1-2-3 Finance

Don’t Go Overboard on Credit Card Debt This Christmas

People concerned about how the expenditure over the Christmas period will be funded are being advised to do so with caution.

People planning on funding Christmas by using credit cards are being urged to ensure they pay off the balance as soon as possible.

Chris Whitehead, chief executive of Credit Union Australia, advised that those concerned about meeting the financial cost of presents, food and other seasonal out-goings in the approach to Christmas should try making a list of everything they want to buy in advance.

The next step is to create a budget so they are able to work out how such items can be paid for, something that may help to steer them away from buying on impulse.

In taking this action, he tells the Australian Associated Press that people should be able to avoid starting the new year in a significant amount of credit card debt.

Many shoppers use credit cards to make their Christmas purchases – thinking they can pay the balance off in the new year, Mr Whitehead points out.

However, he claims that although people may be looking to make use of the interest free period deals attached to cards, when such offers end those who have not taken action to make repayments may find themselves suddenly financially overcommitted.

The key is to ensure you are able to pay the balance in full each month, avoiding surmountable debt issues, he adds.

And despite recent research indicating overall growth in outstanding card balance has slowed down, “there is no room for complacency and consumers should continue to pay off any existing credit card debt and spend smartly over Christmas.”

Shopping around for the best offers on goods was among the tips for saving the Credit Union Australia head also recommended.

Tags: christmas credit card debt, credit crunch

Home Sales and Refinancing Effected by Credit Scoring

Credit scoring models have changed recently, which may affect the qualification of some borrowers when buying a home or refinacing a mortgage. Here are the primary changes:

1. Available Credit

The ratio of account balance to the amount of credit available appears to have more influence on the credit score formula. The less credit available that a borrower has on credit cards, the lower the score would be. Having more credit available could result in a better score. This change could have a broad impact on credit scores used by mortgage lenders to qualifying borrowers, if credit card issuers implement more cuts on their maximum limits. It doesn’t matter if an account has a balance or not, credit scores may drop if the available credit limit is lowered.

2. Open Accounts

It used to be that having too many open credit card accounts was viewed as a negative factor. However, it appears that has been reversed, provided that the accounts have not been delinquent or overused. Now, having more open and active accounts could have a positive effect on credit scores under the new scoring system. A potential negative aspect of this change is that more credit card issuers may close seldom used consumer accounts. From a mortgage lenders perspective, underwriters will also have to change how they view borrower credit files.

3. Isolated Issues

The new credit score model will apparently be more forgiving to mortgage borrowers who only have one major negative problem on their credit report. The scoring model calculates the severity and frequency of negative credit items. Depending on the item reported, isolated problems will have less impact on credit scores, as opposed to continuous and recurring late payments and delinquencies. Mortgage lenders and borrowers should welcome this change because of the potential upside of good borrowers not being lumped into a category of repeat offenders.

4. Collection Accounts

Collection accounts with an original amount of less than $100 are disregarded. Another positive benefit for borrowers with minor debts owed from parking tickets, unpaid library fines, small medical bills, or other disagreements. Infractions like these should no longer affect credit scores.

5. Authorized Users

The previous FICO credit score model allowed for authorized users on credit card accounts to build a positive credit profile without being the primary card holder. While some authorized user data is allowed, the new formula has reduced the ability to build credit based on this method.

Tags: home refinancing, mortgage rates

Getting Approved is As Easy As 1-2-3!

Here at 1-2-3 Finance, we believe that online lending should be easy, fast and accessible to everyone.  Regardless of your credit score, we offer various loan products and financing solutions that will work for you!

Getting approved is as easy as 1-2-3!

Step 1: Choose the type of loan that you want to apply for.

Step 2: Fill out a short and easy loan application form.

Step 3: One of our qualified loan officers will work to get you approved!

It really is that simple and you have absolutely nothing to lose, so why not try us out today?

Tags: Debt Management, easy loan approval

Lower Your Payments With Debt Consolidation

It’s true that credit cards can be  very useful and convenient for us, but in fact, there can be serious  side effects as well. The reality of using credit cards is that sometimes we have a tendency to use them badly and you might find yourself in debt, which can be a real pain and sometimes a complete nightmare.

When talking about the various terms that are used in the topic of credit cards, one of the most discussed is credit card debt consolidation. If you haven’t been hiding under a rock for the past 10 years, you’ve probably read an article or two about credit card debt and already know what  credit card debt consolidation is.  But just in case you haven’t,  credit card debt consolidation is the process of taking all of your debt from high interest cards and putting it all into a single low interest loan.

When you consolidate your credit card debt in this fashion,  you will gain a reduction in your APR, which slows down your total credit card rate of growth. This is the number one benefit from credit card debt consolidation. You can reduce your overall interest and payments by consolidating all of your debt into one easy loan.

You also get easy management, because all of your credit card debt is transferred to a single loan, so you can manage your account without having to send out multiple payments and meeting various minimum payment amounts.

If you have been falling behind on your monthly payments or using one credit card to pay for another, getting a debt consolidation loan can often reduce your monthly payments and give you that extra bit of breathing room that you need to get back on your feet.  You’ll also save your credit score by being able to get your monthly payments under control.  All of your loan payments will be reported to the major credit bureaus and you can start to improve your credit rating with regular monthly payments.

If you are interested in more information about a debt consolidation loan for getting your credit cards under control, please apply for a debt consolidation loan and we will be happy to answer any questions you may have.

Tags: debt consolidation, lower your payments