More than 1.3 million Americans refinanced their homes in the first three months of 2020, marking a seven-year high. There are times in all our lives when we could do with extra cash. From waving a child off to college to finally building that home extension, raising additional capital can be hard work. A cash-out refinance on a loan or mortgage can provide you with the money you need, but just how does a cash-out refinance actually work? What is a Cash-Out Refinance?A cash-out refinance allows you to borrow a sum of money, at the same time as refinancing your mortgage. Put simply, refinancing replaces your old mortgage with a new one, ideally with better terms. If you took out a mortgage five years ago with a 4.5% interest rate, a new mortgage agreement could see you paying 3% instead. With a cash-out refinance, you’ll have these same potential benefits, plus the opportunity to borrow a sum of money. You’ll receive a check for the amount you want to borrow, but your mortgage repayments will increase to cover the cost of the amount of your loan—as well any closing fees. Lenders vary on how much they’ll lend you, but generally, you won’t be able to borrow more than 80 percent of your home’s value. When Does a Cash-Out Refinance Make Sense?There are many reasons that people choose to use a cash-out refinance. They can come in handy for paying off debts or getting a business off the ground. You can use the money you draw out for any purpose you like, but should be aware that there may be tax consequences on certain uses. You May End Up With Better RatesA major draw of a cash-out refinance is that the interest rates are often lower than with other types of loans. So if you have substantial debts on credit cards or with high-interest loans, you are likely to end up paying less in interest over time. Depending on when you took out your mortgage, you could also end up with an improved rate after a cash-out refinance. For example, if you bought your home when market rates were high, a cash-out refinance could help you secure an improved rate, as well as borrow a chunk of money. You Can Renegotiate the Length of the LoanAnother perk can be the length of time you have to repay what you owe. Many loans have a cap of 5 or 10 years to bring the balance to zero, whereas mortgages can often be repaid over the course of 30 years, giving you a cushion of extra time to spread the cost. What You Should Know About Cash-Out RefinancesA cash-out refinance is definitely not the best option for everyone. You’ll be liable to pay closing costs of 3% to 6% on the total loan amount, which means that if you have a remaining balance of $200,000 on your mortgage and you borrow an extra $50,000, you’ll be paying 3% to 6% of a total of $250,000. There’ll also be costs such as origination fees, closing costs and appraisal fees. For people wishing to borrow a large sum, cash-out refinances can be a good option. But if you only need a smaller loan, you may well be better off with a line of credit or a home equity loan. It’s important to remember that you are also at risk of foreclosure if you end up not being able to pay your monthly repayments. If your monthly payments increase after refinancing, carefully consider whether the chunk of cash you withdraw is worth the financial burden. Do You Have to Pay Taxes on a Cash-Out Refinance?The IRS doesn’t count the money you cash out as income, so you won’t be liable to pay income taxes. If you use what you borrow to make home improvements, you may be liable for a tax deduction by deducting your monthly mortgage repayments from your taxes. Make sure you check with a tax professional before undertaking any projects. How Your Credit Score Affects a Cash-Out RefinanceYour loan provider will want to know that you can manage your new repayments, so you’ll need to show you’ve got income coming in and that your credit score is decent. SmartCredit can help you take control of your future score with a range of easy to use tools. With ScoreBuilder*, you can take action on a negative account with a 120-day plan, while ScoreTracker gives you insight into your score fluctuations over time, as well as the sorts of scores available to you. *This feature unlocks if you have negative credit data.
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The post How Does a Cash-Out Refinance Work? appeared first on SmartCredit Blog. from https://blog.smartcredit.com/2020/09/29/how-does-a-cash-out-refinance-work-2/
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Many individuals do not know concerning the credit report system-- a lot less their credit history-- up until they try to acquire a home, take out funding to begin a company, or make a significant purchase. A credit score is usually a three-digit number that loan providers use to assist them to make a decision whether you obtain a home loan, a bank card, or a few other credit lines, and the interest rate you are billed for this credit. The ball game is a photo of you as a credit risk to the lender at the time of your application. To learn more visit: www.smartcredit.com/dispute-credit-report.htm Each individual has his or her own credit report. If you're married, both you and also your partner will have an individual score, and if you are co-signers on finance, both ratings will be looked at. The riskier you appear to the loan provider, the much less likely you will be to obtain credit or, if you are accepted, the extra that credit will cost you. Simply put, you will pay even more to obtain money. Ratings range from approximately 300 to 850. When it comes to locking in rates of interest, the greater your score, the far better the terms of credit you are likely to obtain. The most popular credit history system was established by Fair Isaac Company and also is called the FICO ® score. The 3 significant credit bureaus-- Equifax ®, TransUnion ®, and also Experian ®-- use the FICO scoring version for their proprietary systems. Considering that each scoring system uses a slightly various analytical design, your score from each of the 3 will not be precisely the exact same. This is due to the fact that lending institutions as well as various other companies report info to the credit coverage agencies in various ways, and the firms might offer that details with their proprietary systems in different ways. Because various loan providers have different standards for making a car loan, where you stand depends upon which credit bureau your lending institution turns to for credit rating. How Your Credit Score Influences You Suppose you wish to borrow $200,000 in the type of a set rate thirty-year home loan. If your credit rating remains in the greatest category, 760-850, a lender might charge you a 3.307 percent rate of interest for the car loan.1 This means a month-to-month payment of $877. If nonetheless, your credit report remains in a lower range, 620-639 for example, loan providers might bill you 4.869 percent that would lead to a $1,061 month-to-month payment. Although quite commendable, the lower credit history would certainly cost you $184 a month a lot more for your mortgage. Over the life of the loan, you would certainly be paying $66,343 greater than if you had the very best credit rating. Think of what you want that added $184 per month. For more details visit: Smart Credit What Aids and Harms a Credit History Here is what each component claims concerning you: Repayment History details your performance history of paying back your financial debts in a timely manner. This element includes your repayments on credit cards, retail accounts, installment financings (such as auto or pupil finances), money business accounts, and also home mortgages. Public records as well as reports detailing such things as personal bankruptcies, repossessions, suits, liens, judgments, and also wage accessories also are considered. A background of punctual payments of at the very least the minimum amount due to assists your score. Late or missed payments harm your score. Quantities Owed or Credit Usage discloses how deeply in debt you are as well as add to establishing if you can handle what you owe. If you have high exceptional balances or are nearly "maxed out" on your bank card, your credit history will be negatively influenced. A great rule of thumb is not to go beyond 30% of the credit line on a credit card. Paying down an installment lending is considered with favor. As an example, if you borrowed $20,000 to acquire a car and truck as well as have actually repaid $5,000 of it on time, despite the fact that you still owe a substantial amount on the original lending, your settlement pattern today demonstrates responsible financial debt management, which positively influences your credit rating. Length of Credit History describes how long you have actually had and used credit. The longer your background of liable credit monitoring, the much better your score will be since lenders have a better opportunity to see your payment pattern. If you have actually paid on time, each time, then you will look specifically great around. Sort of Credit concerns the "mix" of credit you access, including credit cards, retail accounts, installment car loans, money firm accounts, and mortgage loans. You do not need to have each type of account. Rather, this aspect considers the numerous kinds of credit you have as well as whether you use that credit properly. For instance, making use of a credit card to purchase a boat can harm your score. New Credit (Inquiries) recommends that you have or are about to tackle even more debt. Opening many charge account in a short amount of time can be riskier, particularly for individuals who do not have a long-established credit history. Each time you get a brand-new credit line, that application counts as a question or a "difficult" hit. When you price buys a home mortgage or a vehicle loan, there might be numerous inquiries. Nevertheless, due to the fact that you are searching for just one lending, queries of this sort in any 14-day duration matter as a solitary tough hit. By comparison, looking for countless bank cards in a brief time period will count as several tough hits and also potentially lower your score. "Soft" hits-- including your individual ask for your credit report, requests from loan providers to make you "pre-approved" credit offers, and also those originating from companies -will not affect your score. Great Credit Places Money in Your Pocket Good credit administration brings about a higher credit report, which consequently lowers your cost to borrow. Living within your means, utilizing debt wisely, and also paying all expenses-- consisting of bank card minimum settlements-- on schedule, every time is smart financial moves. They help improve your credit score, minimize the quantity you pay for the money you obtain, and put more money in your pocket to save and also invest. To learn more and know more visit: Smart Credit How Commonly Should I Check My Credit Report? The 5-Minute Overview Allow's start with the straightforward response: You can inspect your credit score nonetheless commonly you wish to. The typical misconception that examining often negatively impacts your score is just that, a misconception. Nevertheless, just because you can check your credit report whenever your want doesn't mean that you always should, or, will need to. This easy overview will rapidly aid establish when as well as how inspecting your credit report is right for you. To know more visit: https://www.smartcredit.com/check-credit-score.htm Recognizing Your Credit History? In order to comprehend your credit report, initially you have to comprehend your credit report. A credit report is a record of exactly how you handle your money. These records have a history of balances, payments, accounts, queries as well as various other items of individual info that lending institutions make use of to assess whether to expand your credit. If you have a charge card or a financing, you have a credit report. Credit history are determined from the information had in your credit report. Typically, ratings range between 300 and 850. Typically, the greater the number, the far better ball game. Both credit reports as well as credit rating are In order to understand your credit rating, initially you need to comprehend your credit report. A credit report is a document of just how you handle your cash. These reports contain a background of equilibriums, settlements, accounts, questions and various other pieces of individual information that lending institutions make use of to evaluate whether or not to expand your credit. If you have a bank card or a funding, you have a credit report. Credit history are calculated from the data contained in your credit report. Generally, ratings range between 300 and 850. Normally, the higher the number, the better ball game. Both credit records and credit rating are very important devices when it comes to managing personal finances however it's not always clear how your score is determined. See the chart listed below for an explanation of the parts that may make up your score. When to Inspect Credit Rating? Making a decision when to check your credit rating depends upon your convenience level. For some, examining each year is sufficient. Nonetheless, numerous favor examining their credit rating month-to-month and even once a week. It is very important to bear in mind that you can inspect your credit report as long as you would certainly like without impacting your score. In fact, tracking your progression might provide you a lot more insight right into what's influencing your score. Beware to avoid focusing too much on daily adjustments as well as instead determine total patterns. Some circumstances in which you might intend to examine your score more regularly can include: Determining when to check your credit score relies on your comfort level. For some, examining yearly suffices. Nonetheless, several prefer inspecting their credit report monthly or perhaps weekly. It's important to keep in mind that you can inspect your credit report as long as you would certainly such as without impacting your score. In fact, tracking your progress may give you more understanding into what's impacting your score. Take care to prevent focusing way too much on daily changes and also instead identify general patterns. Some circumstances in which you may intend to examine your score a lot more often can consist of:
When Not to Check Credit Score? Even when you remain in good standing, it is necessary to consistently inspect and also make sure that the excellent credit you've established continues to be secure. If your credit score gets on the lower end, don't ignore it. Nonetheless, it is not always necessary to examine your credit rating daily. Checking way too much can trigger anxiousness. Small or day-to-day adjustments are typical as well as should not be a cause for concern. How to Inspect Credit Rating? There are several means to check your credit report. By law, you are entitled to a cost-free credit report from all 3 major credit reporting firms once a year, including TransUnion, Equifax as well as Experian. Additionally, some tracking solutions allow you limitless access to your credit details year-round. These services might help you find mistakes, prospective scams as well as even more on your credit report. To learn more visit: Smart Credit Inspecting your credit rating can be very easy and also tension totally free with the right devices and on-line monitoring services. The Federal Housing Administration loan was borne out of the Great Depression, but it’s still a lifeline in the era of booming home ownership. Depending on your credit score, it may well be the best option available for buying your first home if you meet the FHA qualifications. Find out more about the terms, the minimum credit score required and how to qualify for an FHA loan. The FHA Loan in a Nutshell
The FHA loan was launched in 1934 against a backdrop of huge foreclosures because of the Great Depression. The program now falls under the responsibility of the U.S. Department of Housing and Urban Development. It’s essentially a federally backed mortgage, although the loan itself is from an FHA-approved lender, such as a bank. The standout advantage of an FHA loan is the possibility of securing a loan with a down payment as little as 3.5%. You pay mortgage insurance premiums to the FHA, who pays the lender if you default. Who Is the FHA Loan for?Because it has a lower minimum down payment, the FHA loan is aimed at borrowers with lower-to-medium incomes or those with credit scores too low to meet the criteria for conventional mortgages. Although they offer a lower barrier to entry, they are not necessarily the cheapest loan option in the long term. FHA loans cannot be used for investment or rental properties. The target market is first-time buyers. FHA loans also come with stringent requirements. You will have to pay an Upfront Mortgage Insurance Premium at closing to the FHA, equivalent to 1.75% of the loan amount, and an annual Mortgage Insurance Premium, which is due every month. These premiums range from 0.45% to 1.05% of the loan amount depending on the original Loan-to-Value ratio. These are payable for 11 years, or the life of the loan, which is set at a maximum term of 30 years. How Do I Qualify for an FHA Loan?As long as you have a minimum credit score of 580, you can typically qualify for an FHA loan with the 3.5% down payment. If your score is between 500 and 579, you might still be able to get a loan, but with a 10% down payment. Lenders are also looking for a debt to income ratio under 43%, which is lower than with conventional loans. Other restrictions apply: You must also be: The maximum loan amount depends on where you are buying. It is calculated based on the median house price in your area. You can check your limits using this FHA tool. Tips on Applying for an FHA LoanApproach an FHA loan application with the same due diligence as you would most other home loans. You will want a complete record of your income, outgoing payments, work history and savings. Clearly, achieving your best possible credit score is an important and effective step. Make sure it is up to date and resolve any errors or inaccuracies that might be affecting your score. Your lender will look at a range of factors, from your credit score to your work history and rent payments. As with any loan, ensure that your monthly payments are at a manageable level in relation to your income. Bear in mind that an FHA loan is not the answer for all circumstances. Because of the extra insurance premium costs tied to the loan, a conventional loan may be the cheaper alternative should you qualify. Find out more about achieving your best future credit score with our range of resources and guidance. References
The post What to Know About FHA Loan Qualifications appeared first on SmartCredit Blog. from https://blog.smartcredit.com/2020/09/22/fha-qualifications/ Dispute credit report mistakes to get errors or out-of-date information off your credit report, which can help your score. Mistakes on your credit reports can create your credit report to be lower than they must be. Obtaining those adverse things eliminated can be a fast path to a much better score, which can save you money on car loans or insurance. For more information visit: Smart Credit Right here's just how to dispute credit report mistakes and also have them eliminated in 4 steps. 1. Review all 3 credit reports With April 2021, you're qualified to free once a week credit records from the 3 significant credit reporting bureaus: Experian, Equifax and TransUnion. There may be tiny differences among your reports, since some lenders do not report your account task to all three bureaus. Yet if negative details has actually turned up on one report, it's a good idea to see whether it's additionally on the various other two.
An unfavorable mark might stun you, but that doesn't suggest it's a mistake. If it's exact, attempt to settle the problem straight with the lender. For instance, if you inadvertently missed out on a repayment, call the financial institution, arrange to compensate as well as ask if it will rescind the misbehavior so it no more shows up on your records. To learn more visit: www.smartcredit.com/dispute-credit-report.htm Some false information can recommend identity theft, such as accounts you do not recognize and addresses where you've never ever lived. Check with the source of the details, such as a bank or lender, to get more information. If you've been preyed on, follow the actions to report identity theft. Focus on errors that might reduce your score, such as repayments noted late when you paid on time, incorrect credit limits or negative marks that are also old to be consisted of. Smaller mistakes that do not affect your score-- like a misspelled former company or an out-of-date phone number-- do not impact anybody's assessment of your creditworthiness and aren't worth contesting. 2. Gather products to dispute mistakes Relying on the mistake, things you gather to support your instance might consist of duplicates of credit card statements, lending files, bank statements, birth or death certificates, or a separation decree. Your objective is to make it as very easy and quick as feasible for investigators to validate that your grievance is valid. If you've reported identity theft, make a copy of your Federal Trade Compensation issue or authorities report to include. There is no charge to dispute, and you can dispute as lots of products as you like. However, it's a waste of time to dispute irrelevant things or adverse items you recognize to be true. The credit firms are not obligated to check out "unimportant" insurance claims. 3. Dispute credit report mistakes All 3 bureaus have an online dispute process, which is frequently the fastest way to take care of a trouble, or you can compose a letter. You can likewise call, however you may not be able to finish your dispute over the phone. Below's details for each and every bureau: EQUIFAX Utilize the Equifax online portal. Write to Equifax, P.O. Box 740256, Atlanta, GA 30374-0256. Call 866-349-5191 and also comply with the triggers to talk to an agent. EXPERIAN Make use of the Experian online dispute kind. Write to Experian National Consumer Assistance Facility, P.O. Box 4500, Allen, TX 75013. Call 866-200-6020 to see if your dispute can be resolved by phone. TRANSUNION Use the TransUnion dispute online assistance page. Write to TransUnion LLC, Customer Dispute Center, P.O. Box 2000, Chester, PA 19016. Call 800-916-8800 and have a copy of your TransUnion credit report helpful; the agent will require the file number. Give documents In addition to the list of things you are contesting and copies of documents sustaining your situation, you'll likewise require to supply evidence of identity:
A copy of an utility bill or financial institution or insurance declaration that includes your name and address. 4. Testimonial the feedback The credit bureaus need to examine your dispute and after that tell you the outcome in creating. Under most scenarios, the bureaus have to react within 1 month. If the bureau agrees it's a mistake The bureau will eliminate the product as well as send you a new duplicate of your credit report. Testimonial the new report to make sure it's right. You can request that the bureau communicate the adjustment to any person who got your report in the past 6 months. If anyone requested your credit for work functions in the last two years, you can request for a fixed duplicate to be sent out to them. If the bureau differs The bureau-- or the company that equipped the info, such as your credit card provider-- might disagree that the thing is a mistake and also refuse to remove it. For more details visit: www.smartcredit.com/credit-monitoring.htm If you make certain the thing on your report is incorrect, it's time to take it to the Customer Financial Protection Bureau. Discuss what you're disputing as well as offer copies of your proof. The CFPB will check into it, as well as you can follow progression with the e-mail updates it sends or by visiting to the site. Your credit score is one of the most critical numbers in your financial life. Whether you’re applying for a new credit card, personal loan, or a mortgage, it is vital to know your credit score so that you have the proper insight into what type of credit you qualify for and what interest rates you can anticipate. But what exactly is your credit score, and what does it consist of? Below, we’ll discuss all the ins and outs of your credit and what you need to know about your credit score. What is a Credit Score?A credit score is a three-digit number, ranging from 300 to 850, that serves as an evaluation of your credit history and estimates how likely you are to repay borrowed money. When determining your credit score, many different things are considered, such as payment history and duration of credit history, from your present and past credit reports, which we will discuss shortly. While a low credit score may not prevent you from being eligible for credit, you may be forced to pay higher interest rates or place a considerably more substantial amount of money on deposit. In some instances, you might also need to pay more for car insurance or put down more significant deposits on utilities. Landlords may also use your credit score to determine whether or not you are a suitable renter. A high credit score, on the other hand, can grant you access to many more types of credit products. Additionally, you are also eligible for reduced interest rates and lower deposits. Borrowers with credit scores above 750 also frequently have many financial possibilities, including the chance to qualify for 0% financing on automobiles, as well as credit cards with 0% introductory interest rates. What are the Credit Score Ranges?While each creditor has its own set of criteria for what constitutes a good credit score, the general guidelines can be found below:
The most commonly used credit score model is the VantageScore. Although all three credit bureaus use VantageScore, each bureau looks at different factors, so a consumer’s score can vary depending on which credit bureau supplied the data. Where Does the Information from a Credit Score Come From?The three major credit reporting agencies – Equifax, Experian, and TransUnion – provide the information on your credit account. These agencies use the information to create the credit score, which is then provided to lenders when evaluating loan applicants. So what does a credit score consist of? Let’s take a look. Payment HistoryPayment history accounts for 35% of most credit scores. A history of missed or late payments lowers your credit rating more than any other factor. When determining your score, creditors look at how recently you missed a payment or were late on a payment, as well as the number of accounts that have previously been overdue. For a good credit score, you need to have as clean a payment history as possible with no or few late payments. Charge Utilization RatioCredit utilization is responsible for 30% of most credit scores. Your credit utilization ratio is the amount of credit that you’ve used, divided by your total available credit limit For example, if you have multiple credit cards with a combined credit limit of $8,000 and a balance of $3,000, then your credit utilization ratio is 37.5%. To have a good credit score, your credit utilization ratio should be roughly 30% or less. Most experts recommend 10%. Credit AgeCredit age is used to calculate 15% of most credit scores and refers to how long you’ve used credit. More accurately, credit age is the age of the oldest account, latest accounts, and average ages of all accounts on your credit file. For a good credit score, you should have at least one account in your credit file that’s at least six months old. Account MixAccount mix makes up 10% of most credit scores and refers to how many credit accounts you have. Account mix can consist of things such as mortgages, car loans, or personal loans. Revolving accounts such as credit cards and lines of credit are also considered. For a good credit score, most lenders prefer borrowers who have a diverse combination of accounts in their credit history. Credit InquiriesCredit inquiries, classified into hard and soft, are used to determine 10% of most credit scores. Hard inquiries occur when a creditor looks at your credit report because you have applied for a line of credit and can reduce your credit score by 5 to 10 points for as much as two years. Soft inquiries, which refer to instances where you or a lender check your credit score, however, don’t affect your credit score. While this category only accounts for 10% of your credit score, try to minimize credit inquiries as much as possible. How Can I Improve My Credit Score?Now that you have a better understanding as to what makes up your credit score, let’s take a look at a few ways you can start improving your credit score today. Pay Your Bills On TimePayment history is the most potent factor for your credit score, which is why you should always stay on top of your monthly payments. If you have a difficult time remembering to make payments, create a calendar reminder on your phone or opt to enroll in automatic payments. If you have a SmartCredit account, you will also receive alerts for upcoming payments before they are due. This will help you avoid hits to your credit score from late payments. Regularly Monitor Your Credit ScoreIdentity theft and reporting errors can quickly derail your credit score. Be sure to check your credit report throughout the year to ensure no unusual or fraudulent activity is occurring. If you catch anything inaccurate on your report, follow the proper measures to dispute the error as soon as possible. Consider Your Credit MixLastly, credit scores take into account your ability to manage different kinds of credit. If you think your credit combination needs to diversify, consider taking on a low-interest rate loan that you know you will be able to pay on time. Be Strategic About New DebtWhile it’s smart to have a healthy mix of credit, too many hard inquiries over time may indicate that you are taking on more debt than you can manage, which can negatively affect your credit score. However, provided that you continue to show that you’re a responsible borrower, your score should return to normal over time. View Your Credit Score with SmartCredit TodayAs you can see, credit scores are a quick way for lenders to predict consumer credit risk and credit behavior. Considering the importance of your credit score, it’s vital that you do everything you can to keep it in good standing. If you want to take back control of your credit score, contact SmartCredit today to see where your credit stands. Find out what proactive steps you can take to start improving your credit score right away with SmartCredit. The post How Healthy is Your Credit Score? appeared first on SmartCredit Blog. from https://blog.smartcredit.com/2020/09/15/how-healthy-is-your-credit-score/ Identity theft is a frightening crime that affects millions of consumers each year. If someone gets your personal information, you want to do everything you can to help safeguard your identity. In some instances, identity theft insurance and monitoring may be worth considering. While the steps involved to react to identity thefts may include several measures, each step is critical in protecting your future. Here’s a look into what identity theft is and what you can do if it happens to you. What is Identity Theft?Identity theft occurs when someone steals your personal information, and fraudulently uses it for their profit. Scammers can take personal data, such as birth dates, names, passwords, or social security numbers, to hack into an account or create false accounts. Identity theft can also occur in other forms, such as medical identity theft and account takeover. Now that you’ve got a better understanding as to what constitutes identity theft, let’s talk about what actions you can take if it happens to you. How to Respond to Identity TheftIf you believe your identity may have been stolen or used in fraudulent activity, you may be confused as to what your next steps should be. Here are some steps you can immediately take if you believe you’re a victim of identity theft. Check Your Financial AccountsYou can check for any changes to your credit scores and credit reports. Additionally, it’s also wise to check to see if your personal information was subject to a data breach with a different organization. As you get to the bottom of the problem, be sure also to save receipts and make a record of any phone calls with lenders, credit bureaus, and law enforcement. Identify Compromised AccountsNow that you’ve gone through your accounts, identify any accounts that you believe were endangered and make an accurate record of each. You will want to identify each type of account that was hacked and take the necessary steps for each account. You will also want to request copies of your credit report from all three national credit bureaus. This will help keep a lookout for any info that is incorrect or incomplete, or any unfamiliar accounts and addresses that were used. With SmartCredit’s Action Buttons, you can also resolve instances of suspicious activity that you see on your credit report by sending communication directly to the source. Place Fraud Alerts on Your Accounts or Freeze Your Credit ReportsYour next step will be to try and prevent any further damage to your financial records. You can mitigate your risk of additional harm by setting up fraud alerts or by putting a freeze on your credit reports. You can put a fraud alert on your credit reports by contacting any of the major credit bureaus. This will require lenders to take additional measures to confirm your identity when opening any new account in the future. Additionally, a fraud alert will inform the other reporting agencies of potential identity theft and will be retained on your account for 90 days. A credit freeze, on the other hand, restricts access to your credit reports, which can prevent new accounts from being opened under your name. To freeze your credit reports, you will need to contact each credit reporting agency individually and request a credit freeze. While both generally have the same impact on your credit report, they are slightly different. Unless you temporarily lift or permanently remove the credit freeze, it cannot be used to open new accounts. Either option is well worth considering in the event of identity theft. Change All of Your PasswordsData breaches can expose your personal information, which is why it’s critical to change all of your passwords after an instance of identity theft. We recommend using a secure digital vault for storing online passwords. Report Your Information to the Federal Trade Commission (FTC)Next, you will want to report the identity theft to the Federal Trade Commission. The FTC has a website dedicated specifically to identity theft that allows consumers to submit their information and let the FTC know precisely what happened. From there, the FTC will be able to help you create an identity theft report, a private recovery program, and assist you with any forms or letters that you will need moving forward. The FTC will help guide you through the recovery process and monitor your progress along the way. In some cases, involving the FTC with the identity theft process can remove the need to involve local police and file a police report. However, if you know the individual who stole your identity or have additional information that could assist law enforcement agencies, it’s imperative that you contact your local police department to examine your identity theft further. Filing a police report with your regional law enforcement agency will provide you with official documentation stating you have been a victim of identity theft. This will prove to be extremely useful in the following step. Dispute Any Fraudulent ActivityOnce you have completed the above steps, you will now need to dispute any fraudulent action that may have occurred. For each account that has been compromised, you will want to alert the company directly to learn about its specific process for dealing with identity theft. During this call, you will want to clearly explain that somebody stole your identity and request the company to close the fraudulent account. Additionally, you will also want to request the company send you an official letter confirming the fraudulent account is not yours and that you are not accountable for the account. This letter should also confirm that the fraudulent account was removed from your credit report. It’s critical that you receive everything in writing in case you need it for future reference. Protect Your FinancesUnfortunately, identity theft can happen to anyone. The good news is that there are steps you can take to take back control of your finances. Additionally, you can also sign up for a credit monitoring service to help you spot suspicious activity in your credit reports in the future. With Smart Credit’s identity theft insurance, you not only monitor cybercrime, but also have coverage that will help keep you protected. Stay alert with SmartCredit today! The post Reporting Identity Theft appeared first on SmartCredit Blog. from https://blog.smartcredit.com/2020/09/08/reporting-identity-theft/ Just 27 percent of Americans currently carry no debt whatsoever, meaning that most of us have a loan or two that we are currently repaying. Mortgages, business, personal and auto loans can all come with prepayment penalties. Whether you’re signing on the dotted line for a new loan or figuring out a repayment plan for a current one, it’s important to get a grip on these fees. What Is a Prepayment Penalty?A prepayment penalty is a clause written into a loan agreement contract stating that if you pay off the loan early (either the whole amount or a substantial chunk of it), you’ll be liable to pay a fee. Often, the clause will only apply if you pay off the loan within a set period of time, such as within the first five years of a mortgage. Lenders write this clause into large loan agreements to ensure they don’t miss out on the interest they would have made if you’d paid the loan off gradually. Not all loans carry prepayment penalty clauses--student loans taken out after 2008, for example, are exempt. But loans that come with the expectation that they will be paid over a certain period of time, such as 30-year mortgages or five-year auto loans, will commonly include this clause. These are called fixed-term loans. How Much Will I Be Charged?The amount you’ll end up paying varies greatly depending upon the provider and the amount you borrowed in the first place. But there are a few common ways that lenders will calculate the charge. Flat FeesSome loans come with a flat fee for paying off the balance early. For example, Wells Fargo will charge you $500 for paying off a home equity line of credit within three years of taking out the loan. Part of the Loan BalanceYour provider could charge you between 2% and 5% of the loan balance. For example, if you owe $100,000, you could end up paying between $2000 and $5,000. Percentage of the Interest DueSome providers will charge you part of the interest that you’ve dodged by paying off the loan early. For example, you could be asked to pay 80 percent of six months’ worth of interest. What You Should Know About Your Mortgage Prepayment PenaltyIf you took out your mortgage anytime from January 10, 2014 onward, your provider will only be allowed by law to charge a maximum of 2 percent and only within the first three years of your mortgage. Lenders are also supposed to make information about mortgage prepayment penalties clear and easy to locate on your estimate. How to Avoid Paying Prepayment PenaltiesOf course, it makes sense to shop around for a loan that doesn’t come with a prepayment penalty, but that isn’t always possible. There are several ways you can avoid paying the fee. Wait it OutAs most penalties are tied into a particular time such as the first five years of the loan, a good option can be to wait until the fixed term has passed. Calculate the interest you’d pay during that remaining period and compare it to the penalty you’d be liable to pay. Consider SellingIf you sell the car or home for which you originally took out the loan, some providers will let you pay off the balance without paying the penalty. Check the terms with your lender. Increase Your PaymentsPaying out the loan in full may result in a penalty, but you may be able to increase the amount you pay to speed up the process. Your lender could let you repay up to 20% of the remainder of the loan a year, which means you could pay off your balance in as little as five years. To make sure you are able to take out loans under the best possible terms, maintaining a decent credit score is essential. SmartCredit can help you control your future score with a range of easy-to-use tools—from a customized 120-day plan of action, to a gamified dashboard to achieve your best possible score. References:
The post 4 Things You Need to Know About Prepayment Penalties appeared first on SmartCredit Blog. from https://blog.smartcredit.com/2020/09/01/what-is-a-prepayment-penalty/ |
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