To Be In Debt or Not To be!!!


To Be In Debt or Not To be!!!

Credit Score or Current debt situation


Credit score or current debt situation is something that depends from individual to individual.

Credit score is a numerical expression based on a person’s credit file. This represents the credit worthiness of that individual. Lenders, Banks and credit card companies, use credit score to evaluate the potential risk posed by lending money to consumers. Credit score is not only limited to banks but other organizations, such as mobile phone companies, insurance companies, landlords, and government departments also use this score to determine the credit worthiness of the individual.

Current debt situation will always differ from person to person and house to house. A lot of factors include in a debt situation. Like, household income, debts, expenses, medical bills etc. A decrease in monthly income will also affect the debt situation of the house. Outstanding bills will worsen the debt situation.

If a person is determined to improve his credit score, then they can take advice or help from credit repair councellor’s or companies. These companies charge a fee and help you improve your credit score. Improving a credit report is not a magical work that will show results in a day or a week. It works slow and gradually the credit report seems to show improvements.

Getting out of the debt has to be planned and a person should have the will to do it. Certain expenses which do not fall in the necessity category can be reduced or eliminated. Paying off the entire debt is not required to improve the credit report. Bringing an old debt to current will help improve the credit report. Similarly paying pending bills and bringing other small debts to the current situation will help improve the credit score. This can easily be determined which debts to be paid off and which to bring to current status by reviewing the credit report. When you are trying to fix your credit, you may find yourself focusing on the “big” stuff like judgments, charge-offs or other negative information. But the personal information on your credit reports is also important. A misspelling of name, or an address you’ve never lived at, could indicate credit information getting mixed up with someone else’s. So take errors here as seriously as any other mistakes you may find on your credit reports.

There are people for whom the credit score is not that important as they have a family to take care of. They let their score take a hit and stay in that debt situation which will not only ruin their credit report but will also hamper their chances of getting a refinance done or buying a car at a lesser interest rate. Staying in a debt situation and letting the credit score take a hit and thinking that it can be handled later on is a mistake which individuals commit.

Agreed that there are situations where an individual is forced to make a decision for a debt and stay in that situation. On the other hand a person should be able to determine what is more important at that point in time. Credit Score or Current Debt Situation. If a person feels that his current situation is where he cannot improve his credit report or work on the credit score and has to stay in the debt situation, then he will only be paying a greater interest rate for his mortgage refinance or buying a new car.

If a person foresees that he needs to get a refinance done in the near future, then he must work on his debts in a systematic manner and then credit repair. Working on the debts is a must before getting a credit repair done. This will enable him to get a lower interest rate. A low credit score or a damaged credit report will only attract high interest rates.

If a person feels that the credit scores are of no relevance to him as of now or in the near future then he may choose to work on debts. He would not need to get into a credit repair program. Once debts are handled, then credit score can be improved gradually.

So, in short, it depends on the individual what he wants and what situation he wants to be in.

Car finance after bankruptcy

Car finance after bankruptcy

Being bankrupt needn`t mean that you are no longer eligible for any car finance products. While the choices will be more limited it is still possible to be able to borrow money if you are buying a car.Buying a new or second hand car is a major purchase for many of us but if you`ve been declared bankrupt it`s likely to be even more important. A new vehicle may be vital to help you get back on track, perhaps because you need it for work, so getting the right finance in place is vital.While normal lending channels will probably be out of reach because if you are bankrupt your credit rating will stop you being approved, you can still get finance to buy your new car. Perhaps surprisingly there area number of options available, depending on your circumstances.

If you have a VAT registered business then contract hire could be right for you. Under this scheme the vehicle is rented for an agreed period of time and mileage, at a fixed monthly fee which is dependant, amongst other things, on the value of the vehicle. What makes this ideal for VAT registered businesses is that 100% of the VAT is reclaimable if the vehicle is only used for business purposes and 50% can be reclaimed if there is some private use. All of the VAT levied on maintenance charges can also be reclaimed.

Private individuals who are not VAT registered can consider personal contract hire. Short-term contract hire gives you ultimate flexibility by allowing you to sign up for a new vehicle for as little as six months and you can cancel the lease after three months without penalty.

Another option is to lease and buy which is suitable for both private and business use. This works as a sale agreement where customers agree to buy the vehicle over an agree time frame, normally 24-30 months. After the final payment the legal ownership of the vehicle will pass to the user. Cars do not carry VAT with vans all being plus VAT.

If you have a VAT registered business you could choose finance leasing. This works by the finance company buying the vehicle and leasing it back to you for a set period. Monthly payments are effectively rentals rather than loan repayments so they attract VAT. When the lease ends the customer can sell the vehicle and keep 95% of the proceeds. In many circumstances customers can also reclaim VAT on the monthly payments.

With hire purchase you have an agreed period for the loan and fixed monthly payments. The customer owns the vehicle but the title only changes when the loan has been repaid. The loan repayments don`t carry VAT and the capital costs can be written against tax.

Of course all this can seem complicated. There are different options to choose from and you may be unsure which one is best for you. It may be worth taking bankruptcy advice to help you decide on the right course of action when financing your new vehicle.