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Money Coach

May 2011 - Posts

  • Business and personal credit – never mix

    Some people starting their own businesses or trying to grow the business they have think they can just rely on their own personal credit in order to get the startup or expansion loans they need. They don’t feel that building up their business credit is something they should be worried about.

    But building business credit works differently than building personal credit, and it’s also used differently. By building business credit, you can avoid using your personal credit for business needs. This is important because you can never tell how a business venture is going to pan out – using business credit, instead of your own, protects you from the risks associated with your business.

     By keeping your personal and business credit separate, you also protect your personal assets – the greater the distance between your personal credit and your business credit the better.

    Building business credit also protects your business. If personal financial problems come up, they show up on your credit reports, which could make it difficult for you to borrow for and operate your business.

    Building your business credit also helps build your company’s reputation as a serious and legitimate business. When other businesses or lenders see you have strong business credit, you’ll look like the real deal.

    The process to build your business credit is very similar to building personal credit: you use credit and pay the money back as agreed. This will allow your credit to improve over time. Just like personal credit, you need to build business credit, and the key is to use that credit responsibly. As each year passes, you’ll find that you build business credit that makes others more and more comfortable to work with you.

    But bear in mind that when you’re first starting out, you might have to use your personal credit to get a loan. As you build business credit, you can use your personal credit less and less. 

    Posted May 26 2011, 10:56 AM by moneycoach with no comments
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  • Getting 'easy' money can be more difficult than you think

    The world is an imperfect place, and there’s probably no area that can get as dicey as the world of finances. One of the most common scams is perpetrated by con artists promising easy money for those who need it most.

    If you find yourself in need of some fast cash, what do you do? How do you know who the good guys are?

    When you are searching for the right loan opportunity for you, the first red flag you will likely see is when you’re offered a loan without any kind of a credit check. In this case, the lender will ask you to pay a fee to obtain the loan. The fee is called by a number of names, like an origination fee, loan insurance or collateral, but whatever it’s called, it’s bad news. Often, once the fee is paid, you never hear from the lender again.

    The practice of doing this is against the law. Legitimate lenders don’t require a fee payment up front in order to lend you money. If you come across this, run the other direction.

    Another loan scam is when a less-than-honest lender gives you a 1-900 number and directs you to call the number in order to choose your loan. You can be you’ll be kept on the line for a long time, and you’ll wind up with a whopping phone bill.

    If a lender asks you to wire a fee, you should recognize this as a huge red flag. This isn’t required by legitimate lenders, and should give you serious cause for concern.

    If a lender contacts you and asks for sensitive information such as your Social Security number, bank account or credit card numbers or any other personal data, walk away. Never provide your personal information to anyone unless you initiated contact and you trust the person or company on the other end.

    If you have been victimized by a fast loan scam, report it to your local law enforcement as soon as possible. You should also contact your state attorney’s office, and your local Better Business Bureau.

     

    Posted May 19 2011, 10:26 AM by moneycoach with no comments
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  • Learn how to use your credit cards the right way

    People use credit cards every day, and they use them for a variety of reasons – these reasons vary from paying for vacations to starting a new business.

    Whatever your reasons, it’s important to remember that improper use of a credit card could lead to unmanageable debt.

    A credit card can be a tool that you can use to access a line of credit extended by the card issuer. You can use the money to make purchases, do balance transfers and make withdrawals from ATMs. While using a credit card is a convenience, keeping a balance on the card is expensive, since the average interest rate currently is around 15 percent.

    Make every effort to pay off your balance at the end of each billing period. You shouldn’t make a purchase on the card unless you can pay off that purchase within a month or two. You should not have more than 30 percent of the available limit used on your card at any given time, as having more than that can negatively affect your credit score.

    One good rule of thumb is to never use your card at gas and grocery stores. Some gas stations charge more per gallon if you purchase your gas with a credit card. Generally speaking, it’s not wise to use your card for food, clothing or gas, because these are everyday items and can lead to temptation to do so more frequently, which will lead to greater debt.

    Make your payments on time and in full each month. If you’re late, even by just a day, the creditor assesses an expensive late fee to the account. If you are more than 30 days late, you’ll find a negative mark on your credit report.

    But using a credit card the right way can effectively help you build up your credit and increase your credit score. But use your cards wisely.

    Posted May 12 2011, 11:14 AM by moneycoach with no comments
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  • Know what the pros, cons are of refinancing your mortgage

    If you have a fixed rate mortgage and mortgage rates are falling, it may make perfect sense for you to consider refinancing at a lower rate. But as with most things in finance, it isn’t always the simplest thing to do.

    Refinancing certainly makes sense, but it also costs money to refinance a mortgage. Depending on your specific situation, a refinance may actually end of costing you more money, instead of saving you money.

    If you have an adjustable rate mortgage, and your rate has reset to a higher rate than your initial low rate, it’s definitely worth looking at refinancing. The good news here is that adjustable rate mortgages can change their interest rates over the term of the loan, and when rates are going down, it can be a good thing. But the real problem is that you will likely find that you are still paying more than you would with a fixed rate mortgage.

    A fixed rate mortgage can be one of the best ways to refinance your mortgage. Your payment will remain the same, but there are times it can be a drawback. If mortgage rates fall in the future, you may find yourself paying more interest than what you could get on a current mortgage. But the reverse is also true. If you lock in a rate at a low point, and rates go up, you could save a lot of money.

    When considering the cost of refinancing your mortgage, look at how long you plan to be in the home. If your plans are to move in three years or less, you may find that a refinance could actually cost you.

    You should also consider the amount of equity you have in the home. Most banks will require at least 20 percent equity in order to refinance your mortgage. A refinance can be done with less equity, but you’ll get a better deal with at least 20 percent.

    And don’t forget: refinancing will extend the term of the loan again.

    If lower rates have you interested in refinancing your mortgage, it's worth taking a loot at. just make sure you don't get sucked in by the rate alone, and that you are really going to reap the rewards of a refinance.


    Posted May 05 2011, 10:25 AM by moneycoach with no comments
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