30 Days of Magic

Your creditors report to the credit bureaus when you make late payments – true. The reality of the situation, however, is that most won’t waste their time reporting you unless you are over 30 days past due. Go ahead, breathe a sigh of relief. Approximately 35% of the total score is impacted by debts that are late. Keep yourself within that margin of error and you’ll see less of an impact.

Know Your Debt to Income Ratio

Your credit rating is impacted not only by late payments but by your overall debt to income ratio. Let’s say, for example, you make $50,000 per year. If you owed $25,000 in credit card debt you’d have a 50% ratio – and your ratio is actually higher once you weigh in on other payments you owe – like mortgages and car payments. Keep your debt to income ratio as low as possible and your lenders will love you.

Your Score Can Change Drastically in Very Little Time

A senior lender once told a story about a business owner with a low credit score. Two weeks later that business owner had increased his score by more than 150 points. Baffled, the lender ran the report again and came up with the same number she had received previously, despite the paper the business owner had showing the higher score. She had several different departments run the scores and ended up with three very different numbers. They were all run by different people but they all came from the same place. Why the difference? Because your lender has the ability to customize the criteria he uses to determine your credit score. Combine that with the fact that three different credit agencies can interpret the same information differently and you’ve got a real recipe for disaster.

Cash Only Isn’t a Good Idea

Many will tell you to simply ditch your credit cards and loans and live a cash only lifestyle. This sounds great in theory, but there are areas in your life where you simply can’t live without credit. Besides, no one is perfect and planning for emergencies can be harsh. If you don’t have enough cash on hand, how will you pay for a quick tire repair or for something that goes wrong in your home? Besides, creditors find that no credit equals bad credit, so if you need credit in the future and don’t have any to start with, you’ll have a very difficult time getting a loan.

Teens Should Learn about Credit

Woah! Never thought you’d hear this one, right? Teenagers aren’t necessarily prepared for the world of money, but the sooner you teach them about using credit responsibly the greater your odds of preventing a credit disaster in college or later in life. Consider letting your teen have a low-limit card from a department store. They’ll begin to build their credit scores early and will be less likely to destroy them later.

It doesn’t matter if you’re looking to obtain a bad credit loan, a home mortgage, or a credit card. Your credit score will play a huge role in your bank’s decision. Keep these things in mind as you apply for financial aid and be prepared to fight for your rights as a credit holder. You’ll find the outcome to be worth your time.

Celina Tern is a writer and works in recruitment business, staffing and she highly recommends Modis IT Staffing agency for businesses looking to hire new IT staff.

Bank Issued Personal Loans for Bad Credit

Major bank institutes offer the best options for personal loans for bad credit. The rates issued by major bank institutes is based on available income, credit damage and repayment history. Many banks may offer the option to participate in a credit repair program to influence long term financial health. Applicants considering this option are able to request a loan based on the listed factors by filling out an application for a personal loan online through the bank website or speaking with a loan specialists representing the chosen bank. Consumers faced with special circumstances such as death, unemployment caused by an accident or extraordinary unforeseen incidents causing damaged repayment history are advised to speak to a loan specialist.  Providing supporting documentation outlining the reason for damaged credit and the reason for the personal loan may offer an opportunity to overlook the complete damage of repayment history displayed on a credit report.

Independent Broker Loan Options for Bad Credit

Companies offering short term pay day loans; check cashing or unsecured personal loans for bad credit are an exceptional option for consumers able to offer repayment in a short time period. Companies offering a pay day loan option or personal loan options to consumers with bad credit often provide a standard outline for repayment. The consumer is subject to interest rates exceeding the National standard if the loan amount is not repaid in the agreed upon deadline. Consumers are urged to review all documentation supporting this loan option to make an informed decision based on participating interest rates.

Private Lender Personal Loan Options for Bad Credit

The internet has influenced the growth of private lenders or peer to peer lending. Consumers are able to create a profile outlining the reason for the loan and request offers for the loan. Private lenders are able to provide varying loan amounts and interest rates based on this option. Consumers utilizing this option are advised that the entire loan amount may be obtained through various loan offers.

The Federal Reserve also released a revised estimate of the fourth quarter for 2010, changing it to 2.1 percent, an incline for the fourth quarter after the amount declined in the first three quarters of the year. These numbers reflect the fact that banks across the country are issuing more unsecured personal loans to those applying for them. Three of the major lenders in the country; Mutual of Omaha, Kaiser Federal Bank, and Union Bank, all made the news regarding these loans in 2010 and early 2011.

Mutual of Omaha did not change their rates for personal loans, whether they are secured or unsecured, which means their rate still stands at 5.79 percent. Kaiser Federal Bank offers normal personal loans at 3.99 percent while they also offer a Savings Secured Loan at 3 percent. Union Bank offers unsecured personal loans beginning at the rate of 9 percent and going as high as 18.885 percent. Another major lender in the United States, CitiBank, lowered their unsecured personal loan rates to 10.49 percent. Bank of America has personal loans with rates of 2.99 percent while Chase lowered their personal loan rates to 4.04 percent from 4.29 percent. If you are in need of an unsecured personal loan, perform plenty of research prior to applying for the loan because you might be able to find lower rates when you browse around with different lending companies.

The first thing a person searching for a personal loan with bad credit should do is find any type of collateral they have available to offer for the loan. For the most part, people offer up their car or their house as collateral, which will be taken from them should they not be able to make payments on the loan. Others, who know they might not be able to make loan payments, offer up electronics or jewelry as collateral for the loan.

Financial advisors across the country recommend that those searching for personal loans for bad credit should be sure of three things prior to acquiring a loan. Those three things include comparing interest rates, fee schedules, and limiting the amount of the loan as much as possible. Interest rates vary greatly on loans for those with bad credit as well as the companies that provide the loans. Be sure you shop around prior to acquiring a loan in order to acquire the lowest interest rate possible for your bad credit loan.

Anyone looking for personal loans for bad credit should also research the fees associated with the loan. Payment fees and the schedule of when payments must be made differ from lending institution to lending institution based on their company policies. You will want to limit the amount of the loan as much as possible in order to acquire a loan for bad credit. It will be easier to acquire a loan with bad credit if you ask for a limited amount of money instead of thousands of dollars at once. The larger the amount of the loan, the higher the chance is that your application for the loan will be denied.

Most fees from lending companies on loans for bad credit range anywhere from $15 to $35 per every $100 borrowed. These fees do not seem like too much but the fees can add up when you owe hundreds or thousands of dollars on the loan.

For a consumer who only needs a few hundred dollars, or has less than stellar credit, a small-dollar loan provider is a viable option. That is, of course, provided the consumer understands the nature of small personal loans. These loans typically have a higher interest rate, due largely to their short term nature. Lenders do not have several thousands of dollars owed to them, with years to accumulate interest income. Instead, they must rely on higher interest rates to bring in revenues on smaller amounts in less time. For consumers, this means small personal loans cost considerably more than more traditional loans.

While the consumer loan industry, including those lenders that offer small dollar personal loans, is heavily regulated (with more regulation coming every day), much is still left to interpretation in terms of fees, interest rates, and loan terms. For example, some finance companies are now charging fees for initiating the loan. Penalties can be steep when it comes to late payments. The demarcation line between a delinquent loan and a defaulted loan is more narrow than in other loans, thus putting a borrower’s collateral at risk far sooner with small personal loans than a traditional bank loan for more money.

When seeking small personal loans, it may be tempting to focus only on qualifying and getting affordable payments. However, these points are equally as important.

What will the loan ultimately cost you? Include loan initiation fees, interest, and other costs in your total.

If collateral is required, what constitutes default of the loan and forfeiture of the collateral?

What are the loan terms? Are there penalties for late payments? If so, when is the payment considered late?

Because no collateral is necessary, it is a relief to those who may worry about the possibility of losing their home or other personal property should they default. When requesting for the loan, borrowers use their income as proof they will be able to pay. For those that already have a good relationship with their financial institution, the lender may actually send out an invitation to apply.  Today’s interest rates for personal loans are around 10%, but according to Rebuild.com, if you have poor credit your rates maybe be around 25%.

Before borrowing online became an option, individuals would go to their bank or credit union in person and fill out an application. Now, it is still possible to apply with a bank, but there are also websites that will match individuals with lenders online. Borrowers never have to leave home.

Not all personal loan rates are created equal. Payday advances are short-term solutions to those in need of quick cash. The rates for payday advances today generally fall under a dollar amount per every hundred borrowed. So instead of a percentage, it might be $12 owed per each $100 loaned. One may request these types of loans online, in a check-cashing center or payday loan center. With proof of income, the borrower is given a date to repay. This date usually coincides with their next payday. The amount varies, but never runs more than a few thousand dollars. Applicants receive the money in a very short time. It might be in as little as a few minutes, but rarely as long as 24 hours. It may be paid at the center or deposited directly into the bank account of the borrower.

In 1971, Starbucks opened its first store in Seattle’s Pikes Place Market. For about twenty years, it remained a small-scale operation until 1991 when it became the first privately-owned US company to extend stock option programs to its part-time employees. Just a year later, Starbucks IPO’d at $17 per share and closed trading on its first day at $21.50 per share.

In 1996, Starbucks opened its first stores in Japan – the first outside of North America. Just two years later, as part of the dot com revolution, Starbucks.com was launched. In 2001, Starbucks launched its own innovative stored-value credit cards for customers to use in store and reload. The next two years saw Starbucks gain valuable acquisitions: Seattle Coffee Company in 2003 and Ethos Water in 2005. In 2008, Starbucks acquired Coffee Equipment Company and its Clover Brewing System.

During these formative 12 years, Starbucks saw many stock splits, raking in massive profits for the company and its shareholders. Yet, Starbucks also remained committed to its policy of responsible environmental practices and coffee innovation. In 2005, when it acquired Ethos Water, Starbucks set a goal of donating $10 million to clean water projects over the following decade. In 2006, they introduced the first paper cup containing post-consumer recycled fiber, which saves more than 75,000 trees each year. And in 2009, when they introduced VIA ready-brew coffee, Starbucks also became the world’s largest buyer of fair trade certified coffee.

So while the expansion of Starbucks as a chain and as a global economic power is intriguing, just how profitable are they per year? Let’s put their profits in terms of cold, hard cash. In 2010, Starbucks generated $10,707,400.00 of revenue, with gross profits of 6.2 billion dollars from just 16,858 stores. In 2011, they plan to open 500 new stores – 400 abroad and 100 in the United States.

Trickle Down Economics

So how are these profits shared? What’s a barista earn compared to the CEO? The average yearly salaries of Starbucks employees are as follows:

Barista $17,260

Shift Supervisor $21,480

Assistant Store Manager $32,274

Store Manager $42,941

District Manager $73,785

CEO Howard Schultz $12,109,792

$643,954 salary with $643,954 bonus

$9,530,162 in option rewards

$953,676 in “other” income

So where do all these employees work? There are 11,131 Starbucks stores in the United States, 60% of which are company operated, compared to 40% which are licensed. Starbucks also has 5,727 international stores, of which only 37% are company operated, while the remaining 63% are licensed.

How does Starbucks do it? With nearly 75% of their retail sales coming from beverages alone, the profits must be made with every grande you order. Only 19% of their sales come from other foods, 4% from whole bean and soluble coffees, and 2% from coffee-making equipment and other merchandise. In other words, the profits are in the cup, not in the inventory they keep.

There will undoubtedly come a time (or many times) in your life where you find that you are short on cash when you need it the most. It may be an unforeseen medical bill, a semester of college, a car accident, or even a vacation that spurs your desire to procure borrowed funds. One standard go-to for such situations is the personal loan. A personal loan is different from a secured loan in that you are not required to put up a collateral, and you do not have to define the purpose of your loan – it can be used for anything that you deem necessary. If you find that your personal loan application is denied, it is important that you have a back-up plan. Here are some things you can do if you are denied a personal loan:

Ask why. Make sure you get clear-cut reasons for your denial. You may find that you can compensate for these factors by tweaking your application a bit or providing further proof of your credit worthiness. If not, you will at least know what you need to do in order to improve your chances of getting an approval the next time around.

Apply somewhere else. Just because your application was denied by one lender, it does not mean that you can’t get an approval at another lender. There is no substitute for trying again, elsewhere.

Improve your credit. Make it a point to correct credit report blemishes. This may be as simple as reporting inaccurately recorded information in order to have it updated on your report, or it may require that you settle some judgments. Either way, bettering your credit is your best bet for ensuring your ability to procure a personal loan when the need suddenly arises.

Try other routes. Payday advance loans and car title loans are by no means the ideal option, but they are available to those who really need it. If you’re in financial dire straits and have nowhere to turn, it may be time to turn to the hard money lenders.

Seeing that awful word, “denied,” in response to your personal loan application can be a horrifying experience if you’re in a situation where you really need the money. If you are forced to come face to face with that dirty word, don’t worry – all is not lost. You’ll just have to put some effort into making your situation work, and that may involve alternative options.

On Wednesday, July 21, 2010, President Obama signed the Wall Street Reform and Consumer Protection Act. He and the Democratic Party have been both applauded and demonized for it.

What does the new law actually do, and why do people love/hate it? It’s a little confusing, so we decided to break it down:

What’s the problem?

The financial crisis cost millions of jobs, wiped out billions in retirement savings, and caused the foreclosure of countless homes. It was brought on by problems in our financial system, including shady ways of investing.

Lawmakers decided that if we don’t put measures in place to monitor and regulate the financial system better, the same type of crisis could happen again.

Both Republicans and Democrats agreed that measures needed to be taken to prevent similar catastrophes.

What are the goals of the act?

Hold Wall Street accountable for everything it does
Protect American families from unfair financial practices
Close regulatory gaps in the financial system
Instill confidence in the US market and promote growth

What does the the new law claim to do?

Create stronger protections for consumers against unfair credit card practices like raising rates for no reason

Prohibit mortgage brokers from making extra money by selling mortgages they know consumers can’t afford

Give people free access to their credit score so they can stay on top of their finances (if they get denied a loan)

Create a rule that there can be no more taxpayer-funded bailouts; if a company can’t make it, it will have to liquidate

Give shareholders of a company more say on how much their CEO gets paid

Establish a rule that investment brokers must give advice that’s in the best interest of their customers rather than what makes the broker the most money

Prevent financial firms from growing so large that if one fails it will affect the whole financial system

Create a government agency in charge of making sure consumers are protected and lenders are held accountable for their practices

Create a rule so businesses can’t be charged extra fees for debit card processing (above the cost of processing itself). These are called “swipe fees.”

Prohibit banks from owning, investing, or sponsoring their own trading operations for their own profit (unrelated to serving their customers)

How’s it going to happen?

Starting now, the FDIC gets to keep its current insurance coverage for deposits at $250,000. It would have gone back to the old limit of $100,000 in 2013 if not for this new law. That means if your bank fails, you’re insured up to $250,000 for the assets you have in it.

A new Federal Insurance Office will be formed and given authority to seize big, failing companies. A new council called the Financial Services Oversight Council (FSOC) will be formed from existing officials such as the Secretary of the Treasury, Chairman of the Federal Reserve, US Comptroller of the Currency, and others, including one independent member with insurance expertise. They will be able to issue cease and desist orders to big firms they think are “a grave threat to the stability of the United States,” and break them up as a last resort.

The first meeting by the new FInancial Services Oversight Council will be held in 3 months. By 6 months, new rules providing shareholders more of a say on executive pay take effect.

Within a year, consumer protection bureau must be up and running, and the Office of Thrift Supervision will be abolished. In 18 months, new rules restricting proprietary trading will come out. In 2 years, regulators must propose simpler mortgage disclosure forms.

Obama: The bill will “protect consumers and lay the foundation for a stronger and safer financial system, one that is innovative, creative, competitive, and far less prone to panic and collapse.”

What are the arguments against it?

Unsurprisingly, congressional voting on the bill seemed to have more to do with political posturing than working together. 57 Democrats and 3 Republicans voted for it. 38 Republicans and 1 Democrat voted against it. (The Democrat, Russell Feingold, said the bill wasn’t strong enough.).

Those opposed to the act say:

Taxes will go up
It will be “devastating” to the derivatives market (types of investment trading that take place outside public scrutiny).
Banks will lose profits (and therefore jobs) if they have to reduce their debit card fees
The financial industry in general will be unable to make as much money, and those effects will trickle down

Sources: Washington Post, WhiteHouse.gov, FinancialStability.gov, CNBC, Christian Science Monitor, CNN, Bloomberg