells an important story. Make certain it tells the right one.

There are many circumstances revolving around bankruptcy which many creditors and mortgage lenders do consider. First, the person who has declared bankruptcy may have had little choice in the matter. The situation could have arisen from their spouse's troubled credit history or use. Also, bankruptcies can stay on your credit report for 7 years or longer, so being prepared when you do speak to credit lenders should be your first priority. But nevertheless, bankruptcies do happen and there are some things that you can do following the bankruptcy to make yourself more appealing to mortgage lenders.

The very first thing that you need to do when trying to find a mortgage after bankruptcy is to be upfront and honest about the situation when you speak to mortgage companies. Mortgage companies will find out whether you have had a bankruptcy or not anyway, so being honest is the best policy!

Mortgage companies will often overlook the bankruptcy if you have started to clean up your credit report. There are several ways to do this and the first one involves getting a secured credit card. Secured credit cards are great for people with bad credit because they allow the individual to build up their credit using their own money source. Another way to have a better chance to obtain a mortgage after bankruptcy is to pay your bills on time. The bills that you pay on a daily basis, including your telephone bill, all goes on your credit report. If you begin to pay them on time after your bankruptcy, then mortgage lenders will start to take you more seriously.

All in all, though, it is not hard to obtain a mortgage after bankruptcy. On the contrary, it is very easy to start cleaning up your credit report after your bankruptcy because it is like starting with a clean slate. Even though your bankruptcy has to stay on your credit report for so many years, your bad credit history will not follow you if you begin to pay your bills and the rest of your creditors on time each month.

Being able to obtain a mortgage after bankruptcy does not have to be difficult. In fact, there are many mortgage lenders who actually specialize in providing mortgages for people with a blemished credit report. Communicating with your mortgage lender about the situation and making a sincere effort to improve your credit report is essential to doing business with a mortgage lender once again!

You will have to recognize that debt can be changed or avoided based on how you manage your finances. You start out with a growing debt from college age that spirals to a major debt by the time you are thirty or forty years old. You ask yourself, how did I get here? It happened gradually and I did not know where I was headed.

We are conditioned as Americans to think that being deep in debt is normal. This means, your parents had a debt, grandparents and so on. This is how our economy is designed, so just accept your fate gracefully and figure I will just stay in debt for all of my adult life and hopefully by the time I retire it will go away? Not necessarily!

You have not been presented with an alternative way of thinking to remove yourself from this debt, so you continue struggling to pay high interest rates of multiple credit card companies. Does this sound like you? If so, consider yourself the American Dream, because that is what we are brainwashed into thinking.

Credit card debt is an avenue to purchase goods and services that you cannot afford with your current income. If you could, it would only make sense to make a cash payment, so you would not have to pay all the high interest rates that come with owning a credit card. So, how do so many people fall into the credit card debt? Thinking that you don’t have to wait to make a purchase later, you can purchase now and pay later. That is false!

It is very easy to take out your credit card to pay for something, because you can worry about paying the minimum payment at the end of the month; which is usually a minimal fee. The only problem is how many of those minimum payments will you have to pay to payoff a $10,000.00 balance? I can tell you it will take longer than paying off a 30 year mortgage. Whatever you used it to purchase, you are paying for it 3 to 4 more times then if you paid cash.

The Simple Solution is to use Debt Consolidation because it will allow you the chance to get out of credit card debt for good. Debt Consolidation is a program to ease the burden of paying off high interest credit cards by making one low monthly payment, lowering the interest rates on the credit cards, getting those annoying creditors to stop calling you and getting some financial control over your life.

Types Of Zero-Down Loans

100% financing, as it names implies, offers complete financing of your property. The other option, 80/20, finances your mortgage with two loans. Both loans may be carried by your lender, but sometimes the seller or a second lender is required to carry the 20% mortgage.

100% financing is easier to deal with, but not all lenders will offer this type of home loan. 80/20 financing is more common, but takes some negotiation if the seller is involved.

Qualifications For Zero-Down

Each lender has their own criteria for determining who will qualify for a zero-down loan. Most sub-prime lenders require any bankruptcies or foreclosures to have been at least twelve months ago. A conventional loan requires these to be discharged two to four years ago.

While a credit score of 600 or higher is best, large cash reserves can also qualify you. Six to twelve month’s worth of cash reserves in the form of savings, money market, or other liquid assets are considered ideal.

If you choose 80/20 financing with the seller carrying the second mortgage, you can qualify with sub-prime lenders with a score of 560.

Zero-Down Sub-prime Lenders

You can find zero-down sub-prime mortgages with both conventional and niche sub-prime lenders. Make sure that you request quotes from as many mortgage lenders has possible to be sure you find the lowest rate and best terms.

You will also want to decide what type of mortgage you want. An ARM is easier to qualify for and has lower rates. A fixed rate mortgage offers the security of a constant interest rate over the life of your loan.

Typically an ARM will be a better deal if you plan to refinance within a couple of years. After you have improved your credit history, you can refinance for a conventional mortgage with low interest rates.

After receiving your bankruptcy discharge papers the first thing you will want to do is get a copy of your credit report and make sure that the information reported on it is correct. Did you know that over 90% of the time it is incorrect?

You wll want to make sure that your report is showing the date the bankruptcy was filed and when it was discharged. Make sure that ALL creditors that you included in the bankruptcy are showing that they were and that your balance is $0 and nothing else. Profit & Loss or Charge Offs will lower your credit score. Make sure they report as "included in bankruptcy" with a $0.00 balance.

If a creditor shows any balance other than $0.00 and it was included in the bankruptcy it will lower your credit score. It will by your responsibility to contact the creditor and have them update your credit report to show the correct information. Be prepared, you may need to contact them several times before they get it right. But don't stop until it is.

Did you also know your credit score will go up after a bankruptcy? Why? Because all past due, profit & loss and charge offs will now show a balance of $0 instead of a balance past due.

Did you know that if your credit score is over 500 you can purchase a home and get 100% financing? That's right!! However, you need to realize that you will be paying a premium price in the closing costs and interest rate. If you do some credit repair and wait until the bankruptcy is two years old you can qualify for a Fannie Mae low interest rate loan.

Remember, you are responsible for your own credit report. No one else is going to care about it as much as you. Start working on it now, it's never to late.

Over the past few days we have read or listened to numerous sources explain how Congressmen have “grilled” Federal Reserve Governors; how some consumer advocate organizations are calling for federal limits on how much can be charged by lenders. This is absolutely ridiculous. There are already rules in place that limit charges in most states. But the most demanding regulator of all is the open market.

We consumers have more choices now than ever before when it comes to real estate loans. These choices have made it more difficult to determine if we are making the right decision. Add to this fact that over the last few years the number of people who call themselves "loan officers" has doubled from approximately 250,000 to 500,000. This does not lead to the highest quality of service.

An even more harsh reality is the simple fact that most of us have gotten lazy about doing our own due diligence. My wife will spend hours at a mall shopping. She may find a blouse she likes at one store, put it on hold, and then continue to shop at countless other stores to find the same blouse. Once she finds the store with the least expensive blouse, she buys it. This is fun to her. To me, it's torture, but it's a great analogy. We need to do this with our financial decisions, but we should shop for expertise, not price.

With something as complex as mortgage lending, you do yourself a huge favor by seeking out experts. You should do research. Check your local paper for articles written by lenders in your area. Listen to real estate radio talk shows. Check online with lending associations for members of the National Association of Mortgage Brokers (NAMB.org), the Mortgage Bankers Association (MBAA.org) and the National Association of Responsible Loan Officers (NARLO.com). Finally, ask a friend for a referral. Remember, you want to speak with someone who knows what they are talking about (an expert in their field) and can give you the best advice possible.

We, as consumers, have to take responsibility for the decisions we make. Yes, we agree that discrimination takes place, but to a certain extent nowadays it can be avoided. There are national lenders, internet lenders, regional lenders, local lenders and private individuals who all lend money. No one should feel pigeon-holed into a loan without having to bear some of the blame.

One of the biggest issues with this subject is that the lending community does very little to advertise itself as ethical. Lenders seem to think that the way they differentiate themselves is by offering the "lowest" rates. Well guess what...there's no such thing. If we were to ask 5 people with the exact same qualifications to go find the lowest rate they can today, we are guaranteed to get 5 different answers. We consumers don't need the lowest rate; we need experts with the highest ethical standards.

Only ethics and morals will ever change these strings of reports we all read/hear about. No amount of Federal regulation will ever be able to impose these standards without encouraging the best in their field to leave the industry. Let me give you an example.

If I were to tell you to go find a heart surgeon would you consult the yellow pages? NO! Would you price shop their fees? NO! You'd do research and ask for referrals. You'd want to know where he/she was trained and how many operations they had successfully completed and how many unsuccessful. You’d go to incredible lengths to get answers. Why then do we trust the largest financial transaction of our lives to some idiot telemarketer who calls us at dinner time with the promise of the lowest rate and a free toaster oven? It boggles the mind.

It's time to take responsibility America. People are taking advantage of us because we allow them to. There will always be statistics like these until we decide to be responsible for ourselves. Big Brother has too much on his plate to regulate an industry that only needs it's consumers to be more diligent. It's up to us to fix this problem, and the solution is readily available if we look.

We need to verify a loan officer’s credentials. Do they serve a specific niche? Ask them to show you social proof of their expertise. What designations have they earned? Have they been honored by any organization? To which associations do they belong? If we can not resolve our differences, do we as consumers have the ability to mediate our problem? Do they have testimonials from three previous customers that will speak to us? All these questions and more should be on the top of your list; rates, points and fees will automatically be fair if you get good answers to any of these questions.

We have great sympathy for people who have been overcharged for reasons of race. This is an outrage that should never be tolerated. We encourage the predatory people to get out of the lending industry. That however may be a pipe dream. So, the best way we can eliminate reports with findings like these in the future is to be more diligent shoppers of expertise, not rates and fees.