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Why it’s More Important than Ever to Maintain a Strong Credit Score

Credit Score

A strong credit score has always been important, but the past, few years have clearly showed us just how important it is.

Just a few years back, banks and creditors were fairly lenient when it came to lending credit to consumers. Often referred to as the housing boom and the credit boom, it was a time of free-flowing credit, and it seemed as if nearly everyone was being approved for everything from credit cards to mortgages.

Because of this easy access to credit, many consumers simply began neglecting their credit. After all, why worry about credit when getting approved for loans wasn’t just possible, but a sure thing?

The credit industry of today, however, has changed dramatically due, in part, to a variety of factors, including: the housing decline, the decline of the banking industry, high unemployment rates, and credit card legislation.

What does this mean for you?

It means banks and creditors are now decidedly more stringent when it comes to approving consumers for loans and lines of credit. In short, if you want access to credit these days, you must have a strong credit score on your side.

If you fail to have a strong credit score, it may be difficult to:

• Get approved for a credit card – Creditors are lending credit to only those individuals with strong credit scores. If your credit is questionable, you may be able to get approved for a credit card, but don’t expect a competitive interest rate.
• Get approved for a car loan – Automotive lenders, because of a large number of repossessions over the last couple years, are now particular when it comes to approving consumers for auto loans. If you are able to get approved for an auto loan with less-than-perfect credit, don’t expect a low interest rate.
• Get approved for a mortgage – Because foreclosures are still a huge problem across much of the United States, lenders are more particular than ever when it comes to lending money for home loans. If you want a competitive interest rate and an attractive loan program, you must come to the table with a strong credit score.
• Get approved for a home equity loan or line of credit – Just like a mortgage, loans associated with a home are difficult to achieve unless you have a strong credit score.
• Get approved for an apartment lease – Getting approved for an apartment lease may be quite difficult to achieve if your credit isn’t strong. Remember: many things in your life may be affected by a poor credit score.

Payday Loan Scams Flourish as Access to Consumer Credit Slows

News

As the economy struggles and banks and creditors tighten their belts, many Americans are caught in a precarious situation of not being able to make ends meet until their next paycheck.

It therefore comes as no surprise that cash-advance lenders are now using the lack of consumer credit to their advantage. With credit cards maxed or canceled, and personal loans nearly impossible to come by, many consumers are looking to their short-term cash solutions, which is where cash advance loans, often referred to as payday loans, come into play.

Although most cash advance lenders are reputable, there are a few that are looking to scam consumers and make a quick buck.

If you do not have access to cash or credit, and you are in a financial bind, you may look to cash advance loans for your short-term cash flow problems. From a broken down vehicle to an overdue gas bill, millions of Americans use payday loans ever year.

However, it is important to understand that all payday loans are not created equal, and that you should be aware of some of the signs of a possible payday loan scam:

• The online payday loan company does not have a mailing address or telephone number. Many scams do not have solid mailing address and telephones, thereby making the process of finding them much more difficult.
• The payday lender solicits you by phone, as payday lenders are prohibited from doing this under the Federal Trade Commission laws. Never respond to any type of solicitation over the phone, and certainly never provide them with your personal information.
• The payday lender asks that you wire money to them before you can receive your payday loan. A payday loan should never cost you any upfront money, so if a payday lender is requesting upfront money, move on.
• The payday lender asks for your personal information over the phone or Internet and the Internet connection is not secure. Many online payday lenders feature easy, online applications; but make sure the Internet connection is safe – and that the lender is someone you know – before providing any information.
• The payday lender is located outside of the country.

Beware of Small Business Credit Cards with Personal Liability Clauses

Credit Card Types

Small business credit cards offer many small business owners loads of convenient and practical features that allow them to run their businesses more efficiently; which is why so many small business owners have flocked to small business credit cards over the last, few years.

You may think it is in your best interest to take out a small business credit card for your business, and that generally holds true, but there is an exception to this rule.

As more and more credit card companies put the brakes on consumer credit, there are a number of changes that have also taken place; in particular, there are many credit card companies that include personal liability clauses with their small business credit cards.

Personal Liability Clauses Increasing

A small business credit card that features a personal liability clause is something that you might want to steer clear of, mainly because it means that if you are unable to pay your credit card because your business didn’t succeed, you may be personally responsible for paying back that credit card debt.

In other words, the credit card company can come after you, the cardholder, to pay your business credit card. Most small business owners run their business so that the business’s assets and liabilities remain separate from their own, personal accounts. However, credit card companies, in an effort to recoup some of their losses due to the lousy credit market and equally lousy economy, have started attaching small business debt to the cardholders who own the businesses.

Your Small Business Card may be Linked to your Personal Assets

That essentially means that a creditor may now be able to come after your personal assets if you are unable to pay your small business debt.

Unfortunately, the new credit card legislation does not cover small businesses, leaving many small businesses on their own when it comes to fighting creditors.

It therefore pays to take the time to read the small print of your small business credit card. Ask questions if you don’t understand the card’s terms and conditions and, if the creditor has a personal liability clause in their card’s terms and conditions, consider looking for another small business credit card.